Annual Report 2007 - Antofagasta plc

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CHAIRMAN’S REVIEWChairman’s Review continuedTransportationRailway operationsThe rail businesses in Chile and Bolivia producedanother strong operational performance and carried arecord tonnage in 2007 of 5.0 million tons comparedwith 4.5 million tons in 2006.Chile: Antofagasta Railway Company plc – FCAB(100 per cent owned)FCAB’s main business continues to be the transport ofcopper cathodes and sulphuric acid and it depends onproduction from new mines and expansion of existingmines for any substantial increase in freight over itsnetworks.mine, which will be supplied from Mejillones andChuquicamata. FCAB’s road transport subsidiary,Train Ltda., has a contract to deliver one milliontonnes of sulphuric acid from the terminal to theGaby mine annually.The 2007 maintenance programme concentratedon replacing 65 and 75 pound rail with 85 and95 pound rail to counter the damage to the trackcaused by increased axle loads. Track upgradingis now centred on the Augusta Victoria–Socompasection so as to improve services to Escondidaand on the Calama-Ollague section, where trafficfrom San Cristóbal is expected to increasesignificantly.As expected, copper and sulphuric acid shipmentsfrom and to the El Abra, Escondida, Zaldivar, LomasBayas, El Tesoro and Codelco mines were maintainedor increased, and increased tonnage came from thecontinued ramp-up of BHP Billiton’s Spence mine.FCAB carried a combined total of 370,000 tons ofcopper and sulphuric acid under a 12 year contractwith Spence which is located 190 kms fromAntofagasta.After some delays, shipments of silver, zinc and leadconcentrates started in August from Apex Silver’sSan Cristóbal mine located near Uyuni in southwesternBolivia. Production problems at the mineresulted in lower than expected tonnages whichare expected to improve in 2008.FCAB’s main source of new business in 2008 willcome from the Codelco-owned Gabriela Mistral mine(“Gaby”), where annual production is expected toreach 150,000 tonnes of cathodes, starting in July.The mine will also require more than one milliontonnes of sulphuric acid annually.The FCAB is building an acid transfer terminalat Baquedano, located 135 kms from the GabyBolivia: Andino network – FCA (50 per cent owned)The Andino, which is controlled by FCAB andpartly owned by Bolivian pension funds, increasedits tonnage carried and reported its highest profitssince 2004, due to increased revenue fromSan Cristóbal and its traditional mining customers.During the first half of 2007, FCA converted76 flat cars to carry specialised containers forconcentrates and re-conditioned two locomotivesto move the increased tonnages expected overthe next 17 years of the contract. The San Cristóbalproject has re-vitalised the Uyuni-Ollague sectionwhich connects with the Chilean network at Ollague.Road transportTrain Ltda. (100 per cent owned)Train Ltda. increased its operating profit byconcentrating on regional business with bettermargins and reducing its long-haul business toSantiago and southern Chile which had becomeunprofitable. As a result road tonnages were1.3 million tons compared with 1.5 milliontons in 2006. Train’s main business continuesto be the transport of sulphuric acid from transferterminals operated by FCAB. Shipments of acidincreased in 2007 and are projected to increase16Antofagasta plc Annual Report and Financial Statements 2007
CHAIRMAN’S REVIEWfurther in 2008 following the start of operations atthe Gaby mine in July. The transport of quicklimefrom Inacesa’s cement plant to the Collahuasi andChuquicamata mines also increased, reflectingdemand from the mining sector for use inthe flotation process of their concentrators.Train Ltda. continues to be a key part of FCAB’sbi-modal transportation service.Port operationsAntofagasta Terminal Internacional S.A. (ATI)(30 per cent owned)The port of Antofagasta, which is managed byATI under a 30-year concession, retained itstraditional cargo and increased its tonnage despitecompetition from the port of Mejillones. The portof Antofagasta continued operating and sufferedminimal