Resumen corto:
CODELCO emite bonos por US$1.500 millones; ingresos de US$16.4 mil millones en 2023 y activos de US$49.6 mil millones en septiembre de 2024; inversión proyectada de US$16.3 mil millones (2024-2026).
**********
COMISIÓN PARA EL MERCADO FINANCIERO CHILE a
FORMULARIO HECHO ESENCIAL
COLOCACIÓN DE BONOS EN EL EXTRANJERO
1.0 IDENTIFICACIÓN DEL EMISOR
1,1 Razón Social Corporación Nacional del Cobre de Chile
1,2 Nombre fantasia CODELCO-CHILE
1.3 A.U.T. 61.704.000-K
1.4 N* Inscripción Reg. Valores 785
1.5 Dirección Huérfanos 1270, Comuna de Santiago, santiago
1.6 Teléfono 22 690 3000
1,7 Actividades y negocios Ver Anexo 1,
20 ESTA COMUNICACIÓN SE HACE EN VIRTUD DE LO ESTABLECIDO EN EL ARTÍCULO 9 E INCISO SEGUNDO DEL ARTICULO 10 DE LA LEY NP 18,045, Y SE TRATA DE UN HECHO ESENCIAL RESPECTO DE LA SOCIEDAD, SUS NEGOCIOS, SUS VALORES DE OFERTA
PÚBLICA YO DE LA OFERTA DE ELLOS, SEGUN CORRESPONDA.
30 CARACTERÍSTICAS EMISIÓN
3,1 Moneda de denominación ¡| Dólares de los Estados Unidos de América (US5). |
3.2 Moneda total emisión [US$ 1.500.000.000 |]
3.3 Portador ¿a la orden Bonos registrados a nombre de los tenedores en los libros de The Depository Trust Company (“DTC”) –
3.4 Serias Bono Enero 2035 – Bono Enero 2055
3.441 Monto de la serie 145% 750,000,000 y US$ 750,000,000.
34.2 – N*debonos Ver 3.4.3 ¡-_— |
3.4.3 Walor nominal bono 155200,000 minimo. En 2330 de sumas.
superiores, serán por múltiplos de US$1,000.
3.4,4 Tipo reajuste ANA
COMISIÓN PARA El MERCADO FINANCIERO 1 COMISIÓN PARA EL MERCADO FINANCIERO CHILE
3,4,5
3.4.6
Tasa de interés
Fecha de emisión
6.33% y 5.78% respectivamente
08012025
Para cada sena llenar la siguiente tabla de desarrollo
Bonos Enero 2035:
El capital de los bonos será pagadero en su integridad a su vencimiento, el día 13 de enero de
2035
Los bonos devengarán un interés de 6.33% anual, base de un año de 360 días, el cual será pagadero en 20 cuotas los días 13 de enero y 13 de julio de cada año, a partir del 13 de julio de
2025. Los intereses serán devengados desde el 13 de enero de 2025.
NP N* Cuota Fecha intereses Amortización | Total Cuota | Saldo Capital Cuota Arnortiz.
Interés
0 . 13-01-2025 a -1+50.000.000 SES 750.000.000 |
1 | 1307-2028 | 23.737.500 : 23.731.500 | 750.000.000
2 . 1301-2026 23.737.500 – 23.737.500 750.000.000 Lo 3 13-07-2026 23.737.500 : 23.737.500 750.000.000 |
4 13-01-2027 | 23.737.500 – 23.737.500 750.000.000
5 + 13-07-2027 23.737.500 . 23.737,500 250.000.000
6 13-01-2038 | 23.737.500 23,737,500 750.000.000
7 13-07-2028 23.737.500 a 23.737.500 | 750.000.000 É a 13-01-2029 | 23.737.500 – 23.737.500 750.000.000 a – 13-07-2029 23,737,500 – 23.137.500 750.000.000
30 2 13-01-2030 23.737.500 . 23.737.500 750.000.000
11 13-07-2030 23.737.500 ] 23,737.500 750.000.000
12 . 13-01-2031 23,737,500 | – É 23.737.500 750.000.000
13 . 13-07-2031 23,737,500 a 23.737.500 750.000.000
15 == 13-01-2082 23.737.500 > 23.737.500 750.000.000
15 13-07-2032 23.737.500 < | 23.737.500 750.000.000
16 – 13-01-2033 23.737.500 – 23.737.500 750.000.000 17 a 13-07-2093 23.737.500 . 23.737.500 750.000.000
18 . 13-01-2034 23.737.500 : 23.737.500 750.000.000
19 ” 13-07-2034 | 23737.500 | = e 23.737.500 | 750.000.000
20 . J 13-01-2035 | 23.737.500 , 773.737.500 0
El capital de los bonos será pagadero en su integridad a su vencimiento, el día 13 de enero de 2055.
Los bonos devengarán un interés de 6.78% anual, base de un año de 360 días, el cual será pagadero en 60 cuotas los dias 13 de enero y 13 de julio de cada año, a partir del 13 de julio de 2025. Los intereses serán devengados desde el 13 de enero 2025,
Ne N* Cuota Fecha Intereses Amortización | Total Cuota | Saldo Capital Cuota Armnortiz.
Interés . A re a e A o ” 13-01-2025 780.000.000 – 750.000.000 a 13-07-2025 25.425.000 – 25.425.000 | 750.000.000 2 id 13-01-2026 25.425.000 25.925.000 750,000,000
3 Ñ 1307-2026 | -_25423.000 25425000 | 730.000.000 NT . | 13-01-2027 25.425.000 25.425.000 | 750.000.000
COMISIÓN PARA EL MERCADO FINANCIERO
2
COMISIÓN PARA EL
MERCADO FINANCIERO _ CHILE
5 13-07-2027 | 25.425.000 | 25.425.000 | 750.000.000 MU” 13-01-2028 25.425.000 25.425.000 | 750.000.000
, 13-07-2028 25,425,000 25.425.000 | 750.000.000 a 13-01-2029 | 26,425,000 25.425.000 | 750.000.000 A 13-07-2029 25.425.000 25.425.000 | 750.000.000 O 13-01-2030 25.425.000 25.425.000 | 750.000.000
11 13-07-2030 25.425.000 25.425.000 | 750.000.000
12 13-01-2031 25,425.000 25,425,000 | 750.000.000
13 13-07-2031 | 25.425.000 25.425.000 | 750.000.000
14 13-01-2032 25.425.000 25.425.000 | 750.000.000
15 13-07-2032 25.425.000 = 25.425.000 | 750.000.000
16 13-01-2033 | 25.425.000 á 25.425.000 | 750.000.000
17 13-07-2033 25.425.000 25.425.000 750.000.000 18 Pez ceci AAA RA
19 13-07-2034 25.425.000 25.425.000 | 750.000.000
20 13-01-2035 25.425.000 25.425.000 750.000.000
21 13-07-2035 25,425,000 25.425.000 | 750.000.000
22 – 13-01-2036 | 25.425.000 25.425.000 | 750.000.000
23 13-07-2036 25.426.000 26.425.000 | 750.000.000 2d 13-01-2037 25.425.000 25.425.000 | 750.000.000
55 13-07-2037 25,425,000 25.425.000 | 750.000.000
+6 13-01-2038 25.425.000 25.425.000 | 750.000.000
“7 13-07-2038 | 25.425.000 25.425.000 | 750.000.000
28 13-01-2039 | 25.425.000 26.425.000 | 750.000.000
29 13-07-2039 25.425.000 25.425,000 | 750.000.000
30 13-01-2040 | 25.425.000 26.425.000 | 750.000.000
31 13-07-2040 25.425.000 25.425.000 750.000.000 32 On | AA AAA | AAA
33 13-07-2041 25.425.000 25,425.000 | 750.000.000 a 13-01-2042 25.425.000 25.425.000 | 750.000.000 A 13-07-2042 | 25.425.000 25.425.000 | 750.000.000
36 13-01-2043 25.426.000 25.425.000 | 750.000.000 er) 13-07-2043 25.425.000 25.425.000 | 750.000.000
38 13-01-2044 25.425.000 25.425.000 | 750.000.000
39 13-07-2044 | 25.425.000 | 25.425.000 | 750.000.000 40 O] AAA: Y cette MN rc
41 13-07-2045 25,425.000 25,425,000 750,000.000
47 13-01-2046 25.425.000 25.425.000 | 750.000.000
43 13-07-2048 | 25.425.000 25.425.000 | 750.000.000
48 13-01-2047 | 25.425.000 25.425.000 | 750.000.000
45 13-07-2047 25.425.000 25,425,000 | 750.000.000
46 13-01-2048 | – 25.425.000 25.425.000 | 750.000.000
47 13-07-2048 25.425.000 25.425.000 | 750.000.000
48 13-01-2049 25.475,000 25.425.000 | 750.000.000 as [| _13:07-2049 | 25.425.000 25.426.000 | 750.000.000
50 13-01-2050 25,425.000 25.425.000 | 750.000.000
0 13-07-2060 | – 25.425.000 25.425.000 750.000.000 e 13-01-2051 25.425.000 25.425.000 | 750.000.000 5d 13-01-2052 25,425,000 25.425.000 | 750.000.000
5 13-07-2052 25.425.000 25.425.000 | 750.000.000 56 AY ARA PA AAA.
COMISIÓN PARA EL
MERCADO FINANCIERO CHILE 57 13-07-2053 25,425,000 : 25,425,000 750,000,000 > isoiz054 | ¿amoo | | 25426000 | 750.000.000
59 – 13-07-2054 25.425.000 – 25.425.000 750.000.000 60 E 13-01-2055 | 25425000 [| 750.000.000 | 775425000 |
3.5
3.5.1
3.6
3.6.1
4.0
6.0
7.0
Garantias ES A LX]
Tipo y montos de las garantias
No aplica.
Amortización Extraordinaria: [- ] EA
Procedimientos y fechas:
No aplica.
OFERTA: [Pública | – [Privadax | [ x |]
PAÍS DE COLOCACIÓN
5,1 Nombre Bonos vendidos a los Compradores Iniciales ([* initial Purchasers, según dicho concepto se define en el Purchase Agreement, definido más abajo) domiciliados en los Estados Unidos de América.
5.2 Normas para obtener autorización de transar
Rule 144 A y Regulation $ de la
US Securities Act de 1933 de los
Estados Unidos de América.
INFORMACIÓN QUE PROPORCIONARÁ
6.1 A futuros tenedores de bonos
Prospecto informativo [* Offering Memorandum) de fecha 8 de enero de
2025. Ver Anexo 2.
62 A futuros representantes de tenedores de bonos
Mismo documento mencionado en el punto 6.1 precedente.
CONTRATO DE EMISION 7,1 Caracteristicas generales Contrato de Compraventa (Purchase
Agreement) celebrado el día 08 de enero de 2025 entre (A) Corporación o – PA 4
COMISIÓN PARA EL
MERCADO FINANCIERO CHILE MA 1 1 1 Nacional del Cobre de Chile, como emisor de los bonos, y (B) Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Santander US Capital Markets LLC y BofA Securities, Inc., como Compradores Iniciales (Initial Purchasers). Ver Anexo 3, El objeto del Purchase Agreement fue la adquisición, por los Compradores Iniciales (Initial Purchasers), de la totalidad de los bonos emitidos por Corporación Nacional del Cobre de Chile, bajo los términos y condiciones que se expresan en dicho contrato.
2.2 Derechos y obligaciones de los tenedores de bonos
Los bonos emitidos por Corporación Nacional del Cobre de Chile constituyen obligaciones directas, no garantizadas y no subordinadas de la compañía emisora. Los tenedores de bonos pueden declarar exigible anticipadamente la totalidad del capital más intereses en ciertos casos
E incumplimiento por parte de Corporación Nacional del Cobre de Chile,
COMISIÓN PARA EL MERCADO FINANCIERO
MERCADO FINANCIERO CHILE :
3.0 OTROS ANTECEDENTES IMPORTANTES ¡compredores institucionales calificados de acuerdo a lo dispuesto en la Fine Fdd. Aa lo señalado en la Fogulaton $ de la misma norma.
Los bonos no han sido registrados en los Estados Unidos de América bajo la US.
Sucurntiós Act de 19433 y, por lo tanto, solamente podrán ser vendidos d Cortos | de la mencionada ley yo fuera de los Estados Unidos de América. de acuerdo con |
DECLARACION DE RESPONSABILIDAD
El suscito, en su cólldad de Presidente Ejecutivo de ta Corporación Nacional del Cobre de Chiló (lá GBociedad), ambos domicillados sn calla Hiértanos 12D, santiago, a fin de der debido cumplimiento a lo dispuesto on lo Circular N1072 de lo Superintendencia de Valores y Seguros ihoy CMF), declara y da fa. bajo juramento, en este acto y bajo su correspondiante responsebilidad legal, respecto de la plena y absoluta veracidad y autenticidad de toda la información presentada yodjuntada por la Soctedad a la CMF 0 81 presente “Formulario de Hecho Esencial Colocación de Bonóús en el Extranjero, con fecha 13 de Enero de 2025,
NOMBRE CARGO CN FINMA. pe pS IA : | Rubén Presidente 7346, 2248- AN IN Alvarado Y, Ejecutivo p a y LA A PS Aa
COMISIÓN PARA EL MERCADO FINANCIERO COMISIÓN PARA EL MERCADO FINANCIERO CHILE
ANEXO 1
MEMORIA ANUAL https:www.codelco.comprontus codelcositedocs202404042024040419104024jun codelco annual report.
pdf
COMISIÓN PARA EL MERCADO FINANCIERO 7 COMISIÓN PARA EL MERCADO FINANCIERO CHILE
ANEXO 2
OFFERING MEMORANDUM
COMISIÓN PARA EL MERCADO FINANCIERO 8 IMPORTANT NOTICE
THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1) QUALIFIED INSTITUTIONAL BUYERS (QIBs) (WITHIN THE MEANING OF RULE 144A UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR (2) NON-U.S. PERSONS (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) OUTSIDE THE U.S.
IMPORTANT: You must read the following before continuing. The following applies to the Offering Memorandum following this page, and you are advised to read this carefully before reading, accessing or making any other use of the Offering Memorandum. In accessing the Offering Memorandum, you agree to be bound by the following terms and conditions, including any modifications thereto any time you receive any additional information from us.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE LAWS OF OTHER JURISDICTIONS. THE OFFERING MEMORANDUM AND THE OFFER OF THE NOTES ARE ONLY ADDRESSED TO AND DIRECTED AT PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE EEA) OR IN THE UNITED KINGDOM WHO ARE, WITH RESPECT TO THE EEA, QUALIFIED INVESTORS AS DEFINED IN REGULATION (EU) 20171129 (THE PROSPECTUS REGULATION) OR, WITH RESPECT TO THE UNITED KINGDOM, AS DEFINED IN THE PROSPECTUS REGULATION AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE EUWA). NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 12862014 (AS AMENDED, THE PRIIPS REGULATION) OR BY THE PRIIPS REGULATION AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA (THE UK PRIIPS REGULATION), AS APPLICABLE, FOR OFFERING OR SELLING THE SECURITIES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA OR THE UNITED KINGDOM, HAS BEEN PREPARED AND THEREFORE THE OFFERING OR SELLING OF THE SECURITIES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA OR THE UNITED KINGDOM MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION OR THE UK PRIIPS REGULATION. THIS COMMUNICATION IS ONLY BEING DISTRIBUTED TO AND IS ONLY DIRECTED AT (D) PERSONS WHO ARE OUTSIDE THE UNITED KINGDOM (II) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE ORDER), OR (11!) HIGH NET WORTH COMPANIES AND OTHER PERSONS TO WHOM IT MAY LAWFULLY BE COMMUNICATED FALLING WITHIN ARTICLES 49(21(A) TO (D) OF THE ORDER (ALL SUCH PERSONS TOGETHER REFERRED TO AS RELEVANT PERSONS). THE NOTES ARE ONLY AVAILABLE TO, AND ANY INVITATION, OFFER OR AGREEMENT TO SUBSCRIBE, PURCHASE OR OTHERWISE ACQUIRE SUCH NOTES ARE ONLY AVAILABLE TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. ANY PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS DOCUMENT OR ANY OF [TS CONTENTS.
THE FOLLOWING OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MA Y NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
Confirmation of your Representation: In order to be eligible to view this Offering Memorandum or make an investment decision with respect to the securities, investors must be either (1) QIBs or (2) non-U.S. persons (within the meaning of Regulation S under the Securities Act) outside the United States. This Offering Memorandum is being sent at your request and by accepting the e-mail and accessing this Offering Memorandum, you shall be deemed to have represented to us that (1) you and any customers you represent are either (a) QIBs or (b) non-U.S. persons (within the meaning of Regulation S under the Securities Act) and (2) you consent to the delivery of such Offering Memorandum by electronic transmission.
You are reminded that this Offering Memorandum has been delivered to you on the basis that you are a person into whose possession this Offering Memorandum may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this Offering Memorandum to any other person.
The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the initial purchasers or any affiliate of the initial purchasers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the initial purchasers or such affiliate on behalf of the issuer in such jurisdiction.
The following Offering Memorandum has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission, and consequently, neither the initial purchasers, nor any person who controls them nor any of their directors, officers, employees nor any of their agents nor any affiliate of any such person accept any liability or responsibility whatsoever in respect of any difference between the Offering Memorandum distributed to you in electronic format and the hard copy version available to you on request from the initial purchasers.
OFFERING MEMORANDUM Strictly Confidential
S CODELCO
Corporación Nacional del Cobre de Chile
U.S.5750,000,000 6.330% Notes due 2035
U.S.5750,000,000 6.750% Notes due 2055
The notes due 2035 (the 2035 notes) will bear interest at the rate of 6.330% per year and will mature on January 13, 2035. The notes due 2055 (the 2055 notes) will bear interest at a rate of 6.780% per year and will mature on January 13, 2055. We refer to the 2035 notes and the 2055 notes, collectively as the notes and, separately, as a series of notes. The interest on the 2035 notes will be payable semi-annually in arrears on January 13 and July 13 of each year, beginning on July 13, 2025. The interest on the 2055 notes will be payable semi-annually in arrears on January 13 and July 13 of each year, beginning on July 13, 2025.
We may redeem the 2035 notes at our option, in whole or in part, at any time and from time to time prior to the date that is three months prior to the maturity date of the 2035 notes, at a redemption price equal to the greater of 100% of the outstanding principal amount of the 2035 notes to be redeemed and a redemption price based on a make-whole premium, plus accrued and unpaid interest to the date of redemption. We may redeem the 2055 notes at our option, in whole or in part, at any time and from time to time prior to the date that is six months prior to the maturity date of the 2055 notes, at a redemption price equal to the greater of 100% of the outstanding principal amount of the 2055 notes to be redeemed and a redemption price based on a make-whole premium, plus accrued and unpaid interest to the date of redemption. In addition, we may redeem the 2035 notes at our option, in whole or in part, at any time and from time to time, beginning on the date that 1s three months prior to the maturity date of the 2035 notes, at a redemption price equal to 100% of the outstanding principal amount of the 2035 notes to be redeemed, plus accrued and unpaid interest to the date of redemption. We may redeem the 2055 notes at our option, in whole or in part, at any time and from time to time, beginning on the date that 1s six months prior to the maturity date of the 2055 notes, at a redemption price equal to 100% of the outstanding principal amount of the 2055 notes to be redeemed, plus accrued and unpaid interest to the date of redemption.
Upon the occurrence of specified events relating to Chilean tax law, we may redeem each series of notes in whole, but not in part, at 100% of their principal amount plus accrued and unpaid interest to the date of redemption. See Description of Notes-Tax Redemption and -Optional Redemption.
The notes will constitute direct, general, unconditional, unsecured and unsubordinated obligations of Corporación Nacional del Cobre de Chile, a state-owned corporation incorporated under the laws of Chile (CODELCO or the Company). The notes will rank without any preference equally among themselves and equally with all other unsubordinated and unsecured obligations of CODELCO, other than certain obligations granted preferential treatment pursuant to Chilean law. It 1s understood that this provision will not be construed so as to require CODELCO to make payments under the notes ratably with payments being made under any other obligations. See Description of Notes-Ranking.
We intend to use the net proceeds from the sale of the 2035 notes and the 2055 notes, in each case, for general corporate purposes. We intend to apply to list the notes on the Official List of the Luxembourg Stock Exchange and for trading on the Euro MTF market of the Luxembourg Stock Exchange. No guarantee can be given that such application will be approved or that the notes will trade in the Euro MTF market. Currently, there is no public market for the notes.
See Risk Factors beginning on page 20 for a discussion of certain risks that you should consider in connection with an investment in the notes.
Neither the U.S. Securities and Exchange Commission (the SEC) nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this offering memorandum. Any representation to the contrary is a criminal offense.
The notes have not been registered under the Securities Act, or any state securities laws, and are being offered and sold only to (1) qualified institutional buyers under Rule 144A under the Securities Act and (11) persons outside the United States under Regulation S under the Securities Act. For a description of certain restrictions on the transfer of the notes, see Transfer Restrictions and Plan of Distribution.
The notes will not be registered under Law No. 18,045, as amended, (the Securities Market Law) with the Chilean Financial Market Commission (Comisión para el Mercado Financiero or CMF) and, accordingly, the notes cannot and will not be offered or sold to persons in Chile except in circumstances in which they are offered in reliance on an available exemption from such registration. The notes may be privately offered in Chile to certain qualified investors, pursuant to Rule (Norma de Carácter General) No. 216, dated June 12, 2008, and to Rule (Norma de Carácter General) No. 336, dated June 27, 2012, of the CMF, as amended.
The notes are being offered pursuant to an exemption from the requirement to publish a prospectus under the Prospectus Regulation, of the European Union, and this offering memorandum has not been approved by a competent authority within the meaning of the Prospectus Regulation. The notes are not intended to be offered, sold, or otherwise made available to and should not be offered, sold, or otherwise made available to any retail investor in the European Economic Area.
The notes are being offered pursuant to an exemption from the requirement to publish a prospectus under the UK Prospectus Regulation and this offering memorandum has not been approved by a competent authority within the meaning of the UK Prospectus Regulation. The notes are not intended to be offered, sold, or otherwise made available to and should not be offered, sold, or otherwise made available to any retail investor in the United Kingdom.
Issue price per note due 2035: 99.963% plus accrued interest, if any, from January 13, 2025.
Issue price per note due 2055: 99.962% plus accrued interest, if any, from January 13, 2025.
Both series of notes will be delivered in book-entry form only through the facilities of The Depository Trust Company (DTC) and its direct and indirect participants, including Euroclear Bank S.A.N.V. (Euroclear), as operator of the Euroclear system, and Clearstream Banking, S.A., Luxembourg (Clearstream) on or about January 13, 2025.
Joint Book-Running Managers
BofA Securities Citigroup J.P. Morgan Santander
The date of this offering memorandum 1s January 8, 2025.
We have not, and the initial purchasers have not, authorized anyone to provide any information other than that contained in this offering memorandum. We and the initial purchasers take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are not, and the initial purchasers are not, making an offer of these securities in any jurisdiction where the offer is not permitted. Prospective investors should not assume that the information contained in this offering memorandum is accurate as of any date other than the date on the front of this offering memorandum.
After having made all reasonable inquiries, we confirm that (1) the information contained in this offering memorandum is true and accurate in all material respects, (11) the opinions and intentions expressed herein are honestly held and (111) there are no other facts the omission of which would make this offering memorandum as a whole, or any of such information or the expression of any such opinions or intentions, misleading. CODELCO accepts responsibility accordingly.
Unless otherwise indicated or the context otherwise requires, all references in this offering memorandum to CODELCO, the Company, we, our, ours, us or similar terms refer to Corporación Nacional del Cobre de Chile (CODELCO) together with its subsidiaries.
TABLE OF CONTENTS
Page Note Regarding Forward-Looking Statements ….ooooconnococcnooonccnononnonoonnncnonnnnnnnnnnnnonnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos 1v Enforceability of Civil L1abilit18S ………..ooonooocccnonocccononnnononanccnnnnnnnnnnnnncnonnnnononnnncnnnnncnnnnnncnnnnnncnnnnnn cono nn ncnnnnnnnnnn nan cnnnnncnnnnnncnnns Vv Presentation of Financial and Statistical InformMati0N…….oooocnnococccnoooncononancnoonnncnnnnnncnnnnnnnnnonnncnnonnnnnnonnnnnnnnnnnnnnnnnnnnnnncnnnnnnos vil SUMMA Y ccccccnooonnnnnncnnnnnnnnnnnnnnnnnnn RR nn RR RR nn RR RR RR RR RAR RRA RR RR RR N NN RR RARA RR R NN NN RRRRnnnnnnnnnnrnnnnnnnnnnnss l ¡IDIES 19 ¡IR 39 [AAA 40 GET 42 Selected Consolidated Financial Data …….oooconnncoccnococccoooonccnonnnnnonnnnononononnnnnnononnnncnnnnnncnnnnnncnnnnnncnnnnnn cono nnncnnnnnncnnnnnncnnn rancios 43 Selected Operating Data…….ooooconococccnoocccnonancnnonnnncnonnnnnnnnnnnnnonnnnnnnnnnnnnnnnnnnnnnn nn nono nnnnnnn nn nnnnnnnnc non nnnnnnnnnnnnnnnnnnnnnnnncnnnnncnnnnancnnns 47 Management’s Discussion and Analysis of Financial Condition and Results of Operati0nS …..oooooconocccooonncononcnonnnonanononos 40 Business and PrOPerti8S……oooonococcnoooonccnonnncnnonnncnnonnnnnnnnononnnnnnnnnnnnnnnnnnnnnnnnn nn nono nn nn nnnN nn nnnnN nn non NRnnnnnnnnnn nn nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos 73 Overview of the Copper Market …ooooocnncoccnonccccnoocnncnooonnnnoonnncnnnnnonnnnnnonnnnncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnannnnon 100 Regulatory Framework…….oooonooocccnoocnconooancnooonnnnnonononnononnnnonnnnnnnnnnnnnnnnnnnnnnn nn ono nn nnnnn nn nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnncnnnnnncnnnnss 103 VET 111 Related Party TransSacti0OWS…..ooooccnnoncccnnooonnnnonnncnnonnnnnnononnnnonnnnnnnnnnnnnnnnnnnnnnnnnnnnn nn nnnnD nn nnnnnnnnnnnNnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnncnnnnss 115 Foreign Investment and Exchange Controls in Chile………..oooooocccnonoccnononacononancnoonnnconononcnnonnnnnnononcnnnnnnnnnnnnnnonnnnnncnnnnncnnnnos 117 Description Of Not8S….oococooocconococcnnonnnnnoonnncnnononcnnonnnnonnnnnnnnnnn nro non nn nnnN nn nn nnN RR RR nnN RR nRnnNNnnRnnNRnnnnnNNnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnncnnnnss 118 E 131 Plan Of DISTEIDULION ….oooconooocccnonoccnnonnncnononnnnnononcnnoonnnnnnnnnnnnn nro none nn Ronan nn nn nn RR nn nn RR nnnnNNnnnnnNNnnnnnNNnnnnnnnnnnnnnnnnnnnnnnnnnnnnnannnnnnnnnnnss 135 Transfer RestriCtiONS ….ooooooccnnoooccnooonncnooonncnonnnncnnnnnncnnnnnnonnnn nn nono n nn nnn nn nn nn enn nn nn NR nn RON NR nn nnNNnnnnnNNnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnon 142 Validity Of the NOTES ….ocooooocccnococcnoooonconononcnnonancnnononnnnnnnnnnnnnnnnnnnn nn nnnnn nn nn nnn nn nn nn nn nnnnNNnnnnnNNnnnnnNnnnnnnnnnnnnnnnnnnnnnnnnnnnnncnnnnncnnnnss 145 ANN 146 Glossary of Certain Mining TerIMWOS ..ccoooooccnoocnnnnoonnncnonnnnnnonnnnnnnonnnnnnnnnnnnnnnnnnnnnnn non nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnannon 147 General InfOrMAtION ….oooocononoccnnoncnonnnononncnnnnncnonnnnnnn nono nn nono nn non nn non RR Ran R RR R RD RR RRnN RR Dn RRA RON RR RN RR DDN NR RRNN NR RRNNRRRnnR Ra nn nnnnnnrnnannnnnnnnnnnns 151 Index to Financial Statements …..ooooocccnococcnooocnnononononoonnncnnnnnncnnonnnonnnnnnonnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnon F-1
The notes may not be offered or sold, directly or indirectly, in the Republic of Chile (Chile) or to any resident of Chile, except as permitted by applicable Chilean law.
This offering memorandum has been prepared by CODELCO solely for use in connection with the proposed offering of the securities described herein. This offering memorandum is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for, or otherwise acquire, securities. We and the initial purchasers reserve the right to reject for any reason any offer to purchase any of the notes.
This offering memorandum may only be used for the purposes of this offering.
The initial purchasers make no representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this offering memorandum. Nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation by the initial purchasers as to the past or future.
CODELCO has furnished the information contained in this offering memorandum.
In making an investment decision, prospective investors must rely on their own examination of CODELCO and the terms of the offering, including the merits and risks involved. Prospective investors should not construe anything in this offering memorandum as legal, business or tax advice. Each prospective investor should consult its own advisors as needed to make its investment decision and to determine whether it is legally permitted to purchase the securities under applicable legal investment or similar laws or regulations. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time.
This offering memorandum contains summaries believed to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All such summaries are qualified in their entirety by such reference. Copies of documents referred to herein will be made available to prospective investors (1) upon request to CODELCO or the initial purchasers and (11) at the office of the paying agent.
IN CONNECTION WITH THIS OFFERING, BOFA SECURITIES, INC., CITIGROUP GLOBAL MARKETS INC., J.P. MORGAN SECURITIES LLC, AND SANTANDER US CAPITAL MARKETS LLC OR ANY PERSON ACTING FOR ANY OF THEM, MAY OVER ALLOT OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED PERIOD AFTER THE ISSUE DATE.
HOWEVER, THERE IS NO OBLIGATION FOR BOFA SECURITIES, INC., CITIGROUP GLOBAL MARKETS INC., J.P. MORGAN SECURITIES LLC, AND SANTANDER US CAPITAL MARKETS LLC, OR ANY PERSON ACTING FOR ANY OF THEM, TO DO THIS. SUCH STABILIZING, [IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME, AND MUST BE BROUGHT TO AN END AFTER A LIMITED PERIOD.
You must: (1) comply with all applicable laws and regulations in force in any jurisdiction in connection with the possession or distribution of this offering memorandum and the purchase, offer or sale of the notes; and (11) obtain any consent, approval or permission required to be obtained by you for the purchase, offer or sale by you of the notes under the laws and regulations applicable to you in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales; neither we nor the initial purchasers shall have any responsibility therefor.
In this offering memorandum, unless otherwise specified or the context otherwise requires, a reference to a law or a provision of a law 1s a reference to that law or provision as extended, amended or re-enacted.
The notes are subject to restrictions on resale and transfer as described under Transfer Restrictions. By purchasing the notes, you will be deemed to have made certain acknowledgments, representations and agreements as described under Transfer Restrictions. You may be required to bear the financial risks of investing in the notes for an indefinite period of time.
The price and amount of the notes to be issued under the offering memorandum will be determined by the Issuer and the initial purchasers at the time of issue in accordance with prevailing market conditions.
You acknowledge that: e you have been afforded an opportunity to request from us, and to review, all additional information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained in this offering memorandum;
11 e you have not relied on the initial purchasers or any person affiliated with the initial purchasers in connection with your investigation of the accuracy of such information or your investment decision; e you have made your own assessment concerning the relevant tax, legal, currency and other considerations relevant to investment in the notes; e you have sufficient knowledge and experience to be capable of evaluating the merits and risks of a prospective investment in the notes; and e noperson has been authorized to give any information or to make any representation concerning us or the notes, other than as contained in this offering memorandum and, if given or made, any such other information or representation should not be relied upon as having been authorized by us or the initial purchasers.
This offering memorandum is for distribution only to and is directed only at (1) persons who are outside the United Kingdom or (11) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (111) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). The notes are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such notes will be engaged in only with relevant persons. Any person who 1s not a relevant person should not act or rely on this offering memorandum or any of its contents.
The notes are not intended to be offered, sold, or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (EEA). For these purposes, a retail investor means a person who 1s one (or more) of: (1) a retail client as defined in point (11) of Article 4(1) of Directive 201465EU (as amended, MIiFID IP); (11) a customer within the meaning of Directive (EU) 201697 (as amended, the Insurance Distribution Directive), where the customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MIiFID II; or (111) not a qualified investor as defined in Regulation (EU) 20171129 (as amended, the Prospectus Regulation); and the expression of an offer includes the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe for the notes. Consequently, no key information document required by Regulation (EU) No 12862014 (as amended, the PRIIPs Regulation) for offering or selling the notes or otherwise making them available to retail investors in the EEA, has been prepared and therefore the offering or selling of the notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
The notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the UK. For these purposes, a retail investor means a person who is one (or more) of the following: (1) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017565 as 1t forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (*EUWA; (11) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the FSMA) and any rules or regulations made under the FSMA to implement Directive (EU) 201697, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 6002014 as it forms part of domestic law by virtue of the EUWA; or (111) not a qualified investor as defined in the Article 2 of Prospectus Regulation as 1t forms a part of UK domestic law by virtue ofthe EUWA. Consequently, no key information document required by the PRIIPs Regulation as 1t forms part of domestic law by virtue of the EUWA (the UK PRIIPs Regulation) for offering or selling the securities or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the securities or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.
See Risk Factors beginning on page 20 for a description of certain risks you should consider before investing in the notes.
111 NOTE REGARDING FORWARD-LOOKING STATEMENTS
This offering memorandum contains forward-looking statements. We may from time to time make forward-looking statements in (1) our annual report; (11) prospectuses, press releases and other written materials; or
(111) oral statements made by our officers, directors or employees to analysts, institutional investors, representatives of the media and others. Examples of these forward-looking statements include: e projections of revenues, profit (loss), capital expenditures, dividends, capital structure or other financial items or ratios; e statements of our plans, objectives or goals, including those relating to anticipated trends, competition, regulation and rates; e statements about our future economic performance or that of Chile or other countries in which we have investments; and e statements of assumptions underlying these statements.
.”. 5 .”. 5 . 6;
Words such as believe, could, may, will, anticipate, plan, expect, intend, target, estimate, project, potential, guideline, should and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying these statements.
Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of Important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in these forward-looking statements. These factors, some of which are discussed under Risk Factors, include economic and political conditions and government policies in Chile or elsewhere, inflation rates, exchange rates, regulatory developments and changes in Chilean law, customer demand, competition, unanticipated mining and production problems, commodity prices, relations with employees and contractors, variances in ore grade, adverse weather conditions, natural disasters and the outbreak of coronavirus (COVID-19) and its potential impact on our business. We caution you that the foregoing list of factors 1s not exclusive and that other risks and uncertainties may cause actual results to differ materially from those in forward -looking statements.
You are cautioned not to place undue reliance on these forward-looking statements which reflect our views only as of the date they are made, and we do not undertake any obligation to update them or publicly to release the result of any revisions to these forward-looking statements in light of new information or future developments after the date of this offering memorandum.
By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance.
New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors. We cannot assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward -looking statements as a prediction of actual results.
ENFORCEABILITY OF CIVIL LIABILITIES
CODELCO is a state-owned enterprise organized under the laws of Chile. All of its directors and executive officers and certain experts named in this offering memorandum reside outside the United States (principally in Chile), and all or a substantial portion of the assets of CODELCO and of such persons are located outside the United States.
As a result, 1t may not be possible for investors to effect service of process within the United States on, or bring actions or enforce foreign judgments against, CODELCO or such persons in U.S. courts. In addition, CODELCO has been advised by 1ts Chilean counsel, Carey y Cía. Ltda., that no treaty exists between the United States and Chile for the reciprocal enforcement of foreign judgments. There is also doubt as to the enforceability in Chilean courts of judgments of U.S. courts obtained in actions predicated upon the civil liability provisions of U.S. federal securities laws. Chilean courts, however, have enforced judgments rendered in the United States by virtue of the legal principles of reciprocity and comity, subject to the review in Chile of the U.S. judgment in order to ascertain whether certain basic principles of due process and public policy have been respected, without reviewing the merits of the subject matter of the case. If a U.S. court grants a final judgment for the payment of money, enforceability of this judgment in Chile will be subject to obtaining the relevant exequatur (1.e., recognition of enforceability of the foreign judgment) in a proceeding before the Chilean Supreme Court, according to Chilean civil procedure law in effect at that time and satisfying certain legal requirements. Currently, the most important of these requirements are (except when a treaty between the United States and Chile exists for the reciprocal enforcement of foreign judgments): e the judgment will be enforced if there is reciprocity, as to the enforcement of judgments (i.e., the relevant
U.S. court would enforce a judgment of a Chilean court under comparable circumstances). If reciprocity cannot be proven, the foreign judgment will not be enforced in Chile; e ¡freciprocity cannot be proven, the foreign judgment will be enforced, nonetheless, 1f: (1) 1t does not contain anything contrary to Chilean law, notwithstanding the differences in procedural rules; (11) 1t 1s not contrary to Chilean jurisdiction and public policy; (111) 1t has been duly served, although the defendant may prove that, for other reasons, he or she was prevented from using a defect in service of process as a defense; and (1v) 1t is final under the laws of the country where the judgment or arbitral award, as the case may be, was rendered. With respect to service of process, the Chilean Supreme Court has decided that, to determine that process was duly served, service should be considered valid in the jurisdiction where the case was decided and 1t can be proven that the defendant had actual knowledge of the suit; and e in any event, the foreign judgment must not be contrary to the public policy of Chile or Chilean jurisdiction and must not affect in any way any property located in Chile, which, as a matter of Chilean law, are exclusively subject to the jurisdiction of Chilean courts.
If the exequatur is granted, then the judgment may be enforced by a lower court through a collection proceeding under Chilean civil procedure law.
In addition, 1t may be necessary for investors to comply with certain procedures, including evidence of timely payment of the stamp taxes (currently at a rate of 0.066%. per month or fraction thereof elapsed between the issuance and the maturity of the notes, calculated over the principal amount of the notes, with a maximum 0.8% over the principal amount, which would be the stamp tax rate applicable to this case to be paid by CODELCO), to file a lawsuit concerning the Notes in a Chilean court.
Also, foreign judgments specifically related to properties located in Chile, including the attachment of liens on such properties, could be considered to violate Chilean law because such properties are exclusively subject to Chilean law and to the jurisdiction of Chilean courts.
Lastly, CODELCO has been advised by Carey y Cía. Ltda. that there is doubt as to the enforceability in original actions in Chilean courts of liabilities predicated solely upon U.S. federal securities laws.
The notes, the indenture and the purchase agreement will provide that CODELCO will appoint Cogency Global Inc. in New York City as its agent upon whom process may be served in any action arising out of or based upon, respectively, the notes, the indenture, the purchase agreement or the transactions contemplated thereby, which may be instituted in any federal or state court having subject matter jurisdiction. See Description of Notes.
vV Pursuant to the Chilean Mining Code, mining concessions as well as certain raw materials and other property or assets permanently dedicated to the exploration or extraction of minerals cannot be subject to an order of attachment, except with respect to mortgages, in the case that the debtor consents to the attachment in the same enforcement proceeding or when the debtor 1s a stock corporation. In addition, pursuant to the Chilean constitution (the Constitution), mining concessions corresponding to mining deposits exploited by CODELCO upon its creation in 1976 cannot be subject to attachment nor to any act of disposition by CODELCO. As a result, the rights of holders to attach property of CODELCO in the event of a default under the notes would be limited by such provisions. See Regulatory Framework-Mining Regulations.
vi PRESENTATION OF FINANCIAL AND STATISTICAL INFORMATION
In this offering memorandum, references to U.S.$, $, U.S. dollars and dollars are to United States dollars and references to ¿ and cents are to United States cents (U.S.$0.01). References to pesos, CLP or Ch$ are to Chilean pesos and references to UF are to Unidades de Fomento. References to AU$ and AUD are to Australian dollars. References to HKD are to Hong Kong dollars. The UF is an inflation-indexed Chilean monetary unit that is linked to, and adjusted daily to reflect changes in, the Chilean consumer price index during the preceding 30 days. References to euro or € are to the legal currency of the European Economic and Monetary Union.
CODELCO, as an issuer of publicly traded securities in Chile, is required by Circular No. 368 (Oficio Circular No. 368) of October 2006, as amended, of the Chilean Market Commission (Comisión para el Mercado Financiero, the Chilean securities authority, or CMF) to prepare and report consolidated financial statements in accordance with IFRS Accounting Standards (IFRS) issued by the International Accounting Standards Board (TIASB).
The audited consolidated financial statements as of and for the years ended December 31, 2021 and 2022 and the audited consolidated financial statements as of and for the years ended December 31, 2022 and 2023 included herein are referred to as the 2021-2022 Consolidated Financial Statements and the 2022-2023 Consolidated Financial Statements, respectively. The 2021-2022 Consolidated Financial Statements and the 2022-2023 Consolidated Financial Statements (together, the Audited Annual Consolidated Financial Statements) are presented in accordance with IFRS issued by the IASB.
The unaudited interim consolidated financial statements as of September 30, 2024 and for the nine-month periods ended September 30, 2023 and 2024 included herein (the Unaudited Interim Consolidated Financial Statements) are presented in accordance with IAS 34 Interim Financial Reporting. The Unaudited Interim Consolidated Financial Statements and the Audited Annual Consolidated Financial Statements are referred to together as the Consolidated Financial Statements.
The accounting policies adopted in the preparation of the Unaudited Interim Consolidated Financial Statements are consistent with those applied in the preparation of the Audited Annual Consolidated Financial Statements.
Unless otherwise indicated, the Consolidated Financial Statements and other financial information concerning CODELCO included herein are presented in U.S. dollars in conformity with Decree Law No. 1,350 of 1976 (Decree Law No. 1,350), published in the Diario Oficial de la República de Chile ( Official Gazette) on February 28, 1976, as amended by Law No. 20,392 ( Law 20,392) published in the Official Gazette on November 14, 2009, and for periods after January, 1, 2009, in accordance with IFRS. Decree Law No. 1,350 is the Chilean law pursuant to which CODELCO was created and which provides for 1ts governance.
Because the notes offered hereby have not been and will not be registered with the SEC, this offering memorandum does not and 1s not required to comply with the applicable requirements of the Securities Act, and the related rules and regulations adopted by the SEC, which would apply if the notes offered hereby were being registered with the SEC.
The U.S. dollar is the currency used in the primary economic environment in which CODELCO operates.
Nevertheless, as an international company operating primarily in Chile, as well as in several other Latin American countries, several European countries and China, a portion of CODELCOs business is transacted in Chilean pesos and other non-dollar currencies.
The body of generally accepted accounting principles is commonly referred to as GAAP. A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but: (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the issuers statement of income, balance sheet or statement of cash flows (or equivalent vil statements); or (11) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.
In this offering memorandum, CODELCO discloses several non-GAAP financial measures, including Adjusted EBIT, Adjusted EBITDA, cash cost, total costs and expenses and financial debt. Adjusted EBIT 1s calculated by adding finance cost, impairment charges and income tax expense to profit (loss) for the period.
Adjusted EBITDA is calculated by adding finance cost, income tax expense, depreciation and amortization of assets plus export taxes and impairment charges to profit (loss) for the period. Impairments include charges and reversals related to charges of investment projects, research projects and investment in associates and joint ventures and exclude Impairment charges related to definite-lived tangible assets which show indicators of impairment under International Accounting Standard No. 36. Cash cost is calculated in accordance with the methodology specified by Brook Hunt € Associates for the determination of Cl cost (cash cost) and includes all direct cash costs of mining, including costs associated with extraction, leaching, smelting and further processing of copper ores into refined metal, as well as labor, electricity, diesel, finance costs, third-party services, other costs, transportation and physical plant costs associated with those processes, net of income from sales of byproducts. Cash cost is presented as a nominal dollar amount, usually expressed as cents per pound, and excludes provisions, amortization, depreciation and central office costs.
Total cost and expenses includes all cost and expenses that the cash cost calculation includes, plus other non-cash direct expenses such as depreciation expenses, among others. Financial debt is calculated as loans from financial institutions plus bonds issued. Total debt to capitalization includes total financial debt divided by total financial debt plus total equity.
Adjusted EBIT and Adjusted EBITDA data are included in this offering memorandum because such data are used by investors to assess: (1) the operating trends and financial performance of the Company and (11) the ability of the Company to (a) service its existing debt, (b) incur new debt and (c) fund its capital expenditures.
CODELCO believes that Adjusted EBIT and Adjusted EBITDA, while providing useful information, should not be considered in isolation or as a substitute for profit for the period as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity. Adjusted EBIT and Adjusted EBITDA are not measures of financial performance in accordance with IFRS. Additionally, CODELCOs calculation of Adjusted EBIT and Adjusted EBITDA may differ from the calculation used by other companies and, therefore, comparability may be affected.
Cash cost is disclosed in this offering memorandum because it is a widely used measure of costs in the mining Industry. CODELCO believes that cash cost, while providing useful information, should not be considered in isolation or as a substitute for cost of sales, cost of selling and administrative expenses or as an indicator of costs. Cash cost 1s not a measure of financial performance in accordance with IFRS.
CODELCO also presents certain ratios and margins that are derived using Adjusted EBITDA, including the ratio of debt to Adjusted EBITDA, the Adjusted EBITDA coverage ratio and earnings to fixed charges (adjusted).
CODELCO believes that these ratios are widely used by investors to measure our performance. In the section titled Summary Consolidated Financial Data, CODELCO provides a reconciliation of Adjusted EBIT and Adjusted EBITDA to profit, along with the ratio of debt to Adjusted EBITDA, Adjusted EBITDA coverage ratios and ratio of earnings to fixed charges (adjusted), for the relevant periods.
These non-GAAP financial measures may not be comparable to similarly titled measures of other companies.
The assumptions underlying the non-GAAP financial measures have not been audited in accordance with International Standards on Auditing or any other generally accepted auditing standards.
In evaluating the non-GAAP financial measures, investors should carefully consider the financial statements of the Company included in this offering memorandum. Although certain of this data has been extracted or derived from the financial statements included in this offering memorandum, this data has not been audited or reviewed by the independent auditors.
Under the accounting policies adopted by CODELCO, gross profit is calculated before the provision for a 10% special export tax. Under Law No. 21,174 of 2019, as amended, that repealed Law No.13,196 of 1958 (the vi1l Copper Reserve Law), CODELCO is required to pay a special export tax on the sales revenues that CODELCO derives from the export of copper sourced and related byproducts produced by CODELCO. In addition, CODELCO 1s subject to the new mining royalty tax under Law 21,591 (the Mining Royalty Law), which generally comprises an Ad Valorem component which applies a tax rate of 1% on annual copper sales, and a mining margin component which applies a progressive tax rate (1.e., 8%-26%) on the adjusted taxable mining operating margin. In addition, a maximum potential tax burden of 46.5% 1s established on the mining entitys operating profitability, measured as the adjusted pre-taxable mining operating income. See Risk Factors-Risks Relating to CODELCOs Relationship with the Government of Chile-CODELCO is subject to special taxes for additional information on these special taxes, including the mining tax rate effective for 2020, 2021, 2022 and 2023. Certain figures included in this offering memorandum and in the Consolidated Financial Statements have been rounded for ease of presentation. Percentage figures included in this offering memorandum have in some cases been calculated on the basis of such figures prior to rounding. For this reason, certain percentage amounts in this offering memorandum may vary from those obtained by performing the same calculations using the figures in the Consolidated Financial Statements. Certain other amounts that appear in this offering memorandum may not sum due to rounding.
The Observed Exchange Rate (as defined herein under Exchange Rates) reported by the Central Bank of Chile (1) as of January 4, 2021 was Ch$710.95 = U.S.$1.00; (11) as of January 3, 2022 was Ch$844.69 = U.S.$1.00;
(111) as of January 3, 2023 was Ch$855.86 = U.S.$1.00; (1v) as of October 3, 2023 was Ch$902.26 = U.S.$1.00; (v) as of January 2, 2024 was Ch$877.12 = U.S.$1.00; and (vi) as of October 1, 2024 was Ch$897.68 = U.S.$1.00. This offering memorandum contains translations of certain Chilean peso amounts into dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the Chilean peso amounts actually represent such dollar amounts or could, at this time, be converted into dollars at the rate indicated.
The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos. Unless otherwise indicated, such dollar amounts have been converted from Chilean pesos at an exchange rate of Ch$877.12 per
U.S.$1.00, which corresponds to the Observed Exchange Rate on January 2, 2024. As of January 8, 2025, the Observed Exchange Rate was Ch$1,005.85 per U.S.$1.00. See Exchange Rates.
In this offering memorandum, all tonnage information is expressed in metric tons and all references to ounces are to troy ounces, in each case, unless otherwise specified. Except where otherwise noted, tonnage information in this offering memorandum does not include: (1) CODELCO”s 49.0% direct share of the El Abra deposit, which is mined by Sociedad Contractual Minera El Abra and 51.0% owned by Cyprus El Abra Corporation, a subsidiary of Freeport-McMoRan Inc., (11) CODELCOs 20.0% share of Anglo American Sur S.A. (Anglo American Sur), or (111) CODELCO*s 10% share of Compañía Minera Teck Quebrada Blanca S.A. deposit, which is mined by Teck Resources Ltd. (Teck Resources), Sumitomo Metal Mining Co., Ltd. (Sumitomo Metal Mining) and Sumitomo Corporation (Sumitomo Corporation), unless otherwise specified. See Business and Properties-Copper Production- Associations, Joint Ventures and Partnerships-SCM El Abra, – Anglo American Sur, and -Compañía Minera Teck Quebrada Blanca S.A. for a description of these interests. Certain terms relating to the copper mining business are defined in Glossary of Certain Mining Terms.
Market information regarding CODELCOs share of copper production and relative cost position has been derived by CODELCO from third-party sources, including reports from Brook Hunt € Associates, and from CODELCO’s own industry research. Brook Hunt £ Associates publishes periodic reports containing global copper production data and cost analysis by mine site. While CODELCO believes that 1ts estimates are reliable, such estimates have not been confirmed by independent sources. The Consolidated Financial Statements do not necessarily reflect the value of CODELCOs mining concessions or its resources and reserves. Fair value of mining properties acquired through business combinations is reflected in the Consolidated Financial Statements when acquired.
With respect to any information included herein and specified to be sourced from a third party, CODELCO confirms that such information has been accurately reproduced and that, as far aa CODELCO is aware and is able to ascertain from information published by such third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.
1X As used in this offering memorandum, Chuquicamata, Radomiro Tomic, Gabriela Mistral, El Teniente, Andina, Salvador, Mina Ministro Hales and Ventanas refer to divisions of CODELCO, not the mines having those names, unless otherwise required by context.
SUMMARY
This summary must be read as an introduction to this offering memorandum and any decision to invest in the notes should be based on a consideration of the offering memorandum as a whole.
The following summary is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in this offering memorandum. Except as otherwise disclosed herein or indicated, financial information with respect to CODELCO provided in this offering memorandum has been presented in U.S. dollars and prepared in accordance with IFRS.
CODELCO is the worlds largest copper producer and one of the largest companies in Chile in terms of revenues (U.S.$16.4 billion in 2023). As of December 31, 2023, CODELCOs total assets were U.S.$46.9 billion and equity amounted to U.S.$11.0 billion. As of September 30, 2024, CODELCO”s total assets were U.S.$49.6 billion and equity amounted to U.S.$11.3 billion.
CODELCO engages primarily in the exploration, development and extraction of ores bearing copper and byproducts, the processing of ore into refined copper and the international sale of refined copper and byproducts.
CODELCO is wholly-owned by the Government of Chile and controls approximately 4.7% of the worlds proved and probable copper reserves, as such terms are defined by the U.S. Geological Survey.
In 2023, CODELCO had an estimated 6.4% share of total world copper production, with production amounting to approximately 1.424 million metric tons, including: (1) CODELCO*s share of the El Abra deposit, which is mined by Sociedad Contractual Minera El Abra and owned 49.0% by CODELCO and 51.0% by Cyprus El Abra Corporation (a subsidiary of Freeport-McMoRan Inc.); and (11) CODELCO’s share of Anglo American Sur (of which CODELCO owns a 20.0% indirect share), and an estimated 6.2% share of the world?*s molybdenum production, with production amounting to approximately 17.3 metric tons excluding CODELCO'”s share of Anglo American Sur.
CODELCO’s main commercial product is Grade A cathode copper. In 2023 and for the nine-month period ended September 30, 2024, CODELCO derived 90.1% and 92.4% of 1ts total sales from copper and 9.9% and 7.6% of its total sales from byproducts of its copper production, respectively.
CODELCOSs sales of copper in 2023 were geographically diversified, with approximately 55.2% of sales made to Asia, including approximately 41.7% to China, as well as approximately 34.4% to North and South America and 10.4% to Europe. CODELCOS*s top ten customers purchased approximately 26.4% of its total copper sales volume in 2023.
CODELCO”s copper operations are divided into the following eight divisions: e The El Teniente Division operates the El Teniente mine, which is the worlds largest underground copper mine and has been in operation for more than 100 years. The El Teniente Division includes the Caletones smelter. In 2023, this division produced 351,874 metric tons of copper, or 24.7% of CODELCO'”s total copper output (including CODELCOS*Ss share of the El Abra deposit and Anglo American Sur), with a cash cost of 138.0 cents per pound, compared to 105.2 cents per pound in 2022, and a total cash cost of U.S.$1,059.7 million in 2023, compared to
U.S.$930.5 million in 2022. During the first nine months of 2024, this division produced 245,483 metric tons of copper with a cash cost of 162.7 cents per pound and a total cash cost of U.S.$868.9 million.
e The Radomiro Tomic Division operates the Radomiro Tomic mine, which began its first full year of production in
1998. In 2023, this division produced 314,805 metric tons of copper cathodes, or 22.1% of CODELCOS”s total copper output (including CODELCO*s share of the El Abra deposit and Anglo American Sur), with a cash cost of 235.9 cents per pound, compared to 205.6 cents per pound in 2022, and a total cash cost of U.S.$1,617.2 million in 2023 compared to U.S.$1,351.9 million in 2022. During the first nine months of 2024, this division produced 196,520 metric tons of copper with a cash cost of 243.3 cents per pound and a total cash cost of U.S.$1,039.3 million.
e The Chuquicamata Division operates the Chuquicamata mine, one of the largest copper-producing mines in the world, which began 1ts operations in 1915 and currently includes smelting and refining capacities. In 2023, this division produced 248,495 metric tons of copper cathodes, or 17.5% of CODELCO’s total copper output (including
CODELCOS*Ss share of the El Abra deposit and Anglo American Sur), with a cash cost of 158.5 cents per pound, compared to 127.4 cents per pound in 2022, and a total cash cost of U.S.$851.7 million in 2023, compared to
U.S.$740.7 million in 2022. During the first nine months of 2024, this division produced 194,846 metric tons of copper with a cash cost of 137.1 cents per pound and a total cash cost of U.S.$578.6 million.
The Mina Ministro Hales Division was created in 2010 for the operation of the Mina Ministro Hales ore body, which first began producing copper at the end of 2013. In 2023, this division produced 126,010 metric tons of copper, or
8.9% of CODELCOS”s total copper output (including CODELCOs share of the El Abra deposit and Anglo American Sur), with a cash cost of 200.7 cents per pound, compared to 129.6 cents per pound in 2022, and a total cash cost of
U.S.$539.4 million in 2023, compared to U.S.$420.1 million in 2022. During the first nine months of 2024, this division produced 64,665 metric tons of copper with a cash cost of 268.2 cents per pound and a total cash cost of
U.S.$370.7 million.
The Andina Division operates the Andina and Sur-Sur mines with production split among open-pit and underground mines. It does not have independent smelting capacity. Andina has been in operation since 1970. In 2023, this division produced 164,545 metric tons of copper, or 11.6% of CODELCOs total copper output (including CODELCOS*Ss share of the El Abra deposit and Anglo American Sur), with a cash cost of 230.3 cents per pound, compared to 187.5 cents per pound in 2022, and a total cash cost of U.S.$806.9 million in 2023, compared to
U.S.$707.0 million in 2022. During the first nine months of 2024, this division produced 139,602 metric tons of copper with a cash cost of 212.7 cents per pound and a total cash cost of U.S.$632.3 million.
The Gabriela Mistral Division was created in 2013 and operates the Gabriela Mistral mine, which uses SX-EW technology. The Gabriela Mistral mine produced its first copper cathodes in 2008 after a 26-month construction period. In 2023, this division produced 105,825 metric tons of copper, or 7.4% of CODELCO”s total copper output (including CODELCO*s share of the El Abra deposit and Anglo American Sur), with a cash cost of 292.5 cents per pound, compared to 275.8 cents per pound in 2022, and a total cash cost of U.S.$682.4 million in 2023, compared to
U.S.$665.9 million in 2022. During the first nine months of 2024, this division produced 77,132 metric tons of copper with a cash cost of 263.5 cents per pound and a total cash cost of U.S.$448.0 million.
The Salvador Division operates the Salvador mine and concentrator and the smelterrefinery complex at Potrerillos, which has the capacity to treat 671,000 metric tons of concentrate. In 2023, this division produced 13,000 metric tons of copper cathodes, or 0.9% of CODELCOs total copper output (including CODELCOs share of the El Abra deposit and Anglo American Sur), with a cash cost of 575.5 cents per pound, compared to 389.6 cents per pound in 2022, and a total cash cost of U.S.$164.3 million in 2023, compared to U.S.$271.7 million in 2022. During the first nine months of 2024, this division did not produce any copper as it is in the process of the ramp-up of the Inca Pit project. As of September 30, 2024, the project was under construction and was approximately 88% complete.
The Ventanas Division was created in connection with the acquisition ofthe Ventanas smelterrefinery complex from Chiles state-owned mining company Empresa Nacional de Minería ((ENAMT) in 2005. In 2023, this division refined 357.2 thousand metric tons of copper, compared to 370.6 thousand metric tons of copper in 2022. During the first nine months of 2024, the Ventanas Division refined 204.5 thousand metric tons of copper. Pursuant to the terms of the acquisition, CODELCO is required to provide on market terms the necessary smelting and refining capacity for the treatment of copper concentrate delivered by the small- and medium-sized mining industry that ENAMI serves. In May 2023, Law No. 21,546 permitted the gradual closure of the Ventanas smelterrefinery complex and after almost 60 years of operation, the furnaces at Ventanas Division smelting plant were shut down. The transition of its former workers successfully concluded, with 58.8% of workers opting for an exit plan, 26.9% retrained for new roles at the Ventanas division, and 14.3% relocated to other divisions, following the smelter’s closure.
CODELCO will continue to operate in the area through its refinery.
The Chuquicamata Division, the Radomiro Tomic Division, the Mina Ministro Hales Division, the Gabriela Mistral Division and the Salvador Division form part of CODELCOs Northern Operations (Operaciones Norte). The Andina Division, the El Teniente Division and the Ventanas Division form part of CODELCOs Central Southern Operations (Operaciones Centro Sur). For a description of CODELCOs associations with other companies, see Business and Properties-Copper Production-Associations, Joint Ventures and Partnerships.
