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SPONSORED BY:<br />
FINANCIAL<br />
REPORT ON<br />
MINING<br />
N°11<br />
First<br />
Quarter<br />
2011
SPONSORED BY:<br />
FINANCIAL<br />
REPORT ON<br />
MINING<br />
N°11<br />
First<br />
Quarter<br />
2011<br />
1
2<br />
CONTENTS<br />
.EXECUTIVE SUMMARY<br />
.NEWS HIGHLIGHTS<br />
.OUTLOOK FOR WORLD COPPER MARKET<br />
.WORLD COPPER INDUSTRY<br />
.COPPER MINING INDUSTRY IN CHILE<br />
.COPPER MINING INDUSTRY IN PERU<br />
.EDITOR’S NOTES<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
03<br />
04<br />
07<br />
08<br />
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39
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
EXECUTIVE SUMMARY<br />
During the first quarter of the year, copper prices were high, starting off 2011 30% higher than 2010, and reaching a maximum<br />
price of 460.31 ¢/lb on February 14, driven by favorable imports from China.<br />
The main copper-producing companies throughout the world announced quarterly income of approximately US$ 29.2 billion,<br />
reflecting a 52% increase compared with the same period last year. Profits before taxes, interest, and other non-operating<br />
effects measured in Ebitda reached approximately US$ 19 billion, with an 87% year-on year increase.<br />
As in the previous quarter, Vale led the increases in income and Ebitda, which were approximately US$ 13.5 billion and<br />
US$ 9.2 billion, respectively. Codelco had income of approximately US$ 4.3 billion, an important 30% increase from the<br />
approximately US$ 3.3 billion obtained in the same period last year.<br />
Six of the fourteen world companies analyzed in this report showed a decline in production so the increase in production of<br />
the remaining eight enabled total quarterly world production to increase 4% year-on-year. Vale led the increase in production<br />
with 105.3%, while Rio Tinto decreased the most, with 14.5%.<br />
Chilean copper mining produced 1,263,700 M.T. in the first quarter, representing a 4% increase compared with 2010. Only five<br />
of the twelve Chilean companies reported an increase in production. Codelco, the state-owned company, showed the highest<br />
total increase in production, surpassing 400,000 M.T. in the period, while El Abra decreased the most in percentage terms, and<br />
Collahuasi decreased the most in total production, with 31.9 thousand M.T. less than the first quarter of 2010.<br />
High copper prices enabled Chilean companies to total income of approximately US$ 11.8 billion, representing a 25% year-onyear<br />
increase, while operating costs continued their upward trend, reaching approximately US$ 6.9 billion, 29% higher than the<br />
same period in 2010. Similarly, quarterly profits for Chilean copper-producing companies grew 25%, reaching approximately<br />
US$ 4 billion in the first three months of 2011.<br />
The Peruvian mining industry, which produced 1,247,000 M.T. of copper last year, performed well this quarter, with production<br />
of 301,000 M.T. The Peruvian companies included in this report represent 92% of the country’s total copper production. Cerro<br />
Verde produced 81,900 M.T. in the first quarter, while Southern Peru dropped 14% in the same period.<br />
Total income of the Peruvian companies included in this report increased 108%, while operating costs were 69% higher than<br />
they were in 2010. Nevertheless, total profits for the Peruvian companies increased 119%, reaching US$ 1.3 billion in the<br />
first quarter.<br />
3
4<br />
NEWS HIGHLIGHTS<br />
Anglo American<br />
The company has sold several assets as part of the plan<br />
announced in 2009 to finance investment plans on the<br />
current agenda. In January the company completed the sale<br />
of Moly-Cop and AltaSteel to OneSteel for approximately<br />
US$ 1 billion. In February the sale of the company’s interests<br />
in Black Mountain in South Africa for US$ 346 million and<br />
its interests in Lisheen in Ireland for US$ 546 million was<br />
finalized. This transaction was part of an agreement to sell<br />
Anglo Zinc’s assets to Vedanta Resources for a total of<br />
approximately US$ 1.3 billion, and it included the sale of<br />
Skorpion Mines for US$ 707 million in December.<br />
Antofagasta Plc<br />
The company, which is mostly Chilean capital, continued<br />
its internationalization process. In February it announced<br />
an agreement with Eurasian Minerals Inc. to explore copper<br />
resources in Sweden, which includes a 70% stake in Kiruna<br />
South. In March Duluth Metals agreed to acquire 100%<br />
of Franconia, whose assets will be part of the Twin Metals<br />
company that Antofagasta has a 40% share in, which<br />
includes the Nokomis deposit in Minnesota (U.S.A.)<br />
The company has had trouble developing its joint venture<br />
in Pakistan with Barrick in the Tethyan Copper Company<br />
(TCC), after the Supreme Court of that country decided to<br />
suspend the exploration rights for the Reko Diq project. The<br />
exploration rights were assigned to BHP Billiton in 1993<br />
and then transferred to TCC in 2006 when Barrick and<br />
Antofagasta Plc acquired 100% of TCC.<br />
BHP Billiton<br />
In February the Anglo-Australian company announced its<br />
intention to sell the rights to develop coal projects in South<br />
Africa, including Hartogshof, T-Project, Davel, Pegasus,<br />
Theunissen, Waterberg, Newcastle, Ermelo and Remhoogte,<br />
to concentrate on properties that are currently operating<br />
where the company has invested about US$ 1.5 billion.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
During the quarter the company agreed with Chesapeake<br />
Energy on the acquisition of the assets of Fayetteville Shale<br />
in Arkansas, where natural gas is extracted and processed,<br />
for approximately US$ 4.8 billion. Also in the energy<br />
business, the company renegotiated its stake in the joint<br />
venture with Falkland Oil and Gas Limited.<br />
In March the company announced the approval of the<br />
investment project Escondida Ore Access, in the biggest<br />
operating copper mine in the world, for a total cost of US$<br />
554 million, which will relocate the crushing and transport<br />
facilities in order to gain access to higher-grade ore and<br />
thereby increase production as of 2013.<br />
Codelco<br />
In January the Chilean company announced an investment<br />
plan for 2011 of US$ 3,243 million. Investments include the<br />
expansion of the Ministro Hales division at a cost of US$<br />
650 million, construction of a new level at the El Teniente<br />
Mine of US$ 300 million, feasibility studies for Andina<br />
Phase II at a cost of US$ 150 million, and early works to<br />
equip underground Chuquicamata with a capital cost of US$<br />
140 million for this year.<br />
The investment plan will be partially financed by the sale<br />
of Edelnor, which collected approximately US$1 billion for<br />
the company and by the sale of other assets, like the stateowned<br />
company’s 66% stake in Inca de Oro to Panaust for<br />
US$ 55.3 million. Another important part of the financing<br />
will be provided by the owner – the State of Chile- through<br />
the capitalization of US$ 376 million.<br />
First Quantum<br />
The Canadian company announced it will build a copper<br />
smelter at the Kansanshi mine in Zambia. Internal sources<br />
state that although the corporate business is mining, the<br />
smelter is a necessary investment. The project will have a<br />
capacity of 1.2 million M.T. per year, and it will also process
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
material from the Sentinel deposit, which is currently under<br />
development.<br />
Freeport McMoRan<br />
In February the company listed in Nueva York carried out the<br />
2x1 stock split that had been announced in December. The<br />
origin of the split was the good prospects for copper mining,<br />
which mean the price of company shares has increased five<br />
times in the last two years. The company also agreed to pay<br />
a special dividend of US$ 0.50 per share of common stock<br />
in June 2011.<br />
This year the company plans to carry out capital spending of<br />
US$ 2.5 billion, mainly on the development of underground<br />
activities at Grasberg, construction of the Climax<br />
molybdenum mine, and completion of the initial phase of<br />
the sulfide project at El Abra.<br />
Grupo México<br />
The Mexican company with presence in mining through<br />
its subsidiaries Southern Copper Corp. and ASARCO<br />
will invest US$ 524 million this year in the expansion of<br />
Buenavista (formerly Cananea), US$ 324 million in the<br />
Tía María project, and US$ 271 million in the expansion<br />
of Toquepala in Peru. It announced the construction of a<br />
250 watt combined-cycle power plant. The plant, which<br />
will be built by Siemens, will provide energy for its mining<br />
operations in Sonora as of March 2013.<br />
Kazakhmys<br />
The most important mining company in Kazakhstan, whose<br />
capital is largely traded in London, announced a plan in<br />
January to raise between US$ 500 million and US$ 600<br />
million on the Hong Kong Stock Exchange. In February<br />
the President of the company, Vladimir Kim, disposed of<br />
about 11% of the corporate ownership to create the liquidity<br />
required for its listing in Hong Kong. According to Kim,<br />
the decision to be listed in Hong Kong does not respond<br />
mainly to a need for financing, but is an effort to increase<br />
the company’s visibility and presence among investors in<br />
China. The company’s good results meant the final capital<br />
offer was less than the amount announced in March and will<br />
be about US$ 250 million.<br />
KGHM<br />
The CEO of the Polish company, Herbert Wirth, has<br />
announced it plans to invest US$ 3.1 billion in 2011, with<br />
approximately US$ 2.6 billion of that amount being intended<br />
for mining acquisitions. The other key activity the company<br />
would focus on is energy, where the acquisition of shares<br />
in Tauron, the second largest generator in Poland, for US$<br />
153 million, enabled the company to accumulate 10.39% of<br />
its capital, without ruling out future increases in that entity.<br />
Norilsk Níquel<br />
In January the Russian company reported that through its<br />
transportation division, Polar, it has commissioned the<br />
construction of 1,110 fuel supply ships from Astilleros<br />
OJSC Krasnoyarsk. The fleet renewal program also includes<br />
the construction of two tugboats.<br />
In February the company reported the ruling of the arbitration<br />
court in Moscow, which invalidated the requirements for<br />
information issued by the Federal Service of Financial<br />
Markets, in response to the claim of UC Rusal Investment<br />
Management, one of its main shareholders. The meeting<br />
alleges the latter would be trying to take over the company<br />
by means of juridical arguments instead of making a public<br />
bid. The meeting made an offer for the share of UC Rusal<br />
Investment Management, which was rejected by omission<br />
in March.<br />
Rio Tinto<br />
In February the company approved the US$ 933 million<br />
investment that seeks to prolong the useful life of the<br />
Marandoo iron mine in the Australian region of Pilbara<br />
to 2030. It also announced it will invest US$ 277 million<br />
in the second stage of the project in order to increase the<br />
production capacity of the Iron Ore Company of Canada<br />
(IOCC) by 40%.<br />
The company made a bid of US$ 16 per share to acquire<br />
Riversdale mining, which enabled it to take control of the<br />
company’s assets in early April. The successful acquisition<br />
of Río Tinto enabled it to have access to coal exploration<br />
and mining projects in Mozambique like the Benga project<br />
developed in conjunction with Tata Steel Limited (35%)<br />
and the Zambeze coal project, which is 100% owned by<br />
Riversdale Mining.<br />
5
6<br />
Río Tinto recognized a bid from Imerys in February to<br />
acquire its talc business for US$ 340 million, which finally<br />
took place in July.<br />
Rio Tinto acknowledged an offer from Imerys in February<br />
to acquire its talcum business for US$ 340 million, which<br />
was finally made concrete in July.<br />
Teck<br />
The Canadian company was affected by a coal miners’<br />
strike at Elkview at the end of January. The strike ended in<br />
early April when a new collective agreement was reached<br />
that made it possible to normalize operations.<br />
In March, the company closed an agreement with Westshore<br />
Terminals for coal transport from its operations in Alberta<br />
and British Columbia that will be in effect until 2016. The<br />
agreement establishes that shipments in the first year will be<br />
16 M.T. tons, and they will increase annually until the end<br />
of the agreement.<br />
Teck also reported in March that it will dispose of its stake<br />
in the Carrapateena gold and copper project in Australia. It<br />
will receive US$ 134 million for it and could also receive<br />
an additional US$ 25 million depending on the results of<br />
the project.<br />
Vale<br />
The Brazilian company dedicated to mining various mineral<br />
resources started operations at Onça Puma, a nickel mine<br />
located in the state of Para, in the north of Brazil, with a<br />
capacity of 53,000 M.T. per year.<br />
In March a ruling caused the partial shut-down of operations<br />
at the Copper Cliff smelter in Canada for a minimum of 16<br />
weeks. The Company estimates this caused a production loss<br />
of 15,000 M.T. of refined nickel, which is the equivalent of<br />
5% of total production anticipated by the Company for 2011.<br />
Vale reached an important agreement with Norsk Hydro<br />
ASA, a company listed in Oslo and London, whereby it<br />
transferred part of its portfolio of assets in aluminum. The<br />
transaction involved 51% of Albras, 57% of Alunorte, 61%<br />
of PAC, and 60% of the capital of Paragominas, with an<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
agreement to transfer the remaining 40% in 2015.<br />
Xstrata<br />
In February Xstrata announced the execution of the purchase<br />
option for 51% of the equity in Jumelles Limited, a subsidiary<br />
