"This process involves achieving savings of US$8 billion in its investment portfolio between 2019 and 2028 through better designs, project prioritization and construction optimization, following efficiency goals and continuous improvement. This amounts to a 20% reduction in the investment budget, including structural projects, without diminishing the value contribution of the portfolio."

Octavio Araneda

CEO, CODELCO

June 04, 2020

What is the current status of your different operations and can you highlight your most important investments?

Codelco is currently developing a strategic transformation plan that seeks to position it as a more sustainable, profitable and competitive company. This process involves achieving savings of US$8 billion in its investment portfolio between 2019 and 2028 through better designs, project prioritization and construction optimization, following efficiency goals and continuous improvement. This amounts to a 20% reduction in the investment budget, including structural projects, without diminishing the value contribution of the portfolio.

The first of these, Chuquicamata Underground, was inaugurated in August 2019. Tests have been carried out and we have already initiated the operation of the mineral transport system. It is a complex technology that includes a 14 km belt, which will allow the transport and feeding of ore to the concentrator plant up to 140,000 mt/d of material.

At Radomiro Tomic we are updating our Environmental Impact Assesment in order to extend the useful life of the oxide deposit for 10 years, until 2030. In parallel, we are continuing with the feasibility study of the RT Sulfuros Phase II project.

In Atacama, in our Salvador Division, the Rajo Inca project is being advanced through its early stage work, while its environmental permits are being approved. Expectations are that operations will begin in 2021.

In Andina Division, the Andean Transfer project reached 80% in the progress of its construction and will be inaugurated in 2020. Andean Future Development, meanwhile, continues with its feasibility study, which currently is 40% complete, while advancing the main engineering and mining contracts.

In El Teniente, the New Mine Level is now 54% complete. In the North Andes, the excavation of the main maintenance cavern began. At the Diamante and Andesita projects, the early works progress is going according to schedule.

It is important to highlight that the Codelco transformation process seeks to position it in 2021 in the second cost quartile, ensure the financing and development of structural projects, and maintain the company's contribution to the country for at least 50 more years.

How has 2019 been from a production perspective?

Between January and September 2019, we reached 1.120 million mt of production, that is, 80,000 mt less than in the third quarter of 2018. There are several explanations for this issue, but the most relevant are the February rains, the 14-day strike in June, the lower head grades and lower levels of treatment. Next year our projections are to reach better production levels.

How are the mines bringing economic and social value to local communities and the country?

Our historical contribution to the development of Chile is unquestionable. For almost half a century (1971-2018), we have been one of the main engines of development in the country. Our exports of US$303 billion represent 20% of all sales abroad during the period. In surpluses for the State, we have generated more than US$116 billion, equivalent to 9% of fiscal revenues. In addition, our capital investments of US$65 billion represent 8% of the total investment made in Chile in the same period, and more than all the foreign investment materialized in mining in our country. We also contribute at the local level, with the generation of economic activity in the areas where our operations are located. This is highly valued by the communities, because it brings employment and improvements in infrastructure.

What goals does Codelco wish to achieve over the next 2-3 years in Chile?

Today we are focused on achieving challenging objectives, which are part of a strategic business plan and cultural transformation. To be more productive, profitable and sustainable we have three main goals. We must look for the best projects and execute them on time and with simpler designs, pursue excellence in all our operations and focus on further development of our mineral resources

This strategic plan aims to expand revenues by US$1 billion per year, starting in 2021. This will be in addition to to our projected savings of 20% in the total investment portfolio we have planned for the coming years. Our intention is to maintain the same projects, but to execute them with maximum efficiency. These resources will help us finance our projects and fulfill our promise to extend Codelco's life.

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