Competitive Strengths
CODELCO believes that 1t has certain distinguishing competitive strengths: e Copper Reserves. CODELCO controls approximately 4.7% of the worlds proved and probable copper reserves. In 2023, CODELCOs proved and probable reserves represented at least 30 years of future production at current levels.
e Market Presence. CODELCO is the largest copper producer in the world, with an estimated 6.4% share of the total world copper production and 1.42 million metric tons (including CODELCOs share of the El Abra deposit and Anglo American Sur) of production in 2023. CODELCO is also one of the largest producers of molybdenum in the world, with an estimated 6.2% share of total world molybdenum production, producing 17,254 metric tons in 2023 (excluding CODELCOs share of Anglo American Sur). CODELCO believes that 1ts significant market presence gives the Company certain advantages in the marketing of its products.
e Research and Technological Innovation. CODELCO remains competitive by developing and incorporating new technologies into its production processes, which aim to improve overall operations, including mining processes, efficiency, productivity, environmental protection and worker safety.
e Stable, Long-term and Geographically Diverse Customer Base. CODELCO has developed long-term relationships with the majority of its customers, including some of the leading manufacturers in the world.
e Financial Strength. In 2023, CODELCOs Adjusted EBITDA amounted to U.S.$3.9 billion, total debt to capitalization as of December 31, 2023, was 64.6%, and the ratio of net financial debt to Adjusted EBITDA was 3.6.
As of September 30, 2024, CODELCOs Adjusted EBITDA amounted to U.S.$4.0 billion and total debt to capitalization as of September 30, 2024, was 66.5%.
e Management Efficiency and Flexibility. CODELCO believes that 1t has a highly experienced workforce and executive team with a proven track record of managing long-life copper reserves that is able to respond to market changes by adjusting the allocation of its resources and operations among several different methods of production and ore deposits.
e Oneofthe Leading Companies in Chile. CODELCO is one of the largest companies in Chile in terms of revenues as of December 31, 2023 (U.S.$16.4 billion) and is a key contributor to the budget of the Government of Chile. In 2023, CODELCO contributed U.S.$1.4 billion to the Chilean Treasury and accounted for approximately 15.2% of Chiles total exports. See Managements Discussion and Analysis of Financial Condition and Results of Operations- Liquidity and Capital Resources-Distributions to the Chilean Treasury and Regulatory Framework.
Business Strategy
CODELCOs mission is to maximize the value of its mineral resources for the benefit of 1ts shareholder, the Chilean state, by fully developing its vast mining resources on a timely basis, leveraging CODELCOs experienced workforce, utilizing 1ts advanced technological assets in key areas and by executing the following key strategic initiatives: e Capital Expenditure Program. We seek to maintain and improve our competitive position in the industry through our three-year capital expenditure program. CODELCO expects to make capital expenditures of approximately
U.S.$16.3 billion between 2024 and 2026 (current project portfolio and mine development) in addition to U.S.$840 million in its subsidiaries. This includes the acquisition of Lithium Power International in March 2024 for U.S.$244 million, and a 10% stake in Quebrada Blanca for U.S.$520 million, of which, U.S.$182 million was paid in September 2024 and the remaining U.S.$338 million was paid in December 2024. We expect these expenditures to be funded with a combination of internal and external resources. For a complete list of planned capital expenditures, see Business and Properties-Copper Production-Operations. CODELCOs expansion and development of major projects between 2024 and 2026 are expected to include: o The Chuquicamata Underground Project, the gradual transformation of the Chuquicamata mine from an open pit mine to an underground operation. This project considers the exploitation of the mine in three levels. The first level started production in 2019 and comprised an initial investment of approximately U.S.$5.9 billion, and considers additional investments in infrastructure and mine development. The second and third levels are still in early engineering stages.
Within 2024-2026, CODELCO expects an investment of U.S.$800 million on the continuity infrastructure of the first level (Phase I Project – construction progress of 67.2%) and will spend U.S.$434 million in mine development. Plans for the second phase of infrastructure continuity are currently being discussed. The reallocation of a part of the Andina concentrator plant, which involves maintaining the treatment capacity of the plant using two production lines has an overall progress 0f 99.8% as of September 30, 2024. The project’s Line 1 started production in 2021, and Line 2 started production in 2024. Only minor works remain outstanding for the projects completion.
o The development of a new production level in the existing El Teniente underground mine (an approximate Investment of U.S.$2.33 billion between 2024 and 2026) to maintain El Teniente?s annual copper production at its current level. The new mining level has been divided into three separate projects: (1) Andes Norte, (11) Diamante, and (111) Andesita. As of September 30, 2024, completion progress at the Andes Norte, Diamante and Andesita works was 60.0%, 46.2% and 57.6%, respectively.
o The development of the Inca Pit project is designed to extend the production of the Salvador Division, and requires an approximate investment of U.S.$1.17 billion between 2024 and 2026. As of December 2024, although some works remain pending, construction of key infrastructure, equipment commissioning, and a unified system for processing 15,000 tons daily is fully complete and production has begun.
o Radomiro Tomic expects the completion of the feasibility stage of 1ts new sulfide operation and concentrator plant, and the start of the execution of this project (an approximate investment of U.S.$472 million between 2024 and 2026).
Focus on curbing production costs. For many years, CODELCO was within the first or second quartiles in the Industry with respect to costs. This position was primarily attributable to the quality of its ore bodies, 1ts economies of scale and the experience of its workforce and management. Currently, CODELCO is in the third quartile of the Industry?s cost curve. The Company intends to make every effort, through investment and management, to be within the first or second quartiles of the industry?s cost curve in the long-term. In 2023, CODELCO”s total costs and expenses increased by 24.2 cents per pound (7.8%) to 335.1 cents per pound, compared to 310.9 cents per pound in 2022 and 254.3 cents per pound in 2021, mainly due to lower copper production volume, higher operating costs, and the foreign exchange rate appreciation of the Chilean peso against the U.S. dollar. For the first nine months of 2024, CODELCOSs total costs and expenses increased by 9.6 cents per pound (2.6%) to 373.2 cents per pound, compared to 363.6 cents per pound for the same period in 2023, mainly due to lower production, partially offset by foreign exchange rate depreciation of the Chilean peso against the U.S. dollar, and a slightly decreased of the operating costs.
In [2023, CODELCOS*s total costs and expenses increased to U.S.$10.7 billion, compared to U.S.$9.9 billion in 2022, and to U.S.$9.1 billion in 2021, mainly due to higher labor and third-party services costs as a consequence of the foreign exchange rate appreciation of the Chilean peso against the U.S. dollar for 2023 compared to 2022 and due to lower production. and higher input prices and depreciation of the Chilean peso against the U.S. dollar for 2022 compared to 2021.
For the first nine months of 2024, CODELCOS*s total costs and expenses amounted to U.S.$7.5 billion, compared to
U.S.$7.7 billion for the same period in 2023, primarily due to lower operating costs, partially offset by increased expenses for bonuses resulting from the negotiation of 25 collective bargaining agreements in 2024. In 2023, CODELCOSs cash cost of production was 203.1 cents per pound, compared to 165.4 cents per pound in 2022 and
132.7 cents per pound in 2021.
For the first nine months of 2024, CODELCO”s cash cost of production was 205.0 cents per pound, compared to
204.5 cents per pound for the same period in 2023 primarily due to lower production, compounded by reduced by- product credits resulting from decreased molybdenum prices and lower sales volumes. In 2023, CODELCOSS total cash cost was U.S.$5.8 billion, compared to U.S.$5.2 billion in 2022 and U.S.$4.7 billion in 2021.
e For the first nine months of 2024, CODELCOS*s total cash cost was U.S.$4.1 billion, as compared to U.S.$4.3 billion for the same period in 2023 (such total cash cost includes certain cash cost incurred at the corporate level). See Managements Discussion and Analysis of Financial Condition and Results of Operations-Overview.
e Improvement in Operations. A number of improvement initiatives are underway to adopt best industry practices, most notably in the areas of labor productivity, asset utilization rates and process efficiency. Together with 1ts capital expenditure program, these initiatives are expected to enhance CODELCOs competitive position. The Company operates in a cyclical business and CODELCOS”s strategy 1s to ensure that 1t is able to take full advantage of high copper prices. The Company 1s developing a number of plans to achieve production targets in the coming years.
These plans mainly focus on reducing the risk of disruptions to production and providing increased flexibility to 1ts operations.
e Exploration Efforts. CODELCO controls the largest copper reserves worldwide, the Company*s single most important long-term competitive advantage. The discovery of new mining resources and improving its ability to locate existing ore bodies and prospects are critical to maintain this preeminent position in the industry. Accordingly, the Companys exploration program will continue to be a key part of its business strategy.
e Investment in Human Capital. The successful execution of CODELCOs business strategy relies on attracting and retaining a world-class management team and professionals of the highest caliber, as well as promoting a culture of diversity and inclusion. The mining industry faces increased competition for workforce talent. As a result, the Company intends to continue improving career development opportunities for its staff and the overall attractiveness of CODELCO as a preferred employer.
e Mining Association with Third Parties. CODELCO seeks to continue to develop and operate assets in association with third parties where these associations will add value to CODELCOs business. A few examples of the Companys willingness and ability to do so are: (1) the association with Freeport-McMoRan Inc. in the El Abra copper mine (CODELCO owns 49.0%), (11) the association with Anglo American plc (Anglo American), Mitsui $ Co., Ltd. (Mitsui) and Mitsubishi Corporation (Mitsubishi Corporation) in Anglo American Sur (CODELCO owns an indirect 20.0% interest), (111) the association with Teck Resources, Sumitomo Metal Mining and Sumitomo Corporation in Compañía Minera Teck Quebrada Blanca S.A. (CODELCO owns 10.0%), and (1v) the association with Sociedad Química y Minera de Chile (SQM) in the new lithium joint venture in Salar de Atacama (CODELCO will control 50% plus one share of the new venture once the specific conditions are fulfilled) CODELCO believes 1ts large mining reserve 1s a strong platform from which to establish such associations. CODELCO may expand mining associations with third parties where 1t helps to optimize the operation of their respective mines.
e Sustainability is an integral part of our strategy. CODELCO has set sustainability targets, which 1t hopes to reach by December 2030, and include: (1) 70.0% reduction of greenhouse gas emissions from 2019 levels; (11) 60.0% reduction of unitary continental water consumption from 2019 levels; (111) recycling 65.0% of industrial waste; (1v) implementation of online monitoring and infiltration control systems to all tailing storage facilities; (v) 60.0% increase of goods and services provided by local suppliers from 2019 levels; and (v1) 25.0% reduction of particulate matter emissions from 2019 levels.
Recent Developments
New Role of CODELCO related to Lithium
On April 20, 2023 the Government of Chile announced the National Lithium Strategy (the Lithium Strategy), which seeks to transform Chile into a world leading lithium producer. The main measures announced include: e Creation of a National Lithium Company (Empresa Nacional del Litio): This company will be 100% state- owned and will be created with the purpose of increasing the wealth of the country, to develop a sustainable industry for the country and the world as well as developing technology and productive chains, among others. The bill for the creation of the National Lithium Company has not been submitted to Congress.
Creation of the CORFO Committee for Productive Transformation (Comité CORFO de Transformación Productiva): This committee will be led by the Ministry of Mining, and its purpose will be to promote productive transformation through scientific-technological and industrial development policies.
Public-private collaboration: Until the creation of the National Lithium Company, the state-owned mining companies, CODELCO and ENAMTÍ, shall play an initial role as representatives of the Government of Chile in the exploitation and exploration of lithium. Notwithstanding, to this date, the government of Chile has not submitted a bill for the creation ofthe National Lithium Company for discussion at the Chilean Congress, and the Government of Chile is seeking to enhance alliances with the private sector, such as the CODELCO and Sociedad Química y Minera de Chile S.A. Partnership Agreement, referred in the paragraph below – New Public-Private Partnership between CODELCO and Sociedad Química y Minera de Chile S.A..
Incorporation of the Government of Chile into the productive activity of the Atacama Salt Flat: CODELCO has been entrusted with assessing alternatives to accomplish the state of Chile*s participation in the exploitation of lithium in the Atacama Salt Flat (Chiles largest lithium deposit) in anticipation of the expiration of the lease agreements currently in force between CORFO and Sociedad Química y Minera de Chile S.A., which allow the exploitation of the lithium located in the Atacama Salt Flat, until 2030. The Government of Chile announced that the lease agreements currently in force will be fully honored, so involvement of the state of Chile in exploiting lithium in the Atacama Salt Flat before the termination of those lease agreements, would be by virtue of a negotiated agreement with Sociedad Química y Minera de Chile S.A. The first step for the subscription of such agreement was announced on December 27, 2023, and consists of a memorandum of understanding executed by CODELCO and Sociedad Química y Minera de Chile S.A. through which both parties agreed on the main terms to negotiate an association to explore, exploit and commercialize lithium and other substances available in the Atacama Salt Flat, that would commence in 2025. The association agreement was executed on May 31, 2024, although its effectiveness 1s subject to certain conditions precedent, which are expected to be fulfilled during 2025.
Creation of protected salt flats and ensuring low environmental impact technologies: In line with the obligations established in the Convention on Biological Diversity, ratified by Chile in 1994, the Lithium Strategy contemplates the creation of a network of protected salt flats to safeguard ecologic sustainability, which objective 1s to have at least 30% of salt flats protected by 2030. Also, the Lithium Strategy seeks to promote the use of new technologies for lithium extraction that minimize environmental impact on salt flats.
Creation of the Public Research and Technological Institute of Lithium and Salt Flat (Instituto Tecnológico y de Investigación Público del Litio y Salares): This institute was incorporated in June 2024, and is expected to be located in the Atacama and Antofagasta Regions, with the aim of collaborating in the development of more sustainable technologies in the extraction of lithium, promoting the conservation of salt flats through biodiversity research.
Within the measures to implement the Lithium Strategy, the Government of Chile mandated CODELCO to support CORFO (Corporación de Fomento de la Producción) for the development of lithium on the Atacama Salar.
On May 19, 2023, CODELCO established two subsidiaries for these purposes: Salares de Chile SpA (Salares de Chile), which 1s set to streamline and consolidate the lithium-related activities of CODELCOs companies, and Minera Tarar SpA (Minera Tarar) which is planned to be exclusively focused on operations within the Atacama Salar and with SQM.
On May 22, 2023, CORFO officially formalized the role of CODELCO as Chiles representative in the negotiation and definition of future contracts with companies interested in the lithium industry in the country starting in
Also as part of the Lithium Strategy, the Government of Chile mandated CODELCO to find the best alternative to enable the development of lithium projects in the Maricunga salt flat. In accordance with such mandate, on October
17, 2023, CODELCO reached an agreement to acquire 100% of Lithium Power International (LPI) shares for approximately U.S.$244 million equivalent (AUS 385 million). LPI owned the Salar Blanco project in the Maricunga salt flat, which 1s adjacent to CODELCOs property. In March 2024, CODELCO successfully closed the acquisition of LPI through its wholly-owned subsidiary Salar de Maricunga SpA, following approvals from authorities, reinforcing its lithium strategy to become a leading supplier of critical minerals.
New Public-Private Partnership between CODELCO and Sociedad Química y Minera de Chile S.A.
On December 27, 2023, CODELCO and Sociedad Química y Minera de Chile S.A. (SQM) announced the execution of a memorandum of understanding setting forth the bases to negotiate a public-private partnership that would commence in 2025 (the Memorandum of Understanding and the SQM Partnership Agreement, respectively). This announcement is aligned with the mandates of the Chilean government and CORFO to secure state participation in mineral exploitation. The SOM Partnership Agreement was executed on May 31, 2024, although its effectiveness 1s subject to certain conditions precedent, which are expected to be fulfilled during 2025. The SQM Partnership Agreement establishes in detail all the steps, stages, rights, obligations, terms, and conditions of the public-private partnership that will take responsibility for production of refined lithium from the Atacama Salt Flat from 2025 to 2060. The partnership, composed of CODELCO through its subsidiary Minera Tarar, and SQM through SQM Salar, will become effective once all the legal, regulatory, technical, and environmental requirements and the respective indigenous consultation process have been fulfilled, all of which are planned to be completed in the first months of 2025. This new joint venture, which will be majority-owned by the Chilean state, is also expected to allow for the transition from contracts with SQM, in effect from January 2025 to December 2030, to new agreements with CODELCOS subsidiary, Minera Tarar, which would be in effect from January 2031 to December 2060. The SQM Partnership Agreement provides that, from January 2025 to December 2030, CODELCO will be entitled to receive a profit corresponding to the benefit from the commercialization of 201,000 tons of lithium carbonate equivalent. From January 2031 to December 2060, each party will receive as economic benefits a pro-rata portion corresponding to 1ts shareholding, which for CODELCO is expected to be 50.00% plus one share. The SQM Partnership Agreement aims to ensure continuous lithium production, aligning with global energy transition goals. The partnership focuses on the Salar Futuro Project (1.e. the exploitation of lithium in the Atacama Salt Flat by virtue of the new agreements in effect from 2031 to 2060) and is expected to incorporate environmental sustainability and technological advancements. CODELCO”s early involvement would allow engagement In project stages and participation in a tripartite board for ecosystem sustainability.
New Public-Private Partnership between CODELCO and a potential partner in Maricunga Salt flat
After the LPI purchase process was completed, a process of integration of geological and hydrogeological information from CODELCO and Minera Salar Blanco S.A. was carried out, which culminated in the update of the conceptual hydrogeological model and the estimation of mineral resources and preliminary lithium reserves of the project.
The execution of a complementary feasibility study of the integrated project is planned to start in 2025.
On May 31, 2024, the partner search process for the Maricunga Salt Flat was launched. This process 1s being developed in parallel to the activities required by the project in 1ts environmental, community, exploratory and technical aspects. The partner selection process is expected to be completed during the first months of 2025. Subsequently, regulatory authorizations from the antitrust authorities in Chile and other countries around the world may be required in order to develop this project.
Acquisition of ENAMI”s 10% Stake in Quebrada Blanca
On September 5, 2024, with the unanimous agreement of its board of directors, CODELCO completed the purchase of 10% of Quebrada Blanca, an asset owned by the ENAMI (Empresa Nacional de Minería or National Mining Enterprise). The agreement involved the immediate acquisition of the shares against the disbursement of U.S.$520 million in two payments, the first of which in an amount of U.S.$182 million was paid upon signing of the sale agreement, while the remaining U.S.$338 million was paid in December 2024, following the completion and fulfillment of certain conditions.
Quebrada Blanca 1s a mega copper deposit, with a resource base of 10 billion tons, with a grade of 0.38% Cu and opportunities for future growth. In full operation of 1ts second phase, 1t will be positioned among the 20 operations with the highest copper production in the world and at national level 1t will be ranked as the sixth producer after Escondida,
Collahuasi, El Teniente, Radomiro Tomic and Los Pelambres, considering 1ts 2023 production.
Main New Environmental Bills Submitted to the Chilean Congress On January 10, 2024, the Chilean government submitted the following bills to the Chilean Congress:
Bill No. 16552-12. The bill updates the environmental approval system by restricting the powers of political bodies involved in the environmental approval process such as the Committee of Ministers and the Evaluation Commissions and establishes a single mechanism to challenge environmental approvals. It also allows the early participation and voluntary intervention of affected communities in the approval process, strengthens the Strategic Environmental Assessment (EAS by its acronym in Spanish) and, among others, establishes that the State Defense Council (Consejo de Defensa del Estado or CDE) will have legal standing to file a claim for environmental damage.
Bill No. 16566-03. The bill creates a new common framework law on sectorial permits, expedites the approval of a substantial number of non-environmental permits required for the development of projects and activities in regulated areas, and provides increased legal certainty to investors.
Bill No. 16553-12. The bill strengthens the Superintendence of the Environment (Superintendencia del Medioambiente or SMA and improves certain aspects of its operation. Among other matters, 1t enhances the SMAs precautionary powers, and strengthens the incentives for compliance as well as the sanctioning regime.
Main New Environmental Laws
On May 18, 2023, the General Environmental Law was amended by Law No. 21,562, which introduced new requirements and standards for economic activities with environmental impact on saturated or latent environmental areas. Such law also granted additional authority to the Ministry of Environment to take action in order to protect zones with high environmental or health risk due to pollution relating to economic activity.
On September 6, 2023, Law No. 21,600 that Creates the Biodiversity and Protected Areas Service and the National System of Protected Areas (Crea el Servicio de Biodiversidad y Áreas Protegidas y el Sistema Nacional de Áreas Protegidas) was enacted. Among other matters, the new public service will be in charge of the National System of Protected Areas, will manage a National Fund for Biodiversity, and have the power to apply sanctions in case of infringement of this new law. The initiative for this new legislation comes from the recommendations of the OECD (Organization for Economic Co-operation and Development), and the Escazú Agreement, and also to complete the environmental institutional framework in Chile, which currently includes the Environmental Superintendency (Superintendencia del Medio Ambiente) and the Environmental Assessment Service (Servicios de Evaluación Ambiental).
The Water Code was amended by Law No. 21,671, published in the Official Gazette on May 30, 2024, to accelerate the entry into force of the declarations of water shortage zones. Among other changes, it sets forth that the supreme decrees and resolutions issued by the General Water Bureau shall be complied with immediately.
CODELCO Signs Renewable Energy Supply Contracts for 2026-2040
On February 28, 2024, CODELCO executed three power purchase agreements based on renewable energy with the companies Atlas Energía Dos SpA, Colbún S.A., and Innergex Energía Renovable SpA. These contracts will supply energy commencing on January 1, 2026, and ending on December 31, 2040. The agreement with Atlas Energía Dos is for 375 GWh per year, the agreement with Colbún is for 1,100 GWh per year, and the agreement with Innergex Energía Renovable is for 350 GWh per year.
Fatal Accident at Radomiro Tomic Division
On March 8, 2024, a CODELCO worker passed away in a workplace accident while operating an extraction truck at the Radomiro Tomic Division. Activities in the sector were immediately suspended, and the authorities were notified. The pit remained closed for over a month, following standard procedures after a fatal accident, until authorities authorized the resumption of activities. This closure resulted in an estimated production loss of approximately 30,000 tons. Additionally, workers initiated a strike demanding enhanced safety measures. The strike ended after 48 hours upon reaching an agreement with the Company, in which CODELCO committed to implementing and fulfilling a series of concrete actions to improve the safety of workers at the Radomiro Tomic Division. An investigation has been initiated to determine the cause of the accident.
CODELCO Secures Climate Finance Deal
On June 28, 2024, CODELCO entered into a climate finance loan for U.S.$532 million, granted by Crédit Agricole CIB and guaranteed by the World Banks Multilateral Investment Guarantee Agency (MIGA). This financing will fund CODELCO”s plan to fully decarbonize its energy matrix by 2030. The plan includes the renewal of power purchase agreements with renewable sources. With CODELCO consuming around 9% of Chiles total energy, this shift 1s critical in reducing greenhouse gas emissions and supporting a sustainable future for the country. Since 2018, CODELCO has signed major agreements with providers like Engie, Colbún, AES Andes, and others to steadily increase 1ts use of renewable energy. Full decarbonization of its energy purchase 1s expected by 2030.
CODELCO Reached Contract Agreements with Twenty-Five Labor Unions
In 2024, CODELCO successfully entered into 25 collective bargaining agreements. These new agreements, each valid for 36 months, encompass 12,408 employees, representing 79% of the total workforce. The following labor unions were involved: (1) Sindicato Supervisores at Chuquicamata Division, (11) Sindicato Trabajadores at Radomiro Tomic Division, (111) Sindicato Adm. Planta at Radomiro Tomic Division, (1v) Sindicato Trabajadores at Casa Matriz, (v) Sindicato Profesionales at Ministro Hales Division, (vi) SIIL y SUT at Andina Division, (vii) SUPLANT at Andina Division, (vi11) SISAN at Andina Division, (1x) Sindicato N6 at Salvador Division, (x) Sindicato Profesionales at Gabriela Mistral Division, (x1) Sindicato N*5, (x11) Caletones, (x111) Sewell, (x1v) El Teniente, (xv) N*7 at El Teniente Division, (xv1) Sindicato N*2 at Salvador Division, (xv11) Sindicato Operadores at Ministro Hales Division, (xv111) Sindicato N?l, N*2, N*5, Chuquicamata and Minero at Chuquicamta Division and (x1x) Sindicato de Supervisores SISPEL at Salvador Division.
CODELCO Entered into U.S.$400 Million Short-Term Export Exchange Contracts
In December 2024, CODELCO entered into five three-month advance on export exchange contracts (ACCs), totaling U.S.$400 million, each ACC with Banco de Crédito e Inversiones (BCI), Banco de Chile, Scotiabank Chile, Banco Santander-Chile, and Banco Itaú Chile. The ACCs will mature in March 2025.
Management Developments
On January 26, 2024, CODELCO announced the appointment of Braim Chiple Cendegui as Vice President of Sales, effective on March 15, 2024, replacing Cristóbal Fuenzalida who was Acting Vice President of Sales since December 1, 2023.
On April 1, 2024, CODELCO announced the appointment of Gabriel Méndez Serqueira as Vice President of Corporate Affairs and Sustainability, effective on April 22, 2024, replacing Patricia Provoste who was Acting Vice President of Corporate Affairs and Sustainability since November 01, 2023.
On May 30, 2024, CODELCO announced the resignation of Christian Caviedes as General Manager of Chuquicamata Division, effective on May 31, 2024, and appointed René Galleguillos as interim General Manager effective the same day. On July 22, 2024, René Galleguillos was confirmed as General Manager of Chuquicamata Division, effective on July 23, 2024.
Corporate Information
CODELCOSs principal executive offices are located at Huérfanos 1270, Santiago, Chile, postal code 8340424 and its telephone number is (562) 2690-3000. CODELCO was established by Decree Law No. 1,350, published in the Official Gazette on February 28, 1976, as amended by Law No. 20,392, published in the Official Gazette on November 14,
2009.
Issue Price
Issue Date
Interest…..
The Offering
Maturity Date …….oocccccccnccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnninnss
AN
Corporación Nacional del Cobre de Chile.
2035 notes: U.S.5750,000,000 aggregate principal amount of 6.330% notes due 2035.
2055 notes: U.S.$$750,000,000 aggregate principal amount of 6.780% notes due 2055.
2035 notes: 99.963%, plus accrued interest, 1f any, from January 13, 2025.
2055 notes: 99.962%, plus accrued interest, 1f any, from January 13, 2025.
January 13, 2025.
2035 notes: 6.330% per year. The interest on the notes will be payable semi-annually in arrears on January 13 and July 13 of each year, beginning on July 13, 2025.
2055 notes: 6.780% per year. The interest on the notes will be payable semi-annually in arrears on January 13 and July 13 of each year, beginning on July 13, 2025.
Interest on the notes will be calculated on the basis of a 360-day year of twelve 30-day months. See Description of Notes.
2035 notes: January 13, 2035.
2055 notes: January 13, 2055.
Interest will be paid after withholding for or on account of certain taxes imposed by Chile. Under current Chilean law and regulations, payments of interest to holders of the notes that are not residents of Chile for purposes of Chilean taxation will generally be subject to Chilean withholding tax at a rate of 4.0%. Subject to specified exceptions and limitations, CODELCO will pay Additional Amounts (as defined in Description of Notes- Payment of Additional Amounts) in respect of such withholding tax on interest payments. See Description of Notes-Payment of Additional Amounts and Taxation-Chilean Taxation.
10
Tax Redempti0W …..oocccccncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss Each series of notes are redeemable at the option of CODELCO in whole, but not in part, at any time at the principal amount thereof, plus accrued and unpaid interest and any Additional Amounts due thereon 1f, as a result of changes in the laws or regulations affecting Chilean taxation that is announced or becomes effective on or after the date of the agreement to purchase the notes, CODELCO becomes obligated to pay Additional Amounts on interest payments on the notes in respect of withholding or deduction of Chilean tax at a rate in excess of 4.0%. See Description of Notes-Tax Redemption, Taxation-Chilean Taxation and Risk Factors-Risks Relating to the Offering.
Optional Redempti0N …….oocccccncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 2035 notes: We may redeem the 2035 notes at our option, in whole or in part, at any time and from time to time prior to the date that is three months prior to the maturity date of the 2035 notes, at a redemption price equal to the greater of 100% of the outstanding principal amount of the 2035 notes to be redeemed and a redemption price based on a make-whole premium, plus accrued and unpaid interest to the date of redemption. In addition, we may redeem the 2035 notes at our option, in whole or in part, at any time and from time to time, beginning on the date that is three months prior to the maturity date of the 2035 notes, at a redemption price equal to 100% of the outstanding principal amount of the 2035 notes to be redeemed, plus accrued and unpaid interest to the date of redemption.
2055 notes: We may redeem the 2055 notes at our option, in whole or in part, at any time and from time to time prior to the date that 1s six months prior to the maturity date of the 2055 notes, at a redemption price equal to the greater of 100% of the outstanding principal amount of the 2055 notes to be redeemed and a redemption price based on a make-whole premium, plus accrued and unpaid interest to the date of redemption. In addition, we may redeem the 2055 notes at our option, in whole or in part, at any time and from time to time, beginning on the date that 1s six months prior to the maturity date of the 2055 notes, at a redemption price equal to 100% of the outstanding principal amount of the 2055 notes to be redeemed, plus accrued and unpaid interest to the date of redemption.
See Description of Notes-Optional Redemption and Risk Factors-Risks Relating to the Offering.
11
Form and Denominati0N……cocccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnninnninos Each series of notes will be issued in book-entry form only in denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.
Each series of notes will be represented by one or more global notes (the Global Notes) registered in the name of a nominee of DTC, as depositary, for the accounts of its direct and indirect participants, including Euroclear, as operator of the Euroclear system, and Clearstream. See Description of Notes.
Payments; Transfers ……ooocccccncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos Payment of interest and principal amount with respect to interests in Global Notes will be credited by DTC, Euroclear or Clearstream, as the case may be, to the account of the holders of such interests with DTC, Euroclear or Clearstream, as the case may be. Transfers of interests in notes held through DTC, Euroclear or Clearstream will be conducted in accordance with the rules and operating procedures of the relevant system. There will be a paying agent.
RankIOg ….ccccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnninos The notes will constitute direct, general, unconditional and unsubordinated obligations of CODELCO. The notes rank and will rank without any preference among themselves and equally with all other unsubordinated obligations of CODELCO, other than certain obligations granted preferential treatment pursuant to Chilean law. It is understood that this provision will not be construed so as to require CODELCO to make payments under the notes ratably with payments being made under any other obligations.
The indenture governing each series of notes will not contain any restrictions on the amount of additional indebtedness which may be incurred by CODELCO or its subsidiaries; however, as set forth under Description of Notes-Covenants- Limitation on Liens, each series of notes will contain certain restrictions on the ability of CODELCO and its subsidiaries to incur secured indebtedness. See Description of Notes.
Certain COVEeNAanNÍS …ococcccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos The indenture governing each series of notes will contain certain covenants, including, but not limited to, covenants with respect to (1) limitations on liens,
(11) limitations on sale-and-lease-back transactions and (111) limitations regarding consolidation, merger, conveyance, sale or lease transactions. See Description of Notes-Covenants-Limitation on Liens, -Limitation on Sale-and-Lease-Back Transactions and -Consolidation, Merger, Conveyance, Sale or Lease.
12
Transfer RestriCtiONS …….oooccccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnininnss The notes have not been and will not be registered under the Securities Act and are subject to restrictions on resales. See Transfer Restrictions.
Further ISSUES ……ocooocccnnoccnnnccnnnccnonocnnnoccnnnccnonccnonocnnnorcnnnrononicnnnos In accordance with the terms of the indenture, CODELCO may issue additional notes of the same series as the notes offered hereby at a future date.
See Description of Notes-Further Issues of Notes. Each series of notes offered hereby and any additional notes of the same series will be treated as a single fungible series for all purposes under the indenture.
LISTIOY ..ooocccncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos We intend to apply to list the notes on the Official List of the Luxembourg Stock Exchange and for trading on the Euro MTF market of the Luxembourg Stock Exchange.
Governing Law; Submission to Jurisdicti0N ……….occccccnnnnnnnnnns. Each series of notes and the indenture will be governed by the laws of the State of New York.
CODELCO will submit to the jurisdiction of the United States federal and state courts located in the Borough of Manhattan in the City of New York in respect of any action arising out of or based on the notes or the indenture. See Description of Notes- Governing Law; Submission to Jurisdiction; Sovereign Immunity.
Use Of ProceedS ….ooooooooocoonooocnnnononononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnonnnnnnnnnos We intend to use the net proceeds from the sale of the 2035 notes and the 2055 notes, in each case, for general corporate purposes.
Trustee, Paying Agent, Transfer Agent and Registrar…………… The Bank of New York Mellon Risk Factors ……..oococcccnccncnnnnnnnnnnnnnnnnonononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos Before investing, you should carefully consider the risks set forth under Risk Factors beginning on page 20 of this offering memorandum.
13
CN
The notes will be assigned the following securities codes:
2035 notes:
144A:
CUSIP: 21987B BL1 ISIN: US21987BBL18
Regulation S:
CUSIP: P3143N BVS5 ISIN: USP3143NBV57
2055 notes:
144A:
CUSIP: 21987B BM9 ISIN: US21987BBM90
Regulation S:
CUSIP: P3143N BW3 ISIN: USP3143NBWS31
14
SUMMARY CONSOLIDATED FINANCIAL DATA
The following tables present CODELCOs summary consolidated financial data and other data as of and for each of the periods indicated. This data (other than the average London Metal Exchange (LME) copper prices) 1s derived from, and should be read together with, CODELCOs Consolidated Financial Statements, including the notes thereto, included elsewhere in this offering memorandum. This data should also be read together with Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Consolidated Financial Statements and other financial information included in this offering memorandum are presented in accordance with IFRS. The unaudited results of operations for the nine-month periods ended September 30, 2023 and 2024 are not necessarily indicative of the results to be expected for the full year or any other period.
For the nine-month period ended
For the year ended December 31, September 30,
2021 2022 2023 2023 2024 (in thousands of U.S.S$)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
ReVenUO ooooccccnnnnnnnnnnononononcccnnnnnnnnnnnnnonaninccncnonoss 21,024,815 17,018,409 16,393,229 12,218,396 12,314,933 Costof sales canooiconconiconococanananananccanccanccnnnos (12,185,688) (12,284,652) (13,273,343) (9,898,852) (9,231,435) GTOSS PO lb oooooooooooooooooncnnnnnnnnnnnnnnnnnnnnnnnnnnononnnnss 8,839,127 4,133,757 3,119,886 2,319,544 3,083,498 Other INCOME c.oooconocnnccnnnccnnccnncconoconoconocononcnnccnn 115,741 64,731 93,039 64,581 62,802 Impairment losses andor reversal of impairment (1,250) (2,648) 2,279 1,598 (663) losses determined in accordance with IFRS 9 DistributiON COSS…..oooooonnccnncnnnnnnnnnnnnnononocccnonoss (9,389) (17,151) (25,497) (16,235) (17,158) Administrative eXpenSeS…..ooooooocccncncncnnnncnnnonoss (459,278) (502,313) (544,162) (392,994) (370,181) Other expenses, by function aooocononicnc……. (2,717,007) (2,103,316) (2,062,806) (1,476,620) (1,752,316) Other galdS …ooooooonooooooonnnonnnnnnnnnnnnnnnnnnnnnnnnnononoss 37,531 29,782 43,046 23,212 33,814 Finance INCOME coocooccnncconccnnncnnnccnnoconoconiconiconoss 13,657 47,245 99.051 69,700 104,935 Finance COSÉS ..cccccconcnnnonoocccncnnnnnnnnnnnnnnoninocncnnnass (641,009) (569,060) (778,910) (570,413) (686,020) Share of profit of associates and joint ventures 414,845 51,991 (658,118) (134,279) 84,429 accounted for using equity method ………………
Foreign exchange differences………cccccccccccnnnns 313,736 (237,777) (44,963) 36,354 69,104 Profit (loss) before taX ……..ooccccccccccccccncnonininonss 5,906,704 1,495,241 (757,155) (75,552) 612,244 Income tax expenseb ccccncocicniccnicinininncnnnonnos (3,855,336) (1,133,670) 165,916 94,064 (384,832) IProfit (loss) for the period ………..cccccccccnccncnnns 2,051,368 361,571 (591,239) 18,512 227,412 Profit (loss) attributable to owners of the
PAOdcooccccccaaaaanananno nono nono nono nono nana anna nn nano 1,942,486 345,589 (374,974) (135,597) 265,384 Profit (loss) attributable to non-controllin
IDO enn nnnnnnnrnrnnnnnnnnnnnnnnnnnnnnnnccnnnnnnss : bonnno 108,882 15,982 (216,265) 4D 16,958 Profit (loss) for the period …..ccononncocoooocccncnccccnonnn 2,051,368 361,571 (591,239) 18,512 227,412
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of December 31, 2021 2022 2023 (in thousands of U.S.S)
As of September 30, 2024
Total current assetS …….occcccnncccnnnnioccnnnnnnos. 7,801,909 6,794,843 7,289,281 7,089,642 Total property, plant and equipment (*?… 30,811,432 32,715,373 35,013,327 37,410,944 Investments accounted for using equity 3,546,011 3,527,323
Method cncconcccnnococinocccconcnononaninonaninnno 2,866,698 2,951,195 Non-current recelvables…………..o..cc…….. 104,177 88,906 71,272 78,689 All other assetsÚO oncccnnccononccononaccconnnon 793,906 1,610,787 1,635,670 2,117,067 Total assetS……..cccccnnnoccccnnnnnnnicrccnnnonaninocos 43,057,435 44,737,232 46,876,248 49,647,537 Total current liabilities ………………………. 3,938,877 3,920,485 4,383,983 4,767,867 Total non-current liabilities ………………… 27,543,657 29,162,182 31,445,616 33,615,329 Total liabilities……………occoononcccnnnnnnnnncccnss 31,482,534 33,082,667 35,829,599 38,383,196 Non-controlling interests ……………………. 946,412 914,083 696,954 711,196 Equity attributable to owners of the 10,628,489 10,740,482
PATO occocccncccnncnncnnnonano conc nn nono cnncnnanncanono 10,349,695 10,553,145
15
Total equity …..ooooooooooooooonnnnnnnnnnnnnnnnnnnss Total liabilities and equity …………………..
11,574,901
11,654,565
11,046,649 11,264,341
43,057,435
44,737,232
46,876,248 49,647,537
As of and for the nine-month period ended OTHER ITEMS As of and for the year ended December 31, September 30, 2021 2022 2023 2023 2024 (in thousands of U.S.$, except ratios and copper prices)
Depreciation and amortization of assets .. 2,259,324 2,227,284 2,292,126 1,672,275 1,652,710 Interest expense, Met ..oooocccccccccccccncnnnnnonoos: (627,352) (521,815) (679,859) (500,713) (581,085) Ratio of earnings to fixed charges 10.2 3.6 0.9 CAI 0,03 1.9 Average LME copper price (U.S. £ per 422.6 399.0 389.6
POUM) cocccicciconocanuconccananononininncnnnonnos 384.5 414.3 Adjusted EBITDAO Lunconcnninninnnicicncnnnes. 10,378,724 5,565,010 3,570,220 3,115,786 3,893,775 Ratio of debt to Adjusted EBITDAS? …… 1.7 3.0 5.7 N.A. 5.7 Ratio of debt to LTM Adjusted 1.7 3.0 6.4 5.1 EBITDACO unnnnccnccninicinnconncnanonaninanininecns S.7 Adjusted EBITDA coverage ratio(*…….. 16.5 10.7 5.3 6.2 6.7
Cost of sales for any period includes direct and indirect costs, depreciation and amortization associated with the production of copper and
Other expenses 1s comprised principally of costs related to the 10.0% special export tax paid by the Company, retirement plan and severance indemnities and fixed indirect costs below production level. See note 22.b of the Consolidated Financial Statements and Management’s
CODELCO is subject to the new mining royalty tax, which generally comprises an Ad Valorem component which applies a tax rate of 1% on annual copper sales, and a mining margin component which applies progressive tax rates of between 5.0% and 14.0%under Law No. 20,026 (1.e.,
8%-26%) on the adjusted taxable mining operating margin. In addition, a maximum potential tax burden of 46.5% 1s established on the mining entitys operating profitability, measured as the adjusted pre-taxable mining operating income. In addition, CODELCO is subject to the corporate income tax rate of 25.0% since 2017 (pursuant to the tax reform in 2014) and a 40.0% tax on net earnings applicable to state-owned enterprises as specified by Decree Law No. 2,398, Article 2. See Taxation-Chilean Taxation and Managements Discussion and Analysis of Financial Liquidity and Capital Resources-Distributions to the Chilean Treasury for additional information. See note 5 of the Consolidated Financial Statements and Managements Discussion and Analysis of Financial Condition and Results of Operations- Liquidity and Capital Resources-Distributions to the Chilean Treasury and Regulatory Framework. See also Risk Factors-Risks Relating to CODELCOs Relationship with the Government of Chile-CODELCO is subject to special taxes for information regarding the mining tax rate effective in 2016 and information regarding the new Mining Royalty Law, effective as of January 1, 2024,
See note 9 of the Consolidated Financial Statements and the Unaudited Interim Consolidated Financial Statements and Management’s Discussion
All other assets includes other non-current financial assets; other non-current non-financial assets; accounts receivable from related parties, non- current; non-current inventories; intangible assets other than goodwill; investment property; non-current tax assets and deferred tax assets.
For the purpose of calculating CODELCOSs ratio of earnings to fixed charges (adjusted), (1) earnings consist of Adjusted EBIT and (11) fixed charges consist of finance cost. The ratio of earnings to fixed charges (adjusted) 1s calculated by dividing Adjusted EBIT by finance cost.
Adjusted EBIT is calculated by adding finance cost, impairment charges net of reversals (as defined in note (1) of the following table) and income tax expense to profit (loss) for the period. Adjusted EBIT, while not a financial performance measure under IFRS, is presented as an indicator of funds available to service debt. Adjusted EBIT and Adjusted EBITDA data are included in this offering memorandum because such data are used by investors to assess: (1) the operating trends and financial performance of the Company and (11) the ability of the Company to (a) service its existing debt, (b) incur new debt and (c) fund its capital expenditures. The Company believes that Adjusted EBIT, while providing useful information, should not be considered in isolation as a substitute for profit for the period, as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Additionally, the Companys calculation of Adjusted EBIT may be different than the calculation used by other companies and therefore, comparability may be affected. See notes 8, 20 and 23 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
Adjusted EBITDA is calculated by adding finance cost, income tax expense, depreciation and amortization of assets plus export taxes and impairment charges net of reversals (as defined in note (1) of the following table) to profit (loss) for the period. Adjusted EBITDA is presented because 1t is a widely accepted indicator of funds available to service debt, although it is not an IFRS-based measure of liquidity or performance.
Adjusted EBIT and Adjusted EBITDA data are included in this offering memorandum because such data are used by investors to assess: (1) the operating trends and financial performance of the Company and (11) the ability of the Company to (a) service 1ts existing debt, (b) incur new debt and (c) fund 1ts capital expenditures. The Company believes that Adjusted EBITDA, while providing useful information, should not be considered in isolation or as a substitute for profit as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity.
Additionally, the Company*s calculation of Adjusted EBITDA may be different than the calculation used by other companies and therefore, comparability may be affected. See notes 8, 20 and 23 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information about
(1) byproducts, as well as purchase costs of third-party copper, sold by CODELCO in that period.
(2) Discussion and Analysis of Financial Condition and Results of Operations.
(3) Condition and Results of Operations
(4) and Analysis of Financial Condition and Results of Operations.
(5)
(6)
(7) Average price on the LME for Grade A cathode copper during period.
(8) impairment charges and reversals and other non-cash charges.
(9)
The ratio of debt to Adjusted EBITDA is calculated by dividing debt by Adjusted EBITDA. Debt is defined as loans from financial institutions plus bonds issued.
16
(10) The ratio of debt to LTM Adjusted EBITDA is calculated by dividing debt by the last twelve months of Adjusted EBITDA. Debt is defined as loans from financial institutions plus bonds issued.
(11) Adjusted EBITDA coverage ratio 1s the ratio of Adjusted EBITDA to finance cost net of finance income. See note 8 above for further information about Adjusted EBITDA and notes 20 and 23 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
(12) The amounts for property, plant, and equipment in the table above include property, plant and equipment and right-of-use assets.
The following table shows CODELCOs earnings, Adjusted EBIT, ratio of earnings to fixed charges (adjusted),
Adjusted EBITDA and reconciliation of Adjusted EBIT and Adjusted EBITDA for the periods indicated.
For the nine-month period ended
For the year ended December 31, September 30,
2021 2022 2023 2023 2024 (in thousands of U.S.S$)
Profit (loss) for the period ………………..
2,051,368
361,571
18,512
(591,239) 227,412 Income tax OXPONSO coocccccconcccconnnccconnnoos 3,855,336 1,133,670 (165 916) (94,064) 384.832 Finance COSÉS …oooooooococnccnnnnnnnnnnnnnnnnnnnnnos 641,009 569,060 778,910 570,413 686,020 Impairments O aooncniconiconicniconincnncnnnoso – – – – _ Adjusted EBITO Looocononnnoncnnnnnno 6,547,713 2,064,301 21,755 494,861 1,298,264 Ratio of earnings to fixed charges 10.2 3.6 0.9 CA 0.03 1.9 Depreciation and amortization of 2,259,324 2,227,284 1,672,275 1.652.710 ASS noo ccoononocnncccnnnonnnnncconnnnncnnnonóns 2,292,126 A Copper Reserve LawO occccnincc…. 1,571,687 1,273,425 1.256,339 948,650 942,801 Adjusted EBITDA ………ooononnnnnnocnccnno 10,378,724 5,565,010 3,570,220 3,115,786 3,893,775
(1)
(2)
(3)
(4)
(5)
Impairments include charges and reversals related to charges of investment projects, research projects and investment in associates and joint ventures and exclude impairment charges related to definite-lived tangible assets which show indicators of impairment under International Accounting Standard No. 36. See notes 8, 20 and 23 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
Adjusted EBIT is calculated by adding finance cost, impairment charges net of reversals (as defined in note (1) above) and income tax expense to profit (loss) for the period. Adjusted EBIT, while not a financial performance measure under IFRS, is presented as an indicator of funds avallable to service debt. Adjusted EBIT and Adjusted EBITDA data are included in this offering memorandum because such data are used by Investors to assess: (1) the operating trends and financial performance of the Company and (11) the ability of the Company to (a) service its existing debt, (b) incur new debt and (c) fund its capital expenditures. The Company believes that Adjusted EBIT, while providing useful information, should not be considered in isolation as a substitute for profit for the period, as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Additionally, the Companys calculation of Adjusted EBIT may be different than the calculation used by other companies and therefore, comparability may be affected. See notes 8, 20 and 23 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Managements Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
For the purpose of calculating CODELCOS”s ratio of earnings to fixed charges (adjusted), (1) earnings consist of Adjusted EBIT and (11) fixed charges consist of finance cost. The ratio of earnings to fixed charges (adjusted) 1s calculated by dividing Adjusted EBIT by finance cost.
See note 20 of the Consolidated Financial Statements and the Unaudited Interim Consolidated Financial Statements.
The Copper Reserve Law currently requires the payment of a 10.0% special export tax on recelvables of the sales proceeds that CODELCO receives and transfers to Chile from the export of copper and related by products produced by CODELCO. For further information, see Risk Factors- Risks Relating to CODELCOs Relationship with the Government of Chile- CODELCO is subject to special taxes.
17
The following table shows CODELCOs debt and ratio of debt to Adjusted EBITDA and Adjusted EBITDA coverage ratio for the periods indicated.
As of and for the nine-month period
As of and for the year ended December 31, ended September 30,
2021
2022 2023 2023 2024 (in thousands of U.S.S, except ratios)
Det occcconononocononononononononononnnannonnnnnnnncnnnnnns 17,241,500 16,958,377 20,198,102 20,024,987 22,233,216 Ratio of debt to Adjusted EBITDA?……. 3.0 5.7 N.A. 5.7 Ratio of debt to LTM Adjusted 3.0 6.4 EBITDAO concoconionconicnocnoncnnnonrnnonacanonnonns 5.7 5.1 Finance INCOME occooonooooooonnnnnnnnnnnnnnnnnnnononoss 13,657 47,245 99,051 69,700 104,935 Adjusted EBITDA coverage ratio ………. 16.5 10.7 5.3 6.2 6.7
(1) The ratio of debt to Adjusted EBITDA is calculated by dividing debt by Adjusted EBITDA. Debt is defined as loans from financial institutions plus bonds issued.
(2) Ratio of debt to LTM Adjusted EBITDA is calculated by dividing debt by the last twelve months of Adjusted EBITDA. Debt is defined as loans from financial institutions plus bonds issued.
(3) Adjusted EBITDA coverage ratio 1s the ratio of Adjusted EBITDA to finance cost net of finance income.
18
RISK FACTORS
Prospective purchasers of the notes offered hereby should carefully consider all of the other information contained herein, including the risk factors set forth below. As a general matter, investing in the securities of an issuer, substantially all of whose operations are in a developing country such as Chile, involves a higher degree of risk than investing in securities of issuers with substantially all of their operations in the United States and other jurisdictions.
Risks Relating to CODELCOs Operations
CODELCO has in the past recognized significant impairment charges for certain assets and, if market and industry conditions deteriorate, further impatirment charges may be recognized.
A substantial amount of CODELCOS*s total assets are property, plant and equipment. As of December 31, 2023,
73.9% of our total assets were property, plant and equipment. In accordance with IFRS as issued by the IASB, we review the carrying amount of our assets to determine whether there is any indication that those assets have suffered an impairment loss. CODELCO uses the value-in-use methodology to ensure that the recoverable amount of our property, plant and equipment is not impaired. In assessing the value-in-use, the estimated future cash flows are discounted using a pre-tax discount rate that reflects current market assessments at the time value of money and the risks specific to the asset.
In 2022, CODELCO recorded an impairment of the value of the Ventanas Smelter assets in the amount of
U.S.$89.4 million before taxes. In 2023, CODELCO performed an evaluation of the value of its investment in the associate Anglo American Sur and determined that the recoverable amount of the asset 1s less than the carrying value recorded, recognizing an impairment of U.S.$522.4 million, which is recognized under the caption Equity in earnings (losses) of associates and joint ventures accounted for using equity method in the statement of comprehensive income for the year 2023. We may write off capitalized expenses for engineering and other costs for certain projects that do not go forward or certain mining rights that we determine may no longer be commercialized, which we would not expect to have a material effect on the Companys financial results or operating position. Because the impairment calculation 1s directly associated with the outlook of copper prices and operating performance, a downturn in the copper price outlook or a decline in operating performance could require further impairment losses on our plant, property and equipment. Such Impairment charges could be material to our financial statements.
CODELCO*s business is highly dependent upon the price of copper.
CODELCOS*Ss financial performance is significantly affected by the market prices of copper. These prices have been historically subject to wide fluctuations and are affected by numerous factors beyond the control of CODELCO, including international economic and political conditions, levels of supply and demand, the availability and costs of substitutes, inventory levels maintained by producers and others and actions of participants in the commodities markets.
To a lesser extent, copper prices are also subject to the effects of inventory carrying costs and currency exchange rates.
In addition, the market prices of copper have occasionally been subject to rapid short-term changes. See Overview of the Copper Market.
In 2023, copper prices averaged 384.5 cents per pound, a decrease from 399.0 cents per pound in 2022 (which could be attributable to lower growth in China and the stabilization of the economy post pandemic). In 2021, copper prices averaged 422.6 cents per pound. China has been the main driver of copper consumption in recent years, and in 2021, 2022 and 2023, 32.4%, 37.7% and 41.7% respectively, of CODELCOs sales were made to China. If economic conditions deteriorate in China or other emerging markets, demand from customers in those markets could decline and the market price of copper could fall. A decline in copper prices would have an adverse impact on CODELCO*s revenues and financial results. In 2023, each one-cent change in CODELCOs average annual copper price per pound sold caused a variation in revenue of approximately U.S.$31.4 million. If CODELCO’s average annual copper price per pound declines significantly for an extended period of time, CODELCO may, subject to other factors such as operating costs, be required to recognize asset impairments.
In the event of a sustained decline in prices, CODELCO has in the past and could again determine to curtail operations or suspend certain of its mining and processing operations. See Managements Discussion and Analysis of Financial Condition and Results of Operations.
19 CODELCO faces competition in the copper market from other copper producers.
CODELCO faces competition from other copper mining companies and producers of copper around the world.
Although CODELCO continues to focus on reducing costs, there can be no assurance that competition from lower cost producers will not have a material adverse effect on the business, financial condition, results of operations or prospects of CODELCO.
The mining industry has experienced significant consolidation in recent years, including consolidation among some of CODELCOs main competitors, as a result of which an increased percentage of copper production is from companies that also produce other products and are, consequently, more diversified. There can be no assurance that the result of current or further consolidation in the industry will not have a material adverse effect on the business, financial condition, results of operations or prospects of CODELCO.
Most of CODELCOs copper output is dependent upon production from three of its main mining complexes.
Three of CODELCO'”s mining complexes produced over 64.3% of its copper output in 2023 (including CODELCOS”s share in the El Abra deposit and Anglo American Sur). The El Teniente Division, including the Caletones smelter, produced an aggregate 0f£ 351.9 metric tons of copper in 2023. The Radomiro Tomic mine produced an aggregate of 314.8 metric tons of copper and the Chuquicamata mine produced an aggregate of 248.5 metric tons of copper, each during the same period. If operations in any of these three mining complexes were significantly reduced, interrupted or curtailed, CODELCO”s financial condition and its ability to make the required payments on the notes could be materially and adversely affected. CODELCO cannot assure you that production interruptions will not occur or that any such incident would not materially adversely affect 1ts production. See Business and Properties-Operations-Chuquicamata Division, -Radomiro Tomic Division and –El Teniente Division.
The business of mining is subject to risks, some of which are not completely insurable.
The business of mining, smelting and refining copper 1s generally subject to a number of risks and hazards, including industrial accidents, labor disputes, unexpected geological conditions, mine collapses, vandalism, theft, changes in the regulatory environment and pollution, environmental hazards, weather and other natural phenomena, such as earthquakes, fires and floods. Such occurrences could result in damage to, loss of, or destruction of, mineral properties or production facilities, human exposure to pollution (e.g., public exposure to sulfur dioxide emissions), personal injury or death, environmental and natural resource damage, delays in mining, monetary losses and possible legal liability.
CODELCO maintains insurance consistent with copper mining industry standards and in amounts that 1t believes to be adequate, but which may not provide complete coverage in certain circumstances. Insurance against certain risks (including certain liabilities for environmental pollution and other hazards as a result of exploration and production) 1s not generally available to CODELCO or to other companies within the industry.
Under each of CODELCOs copper sales agreements, CODELCO or its customer may suspend or cancel delivery of copper during a period of force majeure. Events of force majeure under the agreements include acts of nature, strikes, fires, floods, wars, transportation delays, governmental actions or other events that are beyond the control of the parties. Any suspension or cancellation of deliveries under copper sales agreements that are not replaced by delivery under new contracts or sales on the spot market could have a material adverse effect on the business, financial condition, results of operations or prospects of CODELCO.
CODELCO’*s water supply could be affected by geological changes or environmental regulations.
CODELCO’s business is dependent on the availability of water for the production of copper and subject to environmental regulations regarding water usage. In the past, Chile has experienced droughts severe enough to adversely affect the energy sector of the economy in the central and southern regions of Chile. CODELCOs access to water may also be impacted by changes in geology or other natural factors that CODELCO cannot control. If Chile were to experience a drought or CODELCO was otherwise unable to obtain adequate water supplies, CODELCOS*s ability to conduct its operations could be impaired according to the latest studies, CODELCO’s operations are located in areas of high water stress, with the exception of El Teniente, which operates in a region with lower levels of scarcity.
On April 6, 2022, Law No. 21,435, which reforms the Water Code was published in the Official Gazette (the
20 Water Code Reform). The Water Code Reform reaffirms that water rights are a public asset, acknowledging the right to access water and sanitation as an essential and inalienable human right. However, water rights granted post Water Code Reform will be limited in time, as the concessions will be granted for 30 years. The concession will be automatically renewed, unless Chiles General Water Bureau sets out that the relevant water right 1s not being used effectively upon 1ts expiration date or that a renewal could affect the sustainability of the water source. Furthermore, the Water Code Reform added the concept of public interest as a requirement for the granting of new water rights. Additionally, the Water Code Reform prioritizes human consumption over other uses; recognizes the constitution of rights for non-extractive uses such as environmental conservation and tourism; restricts the use of certain water use rights in situations of scarcity; and reforms the current regulation of mining waters, among other matters. On July 13, 2023, Law No. 21,586, was enacted to amend Law No. 21,435 by extending the term to register certain water rights set forth therein, and to amend the Water Code to introduce an administrative procedure to clarify and complete titles of water rights.
The Water Code was amended by Law No. 21,671, published in the Official Gazette on May 30, 2024, to accelerate the entry into force of the declarations of water shortage zones. Among other changes, 1t sets forth that the supreme decrees and resolutions on this subject matter issued by the General Water Direction (Dirección General de Aguas) shall be complied with immediately.
Relatedly, with the objective of confronting hydric stress and climate change, and considering the need to regulate the desalination industry, on January 25, 2018, a bill was submitted to Congress. The purpose of the bill 1s to regulate the sustainable development of seawater desalination projects. This is relevant considering that many desalination projects are destined for the mining industry. Currently, the draft bill is in its first constitutional state of discussion in Congress -in an early development stage- and we cannot foresee whether this bill will pass. There are also other bills related to desalination pending in Congress, referring to the obligation of large mining companies to desalinate water for their production processes, or establishing concession systems, among others. This 1s a topic that 1s trending, since, according to information from the Chilean Copper Commission (COCHILCO), it 1s expected that by 2034, 69.8% of the water supply for copper mining in Chile will come from the sea.
The enactment of these laws andor other regulatory projects related to water resources currently under discussion in the Chilean Congress may negatively affect CODELCOs water supply.
Also, CODELCOS”s activities are subject to compliance with obligations, measures and conditions set forth in several environmental authorizations (Resoluciones de Calificación Ambiental), including those related to water consumption and supply. Environmental authorizations for future expansions or modifications of current activities may set forth stricter limitations to water use and supply. The enactment of these laws andor other regulatory projects related to water resources currently under discussion in Congress may eventually affect CODELCOs water supply, which in turn may have a material adverse effect on CODELCOs financial condition and results of operations.
CODELCO” compliance with environmental, health and safety laws may require increased costs, including capital commitments, and non-compliance may subject it to significant penalties, legal liabilities, and detrimental financial, business and reputational impacts. Additionally, delays in receiving environmental and safety permits or related suspensions could impact project development and have an impact on CODELCOs operations and revenue.
Chile has adopted environmental, health and safety regulations requiring industrial companies operating in Chile, including CODELCO, to undertake programs to reduce, control or eliminate various types of pollutants and to protect natural resources, including water and air, among other requirements. Ifthe Ministerio del Medio Ambiente (the Ministry of the Environment) declares an area to be polluted or potentially polluted, a prevention or decontamination plan is required. Either type of plan may contain measures that may increase the costs of developing new facilities or expanding existing ones in the designated area. Some of the areas where CODELCO operates have been declared polluted. The measures currently included in the prevention or decontamination plans that govern these areas are subject to change and may become more stringent over time. CODELCO must comply with certain air quality environmental regulations regarding particulate matter (PM10 andor MP2.5) and sulfur dioxide (SO2) in the areas surrounding the Potrerillos, Caletones, Ventanas and Chuquicamata smelting plants. The Chuquicamata, Potrerillos and Caletones smelting plants and Ventanas copper refinery have decontamination plans for such pollutants. In addition, in 2023, the environmental authority initiated the review of the Chuquicamata, Potrerillos and Caletones decontamination plans. CODELCO is currently unable to fully assess what may be required of 1t or the cost of compliance with the revised PM10 pollution reduction plans, the SO2 prevention plan or any future changes to the other plans covering the areas where CODELCO operates. As of the date of this offering memorandum, the impact of operating in latent and saturated zones has not been
21 material to CODELCO; however, 1t could have a material effect in the future.
An air emissions standard for smelters was enacted by the Ministry of the Environment in 2013. This standard involves arsenic (As), SO2, PM10 and mercury (Hg) emissions. Since 2013, CODELCOs cost of complying with this standard was U.S.$2.2 billion. The revision of the emission standard was initiated in 2020. Recently, the preliminary draft was published. As of the date of this offering memorandum, El Teniente, Chuquicamata and Salvador smelters meet the requirements of this standard. See Regulatory Framework–Environmental Regulations.