of Zanaga Iron Ore Company Limited (ZIOC). The Zanaga<br />
project is located in the Lékoumou District of the Republic<br />
of the Congo, and the agreement commits Xstrata to finance<br />
feasibility studies for no less than US$ 100 million.<br />
Also in February the company delivered an update of the<br />
measured and indicated resources of the Horse-Ivaal-Trukai<br />
(HIT) copper and gold deposit in Papúa Nueva Guinea,<br />
where a 52% increase of copper content in the total ore<br />
resource and 125% in the categories of measured and<br />
indicated resources was established.<br />
In March Xstrata announced, together with Gold Corp., its<br />
intention to reach an agreement with Yamana so that Minera<br />
Alumbrera, a company where the three have a stake, will<br />
have a purchase option for four years for Yamana’s rights<br />
in the Agua Rica copper and gold project in the province<br />
of Catamarca, in northwestern Argentina. If the option is<br />
exercised, Yamana will receive US$ 150 million initially<br />
and another US$ 50 million after the mine has started up.<br />
Sir John Bond, a member of various boards, joined the board<br />
of Xstrata as Chairman, replacing Willy Strothotte in that<br />
position.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
OUTLOOK FOR WORLD<br />
COPPER MARKET<br />
The foundations for the recovery of the copper market<br />
have proven to be solid in the first quarter. Neither the<br />
gradual withdrawal of the fiscal stimulus nor the end of the<br />
abundance cycle of stocks has had an impact that would<br />
reverse the trend in the markets throughout 2010.<br />
According to the latest figures reported by the International<br />
Copper Study Group (ICSG) for the first quarter of 2011,<br />
copper demand totaled 4,728 thousand M.T., a 2.4%<br />
increase over the same period last year. World production<br />
of mine copper reached 3,876 M.T., the equivalent of a 2.5%<br />
increase.<br />
Inventories at the London Metal Exchange, which have<br />
moved upward since December, closed at 439.85 thousand<br />
M.T. on March 31. Nevertheless, the average inventory for<br />
the quarter was 24% lower than 2010 which, in addition to<br />
the appetite for raw materials in the emerging economies,<br />
indicates a tighter scenario for this year where the ICSG<br />
projects a deficit of 377,000 M.T., while Barclays thinks<br />
it could even reach 670,000 M.T. Reuters states there is a<br />
consensus among analysts that there will not be a surplus<br />
in the market this year under any circumstances, and it<br />
estimates expectations of a deficit between 100,000 M.T.<br />
and 340,000 M.T.<br />
It will be necessary to follow China’s performance closely,<br />
and the developing world in general -a group of countries<br />
that is expected to grow at 6.5% in 2011- because the<br />
internal demand of those markets will be the main driver of<br />
the world economy during the rest of the year. This can be<br />
explained by the fact that the developed economies will only<br />
grow 2.4% according to the International Monetary Fund<br />
(IMF) in its April update of the World Economic Outlook.<br />
Under these conditions the copper price reacted on the<br />
London Metal Exchange, averaging 437.52 ¢/lb between<br />
January and March, the equivalent of a 33% year-on-year<br />
GRAPH 01<br />
COPPER PRICE AND INVENTORIES ON THE<br />
LONDON METAL EXCHANGE<br />
500<br />
450<br />
400<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
increase.<br />
Jan 10<br />
Feb 10<br />
Mar1 0<br />
Mar1 0<br />
Apr 10<br />
May1 0<br />
Jun 10<br />
Jul 10<br />
Aug 10<br />
Sep 10<br />
Oct 10<br />
Nov 10<br />
Dec 10<br />
Jan 11<br />
Feb 11<br />
Mar1 1<br />
Mar1 1<br />
Copper Inventories (T.M.T.) Nominal Copper Price (¢/lb)<br />
600<br />
Source Prepared by <strong>Cesco</strong> based on market information.<br />
The metal started the year 30% higher than last year, reaching<br />
its historical maximum on February 14 when it hit 460.31 ¢/<br />
lb driven by the favorable announcement of Chinese import<br />
figures. The price closed the quarter at426.35 ¢/lb, after<br />
some signs that the upward trend might slow down during<br />
the next three months.<br />
The greatest uncertainties about the emerging economies<br />
arise from the increase in inflation due to an increase in<br />
the price of raw materials, especially food and fuel, which<br />
they consume intensively. The increase in tension in Europe<br />
regarding the difficulties in agreeing on a solution to the<br />
debt crisis of several countries in the Euro zone, as well as<br />
the fiscal situation in the United States, sow doubts about the<br />
performance of the developed economies.<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
7
8<br />
WORLD COPPER INDUSTRY<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 01<br />
INCOME AND EBITDA OF THE LEADING MINING COMPANIES THAT PRODUCE COPPER<br />
INCOME EBITDA<br />
COMPANY 2010 1Q 2010 1Q 2011 Var % 2010 1Q 2010 1Q 2011 Var %<br />
BHP Billiton 62,388 - - - 30,979 - - -<br />
Rio Tinto 60,323 - - - 25,978 - - -<br />
Vale 46,481 6,848 13,548 98% 25,922 2,855 9,176 221%<br />
Xstrata 30,499 - - - 10,386 - - -<br />
Anglo American 27,960 - - - 11,983 - - -<br />
Freeport McMoRan Copper & Gold 18,982 4,363 5,709 31% 10,104 2,319 3,168 37%<br />
Codelco 16,066 3,314 4,305 30% 7,434 1,609 2,750 71%<br />
Teck 9,339 1,895 2,366 25% 4,297 1,504 1,034 -31%<br />
Grupo México 8,083 1,994 2,505 26% 4,016 879 1,190 35%<br />
Norilsk Nickel* - - - - - - - -<br />
KGHM Polska Miedz 5,841 1,253 1,894 51% 1,087 369 917 148%<br />
Antofagasta Minerals Plc 4,577 982 1,269 29% 2,772 623 812 30%<br />
Kazakhmys 3,237 - - - 2,835 - - -<br />
First Quantum 2,378 551 705 28% - - - -<br />
The companies whose results are included quarterly in this<br />
report announced income of approximately US$ 29.2 billion,<br />
with pre-tax profits, interest, and other non-operating effects<br />
measured in EBITDA that increased 87% year-on-year for<br />
the first three months.<br />
Vale continued to show a favorable growth trend that enabled<br />
the company to report quarterly income of approximately<br />
US$ 13.5 billion, a year-on-year increase of 98%. These<br />
results were generated by an improvement in the operating<br />
performance of all its business areas, which enabled the<br />
company to achieve an EBITDA of approximately US$<br />
In thousands of US$<br />
TOTAL 296,154 21,200 32,301 52% 137,793 10,159 19,047 87%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies.<br />
Notes (*) At the closing of this report, Norilsk Nickel has not published information on its results for 2010.<br />
9.1 billion, 221% higher than the same period in 2010. The<br />
company expects to increase the contribution of copper to its<br />
operating results, which is only 4.1%, but has grown due to<br />
higher prices. A contribution is also expected in the second<br />
semester from better weather conditions at Voisey’s Bay<br />
and the solution of technical imperfections in its operations<br />
at Sossego, Brazil.<br />
Codelco, the largest copper-producing company in the<br />
world, had income of approximately US$ 4.3 billion, a<br />
significant increase from approximately US$ 3.3 billion in<br />
the same period last year. According to the company, this
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
result reflects the effect of the higher price of copper and<br />
such by-products as molybdenum. This year the company<br />
will invest approximately US$ 3.2 billion as part of a fiveyear<br />
US$ 17 billion program, intended fundamentally for<br />
the development of four structural projects – Mina Ministro<br />
Hales, Chuquicamata Subterránea, Nueva Andina Fase II,<br />
and Nuevo Nivel Mina at El Teniente – which will enable<br />
the company to maintain its income-generating base for the<br />
next few years.<br />
The North American company, Freeport, showed a 31%<br />
increase in quarterly income, which reached approximately<br />
US$ 5.7 billion. Freeport CEO Richard Adkerson stated that<br />
these results reflected the sound execution of the company’s<br />
operating plans as well as an increase in the price of its<br />
main products – copper and gold. The company expects to<br />
maintain physical sales of copper this year, although the<br />
volume of gold sales will drop approximately 15%.<br />
The copper mining industry continues to show outstanding<br />
indicators of profitability. In the first quarter of the year<br />
there was an average return of 9% on capital, which is 59.3%<br />
higher than the figure reported a year ago for the same group<br />
of companies.<br />
Without any important changes in shareholders equity, the<br />
rate of return of the Chilean state-owned company, Codelco,<br />
tripled in this quarter compared to 2010, reaching 15%, the<br />
highest figure for the group of companies reported (38%, if<br />
comparable net profit is considered) driven by the price of<br />
copper, its main product.<br />
The higher return obtained by Vale in this period compared<br />
with last year was also noteworthy. Return grew 225%,<br />
positioning the company at the average for this group of<br />
companies, influenced by the evolution in the prices of all<br />
its products.<br />
The negative return shown by First Quantum in 2010 is a<br />
result of the financial effect of asset revaluation. Deducting<br />
the accounting effect of the revaluation, the company<br />
would have reported income of US$ 557 million, whereby<br />
the ROE ratio would have been 18% for 2010, which is<br />
a figure comparable to Kazakhmys. This is confirmed by<br />
the company’s return in the first quarter, which was 8%,<br />
slightly below the average of the 14 largest copper mining<br />
companies.<br />
The Polish company, KGHM, confirmed its good<br />
performance in the copper industry, making it the second<br />
most profitable company after Codelco. KGHM had an ROE<br />
of 12% for the period, which was almost a 70% increase<br />
over 2010, favored by the large share of copper in its results.<br />
TABLE 02<br />
RETURN ON CAPITAL OF THE LEADING<br />
WORLD COPPER MINING COMPANIES<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
BHP Billiton 0.31 - - -<br />
Rio Tinto 0.22 - - -<br />
Var %<br />
Vale 0.24 0.03 0.09 224.9%<br />
Xstrata 0.12 - - -<br />
Anglo American 0.21 - - -<br />
Freeport 0.34 0.08 0.11 43.3%<br />
Codelco* 0.41 0.05 0.15 198.6%<br />
Codelco**<br />
(comparable net profit)<br />
ROE = Net Profit / Shareholders Equity<br />
1.02 0.19 0.38 103.4%<br />
Teck 0.12 0.06 0.03 -50.2%<br />
Grupo México - - - -<br />
Norilsk Nickel 0.28 0.07 0.08 20.8%<br />
KGHM Polska Miedz 0.31 0.07 0.12 69.6%<br />
Antofagasta Minerals Plc 0.14 - - -<br />
Kazakhmys 0.18 - - -<br />
First Quantum -0.04 - 0.08 -<br />
Average* 0.22 0.06 0.09 59.3%<br />
Average** 0.27 0.08 0.13 55%<br />
Source Prepared by <strong>Cesco</strong> based on information of the period reported by the companies<br />
Notes (*) ROE calculated with net profit of the fiscal year.<br />
(**) ROE calculated with comparable net profit. Comparable net profit is the profit that Codelco<br />
would have if it paid taxes like private companies of 17%.<br />
9
10<br />
TABLE 03<br />
DEBT<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
BHP Billiton 0.42 0.45 0.42 -6%<br />
Rio Tinto 0.42 0.68 0.42 -39%<br />
Vale 0.44 0.42 0.40 -3%<br />
Xstrata 0.40 0.43 0.40 -8%<br />
Anglo American 0.43 0.49 0.43 -12%<br />
Freeport 0.50 0.56 0.48 -15%<br />
Codelco 0.78 0.70 0.76 8%<br />
Teck 0.45 - 0.44 -<br />
Grupo México 0.32 0.34 - -<br />
Norilsk Nickel 0.48 0.43 0.46 7%<br />
KGHM Polska Miedz 0.29 0.31 0.25 -20%<br />
Antofagasta Minerals Plc 0.35 - - -<br />
Kazakhmys 0.25 - - -<br />
First Quantum 0.36 - 0.36 -<br />
Average 0.42 0.48 0.44 -9%<br />
GRAPH 02<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by companies<br />
AVERAGE INDUSTRY DEBT RATIO<br />
0.56<br />
0.54<br />
0.52<br />
0.50<br />
0.48<br />
0.46<br />
0.44<br />
0.42<br />
0.40<br />
Total Liabilities / Total Assets<br />
Total Liabilities /Total Assets<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4Q09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by companies.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
At the end of the first three months of 2011, the debt reduction<br />
process observed since the 2008/2009 crisis continued more<br />
slowly, and even increased slightly compared with the<br />
closing of 2010, ending up at 44%, which represents a 9%<br />
reduction compared with 2010.<br />
Rio Tinto, which stood out in the previous quarter due to an<br />
annual reduction of 30% in the debt ratio, maintained the<br />
ratio compared with the previous period, indicating a pause<br />
in the restructuring of the balance sheet. The year-on-year<br />
variation of -39% confirmed the trend seen throughout 2010,<br />
for Anglo American, BHP Billiton and Xstrata as well.<br />
Although Codelco increased its year-on-year debt, it<br />
maintained a similar level to the four previous quarters,<br />
even experiencing a slight reduction compared with the<br />
fourth quarter of 2010. The resources to finance this year’s<br />
investment plan (approximately US$ 3.2 billion) will be<br />
obtained through sale of the stake in the electric generation<br />
plant E-CL (formerly Edelnor) for about US$ 1 billion; 1.5<br />
billion will come from amortization, and the remaining 700<br />
million may be financed by the recapitalization of dividends<br />
contributed by the owner, which has already promised US$<br />
356 million.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 04<br />
MINE COPPER PRODUCTION<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
In thousands of M.T.<br />
Var %<br />
Freeport 1,775 421 431 2.3%<br />
Codelco 1,689 383 415 8.3%<br />
BHP Billiton 1,114 229 274 19.4%<br />
Xstrata 913 223 210 -5.8%<br />
Grupo Mexico 688 159 167 5.2%<br />
Rio Tinto 678 165 141 -14.5%<br />
Anglo American 623 161 139 -13.7%<br />
Antofagasta Plc 521 118 130 10.3%<br />
KGHM Polska Miedz 464 108 140 29.5%<br />
Norilsk Nickel 389 97 94 -3.1%<br />
Kazakhmys 338 81 72 -11.2%<br />
First Quantum 323 86 75 -12.9%<br />
Teck 313 72 75 4.2%<br />
Vale 207 34 70 105.3%<br />