damage following a serious earthquakewhich occurred on 14 November 2007. ATI is astrategic investment for the FCAB. It continuedto perform well in 2007 and the outlook for theport is favourable.FCAB and Andino rail networksP E R UARICAIQUIQUEA GUAQUIC H I L EUJINAAMINCHAMineraEl AbraLA PAZVIACHACOCHABAMBAORUROB O L I V I ARIO MULATOUYUNISan CristóbalOLLAGUEVILLAZONSUCREPOTOSIATOCHATUPIZAMichillaAngamos PortInteracid TerminalMEJILLONESANTOFAGASTAInacesa CementAlto NorteSmelterTALTALChuquicamataMantosBlancosPRATSpenceSIERRA GORDALomasBayasBAQUEDANOAUGUSTAVICTORIAFerrocarrildel Norte0 100200KmsCONCHICALAMAEl TesoroGabyZaldivarEscondida0 100200SOCOMPAMilesLAQUIACACities / Towns80-90 Pound Rail65-75 Pound Rail50-60 Pound RailOther RailwaysGroup MinesOther Mines/ProjectsPlantsA R G E N T I N AAntofagasta plc Annual Report and Financial Statements 200717
Page 1: ANTOFAGASTAAnnual Report and Financ
Page 4 and 5: Highlights• Net earnings up 2.1%
Page 6 and 7: Highlights continued471.8 498.4 467
Page 8 and 9: CHAIRMAN’S REVIEWChairman’s Rev
Page 12 and 13: A R G E N T I N ACHAIRMAN’S REVIE
Page 24 and 25: Financial ReviewFINANCIAL REVIEWBas
Page 26 and 27: Financial Review continuedFINANCIAL
Page 38 and 39: Corporate Social ResponsibilityCSR
Page 41 and 42: TransportationThe Antofagasta Railw
Page 43 and 44: Other international and national st
Page 45 and 46: Organisations of which Group compan
Page 47 and 48: Compensation, recruitment and reten
Page 49 and 50: CSR REPORTEl Tesoro promotes a cult
Page 51 and 52: • health and safety issues are mo
Page 53 and 54: Native vegetation at the Choapa Val
Page 55 and 56: existing naturally in the Andean re
Page 57 and 58: saponaria), Espino (Acacia caven),
Page 59 and 60: • The “Together We Can Grow Mor
Page 61 and 62: Awards and RecognitionDuring the ye
Page 63 and 64: special dividend. The total cost of
Page 65 and 66: EnvironmentThe Group seeks to ensur
Page 67 and 68: Antofagasta Railway Company plc (ra
Page 69 and 70:
Information and professional develo
Page 71 and 72:
Company, for safeguarding the asset
Page 73 and 74:
Statement of Compliance withthe Det
Page 75 and 76:
Non-Executive Directors’ feesThe
Page 77 and 78:
Audited InformationDirectors’ rem
Page 79 and 80:
Basis of audit opinionWe conducted
Page 81 and 82:
Consolidated Balance SheetAt 31 Dec
Page 83 and 84:
Consolidated Statement of Changes i
Page 85 and 86:
2 Principal Accounting Policiesa) A
Page 87 and 88:
2 Principal Accounting Policies con
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
4 Revenue and Total Profit from Ope
Page 97 and 98:
5 Segment Information continueda) P
Page 99 and 100:
5 Segment Information continueda) P
Page 101 and 102:
6 Profit for the YearProfit for the
Page 103 and 104:
8 Net Finance IncomeNet finance inc
Page 105 and 106:
11 DividendsAmounts recognised as d
Page 107 and 108:
13 Property, Plant and EquipmentLan
Page 109 and 110:
16 Investment in Associate2007 2006
Page 111 and 112:
19 Inventories2007 2006US$m US$mRaw
Page 113 and 114:
22 Borrowings continued(ii)Other lo
Page 115 and 116:
22 Borrowings continuedd) Maturity
Page 117 and 118:
24 Financial Instruments and Financ
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
26 Deferred Tax continuedAt 31 Dece
Page 129 and 130:
29 Minority InterestsThe minority i
Page 131 and 132:
33 Notes to the Consolidated Cash F
Page 133 and 134:
37 Related Party Transactions conti
Page 135 and 136:
38 Contingent Assets and Contingent
Page 137 and 138:
40A Basis of Preparation of the Bal
Page 139 and 140:
40D Subsidiaries continueda) Invest
Page 141 and 142:
40G Independent Auditors’ Report
Page 143 and 144:
Dividends to Ordinary ShareholdersD
Page 145 and 146:
Mining Production and Sales, Transp
Page 147 and 148:
A ‘Measured Mineral Resource’ i
Page 149 and 150:
Notes to Ore Reserve and Mineral Re
Page 151 and 152:
GDPGross Domestic Product.Governmen
Page 153 and 154:
TC/RCTreatment and refining charges
Page 155 and 156:
Directors and AdvisorsDirectorsJ-P
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Annual Report 2007 - Antofagasta plc

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