In May 2022, the Ministry of the Environment approved the Preliminary Draft on Emission Standards Applicable to Heavy Motor Vehicles, which aims to reduce the accumulative exposure of the emissions from heavy vehicles.
On July 5, 2024, Supreme Decree No. 50 of 2023 from the Ministry of the Environment was published in the Official Gazette. This decree modifies Supreme Decree No. 55 of 1994 from the Ministry of Transport and Telecommunications, which establishes emission standards applicable to heavy motor vehicles.
Specifically, 1t adds a single article to Supreme Decree No. 55 stating that heavy motor vehicles whose initial registration with the Civil Registry’s Motor Vehicle Registry is requested after the article comes into effect can only circulate in the country 1f they are mechanically capable of meeting the maximum emission levels for carbon monoxide (CO), non-methane hydrocarbons (NMHC), nitrogen oxides (NOx), particulate matter (PM), total hydrocarbons (THC), methane (CH4), ammonia (NH3), particle mass, and particle number (PN).
The regulation outlines the maximum emission levels from the exhaust system, which will be measured, as applicable, using standardized methods defined by the United States Environmental Protection Agency (US-EPA) or through globally harmonized driving cycles for transient or stationary conditions, in accordance with Regulation (EC) No. 595 of 2009 of the European Parliament and Council, concerning the approval of motor vehicles and engines with respect to emissions from heavy vehicles (Euro VI) and access to vehicle repair and maintenance information.
This regulation will take effect 18 months after 1ts publication in the Official Gazette on January 5, 2026.
In February 2023, a water quality standard for the Aconcagua river basin was published in the Official Gazette.
In addition, the authorities are developing water quality standards for other water bodies that CODELCO currently or may in the future discharge into, including the Loa and the Cachapoal rivers. Such standards could require CODELCO to incur additional costs to manage liquid waste discharges.
Environmental, health and safety laws and regulations are complex, change frequently and have tended to become increasingly stringent over time. For example, changes to current environmental laws and regulations, and additional environmental laws and regulations, have been adopted, including mine closure legislation that requires financial guarantees, and have recently been proposed, including green taxes, climate change, environmental crimes and glacier protection laws that could (1) prevent expansion of our operations into certain areas, (11) require us to obtain additional permits and (111) result in increased cost and potential delays. Moreover, certain changes to environmental, health and safety laws and regulations are pending, and other new laws or regulations may be adopted in Chile in the future. In addition, community and environmental activist groups have protested the development of certain mines of our competitors in Chile and may increase demands for socially responsible and environmentally sustainable practices, and their efforts may lead to operational delays and the creation or revision of government regulations and policies with respect to the mining industry in Chile, litigation and increased costs.
Finally, as a result of the Paris Agreement reached during the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change in 2015, a number of governments have pledged Nationally Determined Contributions to control and reduce greenhouse gas emissions. Assuming that the Chilean economy grows at the same rate 1t has grown over the previous ten years, excluding the years of the global financial crisis, and such growth rate 1s sufficient, Chile has committed to reducing its CO2 emissions per GDP unit by 30.0% below 2007 levels by 2030 and, subject to an international monetary grant, reducing its CO2 emission per GDP unit by 2030 until 1t reaches a 35.0% to
45.0% reduction with respect to the 2007 levels. In addition, the Paris Agreement resulted in increased international pressure for the establishment of a global carbon price, and on companies to adopt carbon pricing strategies. In 2019, during the 25th Conference of the Parties to the United Nations Framework Convention on Climate Change in Madrid,
22 the Chilean government announced an update to its Nationally Determined Contribution, which includes the reduction of 1ts CO2 emissions per GDP unit by 45.0% below 2016 levels by 2030.
In June 2022, Law No. 21,455 on climate change was published in the Official Gazette. This law creates a legal framework for the management and implementation of climate change mitigation and adaptation measures, alming to face 1ts challenges and to decrease greenhouse gas emissions, until reaching greenhouse gas emissions neutrality by 2050.
In addition, this law aims to reduce the country?s vulnerability and to increase the level of resilience to the adverse effects of climate change, as a solution to comply with the international commitments assumed by Chile and to ensure access to information on climate change.
Any of these new laws or regulations could result in significant additional environmental compliance costs or delays in expansion projects. As of September 30, 2024, CODELCO had provisions of U.S.$2.4 billion for future decommissioning and site restoration costs, primarily related to tailing dams, closures of mine operations and other mining assets. CODELCO’s operations outside Chile are also subject to extensive international, national and local environmental, health and safety laws and regulations.
Besides the aforementioned laws and regulations, CODELCOs operations are regulated by several environmental authorizations which set forth specific obligations, conditions and measures that have to be fulfilled.
Environmental authorizations for future expansions or modifications of current activities may set forth obligations, conditions and measures that entail increased costs. Failure to comply with the applicable environmental regulations and related obligations, conditions and measures can result in civil, administrative, or criminal fines or sanctions, claims for environmental damages, remediation obligations, the revocation of environmental authorizations or the temporary or permanent closure of facilities.
CODELCOS*s environmental permits may be revoked, annulled or delayed through judicial action brought by interested parties to challenge environmental licenses (recurso de reclamación) or other remedies set forth in general administrative regulations that are frequently used to seek the revocation of granted environmental approvals (solicitud de invalidación).
CODELCO has implemented an ISO 14001 certified environmental management systems at each of its divisions to monitor and achieve compliance with applicable environmental laws and regulations. While CODELCO has budgeted for future capital and operating expenditures to maintain compliance with these laws and regulations, there is no guarantee that current levels of expenditures and capital commitments will be sufficient to achieve future compliance. There also can be no assurance that CODELCO has been or will be at all times in complete compliance with environmental laws and regulations, or that proceedings or civil actions will not be brought, or that fines and other sanctions will not be imposed for such noncompliance in the future. In addition, there can be no assurance that more stringent enforcement of, or changes in, existing laws and regulations, the adoption of additional laws and regulations or the discovery of new facts resulting in increased liabilities would not have a material adverse effect on CODELCOs business, financial condition, results of operations or prospects.
For further information on environmental matters, and current and proposed environmental laws and regulations, see Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Environmental and Regulatory Framework-+Environmental Regulations.
CODELCO” failure to meet investor, consumer or societal expectations related to environmental, social or governance (ESG) matters could adversely affect its reputation, investor opinion and access to new capital.
Sustainability is an integral part of CODELCOS*s strategy. CODELCO has set sustainability targets, which 1t hopes to reach by December 2030, and include (1) 70.0% reduction of greenhouse gas emissions from 2019 levels; (11) reduction in the unit consumption of continental water for sulfides in high water stress basins by 60% compared to 2019 levels; (111) recycling 65.0% of industrial waste; (1v) implementation of online monitoring and infiltration control systems to all tailing storage facilities; (v) 60.0% increase of goods and services provided by local suppliers from 2019 levels; and (vi) 25.0% reduction of particulate matter emissions from 2019 levels. Although CODELCO is committed to reaching such sustainability targets by 2030, not reaching them may affect CODELCO”s reputation, investor opinion and access
23 to new capital.
CODELCO is committed to operating in a socially responsible manner, however our reputation and social license to operate may be affected by our perceived impact on the environment and society in which CODELCO operates, and CODELCO may face opposition from local communities with respect to its ongoing and future projects. Such perception could adversely affect our reputation, investor opinion and access to new capital and thus our results or operations and financial condition.
CODELCO ¡is subject to legal proceedings and legal compliance risks that may adversely impact its financial condition, results of operations and liquidity.
CODELCO spends substantial resources ensuring that 1t complies with local regulations, contractual obligations and other legal standards. Notwithstanding this, CODELCO is subject to a variety of legal proceedings and compliance risks in respect of various matters, including tax, environmental- and labor-related matters that arise in the course of its business and in its industry as well as disputes with governmental agencies. For example, CODELCO is subject to various labor proceedings in which workers and families of deceased workers allege that working conditions caused the workers to contract silicosis. Although CODELCO has undertaken precautionary measures, there have been fatalities involving CODELCO personnel in the past and there may be additional fatalities in the future. Serious accidents, including fatalities, may subject CODELCO to substantial penalties, civil litigation or criminal prosecution. Claims for damages to persons, including claims for bodily injury or loss of life, could result in substantial costs and liabilities, which could materially and adversely affect CODELCOs financial condition, results of operations or cash flows. If CODELCO”s safety record were to substantially deteriorate over time or CODELCO were to suffer substantial penalties or criminal prosecution for violation of health and safety regulations, CODELCOs contracts may be cancelled or it may not be awarded future business. In addition, CODELCO has filed administrative appeals against three decisions issued by the General Comptroller of Chile (the Comptroller) against CODELCO in 2017. CODELCO estimates that these statements have had, as of the date of this offering memorandum, a negative effect in our profits of approximately U.S.$100.0 million. In December 2022, CODELCO and the Comptroller entered into a collaboration agreement aimed at safeguarding probity and transparency in the operations carried out by CODELCO in the market, ending the dispute with the withdrawal of the lawsuit by CODELCO. A negative outcome in an unusual or significant legal proceeding or compliance investigation could also adversely affect our financial condition and results of operations. For information regarding CODELCO’s current significant legal proceedings, see Business and Properties-Comptroller General of the Republic and Business and Properties-Legal Proceedings.
Earthquake damage to CODELCOs properties and operations could negatively affect CODELCO results.
Chile is located in a seismic area that exposes CODELCOs operations to the risk of earthquakes. Chile has been adversely affected by powerful earthquakes in the past, including, most recently, (1) in 2015 when an earthquake struck the coast of Chile, (11) in 2014 when an earthquake struck the north of Chile and (111) in 2010 when a severe earthquake struck the southern central region of Chile. The 2015 earthquake measured 8.3 on the Richter scale and affected the coast of Chile just north of Santiago, with no significant consequences for the rest of the country. The 2014 earthquake measured 8.2 on the Richter scale and affected mainly the Arica and Tarapacá Regions, with no significant consequences for the rest of the country. The 2010 earthquake and its aftershocks, as well as tsunamis from adjacent coastal waters, caused severe damage to Chiles infrastructure, including roads, bridges, ports and Santiagos international airport, affecting areas across the country.
Although the 2015, 2014 and 2010 earthquakes did not have any substantial effect on CODELCO or its results of operations, and although CODELCOs mining operations are subject to, and designed to withstand, damage from significant seismic events, an earthquake occurring closer to CODELCO’s operations in northern Chile could cause damage to its mining operations that would not be covered by insurance, except to the extent that 1ts production ceased for more than 30 days. Any such damages caused by an earthquake that were not covered by insurance could have an adverse effect on CODELCO”s results of financial condition, results of operations or cash flow.
If these and other natural phenomena occur in the future, CODELCO may suffer damage to, or destruction of, properties and equipment, which may negatively affect 1ts business, particularly 1f those problems affect 1ts computer- based data processing, transmission, storage and retrieval systems and destroy valuable data. In addition, if a significant number of its local employees and managers were unavailable in the event of a disaster, CODELCOS*”s ability to effectively
24 conduct business could be severely compromised. An earthquake, or another natural disaster could damage some of CODELCOs mining operations, force 1t to close damaged facilities or locations, increase recovery costs as well as cause economic damage, which in turn may have a material adverse effect on CODELCO”s business.
Future compliance with a changing and complex regulation scheme may require changes in CODELCOs business.
CODELCOS*Ss exploration, mining, milling, smelting and refining activities are also subject to non-environmental Chilean laws and regulations (including certain industry technical standards), which change from time to time. Matters subject to regulation include, but are not limited to, concession fees, transportation, production, reclamation, export, taxation and labor standards.
While CODELCO does not believe that compliance with such laws and regulations will have a material adverse effect on 1ts business, financial condition, results of operations or prospects, there can be no assurance that more stringent enforcement of, or change in, existing laws and regulations, the adoption of additional laws and regulations, including increased government supervision and control over the management of CODELCO'”s business and its awarding of contracts, or the discovery of new facts resulting in increased liabilities or costs would not have a material adverse effect on CODELCOS*s business, financial condition, results of operations or prospects.
CODELCO*s business plans are based on estimates of the volume and grade of CODELCO’*s ore deposits, which could be incorrect.
CODELCO”s ore deposits (its resources and reserves) described in this offering memorandum constitute estimates based on standard evaluation methods generally used in the international mining industry and on assumptions as to production costs and market prices. The actual ore deposits may not conform to geological, metallurgical or other expectations, and the volume and grade of ore recovered may be below the estimated levels. Lower market prices, as well as increased production costs, reduced recovery rates and other factors, may render CODELCOs ore deposits uneconomic to exploit and may result in revision of its reserve and resource estimates from time to time. Reserve and resource data are not indicative of future results of operations. See Business and Properties-Ore Reserves.
CODELCO’*s business requires substantial capital expenditures.
CODELCO’*s business is capital-intensive. Specifically, the exploration and exploitation of copper reserves, mining, smelting and refining costs, the maintenance of machinery and equipment and compliance with applicable laws and regulations require substantial capital expenditures. CODELCO expects to make capital expenditures of approximately U.S.$16.3 billion between 2024 and 2026 (current project portfolio and mine development) in addition to
U.S.$840 million in its subsidiaries. This includes the acquisition of Lithium Power International in March 2024 for
U.S.$244 million, and a 10% stake in Quebrada Blanca for U.S.$520 million, of which U.S.$182 million was paid in September 2024 and the remaining U.S.$338 million was paid in December 2024. See Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Capital Expenditure Program. There can be no assurance that CODELCO will be able to maintain its production levels or generate sufficient cash flow, capitalize a sufficient amount of its profit or have access to sufficient investments, loans or other financing alternatives to finance its capital expenditure program at a level necessary to continue its exploration, exploitation and refining activities at or above its present levels.
CODELCO*s future performance depends on the results of current and future innovation and exploration.
CODELCO has a two-pronged exploration program that is focused on increasing reserves of its existing divisions and exploring for new deposits outside of its current operations. As the ore quality of CODELCOs reserves continues to decline over time, innovation and exploration are increasingly important to CODELCOs success.
CODELCO expects to maintain its production levels through 1ts expansion and development projects for the next three years. See Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Capital Expenditure Program for more detail. While initial results have been favorable, there can be no guarantee that CODELCOs exploration program will continue to be successful. In addition, there may be some degree of execution risk associated with the expansion of operations into deeper mines or mines at higher altitudes.
CODELCOS*s expansion program could also experience delays or be negatively impacted by higher costs. IfHCODELCOs
25 expansion program 1s not successful, 1t would materially and adversely affect 1ts copper production levels. For a description of CODELCOs current development programs, see Business and Properties-Resource Development.
CODELCO has experienced high energy costs and may experience higher energy costs in the future.
Energy represents an important part of CODELCOs production costs. The main sources of energy for CODELCO'”s operations are electricity, liquid fuels (such as diesel, fuel oil and gasoline) and natural gas. With respect to liquid fuels and natural gas, these commodities are subject to price fluctuations as a result of external factors. For example, their cost significantly increased due to the COVID-19 pandemic and the ongoing war in Ukraine. As a result, CODELCOS*s profits and cash flows have been adversely affected and may continue to be adversely affected in the future.
With the purpose of decarbonizing its electricity supply and reducing costs with new technologies, in January 2023, CODELCO launched an electricity supply bidding process focusing on renewable sources to procure approximately 2,500 GWhyear (which represents, approximately, 30% of CODELCOS*s electricity requirements) starting in January 2026. In March 2024, CODELCO successfully concluded the renewable energy public bidding process undertaken in 2023, in which more than 50 national and international companies participated. The bid was awarded to Colbún, Atlas and Innergex, for a total of 1.8 terawatt hours per year (TWhyear), equivalent to the consumption of approximately 222 thousand households. In May 2024, CODELCO and Engie announced modifications to the power purchase agreement signed in 2007 with Central Termoeléctrica Andina (CTA), which currently supplies electricity to the Gabriela Mistral Division and part of Chuquicamata. Under the revised agreement, CODELCO is expected to have the option to transition from CTA’s coal-based energy supply to renewable energy starting January 1, 2026, ahead of the original 2032 timeline.
Thanks to these processes CODELCO is expected to be supplied from 100% renewable sources, thus moving toward achieving its strategic plan goal of decarbonizing its power grid before 2030.
Any interruption or destruction or loss of data in CODELCO”s information technology systems due to technical or operational malfunctions or cyber-attacks could have a material adverse effect on its reputation, business, financial condition and results of operations.
CODELCO is subject to a variety of information technology and system risks as a part of its normal course of operations, including potential breakdown, invasion, virus, cyber-attack, cyber-fraud, security breach, and destruction or interruption of CODELCOS*”s information technology systems by third parties or CODELCOs own personnel. Although CODELCO has security measures and controls in place that are designed to mitigate these risks, a breach of its security measures or a loss of information could occur and result in a loss of material and confidential information, breach of privacy laws and a disruption to its business activities. In addition, information systems could be damaged or interrupted by natural disasters, force majeure events, telecommunications failures, power loss, acts of war or terrorism, computer viruses, malicious code, physical or electronic security breaches, intentional or inadvertent user misuse or error, or similar events or disruptions. Any of these or other events could cause interruptions, delays, loss of critical or sensitive data or similar effects, which could have a material adverse impact on the protection of intellectual property, confidential and proprietary information, and on CODELCO”s business, financial condition and results of operations.
On November 15, 2023 CODELCO experienced a cyberattack in Gabriela Mistral Division, leading to a three-day operational halt. Nevertheless, CODELCO managed manual operations, conducted proactive maintenance, and concurrently recovered the autonomous system. The cybersecurity controls implemented by CODELCO successfully contained the malware, preventing 1ts spread to other operations. Additionally, CODELCO enlisted Unit 42 of Palo Alto, a specialized incident response company based in the United States, for forensic analysis. The forensic analysis process confirmed that the attacker did not breach CODELCO’s network directly but instead exploited a remote access point used for manufacturer support. During the cyberattack response, manufacturer support was restored using a security block featuring advanced remote access technologies and robust perimeter protection. Additionally, other measures recommended by the forensic analysis were implemented, including zero-day anti-malware controls for the Gabriela Mistral Division’s autonomous trucks, which had been pre-validated by the autonomy provider.
CODELCO has not experienced any material economic impact as a result of this cyberattack. However, future cyberattacks could have an adverse effect on our results of operations or financial condition.
Labor disruptions involving CODELCOs employees or the employees of its independent contractors could affect
26 CODELCO*s production levels and costs.
As of December 31, 2023, CODELCO employed 15,673 employees, approximately 93% of whom were covered by collective bargaining agreements with labor unions. Most of these collective bargaining agreements have terms of two to three years. CODELCO has experienced material work slowdowns, work stoppages and strikes in the past. In 2019, CODELCO experienced a 14-day strike involving 3,200 union workers in the Chuquicamata Division (or approximately
67.0% of the total work force). The 14-day strike diminished production by approximately 17,600 metric tons. In 2021, CODELCO experienced a 21-day strike involving two labor unions from the Andina Division and a 24-day strike involving one labor union also from the Andina Division, both of which diminished production by approximately 12,000 metric tons. In 2022, CODELCO experienced a one-day strike involving two labor unions from the Ventanas Division.
In March 2024, following the fatal accident that occurred in the Radomiro Tomic division, that division?s workers went on strike demanding an increase in safety measures. This closure resulted in an estimated production loss of approximately 30,000 tons. The strike ended after 48 hours upon reaching an agreement with the Company, in which CODELCO committed to implement and fulfill a series of concrete actions to improve the safety of workers at the Radomiro Tomic Division. An investigation has been initiated to determine the cause of the accident.
CODELCO negotiated two collective bargaining agreements in 2022. CODELCO negotiated 24 collective bargaining agreements and seven collective bargaining agreements in 2021 and 2020, respectively. In 2024, CODELCO successfully negotiated 25 collective bargaining agreements, most of them before the start of the legal negotiation period as early settlements.
CODELCO has experienced work disruptions in the past, and there can be no assurance that a work slowdown or work stoppage will not occur prior to or upon the expiration of the current collective bargaining agreements.
Management is unable to estimate the effect of any such work slowdown, stoppage or strike on CODELCOs production levels. While none of the strikes described in this risk factor had a material impact in CODELCOS*s results of operations, work slowdowns, stoppages or other labor-related developments affecting CODELCO could have a material adverse effect on the business, financial condition, results of operations or prospects of CODELCO in the future. In particular, work slowdowns, stoppages and other labor-related events could increase CODELCOs independent contracting costs.
In addition, pursuant to the Código del Trabajo (the Labor Code of Chile), CODELCO could be held liable for the payment of labor and social security obligations owed to the employees of independent contractors (or their subcontractors) 1f the independent contractors (or their subcontractors) do not fulfill those payment obligations. For further information on employee and independent contractor matters, including recent work disruptions, see Business and Properties-Employees.
CODELCO is subject to an extensive labor reform law that could affect its business and operating result.
In 2016, the Government of Chile promulgated an extensive labor reform law (the Labor Reform Law), which became effective in 2017. The Labor Reform Law prevents Chilean companies from hiring temporary replacements for striking employees and also prevents the replacement of such employees with other existing workers of the company.
This may have an adverse effect on our overall employment and operating costs, and may increase the likelihood of business disruptions in Chile. However, 1t has not been a practice of CODELCO to replace employees on strike, and there has not been an increase in labor disruptions in Chile since the law became effective.
In addition, under the Labor Reform Law, CODELCO and its labor unions negotiate from time to time the minimum services and emergency teams that the labor unions must provide in case of a strike during a collective bargaining process. Currently, and according to the Labor Reform Law, the following minimum services may be agreed:
(1) services that are strictly necessary to protect the physical assets and premises of the Company and to prevent accidents;
(11) services strictly necessary to guarantee the rendering of all services of public utility, and the attention of the population and basic needs, including those related to life, safety and health; and (111) services strictly necessary to guarantee the prevention of sanitary or environmental damage. If there is any disagreement between CODELCO and its labor unions regarding such minimum services and emergency equipment, the parties may resolve such disagreement through administrative proceedings before the Dirección Regional del Trabajo (Regional Labor Board), which are subject to challenge by the parties before the Director Nacional del Trabajo (National Labor Board).
As of December 31, 2023, CODELCO employed 15,673 employees, approximately 93% of whom were covered by collective bargaining agreements with labor unions. CODELCO currently has positive labor relations with these
27 unions. CODELCO is currently unable to estimate the impact that the Labor Reform Law or similar reforms will have on 1ts labor relations with respect to labor unions, or on its business, financial condition, operating results and prospects.
Recent bills of law on labor and social security matters could affect CODELCOs operations and employee costs.
e Reform to the Pensions Act: In November 2022, the Chilean government proposed a bill to create a new
Combined Pension System and a Social Insurance in the contributory pension component, improve the Guaranteed Universal Pension (GUP) and establish benefits and regulatory amendments.
Currently, the social security system in Chile is composed of: (1) a mandatory contribution of the employees burden, equal to 10.0% of the employees monthly remuneration, which is transferred to the employee*s individual capitalization account with the Pension Fund Administrator (AFP). In case of dependent employees, the employer has the obligation to retain the corresponding sums and transfer them to the respective AFP; (11) a voluntary contribution, that enables employees to voluntarily complement their pension funds; and (111) a welfare contribution or pension aid (pilar solidario), which is a State?s contribution to complement the pension funds of the poorest 60.0% of the population in Chile.
Main topics of the pension reform include: (1) a gradual increase of the GUP from Ch$194,000 (U.S.$200 approximately) to Ch$250,000 (U.S.$257 approximately); (11) a new contribution of the employers charge of 6.0% of the employees gross income, in addition to the aforementioned 10.0% corresponding to the mandatory contribution of the employee*s burden, of which as of July 2024, the government proposed the following distribution regarding the new 6% burden: 1% for an insurance to equalize pensions between men and women, 2% for a contribution that will be reimbursed to the employee upon retirement and 3% to increase savings in the individual account; and (111) the elimination of the AFPs and reorganization of the industry in the contributing pension aid.
The pension reform bill is currently advancing through its legislative process. The Senate has authorized the Labor and Social Security Commission to discuss and vote on the bill in general and in detail. A protocol has been agreed upon between the ministers and senators, setting clear timelines and a methodology for the discussion, with a focus on increasing pension savings, improving the competitiveness of pension funds, and ensuring a fairer distribution of pensions.
It 1s uncertain what the impact of this reform will be on CODELCO because: (1) 1t 1s still under discussion, and thus its final text may vary significantly, and (11) 1f passed into law, in the terms currently under discussion, the bill would have different effective dates, with the most relevant being that corresponding to the 25th month following 1ts publication.
e Reduction of the weekly working schedule: On April 26, 2023, Law No. 21,561 was published in the Official Gazette, introducing changes to the Labor Code of Chile, mainly consisting in the reduction of the weekly working hours from 45 to 40 hours. This 5-hour reduction will enter into force gradually over a five-year period. On April 26, 2024, the ordinary working hours limit was reduced to 44 hours, in 2026 1t will be reduced to 42 and, finally, to 40 hours in 2028.
The impact that this law could have on CODELCOs operations will depend on the applicable type of employee (administrative, miners, etc.), the different workday schemes in place on each labor site and the capacity of CODELCO to maintain productivity levels despite 1ts approval. Additionally, it could also impact CODELCO’s operations and labor-related costs. The uncertainties facing CODELCO with regard to the implementation of this law are similar to those faced by other affected Chilean companies.
e Distribution of Profit Sharing: On September 2, 2021, the Chamber of Deputies of the Chilean Congress approved a bill to change the distribution of profit sharing in companies. According to this bill, companies will have to distribute to their employees between 8.0% to 15.0% of their annual net profits, a percentage that will depend on the amounts invoiced by the company during the respective annual period. The amount payable to each employee annually 1s capped at 20 times the monthly minimum income (MMT). Furthermore, companies will have to make monthly payouts equal to 25.0% of the employee?s monthly remuneration, capped annually at six times the MMI. This monthly payment will be attributable to the annual payment, in case the latter turns out to be higher.
The draft is currently being discussed at the Chilean Congress and has not progressed since 2021. It is possible that the draft could be substantially modified when 1t continues its discussion and approval process, thus 1ts impact on CODELCO is unknown at this time.
28 e New MMI: Pursuant to the provisions of Law No. 21,578, as of July 1, 2024, the MMI was increased to Ch$500,000 (approximately U.S.$538.0). The MMI will be readjusted in January 2025 according to the variation experienced by the CPI between July 1, 2024, and December 31, 2024. An increase in the MMI could lead to an increase in CODELCOSs labor-related costs.
e Karin Act: Effective August 1, 2024, Law 21,643 on prevention, investigations and sanctioning of sexual and labor harassment and workplace violence (unofficially known as the Karin Act), introduced several amendments to the Labor Code of Chile andor new regulations on said matters. Although these changes may not have a direct impact on CODELCOSs costs, they could potentially lead to higher administrative expenses and an increase in litigation or claims.
Recent bills of law on tax matters could affect CODELCOs operations and employees costs.
On August 10, 2023, Law No. 21,591, also known as the Mining Royalty Law, was published in the Official Gazette. This law eliminates the specific mining tax (currently applicable to CODELCO) and establishes a special tax for the establishment of copper mining activities. A maximum tax rate of 46.5% is established over the operational income of the mining producers of over 80,000 metric tons of fine copper per year and a maximum tax rate of 45.5% for mining producers with production of up to 80,000 metric tons of fine copper per year. Part of the funds obtained with this tax will be used for special funds to benefit different and vulnerable communities or communities in which mining activities are performed in Chile. CODELCO’s current mining tax rate 1s 5% and CODELCO expects it to increase to 8% in the coming years. Nonetheless, for CODELCO, there should not be significant impact on free cash flow as higher taxes are expected to lead to lower net income and therefore lower dividend payout. Starting January 1, 2025, under Law No.
21,420 and Law No. 21,649, mining concession holders in Chile must pay annual fees of approximately U.S.$4.5 per hectare for exploration concessions and U.S.$29.9 per hectare for exploitation concessions during the first five years, however, those mining concessions considered to be in productive mining operations may opt to maintain a payment of
U.S.$7.5 per hectare with exploitation fees increasing to U.S.$897.3 per hectare by the 31st year since the law came into effect. Concession holders actively undertaking mining works or involved in projects with environmental approvals may apply for a reduced exploitation fee of U.S.$7.5 per hectare by providing evidence to the National Geology and Mining Service (SNGM). Annual fees are due in March, and failure to pay can result in loss of the concession through auction or the termination of the mining concession through a declaration of open land. Certain exploitation fees may also be credited against income taxes.
On October 24, 2024, Law No. 21,713 was published in the Official Gazette, establishing rules to ensure compliance with tax obligations. The provisions of this law came into effect on November 1, 2024, notwithstanding specific effective dates established by the law for certain provisions. The key aspects of this law, among others, are related to: (1) corporate reorganizations, including the legal recognition of international reorganizations and the requirements for the Chilean Internal Revenue Service power of appraisal not to apply; (11) international taxation, including the strengthening of transfer pricing rules, modifications regarding the relationship rules in the case of provisions associated with controlled foreign corporations, and the substitution of the definition of jurisdictions with a preferential tax regime;
(111) a specific voluntary disclosure program regarding assets and income abroad that were not timely declared or taxed in Chile; (1v) modifications regarding the procedure for requesting information subject to bank secrecy; (v) multiple modifications regarding audit matters, including reporting obligation for digital platforms, the calculation of default interest, audit processes, tax penalties and infractions, among others; (vi) value added tax (VAT), including modifications on VAT regarding digital services and regarding the export VAT request procedure; (vii) multiple modifications regarding the Tax Ombudsman; and (vi11) General Anti Avoidance Rules, maintaining a judicial procedure but including a stage before the Executive Committee, a newly created body responsible for recommending whether or not the General Anti-Avoidance Rule should be applied.
In addition, a bill proposing an income tax reform is expected to be presented by the current Government in January 2025,
CODELCO engages in hedging activity from time to time, particularly with respect to its copper production, which
29 may not be successful and may result in losses to CODELCO.
CODELCO from time to time hedges certain future copper delivery commitments and production in order to manage the risks associated with copper price volatility. CODELCO currently does not have any production hedging commitments. See notes 28 and 29 to the Consolidated Financial Statements.
CODELCO”s production hedging activities could cause 1t to lose the benefit of an increase in copper prices 1f copper prices increase over the level of CODELCOs hedge position, as occurred in 2012. The cash flows from and the mark-to-market values of CODELCO’*s production hedges can be affected by factors such as the market price of copper, copper price volatility and interest rates, which are not under CODELCOs control.
CODELCO”s production hedging agreements contain events of default and termination events that could lead to early close-outs of CODELCOs hedges. These include failure to pay, breach of the agreement, misrepresentation, default under CODELCO*”s loans or other hedging agreements and bankruptcy. In the event of an early termination of CODELCO”s hedging agreements, the cash flows from the affected hedge instruments would cease and CODELCO and the relevant hedge counterparty would settle all of CODELCO”s obligations at that time. In that event, there could be a lump sum payment to be made either to or by CODELCO. The magnitude and direction of such a payment would depend upon, among other things, the characteristics of the particular hedge instruments that were terminated and the market price of copper and copper price volatility and interest rates at the time of termination.
In addition to its production hedging activities, CODELCO has hedged a portion of 1ts exchange rate and interest rate exposure by entering into forward exchange contracts to hedge against fluctuations in the UF to U.S. dollar exchange rate for its outstanding UF-denominated bonds. CODELCO also periodically enters into futures contracts with respect to certain sales of its own copper. No assurance can be given that CODELCO will be adequately protected by 1ts hedging activities.
See Business and Properties-Marketing-Pricing and Hedging, notes 28 and 29 to the Consolidated Financial Statements for further information on CODELCOs hedging activity.
Global economic, political and regulatory developments may adversely affect CODELCO.
Revenue from international sales constitutes a material portion of our total revenue, and we anticipate 1t will continue to for the foreseeable future. This year, the U.S. administration has intensified 1ts trade policies, implementing new tariffs and restrictions, particularly impacting trade with China. Additionally, escalating geopolitical tensions, including the conflict in the Middle East and the conflict in Ukraine and economic sanctions on Russia, have further strained global supply chains. These factors, combined with uncertainties in U.S.-China relations, could disrupt the global economy and negatively affect our revenues. If our revenues generated from international sales decline significantly as a result, 1t could have a material adverse effect on CODELCOs business and results of operations. Additionally, in light of the recently held elections in the U.S. and various international jurisdictions, there is considerable uncertainty regarding reforms of various aspects of existing laws, regulations, and enforcement priorities and strategies that could affect trade policies, labor matters, taxes, and technological advancements, among other areas, and have a material effect on our business and results of operations.
CODELCO*s new role in the lithium industry set by the National Lithium Strategy involves numerous risks, many of which are different to the risks derived from the businesses CODELCO has traditionally engaged in.
CODELCO has been designated as the Republic of Chiles representative and is working with CORFO in the negotiation and definition of future contracts with private companies for the development of lithium production in the Atacama and Maricunga Salt Flats. See Summary-Recent Developments-New Role of CODELCO related to Lithium.
While CODELCO already explores and exploits copper, its new role in, and increased focus on, the lithium Industry could prove difficult to integrate with our other lines of business, resulting in unknown or unforeseen liabilities, disrupt our business, dilute stockholder value and ownership and adversely affect our operating results and financial condition.
30 Being one of Chiles agents for the development of the countrys lithium industry involves numerous risks, many of which are different from the risks derived from the other businesses we have traditionally engaged in. Those risks include, among others: e potential failure to achieve the expected benefits of engaging in the new businesses; e difficulties in, and the cost of, integrating operations, technologies, services, platforms and personnel; e diversion of financial and managerial resources from existing operations; e the potential entry into new markets in which we have little or no experience or where competitors may be stronger; e reputational risk; e failure to increase or maintain our market position due to, among others; e unavailability of external financing beyond CODELCO”s control, required to make additional investments and take on additional costs; e inability to generate sufficient revenue to offset investment costs; e potential unknown liabilities associated with the new lines of business, including regulatory noncompliance; and e ¡neffective or inadequate controls, procedures and policies in connection with the new business.
Any of these risks could have an adverse effect on our business, operating results and financial condition. To perform this new role in the lithium industry we may be required to make additional investments and take on additional costs, which may be higher than expected and may not be recoverable. To finance such investments and costs, we may seek additional debt financing, which may not be available on terms favorable to us, or at all, which may affect our ability to complete investments. If we finance these investments by incurring additional debt, we could face constraints related to the terms of, and repayment obligations related to, the incurrence of indebtedness.
Risks Relating to CODELCOs Relationship with the Government of Chile
Important corporate governance matters, the annual budget and financing programs are determined by or subject to the approval of the President of Chile and the Ministries of Finance and Mining.
CODELCO is a mining, industrial and commercial state-owned enterprise of indefinite duration with 1ts own legal personality and capital. CODELCOS”s relationship with the Government of Chile is through the Ministry of Mining, and is governed by Decree Law 1,350, as amended by Law 20,392, 1ts bylaws and other applicable legislation. The President of Chile is vested with the authority analogous to that of the shareholders of a corporation (sociedad anónima) under Chilean law, which may be delegated in whole or in part to the Ministers of Finance and Mining, jormtly. Pursuant to such authority, the President of Chile (1) participates in the designation of the Board of Directors by designating three directors without external input and by electing six directors on the basis of third-party short lists; (11) appoints the Chairman of the Board of Directors; and (111) may approve and amend the bylaws of the Company, by means of an executive decree issued jointly by the Ministries of Finance and Mining. In 2021, Gabriel Boric was elected as President of Chile. Mr. Boric*s administration began on March 11, 2022. Senior management and administration of the Company are vested in its Board of Directors and further delegated to 1ts Chief Executive Officer. Pursuant to Decree Law 1,350, CODELCO’*s Board of Directors must submit its proposed annual budget to the Ministries of Finance and Mining for approval and possible revision. In addition, Decree Law 1,350 requires CODELCO to include as part of its proposed annual budget a debt amortization budget that includes interest and principal payments on CODELCOs debts, including the notes. CODELCO must also submit a three-year Plan de Negocios y Desarrollo (a Business Development Plan, or BDP) report, approved by the Companys Board of Directors, to the Ministries of Finance and Mining by March of each year. There is no guarantee that actions taken with respect to the appointment of CODELCO”s directors, amendments
31 to 1ts bylaws, and revision and approval of its budget, including CODELCOs capitalization of profit, will be adopted by the administration of the new President andor will be the same as they would be in a privately owned company. See Management and Regulatory Framework.
CODELCO funding through retention of profits is restricted and is subject to the approval of the Ministries of Finance and Mining.
As a state-owned enterprise and according to its governing law, CODELCOs profit 1s required to be transferred to the Chilean Treasury. Before June 30 of each year, the Ministries of Finance and Mining are required to determine, by means of a joint decree, the amount, 1f any, that the Company shall allocate to the creation of capitalization and reserve funds as retention of profits. Between 2014 and 2019, the Government of Chile authorized the capitalization by capital injection and retention of profit within CODELCO in an aggregate amount of U.S.$3.3 billion. Although CODELCO currently expects the Ministries of Finance and Mining to make available a substantial amount of its pre-tax profit over the next three years, a joint decree ofthe Ministries of Finance and Mining 1s required each year and the amounts approved in any given year, 1f any, could vary significantly. Since 2022, the Chilean Government is allowing CODELCO to annually reinvest 30.0% of 1ts 2021-2024 profits. This represents a change in CODELCO’s dividend policy, which previously consisted of 100% net-profit distribution policy. This profit-reinvestment plan is expected to strengthen CODELCO*”s financial balance sheet and reduce the need for additional financial debt. The 30.0% profit-reinvestment plan resulted in an additional U.S.$583.0 million which CODELCO was allowed to allocate against profits from 2022 and an additional U.S.$103.7 million which CODELCO was allowed to allocate against profits from 2023, in each case to the formation of a Capitalization and Reserve Funds reserve. The amount is calculated over the net profit of the previous year and is charged in the current year or the following year until the amount is completed. A similar exercise 1s expected to be carried out in 2024. As of December 31, 2023, no funds were allocated to such reserve due to CODELCO losses. As of September 30, 2024, CODELCO had allocated U.S.$346 million to such reserve.
IfCODELCO”s funding through capitalization and retention of profits, depreciation, amortization and deferred taxes are insufficient to fund capital expenditures and 1f it is unable to otherwise finance planned expenditures, CODELCOS*s business would be adversely affected. See Managements Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources. In addition, 1fthe Government of Chile does not authorize additional capitalization or the retention of profits, our credit rating may be adversely affected, which could have a material adverse effect on our business and financial condition.
CODELCO is subject to special taxes.
Law No. 21,174, that repealed Law No. 13,196, the Copper Reserve Law, exclusively requires CODELCO to pay a 10.0% special export tax on receivables of the sales proceeds received and transferred to Chile from the export of copper and related by-products the Company produces. As a result, the Banco Central de Chile (the Central Bank of Chile) retains 10.0% of the amounts from such sales that CODELCO transfers to 1ts Chilean account. The Copper Reserve Law has an adverse effect on our ability to retain earnings for purposes of capital expenditures. In July 2019, the Chilean Congress issued a new resolution to repeal the Copper Reserve Law. Under this resolution, CODELCO will remain subject to the 10.0% special export tax until 2028. Beginning in 2029, the tax will be reduced annually by 25.0% until 2032 when CODELCO will no longer be subject to such tax. As of April 1, 2020, CODELCO is paying the taxes owed pursuant to the Copper Reserve Law on a monthly basis, following a response measure from the Government of Chile to the economic effects of the COVID-19 pandemic.
The Chilean income tax law (the Income Tax Law) contemplates thin capitalization rules which are applicable to CODELCO. As such, under article 41 F of the Income Tax Law, interest, premiums, remuneration for services, financial expenses and any other contractual surcharges under credit facilities which are paid or credited to an account or made available to related entities (as defined below) of CODELCO in respect of loans or liabilities, are subject to a
35.0% tax (applied to the debtor) 1f the debtor 1s considered to be in an excessive indebtedness situation by the years end. The withholding tax applicable to the interest payments made by CODELCO (for example, the 4% Chilean Withholding Tax), can be used as a credit against such 35.0% sole tax. Indebtedness will be considered to be excessive when at the end of the corresponding fiscal year the total annual indebtedness granted by entities incorporated, domiciled or established in a foreign country or in Chile, either related or not, exceeds three times CODELCO’s tax adjusted equity, calculated pursuant to the provisions of the Income Tax Law. Only short-term debt (1.e., with maturity of less than 90 days, including extensions or renewals) with non-related parties may be excluded from the total annual
32 indebtedness calculation. Under the Excessive Indebtedness rules, a lender or creditor will be deemed to be related to CODELCO 1f: (1) the beneficiary 1s incorporated, domiciled, resident or established in one of the territories or jurisdictions listed in section 41 H of the Income Tax Law; (11) the beneficiary and CODELCO belong to the same corporate group or the beneficiary or debtor directly or indirectly, owns or participates in 10% or more of the capital of the profits of the other, or 1f the beneficiary and debtor have a common partner or shareholder which, directly or indirectly, owns or participates in 10% or more of the capital or the profits of one or the other, and that the beneficiary is incorporated, domiciled, resident or established outside Chile; (111) the indebtedness is guaranteed directly or indirectly by a third-party related to CODELCO, in the terms of clauses (1) or (11) above, or (1v) hereafter, provided that such third -party is domiciled or resident abroad and is a final beneficiary (beneficiario final) of the financing; (1v) the relevant financial instruments documenting such indebtedness are placed and acquired by independent entities and such indebtedness 1s subsequently acquired or transferred to a related entity according to subsections (1) to (111) above; or (v) one party (i.e., beneficiary or CODELCO) conducts one or more operations with a third-party who, in turn, directly or indirectly conducts one or more similar or identical operations with a related party of such party, whatever the capacity in which said third party and the parties intervene in such operations. The debtor will be required to issue an affidavit in this regard in the form set forth by the Chilean tax authorities.
Since the 2012 fiscal year and pursuant to Law No. 20,026, as amended, CODELCO has been subject to a mining tax (Impuesto Específico a la Actividad Minera) on operating income generated during the operating year at progressive rates between 5.0% and 14.0%. During 2023, CODELCO distributed a total of U.S.$1.4 billion (including income tax, and export tax payments and distributions) to the Chilean Treasury. See Managements Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Distributions to the Chilean Treasury and Regulatory Framework. The statutory rate of the mining tax for CODELCO was calculated at 5.0% for 2021 and
2022. However, no assurances can be made that such rate will remain in place.
On January 1, 2024, Law No. 21,591 came into effect, Mining Royalty Law. Under this law, CODELCO is subject to this new mining royalty tax, which generally comprises an Ad Valorem component which applies a tax rate of 1% on annual copper sales, and a mining margin component which applies a progressive tax rate (1.e., 8%-26%) on the adjusted taxable mining operating margin. In addition, a maximum potential tax burden of 46.5% 1s established on the mining entitys operating profitability, measured as the adjusted pre-taxable mining operating income. This limit considers jointly the mining royalty tax, the corporate tax and final taxes. The royalty must be adjusted correspondingly 1f the sum of those taxes exceeds the maximum potential tax burden.
CODELCOS*s corporate tax rate has gradually increased from 21.0% in 2014 to up to 25.0% since 2017. In addition, CODELCO is subject to a 40.0% tax on net earnings applicable to state-owned enterprises as specified by Decree Law 2,398, Art. 2.
The revenue generated by CODELCO transferred to the Chilean state for the year ended December 31, 2023 was U.S.$1.4 billion, approximately, compared with U.S.$2.8 billion, approximately for the year ended on December 31,
2022.
Constitutional amendments could be proposed that would allow private ownership of CODELCO.
CODELCO is 100% owned by the Government of Chile and a constitutional amendment approved by the Chilean Congress would be required to allow private participation in CODELCOs ownership. Although there has been no formal governmental action to permit private investment in CODELCO, no assurance can be given that such a constitutional amendment will not be proposed to the Chilean Congress in the future. See Regulatory Framework- Overview of the Regulatory Regime.
Risks Relating to Chile
CODELCO” growth and profitability depend on political stability and economic activity in Chile and other emerging markets.
Almost all of CODELCOs revenues are derived from 1ts operations in Chile. Accordingly, CODELCO”s results of operations and general financial condition depend in part on Chilean markets for labor and certain materials and equipment, and on factors relating to Chilean political stability generally. The Chilean economy has been influenced, to
33 varying degrees, by economic conditions in other countries, especially the United States and China. Changes in Chilean economic growth in the future or developments affecting the Chilean economy, including consequences from a monetary policy normalization in the United States or a deceleration of economic growth in China or other developed nations to which Chile exports a majority of 1ts goods, could materially and adversely affect CODELCOs business, financial condition or results of operations. CODELCO”s results of operations and financial condition could also be affected by changes in economic or other policies of the Chilean Government, which has exercised and continues to exercise a substantial influence over many aspects of the private sector, or other political or economic developments in Chile.
The continuing trade war between the United States and China as well as the evolution of the Chinese economy and the impact that a slowdown would have on the price of copper may have an adverse effect on international trade.
Persistent declines in the price of copper would impact negatively the Chilean economy.
CODELCO” business performance is subject to the effects of inflation and changes in the value of the peso.
Although Chilean inflation rates have been low during the last decade, Chile has in more recent years experienced higher levels of inflation, as a consequence of the COVID-19 pandemic on the global and local economy, and other geopolitical tensions such as the war in Ukraine and Middle East. High levels of inflation in Chile could adversely affect the Chilean economy and have an adverse effect on CODELCO’s results of operations 1f the high inflation is not accompanied by a matching devaluation of the local currency. Although inflation levels have been decreasing since 2023 and have remained stable in 2024, there can be no assurance that Chilean inflation will not revert to prior levels in the future. In addition, the measures taken by the Central Bank of Chile to control inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and economic growth.
The following table shows the annual rate of inflation (as measured by changes in the Chilean consumer price index and as reported by the Instituto Nacional de Estadisticas, or the Chilean National Institute of Statistics):
Year Inflation (CPI) (in percentages) 2018 cocccccccnnnnnnnnnnonononononononnncnonnnnnnnnnnnnnnnnnnnnnnnnnccnnnnnnnnos 2.6 201 cecoccccccnnnnnnnononononononononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnncnnnnnnnnnss 3.0 ZO02ÓO cncocccccnnnnnnnncnononononanonnnnnccnnnnnnnnnnnnnnnnnnnnnnnnnncnnnnnnnnnss 3.0 LS 7.2 ZOZZ encoccccnnnnnnnnonononononononnnnncncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 12.8 ZOZI encoccccnnnnnnononononononanononnncnnnnnnnnnnnnnnnnnnnnnnnnrnnccnnnnnnnnos 3.9 2024 (through November 30, 2024). .00000o.coooooooocoonnccoo 4.7
Source: Chilean National Institute of Statistics
A significant portion of CODELCOs operating costs is denominated in pesos and could therefore be significantly affected by the rate of inflation in Chile. If inflation in Chile were to increase without a corresponding depreciation of the peso, or 1f the value of the peso were to appreciate relative to the U.S. dollar without the peso experiencing corresponding deflation in Chile, the financial position and results of operations of CODELCO as well as the value of the notes could be materially and adversely affected. See Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.
The variation of the U.S. dollar against the peso constitutes CODELCOs main foreign exchange rate exposure.
The mismatch between assets and liabilities denominated in pesos and UF amounts to a net liability for the Company of
U.S.$2.5 billion (6.4% of the total amount of liabilities on a consolidated basis) as of December 31, 2023, and U.S.$2.8 billion (10.7% of the total amount of liabilities on a consolidated basis) as of December 31, 2022. In order to cover this risk, CODELCO has, and currently is, engaged in hedging transactions to partially mitigate the effects of the volatility of
34 foreign exchange rates. See Risk Factors-Risks Relating to CODELCOs Operations-CODELCO engages in hedging activity from time to time, particularly with respect to 1ts copper production, which may not be successful and may result in losses to CODELCO.
CODELCO”s business is exposed to fluctuations in currency exchange rates. Any future changes in the value of the Chilean peso against the U.S. dollar will affect the U.S. dollar value of our securities. The Chilean peso has been subject to large depreciations and appreciations in the past and could be subject to significant fluctuations in the future.
The main drivers of exchange rate volatility in past years were the significant fluctuations of commodity prices, general uncertainty and trade imbalances in the global markets, the impact of the COVID-19 pandemic, and political uncertainty surrounding Chile*s new constitution and tax and pensions reforms.
Any downgrading of Chile?s debt credit rating for domestic and international debt by international credit rating agencies may also affect our ratings, our business, our future financial performance, and the value of our securities, and any downgrading of our credit ratings could increase our cost of funding and adversely affect our interest margins and results of operations.
In July 2024, Fitch Ratings (Fitch) affirmed the credit rating of Chiles long-term foreign currency as A-, with stable outlook. In October 2024, S£P Global Ratings affirmed 1ts A-1 long-term foreign currency and its AA-1 long- term local currency sovereign credit ratings on Chile and changed the outlook from stable to negative due to weaker political consensus on the key parameters of Chiles political and economic agenda. In November 2024, Moodys confirmed the Government of Chiles long-term local and foreign-currency issuer to A2 with stable outlook.
However, any adverse revisions to Chile*s credit ratings for domestic and international debt by international rating agencies may adversely affect CODELCO”s ratings, business, future financial performance, stockholders equity and the value of CODELCOs securities.
In addition, credit ratings affect the cost and other terms upon which CODELCO is able to obtain funding.
Rating agencies regularly evaluate CODELCO and their ratings of 1ts debt are based on a number of factors, including our financial strength and conditions affecting the financial services industry generally. There can be no assurance that the rating agencies will maintain the current ratings or outlooks, and any downgrading in CODELCOs debt credit ratings would likely increase CODELCOs borrowing costs and could limit 1ts access to capital markets and adversely affect 1ts operating results and financial condition.
Risks Relating to the Offering
In case of a default under the notes, the ability of holders to attach property of CODELCO may be limited by Chilean law.
CODELCOS*Ss activities in Chile are dependent on concessions granted by the Chilean Ordinary Courts. These concessions are granted for indefinite terms in the case of exploitation concessions and for four-year periods in the case of exploration concessions (renewable with certain limitations). As a general matter, the Ordinary Courts, through legal proceedings brought by third parties (or by the Chilean Treasury in case of noncompliance with the obligation to pay annual fees), have the legal right to terminate or annul the concessions. Pursuant to the Chilean Mining Code, all mining concessions, as well as certain raw materials and other property or assets permanently dedicated to the exploration or extraction of minerals, cannot be subject to an order of attachment, except with respect to mortgages, where the debtor consents to the attachment in the relevant legal proceeding or when the debtor 1s a stock corporation. In addition, pursuant to the Constitution, mining concessions corresponding to mining deposits currently exploited by CODELCO can be subject neither to attachment nor to any act of disposition by CODELCO. As a result, the rights of holders to attach property of CODELCO in the event of a default under the notes would be limited by such provisions. See Regulatory Framework-Mining Regulations.
CODELCO ¡is permitted to incur additional indebtedness ranking equally to the notes or certain secured indebtedness.
The indenture governing the notes will not contain any restrictions on the amount of additional indebtedness which may be incurred by CODELCO or its subsidiaries; however, the notes contain restrictions on the ability of CODELCO and its subsidiaries to incur certain secured indebtedness as set forth in Description of Notes-Limitations
35 on Liens below. As a result, CODELCO is permitted to issue additional unsecured debt that ranks on an equal basis with the notes. If CODELCO incurs any additional unsecured debt that ranks on an equal basis with the notes, the holders of that debt will be entitled to share with the holders of the notes in any proceeds distributed in connection with an insolvency, liquidation, reorganization, dissolution or other winding-up of CODELCO subject to satisfaction of certain debt limitations. This may have the effect of reducing the amount of proceeds paid to the holder of the notes under such an event. The indenture does not require CODELCO to make payments under the notes ratably with payments being made under any other obligations.
We may not be able to generate sufficient cash flows from operating activities to fund our operations, service our indebtedness and pay our liabilities, including the notes, and may be forced to take other actions to make such payments, which may not be successful.
Our inability to generate sufficient cash flows to satisfy our liabilities and debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our business, financial position, and results of operations and our ability to satisfy our obligations under the notes.
Our ability to fund and honor our liabilities and service our indebtedness, including the notes, depends on our ability to generate sufficient cash flows. This, in turn, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors beyond our control. We might not be able to maintain a level of cash flows from operating activities, or generate sufficient profits, to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the notes.
In addition, we conduct part of our operations through our subsidiaries, however they will not be guarantors of the notes or our other indebtedness. Our subsidiaries have no obligation to pay amounts due on the notes or our other indebtedness or to make funds available for that purpose.
If our cash flows and capital resources are insufficient to fund our liabilities or debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or restructure or refinance our indebtedness, including the notes. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even 1f successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The notes contain restrictions on the ability of CODELCO to incur certain secured indebtedness as set forth in Description of Notes- Limitations on Liens below. Because of these restrictions, we may not be able to raise additional indebtedness and to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
If certain changes to tax law were to occur, CODELCO would have the option to redeem the notes of an affected series.
CODELCO may also redeem the Notes before maturity at its option at the prices set forth in this offering memorandum.
Under current Chilean law and regulations, payments of interest to holders of the notes that are not residents of Chile for purposes of Chilean taxation generally will be subject to Chilean withholding tax at a rate of 4.0%. Subject to certain exceptions, CODELCO will pay Additional Amounts (as defined in Description of Notes-Payments of Additional Amounts) so that the amount received by the holder after Chilean withholding tax will equal the amount that would have been received 1f no such taxes had been applicable. Each series of notes are redeemable at the option of CODELCO in whole, but not in part, at any time, at the principal amount thereof plus accrued and unpaid interest and any Additional Amounts due thereon if, as a result of changes in the laws or regulations on or after the date of this offering memorandum affecting Chilean taxation, CODELCO becomes obligated to pay Additional Amounts with respect to interest on such notes in respect of withholding or deduction of Chilean tax at a rate in excess of 4.0%. CODELCO is unable to determine whether such an increase in the withholding tax rate will ultimately be presented to or enacted by the Chilean Congress; however, 1f such an increase were enacted, the notes would be redeemable at the option of CODELCO.
See Description of Notes- Redemption-Tax Redemption and Taxation-Chilean Taxation.
We may redeem the 2035 notes at our option, in whole or in part, at any time and from time to time prior to the date that is three months prior to the maturity date of the 2035 notes, at a redemption price equal to the greater of 100% of the outstanding principal amount of the 2035 notes to be redeemed and a redemption price based on a make-whole premium, plus accrued and unpaid interest to the date of redemption. We may redeem the 2055 notes at our option, in
36 whole or in part, at any time and from time to time prior to the date that is six months prior to the maturity date of the 2055 notes, at a redemption price equal to the greater of 100% of the outstanding principal amount of the 2055 notes to be redeemed and a redemption price based on a make-whole premium, plus accrued and unpaid interest to the date of redemption. In addition, we may redeem the 2035 notes at our option, in whole or in part, at any time and from time to time, beginning on the date that 1s three months prior to the maturity date of the 2035 notes, at a redemption price equal to 100% of the outstanding principal amount of the 2035 notes to be redeemed, plus accrued and unpaid interest to the date of redemption. We may redeem the 2055 notes at our option, in whole or in part, at any time and from time to time, beginning on the date that 1s six months prior to the maturity date of the 2055 notes, at a redemption price equal to 100% of the outstanding principal amount of the 2055 notes to be redeemed, plus accrued and unpaid interest to the date of redemption. See Description of Notes-Tax Redemption and -Optional Redemption.
An investor may not be able to reinvest the redemption proceeds in other securities with interest rates similar to that applied to the notes redeemed.
Our obligations under the notes will be subordinated to certain statutory liabilities.
Under Chilean bankruptcy law, the obligations under the notes are subordinated to certain statutory preferences.
In the event of a liquidation, such statutory preferences, including claims for salaries, wages, secured obligations, social security, taxes and court fees and expenses, will have preference over any other claims, including claims by any investor in respect of the notes. The aforementioned statutory preferences have not been included in a legal order. In addition, the liabilities of our subsidiaries are structurally senior to the Notes.
In addition, the Issuer?s creditors may hold negotiable instruments or other instruments governed by local law that grant rights to attach the assets of the Issuer at the inception of judicial proceedings in the relevant jurisdiction, which attachment is likely to result in priorities benefitting those creditors when compared to the rights of holders of the Notes.
The market value of the notes may depend on economic conditions in other countries over which CODELCO has no control.
The market value of securities of Chilean companies, including CODELCO, is affected to varying degrees by economic and market conditions in other emerging market countries. Although economic conditions in such countries may differ significantly from economic conditions in Chile, investors? reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Chilean issuers. International financial markets have in recent years experienced volatility due to a combination of international political and economic events. There can be no assurance that the deterioration of emerging market economies or other events in or outside of the region will not adversely affect the market value of the notes.
The perception of higher risk in other countries, especially in Latin American or other emerging economtes, may adversely affect the Chilean economy, CODELCOs business and the market price of Chilean securities issued by Chilean issuers, including the Notes.
Emerging markets like Chile are subject to greater risks than more developed markets, and financial turmoil in any emerging market could disrupt business in Chile and adversely affect the price of the Notes. Moreover, financial turmoil in any important emerging market country may adversely affect prices in stock markets and prices for debt securities of issuers in other emerging market countries as investors move their money to more stable, developed markets.
An increase in the perceived risks associated with investing in Latin American or other emerging markets could dampen capital flows to Chile and adversely affect the Chilean economy in general, and the interest of investors in securities issued by Chilean issuers. CODELCO cannot assure you that the value of the notes will not be negatively affected by events in Latin American or other emerging markets or the global economy in general.
The transferability of the notes may be limited by the absence of an active trading market and restrictions on transfer
37 under applicable securities law.
The notes have not been registered under the Securities Act or any state securities laws. CODELCO does not intend to list the notes on any national securities exchange or to seek admission of the notes for trading on any securities exchange in the United States; however, we intend to apply to list the notes on the Luxembourg Stock Exchange.
Furthermore, CODELCO does not intend to exchange the notes for notes that are registered under the Securities Act. The initial purchasers are not obligated to make a market in the notes. No assurance can be given about the liquidity of any markets that may develop for the notes, the ability of holders to sell the notes or the prices at which the notes could be sold. Future trading prices of the notes will depend on many factors, including prevailing interest rates, CODELCOs operating results and the market for similar securities. There can be no assurance that any active trading market will develop for the notes or that holders of the notes will be able to transfer or resell the notes without registration under applicable securities laws.
We cannot assure you that our credit rating, or the credit ratings for a series of notes, will not be lowered, suspended or withdrawn by the rating agencies.
Our credit rating 1s subject to change in the future, and the credit ratings of the notes may change after issuance.
Such ratings do not address all material risks relating to an investment in CODELCO, or its notes, but rather reflect only the views of the rating agencies at the time the ratings are issued. An explanation of the significance of such ratings may be obtained from the rating agencies. CODELCO cannot assure you that such credit rating will remain in effect for any given period of time or that such ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, 1f, in the judgment of such rating agencies, circumstances so warrant. Our credit rating is an important part of maintaining our liquidity. Credit ratings are not a recommendation to buy, sell or hold any security. Each agencys rating should be evaluated independently of any other agencys rating, as each agency has different evaluation criteria. Any lowering, suspension or withdrawal of such ratings may potentially increase our borrowing costs, and may have an adverse effect on our financial results and business operations and the market price and marketability of the notes.
Payments claimed in Chile on the notes, pursuant to a judgment or otherwise, may be in pesos.