Total 10,035 2,338 2,432 4.0%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies.<br />
GRAPH 03<br />
% Var.1Q 2011 / 1Q 2010<br />
CHANGE IN COPPER PRODUCTION<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
0<br />
20<br />
105.3<br />
Vale<br />
29.5<br />
KGHM<br />
19.4<br />
BHP Billiton<br />
10.3<br />
8.3<br />
Antofagasta Plc<br />
Codelco<br />
5.2<br />
4.2<br />
Grupo Mexico<br />
Teck<br />
2.3<br />
Freeport<br />
-3.1<br />
-5.8<br />
Norilsk Nickel<br />
Xstrata<br />
-11.2<br />
-12.0<br />
Kazakhmys<br />
-13.7<br />
-14.5<br />
First Quantum<br />
Anglo American<br />
Rio Tinto<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by companies<br />
During the first quarter of the year world production was<br />
3,876 T.M.T., which represented 2.5% growth compared<br />
with the previous year. The aggregate production of mine<br />
copper for the 14 mining companies included in this report<br />
increased 4%, reaching 2,432 T.M.T. With this result, the<br />
share of the 14 reported companies in world production was<br />
62.7%.<br />
In absolute terms, BHP Billiton is the mining company<br />
with the largest increase, which enabled the company to<br />
compensate for decreases at Rio Tinto, Anglo American,<br />
First Quantum and Kazakhmys. BHP Billiton’s results were<br />
impacted positively by Olympic Dam and Antamina, while<br />
production at Escondida in Chile fell, also influencing Rio<br />
Tinto, whose stake in the mine is 30%.<br />
Anglo American saw its copper production fall 13.7% due to<br />
the expected drop in grades and unusual rains that affected<br />
normal operations at Collahuasi. The lower ore grade and<br />
maintenance scheduled for March at Los Bronces also had<br />
a negative effect, although it was partially offset by less<br />
hardness of the rock.<br />
Vale doubled production compared with 2010, but it<br />
experienced a slight drop compared with the last quarter<br />
due to technical difficulties and maintenance work at<br />
Sossego. Poor weather conditions in northern Canada also<br />
prevented smooth shipments from Voisey’s Bay, although<br />
production remained at a comparable level to the company’s<br />
historical levels due to a larger contribution from Sudbury,<br />
and marginally from Thompson, both in Canada, together<br />
with the entry into operation of Tres Valles in Chile, whose<br />
annual production is projected to be 18.5 T.M.T. in 2011.<br />
The Chilean state-owned company, Codelco, improved its<br />
contribution to world copper supply significantly, increasing<br />
production to 415 T.M.T. The good operating performance<br />
of the Radomiro Tomic, Andina and El Teniente divisions<br />
more than compensated for the drop at Chuquicamata and<br />
Gaby.<br />
11
12<br />
TABLE 05<br />
ATTRIBUTABLE MINE<br />
COPPER PRODUCTION<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Codelco 1,769 402 425 5.6%<br />
Freeport 1,427 337 350 3.8%<br />
BHP Billiton 1,114 229 274 19.4%<br />
Xstrata 843 215 210 -2.3%<br />
Rio Tinto 678 165 141 -14.5%<br />
Anglo American 630 161 139 -13.7%<br />
Grupo México 559 126 142 12.6%<br />
KGHM 464 108 140 29.5%<br />
Norilsk Nickel 389 97 94 -3.1%<br />
Kazakhmys 335 81 72 -11.2%<br />
Antofagasta 328 75 78 4.6%<br />
First Quantum 277 74 62 -16.5%<br />
Teck 285 65 69 6%<br />
Vale 207 34 70 105.9%<br />
Total 9,305 2,170 2,266 4.4%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by companies.<br />
Notes (*)Codelco includes 49% of El Abra<br />
(**)Xstrata owns 50% of Alumbrera<br />
(***)Grupo México owns 80% of Southern Copper Peru and 100% of Asarco<br />
(****)Anglo American owns 44% of Collahuasi<br />
(*****)AMSA owns 60% of Los Pelambres, 70% of El Tesoro, 74.2% of Michilla and 70% of<br />
Esperanza<br />
(******)First Quantum owns 80% of Kasanshi and 100% of Guelb Moghrein, Frontier and<br />
Bwana Mkubwa,<br />
(*******)Teck owns 97.5% de Highland Valley Copper, 22.5% of Antamina, 76.5% of Quebrada<br />
Blanca, 90% of Carmen de Andacollo, and 100% of Duck Pond,<br />
In thousands of M.T. GRAPH 04<br />
QUARTERLY VARIATION<br />
EXCHANGE RATE TO US$<br />
8%<br />
6%<br />
4%<br />
2%<br />
0%<br />
4.3%<br />
US$<br />
£<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
Source Prepared by <strong>Cesco</strong> based on market information.<br />
TABLE 06<br />
MARKETS WHERE THE LEADING MINING<br />
COMPANIES THAT PRODUCE COPPER<br />
ARE TRADED<br />
EXCHANGE CURRENCY COMPANIES<br />
London Stock<br />
Exchange (LSE)<br />
New York Stock<br />
Exchange (NYSE)<br />
Bolsa Mexicana de<br />
Valores (BMV)<br />
Warsow Stock<br />
Exchange (GPW)<br />
Australian Securities<br />
Exchange (ASX)<br />
Moscow Interbank<br />
Currency Exchange<br />
(MICEX)<br />
Pounds<br />
sterling (£)<br />
Dollars (US$) Freeport<br />
Mexican pesos<br />
($MX)<br />
Polish zloty<br />
(PLN)<br />
Australian<br />
dollars (AUD)<br />
Anglo American, Antofagasta<br />
Plc, BHP Billiton Plc, Rio Tinto<br />
Plc, Xstrata y Kazakhmys Plc<br />
Grupo Mexico<br />
KGHM<br />
BHP Billiton Ltd.y Rio Tinto<br />
Ltd.<br />
Rubles (RUB) Norilsk Nickel<br />
BM&FBOVESPA Reals ($R) Vale<br />
Toronto Stock<br />
Exchange (TSX)<br />
1.6%<br />
US$<br />
AUD<br />
3.1%<br />
US$<br />
R$<br />
Canadian<br />
dollars (CAD)<br />
4.0%<br />
US$<br />
$ mx<br />
7.0%<br />
US$<br />
RUB<br />
First Quantum y Teck<br />
6.2%<br />
US$<br />
PLN<br />
Source Prepared by <strong>Cesco</strong> based on market information.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
GRAPH 05<br />
MARKET CAPITALIZATION<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
BHP Billiton<br />
249.9<br />
Vale<br />
162.9<br />
Rio Tinto<br />
147.0<br />
Xstrata<br />
68.7<br />
Anglo American<br />
68.2<br />
In billions of US$<br />
Freeport<br />
53.1<br />
Thirteen of the mining companies included in this report<br />
are publicly held, and they are quoted in the most important<br />
financial markets in the world. The aggregate market<br />
capitalization for the 13 companies was approximately US$<br />
918.5 billion this quarter, a slight increase of 0.9% since the<br />
last report corresponding to the year-end closing.<br />
This result was mainly influenced by the evolution in the<br />
copper price and by the evolution of various currencies to<br />
the dollar, which is the currency used to express the result.<br />
Six companies quote part of their property on the London<br />
Stock Exchange (LSE), and they were favored in the<br />
calculation of their market value by a 4.3% appreciation of<br />
the pound to the dollar.<br />
Norilsk Nickel<br />
GRAPH 06<br />
MARKET CAPITALIZATION AGGREGATE OF<br />
COMPANIES REPORTED<br />
1.000<br />
800<br />
600<br />
400<br />
200<br />
49.9<br />
0<br />
Teck<br />
804<br />
31.2<br />
Grupo Mexico<br />
2007<br />
29.2<br />
278<br />
Antofagasta<br />
22.2<br />
705<br />
KGHM<br />
13.1<br />
910 918<br />
2007 2008 2009 2010 2011 1T<br />
Kazakhmys<br />
12.0<br />
In billions of US$<br />
Source Prepared by <strong>Cesco</strong> based on market information.<br />
First Quantum<br />
11.1<br />
2008 2009 2010 2011 1T<br />
Source Prepared by <strong>Cesco</strong> based on market information.<br />
In the case of the Australian Securities Exchange (ASX),<br />
the second most important exchange for the companies in<br />
this report, its main currency – the Australian dollar (AUD)<br />
– was revalued by 1.6% to the U.S. dollar. The revaluation<br />
contributed to the values shown by BHP Billiton Ltd. and<br />
Rio Tinto Ltd., whose value in Australian dollars dropped<br />
0.84%, but represents a 2.77% increase in U.S. currency<br />
according to the closing values of the respective periods.<br />
At the company level the best performance was shown by<br />
KGHM, whose market value (Warsaw Stock Exchange) grew<br />
6.9% when measured in Zlotys (Pln), the local currency, and<br />
13.5% in dollars, favored by the exchange rate.<br />
13
14<br />
TABLE 07<br />
MARKET CAPITALIZATION AND OWNERSHIP OF MAJOR MINING<br />
COMPANIES THAT PRODUCE COPPER<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
COMPANY MAIN OWNER(S) 2011-1Q 2010 2009 2008 2007<br />
BHP Billiton Plc<br />
BHP Billiton Ltd.<br />
PLC Nominees (Proprietary)<br />
Limited (18.94%)<br />
National City Nominees Limited (4.36%)<br />
GEPF Equity (3.97%)<br />
Chase Nominees Limited LEND (3.31%)<br />
Chase Nominees Limited (3.10%)<br />
State Street Nominees Limited OM02 (3.09%)<br />
Other Inverstors (63.23%)<br />
HSBC Australia Nominees Pty Ltd (16.93%)<br />
J P Morgan Nominees Australia Limited (11.33%)<br />
National Nominees Ltd (10.54%)<br />
Citicorp Nominees Pty Limited<br />
BHP Billiton ADR Holders A/C (7.40%)<br />
Citicorp Nominees Pty Limited (4.62%)<br />
Other Inverstors (44.18%)<br />
88.32 87.85 70.56 42.09 73.30<br />
161.59 154.55 128.94 70.68 118.81<br />
BHP Billiton Total 249.91 242.40 199.50 112.77 192.11<br />
Rio Tinto Plc<br />
Rio Tinto Ltd.<br />
Shining Prospect Pte. Ltd (12.00%)<br />
BlackRock Inc. (8.38%)<br />
Capital Research and Management Company (4.95%)<br />
AXA S.A. (4.86%)<br />
Legal & General plc (3.97%)<br />
The Capital Group Companies. Inc (3.90%)<br />
Other Inverstors (61.94%)<br />
HSBC Custody Nominees (Australia) Limited (20.38%)<br />
JP Morgan Nominees Australia Limited (13.91%)<br />
National Nominees Limited (13.47%)<br />
Citicorp Nominees Pty Limited (4.39%)<br />
Cogent Nominees Pty Limited (2.53%)<br />
Other Inverstors (45.32%)<br />
108.81 105.88 82.17 21.81 114.18<br />
38.16 37.88 40.46 12.00 53.95<br />
Rio Tinto Total 146.98 143.76 122.63 33.82 168.12<br />
Vale (común)<br />
Vale (preferente)<br />
Valepar (53.5%)<br />
NYSE – ADR (24.6%)<br />
BNDESPar (6.8%)<br />
Other Inverstors (15.1%)<br />
NYSE – ADR (39.8%)<br />
BNDESPar (3.5%)<br />
Valepar (1.0%)<br />
Other Inverstors (55.7%)<br />
104.70 106.90 91.23 37.71 100.49<br />
58.22 58.63 48.69 20.77 55.02<br />
Vale Total 162.92 165.53 139.92 58.48 155.51<br />
Xstrata<br />
Glencore (34.1%)<br />
BlackRock. Inc (5.95%)<br />
Other Inverstors (59.95%)<br />
In billons of US$<br />
68.69 68.08 52.12 5.18 39.78
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 07 - FROM PREVIOUS PAGE<br />
MARKET CAPITALIZATION AND OWNERSHIP OF MAJOR MINING<br />
COMPANIES THAT PRODUCE COPPER<br />
In billons of US$<br />
COMPANY MAIN OWNER(S) 2011-1Q 2010 2009 2008 2007<br />
Anglo American<br />
Freeport<br />
Norilsk Nickel<br />
PLC Nominees (Pty) Limited (37.33%)<br />
BlackRock. Inc. (5.83%)<br />
Public InvesT.M.ent Corporation (PIC) (5.82%)<br />
Legal & General plc (4.51%)<br />
Tarl InvesT.M.ent Holdings Limited (3.58%)<br />
Epoch Two InvesT.M.ent Holdings Limited (3.19%)<br />
Other Inverstors (39.74%)<br />
State Street Corporation (4.09%)<br />
Vanguard Group. Inc. (3.84%)<br />
Blackrock Group Limited (2.81%)<br />
JP Morgan Chase & Company (2.77%)<br />
Blackrock Institutional Trust Company (2.62%)<br />
FMR LLC (2.20%)<br />
Other Inverstors (81.67%)<br />
Ing Bank (Eurasia) (42.18%)<br />
NRD (12.98%)<br />
DKK (9.14%)<br />
Sberbank of Russia (12.5%)<br />
Other Inverstors (23.2%)<br />
68.21 62.55 52.21 27.38 81.88<br />
53.05 56.55 33.08 9.34 34.93<br />
49.94 44.80 26.78 12.96 50.12<br />
Teck N/A* 31.24 35.97 20.73 2.39 15.84<br />
Grupo México<br />
KGHM<br />
Antofagasta Plc<br />
Kazakhmys Plc<br />
Empresarios Industriales de México. S.A. de C.V.<br />
(36.02%)**<br />
Germán Larrea Mota Velasco (15.55%)<br />
Banamex División Fiduciaria (4.35%)<br />
Other Inverstors (44.08%)<br />
Polish State Treasury (31.79%)<br />
Other Inverstors (68.21%)<br />
Familia Luksic (65%)<br />
Other Inverstors (35%)<br />
Cuprum Holding B.V. (25.4%)<br />
The State Property & Privatisation Committee of the<br />
Ministry of Finance of the Republic of Kazakhstan<br />
(15%)<br />
Joint Stock Company National Welfare Fund Samruk-<br />
Kazyna (11%)<br />
Harper Finance Limited (5.5%)<br />
Other Inverstors (43.1%)<br />
29.17 31.98 17.83 4.87 16.14<br />
13.11 11.54 7.40 1.93 8.91<br />
22.16 24.53 15.50 6.12 14.16<br />
11.99 13.32 11.27 1.80 20.60<br />
First Quantum N/A* 11.12 9.30 6.03 0.99 5.87<br />
TOTAL 918.49 910.31 705.00 278.03 803.99<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by companies<br />
Notes (*) Teck and First Quantum doesn’t report significal shareholders in the period.<br />
(**) Larrea family directly or indirectly, controls Grupo México because of being major shareholders in Empresarios Industriales de México. S.A de C.V.<br />
15
16<br />
GRAPH 07<br />
PRICES OF SHARES TRADED IN MAJOR MARKETS<br />
50<br />
45<br />
40<br />
35<br />
30<br />
25<br />
20<br />
15<br />
53<br />
51<br />
49<br />
47<br />
45<br />
43<br />
41<br />
39<br />
37<br />
35<br />
100<br />
90<br />
80<br />
70<br />
60<br />
50<br />
40<br />
30<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
BHP Billiton Plc (£)<br />
Rio Tinto (£)<br />
Anglo American (£)<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
Grupo Mexico ($ MX)<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
BHP Billiton Ltd. (AUD) Rio Tinto Ltd. (AUD)<br />
18<br />
17<br />
16<br />
15<br />
14<br />
13<br />
12<br />
11<br />
10<br />
200<br />
180<br />
160<br />
140<br />
120<br />
100<br />
150<br />
130<br />
110<br />
90<br />
70<br />
50<br />
30<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
Xstrata (£)<br />
Antofagasta Plc (£)<br />
Kazakhmys Plc (£)<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
KGHM (PLN)<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
Teck (CAD) First Quantum (CAD)<br />
130<br />
120<br />
110<br />
100<br />
90<br />
80<br />
70<br />
60<br />
50<br />
40<br />
65<br />
60<br />
55<br />
50<br />
45<br />
40<br />
8000<br />
7500<br />
7000<br />
6500<br />
6000<br />
5500<br />
5000<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
Freeport (US$)<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
Vale (preferente) (R$) Vale (común) (R$)<br />
11 Oct 10<br />
27 Oct 10<br />
12 Nov 10<br />
30 Nov 10<br />
16 Dec 10<br />
03 Jan 11<br />
19 Jan 11<br />
04 Feb 11<br />
22 Feb 11<br />
10 Mar 11<br />
31 Mar 11<br />
Norilsk Nickel (RUB)
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
COPPER MINING<br />
INDUSTRY IN CHILE<br />
The Chilean copper mining industry produced 1,263,700<br />
M.T. in the first quarter, showing better performance than<br />
the same period of 2010 when total copper production in the<br />