In the event that proceedings are brought against CODELCO in Chile, either to enforce a judgment or as a result of an original action brought in Chile, CODELCO would not be required to discharge those obligations in a currency other than Chilean currency. Such obligation may be satisfied in Chilean currency at the exchange rate in effect on the date on which payments are made. As a result, holders of the notes may suffer a U.S. dollar shortfall 1f judgment in Chile 1s obtained.
38 USE OF PROCEEDS
The estimated total net proceeds from the offering of the notes are U.S.$1,484,547,692, after deducting commissions to the initial purchasers, payment of the Chilean stamp tax of U.S.$12,000,000 and payment of legal fees and all other expenses related to the offering. CODELCO intends to use the net proceeds from the sale of the 2035 notes and the 2055 notes, in each case, for general corporate purposes. See Managements Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources and Capitalization.
39 CAPITALIZATION
The following table sets forth the capitalization of CODELCO as of September 30, 2024 (1) on an actual historical basis,
(11) as adjusted to give effect to the offering of the notes and application of the estimated net proceeds from the offering of the notes as described under Use of Proceeds. This table 1s qualified in its entirety by reference to, and should be read together with, CODELCOs Unaudited Interim Consolidated Financial Statements, including the notes thereto, included elsewhere in this offering memorandum.
As of September 30, 2024 Actual As Adjusted (in thousands of U.S.$) Current financial liabilities
40
Current portion of loans from financial institutions … 118,933 118,933 Current portion of bonds issued ……oooonoccnoccnncnonanincnnos 874,859 874,859 Total current financial liabilities ………………….. 993,792 993,792 Non-current financial liabilities Bank debt…..ooooococinocccinncccnnncccnonanononanononanononanononanononaconanaconns 1,960,216 1,960,216 Notes:
2.500% UF Notes due 20260 LL ocooconicocociccccnnannncnnos 427,067 427,067
3.625% Notes due 2027 c.oooooccocococccccnnccncnnnnoanonnnnnnnnoss 1,249,140 1,249,140
2.869% Notes due 2029… occccnncccooooooccnnncnccccnnnnannonoss 129,382 129,382
3.000% Notes due 2029 coocccocococcccccccccnonananananonononoss 1,092,872 1,092,872
3.150% Notes due 2030 ..ooooococococcccccccccnononanonanonononoss 993,574 993,574
3.750% Notes due 2031 ..oooooococococcccccccccnononanonancnnnnnoss 798,028 798,028
5.125% Notes due 2033 oocccocococcccccccccnonananonanonononoss 891,413 891,413
5.950% Notes due 2084 ooococococcccccccononananonanonnnonoss 1,287,039 1,287,039
2.840% Notes due 20340 cooconiccnocinccnoncnncnnnanininnos 63,903 63,903
5.625% Notes due 2033 …..oooococccconconconcnncnnonccnns 493,804 493,804
6.440% Notes due 2036 …..ooococccccnccnconcnncnncnnonos 1,484,848 1,484,848
6.150% Notes due 2036 …..ooooocccccnccnconcnncnncnnonos 497,192 497,192
3.580% Notes due 2039% LL ccoccnccccncnncnncnncnnnnss 48,183 48,183
4.250% Notes due 2042 o …oooccccccconccnconcnncnncnnono 735,728 735,728
5.630% Notes due 2043 L….ooccocccconconconcnncnncnnonos 935,349 935,349
4.875% Notes due 2044 ….oooocccccccconccnconcnncnncnnono 963,454 963,454
4.50% Notes due 2047 …..ooococccconconconconcnncnncnnono 1,210,110 1,210,110
4.85% Notes due 2048 …..ooooocccccnconccnconcnncnncnnono 594,969 594,969
4.375% Notes due 2049 …..oooccocccconconconcnncnncnnono 1,192,050 1,192,050
3.700% Notes due 2050 ……ooocccocccccnccnconcnncnnonncnos 2,583,887 2,583,887
3.150% Notes due 2051 ……oooooocccccnconccncnncnncncnnos 449,758 449,758
6.300% Notes due 2053 ……ooococccccnccnconcnncnncnnonos 1,157,458 1,157,458 Notes offered herebyÚO ioooccccnonicanicinccnnncanananannnonnono 1,500,000 Total non-current financial liabilities ……………. 21,239,424 22,739,424 Non-controlling Interests …………ooooococcccccncnnnnnnnnnnnnnnnnnonnnnnss 711,196 711,196 Equity Issued capital ……….oooooooooonooccnnnnnnnnnnnnnnnnnnnnnnnnnnononnnnnos 5,619,423 5,619,423 Other reserves …coocccoccnncconoconocnnncnoncconcconoconncnnnrconaconecos 5,633,413 5,633,413 Retained Eamings: Accumulated deficit …………o.ooooooonoccccncnnnnnnnnnnnnnos (699,691) (699,691) Profits distributions to the Chilean Treasury …………..
Equity attributable to owners of the parent ……………. 10,553,145 10,553,145 Total capitalizationÚ ….oononnnnnicnconncnnonnncanancnncnnncna conc cana nnnos 33,497,557 34,997,557
(1)
(2)
(3)
(4)
(5)
The U.S.S$ equivalent of 10 million UF aggregate principal amount of the 2.5% UF notes due 2026 has been translated at an exchange rate of
U.S.$1.00 = 0.0236 at September 30, 2024.
The U.S.$ equivalent of HKD 500 million aggregate principal amount of the 2.84% notes due 2034 has been translated at an exchange rate of
U.S.$1.00 = 0.1287 at September 30, 2024
The U.S.$ equivalent of AUD 70 million aggregate principal amount of the 3.580% notes due 2039 has been translated at an exchange rate of
U.S.$1.00 = 0.6913 at September 30, 2024.
Net of deferred financing costs, commissions to the initial purchasers and payment of legal fees and all other expenses related to the offering.
CODELCO has no convertible debt securities, warrants exercisable for debt securities or other similar securities outstanding.
41 EXCHANGE RATES
As a general matter, prior to 1989, Chilean law permitted the purchase and sale of foreign exchange only in those cases explicitly authorized by the Central Bank of Chile. Law No. 18,840, the Central Bank of Chile Act, liberalized the rules that govern the purchase and sale of foreign currency. The act empowers the Central Bank to determine that certain purchases and sales of foreign currency specified by law must be carried out in the Mercado Cambiario Formal (the Formal Exchange Market). The Formal Exchange Market is formed by the banks and other entities so authorized by the Central Bank. The exchange rate of the transactions conducted in the Formal Exchange Market is freely agreed upon by the parties thereto. For more information, see Foreign Investment and Exchange Controls in Chile. The observed exchange rate for any given day equals the average exchange rate of the transactions conducted in the Formal Exchange Market on the immediately preceding banking day, as certified by the Central Bank (the Observed Exchange Rate). Even though the Central Bank is authorized to carry out its transactions at the rates 1t sets, 1t generally uses the spot rate for its transactions. Authorized transactions by other banks are generally carried out at the spot rate. Purchases and sales of foreign exchange, which may be effected outside the Formal Exchange Market, can be carried out in the Mercado Cambiario Informal (the Informal Exchange Market). There are no limits imposed on the extent to which the exchange rate in the Informal Exchange Market may fluctuate above or below the Observed Exchange Rate.
The following table sets forth, for the periods indicated, the high, low, average and period-end Observed Exchange Rate for U.S. dollars for each year beginning in 2016 as reported by the Central Bank of Chile. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos.
Observed Exchange Rates (Ch$ per U.S.$)
Period High” Low” Average? Period-End* ZOÍÓ cooccnnnnnccnnnnnccnnnonoconnnnorcnnnnoronnnnnnonnnnnocnnnnnaronnnnos 730.31 645.22 676.83 667.29 ZOOL conoccnnnnnccnnnnnccnnnonoconnnnoronnnnoronnnnnocnnnnononnnnnirinnnnns 679.05 615.22 649.33 615.22 ZOÍL8 cooccnnnnnccnnnnnccnnnonoconnnnoronnnnorononnnocnnnnnncnnnanirinnnnns 698.56 588.28 640.29 695.69 ZOOL O coocccnnnncccnnnnnonononoconnnnorcnnnnnoonnnnnronnnnnccnnnnnironnnnns 828.25 649.22 702.63 744.62 ZOO 7 coocccnnnnccnnnnnncnnnonoconnnnorononnnonnnnnnconnnnnnonononicinnnnns 867.83 710.26 792.22 711.24 202 Ll coocccnnnnccnnnnnnocnnonoccnnnnoronnnnorononnnocnnnnnccnnnnniconnnnos 868.76 693.74 759.27 850.25 202 7 cooccnnnnnccnnnnnocnnnonoconnnnronnnnoronnnnnornnnnanonnnonirononnns 1,042.97 777.10 872.33 859.51 OL cocccnnnnnccnnnnnocnnnonoconnnnoronnnnoronnnnnocnnnnnnonnnonirinnnnns 945.61 781.49 839.07 884.59 MODA: conconcccnnnnnannnnnannnnnnnnconnonccnn cnn cnn cnn noncrnncnncnncnnanos 996.35 877.12 943.58 992.12 2025
E 1,011.82 996.46 1,004.99 1,005.85
(1) Rates shown are the actual low and high (as applicable) on a daily basis for periods indicated.
(2) The average annual rates represent the average of average monthly rates for the periods indicated. The average monthly rates represent the average of the rates on each day for the periods indicated.
(3) Period ends on January 1 of the following year, unless otherwise indicated.
(4) Period ends on January 8, 2025.
Source: Central Bank of Chile.
The Observed Exchange Rate reported by the Central Bank of Chile for January 8, 2025 was Ch$1,005.85 =
U.S.$1.00.
42 SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present CODELCOs summary consolidated financial data and other data as of and for each of the periods indicated. This data (other than the average LME copper prices) is derived from, and should be read together with, CODELCOs Consolidated Financial Statements, including the notes thereto, included elsewhere in this offering memorandum. This data should also be read together with Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Consolidated Financial Statements and other financial information included in this offering memorandum are presented in accordance with IFRS. The unaudited results of operations for the nine-month periods ended September 30, 2023 and 2024 are not necessarily indicative of the results to be expected for the full year or any other period.
For the nine-month period ended
For the year ended December 31, September 30, 2021 2022 2023 2023 2024 (in thousands of U.S.S$) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ReVeNU8S cocccccncccnnonioccnnnnnccnnnonoconnnnnconnnnnncnnnnnns 21,024,815 17,018,409 16,393,229 12,218,396 12,314,933 Cost of sales O ccccccnccononnninnnannnnnnnss (12,185,688) (12,284,652) (13,273,343) (9,898,852) (9,231,435) GTOSS PTOÍTE ….oococcccnncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 8,839,127 4,733,757 3,119,886 2,319,544 3,083,498 Other INCOME …oocccnnnnccnnnnnccnnnnnioconnnnarinnnnacinnns 115,741 64,731 93,039 64,581 62,802 Impairment losses andor reversal of 2,279 acorde WN IERS O (1,250) (2,648) 1,598 (663) Distribution COStS….oooncnoninnonncnnccnnconcnncnncnos (9,389) (17,151) (25,497) (16,235) (17,158) Administrative EXpenSES….cooccncccninccncnncncnos (459,278) (502,313) (544,162) (392,994) (370,181) Other expenses, by function Y ccoo… (2,717,007) (2,103,316) (2,062,806) (1,476,620) (1,752,316) Other gaidS …oooononicnnnnnncnncnnnnnnnninacananncnncnnono 37,531 29,782 43,046 23,212 33,814 Finance inCoM€ ..oocooooooonnnnnnononnnnnnnnnnnnnnnnncnnns 13,657 47,245 99,051 69,700 104,935 Finance COSÉS ..ooooconcconconconononnononaconcnncnononnos (641,009) (569,060) (778,91) (570,413) (686,020)
(658,118) o mus a MEthOd.coocooonnnoooononccononononononononnnoninocccnnnnnss Foreign exchange differences…….ommooon……. 313,736 (237,777) (44,963) 36,354 69,104 Profit (loss) before income taX …ononccininn…. 5.906,704 1,495,241 (757,155) (75,552) 612,244 Income tax expenseb eccococicoicnicaniccnnncnnono (3,855,336) (1,133,670) 165,916) 94,064 (384,832) Profit (loss) for the peri0d …ooooncnnnninnincn… 2,051,368 361,571 (591,239) 18,512 227,412 Profit (loss) attributable to owners of the 1.942.486 345.589 (374,974) 66.139 213.170 PATO coccccccconcnnncnnonnnonnonnnonnonancnnonancnnc nacen Profit (loss) attributable to non-controllin 216,265 A anna earn nn nnnnniass Ñ 108,882 15,982 ) (47,627) 14,242 Profit (loss) for the period …oooonnnnnnccccnnnnnooaaoono 2,051,368 361,571 (591,239) 18,512 227,412 As of December 31 As of September 30, 2021 2022 2023 2024 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands of U.S.$) Total current assetS ..ooooocooncncnnoncnnnnncnorncnonnnoos 7,801,909 6,794,843 7,289,281 7,089,642 Total property, plant and equipment”?……… 30,811,432 32,715,373 35,013,327 37,410,944 Investments accounted for using equity Method nnconncnincconococananinonoconnccnnnocanccnnnos 3,546,011 3,527,323 2,866,698 2,951,195 Non-current recelvables………..ooccccncccnnnccnnn… 104,177 88,906 71,272 78,689 All other assetsO ooooocoonocccoooooooncncccccnanos 793,906 1,610,787 1,635,670 2,117,067 Total assetS….oooocccoononocccnnnnnnnocccnnnnnnnccnnnnnnnonos 43,057,435 44 737,232 46,876,248 49,647,537 Total current liabilitiS ……oonononoinininon…. 3.938.877 3.920,485 4.383.983 4.767.867 Total non-current liabilities …………………….. 27,543,657 29,162,182 31,445,616 33,615,329
43 Total liabiliti8S…..oooonnnnnncicicicnnononononononons 31,482,534 33,082,667 35,829,599 38,383,196 Non-controlling interests …………cccccnnnnnnonnnos. 946,412 914,083 696,954 711,196 Equity attributable to owners of the parent … 10,628,489 10,740,482 10,349,695 10,553,145
Total equity ..oooocccoocccconoocccnononcnononancnnnnnnnnos 11,574,901 11,654,565 11,046,649 11,264,341 Total liabilities and equity ………coooooccccnnonnnoo 43,057,435 44,737,232 46,876,248 49,647,537
As of and for the nine-month period ended As of and for the year ended December 31, September 30, 2021 2022 2023 2023 2024 (in thousands of U.S.$, except ratios and copper prices)
OTHER ITEMS Depreciation and amortization of 1.672.275 1.652.710 ASSEÉS coccccccccnnnnnnnnonccnnnnnnnonononnnnnanonos 2,259,324 2,227,284 2,292,126 Interest expense, Net ….ooooooccnnnnco…. (627,352) (521,815) (679,859) (500,713) (581,085)
Ratio of earnings to fixed charges CTI 10.2 3.6 0.03 0.9 1.9 Average LME copper price (U.S. £ per POUM) ccoccccccciccccccncnnonncnos 422.6 399.0 384.5 389.6 414.3 Adjusted EBITDAS iconos. 10,378,724 5,565,010 3,570,220 3,115,786 3,893,775 Ratio of debt to Adjusted EBITDAO dnonconcnncnnccicncnnnnncononncnnos 1.7 3.0 5.7 N.A. 5.7 Ratio of debt to LTM Adjusted EBITDAOO dononcniconicncnnnnonnnincnnonnos 1.7 3.0 5.7 6.4 5.7 Adjusted EBITDA coverage Lati cccciccnacananaconaranonacanonacononos 16.5 10.7 5.3 6.2 6.7
(1) Cost of sales for any period includes direct and indirect costs, depreciation and amortization associated with the production of copper and byproducts, as well as purchase costs of third-party copper, sold by CODELCO in that period.
(2) Other expenses is comprised principally of costs related to the 10% special export tax paid by the Company, retirement plan and severance indemnities and fixed indirect costs below production level. See note 22.b of the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(3) CODELCO is subject to a mining tax on operating income at progressive rates of between 5% and 14%. The tax 1s imposed on operating income generated during the operating year. The statutory rate of the mining tax for CODELCO was 5.0% for each year between 2017 and
2019. In addition, CODELCO is subject to the corporate income tax rate of 24% in 2016 and 25% since 2017 (pursuant to the tax reform in
2014) and a 40% tax on net earnings applicable to state-owned enterprises as specified by Decree Law No. 2,398, Article 2. See Taxation- Chilean Taxation and Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Distributions to the Chilean Treasury for additional information. See note 5 of the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Distributions to the Chilean Treasury and Regulatory Framework. See also Risk Factors-Risks Relating to CODELCO’s Relationship with the Government of Chile-CODELCO is subject to special taxes for information regarding the mining tax rate effective in 2016 and information regarding the new Mining Royalty Law, effective as of January 1, 2024.
(4) See note 8 of the Consolidated Financial Statements and the Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(5) All other assets includes other non-current financial assets; other non-current non-financial assets; accounts receivable from related parties, non-current; non-current inventories; intangible assets other than goodwill; investment property; non-current tax assets and deferred tax assets.
(6) For the purpose of calculating CODELCOS”s ratio of earnings to fixed charges (adjusted), (1) earnings consist of Adjusted EBIT and (11) fixed
(7)
(8) charges consist of finance cost. The ratio of earnings to fixed charges (adjusted) is calculated by dividing Adjusted EBIT by finance cost.
Adjusted EBIT is calculated by adding finance cost, impairment charges net of reversals (as defined in note (1) of the following table) and income tax expense to profit (loss) for the period. Adjusted EBIT, while not a financial performance measure under IFRS, 1s presented as an indicator of funds available to service debt. Adjusted EBIT and Adjusted EBITDA data are included in this offering memorandum because such data are used by investors to assess: (1) the operating trends and financial performance of the Company and (11) the ability ofthe Company to (a) service its existing debt, (b) incur new debt and (c) fund its capital expenditures. The Company believes that Adjusted EBIT, while providing useful information, should not be considered in isolation as a substitute for profit for the period, as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Additionally, the Companys calculation of Adjusted EBIT may be different than the calculation used by other companies and therefore, comparability may be affected. See notes 8, 21 and 22 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
Average price on the LME for Grade A cathode copper during period.
Adjusted EBITDA is calculated by adding finance cost, income tax expense, depreciation and amortization of assets plus export taxes and impairment charges net of reversals (as defined in note (1) of the following table) to profit (loss) for the period. Adjusted EBITDA is presented because it 1s a widely accepted indicator of funds available to service debt, although it is not an IFRS-based measure of liquidity or
44
(9)
(10)
(11)
(12) performance. Adjusted EBIT and Adjusted EBITDA data are included in this offering memorandum because such data are used by investors to assess: (1) the operating trends and financial performance of the Company and (11) the ability of the Company to (a) service 1ts existing debt, (b) incur new debt and (c) fund its capital expenditures. The Company believes that Adjusted EBITDA, while providing useful information, should not be considered in isolation or as a substitute for profit as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Additionally, the Company?s calculation of Adjusted EBITDA may be different than the calculation used by other companies and therefore, comparability may be affected. See notes 8, 21 and 22 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Managements Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
The ratio of debt to Adjusted EBITDA is calculated by dividing debt by Adjusted EBITDA. Debt is defined as loans from financial institutions plus bonds issued.
Ratio of debt to LTM Adjusted EBITDA is calculated by dividing debt by the last twelve months of Adjusted EBITDA. Debt is defined as loans from financial institutions plus bonds issued.
Adjusted EBITDA coverage ratio 1s the ratio of Adjusted EBITDA to finance cost net of finance income. See note 9 above for further information about Adjusted EBITDA and notes 21 and 22 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
The amounts for property, plant, and equipment in the table above include property, plant and equipment and right-of-use assets.
The following table shows CODELCO’s earnings, Adjusted EBIT, ratio of earnings to fixed charges (adjusted), Adjusted EBITDA and reconciliation of Adjusted EBIT and Adjusted EBITDA for the periods indicated.
For the nine-month period ended
For the year ended December 31, September 30, 2021 2022 2023 2023 2024 (in thousands of U.S.S$)
Profit (loss) for the period …………………. 2,051,368 361,571 (591,239) 18,512 227,412 Income tax expenSe .oooooooooooccccccnnnnnnnnnnnnos 3,855,336 1,133,670 (165,916) 94,064 384,832 Finance COStS .oooooooooocccnnccccnnononanananoncnnnnnos 641,009 569,060 778,91 570,413 686,020 ImpairmentsO iconnnnnicniconicnicanincnncnnncnos – – – – – Adjusted EBITO Lococooininoninincnos. 6,547,713 2,064,301 21,755 494,861 1,298,264 Ratio of earnings to fixed charges 0.9 19 (adjust) ococcocicciconiccnaniconicinncinncno 10.2 3.6 0.03 :
Deprectation and amortization of 1.672.275 1.652.710 ASS caaccococccnocnononinnononnnnorinnorannonarnons 2.259.324 2.227.284 2.292.126
Copper Reserve Law? ooconconicniccinncns. 1,571,687 1,273,425 1,256,339 948,650 942,801 Adjusted EBITDA ……ooococccccccccnnnconnnnoo: 10,378,724 5,565,010 3,570,220 3,115,786 3,893,775
(1)
(2)
(3)
(4)
(5)
Impairments include charges and reversals related to charges of investment projects, research projects and investment in associates and joint ventures and exclude impairment charges related to definitely -lived tangible assets which show indicators of impairment under International Accounting Standard No. 36. See notes 8, 21 and 22 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Managements Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
Adjusted EBIT is calculated by adding finance cost, impairment charges net of reversals (as defined in note (1) above) and income tax expense to profit (loss) for the period. Adjusted EBIT, while not a financial performance measure under IFRS, 1s presented as an indicator of funds avallable to service debt. Adjusted EBIT and Adjusted EBITDA data are included in this offering memorandum because such data are used by investors to assess: (1) the operating trends and financial performance of the Company and (11) the ability of the Company to (a) service its existing debt, (b) incur new debt and (c) fund its capital expenditures. The Company believes that Adjusted EBIT, while providing useful information, should not be considered in isolation as a substitute for profit for the period, as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Additionally, the Companys calculation of Adjusted EBIT may be different than the calculation used by other companies and therefore, comparability may be affected. See notes 8, 21 and 22 of the Consolidated Financial Statements and Unaudited Interim Consolidated Financial Statements and Managements Discussion and Analysis of Financial Condition and Results of Operations for further information about impairment charges and reversals and other non-cash charges.
For the purpose of calculating CODELCOSs ratio of earnings to fixed charges (adjusted), (1) earnings consist of Adjusted EBIT and (11) fixed charges consist of finance cost. The ratio of earnings to fixed charges (adjusted) 1s calculated by dividing Adjusted EBIT by finance cost.
See note 20 of the Consolidated Financial Statements and the Unaudited Interim Consolidated Financial Statements.
The Copper Reserve Law currently requires the payment of a 10% special export tax on recerivables of the sales proceeds that CODELCO recelves and transfers to Chile from the export of copper and related by products produced by CODELCO. For further information, see Risk Factors- Risks Relating to CODELCOs Relationship with the Government of Chile- CODELCO is subject to special taxes.
45 The following table shows CODELCOs debt and ratio of debt to Adjusted EBITDA and Adjusted EBITDA coverage ratio for the periods indicated.
As of and for the nine-month period ended As of and for the year ended December 31, September 30, 2021 2022 2023 2023 2024 (in thousands of U.S.S, except ratios) De Dlicoconicicicicconocononononononcnonononnononcnnnnnnnos 17,241,500 16,958,377 20,198,102 20,024,987 22,233,216 Ratio of debt to Adjusted EBITDA …….. 1.7 3.0 5.7 N.A. 5.7 Finance INCOME coococcccnnnoncnnnnnnnnannnnnnnnnnnnss 13,657 47,245 99,051 69,700 104,935 Adjusted EBITDA coverage ratio’?…….. 16.5 10.7 5.3 6.2 6.7
(1) Adjusted EBITDA coverage ratio 1s the ratio of Adjusted EBITDA to finance cost net of finance income.
46 SELECTED OPERATING DATA The following table sets forth a summary of the production and sales data of CODELCO for each of the years ended December 31, 2021, 2022 and 2023 and for the nine-month periods ended September 30, 2023 and 2024. For more information regarding such data, see Business Properties.
As of and for the nine-month
As of and for the year ended period ended December 31, September 30, 2021 2022 2023 2023 2024 COPPER MINING OPERATIONS Ore Mined (in thousands of dry metric tons): Mina Ministro Hales ……occoocccnccnnccnnc…. 16,492 20,125 22,153 16,473 15,977 Chuquicamata DIVISION .0oooonnnnnnnnnnnnnnan os 48,776 43,503 27,790 19,326 27,716 Radomiro Tomic DivisSiON……occ..cc……. 80,597 83,910 88,456 67,729 52,120 Gabriela Mistral Division………………… 38,030 39,060 41,256 30,351 29,055 El Teniente DivisiOM……oonnocinnicnicn…. 55,754 52,658 46,388 35,082 33,504 Andina Divisi0N …oooooioninnninninnnnccinicinnos 26,546 27,150 26,150 19,018 22,166 Salvador DivisSi0O…..ooonoonnnnnnnnnnnnoninnco 10,729 8,980 2,094 2,364 – Total…ooonnonnnninincnncnncnnoncnncnncnncnncnnanos 276,915 275,386 254,287 190,343 153,450 Average Copper Ore Grade: Mina Ministro Hales …….o.o…oonnnncncnnnn…. 1.31 1.04 0.83 0.87 0.66 Chuquicamata DIVISION .0oooonnnnnnnnnnnnnnan os 0.64 0.55 0.45 0.44 0.44 Radomiro Tomic Divisi0N……………….. 0.56 0.52 0.50 0.53 0.45 Gabriela Mistral Division………………… 0.40 0.43 0.42 0.41 0.43 El Teniente DiviSiON…..ononcncnnnnnninnnnno. 0.91 0.88 0.88 0.89 0.87 Andina DivisSiON …oooonccnconcccononnconcnncnnons 0.84 0.81 0.79 0.80 0.76 Salvador DiviSiON….ooooncononnocnnnoninncnncnns 0.66 0.58 0.58 0.58 – Weighted Average…..occcccccccncncnos. 0.70 0.65 0.61 0.62 0.61 PLANT COPPER PRODUCTION (by division in metric tons): Mina Ministro Hal6S….ooooocconinnoinnonnnnono.: 181,704 152,167 126,010 80,652 64,665 Chuquicamata DIVISION ..oooocccccnoccccninnannnnns 319,280 268,348 248,495 177,888 194,846 Radomiro Tomic DIVISION ….oocoocccncccnnccn… 326,456 301,062 314,805 239,134 196,520 Gabriela Mistral DIVISION …..coooooncccccncnnnos. 100,908 109,524 105,825 73,812 77,132 El Teniente DIVISION ….oocccoccnnccnncconioconiccnns. 459,817 405,429 351,874 261,692 245,483 Andina DiviSiON….ooonccinnonincnnincinincnniniconns 177,216 177,027 164,545 120,081 139,602 Salvador DIVISION ….oocoooccnccnnnccnncconoconiconns. 52,885 32,065 13,000 12,278 – Total..ooooonnnnnncccccccnnnonononnnanaccccncnnnons 1,618,266 1,445,621 1,324,554 965,537 918,249 PLANT COPPER PRODUCTION (contained copper in metric tons): ER CathodeS …oooooccccccccccncncnononnnnnaccconoconanos 60,210 22,525 2,658 2,658 29,120 SX-EW CathodeS….ccoooooononnnccccccncccnonononnnos 414,556 392,524 365,350 270,329 235,142 A 135,913 136,099 109,782 78,383 54,552 Anodes – Blister ………ooocccccccccccnnnnnnnnnncccos. 388,084 376,380 334,435 239,442 193,465 White Metal……occccccccnnncnnnnnncccccncccnnnnnnononos 4,384 4,079 7,861 3,398 2,476 CONCENETALES c.cconconccnccononnnnnnnnnncnncnncananccnnino 615,119 514,015 504,467 371,327 403,494 Total…ooonnonnnninincnncnncnnoncnncnncnncnncnnanos 1,618,266 1,445,621 1,324,554 965,537 918,249 MOLYBDENUM PRODUCTION (contained molybdenum in metric tons) …. 21,045 20,498 17,254 12,191 11,813 COPPER SALES (in metric tons; includes sales of third-party copper): CathodesS …ooccccccccnnnnnnnnnnccccnncnnnnnnnnnnonananinoss 1,253,251 1,131,038 1,129,220 839,106 783,398 Fire Refined….ooocccccnnnncccnnnononnnoccnnnnnnnanononns – – – – – Anodes – Blister ………ooocccccccccccnnnnnnnnnncccos. 106,679 108,351 92,687 67,870 41,611 ConcentrateS …oooococcoccnncncnnnnnnncnncnncnnanncnnanos 553,902 492,578 442,384 318,706 346,921 Total..ooonconncnnonicinicincanoncnncnncnncnnncnos 1,913,832 1,731,967 1,664,291 1,225,682 1,171,930
COPPER EXPORTS (in metric tons; includes sales of third-party copper):
Cathodes …oocooccnccnncnnocnocnncnnoconcnnocnnconioccnonnos 1,133,925 1,059,316 1,041,686 771,096 710,757
BÍISteT …ooooocooccncnnocnnccnocnnconoccnconocnorononncnnnos 106,689 108,351 92,687 67,870 41,611
CONCENILAtES ..coooococccnononccononnnnconon cnc connncnnnos 332,733 301,940 304,491 219,179 248,185
Total 1,573,367 11469607 1,438,864 1,058,145 1.000.553 INVENTORIES OF COPPER AT
PERIOD-END (1N MEÉTIC tONS) …occccnnnnnnnnnnnooccccnnnnnnnnnnnnnnos 12,222 19,372 40,135 20,911 33,619
48 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with CODELCO’s Consolidated Financial Statements, including the notes thereto, included elsewhere in this offering memorandum, as well as the data set forth in Selected Consolidated Financial Data. Except as otherwise disclosed herein or indicated, the Consolidated Financial Statements and other financial information included in this offering memorandum are presented in accordance with IFRS.
Overview
CODELCO is the worlds largest copper producer and one of the largest companies in Chile in terms of revenues. CODELCO engages primarily in the exploration, development and extraction of ore-bearing copper and byproducts, the processing of ore into refined copper and the international sale of refined copper and byproducts. In 2023, CODELCO derived 90.4% of its total sales from copper and 9.6% of its total sales from byproducts of its copper production, primarily molybdenum, anodic slimes, and sulfuric acid.
Since its inception in 1976, CODELCO has contributed approximately U.S.$160.9 billion (in 2022 currency) to the Chilean Treasury. Approximately 63.0% of this amount was generated in the last 20 years, representing 8.4% of the revenues of the Government of Chile. In 2023, CODELCO accounted for 15.2% of all Chilean exports.
CODELCOSs financial performance is significantly affected by the market prices of copper. As with prices for other commodities, copper prices have historically been subject to wide fluctuations. LME copper prices averaged 384.5 cents per pound in 2023 compared to 399.0 cents per pound in 2022 and 422.6 cents per pound in
2021. Copper prices averaged 414.3 cents per pound in the first nine months of 2024, compared to 389.6 cents per pound in the first nine months of 2023. Prices have been affected by the COVID-19 pandemic in 2020, following by the recovery of the global economy during 2021 and a lower growth in China in 2022 and 2023. In 2024, prices experienced a recovery primarily driven by challenges faced by copper producers in meeting market demand. For more information, see Overview of the Copper Market.
CODELCO continues to focus on controlling and limiting production cost increases. For many years, CODELCO was within the first or second quartiles in the industry with respect to costs. This position was primarily attributable to the quality of its ore bodies, its economies of scale and the experience of 1ts workforce and management.
Currently, CODELCO is in the third quartile of the industry?s cost curve. The Company intends to make every effort, through investment and management, to be within the first or second quartiles of the industry?s cost curve in the long-term.
In 2023, CODELCOS*Ss total costs and expenses increased by 24.2 cents per pound (7.8%) to 335.1 cents per pound, compared to 310.9 cents per pound in 2022 and 254.3 cents per pound in 2021, mainly due to lower copper production, higher operating costs, and the foreign exchange rate appreciation of the Chilean peso against the U.S. dollar.
For the first nine months of 2024, CODELCOS*s total costs and expenses increased by 9.6 cents per pound
(1.8%) to 373.2 cents per pound, compared to 363.7 cents per pound for the same period in 2023, mainly due to lower production, partially offset by foreign exchange rate depreciation of the Chilean peso against the U.S. dollar, and a slight decrease of the operating costs.
In 2023, CODELCO” s total costs and expenses increased to U.S.$10.7 billion, compared to U.S.$9.9 billion 1n 2022, and to U.S.$9.1 billion in 2021, mainly due to higher labor and third-party services costs as a consequence of the foreign exchange rate appreciation of the Chilean peso against the U.S. dollar for 2023 compared to 2022 and due to lower production. and higher input prices and depreciation of the Chilean peso against the U.S. dollar for 2022 compared to 2021. For the first nine months of 2024, CODELCO”s total costs and expenses amounted to
U.S.$7.5 billion, compared to U.S.$7.7 billion for the same period in 2023, primarily due to lower operating costs,
49 partially offset by increased expenses for bonuses resulting from the negotiation of 25 collective bargaining agreements in 2024. In 2023, CODELCOS*”s cash cost of production was 203.1 cents per pound, compared to 165.4 cents per pound in 2022 and 132.7 cents per pound in 2021.
For the first nine months of 2024, CODELCOs cash cost of production was 205.0 cents per pound, compared to 204.3 cents per pound for the same period in 2023 primarily due to lower production, compounded by reduced by-product credits resulting from decreased molybdenum prices and lower sales volumes. In 2023, CODELCOS total cash cost was U.S.$5.8 billion, compared to U.S.$5.2 billion in 2022 and U.S.$4.7 billion in
2021. For the first nine months of 2024, CODELCO”s total cash cost was U.S.$4.1 billion, as compared to
U.S.$4.3 billion for the same period in 2023 (such total cash cost includes certain cash cost incurred at the corporate level).
CODELCO conducts hedging operations from time to time to reduce the risks associated with copper price volatility. CODELCO also periodically enters into futures contracts with respect to certain sales of 1ts own copper.
Since 2005, CODELCO has occasionally hedged certain future copper delivery commitments and production in order to manage the risks associated with copper price volatility. As of September 30, 2024, CODELCO did not have any production hedging commitments and, accordingly, there was no related impact on pre-tax income for the nine-month period ended September 30, 2024. See notes 28 and 29 to the Unaudited Interim Consolidated Financial Statements.
CODELCO has hedged a portion of 1ts exchange rate and interest rate exposure by entering into forward exchange contracts to hedge against fluctuations in the UF to U.S. dollar exchange rate for 1ts outstanding UF-denominated bonds. See Business and Properties-Marketing-Pricing and Hedging and Risk Factors- Risks Relating to CODELCOs Operations-CODELCO engages in hedging activity from time to time, particularly with respect to 1ts copper production, which may not be successful and may result in losses tó CODELCO. See also notes 27 and 28 to the Consolidated Financial Statements and notes 28 and 29 to the Unaudited Interim Consolidated Financial Statements for further information on CODELCOs hedging activity.
Sale prices for CODELCOs products are established principally by reference to prices quoted on the LME and the New York Commodity Exchange (COMEX) in the case of copper, or prices published in Metals Weekly in the case of molybdenum. The substantial majority of copper produced by CODELCO is sold under annual contracts to customers who have long-term relationships with CODELCO. Pricing under such contracts 1s based on prevailing average copper prices for a quotation period, generally for the month following the scheduled month of shipment. Revenue under such contracts 1s recorded at provisional prices determined at the time of shipment. Usually, an adjustment is then made after delivery of the copper, based on the pricing terms contained in the applicable contract.
CODELCOS*Ss financial performance is also significantly affected by the relationship of copper prices to production costs. In 2023, CODELCOs annual production, including its investment in El Abra and Anglo American Sur, was 1.42 million metric tons from 1.55 million metric tons in 2022 and 1.73 million metric tons in 2021. The production in 2023 was lower mainly due to lower production at Chuquicamata, El Teniente, Gabriela Mistral and Ministro Hales, partially offset by the higher production at Radomiro Tomic.
In 2023, each U.S.$0.01 change in CODELCOs average annual copper price per pound caused a variation in revenue of approximately U.S.$31.4 million. CODELCO expects production to decrease in the near future resulting from lower average ore grades and lower reclamations levels and to stabilize over time. CODELCO continues to develop its project pipeline with the goal of increasing its production marginally in the long-term, by overcoming certain non-permanent disruptions, such as inclement weather and other natural events. See Risk Factors-Risks Relating to CODELCOs Operations-FEarthquake damage to CODELCOs properties and operations could negatively affect CODELCOS”s results.
CODELCO continues to develop and refine its mine management practices and programs to limit and reduce its costs. These include the following: (1) improved deposit identification and mining techniques; (11) the implementation of early retirement plans and workforce reduction programs; (111) an investment in human capital and continuing to attract and retain a world-class management team and professionals of the highest caliber; (1v) improved utilization of equipment and inputs used in the processes of copper production to increase productivity
S0 and efficiency; and (v) the development of key projects, specifically the new mine level at El Teniente, the Andina plant reallocation and the Chuquicamata underground mine projects. Production cash costs are influenced by mining and production practices, as well as the type of ore from which copper is produced, production levels and market prices of byproducts, and foreign exchange rates.
In 2023, CODELCO invested U.S.$2.7 billion mainly in expansion and development projects, including the new El Teniente mine level, the Chuquicamata underground mine expansion and the execution of the Inca Pit project. See Business and Properties.
In addition to selling 1ts current production of copper, CODELCO may sell copper in its inventory from past production cycles to meet the demand of its customers. CODELCO also purchases copper from third parties in the spot market for resale. The Company makes these purchases and sales of third-party copper to meet the requirements under sales contracts and to participate in the spot market for copper based on its evaluation of market conditions. CODELCO has no long-term commitments regarding third-party copper purchases or sales other than pursuant to the joint venture with China Minmetals Non-Ferrous Metals Co. Ltd. (Minmetals), a Chinese state-owned metals company. This joint venture ended in April 2016 and the related selling commitment ended in February 2021. For more information on Minmetals, see Business and Properties-Associations, Joint Ventures and Partnerships. CODELCO also engages in copper transactions with 1ts affiliates at market terms. In addition, CODELCO purchases copper from its affiliates for further processing and resale.
The following tables set forth, for the periods indicated, the components of CODELCOs consolidated financial statements of operations expressed as a percentage of revenue under IFRS. These tables are qualified in their entirety by reference to, and should be read together with, CODELCO”s Consolidated Financial Statements, including the notes thereto, included elsewhere in this offering memorandum:
For the nine-month period ended Year ended December 31, September 30, 2021 2022 2023 2023 2024 Revenue coccccoooononnononn nono non no nnn non nnnnnonnnnnnnnnnnnnnnnns 100.0% 100.0% 100.0% 100% 100% Cost of Sales…………ooooocccccncnnnnnnnnnnnnnnnnnnnnnnnnnnnns (58.0) (72.2) (81.0) (81.0) (75.0) GTOSS PTOÍTE …..oocccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos 42.0 27.8 19.0 19.0 25.0 Other INCOME …ooocnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 0.6 0.4 0.6 0.5 0.5 Administrative expenses …..oocccccccnnnnnnnnnnnnnnnnonos (2.2) (3.0) (3.3) (3.2) (3.0) Other expenses, by functi0N ……….coccccccccccncnnnos (12.9) (12.4) (12.6) (12.1) (14.2) Finance COStS ..ooooonncncccnnnnnnnnnnnnnnnnononononnnnnnnnnnnnnos (3.0) (3.3) (4.8) (4.7) (5.6) Profit (loss) before Income tAX …oocccccccnnnnnnnnnnns. 28.1 8.8 (4.6) (0.6) S.0 Income tax ExXpenSe ..occcccccccccnnnnonoccncncnnnnnnnnnnnnnos (18.3) (6.7) 1.0 0.8 3.1 Profit (loss) for the perlOd …ooooonnccnnnincncncccaooonoo: 9.8% 2.1% (3.6) % 0.2% 1.8%
The following tables set forth, for the periods indicated, certain price, volume and cost data:
For the nine-month period ended
Year ended December 31, September 30, 2021 2022 2023 2023 2024 CODELCO Average Metal Price (per pound) COPPOT..oococccoo..o. $4.36 $3.76 $3.81 $3.85 $4.24 Molybdenum ….. $15.31 $18.2 $24.3 $26.3 $20.9 CODELCO Sales Volume (in metric tons) Own copper (2). 1,546,164 1,664,341 1,562,629 1,154,532 1,107,363 Third-party COP coccinincnos 193,309 192,831 195,493 139,641 107,610 Total copper …… 2,039,473 1,857,172 1,758,122 1,294,173 1,214,973
51 Molybdenum (in oxide and concentrate)….. 21,754 20,889 16,964 12,502 11,206 CODELCO”s Cash Cost of Production (per pound)…………… 132.76 165.44 203.1é 204.3€ 205.06
(1) The average metal price 1s the weighted average of prices actually paid to CODELCO for its product mix.
(2) Includes wire rod sales and cathodes from CODELCOS”s subsidiaries.
Impact of COVID-19
The COVID-19 pandemic and the resulting economic impact have primarily contributed to a decrease in copper prices in 2020. However, in 2021, LME copper prices increased to 424.5 cents per pound compared to 279.8 cents per pound in 2020, which was attributable to the Chinese and global economies recovery from the COVID- 19 pandemic during 2021. In 2022, LME copper prices averaged 399.0 cents per pound in 2022 compared to 424.5 cents per pound in 2021, mainly due to a lower growth in China and the slowdown of the economy post pandemic.
Copper prices averaged 390.0 cents per pound in the first nine months of 2023, compared to 411.1 cents per pound 1n the first nine months of 2022, due to global economic uncertainty and lower growth mainly in China due to strong anti-COVID measures that have slowed the recovery. CODELCOs financial results and prospects are largely dependent on the prices of copper. If economic conditions further deteriorate in China or other emerging markets, demand from customers in those markets could decline and the market price of copper could fall. A decline in copper prices would have an adverse impact on CODELCOs revenues and financial results.
CODELCO has taken steps and implemented several measures to safeguard 1ts employees, businesses and the communities surrounding its operations from the threats posed by the COVID-19 pandemic. Although these steps and measures have not materially affected CODELCOs production or its financial results in 2020 or 2021, the ultimate impact of COVID-19 on CODELCO'”s financial and operating results is unknown and will be reflected in CODELCOSs results of operations over several periods in the future in a disaggregated manner.
Results of Operations for the nine-month Periods Ended September 30, 2023 and 2024
The following table sets forth CODELCOs summarized results of operations for the nine-month periods ended September 30, 2023 and 2024:
For the nine-month period ended
September 30, % Change 2023 2024 20232024 (in millions of U.S.S$) ROVONnUE cocooooooononnnnnnnnncnnnnnnnnnnnononnnnnnnncnnnnnnnnnn nro nnnnnnnnnnnnnnnnnnnn nn nn nnnnnnnnnncnnnnnnnnnnnnss 12,218 12,315 0.8 Cost of Sales ……oooooooonnnncccncnnnnnnnnnonononococcncnnnnnnnononononorccnnnnnnnnn non nnnnnnrncnnnnnnnnnnnnnns (9,899) (9,231) (6.7) GTOSS PTOÍTE …ooooccnnnnnnnnnnnnnnnnnnnnnnnnnnnnn nro n nn non nono nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 2,320 3,083 32.9 Other INCOME ccccoccnnnnnnoonccnnononnnnnnnononononnnncnnnnnnnnnnnnnnnnnrnncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnns 65 63 (2.8) Administrative OXpenSesS ….oooocccnccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss (393) (370) (5.8) Other expenses, by fUNcti0N ………oooccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss (1,477) (1,752) 18.7 FIMAnce COSÉS ..ooooonccncconnnnnnnonononononnncnnnnnnnnnnnonnnnnrnrncnnnnnnnn non nnnnnnnrrnnnonnnnnnnonnnnnnnnnoss (570) (686) 20.3 Share of profit of associates and joint ventures accounted for using (134) 84 (162.9) equity MethOd coooooonnnnnnnnncnnnnnnnannnanananononnnnonnn nono nono nn nono
Foreign exchange dIÍÍerenceS…oococcccccconoooononanononononn nono nono non nono nn nono non non nn nan nnnnnn nos 36 69 90.1 Profit (loss) before INCOME tAX …occccccnnnnnnnnnnonoonccncnnnnnonononononononcccnononnnononnnnnanonoss (76) 612 (910.4) INCOME (aX EXPENSO .ococccccccncnnnonoccnnnnnnnnnnnnonnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 94 (385) (509.1) Profit (loss) for the period ..oooooocnccccccononanonanananananononno no nono nono ono nono nono nnn non nnnnnn non nos 19 227 1,128.5 Profit (loss) attributable to OWNerS OL PArelMt .ooooocncnncccncnonanananonanononnnno ono nono nono no 66 213 222.3 Profit (loss) attributable to non-controlling INterestS …oooonnnncnnncnononaonnnnaanonononono (48) 14 (129.9)
Revenue. The following table sets forth CODELCOs revenue for the nine-month periods ended September 30, 2023 and 2024:
52 For the nine-month period ended
September 30, % Change 2023 2024 2024 (in millions of U.S.S$) A 12,218 12,315 0.8 Sales of CODELCOS OWN COPPOT ooccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 9.802 10,350 5.6 Sales Of third-party COPPOT….oocccccccccnnccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnoss 1,208 1,024 (15.2) Sales of byproducts and Other……….occccccccncnnnnccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnininoss 1,208 941 (22.1)
Revenues increased by 0.8% to U.S.$12.3 billion in the first nine months of 2024, compared to
U.S.$12.2 billion for the same period in 2023. This increase was primarily attributable to a 10.2% increase in copper prices during the first nine months of 2024 compared to the same period in 2023. While CODELCOs own copper sales volume increased by 5.6%, this was offset by a decrease in third-party volumes, leading to an overall decline in total sales volume.
Third-party copper sales totaled U.S.$1.0 billion in the first nine months of 2024, compared to U.S.$1.2 billion for the same period in 2023, attributable to a decrease of sales volume. In general, changes in the volume of third-party copper sales are dependent upon CODELCOs need to meet requirements under sales contracts and, to a lesser extent, purchasing copper under spot market terms 1f CODELCOs own production 1s insufficient to cover the quantities that 1t has agreed to supply 1ts customers.
Sales of byproducts and other decreased 20.1% to U.S.$0.9 billion in the first nine months of 2024, compared to U.S.$1.2 billion for the same period in 2023. This decrease was primarily due to the 20.5% decrease in average realized price of molybdenum from 20.9 cents per pound in the first nine months of 2024 compared to 26.3 cents per pound for the same period in 2023.
Cost of sales. CODELCOS”s cost of sales in any period includes both the mining and production costs of its own copper and byproducts and the purchase costs of copper, as well as gold, silver and other byproducts, at market prices from third parties and processed and sold by CODELCO in that period. The following table sets forth CODELCOSs total cost of sales for the nine-month periods ended September 30, 2023, and 2024:
For the nine-month period ended
September 30, % Change 2023 2024 2024 (in millions of U.S.S$)
Cost of Sales …ooooooonocoooocnonocononcononononcconnncnnn nono nn cnn n nono nn ono nc anar rann ran rra ranas (9,899) (9,231) (6.7) Cost of CODELCO’S OWN COPPOT coooococccccononcnncnnoncnncncnncnnononnan can cnnoncnnns (8,118) (7,705) (5.1) Cost of third-party Sal8sS …..onnnncninnnnninonnnncnonnncnncncnn cnn no nononcnn cnn nncncncinns (1,200) (1,011) (15.8) Cost of byproducts and OtheT….oocnocinonnnnonnnnonnnnonnncnonocancno nn cnn nn cnncncinns (581) (516) (11.2)
CODELCO”s total cost of sales decreased by 6.7% to U.S.$9.2 billion (75.0% of sales) in the first nine months of 2024, compared to U.S.$9.9 billion (81.0% of sales) for the same period in 2023, primarily due to a decrease of 15.8% of cost of third-party sales with respect to the same period last year. Lower operational costs in local currency due to the depreciation of the Chilean peso against the U.S. dollar (for the nine months ended September 30, 2024, the average exchange rate was CLP 937 per U.S. dollar compared to CLP 821 per U.S. dollar for the same period in 2023) decreased cost of sales. Some of the minerals that CODELCO sells are purchased at market prices, and CODELCO also purchases mineral ore from third parties at market prices which 1t processes and sells as copper.
CODELCO”s cost of sales of its own copper decreased by 5.1% to U.S.$7.7 billion during the first nine months of 2024, compared to U.S.$8.1 billion for the same period in 2023. This decrease is primarily attributable to the depreciation of the Chilean peso against the U.S. dollar that impacted salaries and contracts, contributing to an overall decrease in costs.
The cost of copper purchased from third parties decreased by 15.8% in the first nine months of 2024 to
U.S.$1.0 billion, compared to U.S.$1.2 billion for the same period in 2023. The decrease was mainly caused by a lower sales volume of third-party copper.
53 The cost of byproducts and other decreased by 11.2% to U.S.$515.7 million in the first nine months of 2024, compared to U.S.$580.0 million for the same period in 2023, primarily due to lower operational costs, and a depreciation of the Chilean peso against the U.S. dollar that impacted salaries and contracts, contributing to an overall decrease in cost. Depreciation and amortization expenses remained relatively flat at U.S.$1,652 million during the first nine months of 2024, compared to U.S.$1,672 million for the same period in 2023.
Gross profit. Gross profit amounted to U.S.$3.1 billion for the first nine-months of 2024, compared to
U.S.$2.3 billion for the same period in 2023. This 24.8% increase was primarily attributable to the decrease in sale costs due to a depreciation of the Chilean peso against the U.S. dollar positively impacting salaries and contracts, and the higher copper prices for the period, partially offset by lower production.
Other income. The largest components of other income are other miscellaneous income, miscellaneous sales and penalties to suppliers. Other income decreased 2.8% to U.S.$62.8 million in the first nine months of 2024, compared to U.S.$64.5 million for the same period in 2023.
Administrative expenses. Administrative expenses decreased to U.S.$370.2 million (3.0% of total revenues) during the first nine months of 2024, compared to U.S.$393.0 million (3.2% of total revenues) for the same period in 2023. This decrease was primarily attributable to the effect of the depreciation of the Chilean peso against the
U.S. dollar and a decrease in the Consumer Price Index (CPI) that impacted salaries and contracts contributing to an overall decrease in costs.
Other expenses, by function. Other expenses, by function amounted to U.S.$1.8 billion (14.2% of total revenues) during the first nine months of 2024, compared to U.S.$1.5 billion (12.1% of total revenues) for the same period in 2023. This increase was primarily attributable to disbursements for the negotiation of collective bargaining agreement bonuses.
The following table sets forth the principal components of CODELCO’s other expenses, by function for the periods indicated:
For the nine-month period ended September
30, 2023 2024 (in millions of U.S.S$)
Copper Reserve La W…..occccccccccccncononooccnnncnnnnnnnonononnnnnnnnnnnnnnnnnnnnonnnnnnnnnnnnnnnnnrnnnnnnnnnnnnnnnnnnnnnnnos! 949 943 Bonus for the end of collective bargaining and other employee benefltS ….oooooccnncnccocaaaaonn nos. 44 261 Other non-cash charges 79 34
Other expenses .cccoonooooooooncnnnnncccnnnnnnnnnnnononnnnnncnnnnnnnnnnn nor nnnnnnnnnnnnnnnnnnnn nn nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnno: 404 430
1,477 1,752
Total other expenses by ÍUNCtON…ooooocccccocononananononoonnnnnnon nono nnnnononnnnno nono non nn non nn n nn non nnnnnos!
CODELCO recorded other expenses by function of U.S.$1.5 billion and U.S.$1.7 billion in the first nine months of 2023 and 2024, respectively, pursuant to the Copper Reserve Law, which levies a 10.0% tax on CODELCO’s exports of its own copper and related byproducts. Under the accounting policies adopted by CODELCO, this export tax 1s accounted for in other expenses, by function. The decrease of this tax recorded in the first nine months of 2024 compared to the same period in 2023 is primarily attributable to lower revenues from sales of molybdenum.
Bonuses for the end of collective bargaining and other employee benefits increased to U.S.$260.7 million for the nine months ended September 30, 2024, from U.S.$44.2 million for the nine months ended September 30, 2023, due to the negotiation of 25 collective bargaining agreements in 2024, which resulted in increased expenses for termination bonuses.
Other expenses (as a sub-category of other expenses as a whole) increased from U.S.$404.4 million for the nine months ended September 30, 2023, to U.S.$430.0 million for the nine months ended September 30, 2024, mainly due to an increase in study expenses, which include exploration expenses, pre-investment studies, research and technological innovation expenses, and write-offs of investment projects.
54 Finance costs. Finance costs increased to U.S.$686.0 million in the first nine months of 2024, compared to
U.S.$570.4 million for the same period in 2023. This increase was primarily attributable to higher average debt amount in 2024 than in 2023 mainly related to the issuance of bonds in January 2024 and higher average interest rate. The average interest rate was 4.8% as of September 30, 2024, compared to 4.6% as of September 30, 2023. As of September 30, 2024, 90.6% of our debt had a fixed rate and 9.4% had a floating rate.
Share of profit(loss) of associates and joint ventures accounted for using equity method. CODELCO”s net equity participation in related companies increased to a net profit of U.S.$84.4 million in the first nine months of 2024, compared to a net loss 0fU.S.$134.3 million for the same period in 2023, primarily attributable to an improved accrued result from the participation in Anglo American Sur compared to the loss recorded in the same period in
2023.
Foreign exchange differences. According to Decree Law 1,350, CODELCO maintains its accounting records in U.S. dollars, recording transactions in currencies other than U.S. dollars at the exchange rate current at the date of each transaction and, subsequently, for monetary assets and liabilities denominated in currencies other than the U.S. dollar, at the closing exchange rate determined by the Central Bank of Chile. CODELCO experienced a gain from foreign exchange differences of U.S.$69.1 million in the first nine months of 2024, compared to a gain from foreign exchange differences of U.S.$36.4 million in the same period of 2023. The gain recorded in the first nine months of 2024 ¡s primarily attributable to the depreciation of the Chilean peso against the U.S. dollar during the nine-month period ended September 30, 2024 as compared to December 31, 2023.
Profit (loss) before income tax. Profit before income tax was U.S.$612.2 million during the first nine months of 2024, compared to the loss before income tax of U.S.$75.6 billion for the same period in 2023, due to higher gains from operating activities primarily attributable to lower costs.
Income tax expense. During the first nine months of 2024, CODELCO had a statutory tax rate of 65.0% in accordance with applicable regulations, comprised of (1) a corporate income tax rate of 25.0% and (11) a 40.0% tax on net earnings applicable to state-owned enterprises as specified by Decree Law 2,398, Art. 2. During the first nine months of 2024, CODELCO was subject to the same statutory tax rate of 65.0%. CODELCO is subject to the mining royalty tax under Law No. 21,591, which generally comprises an Ad Valorem component which applies a tax rate of 1% on annual copper sales, and a mining margin component which applies a progressive tax rate (1.e., 8%-26%) on the adjusted taxable mining operating margin. In addition, a maximum potential tax burden of 46.5% 1s established on the mining entity?s operating profitability, measured as the adjusted pre-taxable mining operating income. CODELCOS*s statutory rate of the mining tax for 2021, 2022 and 2023 was 5.0%. CODELCO”s taxes on income amounted to an expense of U.S.$384.8 million during the first nine months of 2024 and an income of
U.S.$94.1 million during the same period in 2023. The increase in expense from taxes on income was primarily due to the profit before tax generated during the first nine months of 2024.
Profit for the period. As a result of the factors described above, CODELCOs profit after tax was
U.S.$227.4 million during the first nine months of 2024, compared to a profit after tax of U.S.$18.5 million for the same period in 2023.
55 Results of Operations for the Three Years Ended December 31, 2023
The following table sets forth CODELCOs summarized results of operations for the years ended December 31, 2021, 2022 and 2023:
Year ended December 31, % Change 2021 2022 2023 20212022 20222023 (in millions of U.S.$)
Revenue coccccnocconoonnonn nono nono no nonnononononnnnnnnnos 21,025 17,018 16,393 (19.1) (3.7) Cost of Sales…………ooocccccccccnncnnnccnnnncnnnonoss (12,186) (12,285) (13,273) (0.8) 8.1 GTOSS PTOÍTE…..oococcccnnncnnnnnnnnnnnnnnnnnnnnnnnnnnnss 8,839 4,734 3,120 (46.4) (34.1) Other income, by functi0N…………..ocooo….. 116 65 93 (44.1) 43.7 Administrative expenses ……ccccccccncnnnnnnnnso (459) (502) (544) 9.4 8.4 Other expenses ..ccooonncooooonncnnnnnccccnonanananonoss (2,717) 2,103 2,062 (22.6) (198.1) Finance COStS ..ooooonncccccnnnnnnnononononinonococononoss (641) (569) (778) (11.2) 36.9 Share of profit (loss) of associates and joint ventures accounted for under the equity method……….ooccccccnnnnnnnooncncnnnnns 415 52 (658) (87.5) (1365.4) Foreign exchange differencesS……oooonnnn….. 314 (238) (45) (175.8) (81.1) Profit (loss) for the period before tax ……. 5,907 1,495 (757) (74.7) (150.0) Income tax exXpenSe ..cccccccccncnnnnnonooccnnnnnnnnos (3,855) (1,134) 165 (70.6) (114.6) Profit (loss) for the perlod…..ooooonnnnnnoooo.o. 2,051 362 (591) (82.4) (263.3) Profit (loss) attributable to owners of PATO coccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnononnss 1,942 346 (375) (82.2) (208.4) Profit (loss) attributable to non-controlling interests …………ccccccccccnos. 109 16 (216) (85.3) (1,451.7)
Revenue. The following table sets forth CODELCOs revenues for the years ended December 31, 2021, 2022 and 2023:
Year ended December 31, % Change 2021 2022 2023 20212022 20222023 (in millions of U.S.S$)
Revenue coooooooooooonnnnnnccnnnnnnnonnnnnnnnnnnnnnnnnnnnnns 21,025 17,018 16,393 (19.1% 3.7% Sales of CODELCOs own copper…….. 17,715 13,853 13,149 (21.9% (5.1% Sales of third-party Copper ……………….. 1,846 1,640 1,673 (11.0% 2.0% Sales of byproducts and other……………. 1,464 1,526 1,571 4.6% 2.4%
In 2023, revenues decreased by 3.7% to U.S.$16.4 billion, compared to U.S.$17.0 billion in 2022. This decrease was primarily attributable to a lower sales volume in 2023 compared to 2022. Our own copper sales decreased by 5.1% mainly due to lower sale volume due to lower production. In 2022, revenue decreased by 19.1% to U.S.$17.0 billion, compared to U.S.$21.0 billion in 2021. This decrease was primarily attributable to a lower sales volume and a decrease in CODELCO'”s average copper price from U.S.$4.36 per pound in 2021 to U.S.$3.76 per pound in 2022.
In 2023, our own copper sales decreased by 21.9% mainly due to lower sale volume resulting from lower production levels in 2022. In 2022, our own copper sales increased by 50.4% mainly due to the increase in CODELCOSs average copper price in 2021.
Third-party copper sales totaled U.S.$S1.7 billion in 2023 compared to U.S.$1.6 billion in 2022, attributable to higher copper prices. In 2021, third-party copper sales totaled U.S.$1.8 billion, which was higher than 2022 as a result of higher average price of copper and sales volume in 2021.
In general, changes in the volume of third-party copper sales are dependent upon CODELCO’s need to meet requirements under sales contracts and, to a lesser extent, purchasing copper under spot market terms 1f CODELCO’s own production is insufficient to cover the quantities that 1t has agreed to supply its customers.
Sales of byproducts and other increased 2.4% to U.S.$1.6 billion in 2023, compared to U.S.$1.5 billion in
2022. This increase was primarily due to the 34.0% increase in molybdenum prices offsetting the decrease in molybdenum sale volume and other byproducts income. In 2022, these sales increased by 4.6% to U.S.$1.4 billion,
S6 compared to U.S.$1.5 billion in 2021. This increase was primarily due to an increase in molybdenum prices by 18.6% in 2022.
Cost of sales. CODELCO”s cost of sales in any period includes both the mining and production costs of its own copper and byproducts and the purchase costs of copper, as well as gold, silver and other byproducts, at market prices from third parties and processed and sold by CODELCO in that period. The following table sets forth CODELCOSs total cost of sales for the years ended December 31, 2021, 2022 and 2023:
Year ended December 31, % Change 2021 2022 2023 20212022 20222023 (in millions of U.S.S$)
Cost of Sales…………ooocccccccccnnnnnnnnnnnnnnnnoninonoss 12,186 12,285 13,273 0.8% 8.0% Cost of CODELCO’s own copper ……….. 9,611 9,932 10,835 3.3% 9.1% Cost of third-party sales ……oonoinnnininc…. 1,823 1,647 1,658 (9.1% 0.7% Cost of byproducts and other………………. 752 706 780 (6.0% 10.4%
CODELCO”s total cost of revenue increased by 8.0% to U.S.$13.3 billion (81.0% of revenue) in 2023, compared to U.S.$12.3 billion (72.2% of revenue) in 2022, and compared to U.S.$12.2 billion (58.0% of revenue) in 2021, primarily due to higher input prices and lower production.
Some of the minerals that CODELCO sells are purchased at market prices, and CODELCO also purchases mineral ore from third parties at market prices which it processes and sells as copper.
CODELCO”s cost of sales of its own copper increased 9.1% to U.S.$10.8 billion in 2023 compared to
U.S.$9.9 billion in 2022 mainly due to lower sales volume, and higher operational costs. In 2022 cost of sales increased to U.S.$9.9 billion, compared to U.S.$9.6 billion in 2021. This increase was primarily attributable to lower sales volume and higher operational costs.
In 2023, the cost of copper purchased from third parties increased by 0.7% to U.S.$1.7 billion compared to
U.S.$1.6 billion in 2022, due to a higher average copper price. In 2022, the cost of copper purchased from third parties decreased by 9.7% to U.S.$1.6 billion compared to U.S.$1.8 billion in 2021, due to lower volume and average copper price.
In 2023, cost of byproducts and other increased 10.4% to U.S.$780 million primarily due to an increase in sales volume of gold and silver, mainly due to an increase in production at El Teniente and Ministro Hales of these byproducts. In 2022, cost ofbyproducts and other decreased 9.7% to U.S.$706 million compared to U.S.$752 million in 2021, due to a decrease in volume sale of molybdenum, mainly due to reduced production at Salvador.
In 2023, depreciation and amortization expenses increased by 1.4% to U.S.$2.3 billion compared to
U.S.$2.2 billion in 2022 and U.S.$2.3 billion in 2021.
Gross profit. In 2023, gross profit amounted to U.S.$3.1 billion which is a 34.1% decrease compared to the same period 2022, mainly due to lower revenues. In 2022, gross profit amounted to U.S.$4.7 billion which is a 46.6% decrease compared to gross profit in 2021 primarily attributable to lower revenues due to lower production and reduced copper price. In 2021, gross profit amounted to U.S.$8.8 billion.
Other income, by function. In 2023 other income, by function increased by 43.7% to U.S.$93.0 million compared to U.S.$64.7 million in 2022, primarily due to the income related to insurance compensation for accidents.
Other income, by function decreased by 44.1% to U.S.$64.7 million in 2022 compared to U.S.$115.7 million in 2021 primarily attributable to the income related to the prepayment of U.S.$0.2 million of the debt of Gacrux in
2021. See note 22a to the Consolidated Financial Statements.
Administrative expenses. In 2023, administrative expenses increased by 8.3% to U.S.$544.1 million (3.3% of revenues) compared to U.S.$502.3 million (3.0% of revenues) in 2022 due to lower volume sale and higher input prices. Administrative expenses increased to U.S.$502.3 million (3.0% of revenues) compared to U.S.$459.3 million
(2.2% of revenues) in 2022 compared to 2021 respectively due to lower volume sale and higher input prices offset
57 by a positive effect of the depreciation of the Chilean peso against the U.S. dollar.
Other expenses. In 2023 other expenses amounted to U.S.$2.1 billion (12.6% of revenues) compared to
U.S.$2.1 billion (12.4% of revenues) in 2022 and compared to U.S.$2.7 billion (12.9% of revenues) in 2021. The decrease in 2023 was mainly attributable to a decrease in expenses payable under the Copper Reserve Law, and lower bonuses paid related to collective bargaining processes and mining properties fair value adjustment. The decrease in 2022 was mainly attributable to a decrease in expenses payable under the Copper Reserve Law, and lower bonuses paid related to collective bargaining processes and mining properties fair value adjustment.
The following table sets forth the principal components of CODELCOs other expenses for the periods indicated:
Year ended December 31,
2021 2022 2023 (in millions of U.S.S$)
Copper Reserve La W….oooccccccccccccnccnnnonoccncncnnnnnnnnno: (1,572) (1,273) (1,256) Bonus for the end of collective bargaining and Employee BenefltS …ooooooocnncnocononoooaoonanonano non nonnnnnos: (293) (110) (76) ASSCt IMpalrMentS….occccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnns: (125) (89) – Other non-cash charges……….ccccccccccccnnnnnnnnnnnnnnnnnos: (132) (48) (151) Other EXpenSES ..oooconcccconcononnnncnnnncnnononocnoncncncnncnano, (595) (582) (579)
Total cocococcicccccnonononononononononononcnnonononorararororanono. (2,717) (2,103) (2,062)
CODELCO recorded other expenses of U.S.$1.3 billion, U.S.$1.3 billion and U.S.$1.6 billion in 2023, 2022, and 2021, respectively, pursuant to the Copper Reserve Law, which levies a 10.0% tax on receivables of the sales proceeds that CODELCO receives and transfers to Chile from the export of copper and related byproducts produced by CODELCO. The decrease of this tax recorded in 2023 compared to 2022 1s primarily attributable to lower volume sold and lower revenues.
Other expenses decreased to U.S.$579.0 million in 2023 compared to U.S.$582.0 million in 2022 mainly due to the decrease in the mining property value adjustment in 2023 compared to 2022. Other expenses decreased to U.S.$582.0 million in 2022 compared to U.S.$595.0 million in 2021 mainly due to the decrease in the mining property value adjustment in 2022 compared to 2021.
Finance costs. In 2023, finance costs increased 36.9% to U.S.$778.9 million from U.S.$569.0 million in 2022, compared to U.S.$641.0 million in 2021, primarily attributable to higher interest expenses of bonds during 2023 and lower interest expenses of bonds during 2022. CODELCOs debt level was U.S.$20.2 billion as of December 31, 2023, compared to U.S.$17.0 billion as of December 31, 2022, and U.S.$17.2 billion as of December
31, 2021.
CODELCOS*Ss average interest rate remained at 4.6% as of December 31, 2023. As of December 31, 2023,
92.8% of our debt had fixed rate and 7.2% a floating rate, as of December 31, 2022, 94.2% of our debt had fixed rate and 5.8% a floating rate and, as of December 31, 2021, 94.3% of our debt had fixed rate and 5.7% a floating rate. See Selected Consolidated Financial Data for information regarding debt during the years ended December 31, 2021, 2022 and 2023.
Share of profit(loss) of associates and joint ventures accounted for using equity method. In 2023, CODELCO”s net equity participation in related companies was a net loss of U.S.$658.1 million, compared to a net profit of U.S.$51.9 million in 2022 and a net profit of U.S.$415.0 million in 2021. The decrease in 2023 compared to 2022 was primarily attributable to an impairment loss on its investment in Anglo American Sur due to lower- than-expected production and cost performance. The decrease in 2022 compared to 2021 was primarily attributable to a decrease in Sociedad Contractual Minera El Abra and Anglo American Surs profitability. See note 9 to the Consolidated Financial Statements.
Foreign exchange differences. CODELCO experienced a loss from foreign exchange differences of
U.S.$45.0 million in 2023 compared to 2022, primarily attributable to the depreciation of the Chilean peso against
58 the U.S. dollar during 2023 as compared to 2022. In 2022, foreign exchange differences experienced a loss of
U.S.$237.7 million compared to a gain from foreign exchange differences of U.S.$313.7 million in 2021, primarily attributable to the depreciation of the Chilean peso against the U.S. dollar during 2022 as compared to 2021.
Profit (loss) before tax. In 2023, loss before tax reached U.S.$757.0 million, compared to a profit of
U.S.$1.5 billion in 2022. This decrease was primarily attributable to lower sales volume in 2023. In 2022, profit before tax increased to U.S.$1.5 billion compared to U.S.$5.9 billion in 2021 primarily due to lower sales volume.
Income tax expense. In 2023, CODELCO had a statutory tax rate of 65.0% in accordance with applicable regulations, comprised of (1) a corporate income tax rate of 25.0% (a 17.0% historic corporate tax rate applied to income earned in and prior to 2011 but changed by means of the 2014 tax reform) and (11) a 40.0% tax on net earnings applicable to state-owned enterprises as specified by Decree Law 2,398, Art. 2. During 2022 and 2021, CODELCO was subject to the same statutory tax rate of 65.0%. Since January 1, 2024, CODELCO is subject to the new mining royalty tax under Law No. 21,591, which generally comprises an Ad Valorem component which applies a tax rate of 1% on annual copper sales, and a mining margin component which applies a progressive tax rate (1.e., 8%-26%) on the adjusted taxable mining operating margin. In addition, a maximum potential tax burden of 46.5% 1s established on the mining entity?s operating profitability, measured as the adjusted pre-taxable mining operating income. CODELCOS*s statutory rate of the mining tax for 2023, 2022 and 2021 was 5.0%. CODELCO”s taxes on income amounted to an income of U.S.$165.9 million in 2023, compared to an expense of U.S.$1,134 million in 2022 and U.S.$3,855 million in 2021, primarily as a result of a decrease in CODELCO”s pre-tax profit in 2023. For more information regarding this payment, see note 5 to the Consolidated Financial Statements and Risk Factors Risks Relating to CODELCOs Relationship with the Government of Chile-CODELCO is subject to special taxes.
Profit for the period. As a result of the factors described above, CODELCO recorded a loss after tax of
U.S.$591.2 million in 2023, a profit of U.S.$362.0 million in 2022 and a profit of U.S.$2,051 million in 2021.
Liquidity and Capital Resources
CODELCO”s primary sources of liquidity are funds from (1) operations, (11) domestic and international borrowings from banks and (111) debt offerings in the domestic and international capital markets. CODELCO is generally required to transfer 1ts profit to the Chilean Treasury. The calculation of profit and other comprehensive income includes certain non-cash generating charges or benefits. Significant non-cash generating charges or benefits are deferred tax expensebenefit and amortization and depreciation recorded against other comprehensive income andor profit and loss. For the nine-month period ended September 30, 2024, non-cash charges were U.S.$135.0 thousand in amortization and U.S.$1,653 million in depreciation. Non-cash deferred tax charges of U.S.$182.0 thousand in amortization and U.S.$1,672 million in depreciation were recorded for the nine-month period ended September 30, 2023. Specifically with respect to deferred taxes, non-cash charges or benefits are generated by recording the fluctuation of the deferred tax assets and liabilities, which may be recorded against other comprehensive income in equity or through profit and loss. Amortization and depreciation are recorded directly in profit and loss.
In June 2014, the Ministries of Finance and Mining approved the capitalization of U.S.$200.0 million through a retention of CODELCO”s profits from 2013. In October 2014, the mult1-year capitalization law approved by the Chilean Congress was promulgated and became effective following its publication in the Official Gazette.
This law allocates a maximum of U.S.$3.0 billion to CODELCO in the form of a capital injection by the Chilean Treasury over the period from 2014 to 2018. Pursuant to this law, CODELCO must present a yearly progress report on the BDP for the 2014-2018 period to the Ministries of Finance and Mining and to the Finance Committee of both the Upper House and the Lower House of Congress by March 30 of each year. The BDP report details the progress of CODELCOs investments, including information about their financing and execution, covering each of the structural projects and their corresponding investments. The BDP report also discusses CODELCOs progress with respect to production, costs and results. On the same date that the multi-year capitalization law was promulgated, the President of Chile announced a commitment to authorize the retention by CODELCO of up to an additional
U.S.$1 billion of profit (which includes the U.S.$200.0 million that had been authorized in June 2014) over the
2014-2018 period.
In accordance with this commitment, in June 2015, the Ministries of Finance and Mining approved the capitalization of U.S.$225.0 million of 2014 profit, but charged to 2015 profits. However, due to CODELCO’s
59 operating losses in 2015, this capitalization has not been implemented. Nonetheless, pursuant to the multi-year capitalization law, the Government of Chile authorized a capital injection of U.S.$600.0 million (out of the maximum U.S.$3.0 billion for the 2014-2018 period), which was received in U.S. dollars in December 2015. In December 2016, the Ministries of Finance authorized the capitalization of U.S.$975.0 million, U.S.$500.0 million of which related to a capital injection to finance CODELCOs investment plan and was received in December 2016.
The remaining U.S.$475.0 million was authorized pursuant to a new law (Law 20,989), effective as of January 2017, which provided for additional capitalization of a maximum of U.S.$950.0 million for both 2016 and 2017 (up to
U.S.$475.0 million for each year) in the event CODELCO does not have the required pre-tax profits to cover the
10.0% special export tax under the Copper Reserve Law. In April 2017, CODELCO received the U.S.$475.0 million capital injection in U.S. dollars for 2016.
Law 20,989 also extended the U.S.$3.0 billion capitalization commitment for the 2014-2018 period to 2019.
While CODELCO did not expect additional capital injections in connection with Law 20,989 during 2017, in November 2017, the Government of Chile authorized a capital injection of U.S.$520.0 million (out of the maximum
U.S.$3.0 billion for the newly extended 2014-2019 period), which was received in U.S. dollars in December 2017.
In June 2018, the Government of Chile announced a final capital injection of U.S.$1.0 billion to complete the multi- year capitalization law approved in October 2014. Moreover, in October 2018, the Government of Chile authorized the disbursement of such amount in two installments completed on December 31, 2018 for U.S.$600.0 million and on February 28, 2019 for the remaining U.S.$400.0 million.
Since 2014, the Government of Chile has authorized the capitalization by capital injection and retention of profit within CODELCO in an aggregate amount of U.S.$3.5 billion, U.S.5225.0 million of which could not be implemented.
Since 2022, the Chilean Government is allowing CODELCO to annually reinvest 30.0% of 1ts 2021-2024 profits. This represents a change in CODELCO’s dividend policy, which previously consisted of 100% net-proftt distribution policy. This profit-reinvestment plan 1s expected to strengthen CODELCOs financial balance sheet and reduce the need for additional financial debt. The 30.0% profit-reinvestment plan resulted in an additional
U.S.$583.0 million to CODELCO”Ss financial cash flow in 2022 and additional U.S.$103.7 million to CODELCOs financial cash flow in 2023. In 2023, CODELCO reported losses amounting to U.S.$591.2 million. As a result, despite the issued decree to retain 30% of profits, no additional funds were available for retention in 2024. The amount is calculated over the net profit of the previous year and charged in the current year or the following year until 1t is completed. A similar exercise 1s expected to be carried out in 2025,
See Risk Factors-Risks Relating to CODELCO'”s Relationship with the Government of Chile- CODELCO”s funding through retention of profits 1s restricted and 1s subject to the approval of the Ministries of Finance and Mining.
Cash flows. In 2023, net cash flows from operating activities decreased by 45.0% to U.S.$2.4 billion from
U.S.$4.3 billion in 2022. This decrease in net cash flows from operating activities during 2023 was primarily attributable to the decrease in cash received from the sales of goods and services due to a decrease of sales volumes of 5.3% as well as the increased use of cash to pay suppliers of goods and services. In 2022, net cash flows from operating activities decreased by 26.2% to U.S.$4.3 billion from U.S.$5.9 billion in 2021. During the first nine months of 2024, net cash flows from operating activities totaled U.S.$3.2 billion, which was 83.0% more than in the same period in 2023. The decrease in payments to suppliers in the period due to the foreign exchange rate depreciation of Chilean peso against the U.S. dollar, higher cash received and lower cash paid from other receipts from operating activities was the main explanation for this increase. See note 27 to the Unaudited Interim Consolidated Financial Statements and note 26 to the 2022-2023 and 2022-2023 Consolidated Financial Statements.
Bank debt. CODELCOS”s total financial debt (defined as loans from financial institutions plus bonds issued) as a percentage of its total capitalization was 59.8% as of December 31, 2021, 59.3% as of December 31, 2022, and
64.6% as of December 31, 2023, and 66.4% as of September 30, 2024. CODELCOSs total outstanding financial debt as Of December 31, 2021, 2022 and 2023, and as of September 30, 2024 was U.S.$17.2 billion, U.S.$17.0 billion and U.S.$20.2 billion, and U.S.$22.2 billion, respectively.
60 In May 2012, CODELCO entered into a two-tranche U.S. dollar unsecured bilateral loan, each tranche with a commitment fee of 15.0 basis points per annum with a maturity date of (1) ten years for the Japan Bank for International Cooperation loan and (11) seven years for The Bank of Tokyo-Mitsubishi UFJ, Ltd., to be disbursed by the lenders on a pro rata basis, for the development, construction and operation of a metals processing plant to be constructed in Mejillones and the export of certain metals to Japanese customers pursuant to long-term offtake agreements. The terms of the loans are described below:
Availability Credit Amount Interest Rate Period Japan Bank for International Cooperation. U.S.$224.0 million LIBOR plus 45.0 basis points 36 months The Bank of Tokyo-Mitsubishi UFJ, Ltd.. U.S.$96.0 million LIBOR plus 55.0 basis points 36 months
As of September 30, 2024, the loans described above were repaid in full at their respective maturity dates.
In October 2018, CODELCO rolled over a loan with Export Development Canada for U.S.$300.0 million.
The loan matures in 2028 and the terms are described below:
Credit Amount Interest Rate Date Loan Drawn Export Development Canada ….. U.S.$300.0 million LIBOR plus 121.5 basis points October 2018
As of September 30, 2024, U.S.$300.0 million was outstanding under the loan described above with Export Development Canada.
Between June and December 2019, CODELCO entered into a bilateral credit facility with Export Development Canada. The credit facility included a commitment fee of 50.0 basis points and matures in 2029.
CODELCO also entered into a seven-year U.S. dollar unsecured bilateral credit facility with the Banco Latinoamericano de Comercio Exterior (Bladex). The terms are described below:
Credit Amount Interest Rate Date Loan Drawn Export Development Canada ….. U.S.$300.0 million LIBOR plus 121.5 basis points July 2019 Banco Latinoamericano de Comercio Exterior. ….ccccnnnnnnnnn… U.S.$75.0 million LIBOR plus 120.0 basis points December 2019
As of September 30, 2024, U.S.$300.0 million was outstanding under the loan described above with Export Development Canada and U.S.$75.0 million was outstanding under the loan described above with Banco Latinoamericano de Comercio Exterior.
In May 2020, CODELCO entered into a bilateral credit facility with Export Development Canada. The credit facility included a commitment fee of 32.0 basis points and matures in 2027. The terms are described below:
Credit Amount Interest Rate Date Loan Drawn Export Development Canada ….. U.S.$300.0 million LIBOR plus 115.0 basis points May 2020
As of September 30, 2024, U.S.$300.0 million was outstanding under the loan described above with Export Development Canada.
In January 2023, CODELCO entered into a bilateral credit facility with Export Development Canada. The credit facility included a commitment fee of 165.0 basis points and matures in 2033.
Credit Amount Interest Rate Date Loan Drawn Export Development Canada………. U.S.$500.0 million SOFR plus 165.0 basis March 2023 points
61 As of September 30, 2024, U.S.$500.0 million was outstanding under the loan described above with Export Development Canada.
In August 2023, CODELCO entered into two up to three-months advances on export exchange contracts (ACC). These facilities were fully prepaid in September 2023.
Credit Amount Interest Rate Date Loan Drawn Banco Santander-Chile ………………… U.S.$130.0 million SOFR plus 37.0 basis August 2023 points Banco de Chile………..cocoooooocccnccnnnnns. U.S.$200.0 million 5.740% August 2023
In June 2024, CODELCO entered into a bilateral credit facility with Credit Agricole Corporate Investment Banking with MIGA guarantee. The credit facility included a commitment fee of 76.0 basis points and matures in
2039.
Credit Amount Interest Rate Date Loan Drawn Credit Agricole CIB…..ooo…..nn………. U.S.$531.7 million SOFR plus 76.0 basis September 2024 points
In July 2024, CODELCO entered into a one-year advance on export exchange contract (ACC). The loan matures in July 2026 and the terms are described below:
Credit Amount Interest Rate Date Loan Drawn Banco de Chile………..cocoooooocccnccnnnnns. U.S.$100.0 million 5.630% July 2024
Other Debt. In July 2017, CODELCO launched a cash tender offer for any and all of 1ts 7.500% notes due
2019, 3.750% notes due 2020 and 3.875% notes due 2021 and a waterfall cash tender offer for 1ts 3.00% notes due
2022, 4.500% notes due 2023 and 4.500% notes due 2025, which was financed with the proceeds from a concurrent offering of U.S.$1.5 billion aggregate principal amount of its 3.625% notes due 2027 and U.S.$1.25 billion aggregate principal amount of 4.500% notes due 2047,
Moreover, in January 2019, CODELCO launched a second cash tender offer for 1ts 3.750% notes due 2020,
3.875% notes due 2021 and 3.00% notes due 2022 and a waterfall cash tender offer for 1ts 4.500% notes due 2023 and 4.500% notes due 2025, which was financed with the proceeds from a concurrent offering of U.S.$1.3 billion aggregate principal amount of its 4.375% notes due 2049.
Moreover, in September 2019, CODELCO launched a third cash tender offer for 1ts 3.750% notes due 2020 and 3.875% notes due 2021 and a waterfall cash tender offer for 1ts 3.00% notes due 2022 and 4.500% notes due 2023, which was financed with the proceeds from a concurrent offering of U.S.$1.1 billion aggregate principal amount of its 3.000% notes due 2029 and U.S.$0.9 billion aggregate principal amount of 3.700% notes due 2050.
Moreover, in December 2020, CODELCO launched a fourth cash tender offer for its 3.875% notes due
2021, 3.00% notes due 2022 and 4.500% notes due 2023 and a waterfall cash tender offer for 1ts 4.500% notes due 2025 and its 3.625% notes due 2027, which was partially financed with the proceeds from a concurrent offering of
U.S.$0.5 billion aggregate principal amount of its 3.15% notes due 2051.
On January 14, 2020, CODELCO issued notes in an aggregate principal amount of U.S.$2.0 billion, consisting of a U.S.$1.0 billion international debt offering of 3.150% notes due 2030 and a U.S.$1.0 billion international debt offering of 3.700% notes due 2050. The notes due 2050 form part of the same series of
62 CODELCOs outstanding U.S.$900.0 million 3.700% notes due 2050 issued on September 30, 2019, resulting in a total aggregate principal amount outstanding of U.S.S$1.9 billion in this series.
On May 6, 2020, CODELCO issued notes in an aggregate principal amount of U.S.$800.0 million consisting of its 3.150% notes due 2031.
On May 8, 2020, CODELCO issued notes in an aggregate principal amount of U.S.$131.0 million, consisting of 1ts 4.500% notes due 2023 issued on August 13, 2013. These notes form part of the same series of CODELCO”s outstanding U.S.$335.0 million 4.500% notes due 2023 issued on August 13, 2013, resulting in a total ageregate principal amount outstanding of U.S.$466.0 million in this series.
On October 22, 2021, CODELCO launched a cash tender offer for any and all of 1ts outstanding 4.500% Notes due 2023, 2.250% Notes due 2024, and its 4.500% Notes due 2025, which was financed with the proceeds from a concurrent offering of U.S.$780.0 million aggregate principal amount of its 3.700% notes due 2050. The notes had identical terms, are fungible with and are part of a single series of senior debt securities with the U.S.$900.0 million aggregate principal amount of 3.700% Notes due 2050 issued on September 30, 2019 and the U.S.$1.0 billion aggregate principal amount of 3.700% Notes due 2050 issued on January 14, 2020. On February 2, 2023, CODELCO issued notes in an aggregate principal amount of U.S.$900 million, consisting of an international debt offering of 5.125% notes due 2033. On September 8, 2023, CODELCO issued notes in an aggregate principal amount of U.S.$2.0 billion, consisting of an international debt offering of 5.950% notes due 2034 and 6.300% notes due 2053.
On January 26, 2024, CODELCO issued notes in an aggregate principal amount of U.S.$2.0 billion, consisting of a U.S.$1.5 billion international debt offering of 6.440% notes due 2036 and a U.S.$500.0 million international debt offering of 6.300% notes due 2053. The notes due 2053 form part of the same series of CODELCO”s outstanding U.S.$700.0 million 6.300% notes due 2053 issued on September 5, 2023, resulting in a total aggregate principal amount outstanding of U.S.S$1.2 billion in this series.
The following table shows amounts due by CODELCO under notes issued in both international and local markets as of September 30, 2024:
Outstanding Principal Amount and Accrued Interest
Type of Principal as of September 30, Issuance Maturity Amount 2024 Interest Rate
International September 16,2025 U.S.$2.00 U.S.$397 million 4.50% billion
Local April 1, 2025 6.9 million UF U.S.$292 million 4.00%
Local August 24, 2026 10 million UF U.S.$428 million 2.50%
International August 1, 2027 U.S.$1.50 U.S.$1.257 billion 3.63% billion
International August 23, 2029 U.S.$130 U.S.$130 million 2.81% million
International September 30,2029 U.S.$1.10 U.S.$1.093 billion 3.00% billion
International January 14, 2030 U.S.$1.00 U.S.$1.00 billion 3.15% billion
International January 15, 2031 U.S.$800 U.S.$804 million 3.75% million
International January 8, 2034 U.S.$1.30 U.S.$1.304 billion 5.95% billion
International November 7,2034 – HKD500 million U.S.$66 million 2.84%
International February 2, 2033 U.S.$900 U.S.$899 million 5.13% million
63 International September 21,2035 U.S.$500 U.S.$495 million 5.63% million
International October 24, 2036 U.S.$500 U.S.$511 million 6.15% million
International January 26, 2024 U.S.$1.50 U.S.$1.50 billion 6.44% billion
International July 22, 2039 AUD7O million U.S.$49 million 3.58%
International July 17, 2042 U.S.$750 U.S.$742 million 4.25% million
International October 18, 2043 U.S.$950 U.S.$960 million 5.63% million
International November 4, 2044 -U.S.$980 U.S.$983 million 4.88% million
International August 1, 2047 U.S.$1.25 U.S.$1.219 billion 4.50% billion
International May 18, 2048 U.S.$600 U.S.$606 million 4.85% million
International February 5, 2049 U.S.$1.30 U.S.$1.201 billion 4.38% billion
International January 30, 2050 U.S.$2.68 U.S.$2.601 billion 3.70% billion
International January 15, 2051 U.S.$500 U.S.$453 million 3.15% million
International September 8, 2053 U.S.$1.20 U.S.$1.162 billion 6.30% billion
The following table sets forth the scheduled maturities of CODELCOs bank and unsecured note obligations as of September 30, 2024:
Bank and Unsecured Note Obligations Outstanding (in millions of U.S.$)
Average Less More Annual than 1 2-3 3-5 than Interest
Total year 1-2 years years years 5 years Rate Loans from financial SOFR institutiONS ……oo.o……. 2,079 101 0 379 604 995 +126%
20,154 689 428 1,257 1,223 16,557 4.60%
Total oocccinnicicinnonininons. 22,233 790 428 1,636 1,527 177,552
In addition to the obligations set forth in the table above, CODELCO was a party to certain commitments primarily to secure the payment of (1) deferred customs duties and (11) staff severance indemnities payable upon the retirement of individual employees, amounting to U.S.$36.0 million and U.S.$617.4 million, respectively, as of December 31, 2023 and to U.S.$41.0 million and U.S.$617.4 million, respectively, as of September 30, 2024. See notes 16 and 17 to the Consolidated Financial Statements and to the Unaudited Interim Consolidated Financial Statements. In addition, as of September 30, 2024, CODELCO believes that its net deferred taxes will reverse as follows: deferred tax benefit in the amount of U.S.$18 million in 2024, U.S.$59 million in 2025 and U.S.$9.725 billion after 2029, and deferred tax expense in the amount of U.S.$193 million in 2026, U.S.$339 million in 2027,
U.S.$392 million in 2028 and U.S.$433 million in 2029. CODELCO currently has no hedges related to 1ts production of copper through 2019. See Business and Properties-Marketing-Pricing and Hedging and Risk Factors- Risks Relating to CODELCOs Operations-CODELCO engages in hedging activity from time to time, particularly with respect to 1ts copper production, which may not be successful and may result in losses to CODELCO.
64 CODELCO entered into an agreement with Mitsui on October 12, 2011, pursuant to which Mitsui made available to Inversiones Mineras Acrux SpA (Acrux) a short-term bridge financing facility of up to
U.S.$6.75 billion, guaranteed by CODELCO and subsidiaries of Acrux, as a possible means to fund the exercise of the Sur Option (as defined in Business and Properties-Copper Production-Associations, Joint Ventures and Partnerships). CODELCO also entered into a separate agreement with Mitsui that provided CODELCO with the option to repay a portion of the bridge loan from Mitsui through a put option for an indirect 50.0% stake in the Anglo American Sur interest acquired, assuming a pre-determined value of U.S.$9.76 billion for the 49.0% interest in Anglo American Sur. The balance of the bridge loan would convert into a non-recourse five-year term loan between Acrux and Mitsui, which would not be guaranteed by CODELCO, and would be repayable only from cash distributions on the Anglo American Sur shares held by Acrux. In addition, CODELCO and Mitsui entered into a
10-year sale and purchase agreement for the equivalent 0£ 30,000 tons of fine copper per year subject to market-based pricing terms. On May 20, 2021 the total amount owed by Acrux to Mitsui was paid in full.
e Capital Expenditure Program. We seek to maintain and improve our competitive position in the industry through our three-year capital expenditure program. CODELCO expects to make capital expenditures of approximately U.S.$16.3 billion between 2024 and 2026 (current project portfolio and mine development) in addition to U.S.$840 million from its subsidiaries, which includes the acquisition of Lithium Power International and 10% stake in Quebrada Blanca. We expect these expenditures to be funded with a combination of internal and external resources. For a complete list of planned capital expenditures, see Business and Properties-Copper Production-Operations. CODELCOs expansion and development of major projects between 2024 and 2026 are expected to include: o The Chuquicamata Underground Project, the gradual transformation of the Chuquicamata mine from an open pit mine to an underground operation. This project considers the exploitation of the mine in three levels. The first level started production in 2019, comprised an initial investment of approximately
U.S.$5.9 billion and considers additional investments in infrastructure and mine development. The second and third levels are still in early engineering stages.
Within 2024-2026 CODELCO expects an investment of U.S.$800 million on the continuity Infrastructure of the first level (Phase I Project – construction progress of 67,2%) and will spend U.S.$434 million in mine development. Plans for the second phase of infrastructure continuity are currently being discussed.
o The reallocation of a part of the Andina concentrator plant, which involves maintaining the treatment capacity of the plant using two production lines. The project has an overall progress of 99.8% as of September 30, 2024. The project’s Line 1 started production in 2021, and Line 2 started production in
2024. Only minor works remain outstanding for the project’s completion.
o The development of a new production level in the existing El Teniente underground mine (an approximate investment of U.S.$2.33 billion between 2024 and 2026) to maintain El Tenientes annual copper production at its current level. The new mining level has been divided into three separate projects:
(1) Andes Norte, (11) Diamante, and (111) Andesita. As of September 30, 2024, completion progress at the Andes Norte, Diamante and Andesita works was 60.0%, 46.2% and 57.6%, respectively. The development of the Inca Pit project is designed to extend the production of the Salvador Division, and requires an approximate investment of U.S.$1.17 billion between 2024 and 2026. As of December 2024, although some works remain pending, construction of key infrastructure, equipment commissioning, and a unified system for processing 15,000 tons daily 1s fully complete and production has begun.
o The completion of the feasibility stage of Radomiro Tomics new sulfide operation and concentrator plant, and the start of the execution of this project (an approximate investment of U.S.$472 million) is expected between 2024 and 2026.
CODELCO has already begun investing in the aforementioned projects. In 2023, CODELCO invested
U.S.$2.7 billion mainly in expansion and development projects, including the new El Teniente mine level, the
65 Chuquicamata underground mine expansion and, the execution of the Inca Pit project. CODELCO invested U.S.$2.3 billion and U.S.$1.9 billion in 2022 and 2021 respectively. For an additional description of CODELCO” principal planned capital expenditures, see Business and Properties-Copper Production-Operations.
CODELCO expects that 1t will have sufficient resources from operations, including cash flows, capitalization and retention of profits, in addition to new borrowings from banks and the capital markets to fund its anticipated capital expenditures and investments.
As described under Regulatory Framework–Overview of the Regulatory Regime below, the Ministries of Finance and Mining are required to determine, by means of a joint decree, the amount, 1f any, that the Company shall allocate to the creation of capitalization and reserve funds. In June 2014, the Ministries of Finance and Mining approved the capitalization of U.S.$200.0 million through a retention of profits from 2013 profits. In October 2014, the multi-year capitalization law approved by the Chilean Congress was promulgated and became effective following its publication in the Official Gazette on October 30, 2014. This law allocates a maximum of U.S.$3.0 billion to CODELCO in the form of a capital injection by the Chilean Treasury over the period from 2014 to 2018.
Pursuant to this law, CODELCO must present a yearly progress report on the BDP for the 2014-2018 period to the Ministries of Finance and Mining and to the Finance Committee of both the Upper House and the Lower House of Congress by March 30 of each year. The BDP report details the progress of CODELCOs investments, including information regarding their financing and execution, covering each of the structural projects and their corresponding investments. The BDP report also discusses CODELCOs progress with respect to production, costs and results. On the same date that the multi-year capitalization law was promulgated, the President of Chile announced a commitment to authorize the retention by CODELCO of up to an additional U.S.$1.0 billion of profit (which includes the U.S.$200.0 million that had been authorized in June 2014) over the 2014-2018 period.
In accordance with this commitment, in June 2015, the Ministries of Finance and Mining approved the capitalization of U.S.$225.0 million of 2014 profit, but charged to 2015 profits. However, due to CODELCO’s operating losses in 2015, this capitalization has not been implemented. Nonetheless, pursuant to the multi-year capitalization law, the Government of Chile authorized a capital injection of U.S.$600.0 million (out of the maximum U.S.$3.0 billion for the 2014-2018 period), which was received in U.S. dollars in December 2015. In December 2016, the Ministries of Finance authorized the capitalization of U.S.$975.0 million, U.S.$500.0 million of which related to a capital injection to finance CODELCOs investment plan and was received in December 2016.
The remaining U.S.$475.0 million was authorized pursuant to a new law (Law 20,989), effective as of January 2017, which provided for additional capitalization of a maximum of U.S.$950.0 million for both 2016 and 2017 (up to
U.S.$475.0 million for each year) in the event CODELCO does not have the required pre-tax profits to cover the
10.0% special export tax under the Copper Reserve Law. In April 2017, CODELCO received the U.S.$475.0 million capital injection in U.S. dollars for 2016. Law 20,989 also extended the U.S.$3.0 billion capitalization commitment for the 2014-2018 period to 2019. While CODELCO did not expect additional capital injections in connection with Law 20,989 during 2017, in November 2017, the Government of Chile authorized a capital injection of U.S.$520.0 million (out of the maximum U.S.$3.0 billion for the newly extended 2014-2019 period), which was received in U.S.
dollars in December 2017. In June 2018, the Government of Chile announced a final capital injection of U.S.$1.0 billion to complete the multi-year capitalization law approved in October 2014. Moreover, in October 2018, the Government of Chile authorized the disbursement of such amount in two installments completed on December 31, 2018 for U.S.$600.0 million and on February 28, 2019 for the remaining U.S.$400.0 million.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources and Risk Factors-Risks Relating to CODELCOs Relationship with the Government of Chile-CODELCOs funding through retention of profits 1s restricted and 1s subject to the approval of the Ministries of Finance and Mining.
Since 2014, the Government of Chile has authorized the capitalization and retention of U.S.$2.5 billion within CODELCO, U.S.$225.0 million of which has not been implemented.
Since 2022, the Chilean Government is allowing CODELCO to annually reinvest 30.0% of 1ts 2021-2024 profits. This represents a change in CODELCO’s dividend policy, which previously consisted of 100% net-proftt distribution policy. This profit-reinvestment plan 1s expected to strengthen CODELCOs financial balance sheet and reduce the need for additional financial debt. In 2021, net income attributable to 1ts owners amounted to U.S.$1.9
66 billion and amounted to U.S.$345.6 million in 2022. Therefore, the 30.0% profit-reinvestment plan would contribute an additional U.S.$583.0 million to CODELCO”s financial cash flow in 2022 and U.S.$103.7 million in 2023. In 2023, CODELCO reported losses amounting to U.S.$591.2 million. As a result, despite the issued decree to retain 30% of profits, no additional funds were available for retention in 2024. A similar exercise is expected to be carried out in 2025.
Cash flows from operating activities may be affected by a variety of factors, including copper price levels.
In the event that CODELCO is unable to sell assets or obtain external financing with respect to such capital investments, 1t may be required to further curtail such expenditures.
Environmental. An important part of CODELCOs investment policy 1s 1ts pollution abatement plan, which includes several environmental projects undertaken to comply with Chilean law and to achieve its own environmental performance goals. See Regulatory Framework–Environmental Regulations.
CODELCO invested U.S.$3.6 billion in environmental projects from 2012 to 2019 and plans to continue Implementing its pollution abatement plan through additional capital investments of approximately U.S.$1.0 billion in 2021 through 2023. In 2023, CODELCO invested U.S.$391.1 million in environmental projects in the Chuquicamata, Ventanas, Salvador and El Teniente Divisions in order to comply with the new regulation on atmospheric emissions from the smelters. In 2021, planned investments include the continuation of the projects for the abatement of atmospheric emissions in the Chuquicamata smelter and the continued enlargement of the tailing dams, among others.
The following table sets forth CODELCOs principal environmental investments in the years 2021-2023:
Environmental Investments (in millions of U.S.S$) 2021 2022 2023 Total
RR RRA RR RAR RR RR RRE R RR nn nn nnrrnnnnnnss 196.0 233.5 397.1 826.6
Distributions to the Chilean Treasury. As a state-owned enterprise and according to its governing law, CODELCOSs profit 1s due to be transferred to the Chilean Treasury. Before June 30 of each year, the Ministries of Finance and Mining determine, by means of a joint decree, the amount, 1f any, that the Company must allocate to the creation of capitalization and reserve funds. Amounts not allocated to the creation of capitalization and reserve funds are distributed to the Chilean Treasury.
In 2021 CODELCO distributed U.S.$2,033 million to the Chilean Treasury, in 2022 CODELCO distributed
U.S.$260 million to the Chilean Treasury, and in 2023 no distributions were realized. While CODELCO makes advance payments to the Chilean Treasury throughout the year, funded by cash flows from operating activities, 1t generally has distributions payable to the Chilean Treasury at the end of each year. These distributions are paid in the first six-month period of the following year but are reflected in the prior years financial statements.
The following table sets forth amounts paid in taxes (which due to the timing of payments may be different from tax amounts accrued) and payments and profit distributions made by CODELCO to the Chilean Treasury for each of the three years ended December 31, 2023 for the nine-month period ended September 30, 2024.
67 Contributions to the Chilean Treasury (in millions of U.S.$)
Nine-month period ended September
Year Ended December 31, 30, 2021 2022 2023 2024 Income tax paymMentS …oooooooooonnncccnnnnnnnnnnnnnns 1,965 742 143 82 Copper Reserve LaW……ccccccccccccnonoocccnncnnnnss 1,550 1,295 1,274 982 Subtotal ………..o.ooooccccccnnnnoccccncnnnnnccccnnnnns 3,515 2,037 1,417 1,064 DivVIdenNdS….oooccccnnnnnnccnnnnncnnnccnnnnnonanoccnnnnnnnnos 2,033 260 -0 0 Total .onoononnonncnnoniconiccnccnnnonccnnncnncnnnonos 5,548 2,297 1,417 1,064
Production Hedging. CODELCO has hedged certain future copper delivery commitments and production in order to manage the risks associated with copper price volatility in the past. CODELCO currently does not have any hedged production commitments and therefore there 1s no relevant impact from hedging. See notes 27 and 28 to the Consolidated Financial Statements and notes 28 and 29 to the Unaudited Interim Consolidated Financial Statements. In 2023, CODELCOs production hedging activities had no negative impact on pre-tax income.
CODELCOS*Ss future production hedging activities could cause 1t to lose some of the benefit of an increase In copper prices if copper prices increase over the level of CODELCO”s hedge position, as occurred in 2012. The cash flows from the mark-to-market values of CODELCO'”s production hedges can be affected by factors such as the market price of copper, copper price volatility and interest rates, which are not under CODELCOS*s control.
CODELCOSs production hedging agreements contain events of default and termination events that could lead to early close-outs of CODELCOs hedges. These include failure to pay, breach of the agreement, misrepresentation, default under CODELCO”s loans or other hedging agreements and bankruptcy. In the event of an early termination of CODELCOs hedging agreements, the cash flows from the affected hedge instruments would cease and CODELCO and the relevant hedge counterparty would settle all “f CODELCOs obligations at that time.
In that event, there could be a lump sum payment to be made either to or by CODELCO. The magnitude and direction of such a payment would depend upon, among other things, the characteristics of the particular hedge instruments that were terminated and the market price of copper and copper price volatility and interest rates at the time of termination.
See Business and Properties-Marketing-Pricing and Hedging, Risk Factors-Risks Relating to CODELCO”s Operations-CODELCO engages in hedging activity from time to time, particularly with respect to lts copper production, which may not be successful and may result in losses to CODELCO, note 28 to the Consolidated Financial Statements and note 29 the Unaudited Interim Consolidated Financial Statements for further information on CODELCOs hedging activity.
Exchange Rates and Interest Rates. CODELCOs main currency exposure 1s between the Chilean peso and the U.S. dollar due to the fact that a significant portion of CODELCO”s operating costs are denominated in Chilean pesos and paid pursuant to contracts providing for indexation to Chilean inflation, and approximately 100% of revenue is denominated in U.S. dollars or other foreign currencies. To cover a part of the risks associated with currency exposures and fluctuations in interest rates, CODELCO enters into interest rate futures contracts and foreign exchange forward contracts which reduce exposure to fluctuations in the Chilean peso to U.S. dollar exchange rate.
As of September 30, 2024, CODELCO had swap contracts in place to hedge the risk of future UFU.S.S, HKDU.S.$ and AUDU.S.$ exchange rate fluctuations with respect to a notional amount of U.S.$614.7 million,
U.S.$63.8 million and U.S.$49.3 million respectively, which were equivalent to, and sufficient to cover, 100% of CODELCO*”s foreign currency-denominated bonds outstanding as of September 30, 2024.
68 As of September 30, 2024, 9.4% of CODELCO”s financial debt had a floating interest rate and 90.6% had a fixed rate.
Controls and Procedures
CODELCOs management conducted an assessment utilizing the Committee of Sponsoring Organizations (COSO) criteria of the effectiveness of its internal controls in the past years of 2019 and 2021. Since 2022, the company has implemented an improved integrated risk management framework based on COSO ERM guidelines and ISO 31000. This framework ensures a systematic and continuous approach to enhance the effectiveness of risk mitigating measures. In connection with the strategic goals, the ERM has been progressively integrated to the business aiming to ensure the proper application of the standards and compliance whilst strengthening 1ts maturity and risk culture.
Critical Accounting Estimates
The preparation of the consolidated financial statements in accordance with the IFRS requires the use of certain critical accounting estimates and assumptions that affect the amounts of assets and liabilities recognized as of the date of financial statements and the amounts of income and expenses during the reporting period. It also requires CODELCOs management to exercise its judgment in the process of applying CODELCO’s accounting principles. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are below. For a full description of CODELCOs accounting policies, see Section II to the Consolidated Financial Statements.
Useful Economic Lives and Residual Values of Property, Plant and Equipment. The useful lives and residual values of property, plant and equipment assets that are used for calculating depreciation are determined based on technical studies prepared by specialists (internal or external). When there are indicators that could lead to changes in the estimated useful lives of such assets, these changes are determined by using technical estimates considering specific factors related to the use of the assets.
Ore Reserves. The measurements of ore reserves are based on estimates of the ore resources that are economically exploitable and reflect the technical considerations of the Company regarding the amount of resources that could be exploited and sold at prices exceeding the total cost associated with extraction and processing.
CODELCO applies its judgment in determining its ore reserves and, as such, possible changes in these estimates could significantly impact the estimates of net revenues over time. For such reason, these changes would lead to modifications in the usage estimates of certain assets and of the amount of certain decommissioning and restoration costs.
CODELCO estimates its reserves and mineral resources based on the information prepared by the Competent Persons of the Company, as defined and regulated by Chilean Law No. 20,235. The estimates are based on the Joint Ore Reserves Committee (JORC) methodology, taking into consideration the historical information of the cost of goods sold and copper prices in the international market.
Impairment of non-financial Assets. CODELCO reviews the carrying amount of its assets to determine whether there 1s any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assets 1s estimated in order to determine the extent of the impairment loss with regard to the carrying amount. In the evaluation of impairment, the assets are grouped into cash generating units (CGUs) to which the assets belong. The recoverable amount of these assets or CGUs 1s calculated as the present value of the cash flows expected to be derived from such assets, considering a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. If the recoverable amount of the assets 1s less than their carrying amount, an impairment loss exists.
CODELCO defines the CGUs and also estimates the timing and cash flows that such CGUSs should generate.
Subsequent changes in the grouping of the CGU, or changes in the assumptions supporting the estimates of cash flows or the discount rate, could impact the carrying amounts of the corresponding assets.
69 Estimates of factors influencing the calculation of cash flows, such as the price of copper or treatment charges and refining charges, among others, are determined based on studies conducted by the Company, which are in turn supported by certain standards over time. Any changes to these criteria may impact the recoverable amount of the assets on which 1s performing the impairment tests. CODELCOs evaluations and definition of the CGUS are made at the level of each of its current operating divisions.
CODELCO has assessed and defined the CGUs that are constituted at the level of each of its current operating divisions, with the exception of the Ventanas Division Smelter and Refinery operations, which are analyzed separately.
In assessing impairment in subsidiaries and associates, CODELCO uses the higher of value in use or fair value less costs to determine the recoverable amount. This recoverable amount may consider elements such as Life of Mine (LOM), reserves and mining resources, among others, for mining operation evaluations. In addition, the evaluation may incorporate market variables such as the price of copper and other commodities, cost of production inputs, exchange rates, discount rates and other market information for long-term asset valuation.
Provisions for Decommissioning and Site Restoration Costs. CODELCO is obligated to incur decommissioning and site restoration costs when an environmental disturbance is caused by the development or ongoing production of a mining property. Costs are estimated on the basis of a formal closure plan and are reassessed annually or as of the date such obligations become known.
Significant estimates and assumptions are made in determining the provision for decommissioning and site restoration costs, as there are numerous factors that will affect the ultimate liability payable. In order to establish such estimates, CODELCO: (1) creates a defined list of mine sites, installations and other equipment assigned to this process, considered at the engineering level profile; (11) evaluates the assets that will be subject to removal and restoration, weighted by a structure of market prices of goods and services, and reflecting the best knowledge at the time to carry out such activities; and (111) examines the techniques and more efficient construction procedures to date.
In addition, CODELCO must make certain assumptions about the exchange rate for tradable goods and services and the discount rate applied to update the relevant cash flows over time, which reflects the time value of money and includes the risks associated with liabilities, which 1s based on the currency in which disbursements will be made.
The provision as of a reporting date represents managements best estimate of the present value of the future decommissioning and site restoration costs required. Changes to estimated future costs are recognized in the statement of financial position by adjusting the provision for decommissioning and site restoration costs as well as the associated asset measured in accordance with IAS 16, Property, Plant and Equipment. Any reduction in the decommissioning and site restoration liability, and therefore any deduction from the decommissioning and site restoration asset, may not exceed the carrying amount of that asset. If 1t does, any excess over the carrying value is immediately accounted for as profit or loss.
If the change in estimate results in an increase in the decommissioning and site restoration liability, and therefore an addition to the carrying value of the asset, the entity 1s required to consider whether this is an indication of impairment of the asset as a whole and test for impairment in accordance with IAS 36 Impairment of Assets. If the revised asset net of decommissioning and site restoration provisions exceeds the recoverable value, that portion of the increase is charged directly to profit or loss statement. Any decommissioning and site restoration costs that arose as a result of the production phase of a mine should be expensed as incurred.
The costs arising from the installation of a plant or other site preparation projects are discounted at net present value, provided for and capitalized at the beginning of each project, as soon as the obligation to incur such costs arises. These decommissioning costs are charged to profit over the life of the mine through depreciation of the asset. The depreciation 1s included in operating costs, while the unwinding of the discount in the provision is included in finance costs.
Accrual for Employee Benefits. Employee benefits costs for severance payments and health benefits for services rendered by the employees are determined based on actuarial calculations using the projected credit unit method and are charged to profit or loss on an accrual basis.
70 We use assumptions to determine the best estimate for these benefits. Such estimates, as well as assumptions, are determined together with an external actuary. These assumptions include demographic assumptions, mortality and morbidity, discount rate and expected salary increases and rotation levels, among other factors.
Although we believe that the assumptions used are appropriate, a change in these assumptions could affect profit.
Accruals for open invoices. The substantial majority of copper produced by CODELCO is sold under annual contracts. Pricing on such contracts is based on prevailing monthly average prices quoted on the LME for a quotation period, generally the month following the scheduled month of shipment. CODELCO uses information on future copper prices, through which it recognizes adjustments to its revenues and trade receivables due to its provisional invoicing. These adjustments are updated on a monthly basis. At the end of each month, CODELCO estimates and accounts for any change in the provisional sales price using information available at the time financial statements are generated. However, the amount estimated may differ from the amount received at settlement.
Revenue is recorded at the time control of the asset is transferred to the customer according to the shipment or dispatch of the products, in conformity with the agreed-upon conditions and are subject to variations related to the content andor sales price at their liquidation date. Notwithstanding the foregoing, there are certain contracts under which control of the product is transferred to the client based on receipt of the product at the buyers destination point, and for these contracts* revenue 1s recorded at the moment of such transfer.
Sales contracts include a provisional price at the shipment date, which final price is generally based on the price recorded in the LME. In the majority of cases, the recognition of sales revenue for copper and other commodities is based on the estimates of the future spread of metal price on the LME andor the spot price at the date of shipment, with a subsequent adjustment made upon final determination and presented as part of Revenue.
The terms of sales contracts with third parties contain provisional pricing arrangements whereby the selling price for metal in concentrate 1s based on prevailing spot prices on a specified future date after shipment to the customer (the quotation period). As such the final price will be fixed on the dates indicated in the contracts. Adjustments to the sales price occurs based on movements in the LME up to the date of final settlement. The period between provisional invoicing and final settlement can be between one and nine months. Changes in fair value over the quotation period and up until final settlement are estimated by reference to forward market prices for the applicable metals.
Sales in the national market are recorded in conformity with the regulations that govern domestic sales as indicated in Articles 7, 8 and 9 of Law No.16,624, modified by Article 15 of Decree Law No.1,349 of 1976, on the determination of the sales price for the internal market.
Additionally, we recognize revenue for providing services, mainly related to the processing of minerals bought from third parties. Revenue is recognized when the performance obligation has been satisfied.
See Business and Properties-Marketing-Pricing and Hedging for information regarding hedge accounting.
Fair Value of Derivatives and Other Instruments. Management may use its judgment to choose an adequate and proper valuation method for the instruments that are not quoted in an active market. In the case of derivative financial instruments, assumptions are based on the observable market inputs, adjusted in conformity with the specific features of the instruments.
Lawsuits and Contingencies. We assess the probability of lawsuits and contingency losses on an ongoing basis according to estimates performed by our legal advisors. No provision is recognized for cases in which management and our legal advisors believe that (1) a favorable outcome will be obtained, (11) the probability of a loss is remote or possible, but not probable, or, if probable, (111) the amount of the obligation cannot be measured reliably.
Application of IFRS 16: includes the following:
– Estimation of the lease term
– Determine 1f 1t is reasonably certain that an extension or termination option will be exercised
– Determination of the appropriate rate to discount lease payments
71 Revenue recognition: CODELCO determines appropriate revenue recognition for its contracts with customers by analyzing the type, terms and conditions of each contract or agreement with a customer. As part of the analysis, the management must make judgments about whether an agreement or contract is legally enforceable, and whether the agreement includes separate performance obligations. In addition, estimates are required to allocate the total price of the transaction to each performance obligation based on the stand-alone selling price of the promised goods or services underlying each performance obligation. (CODELCO applies the constraint on variable consideration as defined in IFRS 15, 1f applicable).
Stripping costs: Costs incurred from removing mine waste materials (overburden) in open pits that are in production and that provide access to mineral deposits are recognized in property, plant, and equipment when the following criteria set out in IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine are met:
– 1tis probable that the future economic benefits associated with the stripping activity will flow to the entity;
– 1tis possible to identify the components of an ore body for which access has been improved because of the stripping activity; and
– the costs relating to that stripping activity can be measured reliably.
The stripping costs are amortized based on the production units of production extracted from the ore body related to the specific stripping activity which generated this amount.
Although the abovementioned estimates have been made based on the best information available as of the date of issuance of these consolidated financial statements, it is possible that new developments could lead CODELCO to modify these estimates in the future. Such modifications, 1f applicable, would be adjusted prospectively, as required by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
72 BUSINESS AND PROPERTIES
CODELCO is the worlds largest copper producer and one of the largest companies in Chile in terms of revenues (U.S.$16.4 billion in 2023). As of December 31, 2023, CODELCO”s total assets were U.S.$46.9 billion and equity amounted to U.S.$11.0 billion. As of September 30, 2024, CODELCOs total assets were U.S.$49.6 billion and equity amounted to U.S.$11.3 billion.
CODELCO engages primarily in the exploration, development and extraction of ores bearing copper and byproducts, the processing of ore into refined copper and the international sale of refined copper and byproducts.
CODELCO is 100% owned by the Government of Chile and controls approximately 4.7% of the world?s proved and probable copper reserves, as such terms are defined by the U.S. Geological Survey.
In 2023, CODELCO had an estimated 6.4% share of total world copper production, with production amounting to approximately 1.424 million metric tons, including: (1) CODELCO”s share of the El Abra deposit, which is mined by Sociedad Contractual Minera El Abra and owned 49.0% by CODELCO and 51.0% by Cyprus El Abra Corporation (a subsidiary of Freeport-McMoRan Inc.); and (11) CODELCOS*s share of Anglo American Sur (of which CODELCO owns a 20.0% indirect share), and an estimated 6.2% share of the world?s molybdenum production, with production amounting to approximately 17.3 metric tons excluding CODELCO*s share of Anglo American Sur. CODELCOs main commercial product is Grade A cathode copper. In 2023 and for the nine-month period ended September 30, 2024, CODELCO derived 90.1% and 92.4% of its total sales from copper and 9.9% and 7.6% of its total sales from byproducts of its copper production, respectively. The following table sets forth certain production, cost and price information relating to CODELCO for the years ended December 31, 2021, 2022, and 2023 and the nine-month periods ended September 30, 2023 and 2024:
Copper Production, Cash Cost of Production and Price Information (excluding El Abra and Anglo American Sur) (production in thousands of metric tons and cash costs and prices in cents per pound)
For the nine-month period ended Year ended December 31, September 30, 2021 2022 2023 2023 2024 CODELCOS*”s Copper Production…………. 1,618 1,446 1,424 965.5 918.2 CODELCO”s Cash Cost of Production…. 132.7 165.4 203,1 204.3 205.0 Average LME Pricec) bennnnnnnnnnnnnannrnnrnrnnnananinnnnns 422.6 399.0 384.5 389.4 414.2
(1) Price for Grade A cathode copper.
CODELCOs mission is to maximize the value of 1ts mineral resources for the benefit of its shareholder, the Chilean state, by fully developing its vast mining resources on a timely basis, leveraging the Companys experienced workforce, utilizing 1ts advanced technological holds in key areas and by executing the following key strategic Initiatives:
Capital Expenditure Program. We seek to maintain and improve our competitive position in the industry through our three-year capital expenditure program. CODELCO expects to make capital expenditures of approximately U.S.$16.3 billion between 2024 and 2026 (current project portfolio and mine development) in addition to U.S.$840 million from its subsidiaries, which includes the acquisition of Lithium Power International and 10% stake in Quebrada Blanca. We expect these expenditures to be funded with a combination of internal and external resources. For a complete list of planned capital expenditures, see Business and Properties-Copper Production-Operations. CODELCOs expansion and development of major projects between 2024 and 2026 are expected to include: o The Chuquicamata Underground Project, the gradual transformation of the Chuquicamata mine from an open pit mine to an underground operation. This project considers the exploitation of the mine in three levels. The first level started production in 2019 and comprised an initial investment of approximately
U.S.$5.9 billion and considers additional investments in infrastructure and mine development. The
73 second and third levels are still in early engineering stages.
o Within 2024-2026 CODELCO expects an investment of U.S.$800 million on the continuity Infrastructure of the first level (Phase I Project – construction progress of 67.2%) and will spend U.S.$434 million in mine development. Plans for the second phase of infrastructure continuity are currently being discussed. The reallocation of a part of the Andina concentrator plant, which involves maintaining the treatment capacity of the plant using two production lines has an overall progress of 99.8% as of September 30, 2024. The project*s Line 1 started production in 2021, and Line 2 started production in
2024. Only minor works remain outstanding for the project’s completion.
o The development of a new production level in the existing El Teniente underground mine (an approximate investment of U.S.$2.33 billion between 2024 and 2026) to maintain El Tenientes annual copper production at its current level. The new mining level has been divided into three separate projects:
(1) Andes Norte, (11) Diamante, and (111) Andesita. As of September 30, 2024, completion progress at the Andes Norte, Diamante and Andesita works was 60.0%, 46.2% and 57.6%, respectively.
o The development of the Inca Pit project 1s designed to extend the production of the Salvador Division, and requires an approximate investment of U.S.$1.17 billion between 2024 and 2026. December 2024, although some works remain pending, construction of key infrastructure, equipment commissioning, and a unified system for processing 15,000 tons daily is fully complete and production has begun.
o The completion of the feasibility stage of Radomiro Tomics new sulfide operation and concentrator plant, and the start of the execution of this project (an approximate investment of U.S.$472 million) is expected between 2024 and 2026.
Improvement in operations. A number of improvement initiatives are underway to adopt best industry practices, most notably in the areas of labor productivity, asset utilization rates and process efficiency. Together with 1ts capital expenditure investment program, CODELCO expects these initiatives to enhance 1ts competitive position. CODELCO operates in a cyclical business and its strategy 1s to ensure that 1t is able to take full advantage of high copper prices. CODELCO is developing a number of plans to achieve production targets in the coming years.
These plans mainly focus on reducing the risk of disruptions to production and providing increased flexibility to 1ts operations.