country was 1,225,200 M.T. This result represented 32.6%<br />
of world production in the period, according to the figures<br />
reported by ICSG.<br />
Detailed information is provided in this report for the twelve<br />
largest mining companies that operate in Chile, which<br />
together represent 30.4% of world production. Only five of<br />
those companies performed better this quarter than they had<br />
the previous year.<br />
Codelco, the largest copper producer in the world, was<br />
one of the exceptions with positive figures during this<br />
quarter. Production increased above 400 T.M.T., making<br />
it the company’s best year start on record. The result is the<br />
consequence of better performance at the Radomiro Tomic<br />
(+34 T.M.T.), Andina (+14 T.M.T.), and El Teniente (+7<br />
T.M.T.) divisions, and to a lesser degree at El Salvador (+1<br />
T.M.T.), which offset lower production at Chuquicamata<br />
(-17 T.M.T.) and Gaby (-7 T.M.T.).<br />
Escondida, the biggest copper mine in the world, had<br />
slightly lower results than it did in the same period last year<br />
which was due partly to less availability of equipment, as<br />
the company explained, but mainly to restrictions caused<br />
by maintenance activities in the crushing and conveyor belt<br />
system.<br />
Production at Antofagasta Minerals increased 18%<br />
compared to 2010, with 129,800 M.T. of copper produced in<br />
the period. In the first quarter of the year the first shipments<br />
were made from Esperanza, which contributed 7,400 M.T.<br />
of copper to the company total. This result, however, was<br />
lower than initial projections, which aimed at production<br />
of 19 T.M.T. in the first quarter of 2011. That goal was<br />
impossible to achieve due to delays in the startup of the<br />
operation. Los Pelambres, the company’s biggest operation,<br />
which produced 384 T.M.T. of copper in 2010, faced lower<br />
grades than projected, with production 1,100 M.T. less<br />
than the first quarter of last year, despite a 10% increase in<br />
the amount of ore treated. El Tesoro carried out scheduled<br />
maintenance works that had a negative impact on copper<br />
production in the period (-3,500 M.T.), while Michilla (-300<br />
M.T.) faced lower ore grades, which were partially offset by<br />
a better yield in ore treatment.<br />
Collahuasi, a joint venture of AngloAmerican and Xstrata<br />
that was the fourth largest Chilean producer of copper in<br />
2010, saw its production reduced significantly (-31,900<br />
M.T., -22.6%) in the first quarter of 2011, totaling 109,500<br />
M.T. of copper in the period. The reduction was influenced<br />
by unusually severe weather conditions that forced<br />
modifications in the production plan.<br />
The performance of Anglo American Chile, which produced<br />
89,100 M.T. of copper between its Norte and Sur operations,<br />
was influenced by the results of Los Bronces. The company<br />
hopes, however, to reverse the downward trend of previous<br />
periods with the entry into operation in the fourth quarter of<br />
2011 of the Los Bronces expansion, a project with a capital<br />
cost of US$ 2.8 billion that will raise mine production from<br />
230 T.M.T. to 400 T.M.T. of copper per year.<br />
GRAPH 08<br />
% Var. 1Q-2011 / 1Q-2010<br />
CHANGE IN COPPER PRODUCTION<br />
50<br />
30<br />
10<br />
-10<br />
-30<br />
-50<br />
44.2<br />
Candelaria<br />
11.9<br />
Lomas Bayas<br />
11.9<br />
Cerro Colorado<br />
10.3<br />
Antofagasta Plc<br />
8.1<br />
Codelco<br />
-4.9<br />
Minera Escondida<br />
-5.8<br />
Zaldívar<br />
-8.0<br />
Spence<br />
-8.6<br />
Anglo American Chile<br />
-22.6<br />
Collahuasi<br />
-28.5<br />
-43.8<br />
Quebrada Blanca<br />
El Abra<br />
Source Prepared by <strong>Cesco</strong> based on information reported by Cochilco.<br />
17
18<br />
The El Abra mine, whose transition from oxide to sulfide<br />
treatment took place this quarter, suffered another drop in<br />
production, which was 43.8% less than it was in the same<br />
period of 2010. It is expected, however, that the US$ 725<br />
million project will reach its design levels of about 135<br />
T.M.T. of copper per year in the second half of this year.<br />
A better grade of treated ore explains the good performance<br />
of Candelaria, which increased copper production 44.2%<br />
in the first quarter, reaching 36,200 M.T. of copper in that<br />
period. The opposite occurred at Quebrada Blanca, which<br />
TABLE 08<br />
COPPER PRODUCTION OF CHILEAN INDUSTRY BY COMPANY<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
In M.T. of fine copper<br />
COMPANY MAIN OWNER(S) 2010 1Q 2010 1Q 2011 Var %<br />
Codelco Chilean State 1,689,100 383,300 414,200 8.1%<br />
Minera Escondida<br />
BHP Billiton (57.5%)<br />
Rio Tinto (30%)<br />
Jeco Corp (12.5%)<br />
1,086,700 245,600 233,600 -4.9%<br />
Antofagasta Minerals Antofagasta Plc 521,000 117,680 129,800 10.3%<br />
Collahuasi<br />
Anglo American plc (44%)<br />
Xstrata plc (44%)<br />
Mitsui & Co. Ltd. y Mitsui Mining & Smelting Co. Ltd. (7%)<br />
Nippon Mining & Metals Co. Ltd (5%)<br />
decreased 29% in the first quarter to 15,800 M.T., due to<br />
lower ore grades and lower production as a result of faults<br />
in the walls of the mine in the fourth quarter of 2010 and<br />
unusual rain in January, which made operations difficult<br />
and deteriorated the copper solution. These factors in<br />
conjunction signified that the result ended up 5,500 M.T.<br />
short of the plan.<br />
The “Other” category has increased production in response<br />
to the good prices, which have made it possible to operate<br />
deposits with higher operating costs.<br />
504,000 141,400 109,500 -22.6%<br />
Anglo American Chile Anglo American Plc 397,300 97,500 89,100 -8.6%<br />
Spence BHP Billiton 178,100 45,000 41,400 -8.0%<br />
El Abra Freeport McMoRan (51%) Codelco (49%) 145,200 38,400 21,600 -43.8%<br />
Zaldívar Barrick Gold Corp. 144,400 36,300 34,200 -5.8%<br />
Candelaria Freeport McMoRan (80%) Sumitomo Corp. (20%) 136,400 25,100 36,200 44.2%<br />
Cerro Colorado BHP Billiton 89,000 20,200 22,600 11.9%<br />
Quebrada Blanca Teck (76.5%) Pudahuel (13.5%) Enami (10%) 86,200 22,100 15,800 -28.5%<br />
Lomas Bayas Xstrata 71,800 16,800 18,800 11.9%<br />
Other 306,100 35,820 96,900 170.5%<br />
TOTAL 5,368,800 1,225,200 1,263,700 3.1%<br />
Source Prepared by <strong>Cesco</strong> based on information reported by Cochilco.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
GRAPH 09.1<br />
ANNUALIZED PRODUCTION<br />
1,800,000<br />
1,700,000<br />
1,600,000<br />
1,500,000<br />
1,400,000<br />
1,300,000<br />
1,200,000<br />
1,100,000<br />
1,000,000<br />
GRAPH 09.3<br />
ANNUALIZED PRODUCTION<br />
250,000<br />
200,000<br />
150,000<br />
100,000<br />
50,000<br />
0<br />
M.T. of fine copper (prod. over 1 million m.t.) GRAPH 09.2<br />
M.T. of fine copper (prod. between 350 thousand and 1 million m.t.)<br />
Dec 06 Aug 07 Apr 08 Dec 08 Aug 09 Apr 10 Dec 10<br />
Codelco Escondida<br />
M.T. of fine copper (prod. between 100 thousand and 350 thousand m.t.)<br />
ANNUALIZED PRODUCTION<br />
Source Prepared by <strong>Cesco</strong> based on information reported by Cochilco. Source Prepared by <strong>Cesco</strong> based on information reported by Cochilco.<br />
Dec 06 Aug 07 Apr 08 Dec 08 Aug 09 Apr 10 Dec 10<br />
El Abra<br />
Zaldívar Candelaria Spence<br />
Source Prepared by <strong>Cesco</strong> based on information reported by Cochilco.<br />
600,000<br />
550,000<br />
500,000<br />
450,000<br />
400,000<br />
350,000<br />
Dec 06 Aug 07 Apr 08 Dec 08 Aug 09 Apr 10 Dec 10<br />
GRAPH 09.4<br />
M.T. of fine copper (prod. up to 100 thousand m.t.)<br />
ANNUALIZED PRODUCTION<br />
120,000<br />
100,000<br />
80,000<br />
60,000<br />
40,000<br />
20,000<br />
0<br />
Antofagasta Plc Collahuasi Anglo American<br />
Dec 06 Jul 07 Feb 08 Sep 08 Apr 09 Nov 09 Jun 10 Jan 11<br />
Cerro Colorado Quebrada Blanca Lomas Bayas<br />
Source Prepared by <strong>Cesco</strong> based on information reported by Cochilco.<br />
19
20<br />
TABLE 09<br />
OTHER MINERALS IN THE CHILEAN INDUSTRY BY COMPANY<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
COMPANY / PRODUCT MAIN OWNER(S) 2010 1Q 2010 1Q 2011 Var %<br />
IRON AND STEEL<br />
CAP (Iron, shipments in T.M.T.)<br />
Invercap S.A. (31.2%)<br />
Mitsubishi Corporation (19.3%)<br />
Banco de Chile (5.0%)<br />
10,213 1,906 2,289 20%<br />
CAP (Steel, shipments in M.T.) Other (44.5%)<br />
670,525 196,222 313,576 60%<br />
NITRATES<br />
SQM (Iodine and by-products, in M.T.)<br />
Sociedad de Inversiones Pampa<br />
Calichera (26.1%%)<br />
521,000 - - -<br />
SQM (Lithium and by-products, in M.T.) Inversiones El Boldo Ltda. (23.68%) 504,000 - - -<br />
The Bank of New York (16.69%)<br />
SQM (Chloride and Potassium Sulfate, in M.T.) Inversiones RAC Chile Ltda. (8.32%) 397,300 - - -<br />
SQM (Industrial Nitrates, in M.T.)<br />
Other (25.2%)<br />
178,100 - - -<br />
MOLYBDENUM<br />
Molymet (FEMO, prod. in millions of lbs. of Mo) Capitalización y Rentas del Pacífico 40,416<br />
- -<br />
Molymet (Pure products, prod. in millions of lbs. of Mo)<br />
S.A. (35,56%)<br />
Other (64,44%)<br />
10,547 34,950* - -<br />
Molymet (Oxide, prod. in millions of lbs. of Mo) 138,905 - -<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period delivered to the Securities and Insurance Commission by the companies and public information about the companies.<br />
Notes (*)As of the 2010 annual report, Molymet provides information about its FeMo production, pure products and oxide, and it no longer reports data on Own Sales and Processing<br />
CAP, the company dedicated to iron mining and steel<br />
production that was severely affected by the earthquake in<br />
February 2010, succeeded in surpassing its shipments in the<br />
first quarter of 2010 during this quarter, making it the best<br />
year start since 2007.<br />
The mining subsidiary of the CAP group, which contributes<br />
55% of the group’s income on the average, shipped a total of<br />
2,289 T.M.T. of iron, representing a 20% increase compared<br />
with 2010, while CAP steel shipped 313 T.M.T., 60% more,<br />
year on year.<br />
Since its merger with Mitsubishi, the company, which sees its<br />
greatest growth potential in mining, has announced various<br />
projects involving investment of about US$ 1 billion. The<br />
projects include the opening of the Cerro Negro deposit<br />
and the expansion of Los Colorados whereby the company<br />
expects to raise production from the current 10 million M.T.<br />
to more than 18 million M.T. in 2013.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 10<br />
INCOME<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Codelco 16,066 3,314 4,305 30%<br />
Minera Escondida 9,212 1,997 2,145 7%<br />
Antofagasta Minerals 4,264 925 1,203 30%<br />
Collahuasi 3,929 1,013 947 -7%<br />
Anglo American 4,085 1,010 1,248 24%<br />
Spence - - 483 -<br />
In millions of US$<br />
El Abra 1,126 282 207 -27%<br />
Zaldívar 1,119 247 323 31%<br />
Candelaria 1,434 254 443 75%<br />
Cerro Colorado 810 161 241 49%<br />
Quebrada Blanca 677 180 144 -20%<br />
Lomas Bayas 560 105 170 62%<br />
Total 43,283 9,490 11,858 25%<br />
CAP 1,994 317 595 88%<br />
SQM 1,830 389 480 24%<br />
Molymet 1,327 278 343 24%<br />
Total 5,151 983 983 44%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided by companies<br />
to the Securities and Insurance Commission and public information about the companies.<br />
Chilean copper mining was favored by the economic<br />
environment, driven strongly by Chinese imports of raw<br />
materials. According to data published by Cochilco, the<br />
value of mining exports represented 60% of total Chilean<br />
exports in the first quarter of the year, while copper alone<br />
represented 53.9% in the same period.<br />
Income of the leading mining companies in Chile increased<br />
significantly. Copper mining totaled approximately US$<br />
11.9 billion, increasing 25% in one year, while the companies<br />
that produce other minerals also benefited from the prices of<br />
steel, iron, molybdenum, and industrial chemicals.<br />
The three mining companies that showed the highest<br />
percentage increases in copper production in the first quarter<br />
–Candelaria, Lomas Bayas and Cerro Colorado-, had the<br />
highest increases in income, a result that was reinforced by<br />
the good copper price.<br />
The income of Antofagasta Minerals, which had the<br />
fourth largest increase in copper production in the first<br />
quarter, increased 30%, while Codelco’s income totaled<br />
approximately US$ 4.3 billion in the quarter, driven by<br />
the value of copper sales, in addition to an increase in the<br />
volume of copper sold.<br />
The main destination of Codelco’s sales was the Asian<br />
market, which attracted 54%. China alone received 33%<br />
of the total, although it reduced its share compared with<br />
2010, when the region attracted 58% of sales and China<br />
alone received 42%. Despite fears about the future of the<br />
developed economies, Europe’s market share grew from<br />
19% to 23%, and North America grew from 8% to 12%.<br />
The South American markets reduced their share from 13%<br />
in the first quarter of 2010 to 10% in 2011.<br />
Only three of the fifteen companies reported showed lower<br />
income in the quarter, compared with the same period last<br />
year. Collahuasi suffered a 22.6% drop in production; this<br />
had an adverse impact on the company’s income, which fell<br />
7% compared with 2010. The same reasons influenced the<br />
income of El Abra and Quebrada Blanca, which led the falls<br />
in production, consequently showing the largest year-onyear<br />
drops in income, with -27% and -40%, respectively.<br />
Other companies that suffered falls in production had higher<br />
income than in the first quarter of 2010 – Anglo American,<br />
Zaldivar and Escondida.<br />
21
22<br />
TABLE 11<br />
OPERATING COSTS<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Codelco 9,494 1,898 2,343 23%<br />
Minera Escondida 3,546 733 854,7 17%<br />
Antofagasta Minerals 1,779 366 463 27%<br />
Collahuasi 1,243 324 332,3 2%<br />
Anglo American 2,337 551 795,3 44%<br />
Spence - - 193 -<br />
In millions of US$<br />
El Abra 508 116 83,7 -28%<br />
Zaldívar 401 100 118,5 18%<br />
Candelaria 733 151 195,3 29%<br />
Cerro Colorado 478 82 118,8 45%<br />
Quebrada Blanca 351 71 68,7 -3%<br />
Lomas Bayas 286 57 71,2 25%<br />
Total 25,272 5,366 6,895.7 29%<br />
CAP 1,994 317 595 88%<br />
SQM 1,830 389 480 24%<br />
Molymet 1,327 278 343 24%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
In the period covered by this report, the aggregate operating<br />
costs of Chilean companies that produce copper grew 29%<br />
compared with 2010, even though production for those<br />
companies only increased 3%.<br />
Technical difficulties in the ore extraction phase, as well<br />
as higher water and energy costs, affected the companies’<br />
aggregate costs. The wholesale price index (WPI) for<br />
electric energy, gas, and water issued periodically by the<br />
Central Bank of Chile showed a 2% year-on-year increase,<br />
while the average price of energy increased 20% in the SIC<br />
and 5% in the SING, according to figures from the National<br />
Energy Commission (CNE).<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
In the group of companies reported, only El Abra and<br />
Quebrada Blanca showed a reduction in operating costs,<br />
consistent with the drops in their respective production<br />
levels.<br />
Compañía Minera Cerro Colorado showed the highest<br />
relative increase in operating costs for the period reported<br />
(+45%), which were influenced by the cost of third party<br />
cathodes (+US$ 17.3 million, +152%), higher payment to<br />
contractors (+US$ 8.3 million, +39%), as well as electricity<br />
and fuel (+US$ 3.9 million, +24.6%).<br />
Anglo American Chile had a 44% increase in operating<br />
costs, which reached US$ 795.3 million. Anglo Sur showed<br />
a 22.7% increase, which included higher spending on<br />
exploration of US$ 18.7 million (+228%). Anglo Norte<br />
followed a similar pattern, which meant that in the first<br />
quarter of 2011 operating costs of US$ 516.5 million were<br />
recorded (+55.3%), with exploration expenditures of US$<br />
3.1 million in the period (+107%).<br />
Operating costs at Antofagasta Minerals increased 27% from<br />
March to March, but if the comparison excludes the costs<br />
of Minera Esperanza (US$ 28.1 million), where shipments<br />
started in January, the increase was 18.8%. Minera Michilla<br />
showed operating costs in the period that were 30% higher<br />
than in 2010, while at El Tesoro the increase was 24.6% and<br />
14.7% at Los Pelambres in a scenario where production was<br />
lower at the three operations.<br />
The state-owned company Codelco showed a 23% increase<br />
in operating costs, which was a direct result of the company’s<br />
year-on-year growth in production (+8%), together with the<br />
evolution of the price of the materials, fuel, and energy that<br />
are relevant to the operation.<br />
Collahuasi´s operating costs increased moderately (+2%),<br />
even though its copper production in the period fell 22.6%.<br />
In the same period Minera Escondida had operating costs of<br />
US$ 854.7, a figure influenced by an increase in payment<br />
to contractors (+US$ 54.9 million, +27.3%), materials<br />
and other inputs (+US$ 37.6 million, +18.4%), fuel and
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
electricity (+US$ 40 million, +34.5%), and salaries and<br />
benefits paid (+US$ 24.87 million, +40.7%).<br />
CAP’s operating costs evolved as expected according to the<br />
increase in shipments of iron (+20%) and steel (+60%) in<br />
the first three months of 2011. This was confirmed by the<br />
fact that sales costs, which represent 90% of operating costs,<br />
increased US$ 116 million, which was 45% more than in the<br />
same period in 2010.<br />
TABLE 12<br />
UNIT COSTS (CASH COST - C1)<br />
COMPANY 2010<br />
1Q<br />
2011<br />
Var %<br />
Codelco 102.3 98.2 -4%<br />
Minera Escondida 83.4 108.5 30%<br />
Antofagasta Minerals 94.7 107.8 14%<br />
Collahuasi - - -<br />
Anglo American - - -<br />
Spence - - -<br />
El Abra - - -<br />
Zaldívar 104.0 125.0 20%<br />
Candelaria - - -<br />
Cerro Colorado - - -<br />
Quebrada Blanca - - -<br />
Lomas Bayas - - -<br />
In cents of dollar per pound<br />
Simple Average 96.10 109.88 14%<br />
Weighted Average 95.30 103.89 9%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
Only four of the twelve companies reported information<br />
about their unit costs - cash cost or C1 -, during the first<br />
quarter.<br />
The state-owned company Codelco showed a moderate<br />
reduction in this indicator due to a higher discount for<br />
credits generated by the by-products of copper production-<br />
mainly molybdenum. It should be pointed out that in the<br />
case of Codelco, unlike other companies, unit costs include<br />
refining costs, which makes direct comparisons with other<br />
companies impossible.<br />
The other three companies showed significant increases<br />
in unit costs. This situation is due to greater technical<br />
difficulties in ore extraction, lower grades, higher costs of<br />
energy and certain key inputs like sulfuric acid.<br />
In the case of Minera Escondida, the increase in unit costs<br />
was amortized by a higher credit for by-products –gold and<br />
silver-, that totaled US$ 69.2 million in the first quarter of<br />
2011 (+US$ 10.6 million, +18% than in 2010).<br />
Unit costs reported for Antofagasta Minerals rose during<br />
the period, although the evolution was not the same at the<br />
operations level. Esperanza reported direct costs of 144.9 c/<br />
lb (in March they were 102.7 c/lb), which are expected to<br />
drop in the second quarter as operations reach the design<br />
level. At Los Pelambres direct costs were significantly lower<br />
than in the same period of 2010 (22.8 c/lb, -23%) reaching<br />
75.2 c/lb, while at El Tesoro direct costs rose from 192.8 c/<br />
lb to 195.2 c/lb in the first quarter. Michilla had direct costs<br />
that were 4.3% higher than 2010, reaching 192.2 c/lb in the<br />
first three months of 2011.<br />
23
24<br />
GRAPH 10.1<br />
OPERATING COSTS PER M.T.<br />
8000<br />
7000<br />
6000<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
GRAPH 10.3<br />
OPERATING COSTS PER M.T.<br />
In dollars per M.T. ( prod. over 1 million M.T)<br />
Codelco Minera Escondida<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
7000<br />
6000<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4T09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
GRAPH 10.2<br />
OPERATING COSTS PER M.T.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
In dollars per M.T. (prod. between 350 thousand and 1 million M.T.)<br />
In dollars per M.T. (prod. between 100 thousand and 350 thousand M.T.) GRAPH 10.4<br />
In dollars per M.T. (prod. up to 100 thousand M.T.)<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4T09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
Spence<br />
El Abra Zaldívar Candelaria<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
8000<br />
7000<br />
6000<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4T09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
Antofagasta Minerals Anglo American Chile Collahuasi<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
OPERATING COSTS PER M.T.<br />
7000<br />
6000<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4T09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
Cerro Colorado Quebrada Blanca Lomas Bayas<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
GRAPH 11<br />
AGGREGATE PROFITS OF<br />
COMPANIES REPORTED<br />
$ 20,000<br />
$ 18,000<br />
$ 16,000<br />
$ 14,000<br />
$ 12,000<br />
$ 10,000<br />
$ 8,000<br />
$ 6,000<br />
$ 4,000<br />
$ 2,000<br />
$ 0<br />
17,974<br />
3,074<br />
18,647<br />
3,575<br />
11,443<br />
5,404<br />
9,996<br />
1,093<br />
In millions of US$ at current value<br />
15,175<br />
3,282<br />
4,219<br />
2006 2007 2008 2009 2010 1T 2011<br />
annual 1st quarter<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
Total profits recognized in the first quarter for the<br />
companies included in this report were significantly higher<br />
in comparison with last year as a result of the evolution of<br />
the companies’ income and expenses. The first three months<br />
showed the second best results for a first quarter since 2006,<br />
totaling approximately US$ 4.2 billion in profits.<br />
The profits of the copper-producing companies for the<br />
quarter were approximately US$ 4 billion, and if Codelco’s<br />
comparable profit is included, they were approximately US$<br />
5 billion, which is a 25% increase in the case of the former<br />
and 30% for the latter.<br />
Individually, Codelco showed a 175% increase in profits for<br />
the period, due to an increase in income that far exceeded<br />
the increase in operating costs, as in previous quarters. This<br />
can be confirmed when observing the profits per M.T. of<br />
copper produced (graph 12.1), which have grown from the<br />
first quarter of 2010 to date.<br />
Candelaria, which belongs to Freeport and Sumitomo, had<br />
the second largest year-on-year increase in profits. The<br />
company’s operating costs have grown more moderately<br />
than production which, in addition to the higher copper<br />
price, permitted net profits per M.T. produced to be higher<br />
than the same period of 2010. Zaldivar, Cerro Colorado and<br />
Lomas Bayas also benefited from the good prices, and all of<br />
them saw their profits increase over 40% year-on-year.<br />
The companies that belong to Antofagasta Minerals showed<br />
a 20% increase in net profits in the first quarter. Profits at<br />
Los Pelambres increased 24.6%, reaching US$ 454 million,<br />
which represents 85% of Antofagasta’s net profits. El<br />
Tesoro generated 10.4% more profits than in the first quarter<br />
of 2010, while Michilla had the best relative performance,<br />
generating net profits of US$ 31 million, 95% more than in<br />
2010. Minera Esperanza showed losses of US$ 23.4 million<br />
in its first individual income statement.<br />
The profits of Escondida barely increased 0.4% year-onyear,<br />
due to the fact that operating costs (+17%) grew<br />
proportionally more than income in the period (+7%). This<br />
conjunction of elements had a moderate impact on net<br />
profits per M.T. of copper produced (indicator reported in<br />
graph 12.1) due to lower production in the first quarter.<br />
In the same period Anglo American showed a 3% year-onyear<br />
increase in net profits, mainly influenced by the high<br />
copper price, which helped to mitigate the effect of the lower<br />
volume of copper produced at its operations Norte and Sur<br />
(-8.6% compared with 2010).<br />
The three companies that suffered a setback in profits<br />
– Collahuasi, El Abra and Quebrada Blanca – had lower<br />
production levels compared with the same period in 2010.<br />
Except for El Abra, this had a stronger impact on the<br />
companies’ income than on their operating costs, which<br />
was reflected in the operating profits per M.T. of copper<br />
produced that fell at Collahuasi (graph 12.2) and Quebrada<br />
Blanca (graph 12.4), while it had a positive impact for El<br />
Abra (graph 12.3).<br />
Results of the big companies that produce minerals other<br />
than copper and industrial chemicals, reported quarter to<br />
25
26<br />
quarter in this report, showed an aggregate increase of 136%<br />
in net profits for the period compared with 2010, making it<br />
their best first quarter since this report has been issued.<br />
The result is heavily influenced by the performance of CAP,<br />
whose quarterly profits grew 351% in one year, totaling US$<br />
121 million, driven by an increase in company sales, both<br />
physical and in value, in addition to a moderate increase<br />
in operating costs. CAP attributed the driver behind these<br />
results to be the increase in iron ore prices in the first quarter<br />
of 2011, as well as improvements in operations as a result of<br />
the merger of Compañía Minera del Pacífico and Compañía<br />
Minera Huasco, both CAP subsidiaries.<br />
In the case of Molymet, the price of molybdenum oxide<br />
increased 7.7%, and the price of ferromolybdenum increased<br />
5.9% between the first quarter of 2010 and 2011; therefore,<br />
despite the fact the company did not report any production<br />
information for the period, it may be inferred that the profits<br />
recognized in the first quarter responded to an increase in<br />
production.<br />
SQM also showed an important increase in net profits,<br />
reaching US$ 112 million, the highest figure for a year start<br />
and the best quarter for the company since the first edition<br />
of this report. According to information published by the<br />
company, operating costs grew 17%. Income in the vegetal<br />
nutrition segment increased 33.4%, and it increased 49.2%<br />
from the sale of iodine and by-products. Income from the<br />
sale of lithium and by-products increased 24%, and sales of<br />
industrial chemicals increased 22%, while potassium did not<br />
show any change.<br />
TABLE 13<br />
FISCAL YEAR PROFIT<br />
COMPANY 2010<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Codelco (SVS)* 1,876 267.1 267.1 175%<br />
Codelco (Comparable<br />
Net Profit)**<br />
4,610 984.0 984.0 87%<br />
Minera Escondida 4,338 1,025.9 1,025.9 0.4%<br />
Antofagasta Minerals 1,898 443.5 443.5 20%<br />
Collahuasi 2,048 578.5 578.5 -22%<br />
Anglo American 1,449 336.0 336.0 3%<br />
Spence - - - -<br />
El Abra 483 132.9 132.9 -25%<br />
Zaldívar 529 125.4 125.4 42%<br />
Candelaria 542 82.6 82.6 128%<br />
Cerro Colorado 230 55.4 55.4 49%<br />
Quebrada Blanca 259 87.8 87.8 -35%<br />
Lomas Bayas 218 37.4 37.4 77%<br />
Total with<br />
Codelco*<br />
Total with<br />
Codelco**<br />
In millions of US$<br />
13,871 3,172 3,960 25%<br />
16,605 3,889 5,068 30%<br />
CAP 822.2 26.9 121.4 351%<br />
SQM 387.3 76.9 112.1 46%<br />
Molymet 93.9 5.8 24.7 328%<br />
Total 1,303 110 258 136%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
Notes (*) Fiscal year profit reported at the Securities and Insurance Commission.<br />
(**) Comparable Net Profit published by Codelco. It is the result it would have had if it paid the<br />
same income tax as private companies (17%).