Exploration Efforts. CODELCO controls the largest copper reserves worldwide, the Companys single most important long-term competitive advantage. The discovery of new mining resources and improving its ability to locate existing ore bodies and prospects are critical tó CODELCO maintaining its preeminent position in the industry. Accordingly, the Companys exploration program will continue to be a key part of its business strategy.
Investment in Human Capital. The successful execution of CODELCOs business strategy relies on continuing to attract and retain a world-class management team and professionals of the highest caliber. The mining Industry faces increased competition for workforce talent. As a result, the Company intends to continue improving career development opportunities for its staff and the overall attractiveness of CODELCO as a preferred employer.
Mining Association with Third Parties. CODELCO seeks to continue to develop and operate assets in association with third parties where these associations will add value to CODELCOs business. A few examples of the Company?s willingness and ability to do so are (1) the association with Freeport-McMoRan Inc. in the El Abra copper mine (CODELCO owns 49.0%), (11) the association with Anglo American, Mitsui and Mitsubishi Corporation in Anglo American Sur (CODELCO owns an indirect 20.0% interest), and (111) the association with Teck Resources, Sumitomo Metal Mining and Sumitomo Corporation in Quebrada Blanca (CODELCO owns
10.0%). CODELCO believes its large mining reserve is a strong platform from which to establish such associations.
CODELCO may expand mining associations with third parties where it helps to optimize the operation of their respective mines.
74 Copper Production General
The copper deposits in CODELCOs mines exist in two principal forms-sulfide ore and oxide ore. The majority of CODELCOs mines, including Chuquicamata and El Teniente, yield primarily sulfide ore. The ore extracted from the Radomiro Tomic deposit is copper oxide and sulfides. CODELCO produces refined copper from oxide and sulfide ore using different processes. CODELCO believes that having these two different forms of copper deposits gives it a high level of flexibility to respond to market changes by adjusting its production and utilizing the refining processes described below.
Sulfide Ores. Sulfide ores are found in CODELCOs open-pit and underground mines. In open-pit mines, the process of producing copper from sulfide ores begins at the mine pit. Waste rock and ores containing copper are first drilled and blasted and then loaded onto diesel -electric trucks by electric shovels. Waste 1s hauled to dump areas.
In underground mines, copper ore is deposited on rail cars and transported to a crushing circuit where gyratory crushers break the ore into sizes no larger than three-fourths of an inch. In both types of mines, the ore is then transported to rod and ball mills which grind it to the consistency of powder. In the conventional concentratorsmelterrefinery process for sulfide ore, this finely ground ore is agitated in a water and chemical solution and pumped as a watery mixture to the flotation separator. The solution is then aerated, producing a froth which carries the copper minerals, but not the waste rock, to the surface. The froth 1s skimmed off and filtered to produce copper concentrates. The waste rock, called tailings, 1s sent to a tailings storage facility. The copper concentrates (which contain a copper grade of approximately 30.0%) are then sent to the smelter.
At the smelter, the concentrates are blended with fluxes and fed into reverberatory furnaces or a Teniente converter (a technologically advanced type of converter designed by CODELCO) where they are melted, producing matte and slag. Matte from reverberatory furnaces contains approximately 45.0% copper, and matte from a Teniente converter contains approximately 75.0% copper. Slag 1s a residue of the smelting process containing iron and other impurities, which the Company disposes of with 1ts other industrial solid waste. The matte 1s transferred by ladles to the converters and is oxidized in two steps. First, the iron sulfides in the matte are oxidized with silica, producing slag that 1s returned to the reverberatory furnaces. Second, the impurities in the matte sulfide are oxidized to produce blister copper. The blister copper contains approximately 98.5% copper. Some of the blister copper 1s sold to customers. The remainder is transferred to the electrolytic refinery.
After additional treatment in the anode furnace, the copper 1s cast into anodes and then moved to the refinerys electrolytic tank house. This anode copper is approximately 99.0% copper. In the electrolytic tank house, anodes are suspended in tanks containing an acid solution and copper sulfate. An electrical current 1s passed through the anodes and chemical solution to deposit clean copper on pure copper plates. The resulting refined copper cathodes are 99.99% copper. Silver and small amounts of other metals contained in the anodes settle on the bottom of the tanks and are recovered in a separate process.
Oxide Ores. Oxide ore 1s scarcer than sulfide ore and is typically found closer to the surface of the earth. A different process (called the SX-EW process) is used to produce refined copper from oxide ores, which CODELCO employs at 1ts SX-EW facilities in Chuquicamata, El Teniente, Salvador, Gabriela Mistral and Radomiro Tomic. In the first step of the SX-EW process, copper oxide ore is mined, crushed and deposited into large piles. The piles are leached for a period of several days with a solution of sulfuric acid, resulting in the effusion from the piles of a solution with a high-concentration of copper. The copper solution 1s collected into large pools, from which copper 1s then recovered by solvent extraction, followed by a second recovery method called electrowinning, to produce high-grade copper cathodes. The SX-EW process involves lower overall refining costs and can be used with a lower grade of ore, than the traditional concentratorsmelterrefinery process. The SX-EW process also enables CODELCO to recover copper by re-leaching waste material left over from prior copper extractions.
Operations
CODELCO”s copper operations are divided into the following eight divisions: e The El Teniente Division operates the El Teniente mine, which is the worlds largest underground copper mine and has been in operation for more than 100 years. The El Teniente Division includes the Caletones smelter. In
75 2023, this division produced 351,874 metric tons of copper, or 24.7% of CODELCO’s total copper output (including CODELCOS*”s share of the El Abra deposit and Anglo American Sur), with a cash cost of 138.0 cents per pound, compared to 105.2 cents per pound in 2022, and a total cash cost of U.S.$1,059.7 million in 2023, compared to U.S.$930.5 million in 2022. During the first nine months of 2024, this division produced 245,483 metric tons of copper with a cash cost of 162.7 cents per pound and a total cash cost of U.S.$868.9 million.
The Radomiro Tomic Division operates the Radomiro Tomic mine, which began its first full year of production in 1998. In 2023, this division produced 314,805 metric tons of copper cathodes, or 22.1% of CODELCOs total copper output (including CODELCOS*s share of the El Abra deposit and Anglo American Sur), with a cash cost 0f 235.9 cents per pound, compared to 205.6 cents per pound in 2022, and a total cash cost of U.S.$1,617.2 million in 2023 compared to U.S.$1,351.9 million in 2022. During the first nine months of 2024, this division produced 196,520 metric tons of copper with a cash cost of 243.3 cents per pound and a total cash cost of
U.S.$1,039.3 million.
The Chuquicamata Division operates the Chuquicamata mine, one of the largest copper producing mines in the world, which began its operations in 1915 and currently includes smelting and refining capacities. In 2023, this division produced 248,495 metric tons of copper cathodes, or 17.5% of CODELCOs total copper output (including CODELCOS*”s share of the El Abra deposit and Anglo American Sur), with a cash cost of 158.5 cents per pound, compared to 127.4 cents per pound in 2022, and a total cash cost of U.S.$851.7 million in 2023, compared to U.S.$740.7 million in 2022. During the first nine months of 2024, this division produced 194,846 metric tons of copper with a cash cost of 137.1 cents per pound and a total cash cost of U.S.$578.6 million.
The Mina Ministro Hales Division was created in 2010 for the operation of the Mina Ministro Hales ore body, which first began producing copper at the end of 2013. In 2023, this division produced 126,010 metric tons of copper, or 8.9% of CODELCOS*”s total copper output (including CODELCO*s share of the El Abra deposit and Anglo American Sur), with a cash cost of 200.7 cents per pound, compared to 129.6 cents per pound in 2022, and a total cash cost of U.S.$539.4 million in 2023, compared to U.S.$420.1 million in 2022. During the first nine months of 2024, this division produced 64,665 metric tons of copper with a cash cost of 268.2 cents per pound and a total cash cost of U.S.$370.7 million.
The Andina Division operates the Andina and Sur mines with production split among open pit and underground mines. It does not have independent smelting capacity. Andina has been in operation since 1970. In 2023, this division produced 164,545 metric tons of copper, or 11.6% of CODELCOs total copper output (including CODELCOSs share of the El Abra deposit and Anglo American Sur), with a cash cost of 230.3 cents per pound, compared to 187.5 cents per pound in 2022, and a total cash cost of U.S.$806.9 million in 2023, compared to
U.S.$707.0 million in 2022. During the first nine months of 2024, this division produced 139,602 metric tons of copper with a cash cost of 212.7 cents per pound and a total cash cost of U.S.$632.3 million.
The Gabriela Mistral Division was created in 2013 and operates the Gabriela Mistral mine, which uses SX EW technology. The Gabriela Mistral mine produced its first copper cathodes in 2008 after a 26 month construction period. In 2023, this division produced 105,825 metric tons of copper, or 7.4% of CODELCO'”s total copper output (including CODELCOs share of the El Abra deposit and Anglo American Sur), with a cash cost 0f 292.5 cents per pound, compared to 275.8 cents per pound in 2022, and a total cash cost of U.S.$682.4 million in 2023, compared to U.S.$665.9 million in 2022. During the first nine months of 2024, this division produced 77,132 metric tons of copper with a cash cost of 263.5 cents per pound and a total cash cost of U.S.$448.0 million.
The Salvador Division operates the Salvador mine and concentrator and the smelterrefinery complex at Potrerillos, which has the capacity to treat 671,000 metric tons of concentrate. In 2023, this division produced 13,000 metric tons of copper cathodes, or 0.9% of CODELCOs total copper output (including CODELCOs share of the El Abra deposit and Anglo American Sur), with a cash cost 0f 575.5 cents per pound, compared to
389.6 cents per pound in 2022, and a total cash cost of U.S.$164.3 million in 2023, compared to U.S.$271.7 million in 2022. During the first nine months of 2024, this division did not produce as the Rajo Inca project was under construction. As of September 30, 2024, the project was under construction and was approximately 88.0% complete.
76 e The Ventanas Division was created in connection with the acquisition ofthe Ventanas smelterrefinery complex from Chiles state-owned mining company ENAMTI in 2005. In 2023, this division refined 357.2 thousand metric tons of copper, compared to 370.7 thousand metric tons of copper in 2022. During the first nine months of 2024, the Ventanas division refined 204.5 thousand metric tons of copper. Pursuant to the terms of the acquisition, CODELCO is required to provide on market terms the necessary smelting and refining capacity for the treatment of copper concentrate delivered by the small- and medium-sized mining industry that ENAMI serves. In May 2023, Law No. 21,546 permitted the gradual closure of the Ventanas smelterrefinery complex and after almost 60 years of operation, the furnaces at Ventanas Division smelting plant were shut down. The transition of its former workers successfully concluded, with 58.8% of workers opting for an exit plan, 26.9% retrained for new roles at the Ventanas Division, and 14.3% relocated to other divisions, following the smelters closure. CODELCO will continue to operate in the area through its refinery.
e The Chuquicamata Division, the Radomiro Tomic Division, the Mina Ministro Hales Division, the Gabriela Mistral Division and the Salvador Division form part of CODELCOs Northern Operations (Operaciones Norte).
The Andina Division, the El Teniente Division and the Ventanas Division form part of CODELCOs Central Southern Operations (Operaciones Centro Sur). For a description of CODELCOs associations with other companies, see Business and Properties-Copper Production-Associations, Joint Ventures and Partnerships.
Beginning in late 2010, CODELCO implemented a corporate reorganization plan which divided the management of CODELCOs operations into Northern Operations (Operaciones Norte) and Central Southern Operations (Operaciones Centro Sur), to supervise the divisions in the north and center-southern regions, respectively. The reorganization was intended to simplify the organizational structure by causing all corporate administrative and support functions to report to a single vice president, and the productive divisions to concentrate on maximizing production, controlling costs and implementing safety measures. The Chuquicamata Division, the Radomiro Tomic Division, the Mina Ministro Hales Division and the Salvador Division are now supervised by the Vice President of Northern Operations (Operaciones Norte). The Andina Division, the El Teniente Division and the Ventanas Division are now supervised by the Vice President of Central Southern Operations (Operaciones Centro Sur).
CODELCOS*s copper production, including its share of the El Abra deposit and of Anglo American Sur, decreased to 1,423,785 metric tons during the twelve months of 2023 from 1,552,700 in 2022 and from 1,727,896 metric tons in the twelve months of 2021. This decrease was mainly due to lower copper production at Chuquicamata, El Teniente and Ministro Hales offset production declines mainly at Gabriela Mistral. Molybdenum production decreased by 15.8% in 2023 compared to 2022, from 20,498 to 17,254.
The table below shows the production of copper from CODELCOs mines, as compared to private sector production in Chile, for years ended December 31, 2021, 2022 and 2023 and the nine-month periods ended September 30, 2023 and 2024:
Production of Copper from Chilean Mines (CODELCO and Private Sector) (in thousands of metric tons)
For the nine-month period ended September
Year ended December 31, 30, % Change
2021 2022 2023 2023 2024 20232024 El Teniente DIVISION …oooocccccnnnnnnnccnos. 460 405 352 262 246 (6.1) Radomiro Tomic Division ……………. 327 301 315 239 197 (17.6) Chuquicamata DIVISION …oooonnnnnnnnonono. 319 268 248 178 195 9.6 Mina Ministro Hales ……………………. 182 152 126 81 65 (19.8) Andina DIVISION ….ccccccnnnnnnnnonnncnnnnnnnss 177 177 165 120 140 16.7
Gabriela Mistral Division……………… 101 110 106 74 77 4.1 Salvador DIVISION …..ooocccccnnnnnncccnnnnnns 53 32 13 12 0 (100.0) El Abra ccccniccnincconcconncnononananinonono 36 45 48 36 36 0.0 Anglo American Sur ocn… 74 62 51 38 33 (10.5) CODELCO Total Production …….. 1,728 1,553 1,424 1,040 990 (4.8)
7 Chilean Private Sector? …………….. 3,897 3.770 3,827 2,815 2,981 5.9 Total Chilean Production 5,625 5,322 5,250 3,854 3,969 3.0
(1) CODELCOS”s figures presented for El Abra include 49% of the mines total production (the share of production which corresponds to CODELCO”s 49% direct ownership interest in the mine). The balance of El Abras production 1s included in the private sector figures.
(2) CODELCO”s figures presented for Anglo American Sur include 20% of the mines total production (the share of production which corresponds to CODELCO”s 20% ownership interest in the mine). The balance of Anglo American Sur production 1s included in the private sector figures.
(3) Source: Chilean Copper Commission.
The table below shows the breakdown of CODELCOs own copper output for the years ended December 31, 2021, 2022 and 2023 and the nine-month period ended September 30, 2024:
Copper Output of CODELCO (excluding El Abra and Anglo American Sur) (in thousands of metric tons)
For the nine- month period ended Year ended December 31, September 30, 2021 2022 2023 2024 Cathodes …occoocccnccnnccnnocnnoccnncconcconoconoconoccnnrcnnccnn 475 415 376 532 Blister and anodes….occoocccncccncccnnccnncconoconoconinonoso 388 376 334 42 Calcines …ooccoocconccnnccnnioconoconncnoncconoconoconoccnnrcnnicono 136 136 110 74 CoNCentrates …ooccnocccnccncccnconccnnconcconcnnccnnccnccnnconens 615 514 504 254 Total ………oooooccoocconcccnccnnoconnccnncconoconoconoconos 1,614 1,446 1,324 202
The following table sets forth CODELCOS*s initial capital expenditures budget for the period 2024-2026 by division, and for the executive offices, as approved by the Companys Board of Directors as part of CODELCOs BDP report, which 1s subject to the approval of the Ministries of Finance and Mining (capital expenditures are subject to change at the discretion of CODELCO). The capital expenditures budget is subject to an annual review and therefore may be subject to change.
Estimated Division Investment! (in millions of U.S.S$) ChUQqUICAMAtA..ooooccnooocccnnoonnnconnnnanononnnanonnnnnnnonnnnononnnnnnncnnnnnnncnnnnnnnconananonos $2,789 El Teniente ..ooooooocccnncnnnnocnnnnnnnnonncnnnnnnnornnnnnnnnnor rn nro nnnnnr rn nn nnnnnnrr rn nnnnnanicnss $3,480 ANUN oonnnnoccnnnn nono ron nono eran nn n nen rr rn nn nnnnnrrcnnnnnnnss $1,364 Radomiro TOMiC ..0occocoooccnnnnnnnnnonnnnnnnnnnornnnnnnnnnnrnnnnnnnnnnr ro nnnnnnnnrrrnnnnnnaniross $2,034 Salvador ..ooccooocnnnocnnnnccnonocnnnorononocnonornonronnnrr nono crono rnnnnrr nono rnonrnnnarcnnnrcnnnoss $1,521 Mina Ministro Hales ……..oooccccncnnnnnnnnnnnnnnnnnnnonononnnnnonnnnnonononononononnnnnnnonoss $289 Gabriela Mistral ….ooonnnnnnnninininicnnnnnnnnnnanonanananananananannnnnnnnnnnnnnnnnnnnaanannn $235 WentaNdaS coooccccoonoonononnnnnnnnnnnnnnnnnnnnnn nono nn nene nn nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnannnannnnnnn $61 Executive OÍÍICES ……oooooccccnnnnnnnnnnnnnnnnnnonononononnnnnnnnnnnnnonnnnnnnnnnnonnnnnnonnnnnss $447 SUbsSIAIArieS ….ooooooooocooonononnnnnnnnnonnnnnnnononononnnnnnnnnnnnnnnnnnnnnnnnnnnnnononnnnnnnnnnnnss $840 Deferred expenses ..cccooooccccnooonncnononnnnononnnnnononnnncnnnnnnnconnnnnnconnnrnnonnnnnancnnnns $4,136 Total $ 17,197
(1) Includes equipment replacement and facilities repair, contributions to subsidiaries and other.
The following table sets forth the estimated investment cost for each of CODELCO”s principal expansion and development projects in each division (projects are subject to change at the discretion of the Company):
Estimated Division Project Status Investment (in millions of U.S.S$)
78 El Teniente. ….oonnccninncninccnn. New mining level (2023) Execution!?? 6,092
Chuquicamata coooonnnnnnnnnnonn o Chuquicamata Underground (2019) Initial Investment 5,897
Chuquicamata coooonnnnnnnnnnonn o Chuquicamata Underground Execution(l) 1,584 (Infrastructure)
A Reallocation Plant (2020) Execution( 1) 1,624
SalvadOT…ooooncconnccninnccinncnns Inca Pit (2021) Execution!?? 2,548
Total ……………… 17,745
(1) Expenditures have been invested in projects in the execution stage.
The figures above reflect the estimated investments that CODELCO expected to make under 1ts 2024 BDP report. CODELCO continues to evaluate the strategy for continuity projects ofthe Chuquicamata underground mine and its second level, the project portfolio arising from new business venues (e.g. lithium), and the execution of projects in early engineering stages (e.g. expansion of Gabriela Mistral?s operation, use of chloride leaching in Radomiro Tomic), among others. Therefore, this medium-term period more reliably reflects CODELCOs commitments than a longer-term period, especially considering current industry trends.
El Teniente Division
Mining Operations. The El Teniente Division is the largest division of CODELCO, based on 2018 production, and operates the El Teniente underground mine located 80 kilometers southeast of Santiago. With the production of 443,220 metric tons in 2020, 1t 1s the world*s largest underground copper mine. For information regarding the new mine level at the El Teniente mine, see Summary-Competitive Strengths.
The El Teniente deposit is also a porphyry-type ore body. The deposit covers a vertical span of over 1,500 meters. A tabular subvertical dacite porphyry intrusion two kilometers long by 200 meters wide 1s well exposed in the northern part of the deposit, and a quartz-diorite stock is located at the southeast side. Wall rock are mostly andesites, which are strongly mineralized, containing a high concentration of chalcopyrite and bornite. The size of the deposit is at least three kilometers north-south and close to one kilometer wide.
El Teniente primarily produces concentrates that are smelted at the Caletones smelter. In addition to the principal mine at El Teniente, the division performs mining operations at several other areas of the main deposit, with a production of approximately 140,000 metric tons of ore per day. The Esmeralda area of the mine is the main producing mine area, producing approximately 36,750 metric tons of ore per day.
As of September 30, 2024, the El Teniente Division employed 3,981 persons and produced 245,483 metric tons of copper with a cash cost of 162.7 cents per pound and a total cash cost of U.S.$868.9 million, as compared to 261,692 metric tons of copper with a cash cost of 134.4 cents per pound and a total cash cost of U.S.$767.1 million during the first nine months of 2023.
In 2023, this division produced 351,874 metric tons of copper, with a cash cost of 138.0 cents per pound, and a total cash cost of U.S.$1,059.7 million, compared to a production by 405,429 metric tons of copper, with a cash cost of 105.2 cents per pound and a total cash cost of U.S.$930.5 million in 2022. In 2021, the El Teniente Division produced 459,817 metric tons of copper at a cash cost of 108.6 cents per pound and a total cash cost of
U.S.$1,088.3 million.
79 Copper Production and Cash Cost-El Teniente Division (production in thousands of metric tons and cash cost in cents per pound)
For the nine-month period ended Year ended December 31, September 30, 2021 2022 2023 2024 Copper Production ..ooooooncocooococcnnnnnnnnnnos 460 405 352 245 Cash COSt…ooocccnnnccnnnnccnnnnccnnnnccnnnniconnnoso 108.6 105.2 138.0 162.7
Smelting Operations. The El Teniente Division includes the Caletones smelter, which has the capacity to smelt 1.25 million metric tons of concentrate per year. The El Teniente mine supplies 1.29 million metric tons of concentrate per year to the Caletones smelter. The balance of concentrate processed by the smelter is brought by railway from the Andina Division, 300 kilometers away.
The Caletones smelter operates two Teniente modified converters, three Pierce Smith Converters and several refining furnaces and gas treatment plants. El Teniente has no electrolytic refining plant, and smelter output 1s sold as fire-refined copper or anodes to be refined at other facilities such as the Ventanas refinery or Chuquicamata.
Radomiro Tomic Division
The Radomiro Tomic deposit lies five kilometers north of the main pit at Chuquicamata. Radomiro Tomic began production at the end of 1997. The Radomiro Tomic mine is a state of the art facility, and the worlds largest producer of copper using the highly efficient SX-EW process.
During the first half of 2010, the Sulfide Phase I project was completed, which enables the treatment of 100,000 metric tons per day of sulfides from Radomiro Tomic in the Chuquicamata processing plants.
As of September 30, 2024, the Radomiro Tomic Division employed 1,357 persons and produced 196,520 metric tons of copper with a cash cost of 243.3 cents per pound and a total cash cost of U.S.$1,039.3 million compared to 239,134 metric tons and a cash cost of 231.9 cents per pound and a total cash cost of U.S.$1,207.6 million, in the same period of 2023.
In 2023, this division produced 341,805 metric tons of copper cathodes with a cash cost 0f 235.9 cents per pound and a total cash cost of U.S.$1,617.2 million compared to 301,062 metric tons of copper, a cash cost of 205.6 cents per pound and a total cash cost of U.S.$1,351.9 million in 2022. In 2021, this division produced 326,456 metric tons of copper at a cash cost of 138.6 cents per pound and a total cash cost of U.S.$989.0 million.
Copper Production and Cash Cost-Radomiro Tomic Division (production in thousands of metric tons and cash cost in cents per pound)
For the nine- month period ended September
Year ended December 31, 30, 2021 2022 2023 2024 Copper Production Radomiro TOMIC c.0ooooooocccncccnnnnnnnns 326 301 315 197 Cash Cost Radomiro TomMIC …ooooonononcncnncnnnnnnnnnnnnnononooss 138.6 205.6 235.9 243.3
Chuquicamata Division
Mining Operations. Located in the Atacama Desert, 1,200 kilometers north of Santiago and 240 kilometers east of the Chilean city of Antofagasta, the Chuquicamata mine has been in continuous operation since 1915. The Chuquicamata mine is an open-pit operation that produces predominantly sulfide concentrates, which are smelted and refined on site. The pit size of the Chuquicamata mine is almost nine kilometers long in a north-south direction by five kilometers wide and one kilometer deep.
80 The Chuquicamata deposit is a porphyry-type ore body. The most important feature of the ore body is a north-south regional fault, the west fissure fault, which cuts the ore on the west side and creates a sharp limit on the deposit. An oxide ore zone was a large part of the deposit and has been almost totally mined out. The mine contains a supergene enrichment layer (a redeposit of copper, by natural forces, from higher to lower layers), which has a thickness of almost 800 meters near the center of the mine. Five kilometers north of Chuquicamata, the ore body narrows and merges with the Radomiro Tomic ore body. For information regarding the transformation of the Chuquicamata mine from an open pit mine to an underground operation, see Summary-Competitive Strengths.
Smelting Operations. Chuquicamata utilizes one Outokumpu flash furnace, five Pierce Smith converters and two Teniente converters to process 1.25 million metric tons of 29.6% copper concentrate per year. Chuquicamata performs all stages of copper production from the mining process through cathode production.
As of September 30, 2024, the Chuquicamata Division employed 3,913 persons and produced 194,846 metric tons of copper with a cash cost of 137.1 cents per pound and a total cash cost of U.S.$578.6 million, compared to 177,888 metric tons with a cash cost of 148.5 cents per pound and a total cash cost of U.S.$553.1 million during the first nine months of 2023.
In 2023, this division produced 248,495 metric tons of copper cathodes, with a cash cost of 158.5 cents per pound and a total cash cost of U.S.$851.7 million, compared to 268,348 metric tons of copper at a cash cost of
127.4 cents per pound and a total cash cost of U.S.$740.7 million in 2022 and, compared to 319,280 metric tons of copper at a cash cost of 116.2 cents per pound and a total cash cost of U.S.$801.7 million in 2021.
Copper Production and Cash Cost-Chuquicamata Division (production in thousands of metric tons and cash cost in cents per pound)
For the nine- month period ended September
Year ended December 31, 30,
2021 2022 2023 2024 Copper Production Chuquicamata …ccccccnnnnocccncnonanananonnnóns 319 268 248 195 Cash Cost Chuquicamata …..ooocccccnnnnnnooonnnnnnnnnnncnnnnnnnnnnnnss 116.2 127.4 158.5 137.1
Mina Ministro Hales Division
Mining Operations. The Mina Ministro Hales Division was created in September 2010 for the operation of the Mina Ministro Hales ore body and delivered its first tons of copper during the last quarter of 2013.
As of September 30, 2024, Mina Ministro Hales employed 821 persons and produced 64,665 metric tons of copper with a cash cost of 268.2 cents per pound and a total cash cost of U.S.$370.7 million, compared to 80,653 metric tons with a cash cost of 249.1 cents per pound and a total cash cost of U.S.$428.3 million during the first nine-months of 2023.
In 2023, this division produced 126,010 metric tons of copper, with a cash cost of 200.7 cents per pound, and a total cash cost of U.S.$539.4 million compared to 152,167 metric tons of copper, with a cash cost of 129.5 cents per pound, and a total cash cost of U.S.$420.1 million in 2022, compared to 181.7 metric tons of fine copper at a cash cost of 89.2 cents per pound and a total cash cost of U.S.$345.5 million in 2021.
81 Copper Production and Cash Cost-Mina Ministro Hales Division (production in thousands of metric tons and cash cost in cents per pound)
For the nine- month period ended September
Year ended December 31, 30, 2021 2022 2023 2024 Copper Producti0N…….cccccccccccncncnnncnos. 182 152 126 65 Cash COSt….ooccccnnccnncccncnccncnnnonininininines: 89.2 129.5 200.7 268.2
Smelting and Refinery Operations. The processing of minerals will be carried out in a stand-alone concentrator with processing capacity of 50,000 tons per day. Copper concentrates will be processed in a new roasting plant. The project also includes a new acid plant.
Gabriela Mistral Division
The Gabriela Mistral ore body is located in Chiles Second Region and began production in May 2008. On January 1, 2013, CODELCO created the Gabriela Mistral Division, which operates the Gabriela Mistral mine.
Gabriela Mistral uses SX-EW technology and produced its first copper cathodes in May 2008 after a 26-month construction period at a cost of U.S.$1.0 billion.
As of September 30, 2024, the Gabriela Mistral Division employed 485 persons and produced 77,132 metric tons of copper with a cash cost of 263.5 cents per pound and a total cash cost of U.S.$448.0 million, as compared to 73,812 metric tons with a cash cost of 304.6 cents per pound and a total cash cost of U.S.$495.6 million during the first nine months of 2023.
In 2023, this division produced 105,825 metric tons of copper, with a cash cost of 292.5 cents per pound and a total cash cost of U.S.$682.4 million. In 2022, this division produced 109,523 metric tons of copper, with a cash cost of
275.8 cents per pound, compared to 100,908 metric tons of copper at a cash cost of 193.4 cents per pound in 2021, and a total cash cost of U.S.$665.9 million in 2022, compared to U.S.$430.3 million in 2021.
Copper Production and Cash Cost-Gabriela Mistral Division (production in thousands of metric tons and cash cost in cents per pound)
For the nine-month period ended Year ended December 31, September 30, 2021 2022 2023 2024 Copper ProductiON……..occccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos 101 110 106 77 ¡CMC 193.4 275.8 292.5 263.5
Andina Division
Mining Operations. The Andina Division operates the Andina mine and the Sur-Sur mine, which are located 50 kilometers northeast of Santiago. Production at the Andina Division is split among open-pit and underground mines. For information regarding the Andina plant reallocation project, see Summary-Competitive Strengths.
The Andina Division does not operate a smelter. Its production is processed at the Caletones smelter of El Teniente, at the Ventanas refinery or at the Salvador Division, and some of its concentrate is sold to ENAMI or other purchasers.
As of September 30, 2024, the Andina Division employed 1,469 persons and produced 139,602 metric tons of copper with a cash cost of 212.7 cents per pound and a total cash cost of U.S.$632,338 million, as compared to 120,081 metric tons of copper with a cash cost of 229.9 cents per pound and a total cost of U.S.$588.0 million
82 during the first nine months of 2023.
In 2023, the Andina Division produced 164,545 metric tons of copper with a cash cost of 230.3 cents per pound and a total cash cost of U.S.$806.9 million. In 2022, this division produced 177,027 metric tons of copper, with a cash cost of 187.5 cents per pound, and a total cash cost of U.S.$707.0 million compared to 177,216 metric tons of copper with a cash cost of 154.9 cents per pound and a total cash cost of U.S.$584.6 million in 2021.
The Río Blanco-Los Bronces porphyry-type deposit, one of the largest copper ore bodies in Chile, 1s partially owned by the Andina Division. The northwest portion of this deposit is owned by the Andina Division; Anglo Sur owns and operates the mines at Los Bronces and El Soldado along with the Chagres smelter and various mineral resources, including Los Sulfatos and San Enrique Monolito, located in the southwest portion of the deposit. The deposit 1s characterized by plentiful tourmaline and breccia rock bodies mineralized with copper sulfides, mostly calcopyrite.
CODELCO”s portion of the deposit is four kilometers in length, in the northwest to southeast direction, with a maximum width of almost one kilometer.
Copper Production and Cash Cost-Andina Division (production in thousands of metric tons and cash cost in cents per pound)
For the nine-month period ended Year ended December 31, September 30, 2021 2022 2023 2024 Copper Producti0N……..ccccccccccncnno.. 177 177 165 140 Cash COStocooononoooooooonnncncccnnonannnnnnoss 154,9 187.5 230.3 212.7
With the aim to increase the processing output of the Andina Division, CODELCO completed the Andina Phase I Expansion Project in 2010. While the Andina Division had plans to continue investing to expand the mine and increase copper production by an additional 350,000 tons of copper per year, the Company is currently reformulating its plans in order to create an alternative that should require less investment, while at the same time seeking to minimize the environmental impact and prolong the life of the Andina Division.
Salvador Division
Mining Operations. The Salvador Division is the smallest of CODELCOs divisions. The complex includes the mine and concentrator at Salvador and a smelterrefinery at Potrerillos. The Salvador mine is located 900 kilometers north of Santiago and 120 kilometers east of the Chilean port of Chañaral. Concentrates are transported 67 kilometers from the mine to the smelter at Potrerillos via pipeline and truck.
The Salvador Division has the smallest base reserve of ore among all of CODELCOs divisions. The Salvador deposit is a typical medium-sized porphyry-type ore body. There is an 80- to 200-meter thick leached capping covering a lensoid-shaped enrichment layer roughly one kilometer in diameter that attains a maximum thickness of about 250 meters. This enrichment layer is almost completely mined out. Mining is currently focused on the primary ore located underneath the secondary enrichment (the so-called Inca levels).
As of September 30, 2024, Salvador employed 1,447 persons and had no copper production as it is focused on developing the Rajo Inca project, as compared to 12,278 metric tons of copper with a cash cost of 523.4 cents per pound and a total cash cost of U.S.$141.1 million during the first nine months of 2023.
In 2023, this division produced 13,000 metric tons of copper cathodes, with a cash cost 0f 575.5 cents per pound, and a total cash cost of U.S.$164.3 million compared to 32,065 metric tons of fine copper at a cash cost of
389.6 cents per pound and a total cash cost of U.S.$271.7 million in 2022 and 52,885 metric tons of fine copper at a cash cost of 268.0 cents per pound and a total cash cost of U.S.$311.4 million in 2021. As of December 2024, although some works remain pending, construction of key infrastructure, equipment commissioning, and a unified system for processing 15,000 tons daily 1s fully complete and production has begun.
83 Copper Production and Cash Cost-Salvador Division (production in thousands of metric tons and cash cost in cents per pound)
For the nine-month period ended Year ended December 31, September 30, 2021 2022 2023 2024 Copper ProductiON……..ooooononononnnnnnnnnnnnnnnnnnnnnnnnnss 53 32 13 – Cash COSt coooooonoonoooononnnnnnnnnnnnnnonononnnnnonnnnnnnnnss 268.0 389.6 575.5 –
Smelting Operations. The smelting and refining operation is located at Potrerillos. This facility includes one Teniente converter and four Pierce Smith converters for a rated annual capacity of 671,000 metric tons of concentrate. CODELCO increased capacity of the Potrerillos smelter in 2004.
Ventanas Division
Smelting and Refinery Operations. The Ventanas Division was created in connection with the acquisition of the Ventanas smelterrefinery complex from Chiles state-owned mining company ENAMI in 2005. In 2023, this division refined 357.2 thousand metric tons of copper, compared to 370.7 thousand metric tons of copper in 2022.
During the nine months of 2024, the Ventanas division refined 204.5 thousand metric tons of copper. Pursuant to the terms of the acquisition, CODELCO is required to provide on market terms the necessary smelting and refining capacity for the treatment of copper concentrate delivered by the small- and medium-sized mining industry that ENAMI serves. As of September 30, 2024, the Ventanas Division employed 456 persons. In June 2022, CODELCO*s Board of Directors approved the decommissioning of the smelter in Ventanas Division. In December 2022, a change in law was approved in Congress allowing CODELCO to smelt copper concentrates at smelters other than those of the Ventanas Division. In January 2023, the Mining and Energy Commission of the Upper House approved the articles particular to the bill setting definitions regarding the future installation of the new smelting capacity, and 1ts compatibility with the environmental safety and the protection of peoples health, among others. In May 2023, the bill was approved and after almost 60 years of operation, the furnaces at Ventanas Division smelting plant were shut down. The transition of 1ts former workers successfully concluded, with 58.8% of 350 workers opting for an exit plan, 26.9% retrained for new roles at the Ventanas division, and 14.3% relocated to other divisions, following the smelter’s closure. CODELCO will continue to operate in the area through its refinery.
Associations, Joint Ventures and Partnerships
CODELCO has undertaken several projects, business ventures and associations with certain private sector mining and non-mining enterprises, including: e SCM El Abra: In 1994, CODELCO (49.0%) formed a company, SCM El Abra, with Cyprus El Abra Corporation (51.0%), a subsidiary of Freeport-McMoRan Inc., to develop the El Abra mine in northern Chile.
The mine is a porphyry copper open-pit facility located 105 kilometers north of the city of Calama at an altitude of 3,900 meters above sea level. Constructed at a cost of U.S.$1.1 billion, 1t is designed to produce 225,000 metric tons of copper per year and includes one of the worlds largest SX-EW facilities. The El Abra project was originally financed by a U.S.$850.0 million syndicated loan, which was repaid in full in 2004.
O In 2009, SCM El Abra approved resuming construction activities for the Sulfolix Project, which had been deferred as a result of market conditions at the end of 2008, to extract and process (by the leaching process) sulfide ores, which 1s expected to extend mine life by 13 years and enable El Abra to produce at least 125,000 metric tons of fine copper per year. This project contains approximately 1.2 billion metric tons of leachable oxide and sulfide copper, with an average ore grade of 0.4%. The project started producing sulfides, shifting from an oxide operation, during the first quarter of 2011 and includes milling mine ores until 2024, and is expected to generate the last cathode in 2029 by leaching heap remains. The Sulfolix Project requires approximately U.S.$565.0 million of initial equity and an additional U.S.$160.0 million to sustain the operations. The project is financed by SCM El Abras retained earnings.
84 o In2023,SCM El Abra produced 98,414 metric tons of fine copper with a cash cost of 3.00 cents per pound. For the nine-month period ended September 30, 2024, the production was 72,954 metric tons of fine copper with a cash cost of 3.17 cents per pound. The project had delivered total dividends of
U.S.$6.0 million in 2019 and CODELCO had received U.S.$3.0 million in dividends in 2019. The project did not deliver dividends in 2020. The project had delivered total dividends of U.S.$0.4 million in 2021, and CODELCO had received U.S.$0.2 million in dividends in 2021. The project had delivered total dividends of U.S.$51.4 million in 2022, and CODELCO had received U.S.$25.2 million in dividends in 2022. The project did not deliver dividends in 2023. As of September 30, 2024, the carrying value of SCM El Abras ownership interest was equal to U.S.$718.2 million.
Anglo American Sur: On December 19, 2008, CODELCO purchased from ENAMI for U.S.$175.0 million an option to purchase up to 49.0% of the equity interests of Anglo American Sur, a wholly-owned subsidiary of Anglo American, for a price to be determined by a prescribed formula based on a multiple of historic earnings (the Sur Option). Anglo American Sur owns and operates the mines at Los Bronces and El Soldado, the Chagres Smelter and various mineral resources, including Los Sulfatos and San Enrique Monolito. In October 2011, CODELCO announced that it had arranged for a bridge loan of up to U.S.$6.75 billion from Mitsui that would allow 1t to exercise the Sur Option and indicated its intent to exercise the Sur Option during the next window for its exercise, which would occur in January 2012. On November 9, 2011, Anglo American announced that it had sold 24.5% of the equity interests of Anglo American Sur to affiliates of Mitsubishi Corporation. Following this sale, CODELCO announced that 1t retained the right to acquire up to 49.0% of the equity interests of Anglo American Sur and requested from the Santiago Court of Appeals a legal order preventing further sales of equity interests of Anglo American Sur until CODELCO was able to exercise the Sur Option. The requested legal order was granted and, on January 2, 2012, CODELCO exercised the Sur Option to purchase 49.0% of the equity interests of Anglo American Sur. Prior to and after the exercise of the Sur Option, Anglo American and CODELCO were involved in additional legal proceedings relating to the exercise of the Sur Option, which were ultimately settled pursuant to the settlement agreement described below.
O On August 23, 2012, CODELCO and Anglo American entered into a settlement agreement to settle their respective claims in relation to the Sur Option. In connection with this settlement agreement, CODELCO and Anglo American agreed that Becrux, then a wholly-owned subsidiary of Acrux, an entity owned by CODELCO and Mitsui in the manner described below, would acquire 29.5% of the equity interests in Anglo American Sur pursuant to the following transactions: . On August 24, 2012, Becrux acquired (1) shares representing 24.5% of the equity interests of Anglo American Sur for a purchase price of U.S.$1.7 billion, which was financed through a draw down by an affiliate of CODELCO on the AS£R Mitsui Bridge Loan Facility described under Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Other Debt; and (11) shares representing 0.9% of the equity interests of Anglo American Sur for a purchase price of U.S.$206.8 million, which was financed by cash contributions made by Mitsui; and . On September 14, 2012, Becrux acquired shares representing 4.0% of the equity interests of Anglo American Sur for a purchase price of U.S.$893.2 million, which was financed by cash contributions made by Mitsul1.
O As part of the settlement agreement, Anglo American Sur transferred to CODELCO certain undeveloped mining properties, Los Leones and Profundo, which are located to the east of CODELCO’s Andina mine, and the shareholders of Anglo American Sur entered into a shareholders agreement that provides a framework for the ongoing governance of Anglo American Sur, which includes board representation and participation in certain decisions for Becrux.
O Immediately following the acquisition of 29.5% of the equity interests of Anglo American Sur, affiliates of CODELCO and Mitsui owned approximately 83.0% and 17.0%, respectively, of the equity interests of Acrux. In connection with the refinancing of the A£R Mitsui Bridge Loan Facility described above under Managements Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Other Debt, an affiliate of Mitsui exercised its right
85 to acquire from an affiliate of CODELCO at the closing of the refinancing a number of equity interests of Acrux representing a 4.5% stake in Anglo American Sur for a purchase price equal to U.S.$998.0 million. This amount was used to prepay a portion of the bridge loan previously drawn down by an affiliate of CODELCO under the A¿R Mitsui Bridge Loan Facility in connection with the transactions described above. Following the consummation of this transaction, affiliates of CODELCO and Mitsui owned approximately 67.8% and 32.2%, respectively, of the equity interests of Acrux. Consequently, CODELCO indirectly owns a 20.0% interest in Anglo American Sur.
O On November 26, 2016, CODELCO signed a credit agreement with Oriente Copper, an affiliate of Mitsui, renegotiating the payment of principal at the end of the contract. The terms established an annual interest rate of LIBOR +2.5% with a five-year maturity to be payable in one installment at maturity with semi-annual interest payments. On May 26, 2017, CODELCO signed a new credit agreement with Mitsui renegotiating the following semi-annual payment, which was on the same terms as the first renegotiation done in November 2016.
O On December 21, 2017, CODELCO and Mitsui agreed to merge Acrux into Becrux, as the surviving entity. The reorganization did not affect the interest that CODELCO and Mitsui indirectly hold in Anglo American Sur.
O Anglo American Sur fine copper production was metric 255,041 tons in 2023 with a cash cost of 306 cents per pound, compared to 311,036 tons in 2022 with a cash cost of 213 cents per pound and 369,980 tons in 2021 with a cash cost of 165 cents per pound. In the nine-month period ended September 30, 2024, the production was 169,373 metric tons of fine copper with a cash cost of 2.52 cents per pound.
Anglo American Sur distributed U.S.$22.7 million in 2020, U.S.$270.6 million in 2021, U.S.$138.4 million in 2022, zero in 2023 and zero as of September 30, 2024 in cash dividends to Becrux, which is an indirectly owned subsidiary of CODELCO. As of September 30, 2024, the carrying value of equity of Anglo American Sur was equal to U.S.$2.2 billion. As of December 31, 2023, the carrying value of equity of Anglo American Sur was equal to U.S.$2.1 billion. CODELCO has a 20.0% indirect participation in Anglo American Sur. See Risk Factors. A substantial amount of our total assets are property, plant and equipment.
SCM Purén: CODELCO (35.0%) and Compañía Mantos de Oro (65.0%), a subsidiary of Kinross Gold Corp., own SCM Purén. SCM Puréns mining activities, located in the Atacama Region, east of the city of Copiapó, began in November 2005, having produced over 801,839 ounces of equivalent gold. In 2015, the company distributed U.S.$2.5 million in dividends to CODELCO. During 2019, 2020, 2021, 2022, 2023 and the first nine months of 2024, this company did not issue dividends. SCM Purén mines two gold and silver ore bodies through open pits. Currently, SCM Purén is evaluating a second phase of the project.
Nuevo Cobre S.A. (formerly Agua de la Falda S.A.): CODELCO (42.26%) and Rio Tinto Chile SpA (57.74%), a subsidiary of Rio Tinto plc, own Nuevo Cobre S.A., formerly named Agua de la Falda S.A., which was created in 1996 to explore and exploit the Agua de la Falda gold deposit that was in production until 2005. The new joint venture aims to explore and develop copper deposits.
Inca de Oro S.A.: CODELCO (33.85%) and Minera PanAust IDO Limitada (66.15%) own Inca de Oro S.A., which was created in 2009 to explore, exploit and process mineral resources in Chile and abroad. The production of Inca de Oro S.A. 1s currently halted pending new market opportunities.
Cobrex Prospeccao Mineral S.A: CODELCO (42.06%) and Glencore Exploracáo Mineral do Brasil Ltda
(57.94%), which was created in 2013 to engage in mining ventures in Brazil and abroad, including exploration, extraction, and commercialization of mineral resources, as well as managing its own or third -party assets. As of January 14, 2024, CODELCOs ownership in Cobrex Prospeccao Mineral S.A decreased from 51% to
42.06%, transitioning 1t from a subsidiary to an associate, following the termination of an exploration contract that reduced CODELCO” stake to 42.06%.
Deutsche Giessdraht GmbH: CODELCO (40.0%) and Aurubis AG (60.0%) own Deutsche Giessdraht GmbH, a German corporation located in Emmerich, Germany. The company, which has been in existence since 1975,
86 produces continuous copper cast wire rod. CODELCO indirectly supplies copper to Deutsche Giessdraht GmbH.
On July 31, 2018, CODELCO sold its 40.0% ownership stake in Deutsche Giessdraht GmbH to its partner Aurubis AG after receiving approval of the transaction by Germany?s federal antitrust regulator (Bundeskartellamt). The sale included an agreement which allowed CODELCO to produce wire rod until December 31, 2018 to fulfill 1ts sales contract obligations that expired at the end of 2018. GNL Mejillones S.A.: Due to the decrease and eventual termination of natural gas supply from Argentina, electrical power generation companies have experienced diminished electricity generation. For this reason, CODELCO and Suez Energy Andino S.A. through GNL Mejillones constructed an LNG re-gasification plant, which has been operating since the beginning of 2010. GNL Mejillones has the capacity to receive, process and store natural gas, with a send-out capacity of 5.5 million of cubic meters of gas per day, originating in Trinidad and Tobago and purchased from SUEZ Global LNG Ltd. under a long-term supply contract. The LNG storage tank 1s currently in Operation. GNL has entered into a long-term agreement with E-CL for the re-gasification and storage of approximately 15 trillion BTU (British Thermal Unit).
O GNL Mejillones provides gas required by the electricity power plant in the Sistema Interconectado del Norte Grande, known as the Sistema Eléctrico Nacional (formerly known as SING), which supplies power to CODELCOs operations. The project partners have financed this project under existing take-or-pay contracts with CODELCO and other mining companies.
O As of June 30, 2019, CODELCO owned 37.0% of the outstanding shares of the company, and Suez Energy Andino S.A. owned the remaining 63.0% of the shares.
O On August 6, 2019, CODELCO completed the sale of 1ts 37.0% stake in GNL Mejillones S.A. to Ameris Capital AGF, for an amount of U.S.$193.5 million.
Planta Recuperadora de Metales SpA: In December 2012, CODELCO (34.0%) together with LS Nikko (66.0%) formed Planta Recuperadora de Metales SpA (PRM), the purpose of which is to process intermediate products derived from refining and processing copper and other metals, in order to recover copper, other metals and byproducts contained in these substances and transform them into commercial products, and also trading and distributing all classes of goods or supplies relating to such process. This entity developed and built a processing plant located in Mejillones, in the Antofagasta Region, which began its commissioning process during 2016. A
20-year contract regulates the treatment of anodic slimes produced at CODELCO refineries for the recovery of precious metals. During 2023, LS-Nikko Copper changed its corporate name to LS MnM Inc.
Salar de Maricunga SpA: In April 2017, CODELCO formed Salar de Maricunga SpA (Salar de Maricunga) to develop projects for the exploration and exploitation of lithium in Chile. In March 2018, Salar de Maricunga entered into a special lithium operating contract with Chiles Ministry of Mining which allows it to explore and exploit lithium (which is not subject to concession in Chile) from the Maricunga salt flat in the northern Atacama Region of Chile. In 2019, CODELCO started to gather environmental and social data in order to prepare the submission of an Environmental Impact declaration for exploring the Maricunga salt flat. In November 2020, CODELCO was granted the environmental authorization to explore lithium resources in some of its mining rights in the Maricunga salt flat. During 2021, CODELCO continued to receive the approvals of the different sectorial permits necessary to begin the exploration work in the Maricunga salt flat. The exploration campaign began in February 2022 and ended in June 2023. In March 2024, Salar de Maricunga indirectly acquired Minera Salar Blanco S.A., holder of the Blanco Project in the Maricunga salt flat, and 1s now looking for a partner to develop this lithium project.
Compañía Minera Teck Ouebrada Blanca S.A.: On September 5, 2024, CODELCO purchased from ENAMI for U.S.$520.0 million a 10.0% equity interest in Compañía Minera Teck Quebrada Blanca S.A. This company owns and operates the Quebrada Blanca mine in the Tarapacá Region, 240 kilometers from Iquique. In 2023, Quebrada Blanca completed the next stage of the original mine, called Quebrada Blanca Phase 2, which includes the operation of an open-pit mine, concentrator plant, and all supporting facilities. For the nine-month period ended September 30, 2024, production reached 147,100 metric tons of fine copper.
Technology and Research and Development Partnerships and Associations: CODELCO has entered into associations with companies and organizations that are world leaders in research and development to increase
87 the integration of knowledge and innovation into mining processes. The following is a representative list of such associations: o CODELCOTec SpA: CODELCO established CODELCOTEc SpA (formerly, BioSigma S.A.) (CODELCOTEec) in 2002 with the Japanese company JX-Nippon Mining and Metals Corporation (JX-Nippon Mining) and has since increased its participation to 99.0% following the exit of JX- Nippon Mining in 2016. CODELCOTecs mission today 1s the development of mining and metallurgy technological innovations, commercial development of processes and technology in the field of genomics, proteomics, and bioinformatics for the mining sector, and, in general, application of systems based on microorganisms, analysis, research, invention and creation, development, and implementation of new applications, processes, and uses for copper, molybdenum, lithium, and other byproducts of mining processes, insofar as they are directly related to greater use of copper. CODELCOTE€cs mission also includes technological monitoring of copper substitutes, representation of domestic or foreign companies and individuals or legal entities, sale and purchase, distribution, trading, import and export of such substitutes and other activities relating to the foregoing. During 2024, CODELCOTE€c was liquidated.
O Kairos Mining S.A.: Kairos Mining S.A. is a company created in 2006 in association with Honeywell Chile S.A., which owns 60.0% (CODELCO owns the remaining 40.0%). Kairos Mining S.A.s purpose 1s to provide services for the automation and control of industrial and mining activities, and to supply related technology and software licenses;
O Ecosea Farming S.A.: CODELCO, through its subsidiary Innovaciones en Cobre S.A., was a 91.3% shareholder in EcoSea Farming (EcoSea), a technology -driven company setting the standard for aquaculture on a global scale. The companys objective was to incorporate the use of metallic copper alloy meshes for fish cultivation systems, in order to take advantage of the various benefits of copper: antimicrobial, antifouling, anti-predator, mechanically strong and infinitely recyclable. In addition, EcoSea discovered new properties that allow for lower operational costs and the expansion of offshore aquaculture in exposed areas. During 2018, CODELCO sold the technology assets of EcoSea to a group of investors and EcoSea was liquidated and dissolved.
The following table sets forth the major mining and exploration agreements to which CODELCO is a party as of September 30, 2024:
Major Mining and Exploration Agreements (As of September 30, 2024)
Partner Type Mining Co-participation in Chile SCM El Abra Freeport-McMoRan Inc. (USA) Copper Nuevo Cobre S.A Rio Tinto SpA (Chile) Gold SCM Purén Compañía Minera Mantos de Oro (Chile) GoldSilver Inca de Oro S.A. PanAust Minera IDO Limited (Australia) Copper Anglo American Sur S.A. Anglo American Clarent (UK) Ltd, Inversiones Anglo American Copper
Sur S.A., MC Resources Development Ltd. And Inversiones
Mineras Becrux SpA Compañía Minera Teck Quebrada Quebrada Blanca Holding SpA (Chile) Copper Blanca S.A.
Exploration Agreement Projects
Chile Puntilla Galenosa Sociedad Punta del Cobre S.A. (Chile) Copper International Liberdade Lara Exploration (Brazil) CopperGold JV Codelco-Glencore Glencore (Brazil) Copper Grupo Propiedades Empresa Nacional Minera de Ecuador (Ecuador) Copper
CODELCO reports its inventory of mining assets, distinguishing mineral resources and mineral reserves, according to Chilean and international regulation. The system described below for categorizing mineral ore, which
88 1s widely used within the mining industry, 1s codified in Law No. 20,235 and is regulated by an independent Chilean private entity called the Comisión Calificadora de Competencias en Recursos y Reservas Mineras (the Commission for the Qualification of Competencies in Mineral Resources and Reserves, or CQCMRR). The CQCMRRK is part of the Committee for Mineral Reserves International Reporting Standards (CRIRSCO).
Geological Resources
Geological resources are concentrations or occurrences of materials in such form, quantity (tonnage and ore grade) and quality, based on specific geological evidence and knowledge, which allow for the calculation of the amount, ore grade and quality of the material with some level of confidence. Geological resources are identified and evaluated through exploration, reconnaissance and sampling. They are estimated based on geological knowledge about the deposit, which 1s based on scientific concepts concerning the formation of minerals such as oxides, sulfides and mixed ores, as well as available knowledge concerning the geological continuity of the mineralized sectors. This 1s based on technical parameters, such as robustness of the genetic-geological model, and its validation through drillings. Geological resources are further categorized as measured, indicated and inferred.
A resource is considered to be measured 1f CODELCOs knowledge of the resource 1s extensive and direct; 1f CODELCOs knowledge of the resource is substantial but less extensive, 1t is considered to be indicated; and 1f CODELCO'”s knowledge of the resource is only indirect, 1t 1s considered to be inferred.
Mineral Resources
Once CODELCO has achieved increased knowledge about its geological resources, 1t 1s able to generate a long-term mining plan for the exploitation of such resources, which are then considered to be mineral resources.
Mineral resources, as well as geological resources, are sub-categorized as measured, indicated and inferred.
Ore Reserves
Ore reserves are defined as the economically mineable part of mineral resources. They include diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, which take into account rationally assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments address at the time of reporting whether extraction is justified. Ore reserves are sub-divided in order of increasing confidence from probable ore reserves to proved ore reserves. Ore reserves are a subset of mineral resources in the same way as mineral resources are a subset of geological resources. The following diagram sets forth the relationships among the different categories of resources and reserves:
89 Resources and Reserves, CODELCO q q AAA ARA ARA dS IIA
AA ROCCA 4 pe ;
Ns
EEE O
+ e A
The modifying factors: Consideration of mining, metallurgical, economic, marketing, legal, environmental, social and government factors
Chilean Code: CH20.235
GEOLOGICAL | | RESOURCES ¡| MINERAL ORE | ¡| RESOURCES RESERVES |:
MEASURED ¡| MEASURED PROVED |
Z O _ ¡ 1 z >, ¿Mining Plan | INDICATED [>| PROBABLE O INDICATED Mi = INE Z Eco xx PE Il
Based on the methods and categories described above, CODELCOs proved and probable reserves include
47.1 million metric fine tons of copper as of December 31, 2023, an amount that represents at least 30 years of future production at current levels. In 2021 and 2022, CODELCO'”s proved and probable reserves included 135.2 and 47.5 million metric fine tons of copper, respectively. As of December 31, 2023, CODELCOs mineral resources include
164.5 million metric fine tons of copper, and its identified geological resources include 401.1 million metric tons of copper, for a cutoff grade of 0.2% copper. The following table sets forth the amount CODELCOs copper holdings by division according to the methodology described above, as of December 31, 2023:
Mineral Resources?
Grade Fine TonnageW% copper copper? Radomiro Tomic……… 5,072 0.43 21.7 Chuquicamata …………. 2,795 0.63 17.5 Ministro HaleS…oooooccnncccnccincccnns. 1,959 0.76 15.0 Gabriela Mistral ………. 594 0.31 1.8 Salvador. ……cooocccn.c…… 2,207 0.50 11.1 ANQUINA cocccnooooonnnnnnnnnnns: 4,994 0.74 36.9 El Teniente……………… 5,415 0.73 39.5 ExplorationBusiness and Subsidiaries………. 3,925 0.54 21.0 A 26,962 0.61 164.5
(1) Geological resources cut-off grade 0.2% copper.
(2) In millions of metric tons.
90 Geological
Resources!
1) Grade Fine TonnageW copper copper? Radomiro Tomic……… 7,549 0.41 30.7 Chuquicamata …………. 14,421 0.42 61.8 Ministro HaleS …ooooonnnnncccccnnnnnnns: 4,232 0.68 28.7 Gabriela Mistral ………. 2,247 0.33 7.4 Salvador. ……cooocccn.c…… 3,700 0.39 14.5 AMNQINA coocccccnnnnnnccccnnnnns 21,933 0.62 134.9 El Teniente…….on.ccc….. 16,272 0.56 91.4 Other deposits…………. 3,190 0.34 10.8 Artificial resources…… 5,376 0.39 20.8 Total resources………… 78,920 0,51 401.1
(1) Geological resources cut-off grade 0.2% copper.
(2) In millions of metric tons.
The following table sets forth the copper holdings of the world and of CODELCO using the U.S. Geological Survey system as of December 31, 2023:
World CODELCO CODELCOs (in millions of tons) (in millions of tons) share (%) Geological Resources………ooocccccncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos 2,100 401.1 19.10% Proved and Probable Reserves………cccccccnnonoooooconnnnncnccnnnnanannnnnoss 1,000 47.1 4.70%
(1) As defined by the U.S. Geological Survey (January 2024) and with reference to identified resources.
(2) Refers to copper holdings that are measured, indicated and inferred.
Each year, the Board of Directors must approve a long-term BDP of the Company. The first three years are subject to the approval of the Ministries of Finance and Mining. This plan must include the annual investment and financing amounts in addition to the annual profits that the Company is estimated to generate during the period. The Ministries of Finance and Mining jointly issue a decree, pursuant to which a portion of CODELCO? s profit may be allocated by CODELCO to the creation of capitalization and reserve funds.
The 2020 BDP enables CODELCO to develop a long-term mining plan. CODELCO reviews the terms of the BDP annually to update or modify 1t for changes in business trends.
The 2020 BDP uses inferred resources to define CODELCOs strategic vision for long-term resource development. However, the incorporation of such resources increases gradually over time, and the inferred resources become proved and probable reserves.
In the early stages of the 2020 BDP, production 1s almost exclusively based on proved and probable reserves and mining projects are at advanced stages of engineering or at the investment stage. Mining projects must support their economic evaluation based on pre-defined minimum proved and probable reserves in order to be approved for Investment.
Resource Development
CODELCO controls approximately 4.7% of the worlds proved and probable copper reserves, as such terms are defined by the U.S. Geological Survey.
Potential geological resources, which have been identified by our internal exploration division as the result of projects carried out through 2023, comprise resources incorporated at different stages of exploration and have not been added into CODELCOs copper holdings. CODELCOS”s total potential geological resources, according to our internal estimates, are approximately 9,400 million of metric tons of ore with a 0.44% average copper ore grade, and equivalent to 41.3 million metric tons of fine copper. As explorations progress and further estimates are completed,
91 these resources could be incorporated into CODELCOs copper holdings. Production Costs of Copper
CODELCO”s production costs include all costs and expenses incurred in connection with the mining and production of its copper mix and related byproducts. These production costs do not include administrative and operating costs incurred in connection with the processing of other copper products purchased from third parties.