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
GRAPH 12.1<br />
PROFIT PER TON<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
0<br />
-1,000<br />
-2,000<br />
-3,000<br />
-4,000<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
GRAPH 12.3<br />
PROFIT PER TON<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
0<br />
-1,000<br />
-2,000<br />
-3,000<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4Q09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
Minera Escondida Codelco (Comparable net profit) Codelco (SVS Profit)<br />
In US$ per M.T. (prod. over 1 million M.T.) GRAPH 12.2<br />
In US$ per M.T. (prod. between 350 thousand and 1 million M.T.)<br />
In US$ per M.T. (prod. between 100 thousand and 350 thousand M.T.)<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4Q09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
Cerro Colorado Quebrada Blanca Lomas Bayas<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
PROFIT PER TON<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
0<br />
-1,000<br />
-2,000<br />
-3,000<br />
-4,000<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4Q09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
GRAPH 12.4<br />
PROFIT PER TON<br />
8,000<br />
6,000<br />
4,000<br />
2,000<br />
0<br />
-2,000<br />
-4,000<br />
Antofagasta Minerals Collahuasi Anglo American Chile<br />
In US$ per M.T. (prod. up to 100 thousand M.T.)<br />
1Q07<br />
2Q07<br />
3Q07<br />
4Q07<br />
1Q08<br />
2Q08<br />
3Q08<br />
4Q08<br />
1Q09<br />
2Q09<br />
3Q09<br />
4Q09<br />
1Q10<br />
2Q10<br />
3Q10<br />
4Q10<br />
1Q11<br />
El Abra Zaldívar Candelaria Spence<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and information reported by Cochilco.<br />
27
28<br />
TABLE 14<br />
INCOME STATEMENT TAX<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Codelco 2,612 713.0 1.213.0 70%<br />
Minera Escondida 1,297 257.1 273.6 6%<br />
Antofagasta Minerals 565 113.8 192.6 69%<br />
Collahuasi 614 148.2 150.8 2%<br />
Anglo American Chile 304 89.8 105.6 18%<br />
Spence - - 65.0 -<br />
In millions of US$<br />
El Abra 138 33.4 22.8 -32%<br />
Zaldívar 174 32.0 52.5 64%<br />
Candelaria 155 21.0 60.8 190%<br />
Cerro Colorado 61 14.2 27.5 94%<br />
Quebrada Blanca 69 21.3 17.1 -20%<br />
Lomas Bayas 62 9.5 22.1 133%<br />
Total 6,050 1,453 2,203 52%<br />
CAP 181 6.2 52.9 752%<br />
SQM 106 20.7 39.0 88%<br />
Molymet 22 10.4 7.8 -25%<br />
Total 309 37.3 99.6 167%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
Due to the good results in the mining industry, income tax<br />
collection reached approximately US$ 2.3 billion when the<br />
amounts recognized by the fifteen companies included in<br />
this report are added together.<br />
When the companies are considered separately according<br />
to their main activity, copper mining added approximately<br />
US$ 2.2 billion to tax revenues, while companies dedicated<br />
to other minerals added an additional US$ 99.6 million.<br />
The tax pattern at the company level is in line with the pattern<br />
of net profits earned during the period, except for Molymet,<br />
whose year-on-year decrease in income tax is a result of<br />
adjustments in tax expenditure of US$ 7.6 million that took<br />
place in 2010. Without that adjustment, the expenditure<br />
would have been US$ 2.7 million, using the legal rate.<br />
Codelco is the company that contributed the largest<br />
amount of resources to the state in income tax, with a total<br />
of approximately US$ 1.2 billion, followed by Minera<br />
Escondida with US$ 273.6 million. The rest of the companies<br />
showed figures below US$ 200 million in that period.<br />
As Codelco belongs to the Chilean State, it is subject to<br />
a special regime whereby the company’s contributions to<br />
the state coffers included, in addition to the approximately<br />
US$ 1.2 billion mentioned above, withholding for the<br />
reserved copper law of US$ 368 million, plus US$ 734<br />
million in income, whereby the company’s total surplus was<br />
approximately US$ 2.3 billion in the first quarter of 2011.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 15<br />
In millions of US$<br />
RESERVES FOR SPECIFIC MINING TAX<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Codelco 278 66 140 112%<br />
Minera Escondida 298.5 50.2 87.6 74%<br />
Antofagasta Minerals 148.2 18.0 62.3 247%<br />
Collahuasi 148.2 29.1 49.9 71%<br />
Anglo American Chile 67.1 15.2 26.2 72%<br />
Spence - - 45 -<br />
El Abra 32 7.1 2.3 -67%<br />
Zaldívar 43.8 5.8 9.7 67%<br />
Candelaria 36.8 3.6 34.4 842%<br />
Cerro Colorado 10.4 2.2 7.5 236%<br />
Quebrada Blanca 16.6 4.1 2.8 -31%<br />
Lomas Bayas 14.1 1.9 5.4 191%<br />
Total 1,094 203 473 133%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
Notes The companies have different reserve policies so the reserve account for the specific<br />
mining tax may show very relevant variations among companies throughout the tax period.<br />
Because of this, public information serves as a reference, and it does not represent a basis<br />
of comparison of the actual amount of tax among companies. Considering that the purpose<br />
of monthly provisional payments (PPM) is to comply with payment of taxes for the respective<br />
tax year, the fact of not having monthly provisions does not signify non-payment of taxes. The<br />
rate for calculating monthly provisional payments varies according to the provisional payments<br />
made and the gross income of the previous fiscal year.<br />
As we explained in the previous report, the specific mining<br />
tax was affected by the temporary modification of the tax<br />
rate applied to the operating income of mining companies<br />
that extract copper.<br />
The structure that is in effect and will remain invariable<br />
until 2023 provides for a variable tax rate of 4% to 9% until<br />
2012, which will decrease to 5% between 2013 and 2017.<br />
The rate will then vary between 5% and 14%. Regardless of<br />
the foregoing, the amount reported as reserve for specific<br />
mining tax or royalty is defined by company management,<br />
and it may defer payment of this tax.<br />
Notwithstanding the above, the mining companies showed<br />
an important increase in the amount set aside in reserve for<br />
this tax, which is included in the income tax expenditure<br />
declared on the income statement that is summarized in<br />
Table 15.<br />
In the first quarter the companies included in the report<br />
reserved US$ 473 million for the royalty, more than double<br />
the amount in 2010, which was US$ 203 million.<br />
29
30<br />
TABLE 16<br />
RETURN ON EQUITY<br />
COMPANY<br />
1Q<br />
2010<br />
Profit / Shareholders Equity<br />
1Q<br />
2011<br />
Var %<br />
Codelco (SVS)* 0.05 0.15 199%<br />
Codelco (Comparable Net Profit)** 0.19 0.38 103%<br />
Minera Escondida 0.19 0.19 0%<br />
Antofagasta Minerals 0.13 0.12 -6%<br />
Collahuasi 0.17 0.12 -30%<br />
Anglo American 0.11 0.09 -11%<br />
Spence - 0.07 -<br />
El Abra 0.11 0.07 -34%<br />
Zaldívar 0.11 0.13 21%<br />
Candelaria 0.09 0.15 64%<br />
Cerro Colorado 0.03 0.03 33%<br />
Quebrada Blanca 0.30 0.19 -36%<br />
Lomas Bayas 0.04 0.06 39%<br />
Average with Codelco* 0.12 0.12 -4%<br />
Average with Codelco** 0.13 0.13 1%<br />
CAP 0.02 0.04 122%<br />
SQM 0.05 0.06 26%<br />
Molymet 0.01 0.03 183%<br />
Total 0.03 0.05 70%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
Notes (*) Fiscal year profit reported at the Securities and Insurance Commission.<br />
(**) Comparable Net Profit published by Codelco. It is the result it would have had if it paid the<br />
same income tax as private companies (17%).<br />
The average return of the copper industry in Chile has not<br />
changed significantly in the last year.<br />
For copper-producing companies, and taking the profits<br />
Codelco declared to the Securities and Insurance Commission<br />
into account, the average ROE was 12% in the first quarter<br />
of 2011, which is slightly less than it was in 2010; on the<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
other hand, when taking Codelco’s comparable net profit (as<br />
if it paid the same taxes as private companies) into account,<br />
the return on equity was 13% in the period.<br />
At the company level, Codelco showed the highest relative<br />
increase, tripling the value of the indicator year-onyear<br />
and also showing the highest ROE, when taking the<br />
company’s comparable profit into consideration. This figure<br />
should be observed cautiously, because of the company’s<br />
undercapitalization due to the legal restrictions under which<br />
it operates.<br />
The biggest relative drops were attributed to Quebrada<br />
Blanca, El Abra and Collahuasi, which were in line with their<br />
production results during the quarter. Production results also<br />
explain the increase in return shown by Candelaria, Lomas<br />
Bayas and Cerro Colorado.<br />
The companies included in this report that produce other<br />
minerals showed an average 5% return on equity in the<br />
quarter, which is a 70% improvement over the same period<br />
in 2010. Molymet led the rise in the indicator, but SQM was<br />
the company with the best absolute performance.<br />
The debt of mining companies that produce copper, measured<br />
as the ratio between total liabilities and assets, showed a<br />
significant increase at the end of one year.<br />
In the first quarter of 2011 debt reached 30% of assets, versus<br />
26% of assets in the same period of 2010. This increase<br />
can be explained by an improvement in the companies’<br />
prospects for the future, which has encouraged them to take<br />
on important investment projects that, according to CESCO<br />
research, will total US$ 75.5 billion over the next years.<br />
Individually, the three companies that showed higher<br />
increases in the percentage of debt are Collahuasi,<br />
Antofagasta Minerals, and Minera Escondida, with increases<br />
of 69.2%, 66.9% and 21.8% respectively.<br />
The debt level shown, which is above the average of the<br />
companies reported, is a result of the companies’ growth<br />
plans. Antofagasta Minerals has just started the operation of<br />
Esperanza, one of the most emblematic projects developed
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 17<br />
DEBT RATIO<br />
COMPANY 1Q 2010 1Q 2011 Var %<br />
Codelco 0.70 0.77 9.8%<br />
Minera Escondida 0.28 0.34 21.8%<br />
Antofagasta Minerals 0.30 0.50 66.9%<br />
Collahuasi 0.29 0.49 69.2%<br />
Anglo American Chile 0.23 0.22 -7.5%<br />
Spence - 0.16 -<br />
Total Liabilities / Total Assets<br />
El Abra 0.15 0.16 5.6%<br />
Zaldívar 0.19 0.21 8.6%<br />
Candelaria 0.22 0.23 3.4%<br />
Cerro Colorado 0.07 0.08 7.6%<br />
Quebrada Blanca 0.31 0.32 3.4%<br />
Lomas Bayas 0.15 0.17 12.6%<br />
Average 0.26 0.30 14.9%<br />
CAP 0.53 0.45 -14.3%<br />
SQM 0.49 0.49 -0.2%<br />
Molymet 0.54 0.47 -13.3%<br />
Average 0.52 0.47 -9.5%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
in Chile in the last few years, and it also aspires to become an<br />
international player. Collahuasi has started the development<br />
of phase III of a project that it expects will enable the<br />
company to increase production above the million M.T. of<br />
copper produced annually.<br />
The mining companies’ liquidity, measured by the acid<br />
test, has regressed 16% in the case of copper mining and<br />
increased 6.7% for companies that extract other minerals.<br />
In the case of Collahuasi, lower production reduced the<br />
capacity to create cash flows, driving the indicator down<br />
47.7% year-on-year, followed by Minera Escondida which<br />
was affected by the same conditions.<br />
TABLE 18<br />
ACID TEST<br />
(Current Assets - Stock) / Current Liabilities<br />
COMPANY 1Q 2010 1Q 2011 Var %<br />
Codelco 0.76 0.82 7.4%<br />
Minera Escondida 2.31 1.33 -42.3%<br />
Antofagasta Minerals 2.86 1.67 -41.5%<br />
Collahuasi 3.29 1.72 -47.7%<br />
Anglo American Chile 2.07 1.70 -17.6%<br />
Spence - 5.17 -<br />
El Abra 4.60 2.79 -39.4%<br />
Zaldívar 3.67 4.21 14.7%<br />
Candelaria 2.74 3.25 18.7%<br />
Cerro Colorado 22.89 19.61 -14.3%<br />
Quebrada Blanca 2.40 1.71 -28.7%<br />
Lomas Bayas 1.18 0.68 -42.1%<br />
Average 4.43 3.72 -16.0%<br />
CAP 1.70 1.61 -5.0%<br />
SQM 2.57 2.32 -9.7%<br />
Molymet 1.48 2.19 48.7%<br />
Average 1.91 2.04 6.7%<br />
Source Prepared by <strong>Cesco</strong> based on financial information of the period provided to the<br />
Securities and Insurance Commission by the companies and public information about the<br />
companies.<br />
Lomas Bayas, unlike the companies mentioned above,<br />
increased production in this period, but showed a drop<br />
mainly due to an increase in liabilities arising from taxes<br />
and accounts payable for projects that had not been invoiced<br />
at the close of the quarter.<br />
Codelco showed a significant improvement in the liquidity<br />
indicator, although it still shows a lower level than the unit,<br />
which is a value that is considered a reference in the short<br />
term.<br />
31
32<br />