In 2023, CODELCOS”s total costs and expenses increased by 24.2 cents per pound (7.8%) to 335.1 cents per pound, compared to 310.9 cents per pound in 2022 and 254.3 cents per pound in 2021, mainly due to lower copper production, higher operating costs, and reduced sales of by-products, such as molybdenum. For the first nine months of 2024, CODELCO”s total costs and expenses increased by 9.6 cents per pound (1.8%) to 373.2 cents per pound, compared to 363.6 cents per pound for the same period in 2023, mainly due to lower production, partially offset by foreign exchange rate depreciation of the Chilean peso against the U.S. dollar, and slightly decreased operating costs.
In 2023, CODELCO” s total costs and expenses increased to U.S.$10.7 billion, compared to U.S.$9.9 billion in 2022, and to U.S.$9.1 billion in 2021, mainly due to higher labor and third-party services costs as a consequence of the foreign exchange rate appreciation of the Chilean peso against the U.S. dollar for 2023 compared to 2022 and due to lower production and higher input prices and depreciation of the Chilean peso against the U.S. dollar for 2022 compared to 2021. For the first nine months of 2024, CODELCO”s total costs and expenses amounted to U.S.$7.5 billion, compared to U.S.$7.7 billion for the same period in 2023, primarily due to lower operating costs, partially offset by increased expenses for bonuses resulting from the negotiation of 25 collective bargaining agreements in
2024. In 2023, CODELCOS”s cash cost of production was 203.1 cents per pound, compared to 165.4 cents per pound in 2022 and 132.7 cents per pound in 2021. For the first nine months 0f 2024, CODELCO”s cash cost of production was 205.0 cents per pound, compared to 204.3 cents per pound for the same period in 2023, 2023 primarily due to lower production, compounded by reduced by-product credits resulting from decreased molybdenum prices and lower sales volumes. In 2023, CODELCOS total cash cost was U.S.$5.8 billion, compared to U.S.$5.2 billion in 2022 and U.S.$4.7 billion in 2021. For the first nine months of 2024, CODELCOs total cash cost was U.S.$4.1 billion, as compared to U.S.$4.3 billion for the same period in 2023 (such total cash cost includes certain cash cost incurred at the corporate level). See Management’s Discussion and Analysis of Financial Condition and Results of Operations-Overview.
For the first nine months of 2024, CODELCO”s total costs and expenses increased by 9.6 cents per pound
(1.8%) to 373.2 cents per pound, compared to 363.6 cents per pound for the same period in 2023, mainly due to lower production, partially offset by foreign exchange rate depreciation of the Chilean peso against the U.S. dollar, and a slight decrease of the operating costs.
In 2013, CODELCO also implemented a productivity and cost structured project intended to lower costs and increase production. The initiative is comprised of: (1) performance optimization to minimize operational disruption; (11) budget optimization to identify expendable and necessary contracts to control the budget for third-party services costs; (111) energy and input costs optimization marked by a review of energy and main inputs contracts; and (1v) a review of hygienic factors and costs, such as travel expenses and consulting services. Moreover, CODELCO has also created a new Vice President for Productivity and Costs position with the aim of increasing productivity, reducing costs and enhancing the cost control program.
The main energy sources for CODELCO’s operations are electricity, liquid fuels (such as diesel, fuel o1l and gasoline) and natural gas. Since 2004, there has been a restricted supply of natural gas from Argentina. With respect to liquid fuels and natural gas, these commodities are subject to price fluctuations as a result of external factors, such as the COVID-19 pandemic and the ongoing war in Ukraine.
CODELCOS*Ss production costs have increased due to these shortages, having to rely on electricity generated from more expensive sources, such as diesel, oil or coal, and these increased costs have adversely affected CODELCOS*s results of operations. Notwithstanding the foregoing, CODELCO has been promoting a strategy to:
(1) decarbonize its electricity supply; (2) adapt costs to current tariffs based in new available technologies; and (3) reduce its exposure to fluctuations in commodity prices. As a result, in 2023 CODELCO renewed its current supply agreement with Pampa Solar. During 2022, CODELCO renegotiated its current supply agreements with producers and distributors of electrical energy AES Andes S.A. and Colbún S.A., to progressively shift the power supply towards renewable energy sources which should help to decrease electricity costs.
92 In addition, in 2018, CODELCO reached an agreement with Engie Energía Chile S.A., which guaranteed that by 2026, 70.0% of CODELCO’s electricity requirements will come from renewable sources, granting CODELCO independence from the constant fluctuation of commodity prices and any additional associated costs.
In late 2009 and early 2010, as a palliative measure given the adverse effects of Argentinas restriction and in order to stabilize future energy costs, CODELCO entered into electrical supply agreements at competitive prices for a 15-year period for its facilities in the Chuquicamata Division and for a 30-year period for facilities in the middle-south region of Chile, respectively. Both supply agreements include the creation of new electrical generation capacity based on coal. Notwithstanding, the latest supply agreement was renegotiated during 2022 to progressively shift the power supply towards renewable energy sources. Furthermore, in 2018, CODELCO entered into an extension of the Chuquicamata Division contract for an additional 11-year period. This new agreement, effective as of 2025, provides for the creation of new electrical generation capacity based on renewable sources.
In 2015, after the expiration of this contract, CODELCO entered into a new five-year supply contract for liquid fuels. In August 2011, CODELCO entered into two energy and power supply agreements with Norgener S.A.
for the Mina Ministro Hales Division and the Radomiro Tomic Division. CODELCO began to receive energy under these contracts in 2011 for Mina Ministro Hales and began in 2017 for Radomiro Tomic, in each case lasting until
2028. During 2014, AES Gener S.A. took over Norgener S.A., assigning CODELCOs contract to AES Gener S.A, now AES Andes S.A. Both energy and power supply agreements were amended and restated on December 29, 2022.
Additionally, on that same day, CODELCO and AES Andes S.A. entered into a new energy and power supply agreement for renewable sources, which became effective as of January 1, 2023, until December 31, 2040. In 2022, CODELCO and AES Andes S.A. renegotiated their agreements to replace the current supply of power based on coal with renewable energy. Similarly, during 2018, CODELCO and Engie Energía Chile S.A. renegotiated an electrical supply agreement. The contracts that were renegotiated by CODELCO with AES Andes S.A. and Engie Energía Chile S.A. guaranteed that by 2026, 70.0% of CODELCOs electricity requirements will come from renewable sources, granting CODELCO independence from the constant fluctuation of commodity prices and any additional associated costs. Additionally, in early 2010, CODELCO entered into a five-year supply contract for liquid fuels with the main Chilean fuel distributors. In 2015, after the expiration of this contract, CODELCO entered into a new five-year supply contract for liquid fuels. In April 2012, CODELCO renewed a contract with Pacific Hydro, involving the purchase of power generation of the Coya and Pangal hydroelectric plants, for 12 years. Since CODELCO*s sale of the Coya and Pangal hydroelectric plants to Pacific Hydro in 2004, Pacific Hydro and CODELCO have entered into similar supply contracts to purchase the injected energy produced by these hydroelectric plants.
With the purpose of decarbonizing its electricity supply, in January 2023, CODELCO launched an electricity supply bidding process focusing on renewable sources to procure approximately 2,500 GWhyear (which represents, approximately, 30% of CODELCOS*s electricity requirements). The start supply date is January 2026. To this date, the electricity supply bidding process is in the stage of evaluation and assessment of the offers. CODELCO expects to sign the new power purchase agreements derived from this supply tender process by the end of 2023 or early 2024 at the latest. In March 2024, CODELCO successfully concluded the renewable energy public bidding process undertaken in 2023, in which more than 50 national and international companies participated. The bid was awarded to Colbún, Atlas and Innergex, for a total of 1.8 terawatt hours per year (TWhyear), equivalent to the consumption of approximately 222,000 households. In May 2024, CODELCO and Engie announced modifications to the power purchase agreement signed in 2007 with Central Termoeléctrica Andina (CTA), which currently supplies electricity to the Gabriela Mistral Division and part of Chuquicamata. Under the revised agreement, CODELCO is expected to have the option to transition from CTA’s coal-based energy supply to renewable energy starting January 1, 2026, ahead of the original 2032 timeline. Thanks to these processes CODELCO is expected to be supplied from 100% renewable sources, thus moving toward achieving its strategic plan goal to decarbonize its power grid before 2030.
CODELCO continues to develop and refine 1ts mine management practices and programs to limit and reduce its costs. These initiatives include the following: (1) improved deposit identification and mining techniques;
(11) the implementation of early retirement plans and workforce reduction programs; (111) an investment in human capital and continuing to attract and retain a world-class management team and professionals of the highest caliber; (1v) improved utilization of equipment and inputs used in the processes of copper production to increase productivity and efficiency; and (v) the development of key projects, specifically the new mine level at El Teniente, the Andina plant reallocation and the Chuquicamata underground projects.
93 Marketing General
Four of CODELCOs wholly-owned subsidiaries and 12 of its sales representatives cover over 35 countries around the world. The following table shows the breakdown of CODELCO’s sales by product type including third-party products for the three years ended December 31, 2023 and the nine-month period ended September 30, 2024:
Copper Sales by Product Type (in thousands of metric tons)
For the nine- month period ended Year ended December 31, September 30, 2021 2022 2023 2024 CathodeS ..oocccccncoonccncnnnonnnocccnnnnnnnonocnnnnonanorononononaninons 1,253 1,131 1,142 783 Blisters and ANOAS ..0cccccccnncccccnnnnnnncccnnnnnnonocinnnnnnnnss 107 108 82 42 CONCENÍTAtesS …ooocccnnncccnnnnccnnnnnoccnnnnoccnnnnoronnnnarononanonos 554 493 442 347 Total..ooooooonnnnnnnnnnnoccnnnnnonnnoccnnnnnononoconnnnnnncrcnnnononinocons 1,914 1,732 1,664 1,172
CODELCO*”s marketing strategy 1s focused in three major areas: e Establishing long-term relationships. CODELCO encourages sales through annual contracts and direct long-term relationships with copper consumers.
e Quality and sales service. CODELCO focuses on product quality and sales service based on timeliness, scheduling and conditions of product delivery.
e Diversification. CODELCO has a geographically diverse sales portfolio.
Pricing and Hedging
The substantial majority of copper produced by CODELCO is sold under long-term contracts of at least one year to customers that have long-term relationships with CODELCO. The specific commercial terms of these contracts are negotiated annually by the parties for the following calendar year. Recently, and as part of a revamped commercial strategy, CODELCO has agreed to sell copper under a rolling deal format known as evergreen contracts with certain key customers. CODELCO’s evergreen contracts have an initial duration of three years from the effective date and, unless terminated by either party, are automatically renewed for an additional year at the end of the original term. The main advantage of evergreen contracts is to lock-in sales to key customers (and for customers to have a guaranteed supply of raw material from a key supplier) over a longer period of time. For both annual and evergreen contracts, the premium over the base price is negotiated annually and the base price 1s the LME cash settlement averaged over the quotation period, which according to CODELCOs commercial policy is the month following the contractual or scheduled month of shipment (referred to as M+1). Products that are not committed under long-term contracts (which represent a small percentage of CODELCOs annual volume) are sold throughout the year at the prevailing conditions of the spot market to either consumers or merchants.
CODELCO applies a premium policy in sales of its Grade A cathodes. Premium amounts for different markets are adjusted in accordance with prevailing ocean freight costs and keyed to the standard terms of payment in different markets, as well as to the individual characteristics and competitive conditions of those markets. For 2023, the base premium for CIF shipments (including shipping and insurance costs) to Rotterdam was set at
U.S.$234 per metric ton, compared to U.S.$128 per metric ton in 2022 and U.S.$98 per metric ton in 2021. The base premium for 2024 is U.S.$234 per metric ton.
94 CODELCO sells 1ts copper concentrates under long-term contracts. These contracts generally have three-year terms with fixed volume. As a general rule, contracts covering one-third of the terms on one-third of the volume are negotiated on a yearly basis. The sale price is based on world metal prices and is generally tied to the LME settlement prices for Grade A copper cathodes minus certain treatment and refining charges.
Molybdenum is sold mainly to steel producers and merchants under annual sale contracts. Sales prices are based on prevailing monthly averages of molybdenum dealer oxide highlow prices as quoted in Metals Week for a quotation period, generally the month following the scheduled month of shipment.
CODELCO has hedged certain future copper delivery commitments and production in order to manage the risks associated with copper price volatility in the past. CODELCO currently does not have any hedged production commitments and therefore there 1s no relevant impact from hedging. See notes 29 and 30 to the Unaudited Interim Consolidated Financial Statements.
CODELCO also periodically enters into futures contracts with respect to sales of its own copper in order to provide protection against fluctuation in the sale price paid by them in connection with such sales.
See Risk Factors-Risks Relating to CODELCOs Operations-CODELCO engages in hedging activity from time to time, particularly with respect to its copper production, which may not be successful and may result in losses to CODELCO, notes 27 and 28 to the Consolidated Financial Statements and notes 28 and 29 to the Unaudited Interim Consolidated Financial Statements for further details regarding CODELCOs hedging activity.
Major Export Customers
As discussed above, most of CODELCOs customers receive shipments on a monthly basis. Consequently, CODELCOSs sales volume is relatively consistent throughout the year. CODELCOS*s sales of copper in 2023 were geographically diversified, with approximately 55.2% of sales made to Asia, including approximately 41.7% to China, as well as approximately 34.4% to North and South America and 10.4% to Europe. CODELCOs top ten customers purchased approximately 26.4% of its total copper sales volume in 2023.
The following table shows CODELCOs copper sales for the years ended December 31, 2021, 2022 and 2023 to CODELCO'”s top export markets and in Chile:
CODELCOs Copper Sales by Destination (in thousands of metric tons)
2021 2022 2023 COMA coocccnnncccnnnnnccnnnnnorcnnonironnnnoronnnnnnccnnnnoronnnnaronnonarcnnonanicnnnnasos 626 665 702 United States …..coooncccnnnncccnnoniocccnnnnoconnnnaronnnnnrcnnonanccnnonarinnnnarinnns 356 254 248 South Korea……coooncccnnnocccnnniocccnnnnoccnnoniconnnnaronnnnnrrcnnnnorcnnnnicinnnnos 114 121 91 ChilO …oocccnnonccnnnniccnnnnnoccnnnnoconnnnnrcnnonarccnnnnoronnnnoronnonaronnonariconanesos 349 275 235 ETQNCO coccooccnnnccnnnnccnnnccnnnocnnnnccnonocnonoronnorononccnonornnnarcnnnrcnonocnnnirons 80 84 81 BraZll…….oocccnonncnnnnicccnnonoccnnonicocnnonaconnnnaronnnnnronnnnnnrcnnnnironnnnarinnns 93 80 82 GOMA Y coooccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 22 S0 31 IOOLA L.occconcccnnnniccnnnonioconnnnnocononironnnnnoronnonironnonaronnnnnnrcnnnnarcnnanininnns 19 29 28 JAPAN cooooocccnnnnnnnnnncnnnonononncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnannnnnnnnss 43 29 22 TALWAN .oocccocccnnnccnnnocononccnnnocnnnorononocnonoronnnrononornnnornnnnccnnnaccnnaronon 73 36 38 SPAM coccccccoanonnnnn nono nono nono nono non nono nono nora nano anno anna anna n nana n nn nnnnnnnnos 33 4] 28 Bulgarla….ooooooononnooooooonnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 11 0 0 TUrTkOY ….ooccccccnnnnnnonononnnnnnnnnccnnnnnnnnnnnnnnnnnnnnnnnnonnnnnn non nnnnnnnncncnnnnns 22 0 0 (TOO coocccnnnccnonccnnnocononccnnnoccnnorononornonoronnnrcnonornnnorcnnnrcnonacnnnaconons l 0 0 VOTAN 10 11 14 MalaySla…ooooooonononoooooonnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 4 18 25 Thailand ……occcooncnnnnnnccnnnnnoccnnnniconnnnnoconnnnorcnnnnaronnonaronnonariconanesos 12 16 15 VICIO cccconcccnnnnioccnnnnnccnnnnncrcnnonoronnnnnronnonironnonircnnonaricnnnnnrcnnnnasos 3 16 5 CANMAdAa o.ccconcccnnnnnccnnnnncccnnoniconnnnarononnnoconnnnoronnnnrcnnonarcnnonaricnnanisos 0 0 0 OHhOTS …occcnncccnnnniccnnnnnoconnnnoronnnnoronnnnnorcnnnnoronnnnronnonarcnnonaricnnnnasos 61 40 38 Total …..ooooooccccnnncccnnnncccnnnniconnnnoronnnnnoccnnnnnccnnonironnonaronnonanicnnnnasos 1,931 1,765 1,684
95 The sales to China increased in 2023 compared to 2022 primarily driven by stronger demand at the beginning of the year related to the recovery in the economy of China.
Competition
CODELCO believes that competition in the copper market is based upon price, quality of product and timing of delivery. CODELCOs products compete with other materials, including aluminum and plastics.
CODELCO competes with other mining companies and private individuals in connection with the acquisition of mining concessions and mineral leases and in connection with the recruitment and retention of qualified employees.
Employees
On December 31, 2023, CODELCO employed 15,404 employees as compared to 15,973 employees as of December 31, 2022. CODELCO spent U.S.$10.6 million during 2023 on staff development and training. A total of 831,298 hours of training were held, with 13,804 employees attending multiple courses.
As of December 31, 2023, approximately 93% of CODELCOs employees were covered by collective bargaining agreements with labor unions. Most of these collective bargaining agreements have terms of two to three years.
In 2023, CODELCO negotiated five collective bargaining agreements and in 2022, CODELCO negotiated four collective bargaining agreements and one additional collective bargaining agreement signed in September 2021, with no conflicts or work stoppages. In 2021, CODELCO experienced a 21-day strike involving two labor unions from the Andina Division and 24-day strike involving one labor union also from Andina Division. During the first nine months of 2024, CODELCO negotiated 25 collective bargaining agreements with no conflicts or work stoppages for 2024 related to such negotiations. In March 2024, following the fatal accident that occurred in the Radomiro Tomic division, workers went on strike demanding more safety measures. This closure resulted in an estimated production loss of approximately 30,000 tons. The strike ended after 48 hours upon reaching an agreement with the Company, in which CODELCO committed to implementing and fulfilling a series of concrete actions to improve the safety of workers at the Radomiro Tomic Division. An investigation has been initiated to determine the cause of the accident. For recent information see Summary-Recent Developments- CODELCO Reached Contract Agreements with Twenty-Five Labor Unions.
In 2022, CODELCO renewed the Strategic Pact for Chile, initially signed by the presidential administration and the Federation of Copper Workers (FTC) in 2015, which defined four key commitments for the future and the transformation of the company: competitiveness, human capital, sustainability, and diversity and inclusion.
CODELCO has experienced material work slowdowns, work stoppages and strikes in the past.
As of September 30, 2024, there were 40,312 employees of regular independent operating contractors and 18,886 employees of contractors involved in the development of CODELCOs investment projects.
Work slowdowns, stoppages and other labor-related events could increase CODELCOs independent contracting costs, which could have a material adverse effect on the business, financial condition, results of operations or prospects of CODELCO. See Risk Factors-Risks Relating to CODELCOs Operations-Labor disruptions involving CODELCOs employees, or the employees of its independent contractors could affect CODELCOS*Ss production levels and costs. In addition, pursuant to the Labor Code of Chile, CODELCO could be held liable for the payment of labor and social security obligations owed to the employees of independent contractors (or their subcontractors) 1f the independent contractors (or their subcontractors) do not fulfill those payment obligations. CODELCO has agreed with a Government of Chile agency to provide a framework to facilitate this agencys supervision of the labor and social security obligations owed by the independent contractors to their employees.
As part of 1ts compensation plan, CODELCO offers each employee the opportunity to partially finance the purchase of a first home or to obtain other personal loans granted through each employee?s severance plan. Such home loans have a term of up to 15 years, and such personal loans have a term of less than one year. Loans of both
96 kinds provide for interest rates of actual inflation plus a margin of between 1.0% and 5.0%. As of September 30, 2024, an aggregate principal amount of U.S.$151.8 million of these loans was outstanding.
Number of Employees by Division
January to December Variation (%) January to September
Divisions 2021 2022 2023 20222023 2024 ¡NI III 3,791 3,835 3,593 (6.3) 3,913 Radomiro TOMIC …oocccoccnnccnnccnnocnnnccnnoconioconiconos. 1,212 1,289 1,333 3.4 1,357 Gabriela Mistral …oooooonnnnnnnnnininnnnnnnnnonnnnnnnooononos 468 481 507 5.4 485 Mina Ministro Hales………….ccccccccnccnnncnnnnnnnnos. 763 788 824 4.6 821 SalvadOT….oooooooononoccncncnnnononononnnnnnonnnnnonononononnnos 1,470 1,491 1,468 (1.5) 1,447 AMIA cocccccccnanannnonnonannonnnnnnn nono 1,436 1,424 1,449 1.8 1,469 El Tenlente…..occccccccnnnnnnnnnnnnnnnnonnnnnnnnnnnnnnnnonnnoss 3,927 3,838 3,976 3.6 3,981 Headquarters ….oooccccccnccnnnnnnnnnnnnnnnnnnnnnnnnnnnnonnnoss 818 784 755 (3.7) 686 WMONÍANAaS coccooccoccccnnnnnnnonccnnnnnnnnnccnnnnnononoconnnnnnnnos 762 769 537 (30.2) 456 Shared Services (Vice Presidency of Projects) 843 875 749 (14.4) 803 Internal AUdItIN8………ccccccccnnncnnnnnnnnnnnnnnnonononoss 38 43 49 14.0 48 Total aooooocnnnnnnnnnnnnnnnnnannnonononnonnornnnnnrnrnrrrnrnn nono 15,528 15,789 15,404 (2.4) 15,624
(1) Average number of employees for the periods presented.
Law No. 20,123 of 2007 (the Chile Subcontracting Law) governing subcontractors provides incentives for companies to ensure that contractors and subcontractors comply with labor, health and safety regulations and standards with respect to their own employees. The Chile Subcontracting Law gives companies the right to request that contractors provide information on the status of their payment of labor and social security obligations to their employees prior to the company?*s payment of amounts due to contractors. Additionally, companies have the right to withhold payments due 1f the contractors cannot provide evidence that they have fulfilled their labor and social security obligations. Finally, companies are required to pay contractors* pending labor and social security obligations with the amounts withheld from the contractors. It also regulates the provision of temporary services by contractors and subcontractors, enabling the creation of specialized and regulated companies for this specific purpose (Empresas de Servicios Transitorios) and defining the specific events under which companies may hire for temporary services.
Occupational Health and Safety
CODELCO, through its structural project on occupational safety and health, has established occupational health and safety performance indicators aimed at avoiding serious and fatal accidents and occupational illInesses.
In 2024 and through the date of this offering memorandum, there were two fatalities involving CODELCO contractors or personnel. In 2021 there was one fatality; in 2022 there were two fatalities involving CODELCO personnel or contractors, including one fatal accident involving a contractor at Andes Norte, and in 2023 there were two fatalities involving CODELCO contractors.
In 2021, the current total number of lost time accidents was 94 and the accident frequency was 0.75 accidents per million hours worked. The total number of lost time accidents in 2022 was 86, and the accident frequency rate was 0.61 accidents per million hours worked. In 2023 lost time accidents was 81, and the accident frequency was 0.50 accidents per million hours worked. As of September 30, 2024, the current total number of lost time accidents is 68 and the accident frequency 1s 0.53 accidents per million hours worked.
Comptroller General of the Republic
During 2017, the Comptroller issued three declarations (Opinions No. 15.759 and No. 18.850, both from 2017, and Final Auditor Report (Informe Final de Auditoria) No. 9002016, from a 2016 audit) that affect CODELCO. Two of these declarations are opinions related to labor relations that: (1) query whether CODELCO could provide greater benefits to 1ts employees than those currently established by law and (11) state that, although CODELCO may continue to engage in collective bargaining with 1ts employees, the Comptroller reserves the right to evaluate the amounts agreed upon. The third declaration was the result of an audit report, which maintained that CODELCO was subject to the provisions of the Public Procurement Law (Law No. 19,886) that relates to: (1) the prohibition on contracts between related parties and (11) the mandatory public tender of contracts through the rules that apply to public services. CODELCO has filed administrative appeals against all three declarations issued, and
97 subsequently filed an action of annulment against the three declarations issued by the Comptroller. The action of annulment was denied and in October 2020 CODELCO appealed the decision. In December 2022, CODELCO withdrew the appeal after signing a joint agreement with the Comptroller that promotes the transparency and protection of integrity, as well as the commercial nature of a State-owned companys operations as 1t develops in a competitive market.
CODELCO had estimated a negative effect of approximately U.S.$100.0 million due to an unfavorable outcome of litigation, caused by the delay in awarding specific contracts and investments and related reduction in production. In December 2022, CODELCO and the Comptroller entered into a collaboration agreement aimed at safeguarding probity and transparency in the operations carried out by CODELCO in the market, ending the dispute with the withdrawal of the lawsuit by CODELCO.
Legal Proceedings
CODELCO is party to various legal proceedings in the ordinary course of business. Other than as disclosed in this offering memorandum, CODELCO is not currently involved in any litigation or arbitration proceeding, including any proceeding that is pending or threatened of which we are aware, which we believe will have, or has had, a material adverse effect on the Company. Other legal proceedings that are pending against or involve us and our subsidiaries are incidental to the conduct of our and their business. We believe that the ultimate resolution of such other proceedings individually or on an aggregate basis will not have a material adverse effect on our consolidated financial condition or results.
Labor-Related Proceedings
We are a party to various legal actions involving labor claims of unions and former and present employees.
These labor disputes relate to working conditions, union practices, improper termination and disecrimination. We do not expect these disputes to have a material adverse effect on our financial condition or future results of operations.
Other Proceedings
In August 2023, CODELCO filed a civil claim in an arbitration process in Chile against Consorcio Belaz Movitec SpA (CBM) and its joint debtors, Movimiento de Tierra y Construcción S.A. (Movitec) and Sociedad Anónima Abierta Belaz – Compañía Administradora del Holding (Belaz), for expenses related to delays, compensation for damages, relnmbursement of severance payments and restitution of improperly charged general expenses. CODELCO’s claims amount to approximately Ch$70,936,507,563 (approximately U.S.$79.4 million) plus interest. CBM and Movitec filed several counterclaims against CODELCO for compensation for damages, claliming a series of damages resulting from pending payment statements, unpaid change notices, additional resources used in the work, among others. The amount of the counterclaim filed by CBM amounts to Ch$176,575,220,314 (approximately U.S.$197.8 million) plus interest. Movitec reserved the determination of the nature and amount of the damages claimed for the stage of enforcement of the judgment. Currently, the arbitration 1s in the evidence stage.
In connection with an injunction request filed by CBM against CODELCO, the highest courts of justice (the Court of Appeals of Copiapó and the Supreme Court of Chile), have ordered CODELCO to pay Ch$11,734,559,342 (approximately U.S.$13.1 million), corresponding to Payment Statement No. 23, and to provision Ch$4,415,816,192 (approximately U.S.$4.9 million), plus Ch$1,026,602,196 (approximately U.S.S1.2 million, corresponding to taxes and readjustments), in order for CBM to proceed with the demobilization of the equipment, machinery and other assets still located at the El Salvador Division.
In July 2020, the State Defense Council (Consejo de Defensa del Estado, a public entity in charge of defending the Chilean Republic in courts) filed a claim against CODELCO seeking environmental rehabilitation measures for alleged environmental damage to water sources and vegetation surrounding the Salar de Pedernales due to surface and underground water use between 1994 and 2017 by CODELCO’s El Salvador Division. On November 16, 2020, CODELCO filed its response, and subsequently the parties to this proceeding agreed to and filed a settlement agreement, which was approved by the Environmental Court. As of the date of this offering memorandum, CODELCO is in compliance with the committed measures.
98 In October 2019, CODELCO was served notice of a civil claim filed by relatives of 139 former employees from the Andina Division, alleging that working conditions caused the former employees to contract silicosis clalming compensation on behalf of the former employees. The claim requests compensation in an aggregate amount of approximately U.S.$15.1 million. A final ruling is still pending.
In July 2019, Ingeniería y Maquinarias Indak Limitada (Indak) filed a civil a claim against CODELCO for contractual liability and payment of damages, loss of profits, loss of opportunities and moral damages, plus Interest thereon, in the amount of approximately Ch$32,511,347,985 (approximately U.S.$36.3 million). The trial took place before the Diego de Almagro Court, and in the definitive judgment -dated August 16, 2023- the court accepted CODELCOs exception of incompetence. The opposing party appealed the decision before the Court of Appeals of Copiapó. The Court upheld the judgment on August 20, 2024, in favor of CODELCO. Indak submitted an appeal on points of law (casación) before the Supreme Court and it is pending the admissibility of this resource.
CODELCO filed an application against the admissibility. If the Supreme Court decides the resource 1s admissible there will be a public hearing prior to the final decision of the Supreme Court.
In April 2018, Trébol Minerals S.A. filed a civil claim against CODELCOs El Salvador Division claiming payment of unpaid services, damages, loss of profits and moral damages, plus interest thereon, in the amount of approximately U.S.$10.2 million. The evidence period has ended and a final ruling is pending.
On June 30, 2016, the Union of Independent Workers, along with a group of artisanal fishermen, divers of Caleta de Horcón and other residents of the boroughs of Quintero and Puchuncaví filed a lawsuit before the Second Environmental Court against the Ministry of the Environment and eleven companies located in the industrial area of the Quintero bay, including CODELCO, seeking mitigation, remediation and restoration of alleged environmental damage caused by pollution that has affected the Quintero bay over the past decades. The discovery period has since ended and a final ruling 1s pending.
On March 25, 2024, Liebherr Chile SpA (Liebherr) filed an arbitration claim against CODELCO, seeking the termination of a certain contract for the rendering of maintenance services for mining trucks and compensation for damages. Liebherr demands that the contract be terminated due to CODELCO”s alleged breach and requests compensation amounting to CLP 38,014,000,000 (approximately U.S.$38,000,000), including loss of profits and direct damages for spare parts or stock and labor costs. In its subsidiary claims, Liebherr requests specific performance of the contract. CODELCO has filed a counterclaim requesting that the contract be terminated due to Liebherr?s material breaches and confirming that no pending obligations remain.
On August 22, 2024, the SMA filed two charges against CODELCOs Ministro Hales Division, citing a failure to implement environmental measures related to the Talabre tailings dam. CODELCO has launched a Compliance Program (PdC) with 11 actions totaling U.S.$42,000,000 to address the issues raised by the SMA. This program advances and strengthens environmental controls for seepage management at the Talabre Tailings Dam, while permanent solutions are implemented through the Environmental Impact Study for the Future Ministro Hales Development Project and the Talabre Thickened Tailings Project. SMA is analyzing the submitted document. A final decision is still pending.
In November 2024, the Chilean SMA filed a charge against CODELCOs Potrerillos Smelter, located in Diego de Almagro, Atacama Region, for failing to implement inline connection of the continuous monitoring system for sulfur dioxide (SO2) emissions, as required by SMA instructions related to the Supreme Decree No. 28 (2013).
The SMA has initiated a sanctioning process in line with Chilean environmental regulations. CODELCO submitted a written statement of defense. A final decision is still pending. The sanctions that may be applied by the agency, includes revocation of the RCA, closure, or fines of up to 5,000 UTA (approximately U.S.$4,300,000.00).
CODELCO believes that 1t has meritorious defenses to the claims against 1t and, accordingly, is vigorously defending its rights and interests in these proceedings.
For additional details related to CODELCO”s litigation and contingencies and amounts of probable loss with respect to lawsuits and legal actions, see note 29 to the Consolidated Financial Statements.
99 OVERVIEW OF THE COPPER MARKET Copper is an internationally traded commodity, the price of which is effectively established on terminal markets including the LME and COMEX. The following table sets forth quarterly average prices for refined copper since 2020 on the LME:
Average Copper Price (¿Pound) 2020 ¡RO 255.7 Second QUArter ….ccccccnnnnnnnnnnooonncnnncnnnnnnnnnnnnonnnnnnnnrrncnnn nn nn nn nn nn nn nn nnnnnn nn nn nnnn nn rre nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnincnnnos 243.0 IO 295.7 Fourth Quarter ….ooooooononnnccncnnnnnnnnnnnononononnnoncccnnnnnnnnn nro nono nn nnnnnnnnnnnn nro n nn nen nn nnnnnnnnnnnnnnnnnnnnnnnnnnnnnrrnccnnnnnnnnns 325.1 2021 ¡RO 385.7 Second QUArter ….ccccccnnnnnnnnnnooonncnnncnnnnnnnnnnnnonnnnnnnnrrncnnn nn nn nn nn nn nn nn nnnnnn nn nn nnnn nn rre nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnincnnnos 440.0 IO 425.1 Fourth Quarter ….ooooooononnnccnccnnnnnnnnnnnnonononnnonoccnnnnnnnnn nn nn nnnnnnnnnnnnnnnn non nn nn rre nen nnnnnnnnnnnnnnnnnnnnnnnnnnnrnnccnnnnnnnnns 435.6 2022 ¡RO 453.5 Second QUArter ….ccccccnnnnnnnnnnooonncnnncnnnnnnnnnnnnonnnnnnnnrrncnnn nn nn nn nn nn nn nn nnnnnn nn nn nnnn nn rre nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnincnnnos 431.5 IO 351.3 Fourth Quarter ….ooooooononnnccnccnnnnnnnnnnnnonononnnonoccnnnnnnnnn nn nn nnnnnnnnnnnnnnnn non nn nn rre nen nnnnnnnnnnnnnnnnnnnnnnnnnnnrnnccnnnnnnnnns 362.9 2023 ¡RO 404.9 Second QUArter ….ccccccnnnnnnnnnnooonncnnncnnnnnnnnnnnnonnnnnnnnrrncnnn nn nn nn nn nn nn nn nnnnnn nn nn nnnn nn rre nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnincnnnos 383.9 IO 379.0 Fourth Quarter ….ooooooononnnccnccnnnnnnnnnnnnonononnnonoccnnnnnnnnn nn nn nnnnnnnnnnnnnnnn non nn nn rre nen nnnnnnnnnnnnnnnnnnnnnnnnnnnrnnccnnnnnnnnns 371.3
Source: London Metal Exchange, Monthly Average Settlement.
The following graph compares average market prices for copper and the level of LME, Shanghai Metal Exchange and COMEX inventories from 2000 through September 30, 2024:
100 Copper Prices and Inventories on Commodities Exchanges
000 tons ¿Mb
Source: Metal Exchanges: London, COMEX and Shanghal.
Historically, copper prices have been subject to wide fluctuations and are affected by numerous factors, including international economic and political conditions, levels of supply and demand, the availability and costs of substitutes, inventory levels maintained by producers and others and actions of participants in the commodities markets. To a lesser extent, copper prices are also subject to the effects of inventory carrying costs and currency exchange rates. In addition, the market prices of copper have occasionally been subject to rapid short-term changes. See Risk Factors-Risks Relating to CODELCOs Operations-CODELCOs business is highly dependent upon the price of copper.
Opportunities for Copper
Since 2005, copper prices have experienced significant volatility. LME copper prices averaged 384.5 in 2023 compared to 399.0 cents per pound in 2022 and 422.6 cents per pound in 2021. While higher copper prices in 2020 compared to prices in 2021 reflected an increased in global demand, higher expectations on China and disruptions on the supply side, lower prices in 2023 and 2024 reflected a slowdown in the economy, mainly in China, impacting on the global growth. See Risk Factors-Risks Relating to CODELCOs Operations-CODELCO’s business 1s highly dependent upon the price of copper.
There is also increased general use of copper tubing, particularly in air conditioning systems. The quantity of copper consumed in electrical applications in cars, trains and other vehicles has also increased. In the electricity generation and transmission area, the control of energy losses and a growing concern for higher energy efficiency are factors that have tended to increase demand for copper, becoming the main copper usage. The termination of widespread substitution of aluminum for copper in overhead high-voltage transmission lines also bodes well for the metal’s future.
Historically, demand and supply of copper have demonstrated continued growth during periods of oversupply as well as periods of overconsumption. The following graph shows the historical development of copper supply, demand and stocks in the world from 2000 to 2029 (in thousands of metric tons):
Refined Copper Supply and Demand Worldwide Balance
101 30,000
25,000
20,000
15,000 -¿*
10,000 ]
5,000
0007 2007 vOOZ 9007 8007 OTOZ
Hua Balance kt
Source: Copper Market Outlook Q3 – September 2024
N N N O O O bo pp. p N Es M
102
8ToZ
OZozZ CLoZz voz
Demand kt
92OoZ
N O N 00
1,400 1,200 1,000 800 600 400 200
-200
-400
-600
-800 REGULATORY FRAMEWORK Overview of the Regulatory Regime
CODELCO is a mining, industrial and commercial state-owned enterprise of indefinite duration with 1ts own legal personality and capital. CODELCOS*s relationship with the Government of Chile is conducted through the Ministry of Mining. CODELCO was incorporated pursuant to Decree Law 1,350 of 1976, as amended by Law 20,392. CODELCO is governed by Decree Law 1,350 and by Decree No. 146 of August 12, 1991, as amended (to conform the same with Law 20,392) by Decree No. 3 of January 13, 2012 issued jointly by the Ministries of Finance and Mining, and published in the Official Gazette on July 4, 2012, which sets forth CODELCOs current bylaws, and the general legal framework applicable to private companies regarding public disclosure (rules applicable to publicly held companies), and other applicable regulations. CODELCO*s principal corporate purpose 1s to exercise all rights acquired by Chile pursuant to the nationalization of the Chilean mining industry, namely mining, exploration and the development of mining deposits and other rights belonging to Chile at the time of CODELCOSs incorporation in 1976.
CODELCO is subject to the oversight of: (1) the Chilean securities authority, the CMF, on the same terms as publicly held corporations (CODELCO is registered under the Securities Registry No. 785 of the CMF) and
(11) the Chilean Commission of Copper (Comisión Chilena del Cobre, or COCHILCO) or the governmental agencies that, among other authorities, are responsible for examining the compliance with certain regulations applicable to CODELCO”s activities and report the relevant findings to its Chief Executive Officer. Furthermore, other government agencies in charge of specific areas, such as taxes and customs, exercise their legal authorities with respect to CODELCO as they do in regard to any other company of the Chilean private sector. The House of Deputies (Cámara de Diputados) of the Chilean Congress also maintains an overarching authority to oversee CODELCO in the exercise of its constitutional duties.
Chilean law requires CODELCO to obtain the approval of the Ministry of Finance before it can assume any financial indebtedness and before it can acquire assets outside Chile with financial or payment terms exceeding one year. Although CODELCO is 100% owned by it, the Government of Chile is not legally liable for CODELCOs obligations unless expressly guaranteed by the Government of Chile, nor do such obligations form any part of the direct public debt of the Government of Chile. A constitutional amendment would be required to allow private participation in CODELCOs ownership.
Each year, the Board of Directors must approve the BDP report of the Company for the following three years, subject to the approval of the Ministries of Finance and Mining. This plan must include the annual investment and financing amounts in addition to the annual profits that the Company is estimated to generate during the period. The Ministries of Finance and Mining jointly issue a decree pursuant to which a portion of CODELCOs profit may be allocated by CODELCO to the creation of capitalization and reserve funds.
CODELCOS*s Board of Directors must also submit 1ts proposed annual budget to the Ministries of Finance and Mining for approval. In addition, Decree Law 1,350 requires CODELCO to include as part of its proposed annual budget a debt amortization budget that includes interest and principal payments on CODELCOs debts, including the notes. CODELCOs budget and financial statements are subject to both internal and external controls.
CODELCO*s Board of Directors is responsible for monitoring its operations, and CODELCO retains independent auditors to audit 1ts consolidated financial statements and an internal comptroller to review 1ts finances, accounting and administration.
CODELCO’s Board of Directors approved corporate governance guidelines consistent with its high transparency, probity and accountability standards which: (1) establish limits and controls on the use of resources of the Board of Directors; (11) implement a transparent and traceable system for the handling of hiring requests, promotions and redundancies of CODELCOs officers and employees; (111) regulate the relationships between members and management of the Board of Directors with related parties; and (iv) establish guidelines for corporate speakers. CODELCOs Board of Directors also agreed to consider directives that: (1) regulate lobbying activities within CODELCO; (11) strengthen and reform internal audit systems; and (111) strengthen policies to avoid any conflicts of interest.
103 Mining Regulations
Legal framework. CODELCO*s exploration, mining, milling, smelting and refining activities are subject to Chilean laws and regulations which are generally applicable to all Chilean companies in the mining sector. The legal framework which regulates CODELCO as a holder of mining concessions is contained in the Chiles Constitution, the Constitutional Law Governing Mining Concessions (Law No. 18,097 of January 21, 1982) and the Mining Code (Law No. 18,248 of October 14, 1983). Under Chilean mining law, the state is the owner of all mineral and fossil substances located in their natural deposit, regardless of who owns the surface land in which such substances are located. Private persons and companies may obtain mining concessions for exploration and exploitation. These concessions are granted by judicial resolutions in accordance with the Mining Code.
Mining concessions are transferable and mortgageable and regulated by the same civil law that regulates real estate rights generally. As a general rule, the owner of a mining concession may occupy as much of the surface land as is necessary for mining activities upon the creation of a mining easement or upon other authorization given by the land owner, such as a lease agreement or an occupation authorization. Mining easements can be obtained by way of direct negotiation with the surface land owner (Voluntary Easement Agreement) or by way of a judicial lawsuit for mining easement before the relevant court. Regardless of how the mining easement is obtained, the servient estate (the property burdened by the easement) has the right to be compensated for any damages caused by the imposed easements and the mining activities that may affect the property. Exploitation concessions have an indefinite duration. Exploration concessions are granted for two years and may be extended for a maximum of four additional years subject to providing evidence of having undertaken exploration works, having obtained an environmental approval for an exploration project, or having submitted an exploration project for environmental Impact assessment. Prior to the expiration of the exploration concession, the owner has priority in applying for exploitation concessions over the area comprised by exploration concessions.
As a result of the amendments introduced by Law No. 21,420, as of January 1, 2025, owners of mining concessions must pay an annual fee equivalent to approximately U.S.$4.2 per hectare in the case of exploration concessions and approximately U.S.$7.0 per hectare in the case of exploitation concessions during the first five years of the concession, progressively increasing thereafter until U.S.$16 per hectare as of the thirty first year of the concession. However, holders of exploitation mining concessions can apply for a reduced licenses of approximatel y
U.S.$7 per hectare, by providing evidence to the Geology and Mining National Service (SNGM) of being effectively undertaking mining works on the concession, or that such mining concessions are part of a project that either has an environmental approval or has been submitted for environmental impact assessment. Exploitation fees, within certain limits, may be credited to income taxes originated through the exploitation of the concession.
Payments of the annual fees must be made in March of each year. Failure to make the annual fee payments may result in the loss of title to the concession through its auction.
CODELCO owns mining concessions granted by the Constitution and the Chilean Ordinary Courts for its exploration and exploitation operations. Some of these concessions were previously held by foreign private mining companies before being transferred to Chile in 1971 and subsequently to CODELCO upon its incorporation in 1976 (Chuquicamata, Salvador, Andina and El Teniente Divisions). CODELCOs principal and actual mining concessions are those which give rights to the mineral deposits of the Chuquicamata, El Teniente, Andina, Salvador, Radomiro Tomic, Gabriela Mistral and Mina Ministro Hales Divisions. CODELCO’s concessions relating to land that 1s currently being mined essentially grant an indefinite right to conduct mining operations in that land, provided that annual concession fees are paid. In 2021, CODELCO paid total concession fees of U.S.$7.28 million and in 2022, CODELCO paid total concession fees of U.S.$8.01 million. In 2023, CODELCO paid total concession fees of
U.S.$7.92 million and as of September 30, 2024, CODELCO paid total concession fees of U.S.$14.82 million.
Pursuant to the Mining Code, all mining concessions, as well as certain raw materials, assets and other property permanently dedicated to the exploration or extraction of minerals cannot be subject, except in extremely limited circumstances, to an order of attachment. In addition, pursuant to the Constitution, mining concessions corresponding to mining deposits exploited by CODELCO upon its incorporation in 1976 cannot be subject to attachment nor to any act of disposition by CODELCO. As a result, the rights of holders to attach property of CODELCO in the event of a default under the notes would be limited by such provisions. See Risk Factors-Risks Relating to the Offering–In case of a default under the notes, the ability of holders to attach property of CODELCO may be limited by Chilean law.
104 On February 4, 2022, Law No. 21,420 was enacted, amending the Mining Code in the following matters: Increased the duration of an exploration mining concession from two to four years.
Introduced a new legal framework of annual mining licenses.
Established new reporting obligations to holders of mining concessions regarding the delivery of geological information. The law provides that upon extinction or at the end of their term (in the case of exploration concessions) or every two years (in the case of exploitation concessions), the holder must submit to the SNGM all the geological information obtained from exploration works performed in them. Fines up to approximately U.S.$7,500 will be imposed to those who do not deliver the information obtained.
Introduced the SIRGAS datum regarding the U.T.M. coordinates of the mining concessions. The regulation will establish the procedure to follow, however, the entry into force of the change is postponed until a definitive consensus 1s reached between the involved parties.
On January 26, 2023, Law No. 21,536 was published, which postponed the entry into force of the mining provisions of Law No. 21,420, setting forth that the amendments to the Mining Code introduced by Law No. 21,420 shall enter into force on January 1, 2024, and that all legal terms set forth in said amendments shall begin as of that date.
On December 30, 2023, Law No. 21,649 was enacted, which amended Law No. 21,420, which in turn amended the Mining Code as of January 1, 2024, and other mining legal provisions in order to generate a more harmonious regulatory framework in line with the practical reality of mining in Chile. Among the main aspects of these provisions are:
Regarding exploration mining concessions, Law No. 21,649: (1) keeps the four-year duration of the exploration mining concession (as was amended by Law No. 21,420), (11) entitles holders of exploration mining concessions to request, for one time, the extension of their exploration mining concessions for an additional period of up to four years, provided that the requirements established by law are met; (111) determines that the holder of an exploration concession 1s banned from applying for a new exploration concession over all or part of the same area, as of the date of filing of the relevant claim until one year after 1ts expiration, either by itself or through a third party, penalizing the contravention of its prohibition with the loss of the preferential right to obtain an exploitation mining concession over the area; (1v).establishes a legal procedure to report contraventions of the aforementioned prohibition, providing that a third party, who was successful in obtaining a favorable court decision through this process, may seek an exploration mining concession for the area subject to the reported contravention. This party can also leverage the filing date of the reported exploration mining concession if specific conditions are met; and (v) establishes that mining concessions that expire during 2024, and for which holders intend to extend for another four years, will be extended until December 31, 2024,
Regarding mining licenses, Law No. 21,649 modifies the following: (1) 1t increases the mining license for exploration mining concessions; (11) 1t progressively increases the mining license for exploitation mining concessions; (111) 1t specifies the conditions under which the holder of an exploitation mining concession is eligible to request a reduced mining license, a requirement to be substantiated annually. These conditions encompass the initiation of ongoing and permanent activities facilitating the continuous development of mining operations and holding mining concessions affiliated with projects that have been granted an Environmental Qualification Resolution or have been submitted for qualification through the Environmental Impact Assessment System, and, for small-scale mining endeavors, eligibility 18 contingent upon the initiation of the application process for any of the permits referred to in the Mining Safety Regulations; and (1v) 1t includes a provision to confer a benefit on individuals, legal mining companies (sociedades legales mineras), mining cooperatives, and limited liability individual companies with mining concessions covering less than 500 hectares. This benefit entails the assumption that eligibility for reduced mining licenses extends for a duration of five years, provided that the eligibility conditions outlined in (111) herein are met.
105 e Regarding the geological information, Law No. 21,649: (1) considers as confidential information for a period of four years, the geological information provided to the SNGM by holders of mining concessions who have carried out advanced exploration activities, given its strategic and commercially sensitive nature for 1ts owner; (11) determines the time and manner in which the holder of a mining concession shall deliver a report with the obtained geological information to the SNGM; and (111) increases the amount of the fine to approximately U.S.$91,500 (instead of the current U.S.$7,500 fine) in case of non-compliance with this reporting obligation. This fine could be doubled if the SNGM requires the geological information and it is not provided, along with disqualifying the mining concessionaire from accessing the benefit of the reduced mining license.
e Regarding the change of datum, Law No. 21,649: (1) eliminates all references in the Mining Code to the SIRGAS datum relating U.T.M coordinates, stating that the datum shall be defined in a specific regulation ;
(11) eliminates the cause for expiry of mining concessions due to the lack of registration of the new coordinates in the SIRGAS datum; and (111) establishes a rule of general application with the procedure by which the transformation of the coordinates of existing concessions shall be carried out ifa change of datum 1s decided in the future, as well as defining that in the event of a change of datum, the registration of the new coordinates shall be done only in the National Registry of Mining Concessions kept by the National Geology and Mining Service and not in the Mines Property Registry kept by the relevant Custodians of Mines, thus facilitating the procedure and avoiding unnecessary costs.
e Regarding possessory actions, Law No. 21,420 introduced an additional provision to article 94 of the Mining Code, stating that holders of mining concessions who submit a new construction complaint must demonstrate that they hold in rem rights, such as easements or other legal claims, over the concerned land for the complaint to be accepted, and Law No. 21,649 introduced additional provisions to article 94 of the Mining Code, specifying that the relevant court has the option to order the suspension or cessation of construction activities. This discretion 1s contingent upon the claimant furnishing evidence of holding an in rem right over the land, along with supporting documentation that substantiates the severe and imminent risk associated with not issuing the suspension or cessation order. Law No. 21,649 also provides that in the event of a suspension of the works, the developer has the option of lifting the suspension by providing a bond to cover the costs of demolition or compensation for damages, the amount of which will be determined by the court, and any issues pertaining to the bond will be addressed as a distinct procedural matter; and 1f a possessory action is filed against the holder of a mining concession, the same rules will apply.
Environmental Regulations
CODELCO'”s operations are subject to national, regional and local regulations as well as international treaties subscribed by the Government of Chile and enacted as Chilean domestic law regarding the protection of the environment, natural resources and the effect of the environment on human health and safety, including laws and regulations concerning water, air and noise pollution, the handling, disposal and transportation of hazardous waste and occupational health and safety.
The General Environmental Law (Law No. 19,300), enacted in March 1994 and modified by Law No.
20,417, enacted in 2010, establishes the general environmental legal framework in Chile, including the establishment of a range of environmental management mechanisms known as the Environmental Impact Assessment System (Sistema de Evaluación de Impacto Ambiental), the Emission Standards and the Environmental Quality Standards, among others. Chilean environmental laws and regulations, and its enforcement, have become increasingly stringent since 2010 and even more in recent years due to recent changes. Such amendments include, among other significant modifications, the creation of a new institutional framework comprised by: (1) the Ministry of the Environment (Ministerio del Medio Ambiente); (11) the Council of Ministers for Sustainability (Consejo de Ministros para la Sustentabilidad); (111) the Environmental Assessment Service (Servicio de Evaluación Ambiental); (iv) the Superintendence of the Environment (Superintendencia del Medio Ambiente); (v) the Environmental Courts (Tribunales Ambientales) and (vi) the Biodiversity and Protected Areas Service (Servicio de Biodiversidad y Áreas Protegidas), each of which are in charge of designing, evaluating and enforcing laws and regulations relating to projects and activities that could have an environmental impact. These institutions are fully operational with the exception of the Biodiversity and Protected Areas Service which is in development. Recent legal and regulatory changes are likely to impose additional restrictions or costs on CODELCO and also increased fines due to non- compliance with such laws and regulations, relating to environmental litigation and protection of the environment,
106 particularly those related to flora and fauna, wildlife protected areas, water quality standards, mine closure, air emissions, and soil pollution. Since the Superintendence of the Environment became fully operational on December 28, 2012, infringement of environmental regulations may result in fines of up to approximately U.S.$8.7 million, the closure of facilities and the revocation of environmental approvals. As described in more detail below, CODELCO incurs, and may be required in the future to incur, substantial capital and operating costs related to environmental compliance. However, many of these costs are inextricably intertwined with the operation of CODELCO”s business as a whole.
The General Environmental Law, as complemented by additional regulations, enables the Government of Chile to: (1) bring administrative and judicial proceedings against companies that violate environmental laws; (11) close non complying facilities; (111) revoke required operating licenses; (1v) require that companies to submit their projects for environmental evaluation as required by applicable law; and (v) impose sanctions and fines when companies act negligently, recklessly or deliberately in connection with environmental matters. The General Environmental Law also grants citizens the right to bring civil actions against companies that are not in compliance with environmental laws and regulations when such companies have caused environmental damage, as defined in such law, after such non compliance has been established by a judicial proceeding.
Since 2013, the Superintendence of the Environment has initiated sanctioning proceedings against CODELCO on seven occasions: Two against Ventanas Division (2016 and 2021), two against Salvador Division (2021 and 2024), one against Andina Division (2020), one against Ministro Hales Division (2024) and one against El Teniente Division (2016).
– – Ventanas Division: In one case, a Compliance Program was submitted and approved by the authority, cancelling the charges, while in the other case, CODELCO submitted discharges which were accepted by the authority.
– – Salvador Division: The first proceeding 1s being reviewed in court, whereas the second has been recently initiated on November 4, 2024.
– – Andina Division: The proceeding was suspended in 2021.
– – Ministro Hales Division: A Compliance Program was submitted on September 10, 2024, and it 1s currently being reviewed by the Superintendence of the Environment.
– – ElTeniente Division: In this case, a fine was paid regarding infringements of forestry and soil management plans regarding Carén Tailings Dam.
The General Environmental Law and its regulations contain certain rules on Environmental Impact Assessment, which have been in effect since April 1997, and that provide that CODELCO must evaluate the environmental impact of any future project or activity listed in article 10 of Law No. 19,300 by means of an environmental impact declaration or an environmental impact study depending on the significance of the environmental impacts associated. CODELCO has conducted these environmental impact declarations and studies pursuant to the General Environmental Law.
Chile has adopted environmental regulations requiring companies operating in Chile, including CODELCO, to undertake programs to reduce, control andor eliminate certain environmental impacts. CODELCO has undertaken a number of environmental initiatives to comply with such regulations. As of September 30, 2024, CODELCO has implemented a strategic change process in all divisions to manage the aspects and risks associated with environmental matters, under a corporate management system issued by the parent company level, ISO 14001 certified and Copper Mark registered. From 2012 to 2022, CODELCO invested U.S.$5.6 billion in environmental projects, including the expansion of the Talabre, Ovejería and Carén Tailings dams in the Chuquicamata, Andina and El Teniente Divisions and various projects in Chuquicamata, Potrerillos and Caletones smelters in order to comply with the new regulation regarding atmospheric emissions. Additionally, as part of 1ts pollution abatement efforts, CODELCO continues to implement water recovery systems, the costs of which are also budgeted in CODELCOSs pollution abatement plan, to conserve resources and minimize pollution of natural water sources.
107 To protect and improve environmental air quality in the country, the Ministry of the Environment has the authority to declare certain areas to be latent zones (zonas latentes) or saturated zones (zonas saturadas). Latent zones are areas in which there exists a high risk of excessive pollution – the pollutant concentration in air water or soil 1s greater than 80.0% of the corresponding quality standard in a certain area – and in which further emissions are highly restricted. Saturated zones are areas in which an excessive level of pollution already has been reached – the concentration of the air pollutant exceeds 100% of the corresponding quality standard for a pollutant in a certain area – and in which emissions are required to be reduced and mitigation measures are required to be implemented.
In connection with the declaration of a latent or saturated zone, the Ministry of the Environment may initiate an investigation and public-consultation process to develop a prevention or decontamination plan, as the case may be.
The whole process for the approval of these plans may take more than two years. Upon publication of either type of plan, emission reduction targets and other environmental remediation actions may be required of specific industries located within the latent or saturated zone. Measures included in the pollution prevention or reduction plans governing CODELCOs operations are subject to change and may become more stringent 1f compliance with applicable air quality standards 1s not achieved.
The area surrounding the Chuquicamata, Potrerillos, Caletones and Ventanas smelting facilities have been declared saturated zones for particulate matter (PM ¡o andor MP, 5) and sulfur dioxide (SO”). These areas are subject to decontamination plans. The Ventanas decontamination plan has been recently reviewed by government authorities.
CODELCO estimates that the cost of complying with this new standard will be U.S.$27.0 million, which will be incurred over a period of approximately four years. In addition, in October 2023, the environmental authority initiated the review of the Chuquicamata, Potrerillos and Caletones decontamination plans. In 2024, the Ministry of the Environment enacted a provisional PM10 decontamination plan for the borough of Calama, which requires dust mitigation efforts for Chuquicamata, Ministro Hales and Radomiro Tomic mines. In parallel, a Permanent Decontamination Plan for the borough of Calama is being prepared, which could result in new and more dust mitigation efforts for these mines.
In 2013, Supreme Decree No. 28 of the Ministry of the Environment, on Emission Standard for Smelting Plants was enacted, which establishes maximum parameters of emission for PM¡o, SO, arsenic (As) and mercury (Hg) generated by smelting plants. Certain aspects of the regulation became effective immediately while other provisions of the new emission standards came into force at a later date- within three years in the case of Ventanas smelter, and within five years in Chuquicamata, Potrerillos and Caletones smelters. The cost of complying with this new standard was U.S.$2.4 billion, which was incurred over a period of approximately five years. This regulation is currently under routine review by the Ministry of the Environment, which is conducted every five years. The preliminary draft has not yet been published.
Supreme Decree No. 902001 of the General Secretary of the Presidency, which sets forth the standards for discharges of liquid waste into surface water bodies, went into effect in 2006. CODELCO has invested significant amounts to reduce liquid waste emissions to date and expects that 1t will continue to incur costs related to compliance with Supreme Decree No. 902001. In February 2023, a water quality standard was published for the Aconcagua River basin, where the Andina mine operates and discharges liquid waste. In October 2024, a water quality standard was also published for the Quintero – Puchuncaví bay, where Ventanas Refinery operates and discharges liquid waste. Both facilities are studying the implementation of liquid waste recycling effort to achieve zero discharge of liquid waste. In addition, the authorities are developing water quality standards for other water bodies that CODELCO currently or may in the future discharge into, such as the Cachapoal river. Such standards could require CODELCO to incur additional costs to manage liquid waste discharges.
Regulations were enacted in February 2004 governing safety standards for mining operations. Pursuant to these regulations, all mining companies, including CODELCO, were required to provide closure plans for their mining facilities, demonstrating compliance with safety standards. These plans must be updated every five years and must consider the requirements set forth in the environmental authorization issued for the respective facility, 1f any. SERNAGEOMIN has approved the closure plans CODELCO prepared for all of its facilities.
A new mining closure regulation, Law No. 20,551, which includes health, safety and environmental requirements along with mandatory provisions that require financial guarantees, was enacted in 2011, and became effective in 2012. According to this law, CODELCO and other mining companies in Chile were required to submit an assessment of the closure expenses of all its mines to the SERNAGEOMIN before 2014. Once the assessment of
108 closure expenses was approved, CODELCO had to provide the financial guarantee between the sixth months since the approval and two-thirds of the project life (less than 20 years), or 15 years of the project life (more than 20 years).
CODELCO has obtained the approval of the closure plans for all of 1ts Divisions from SERNAGEOMIN and has provided the financial guarantees in the term established by the law. CODELCO had total provisions amounting to
U.S.$2.3 billion for future decommissioning and site restoration costs primarily related to tailing dams, closures of mine operations and other mining assets, including potential new governmental regulations. Currently, an update of the regulation of tailings dams (Decree No. 248) 1s taking place.
On June 20, 2020, Law No. 21,169 entered into force, which introduced the following amendments, among others: (1) the recognition of policies issued by Chilean insurance companies within the A.l credit rating category, provided that they are unable to raise exceptions that condition or defer the payment of the indemnity to Sernageomin; and (11) the obligation to request Sernageomins authorization to make changes or alterations in the identity and validity of the A.l financial instruments that comprise the guarantee.