COPPER MINING INDUSTRY<br />
IN PERU<br />
TABLE 19<br />
COPPER PRODUCTION<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Southern Perú 334.4 78.1 67.1 -14%<br />
Antamina 325.0 75.8 81.0 7%<br />
Cerro Verde 312.3 77.1 81.9 6%<br />
Tintaya 93.0 22.3 21.7 -3%<br />
Gold Fields La Cima 43.7 12.1 10.1 -17%<br />
Milpo 22.3 5.4 6.4 19%<br />
El Brocal 18.3 2.6 7.5 187%<br />
Total Companies 1149 273 276 1%<br />
Total Perú 1247 295 301 2%<br />
Share 92% 93% 92% -1%<br />
Accumulated at quarter in T.M.T. GRAPH 13<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies<br />
to the Comisión Nacional Supervisora de Empresas y Valores (CONASEV), Ministry of Energy<br />
and Mines of Peru (MEM), and <strong>Cesco</strong> for this report.<br />
The mining industry in Peru produced 1,247 T.M.T. of<br />
copper last year according to figures reported by the<br />
Ministry of Energy and Mines (MEM) of Peru in its 2010<br />
annual report. On the basis of these results, Peruvian copper<br />
mining was the second largest in the world at the country<br />
level as indicated by the U.S. Geological Survey (USGS),<br />
only surpassed by Chile.<br />
During the first quarter of 2011, mining companies reported<br />
copper production of 276 T.M.T., which represents a meager<br />
increase of 1% compared to the first quarter of 2010. On<br />
a national level, Peruvian mining produced 301 T.M.T. of<br />
copper, 2% more year-on-year, signifying the companies<br />
included in the report had a 92% share of the country’s total<br />
production.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
CHANGE IN COPPER PRODUCTION<br />
210%<br />
160%<br />
110%<br />
60%<br />
10%<br />
-40%<br />
187%<br />
El Brocal<br />
19%<br />
Milpo<br />
7% 6% -3%- 14% -17%<br />
Antamina<br />
Cerro Verde<br />
Tintaya<br />
% Var. 1Q 2011/1Q 2010<br />
Southern Peru<br />
Gold Fields<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies to<br />
the Ministry of Energy and Mines of Peru (MEM) .<br />
At the company level, Southern Peru, the mining subsidiary<br />
in Peru of Grupo México and the largest copper producer<br />
in the country in 2010, reported copper production of 67<br />
T.M.T. in the first quarter of 2011, a 14% drop compared<br />
with the same period the previous year. This result can<br />
be explained largely by the lower levels of production at<br />
Cocotea, Cajon and Tot oral, with drops of 3.4 T.M.T., 6.3<br />
T.M.T., and 9.1 T.M.T. respectively, which were partially<br />
offset by Toquepala and Cimarron, where production<br />
increased 2.9 T.M.T. and 5.1 T.M.T., respectively.<br />
Compañía Minera Antamina, controlled by BHP Billiton,<br />
had better results, increasing production for the period by<br />
7% to reach 81 T.M.T., especially driven by the production<br />
declared in March when it increased 26% compared to<br />
March 2010.<br />
Cerro Verde, which was the 3rd largest copper producer<br />
in the country last year, maintained its production at a<br />
slightly higher level than the previous quarter, producing<br />
81.9 T.M.T. of copper in the first three months of the year<br />
which, compared with 77.1 T.M.T. last year, represent a 6%<br />
increase.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
Xstrata Tinted showed a slight drop of 3% this quarter<br />
compared with the same period in 2010, although the<br />
decrease is bigger when compared with the fourth quarter<br />
in 2010 when the company’s production was 28.4 T.M.T.<br />
of copper concentrate.<br />
Gold Fields La Cyma, an indirect subsidiary of the<br />
South African Gold Fields Ltd., which started to produce<br />
concentrate in 2008, showed the largest relative drop in<br />
copper production in this period. Its production of 10.1<br />
T.M.T. of copper in the first quarter of 2011 was 17% lower<br />
than last year, although it maintained its position on the table<br />
of the largest producers in Peru.<br />
Milo, which has been controlled by the Brazilian Votorantim<br />
Metais since 2010, continued to show a positive trend,<br />
producing 6.4 T.M.T. this quarter, 19% more than in the<br />
same period of 2010 and 12% more than the previous<br />
quarter, when it produced 5.7 T.M.T. The company hopes<br />
to continue along this path by implementing a new leaching<br />
method called Chapilix©, which should enable it to improve<br />
productivity and reduce costs this year.<br />
The positive results shown by El Brocal are a consequence<br />
of the expansion of their operations, which bore its first fruit<br />
in October 2010, when the company rose from producing<br />
about 0.9 T.M.T. per month to 3 T.M.T. per month in<br />
the fourth quarter of 2010. In the first quarter of 2011 the<br />
company produced 7.5 T.M.T., which was a 187% increase<br />
over the first quarter of 2010.<br />
TABLE 20<br />
OPERATING COSTS<br />
COMPANY 2010<br />
1Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Southern Perú 1,279.1 325.2 478.9 47%<br />
Antamina - - 127.5 -<br />
Cerro Verde 704.5 186.8 219.0 17%<br />
Tintaya - - 73.5 -<br />
Gold Fields La<br />
Cima<br />
In millions of US$<br />
222.8 50.4 66.6 32%<br />
Milpo 166.0 37.8 44.7 18%<br />
El Brocal 121.5 25.6 46.6 82%<br />
TOTAL 92% 93% 92% -1%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies<br />
to the Comisión Nacional Supervisora de Empresas y Valores (CONASEV) and to <strong>Cesco</strong> for this<br />
report.<br />
The operating costs of the biggest Peruvian companies<br />
that produce copper have progressed according to the<br />
general trend in the copper industry, accumulating a total<br />
of approximately US$ 1 billion so far this year. Deducting<br />
the costs of Antamina and Tintaya, for which no information<br />
on the first quarter of 2010 is available, operating costs<br />
increased 37% year-on-year, although production barely<br />
increased 1%.<br />
El Brocal showed an important year-on-year increase in<br />
operating costs of 82%, mainly due to the sales cost item.<br />
This situation resulted from the company’s leap in scale of<br />
production in the fourth quarter of 2010.<br />
Southern Perú saw its operating costs grow from US$ 325.2<br />
million in the first quarter of 2010 to US$ 478.9 in the same<br />
period of 2011, showing the largest absolute and relative<br />
increase of any of the companies included in the report. The<br />
company stated that this result is mainly due to an increase<br />
in sales costs, which have grown because of the higher value<br />
of concentrate purchased, an increase in the costs of energy<br />
and other inputs, and higher labor costs.<br />
33
34<br />
TABLE 21<br />
OPERATING COSTS PER M.T.<br />
COMPANY<br />
4Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Southern Perú 4.12 7.14 73.2%<br />
Antamina - 1.57 -<br />
Cerro Verde 2.39 2.67 11.9%<br />
Tintaya - 3.39 -<br />
Gold Fields La<br />
Cima<br />
In thousands of US$ per M.T.<br />
7.03 6.60 -6.1%<br />
Milpo 8.06 6.94 -13.9%<br />
El Brocal 4.01 6.24 55.6%<br />
PROMEDIO 93% 92% -1%<br />
Source Prepared by <strong>Cesco</strong> based on information of the period reported by the companies to<br />
the Comisión Nacional Supervisora de Empresas y Valores (CONASEV) and to <strong>Cesco</strong> for this<br />
report.<br />
Operating costs of Gold Fields La Cima grew 32% this<br />
quarter to reach a total of US$ 66.6 million driven by sales<br />
costs, while operating costs at Compañía Minera Milpo grew<br />
in line with the increase in production levels in this quarter.<br />
Operating costs of Cerro Verde were 17% higher than<br />
2010 in this period, driven by an increase in the value of<br />
raw materials and inputs acquired, energy, and direct labor,<br />
which were 13%, 30% and 20% higher, respectively, than<br />
2010.<br />
A significant increase can be seen in the operating costs per<br />
M.T. of copper produced in the fourth quarter of 2010 and<br />
the first quarter of 2011 for the group of companies being<br />
analyzed. On the average, operating costs per M.T. of copper<br />
produced were US$ 4,940, an increase in cost of US$ 1,280<br />
compared with the previous quarter.<br />
This situation is a reflection of the conditions that underlie<br />
the increase in operating costs, including energy costs, an<br />
increase in the price of raw materials and strategic inputs, as<br />
well as higher labor costs.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
The mining companies whose costs grew the most were<br />
Southern Perú and Compañía Minera El Brocal. In the case<br />
of Southern Perú the increase took place in the context of<br />
a reduction in production, while in the case of El Brocal<br />
total operating costs grew more than production in the first<br />
quarter of 2011.<br />
During the first quarter, income reported by the mining<br />
companies in Peru included in this report totaled<br />
approximately US$ 3.1 billion, while total profits were<br />
approximately US$ 1.3 billion.<br />
When comparing only companies with information for<br />
previous periods, we can see that income increased from<br />
approximately US$ 1.5 billion in the first quarter of 2010 to<br />
approximately US$ 1.9 billion in the same period of this year,<br />
which is a 30% increase. Following the same procedure, net<br />
profits were US$ 756 million, which is the equivalent of a<br />
year-on-year increase of 27%. These results are in line with<br />
the increase in the average price of copper and other relevant<br />
minerals for the companies in the report.<br />
Cerro Verde had a year-on-year increase of 39% in income,<br />
due to a higher copper price and a moderate increase in<br />
production which, despite the increase in operating costs,<br />
enabled profits to grow 52% compared with the first quarter<br />
of 2010, reaching US$ 367.7 million.<br />
The mining company El Brocal increased its income<br />
significantly to US$ 76.2 million, which is 102% higher<br />
than the first quarter of 2010. Better conditions in the copper<br />
market reinforced this result, which enabled the company to<br />
record profits of US$ 23.4 million, a 119% increase over the<br />
same period in 2010.<br />
Milpo increased its income in a higher proportion than the<br />
other companies, due to a larger increase in production and<br />
better conditions in the market of copper and other metals<br />
the company has interests in. These conditions favored the
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 22<br />
INCOME AND PROFITS<br />
INCOME PROFITS<br />
COMPANY 2010<br />
1T<br />
2010<br />
1T<br />
2011<br />
Var % 2010<br />
1T<br />
2010<br />
1T<br />
2011<br />
Southern Perú 3,153.5 721.8 839.3 16% 1,208.0 277.9 239.3 -14%<br />
Antamina - - 1,025.1 - - - 498.6 -<br />
Cerro Verde 2,369.0 534.1 740.9 39% 1,054.4 241.3 367.7 52%<br />
Tintaya - - 139.9 - - - 47.7 -<br />
Gold Fields La<br />
Cima<br />
477.6 110.8 159.4 44% 156.5 33.3 68.6 106%<br />
Milpo 382.4 85.4 119.9 41% 129.7 30.9 57.0 84%<br />
El Brocal 219.2 37.8 76.2 102% 72.3 10.7 23.4 119%<br />
Var %<br />
TOTAL 6,601.7 1,489.9 3,100.7 108% 2,629.9 594.1 1,302.3 119%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies to the Comisión Nacional Supervisora de Empresas y Valores (CONASEV) and <strong>Cesco</strong> for this report.<br />
generation of profits, which totaled US$ 57 million in the<br />
first three months of the year.<br />
Gold Fields La Cima showed a 44% year-on-year increase<br />
in income, despite lower copper production in the first<br />
quarter of 2011. This situation was due to an increase in<br />
the price of copper and gold, which is a relevant product for<br />
the company, whose annual production made it the seventh<br />
largest Peruvian producer of that mineral in 2010. Gold<br />
Fields’ profits for the period were US$ 68.6 million, with a<br />
year-on-year increase of 106%.<br />
In millions of US$<br />
The biggest variations were in Milpo and Gold Fields La<br />
Cima, which also showed the best indicator in absolute<br />
terms, although they were influenced by the profits resulting<br />
from gold extraction by the two companies.<br />
Southern Perú’s income were in line with its production for<br />
the period, a situation that was partially offset by a better<br />
price scenario than in 2010. That price was not sufficient,<br />
however, to compensate for the increase in the company’s<br />
operating costs, which led to a 14% reduction in the<br />
company’s profits in the first quarter of 2011.<br />
35
36<br />
TABLE 23<br />
NET PROFIT PER METRIC TON OF<br />
COPPER PRODUCED<br />
COMPANY 1Q 2010 1Q 2011 Var %<br />
Southern Perú 4.44 3.57 -19..7%<br />
Antamina - 6.15 -<br />
Cerro Verde 4.69 4.49 -4.2%<br />
Tintaya - 2.20 -<br />
Gold Fields La<br />
Cima<br />
In thousands of US$ per M.T.<br />
4.59 6.80 48.2%<br />
Milpo 5.53 8.86 60.2%<br />
El Brocal 3.50 3.13 -10.5%<br />
PROMEDIO 3.25 5.03 54.8%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies<br />
to the Comisión Nacional Supervisora de Empresas y Valores (CONASEV) and <strong>Cesco</strong> for this<br />
report.<br />
Table 23 shows the variation in net profit obtained for each<br />
M.T. of copper produced. On the average, profits were US$<br />
5,030, showing an important increase compared with the<br />
last quarter of 2010, which was the equivalent of 54%.<br />
Antamina also had a noteworthy result, obtaining US$ 6,150<br />
per M.T. of copper produced, although this was influenced<br />
by the inclusion of silver in its statement of financial results.<br />
The companies focused on copper saw their margins drop<br />
because of an increase in operating costs that was more than<br />
proportional. This situation made Southern Perú experience<br />
a drop of US$ 870 in profit per M.T., equivalent to 19.7%,<br />
while Cerro Verde recorded a drop in its profit of US$ 200<br />
per M.T., which was 4.2% less than in 2010.<br />
In the case of El Brocal, the 10.5% drop in profit per<br />
M.T. of copper was due to the fact the company expanded<br />
its production substantially in the fourth quarter, taking<br />
operating costs per M.T. to a new scale, which pushed<br />
margins down during that quarter compared with last year.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
Return on capital, measured as the ratio between Profits and<br />
Shareholders Equity (ROE), experienced on the average<br />
a year-on-year increase of 40.8%, meaning that for every<br />
dollar invested 0.13 dollars were obtained in profits. This<br />
figure is substantially higher than the result indicated for the<br />
world industry, which reported an ROE of 0.9 for the first<br />
quarter of 2011.<br />
Antamina is noteworthy at the company level with an ROE<br />
of 28% for the first quarter of 2011, which is by far the<br />
highest indicator for the group of companies included in the<br />
report. Cerro Verde also showed an important increase in the<br />
indicator, although slightly lower than Antamina. Despite<br />
maintaining a similar level of equity (approximately US$<br />
1.8 billion for Antamina and approximately US$ 1.9 billion<br />
for Cerro Verde), Cerro Verde has significantly lower total<br />
assets (approximately US$ 3.3 billion for Antamina and<br />
approximately US$ 2.7 billion for Cerro Verde).<br />
El Brocal, whose ROE was significantly lower in comparison<br />
with other companies, showed a remarkable year-on-year<br />
increase of 87.7%. This performance was also noteworthy<br />
because the company financed an important increase in its<br />
assets with debt and equity during this period, but due to the<br />
extraordinary profits reported in this quarter it obtained an<br />
ROE of 7% in this period.<br />
Gold Fields showed a higher return on capital over last year,<br />
although it was slightly below the average for the companies<br />
included in this report. The significant increase in profits<br />
was partially mitigated by the 29% increase in net worth,<br />
which enabled the company to reduce its debt.<br />
There have not been any important changes in the debt of<br />
mining companies in Peru since the first quarter of 2010,<br />
showing that the companies’ assets are mostly financed with<br />
equity, but the proportion of liabilities to assets was reduced<br />
by 4% in the first three months of 2011.<br />
It is also interesting to note that this proportion is significantly<br />
lower on the average than it is for mining companies<br />
worldwide, which maintained a proportion of 0.44 total<br />
liabilities to total assets in this quarter.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
TABLE 24<br />
RETURN ON CAPITAL<br />
COMPANY 1Q 2010 1Q 2011 Var %<br />
Southern Perú 0.14 0.12 -17.1%<br />
Antamina - 0.28 -<br />
Cerro Verde 0.14 0.19 30.9%<br />
Tintaya - 0.04 -<br />
Gold Fields La<br />
Cima<br />
0.05 0.09 60.5%<br />
Milpo 0.07 0.10 49.7%<br />
El Brocal 0.04 0.07 87.7%<br />
Average 0.09 0.13 40.8%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies<br />
to the Comisión Nacional Supervisora de Empresas y Valores (CONASEV) and <strong>Cesco</strong> for this<br />
report.<br />
In Peru, only Antamina approaches the average for companies<br />
worldwide, with a debt ratio of 0.44 in this period, while the<br />
indicator for the rest of the companies remained near the<br />
mean.<br />
Gold Fields La Cima and Milpo reduced their debt levels<br />
significantly. The former had a year-on-year variation<br />
of 28.6% and the latter 14.2%, whereas the debt ratio of<br />
Southern Perú evolved towards the average of the companies<br />
included in this report.<br />
Changes in the structures of the companies’ balance sheets<br />
had a negative impact on liquidity. The acid test, which<br />
reflects short-term payment capacity, dropped 12.9% in a<br />
year, from a proportion of liquid assets to current liability of<br />
2.16 in 2010 to 1.89 for the first quarter of 2011.<br />
This result is the consequence of an increase in current<br />
liability, which rose from US$ 925 million to approximately<br />
US$ 1.9 billion in the period reported, while current assets<br />
and stock had a similar evolution with both items increasing<br />
slightly more than 80% year-on-year.<br />
Profit / Shareholders equity TABLE 25<br />
Total Liabilities / Total Assets<br />
DEBT<br />
COMPANY 1Q 2010 1Q 2011 Var %<br />
Southern Perú 0.21 0.24 12.4%<br />
Antamina - 0.45 -<br />
Cerro Verde 0.25 0.26 5.3%<br />
Tintaya - 0.17 -<br />
Gold Fields La<br />
Cima<br />
0.46 0.33 -28.6%<br />
Milpo 0.30 0.25 -14.2%<br />
El Brocal 0.26 0.28 7.7%<br />
Average 0.30 0.28 -4.0%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies<br />
to the Comisión Nacional Supervisora de Empresas y Valores (CONASEV) and <strong>Cesco</strong> for this<br />
report.<br />
At the company level, the change in the value of the ratio for<br />
Southern Perú is the result of an increase in current liability,<br />
particularly accounts payable, which rose from US$ 138<br />
million at the end of the first quarter of 2010 to US$ 288<br />
million in the same period of 2011.<br />
The situation is different in the case of the change in ratio for<br />
El Brocal. There, the change is the result of a 264% increase<br />
in stock, in addition to a 32% increase in current liability for<br />
the period reported.<br />
Milpo was the company with the most important change, as<br />
well as the second highest value in this quarter. The reduction<br />
of 31% in current liability of the company is reflected in<br />
this value, while current assets and stock increased 40%<br />
year-on-year.<br />
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38<br />
TABLE 26<br />
ACID TEST<br />
COMPANY<br />
4Q<br />
2010<br />
1Q<br />
2011<br />
Var %<br />
Southern Perú 2.34 1.37 -41.2%<br />
Antamina - 1.79 -<br />
Cerro Verde 2.47 2.62 5.8%<br />
Tintaya - 1.01 -<br />
Gold Fields La<br />
Cima<br />
(Current Assets - Stock) / Current Liabilities<br />
1.80 1.64 -8.7%<br />
Milpo 1.05 2.15 105.6%<br />
El Brocal 3.17 2.07 -34.%<br />
Average 92% -1%<br />
Source Prepared by <strong>Cesco</strong> based on information about the period reported by the companies<br />
to the Comisión Nacional Supervisora de Empresas y Valores (CONASEV) and <strong>Cesco</strong> for this<br />
report.<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
EDITOR’S NOTES:<br />
.The purpose of this report is to make more information available about the mining industry in Chile, Peru, and the world.<br />
It is written on the basis of public information from the mining companies themselves and other entities that report<br />
information on mining companies. Information is requested occasionally from companies directly when it is not available<br />
from public sources.<br />
.The report is published every quarter, which allows continuous, frequent analysis of the activity in the mining industry. It<br />
has been written with the utmost care to accurately reflect the real figures in the mining industry; however, <strong>Cesco</strong> is not<br />
responsible for any errors caused by the use of information in this report.<br />
.All figures expressed in US$. The acronym M.T. is used for metric tons and T.M.T. is used for thousands of metric tons.<br />
.The use of information contained in this report must mention the source, the Copper and Mining Studies Center CESCO.<br />
World Mining Industry<br />
.The criterion used to rank companies in the world mining industry is from highest to lowest income levels for the last<br />
accounting period, with the exception of production data, where highest to lowest levels of copper production have been<br />
used 1 .<br />
.Anglo American Plc, BHP Billiton, Kazakhmys, KGHM, Norilsk Nickel, Xstrata and Rio Tinto report financial information<br />
every semester. Antofagasta Plc, Codelco, First Quantum, Freeport McMoRan, Grupo México, Teck AND Vale report<br />
financial information on a quarterly basis.<br />
.KGHM Polska Miedz provide data in Zloty (PLN) so they are converted into US$ for comparison purposes.<br />
Mining Industry in Chile<br />
.The criterion used to rank companies in the Chilean copper mining industry is from highest to lowest levels of copper<br />
production in the last accounting year<br />
.As the production levels of Molymet, CAP and SQM are not comparable, the criterion used for the world mining industry<br />
was used, i.e. from highest to lowest income in the last accounting year.<br />
.The deadline for delivering financial information on mining companies to the Securities and Insurance Commission of<br />
Chile is 90 days from the end of the quarterly closing. As an exception, Chilean mining companies can provide data on<br />
the complete year-end closing 120 days after the annual closing. In addition, the companies that adopt the IFRS standards<br />
have an extension of 15 additional days 2 .<br />
1 At the close of this publication, Norilsk Nickel had not published their financial results for the second half of 2010. The company’s relative position<br />
in this report is based on historical information.<br />
2 Financial information from Spence for the first quarter of 2011 was provided to <strong>Cesco</strong> for this report. The company will start reporting its financial<br />
statements to the SVS (Securities and Insurance Commission) in the second quarter of 2011.<br />
39
40<br />
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
.This report has used consolidated financial information for the following companies: Codelco, Anglo American Chile,<br />
CAP, SQM and Molymet. In the case of Anglo American Chile, consolidated information on Anglo American Sur and<br />
Anglo American Norte was used up to the second quarter of 2009.<br />
.Individual financial information has been used for the following companies: Minera Escondida, Antofagasta Minerals,<br />
Doña Inés de Collahuasi, Minera Candelaria, Minera El Abra, Minera Zaldívar, Minera Cerro Colorado, Minera Quebrada<br />
Blanca and Minera Lomas Bayas.<br />
.Comparable Net Profit of Codelco was extracted from presentations of results given by Codelco at the end of each quarter.<br />
.All the results of Antofagasta Minerals for this report were prepared from individual information reported by Minera<br />
Esperanza, Minera Los Pelambres, Minera El Tesoro and Minera Michilla.<br />
Mining Industry in Peru<br />
.The criterion used to rank companies in the Peruvian copper mining industry is from highest to lowest levels of copper<br />
production in the last accounting year.<br />
.The delivery of financial information on companies to the National Supervision Commission of Companies and Securities<br />
(CONASEV) averages 30 days from the end of the quarter 3 .<br />
.Tables have been included instead of graphs for operating costs per M.T. and for profits per M.T. as historical data was<br />
less available. The information will be reported as it is for the Chilean mining industry in future publications of this report.<br />
3 Antamina and Tintaya are not subject to CONASEV requirements for information as they are not quoted on the stock exchange. The information<br />
on those mining companies has been provided directly to <strong>Cesco</strong> for this report.
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
CESCO Copper and Mining Studies Center drafted this report by:<br />
Juan Carlos Guajardo B., Executive Director, and<br />
Gabriel Rojas Sandoval, Analyst.<br />
Design:<br />
Mario Rojas<br />
Printing:<br />
Productora Gráfica Andros<br />
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Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011
Financial Report on Mining - CESCO<br />
Number 11, 1st Quarter 2011<br />
The The Center Center of Copper of Copper and and Mining Mining Studies Studies - CESCO - CESCO<br />
appreciated the the support of: of:<br />
Center Center for Copper for Copper and Mining and Mining Studies Studies - CESCO - CESCO<br />
Telephone: Telephone: (56-2) (56-2) 4814300. 4814300. Fax: (56-2) Fax: (56-2) 4814301. 4814301. Address: Address: Las Urbinas Las Urbinas 53, office 53, 24, office Providencia, 24, Providencia, Santiago. Santiago.<br />
www.cesco.cl www.cesco.cl<br />
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