On February 13, 2018, the Environmental Court (Tribunal Ambiental) in Antofagasta, Chile issued an Interim decision which could potentially reduce the availability of a minor source of water to CODELCO in the city of Calama. As of the date of this offering memorandum, CODELCO: (1) 1s not a party to this legal proceeding; and
(11) has not been contacted by any party or served by the Environmental Court. If and when CODELCO becomes a party to this proceeding, CODELCO expects to: (a) enforce all its available legal remedies against any adverse decision; and (b) implement operational mitigation measures, if necessary. In August 2018, the Environmental Court voided its previous interim decision and subsequently during the month of August 2018 the Superintendence of the Environment desisted from its original action giving rise to such interim decision.
On December 15, 2023, the Office of the General Comptroller confirmed (toma de razón) Supreme Decree No. 302023 of the Ministry of the Environment, which amends the Regulations of the Environmental Impact Assessment System (SEIA) in order to adapt such regulations to the requirements of the Framework Law on Climate Change and the Escazú Agreement. The approved modifications include, among others, the following: (1) amendment to the minimum contents of the Environmental Impact Declarations (DIA) and Environmental Impact Studies (EIA). The climate change factor 1s added transversally in the analysis that the proponents must carry out regarding the impact of their projects on the different components of the environment; (11) the duty to present a summary of the DIA and that the general background section and the summaries of the DIA and EIA must be written in language understandable to the public, and the names of the projects must clearly reflect the type of project involved; (111) the possibility of reviewing the Environmental Approval Resolutions (RCA) 1s reinforced, which would take place when, during the execution of a project, the variables observed in the monitoring plans evolve differently from what was projected, considering the influence of climate change; (iv) a participatory monitoring (monitoreo participativo) may be included by the proponents in the DIA or EIA, which consists of a process to incorporate the community in the follow-up of the development phases of a project through the delivery of information, reports, training, field visits, among other measures; and (v) the scope of the concept of environmental burden is broadened, in order to allow citizen participation in the process of granting DIAs, and for the purposes of analyzing the environmental burdens of a project, nearby communities will be understood as those that are located in or make use of the area where the environmental impacts are manifested. In addition, the term for citizens or organizations to request a citizen participation process within the processing of DIAs is extended from ten to thirty days.
Future legislative or regulatory developments, private causes of action or the discovery of new facts relating to environmental matters may impose new restrictions or result in additional costs that may have a material adverse effect on CODELCO’s business, financial condition, results of operations or prospects. See Risk Factors-Risks Relating to CODELCO’s Operations -CODELCOs compliance with environmental, health and safety laws may require increased costs, including capital commitments, and non-compliance may subject it to significant penalties.
New Economic Crimes Regulation On August 17, 2023, Law No. 21,595 on economic crimes and offenses against the environment, was published and later amended by Law No. 21,694, published in the Official Gazette on September 4, 2024 (the
Economic Crimes Law). This new law, inter alia, (1) systematizes a series of existing business-related offenses;
(11) creates new environmental crimes, including environmental pollution and negligent or imprudent pollution; (111)
109 penalizes new offenses based on money laundering; (1v) strengthens existing penalties by excluding from custodial sentences certain benefits that previously allowed economic crime offenders to avoid effective imprisonment, the confiscation of profits and fines; and (v) amends several provisions to the Corporate Criminal Liability Act (Law No. 20,393, of 2009, as amended) by expanding the catalogue of criminal offenses by corporations, easing the requirements to hold them liable, and establishing new penalties.
The implementation of a Crime Prevention Model (CPM) by CODELCO, prepared in accordance with the requirements set forth in the law, would relieve liability. On the contrary, if a court determines the inexistence or flawed implementation of a CPM, 1t may appoint a supervisor with the power to issue mandatory instructions to CODELCO to ensure proper functioning of the CPM.
Enforceability of Obligations
CODELCO’s commercial obligations are enforceable in the same manner as those of any privately owned company in Chile. Even though CODELCO is a state-owned enterprise, 1t 1s subject to the same laws and regulations applicable to all private Chilean corporations. This principle is consistent with the constitution of 1980, wherein Article 19, No. 21 states that 1f Chile and its bodies carry out commercial activities, they will be governed by common legislation applicable to private persons, unless a specific law approved by an absolute majority of representatives of the Chilean Congress dictates otherwise. No such law has been passed with respect to CODELCO.
Payment of Obligations
Article 23 of Decree Law 1,350 provides that CODELCO has the obligation to return the total proceeds of 1ts exports to Chile, but has no obligation to convert the proceeds to Chilean pesos in excess of 1ts peso requirements.
The proceeds from its exports are deposited at the Central Bank of Chile, and withdrawals against such foreign exchange deposits are made to cover CODELCOs expenses. In addition, Article 13 of Decree Law 1,350 directs CODELCO to prepare a Loan Amortization Budget which must include the payment of principal of CODELCOs debts and related interest payments, including the notes. This budget, as part of the general budget of CODELCO, 1s approved annually by joint decree of the Ministry of Mining and the Ministry of Finance and may be amended to meet non-budgeted expenses, in accordance with the terms and conditions of Article 16 of Decree Law 1,350. The incurrence of any indebtedness by CODELCO must be authorized by an official letter from the Ministry of Finance.
For loans with maturity at issuance of a duration of more than one year, this authorization is required to commence the relevant procedures.
Statutory Documents
The statutory documents of CODELCO are contained in Decree Law 1,350 published in the Official Gazette on February 28, 1976, as amended by Law 20,392, and Decree No. 146 published in the Official Gazette on October 25, 1991, as amended (to conform the same with Law 20,392) by Decree No. 3 of January 13, 2012 issued jointly by the Ministries of Finance and Mining, published in the Official Gazette on July 4, 2012. These gazettes may be seen on-line on the Library of the Chilean Congress website (http:www.ben.cl ) or in a booklet that CODELCO will issue upon request, which contains free translations of the regulations into English.
110 MANAGEMENT
The Board of Directors 1s primarily responsible for the management and administration of CODELCO. The Board of Directors is composed of nine members, appointed as set forth in Law No. 20,392,: (1) three directors are directly appointed by the President of Chile; (11) four directors are appointed by the President of Chile from a short-list presented by the Council of Senior Public Management (Consejo de la Alta Dirección Pública), an entity within the National Civil Service Bureau that advises the President of Chile, ministers and heads of services departments on the appointment of high-ranking public positions; (111) one director is appointed by the President of Chile from a short-list presented by the Federación de Trabajadores del Cobre (FTC); and (1v) one director 1s appointed by the President of Chile from a short-list presented by both the Federación de Sindicatos de Supervisores del Cobre (FESUC) and the Asociación Nacional de Supervisores del Cobre (ANSCO). All directors in CODELCO serve four-year terms and may be reelected for new terms. The Board 1s renewed on a staggered basis and may not be revoked in its entirety.
The Board of Directors 1s vested with all the management and asset-disposal authority, except to the extent that Chilean law or CODELCO’s bylaws establish such authority within the exclusive province of the President of Chile (as discussed below), and other than the authority delegated to the Chief Executive Officer. The main responsibilities of the Board of Directors of CODELCO are to: (1) designate and remove the Chief Executive Officer;
(11) approve and send to the Ministry of Finance an estimate of the revenues and surplus earnings that 1t will transfer to the Government of Chile in the following years budget; (111) prepare the annual budget of CODELCO and send for the approval of the Ministry of Finance; and (iv) approve the BDP report of the Company for the following three-year period.
The President of Chile is vested with authority analogous to that of the shareholders of a corporation (sociedad anónima) under Chilean law, which may be delegated in whole or in part to the Ministers of Finance and Mining, jointly. Pursuant to such authority, the President of Chile: (1) participates in the designation of the Board of Directors by designating three directors without external input and by electing six directors on the basis of third-party short-lists; (11) appoints the Chairman of the Board of Directors; and (111) may approve and amend the bylaws of the Company, by means of an executive decree issued jointly by the Ministries of Finance and Mining. See Risk Factors
– Risks Relating to CODELCOs Relationship with the Government of Chile.
Senior management and administration of the Company are vested in its Board of Directors and Chief Executive Officer. The Board of Directors 1s in charge of the ultimate conduct and oversight of the Company. The Chief Executive Officer 1s named by the Board of Directors and remains in office so long as heshe maintains the confidence of the Board. The Chief Executive Officer 1s responsible for implementing the resolutions of the Board of Directors and supervising the activities of CODELCO. On August 18, 2023, the Board of Directors of CODELCO appointed Rubén Alvarado Vigar as the new CEO, and he commenced his term on September 1, 2023.
On January 26, 2024, CODELCO announced the appointment of Braim Chiple Cendegui as Vice President of Sales, effective on March 15, 2024, replacing Cristobal Fuenzalida who was Acting Vice President of Sales since December 1, 2023.
On April 1, 2024, CODELCO announced the appointment of Gabriel Méndez Serqueira as Vice President of Corporate Affairs and Sustainability, effective on April 22, 2024, replacing Patricia Provoste who was Acting Vice President of Corporate Affairs and Sustainability since November 01, 2023.
On May 28, 2024, CODELCO announced that Felipe Kilian Polanco will take over as General Manager of 1ts subsidiary Minera Salar Blanco on September 1, 2024. Kilians responsibilities will include advancing the lithium project in the Maricunga Salar, strengthening community relations, and supporting the indigenous consultation process for expanding the companys Special Lithium Operation Contract (CEOL). His first major task will be to lead the search for a partner for the Maricunga project with Rothschild as advisor, with plans to conclude the selection process in early 2025.
111 On May 30, 2024, CODELCO announced the resignation of Christian Caviedes as General Manager of Chuquicamata Division, effective on May 31, 2024 and appointed René Galleguillos as interim General Manager effective the same day. On July 22, 2024, René Galleguillos was appointed as General Manager of Chuquicamata Division, effective on July 23, 2024.
On October 21, 2024, CODELCO announced the nomination of its former CEO, André Sougarret, and former director Juan Enrique Morales to the board of Compañía Minera Teck Quebrada Blanca S.A. (Quebrada Blanca).
Organizational Structure
Hoard – PIT YI | | ( 1 | Chief Audiht Executiy ! d bic Esrcubn el Hibbor Paúl Puerto M Rubén Alvarado Y ! G orparatir Miasgoma, A ON Libios and £ omplian=e A O a Manson! Pair WEbir MM | | | VP Leg VE Finane WE People Managrimenal VE Saber ME Corperir Alabro sd! Mecarcna Vargan | Alejandro Sarbrucra 1) Mery Carnes Llano A Hraim Chipk U Sustalmababis Crabrel Méraldes Y | A PFPropu re rel VE Lira aná VE COpermiesn Marron Acuña A Murcia anirol Marancio Harara (6 Sebaurnán Cost EA
VP Projecte
Jul Cueva A
AE Mining Eraaurers srl Ds prepa Moar¿rnret Mmolín Rrrora A | | deerral Vanigrr i huquiramata Disiios Ecrá Galbepuillos P desrral Manigrr Veoleeas Din hon Picado Wenhaupi H iserral Mansgrr Andina [o pr Lisdor Quitvga H |
Peral Minigrr Minero Haba Diismios (heras Lan A
Urra! Manager Hademiro Tomic Disistos Julio Dias R desrral Manager ¿abrirla Máitral Tis ios Cliadia Cabecera U | iasral Manager El Trábiráte Tin hana Andros Aur En
112 iserral Managrr Salhosdor Tin poa Cirmian Touin ” Directors and Executive Officers
The following table sets forth the current directors and executive officers of CODELCO and their positions:
Name Position Directors!)
Máximo Pacheco Matte …oooccccoocccccnoooncccononnncncnnnnncnccnnnnnccccnnns ChairmanY6) Eduardo Bitrán ColodrO………oococccccnnnnnnnonononnnnnnnnnnnncncnnnnnannnns Director Y Ricardo Álvarez Fuentes ….ooonccncnnnononnoncononnonncnncnnonanoncnnnonnono Director VÓ Isabel Marshall Lagarrigu€ …..coonconncnnnconoccnononononanonnoninonanons Director96) Josefina Montenegro Araneda …oooooncccnoccconccnonoconccnnnacincconnnons Director96) Pedro Pablo Errázuriz DOMÍNgUEZ…oooonocccnonccnoncconnncconanonaness DirectorY6) Nelson Cáceres Hernández Director Alejandra Wood HUidobro…….oonocccncccnoncnonccooncconccinnacanccinnnons Director 96
Executive Officers
Rubén Alvarado VigaT …..ococcccccncnnncnnnnnnnnnnnnnnnonnnnnnnnnnnnnnninonoss Chief Executive Officer
Alejandro Sanhueza DÍaz………..ococccccnccnnnnnnnnnnnnnnnnnnnnnnnninnnnnos Vice President of Finance
Mary Carmen Llano AranzaStl……cccccnnnnnnooonononnnnnnnnnnnnnnnnnnnnss Vice President – Human Resources
Sebastián Court Benvenuto Vice President – Strategic and Management Control
Braim Chiple Cendegul…….cocccccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos Vice President of Sales
Julio Cuevas ROSS …….ooccccccccnnnnnnnnnnnnnnnnnnnnnnnnnonnnnnnnnnnononinnnnnos Vice President – Projects
Nicolás Rivera ROdTÍguez …oooooononnonooooononoooooon ono nonnnnnnnnnnnonnnnos Vice President – Mining Resources and Development Management
Gabriel Méndez Serquelra …..occccccccncnnnnncnnnnnnnnnnnnnnnnnnnnnnnnnnnnos Vice President – Corporate Affairs £ Sustainability
Maurici0 ACUÑA Ñ .occonnnnocooooonnnononnnccnnnnnnnnnnno non nnnnnnnnnnnnnnanannnnss Vice President Procurement
Macarena Vargas Losada………coccccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnoos Vice President – Legal
Mauricio Barraza Gallardo …………….coccccccccnnnnnnnnnnnononnnnnnnnnos Vice President -Operations
Raúl Puerto Mendoza. ..ooooooooooonncnnccccnnononononononnnnnnnnnncnnnnnnnnnnnos General Auditor
Olivar Hernández Giugliano ………ccccccncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnns Head of Finance
René Galleguillos Pallauta……………oocccncnnnnnnnnnnnnininininininnnnn: General Manager – Chuquicamata Division
Julio Díaz RIVErAa ………oococcccncncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnononnnnnnnos General Manager – Radomiro Tomic Division
Gonzalo Lara Skiba …………occccccncnncnonononononnnnnonnnnnnnnnnnnnnnnnnnnos General Manager – Mina Ministro Hales Division
Claudia Cabrera CoOrrTOA…..ococccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos General Manager – Gabriela Mistral Division
Christian Toutin Navarro. …occccccccnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnninininos General Manager – Salvador Division
Ricardo Weishaupt Hidalgo……………ccccccccccnnnnnnnnnnnnnnnnnnnnnnnos General Manager – Ventanas Division
Andrés Music GArTIdO …..cccccccncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnninnnoss General Manager – El Teniente Division
Lindor Quiroga BugueñÑo …..ccccccccnnnncnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnoss General Manager – Andina Division
(1) There will be a ninth director who has not been appointed as of the date hereof.
(2) Directly appointed by the President of Chile.
(3) Term expires May 2026.
(4) Appointed by the President of Chile from a short list presented by the Council of Senior Public Management (Consejo de la Alta Dirección Pública).
(5) Term expires May 2025.
(6) Term expires May 2027.
(7) Appointed by the President of Chile from a short list presented by Unions.
There 1s no family relationship between any director or executive officer and any other director or executive officer. The business address for the executives and directors previously listed 1s Huérfanos 1270, 6th floor, Santiago, Chile, postal code 8340424. No executive holds a position as an employee outside of CODELCO.
113 Committees of the Board of Directors Audit, Benefits and Ethics Committee (Comité de Auditoría, Compensaciones y Ética)
CODELCO”s audit, benefits and ethics committee consists of Isabel Marshall Lagarrigue (Cha1r), Ricardo Álvarez Fuentes (Vice Chair), Eduardo Bitrán Colodro, Pedro Pablo Errázuriz Domínguez, who may invite others to assist in 1ts work. The audit, benefits and ethics committee?s primary responsibility 1s to support the Board of Directors by providing and improving internal controls by reviewing transactions with related parties and the work of CODELCOS”s internal audit department. The committee also analyzes and reviews the work and reports of the external auditors. The committee 1s also responsible for analyzing observations made by Chilean regulatory entities and for recommending measures to be taken by the management in response. CODELCO”s audit, benefits and ethics committee is not subject to the independence and other requirements to which U.S. public companies are subject.
Projects and Investment Committee (Comité de Proyectos y Financiamiento de Inversiones)
The projects and investment committee consists of Ricardo Álvarez Fuentes (Chair), Eduardo Bitrán Colodro (Vice Chair), Isabel Marshall Lagarrigue, Pedro Pablo Errázuriz Domínguez and Nelson Cáceres Hernández. This committee analyzes and recommends major mining development projects and financing of these projects.
Management Committee (Comité de Gestión)
The management committee consists of Pedro Pablo Errázuriz Domínguez (Chair), Josefina Montenegro Araneda (Vice-Chair), Alejandra Wood Huidobro, Ricardo Álvarez Fuentes and Nelson Cáceres Hernández The committee 1s primarily responsible for the management of the Companys divisions and key projects. It also reviews and evaluates the performance of subsidiaries and affiliated companies.
Sustainability Committee (Comité de Sustentabilidad)
The sustainability committee consists of Alejandra Wood Huidobro (Chair), Nelson Cáceres Hernández (Vice-Chair), Isabel Marshall Lagarrigue, Josefina Montenegro Araneda and Pedro Pablo Errázuriz Domínguez, The committee advises the Board of Directors with respect to matters of sustainability, providing assistance to the Board of Directors in the Companys sustainability policies and goals as well as analyzing the efficacy of the Companys policies and management systems in the areas of health, safety and the environment.
Science, Technology and Innovation Committee (Comité de Ciencias, Tecnología e Innovación)
The science, technology and innovation committee consists of Eduardo Bitrán Colodro (Chair), Josefina Montenegro Araneda (Vice-Chair), Pedro Pablo Errázuriz Domínguez, Alejandra Wood Huidobro and Nelson Cáceres Hernández. This committee was formed in 2016 and discusses the challenges facing the corporation with respect to science and technology.
114 RELATED PARTY TRANSACTIONS
In the ordinary course of 1ts business, CODELCO engages in a variety of transactions on arms-length terms with certain related parties. For information regarding these transactions, see note 3 to the Consolidated Financial Statements.
In 1ts dealings with Cyprus El Abra Corporation (a subsidiary of Freeport-McMoRan Inc.), the partner in SCM El Abra, CODELCO acts through a subsidiary, as agent. CODELCO does not sell copper to Nordeutsche Affinerie Group, its partner in Deutsche Giessradht GmbH.
Pursuant to Article 147 of the Law No. 18,046 on Corporations (the Corporations Act), CODELCO may only enter into operations with related parties 1f 1ts intent 1s to benefit the corporate interest, 1f its price, terms and conditions are consistent with those prevailing in the market when approved, and 1f 1t follows certain requirements and procedures established by the law, including the Norma de Carácter General No. 501 published by the CMF on January 8, 2024, (General Rule No. 501, hereinafter NCG 501) by virtue of changes made the Chilean Corporations Act by Law No. 21,314 on Market Agents, of 2021. NG 501 came into effect as of September 1, 2024, and establishes the minimum mentions that general habitual policies must contain and regulates the public disclosure of transactions with related parties (OPR).
According to Article 146 of the Corporations Act, as amended, OPR of CODELCO include any and all negotiations, acts, contracts or operations in which the Company must take part, as well as:
(1) one or more related persons to the Company, pursuant to the definition contained in Article 100 of Law No. 18,045 (the Securities Market Law, as amended);
(11) a board member, manager, a main executive or a liquidator of CODELCO, acting directly or on behalf of any persons other than the Company, or their respective spouses or relatives up to the second degree (consanguinity or affinity);
(111) a corporation or partnership in which one of the persons mentioned in (11) above are direct or indirect owners of 10.0% or more of its capital, board members, managers or main executives; (1v) those persons specifically established under CODELCOs bylaws or reasonably identified by the Directors? Committee, as applicable, even 1f the transaction with such persons (a) 1s not of a relevant amount, (b) is conducted on a regular basis (as per the regularity policy determined by the Board of Directors of CODELCO) or (c) is entered into with a subsidiary of CODELCO in which the Company holds a direct or indirect ownership interest of at least 95.0%; and (v) any company in which a board member, manager or main executive of CODELCO has served as a board member, manager, main executive or liquidator, during the last 18 months.
Article 100 of the Securities Market Law provides that the following persons constitute a related party:
(1) the other entities of the business conglomerate to which a company belongs; (11) parents, subsidiaries and equity-method investors and investees of a company; (111) all directors, managers, officers and liquidators of a company, and their spouses or blood relatives to the second degree, or any entity controlled, directly or indirectly, by any of the abovementioned individuals; (1v) any person that, by their own actions or with other persons under a joint action agreement, may appoint at least one member of the management of a company or controls 10.0% or more of the capital or voting capital of a stock company; and (v) other entities or persons deemed a related party by the CMF.
The rules, requirements and procedures to approve operations with related parties apply both to the operations of CODELCO as well as to those of its subsidiaries, regardless of their legal nature, except for some exemptions set forth in Article 147 of the Corporations Act in which related-party transaction may be executed without the requirements referred to above, with the prior approval of the Board of Directors.
115 The breach of any of the restrictions on related party transactions will not affect the validity of the transaction. However, CODELCO or the President of Chile may demand from the breaching party, the re.mbursement for an amount equivalent to the benefits gained by the breaching party resulting from the transaction.
Additionally, CODELCO or the President of Chile may claim damages. Finally, the breaching party bears the burden of proof that the transaction was carried out according to the law.
CODELCO”s policy for transactions with related parties 1s defined and governed by a specific internal regulation created pursuant to general policies established by the Board of Directors and in connection with the guidance provided by Decree Law 1,350 and the Corporations Act. CODELCOS*s internal regulation prescribes the manner in which transactions between CODELCO and related entities must be carried out and provides for sanctions 1f the requirements of the regulation are not met.
116 FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN CHILE
As a general matter, the Central Bank of Chile is, among other things, responsible for monetary policies and for exchange controls in Chile. Most Chilean companies must inform the Central Bank of any international issue of bonds and if the proceeds of the issuance are not left abroad, should be brought into Chile through a bank or other participant in the Formal Exchange Market. Article 23 of Decree Law No. 1,350 provides that CODELCO has an obligation to return the total proceeds of 1ts exports to Chile, but has no obligation to convert such proceeds to Chilean pesos beyond its peso requirements. These proceeds from its exports are deposited at the Central Bank of Chile, and withdrawals against such foreign exchange deposits are made to cover CODELCO’s expenses. As a result, CODELCO does not require foreign exchange approval in connection with the issuance or placement of, or payments upon the notes. See Regulatory Framework–Payment of Obligations.
117 DESCRIPTION OF NOTES
Each series of notes will be issued pursuant to an indenture, dated as of February 5, 2019 (the base indenture), among CODELCO and The Bank of New York Mellon, as trustee, paying agent, transfer agent and registrar (the trustee), as amended and supplemented by the fifteenth supplemental indenture, to be dated on or about January 13, 2025 (together with the base indenture, the indenture), between CODELCO and the trustee.
The following description of certain provisions of the notes and of the indenture is subject to and is qualified in its entirety by reference to the provisions of the notes and the indenture, copies of which will be available for inspection at the office of the trustee at 240 Greenwich Street, New York, New York 10286. CODELCO urges you to read the indenture because it, and not this description, defines your rights as holders of the notes issued under the indenture.
General
Each series of notes will be issued by CODELCO, and CODELCO will be liable therefor and obligated to perform all covenants and agreements to be performed by CODELCO pursuant to each series of notes and the indenture, including the obligations to pay principal, interest and Additional Amounts (as defined below under Payment of Additional Amounts), 1f any. The trustee under the indenture is The Bank of New York Mellon (the trustee, which term shall include any successor trustee under the indenture).
The indenture provides for the issuance by CODELCO from time to time of notes in one or more series up to an aggregate principal amount of notes as from time to time may be authorized by CODELCO, subject to all required government authorizations. Notes having the same date of maturity and Interest Payment Dates (as defined below), payable in the same currency, bearing interest at the same rate and the terms of which are otherwise identical, are referred to as a series. The notes offered hereby will be issued in two serles.
Each series of notes will bear interest at the applicable rates per annum set forth on the cover page of this offering memorandum from the date of issuance. Interest on the 2035 notes will be payable semi-annually in arrears on January 13 and July 13 of each year, beginning on July 13, 2025, or, 1f any such date 1s not a Business Day (as defined below), on the next succeeding Business Day (the 2035 Interest Payment Dates) to the person or persons (each, a Holder) in whose name such notes are registered in the Security Register (as defined below) at the close of business on December 29 and June 28, respectively, preceding the applicable Interest Payment Date (each a 2035 Record Date). Interest on the 2055 notes will be payable semi-annually in arrears on January 13 and July 13 of each year, beginning on July 13, 2025, or, 1f any such date 1s not a Business Day (as defined below), on the next succeeding Business Day (the 2055 Interest Payment Dates) to the person or persons (each, a Holder) in whose name such notes are registered in the Security Register (as defined below) at the close of business on December 29 and June 28, respectively, preceding the applicable Interest Payment Date (each a 2055 Record Date). Interest on the notes will be calculated on the basis of a 360-day year of twelve 30-day months. For the purposes hereof, the term Business Day means a day on which banks in The City of New York are not authorized or required by law or executive order to be closed.
Moneys paid by CODELCO to the trustee or any paying agent for the payment of principal of (and premium, If any) or interest on any of the notes and remaining unclaimed at the end of two years after the date on which such principal (and premium, if any) or interest shall have become due and payable (whether at maturity, upon call for redemption or otherwise) shall, together with interest made available for payment thereof, be repaid to CODELCO, whereupon all liability of the trustee or such paying agent with respect to such moneys shall cease.
The 2035 notes will mature on January 13, 2035 and the 2055 notes will mature on January 13, 2055.
Neither series of notes will be redeemable prior to maturity except as described below and in the event of certain developments affecting taxation, in that case at a price equal to the outstanding principal amount thereof, together with any Additional Amounts and accrued interest to the redemption date. On the maturity date of any series of notes, CODELCO will be required to pay 100% of the then outstanding principal amount of such series of notes plus accrued and unpaid interest thereon and Additional Amounts, if any.
118 Ranking
The notes will constitute direct, general, unsecured, unconditional and unsubordinated obligations of CODELCO. The notes rank and will rank without any preference among them and equally with all other unsecured and unsubordinated obligations of CODELCO, other than certain obligations granted preferential treatment pursuant to Chilean law. It 1s understood that this provision will not be construed so as to require CODELCO to make payments under the notes ratably with payments being made under any other obligations. The indenture contains no restriction on the amount of additional indebtedness which may be incurred by CODELCO or its subsidiaries; however, as set forth under –Limitation on Liens below, the indenture contains certain restrictions on the ability of CODELCO and its subsidiaries to incur secured indebtedness.
Registration, Form and Delivery
The trustee will initially act as paying agent, transfer agent and registrar for each series of notes. Each series of notes will be issued upon the closing of this offering in definitive, fully registered form, without coupons, in denominations of U.S.$200,000 principal amount at maturity and multiples of U.S.$1,000 in excess thereof. The notes will be exchangeable, and transfers thereof will be registrable, at the office of the registrar for the notes. No charge will be made to holders of the notes in connection with any exchange or registration of transfer, but CODELCO may require payment of a sum sufficient to cover any tax or other governmental charge payable in that connection.
The trustee will maintain at its office in the City of New York, currently located at 240 Greenwich Street, New York, New York 10286, a security register (the Security Register) with respect to the notes. The name and address of the registered Holder of each note and the amount of each note will be recorded in the applicable Security Register, and the trustee and CODELCO may treat the person in whose name the note is registered as the owner of such note for all purposes. For so long as a series of notes are represented by one or more Global Notes, the registered owner of such a Global Note, in accordance with the terms of the indenture, may be treated at all times and for all purposes by CODELCO and the trustee as the sole owner with respect to such notes, with respect to all payments on such notes and for all other purposes under the terms of such notes and the indenture.
Each series of notes are being offered and sold in connection with the initial offering thereof solely to qualified institutional buyers, as that term 1s defined in Rule 144A under the Securities Act, pursuant to Rule 144A, and in offshore transactions to persons other than U.S. persons, as defined in Regulation S under the Securities Act, in reliance on Regulation S. Following the initial offering of the notes, the notes may be resold to qualified institutional buyers pursuant to Rule 144A, non-U.S. persons in reliance on Regulation S and pursuant to Rule 144 under the Securities Act, as described under Transfer Restrictions.
The Global Notes Rule 144A Global Note
Each series of notes offered and sold to qualified institutional buyers pursuant to Rule 144A will initially be issued in the form of one or more registered notes in global form, without interest coupons. The Rule 144A Global Notes will be deposited on the date of the closing of the sale of the notes with, or on behalf of, The Depository Trust Company (DTC), and registered in the name of Cede £ Co., as nominee of DTC, or will remain in the custody of the trustee as custodian for DTC. Interests in the Rule 144A Global Note will be available for purchase only by qualified institutional buyers.
Regulation S Global Note
Each series of notes offered and sold in offshore transactions to non-U.S. persons in reliance on Regulation S under the Securities Act will initially be issued in the form of one or more registered notes in global form, without interest coupons. The Regulation S Global Notes will be deposited upon issuance with, or on behalf of, a custodian for DTC.
Except as set forth below, each Rule 144A Global Note and the Regulation S Global Note (collectively the Global Notes) may be transferred, in whole and not in part, solely to another nominee of DTC or to a successor
119 of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for notes in physical, certificated form (referred to as certificated notes) except in the limited circumstances described below.
The notes will be subject to certain restrictions on transfer and will bear a restrictive legend as set forth under Transfer Restrictions.
All interests in the Global Notes are subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream are subject to the procedures and requirements of such systems.
Euroclear and Clearstream will hold interests in the Global Notes on behalf of their participants through customers securities accounts in their respective names on the books of their respective depositaries. Such depositaries, in turn, will hold such interests in the Global Notes in customers securities accounts in the depositaries names on the books of DTC.
Exchanges Among the Global Notes
Prior to the 40th day after the later of the commencement of the offering of the notes and the date of the closing of the sale of the notes (the period through and including the 40th day, the restricted period), transfers by an owner of a beneficial interest in the Regulation S Global Note to a transferee who takes delivery of this interest through the corresponding Rule 144A Global Note will be made only in accordance with applicable procedures and upon recelpt by the trustee of a written certification from the transferor of the beneficial interest in the form provided in the indenture to the effect that such transfer is being made to a person whom the transferor reasonably believes 1s a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A. Such written certification will no longer be required after the expiration of the restricted period.
Transfers by an owner of a beneficial interest in the Rule 144A Global Note to a transferee who takes delivery of such interest through the corresponding Regulation S Global Note, whether before or after the expiration of the restricted period, will be made only upon receipt by the trustee of a certification from the transferor to the effect that such transfer is being made in accordance with Regulation S under the Securities Act.
Any beneficial interest in one of the Global Notes that 1s transferred to a person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, 1f any, and other procedures applicable to beneficial interests in such other Global Note for as long as 1t remains such an interest.
Certain Book-Entry Procedures for the Global Notes
The descriptions of the operations and procedures of DTC, Euroclear and Clearstream set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. Neither CODELCO nor the initial purchasers take any responsibility for these operations or procedures, and investors are urged to contact the relevant system or 1ts participants directly to discuss these matters.
DTC has advised CODELCO that it 1s (1) a limited purpose trust company organized under the laws of the State of New York, (11) a banking organization within the meaning of the New York Banking Law, (111) a member of the Federal Reserve System, (1v) a clearing corporation within the meaning of the Uniform Commercial Code, as amended, and (v) a clearing agency registered pursuant to Section 17A of the Securities Exchange Act of 1934, as amended (the Exchange Act). DTC was created to hold securities for 1ts participants and facilitates the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. DTCs participants include securities brokers and dealers (including the initial purchasers), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTCs system 1s also available to other entities such as banks, brokers, dealers and trust companies, or indirect participants that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Investors who are not participants may beneficially own securities held by or on behalf of DTC only through participants or indirect participants.
120 CODELCO expects that pursuant to procedures established by DTC (1) upon deposit of each Global Note, DTC will credit the accounts of participants designated by the initial purchasers with an interest in the Global Note and (11) ownership of the notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of participants) and the records of participants and the indirect participants (with respect to the interests of persons other than participants).
The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests through participants, the ability of a person having an interest in notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTCs system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the notes represented by the Global Note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of certificated notes, and will not be considered the owners or holders thereof under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee thereunder.
Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a participant or an indirect participant, on the procedures of the participant through which such holder owns its interest, to exercise any rights of a holder of notes under the indenture or such Global Note.
CODELCO understands that under existing industry practice, in the event that CODELCO requests any action of holders of notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the participants to take such action and the participants would authorize holders owning through such participants to take such action or would otherwise act upon the instruction of such holders. Neither CODELCO nor the trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such notes.
Payments with respect to the principal of, premium, 1f any, and interest on any notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such notes under the indenture. Under the terms of the indenture, CODELCO and the trustee may treat the persons in whose names the notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither CODELCO nor the trustee has or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, 1f any, and interest). Payments by the participants and the indirect participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with DTCs procedures, and will be settled in same-day funds. Transfers between participants in Euroclear or Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the notes, cross-market transfers between the participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTCs rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary. However, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines of such system. Euroclear or Clearstream, as the case may be, will, 1f the transaction meets 1ts settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to
121 DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream as a result of sales of interest in a global security by or through a Euroclear or Clearstream participant to a participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTCs settlement date.
Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither CODELCO nor the trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
Certificated Notes
With respect to each series of notes, 1f (1) CODELCO notifies the trustee in writing that DTC 1s no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary 1s not appointed within 90 days of such notice or cessation; (11) CODELCO, at its option, notifies the trustee in writing that 1t elects to cause the issuance of notes in definitive form under the indenture; or
(111) upon the occurrence of certain other events as provided in the indenture, then, upon surrender by DTC of the Global Notes, certificated notes will be issued to each person that DTC identifies as the beneficial owner of the notes represented by the Global Notes. Upon any such issuance, the trustee 1s required to register such certificated notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto.
Neither CODELCO nor the trustee shall be liable for any delay by DTC or any participant or indirect participant in identifying the beneficial owners of the related notes and CODELCO and the trustee may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the notes to be issued).
Covenants
CODELCO has agreed to restrictions on its activities for the benefit of holders of the notes. The following restrictions will apply to the notes:
Consolidation, Merger, Conveyance, Sale or Lease
Nothing contained in the indenture prevents CODELCO from consolidating with or merging into another corporation or conveying, transferring or leasing its properties and assets substantially as an entirety to any person, provided that: (1) the corporation formed by such consolidation or into which CODELCO is merged or the person which acquires by conveyance or transfer, or which leases, the properties and assets of CODELCO substantially as an entirety 1s a corporation organized and existing under the laws of Chile and expressly assumes, by supplemental indenture, the due and punctual payment of the principal of and interest and Additional Amounts, if any, on all outstanding notes and the performance of every covenant in the indenture on the part of CODELCO to be performed or observed; (11) immediately after giving effect to such transaction no Event of Default (as defined below), and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (111) CODELCO has delivered to the trustee an officers certificate and an opinion of counsel, each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture complies with the foregoing provisions relating to such transaction.
122 Limitation on Liens
Nothing contained in the indenture restricts or prevents CODELCO or any Restricted Subsidiary (as defined below) from incurring any additional indebtedness; provided that neither CODELCO nor any Restricted Subsidiary will (1) issue, assume or guarantee any indebtedness for money borrowed (Debt) 1f such Debt 1s secured by a lien upon, or (11) directly or indirectly secure any outstanding Debt by a lien upon, any Principal Property (as defined below) or upon any shares of stock of, or indebtedness of, any Restricted Subsidiary, now owned or hereafter acquired, without effectively providing that the notes shall be secured equally and ratably with such Debt, except that the foregoing restrictions shall not apply to (1) liens on any Principal Property acquired, constructed or improved after the date of issuance of the notes to secure or provide for the payment of the purchase price or cost of construction or improvements (including costs such as increased costs due to escalation, interest during construction and similar costs) thereof incurred after the date of the issuance of the notes, or existing liens on property acquired, provided such liens shall not apply to any property theretofore owned by CODELCO or any Restricted Subsidiary other than theretofore unimproved real property, (11) liens on any Principal Property or shares of stock or indebtedness acquired from a corporation merged with or into CODELCO or a Restricted Subsidiary, (111) liens to secure Debt of a Restricted Subsidiary to CODELCO or another Subsidiary, (1v) the sale or other transfer of any interest in property of the character commonly referred to as a production payment, (v) liens over any property at the time of acquisition of such property by CODELCO or any of its Restricted Subsidiaries which lien was not (or 1s not) created in connection with such acquisition, (vi) liens in existence on the date of the offering of the notes, (v11) liens on deposits to secure, or any lien otherwise securing, the performance of bids, statutory obligations, surety bonds, appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business, (vi11) liens created on any property to secure Debt incurred in connection with the financing of such property, the repayment of which Debt is to be made from the revenues arising out of, or other proceeds of realization from, such property, with recourse to those revenues and proceeds and other property used in connection with, or forming the subject matter of, such property, but without recourse to any other property of CODELCO or any Restricted Subsidiary and (1x) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (1) to (111) or (v), (vi) and (vi11), inclusive of any Debt secured thereby, provided that the principal amount of Debt so secured thereby shall not exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement and that such extension, renewal or replacement lien shall be limited to all or part of the property which secured the lien extended, renewed or replaced (plus improvements on or additions to such property). Notwithstanding the foregoing, CODELCO and one or more Restricted Subsidiaries may issue, assume or guarantee Debt secured by liens which would otherwise be subject to the foregoing restrictions in an aggregate principal amount which, together with the agegregate outstanding principal amount of all other Debt of CODELCO and its Restricted Subsidiaries that would otherwise be subject to the foregoing restrictions (not including Debt permitted to be secured under clauses (1) through (1x) above) and the aggregate value of the sale-and-lease-back transactions described under –Limitation on Sale-and-Lease-Back Transactions below (other than sale-and-lease-back transactions the proceeds of which have been applied as provided in clause (b) under –Limitation on Sale-and-Lease-Back Transactions below), does not at the time of issuance, assumption or guarantee thereof exceed 20.0% of Consolidated Net Tangible Assets.
Consolidated Net Tangible Assets means the total of all assets (including reevaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the consolidated balance sheet of CODELCO and its Subsidiaries as of the then most recent date filed by CODELCO with the CMF, but excluding goodwill, trade names, trademarks, patents, unamortized debt discount and all other like intangible assets (which term shall not be construed to include such reevaluations), less the aggregate of the current liabilities of CODELCO and its Subsidiaries appearing on such balance sheet. The term Principal Property means any mineral property, concentrator, smelter, refinery or rod mill located within Chile, of CODELCO or any Subsidiary except any such property, plant or facility which the Board of Directors by resolution declares 1s not of material importance to the total business conducted by CODELCO and its Subsidiaries as an entity. The term Subsidiary means any corporation more than 50.0% of the outstanding voting stock of which is owned, directly or indirectly, by CODELCO and of which CODELCO has the power to direct the management. The term Restricted Subsidiary means (1) any Subsidiary which owns, directly or indirectly, any Principal Property and (11) any Subsidiary which owns, directly or indirectly, any stock or debt of a Restricted Subsidiary.
123 Limitation on Sale-and-Lease-Back Transactions
The indenture provides that neither CODELCO nor any Restricted Subsidiary will enter into any arrangement with any person (other than CODELCO or a Restricted Subsidiary), or to which any such person is a party, providing for the leasing to CODELCO or a Restricted Subsidiary for a period of more than three years of any property or assets which has been or is to be sold or transferred by CODELCO or such Restricted Subsidiary to such person or to any person (other than CODELCO or a Restricted Subsidiary) to which funds have been or are to be advanced by such person on the security of the leased property or assets unless either (1) CODELCO or such Restricted Subsidiary would be entitled, pursuant to the provisions described under –Limitation on Liens above, to incur Debt in a principal amount equal to or exceeding the value of such sale-and-lease-back transaction, secured by a lien on the property or assets to be leased, without equally and ratably securing the notes, or (11) CODELCO, during or immediately after the expiration of six months after the effective date of such transaction (whether made by CODELCO or a Restricted Subsidiary), applies to the voluntary retirement of indebtedness of CODELCO (including the notes) maturing by 1ts terms more than one year after the original creation thereof (Funded Debt) an amount equal to the value of such transaction, less an amount equal to the sum of (a) the principal amount of notes delivered, within six months after the effective date of such arrangement, to the trustee for retirement and cancellation and (b) the principal amount of other Funded Debt voluntarily retired by CODELCO within such six-month period, in each case excluding retirements of notes and other Funded Debt as a result of conversions or pursuant to mandatory sinking fund or mandatory prepayment provisions or by payment at maturity.
Periodic Reports
CODELCO will furnish, to the noteholders and to prospective purchasers of notes, upon request to the trustee, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the notes are not freely transferable under the Securities Act.
Events of Default
An Event of Default with respect to each series of notes is defined in the indenture as being any of the following (each an Event of Default): (1) default for 30 days in payment of any interest on such notes; (11) default in payment of principal of such notes; (111) default in the performance, or breach, of any covenant or warranty or obligation of CODELCO in the indenture and continuance of such default or breach for a period of 60 days after written notice 1s given to CODELCO by the trustee or to CODELCO and the trustee by the holders of at least 33 13% in aggregate principal amount of the notes; (1v) default under any bond, debenture, note or other evidence of indebtedness for money borrowed, or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by CODELCO or any Subsidiary, whether such indebtedness now exists or shall hereafter be created, in an aggregate principal amount exceeding U.S.$50.0 million (or 1ts equivalent in any other currency or currencies) which default (x) shall constitute the failure to pay any portion of the principal of such indebtedness when due and payable, whether at maturity, upon redemption or acceleration or otherwise, or (y) shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, in either case, 1f such default shall continue for more than 30 Business Days and within such 30 Business Days the time for payment of such amount has not been expressly extended (provided that 1f such default under such indenture or instrument shall be remedied or cured by CODELCO or waived by the holders of such indebtedness, then the event of default with respect to the notes shall be deemed likewise to have been remedied, cured or waived); and (v) certain events of bankruptcy or insolvency of CODELCO or any Significant Subsidiary. Significant Subsidiary is defined in the indenture as a Subsidiary, the total assets of which exceed 10.0% of the total assets of CODELCO and its subsidiaries on a consolidated basis as of the end of the most recently completed year. The trustee shall not be charged with knowledge of any Event of Default with respect to the notes unless a written notice of such default or Event of Default shall have been given to an officer of the trustee who has direct responsibility for the administration of the indenture and the notes by CODELCO or any holder of notes.
The indenture provides that (1) 1f an Event of Default (other than an Event of Default described in clause (v) above) shall have occurred and be continuing with respect to the notes, either the trustee or the holders of not less than 33!3% of the total principal amount of the notes of such series then outstanding may declare the principal of all such outstanding notes and the interest accrued thereon, 1f any, to be due and payable immediately and (11) if an Event of Default described in clause (v) above shall have occurred, the principal of all such outstanding
124 notes and the interest accrued thereon, if any, shall become and be immediately due and payable without any declaration or other act on the part of the trustee or any holder of such notes. The indenture provides that the notes owned by CODELCO or any of its affiliates shall be deemed not to be outstanding for certain purposes, including declaring the acceleration of the maturity of the notes. Upon the satisfaction by CODELCO of certain conditions, including (1) the payment of all fees and expenses of the trustee, (11) CODELCOs deposit with the trustee of a sum sufficient to pay all outstanding amounts then due on the applicable notes (other than principal due by virtue of the acceleration) together with interest on such amounts through the date of the deposit and (111) all Events of Default (other than non-payment of principal that became due by virtue of the acceleration upon the event of default) have been cured or walved, the declaration described in clause (1) of this paragraph may be annulled by the holders of a majority of the total principal amount of the applicable notes then outstanding. Past defaults, other than non-payment of principal, interest and compliance with certain covenants, may be waived by the holders of a majority of the total principal amount of the applicable notes outstanding.
The trustee must give to the holders of the notes notice of all uncured defaults known to 1t with respect to the notes within 30 days after a Responsible Officer of the trustee has received written notification of such a default (unless such default shall have been cured); provided, however, that, except in the case of default in the payment of principal, interest or Additional Amounts, the trustee shall be protected in withholding such notice 1f 1t in good faith determines that the withholding of such notice is in the interest of the holders of the notes. Responsible Officer 1s defined in the indenture as any officer of the trustee with direct responsibility for the administration of the indenture and, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
No holder of notes may institute any proceeding, judicial or otherwise, under the indenture unless (1) such holder shall have given the trustee written notice of a continuing Event of Default with respect to the notes of that series, (11) the holders of not less than 33!3% of the total principal amount of the notes of that series then outstanding shall have made written request to the trustee to institute proceedings in respect of the Event of Default, (111) such holder or holders shall have offered the trustee such reasonable indemnity as the trustee may require, (1v) the trustee shall have failed to institute an action for 60 days thereafter and (v) no inconsistent direction shall have been given to the trustee during such 60-day period by the holders of a majority of the total principal amount of the notes of such series. Such limitations, however, do not apply to any suit instituted by a holder of a note for enforcement of payment of the principal or interest on the notes on or after the respective stated maturity expressed in such notes.
The indenture provides that, subject to the duty of the trustee during default to act with the required standard of care, the trustee will be under no obligation to exercise any of 1ts rights or powers under the indenture at the request or direction of any holders of the notes, unless such holders shall have offered to the trustee reasonable indemnity.
CODELCO is required to furnish to the trustee annually a statement as to the performance by CODELCO of certain of its obligations under the indenture and as to any default in such performance.
Payment of Additional Amounts
All payments of principal and stated interest under each series of notes by CODELCO will be made without deduction or withholding for or on account of any present or future taxes, assessments, duties or governmental charges of whatever nature imposed or levied by or on behalf of Chile or any political subdivision or territory or possession thereof or therein (the Taxing Jurisdiction) unless the withholding or deduction of such taxes, assessments, duties or governmental charges 1s required by law or regulation or by the official interpretation thereof.
In that event, CODELCO will pay to each Holder of a note such additional amounts (Additional Amounts) as may be necessary in order that each net payment on such note after such deduction or withholding will not be less than the amount provided for in such note to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts will not apply to:
(1) any tax, assessment, duty or other governmental charge that would not have been so deducted or withheld but for (1) the existence of any present or former connection between the Holder or the beneficial owner of the note (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder or beneficial owner, if such Holder or beneficial owner is an estate,
125 trust, partnership or corporation) and the Taxing Jurisdiction imposing such tax, assessment, duty or other governmental charge (including, without limitation, such Holder or beneficial owner (or such fiduciary, settler, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been engaged in a trade or business or present therein or having, or having had, a permanent establishment therein) other than the mere receipt of payments in respect of a note or the holding or ownership of a note or beneficial interest therein; or (11) the presentation of a note (where presentation 1s required) for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;
(1) any estate, inheritance, gift, sales, transfer, personal property, capital gains, excise or similar tax, assessment, duty or other governmental charge;
(111) any tax, assessment, duty or other governmental charge that is payable other than by withholding from payments of (or in respect of) principal of, or any interest on, the notes; (1v) any tax, assessment, duty or other governmental charge that would not have been imposed but for the failure to comply with certification, information or other reporting requirements concerning the nationality, residence or identity of the Holder or beneficial owner of the note, if compliance 1s required by statute or by regulation of the Taxing Jurisdiction as a precondition to relief or exemption from all or part of such tax, assessment, duty or other governmental charge, or to a reduction in the applicable tax rate, and proper notice has been sent to the Holder or beneficial owner; or (v) any combination of items (1), (11), (111), and (1v) above.
Nor shall Additional Amounts be paid with respect to any payment of the principal of or any interest on any note to any Holder or beneficial owner that is a fiduciary or partnership or other than the sole beneficial owner of such note to the extent such payment would be required by the laws of the Taxing Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Additional Amounts had 1t been a Holder of such note.
IfCODELCO pays Additional Amounts in respect of the Chilean withholding tax on payments of interest or premium, if any, made by CODELCO in respect of each series of notes to a Foreign Holder (as defined in Taxation) assessed at a rate of 4.0%, and a refund is provided with respect to such withholding tax, CODELCO shall have the right to receive and be entitled to such funds from the relevant Taxing Jurisdiction.
Redemption
CODELCO will not be permitted to redeem the notes before their stated maturity, except as set forth below.
The notes will not be entitled to the benefit of any sinking fund -meaning that CODELCO will not deposit money on a regular basis into any separate account to repay your notes. In addition, you will not be entitled to require CODELCO to repurchase your notes from you before the stated maturity.
Optional Redemption
CODELCO may redeem on one or more occasions some or all of the notes before they mature.
Prior to October 13, 2034 (three months prior to their maturity date of the 2035 notes) (the 2035 Par Call Date), CODELCO may redeem the 2035 notes at 1ts option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:
(1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the notes matured on the 2035 Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points less (b) interest accrued to the date of redemption, and
126
(2) 100% of the principal amount of the 2035 notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date.
Prior to July 13, 2054 (six months prior to their maturity date of the 2055 notes) (the 2055 Par Call Date), CODELCO may redeem the 2055 notes at 1ts option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:
(1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the notes matured on the 2055 Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points less (b) interest accrued to the date of redemption, and
(2) 100% of the principal amount of the 2055 notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date.
On or after the 2035 Par Call Date and the 2055 Par Call Date, as applicable, CODELCO may redeem each series of notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest thereon to the redemption date.
Treasury Rate means, with respect to any redemption date, the yield determined by CODELCO in accordance with the following two paragraphs.
The Treasury Rate shall be determined by CODELCO after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third Business Day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as Selected Interest Rates (Daily) – H.15 (or any successor designation or publication) (H.15) under the caption U.S. government securities–Treasury constant maturities-Nominal (or any successor caption or heading). In determining the Treasury Rate, CODELCO shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the applicable Par Call Date (the Remaining Life); or (2) 1f there 1s no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life – and shall interpolate to the applicable Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) 1f there 1s no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.
Ifon the third Business Day preceding the redemption date H.15 or any successor designation or publication 1s no longer published, CODELCO shall calculate the Treasury Rate based on the rate per annum equal to the semi- annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second Business Day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the Par Call Date, as applicable. If there is no United States Treasury security maturing on the applicable Par Call Date but there are two or more United States Treasury securities with a maturity date equally distant from the applicable Par Call Date, one with a maturity date preceding the applicable Par Call Date and one with a maturity date following the applicable Par Call Date, CODELCO shall select the United States Treasury security with a maturity date preceding the applicable Par Call Date. If there are two or more United States Treasury securities maturing on the applicable Par Call Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, CODELCO shall select from among these two or more United States Treasury securities the United States Treasury security that 1s trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance with the
127 terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of such United States Treasury security, and rounded to three decimal places.
CODELCO’s actions and determinations in determining the redemption price shall be conclusive and binding for all purposes, absent manifest error. CODELCO will notify the trustee of the redemption price promptly after the calculation thereof and the trustee shall have no duty to determine, or verify the calculation of, the redemption price.
Notice of any redemption will be mailed or electronically delivered (or otherwise transmitted in accordance with the depositary?s procedures) at least 10 days but not more than 60 days before the redemption date to each holder of notes to be redeemed. For so long as the notes are listed on the Luxembourg Stock Exchange and the rules of the Euro MTF market so require, CODELCO will cause notices of redemption to be announced through the Luxembourg Stock Exchange.
In the case of a partial redemption, selection of definitive notes for redemption will be made by lot. No notes of a principal amount of U.S.$1,000 or less will be redeemed in part. If any note in definitive form is to be redeemed in part only, the notice of redemption that relates to such note will state the portion of the principal amount of the note to be redeemed. A new definitive note in a principal amount equal to the unredeemed portion of such note will be issued in the name of the holder of such note upon surrender for cancellation of the original definitive note. For so long as the notes are held by DTC (or another depositary), the redemption of the notes shall be done in accordance with the policies and procedures of the depositary, which may be made on a pro rata pass-through distribution of principal basis.
Unless CODELCO defaults in payment of the redemption price, on and after the redemption date interest will cease to accrue on the notes or portions thereof called for redemption.
Tax Redemption
Each series of notes may be redeemed at the election of CODELCO, in whole, but not in part, by the giving of notice as provided in –Notices below (which notice shall be irrevocable), at a price equal to the outstanding principal amount thereof, together with any Additional Amounts and accrued and unpaid interest to the redemption date, 1f, as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder, including a holding by a court of competent jurisdiction) of the Taxing Jurisdiction, or any change in the official application, administration or interpretation of such laws, regulations or rulings in such Taxing Jurisdiction, CODELCO has or will become obligated to pay Additional Amounts on the applicable notes in excess of the Additional Amounts that would be payable were payments of interest on the notes subject to the 4.0% of Chilean Interest Withholding Tax, as defined below (Excess Additional Amounts), and 1f such change or amendment is announced or becomes effective on or after the date of the agreement to purchase the notes and such obligation cannot be avoided by CODELCO taking measures it considers reasonable and that are available to 1t (for this purpose, reasonable measures shall not include any change in CODELCOSs or any successors jurisdiction of incorporation or organization or location of its principal executive or registered office); provided, however, that no such notice of redemption shall be given earlier than 60 days prior to the earliest date on which CODELCO would be obligated to pay such Excess Additional Amounts, were a payment in respect of the notes then due. Prior to the giving of notice of redemption of such notes, CODELCO will deliver to the trustee an officers certificate and a written opinion of recognized Chilean counsel independent of CODELCO to the effect that all governmental approvals necessary for CODELCO to effect such redemption, 1f any, have been or at the time of redemption will be obtained and in full force and effect and that CODELCO is entitled to effect such a redemption, and setting forth in reasonable detail the circumstances giving rise to such right of redemption. See Taxation-Chilean Taxation.
Notices
For so long as the notes are outstanding in global form, notices to be given to holders will be given to the depositary, in accordance with 1ts applicable procedures as in effect from time to time. If notes are issued in individual definitive form, notice to holders of the notes will be given by mail to the addresses of such holders as they appear in the security register. In addition, so long as the notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, notices will also be published in a leading newspaper having general
128 circulation in Luxembourg (which 1s expected to be Luxemburger Wort) or on the website of the Luxembourg Stock Exchange (www.luxse.com). Any such notice will be deemed to have been delivered on the date of first publication.
Replacement of Notes
In case of mutilated, destroyed, lost or stolen notes, application for replacement thereof may be made to the trustee or CODELCO. Any such note shall be replaced by the trustee in compliance with such procedures, and on such terms as to evidence and indemnification, as the trustee or CODELCO may require and subject to any applicable law or regulation. All such costs as may be incurred in connection with the replacement of any notes shall be borne by the applicant. Mutilated notes must be surrendered before new ones will be issued.
Modification of the Indenture
CODELCO and the trustee may, without the consent of the holders of notes, amend, walve or supplement the indenture or the notes for certain specified purposes, including among other things: (1) to evidence CODELCO’s succession by another corporation, and the assumption by such party of CODELCOs obligations; (11) to add to CODELCO”s covenants or surrender any of its rights or powers for the benefit of all or any series of notes; (111) to cure any ambiguity, defect or inconsistency in the indenture; (1v) to provide for the issuance of any new series of securities, andor add to the rights of any holders of any series of notes; (v) to provide for the appointment of a successor trustee; (v1) to add any additional Events of Default for the benefit of any or all series; (v11) to provide for the issuance of securities in bearer form; and (vi11) to make any other change to the indenture as shall not adversely affect the interests of any holder of the notes.
In addition, with certain exceptions, the indenture and the notes may be modified by CODELCO and the trustee with the consent of the holders of a majority in aggregate principal amount of the notes of the series affected thereby then outstanding, but no such modification may be made without the consent of the holder of each outstanding note affected by the modification which would:
(1) change the maturity of any principal of, or any premium on, or any installment of interest on, any note, or reduce the principal amount thereof or the rate of interest or any premium (or Additional Amounts, 1f any) payable thereon, or change the method of computing the amount of principal thereof or interest or premium (or Additional Amounts, 1f any) payable thereon on any date, or change any place of payment where, or the coin or currency in which, the principal or interest (including Additional Amounts) on any note are payable, or impair the right of holders to institute suit for the enforcement of any such payment on or after the date when due;
(11) reduce the percentage in aggregate principal amount of outstanding notes of such series, where the consent of holders is required for any such modification or for any walver of compliance with certain provisions of the indenture or certain defaults thereunder and their consequences provided for in the indenture; or
(111) modify provisions relating to waiver of certain defaults, walver of certain covenants and the provisions summarized in this paragraph, including provisions governing the amendment of the indenture, except to increase any such percentage or to provide that certain other provisions of the indenture cannot be modified or waived without the consent of the holder of each outstanding note affected by the modification.
The indenture provides that the notes owned by CODELCO or any of its affiliates shall be deemed not to be outstanding for, among other purposes, consent to any such modification.
Defeasance and Covenant Defeasance
With respect to each series of notes, CODELCO, at its option, at any time upon the satisfaction of certain conditions described below, may elect to be discharged from its obligations with respect to the notes. In general, upon a defeasance, CODELCO shall be deemed to have paid and discharged the entire indebtedness represented by the applicable notes and to have satisfied all of 1ts obligations under such notes, except for: (1) the rights of holders of notes to receive, solely from the trust fund established for such purposes, payments in respect of the principal of,
129 and interest, and Additional Amounts, 1f any, on the notes when such payments are due; (11) certain provisions relating to ownership, registration and transfer of the notes; (111) the covenant relating to the maintenance of an office or agency in New York City, and (1v) certain provisions relating to the rights, powers, trusts, duties and immunities of the trustee.
In addition, CODELCO, at its option, at any time, upon the satisfaction of certain conditions described below, may discharge its obligation to comply with the covenants specified above under -Consolidation, Merger, Conveyance, Sale or Lease, –Limitation on Liens and -Limitation on Sale-and-Lease-Back Transactions. In order to cause a defeasance or covenant defeasance with respect to the notes, CODELCO will be required to (1) deposit funds or obligations issued by the United States in an amount sufficient to provide for the timely payment of principal, interest and all other amounts due under the notes with the trustee, and (11) satisfy certain other conditions, including delivery to the trustee of an opinion of independent tax counsel of recognized standing to the effect that beneficial owners of notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case 1f such deposit and defeasance had not occurred.
Such opinion of counsel in the case of defeasance must refer to and be based upon a ruling of the U.S. Internal Revenue Service (IRS) or a change in applicable U.S. federal income tax law occurring after the date of the indenture.
Governing Law; Submission to Jurisdiction; Sovereign Immunity
The indenture provides that 1t and the notes will be governed by, and will be construed and interpreted in accordance with, the law of the State of New York. The indenture provides that CODELCO will maintain at all times during the life of the notes an office or agent in the Borough of Manhattan, The City of New York, upon whom process may be served in any action arising out of or based on the notes which may be instituted in the Supreme Court of the State of New York or the United States District Court for the Southern District of New York, in either case in the Borough of Manhattan, The City of New York, by any holder of a note, and CODELCO will expressly accept the jurisdiction of any such court.
To the extent that CODELCO may be entitled, in any jurisdiction in which judicial proceedings may at any time be commenced with respect to the notes, to claim for itself or 1ts revenues or assets any immunity from suit, jurisdiction, attachment in aid or execution of a judgment or prior to a judgment, execution of a judgment or any other legal process with respect to 1ts obligations under the notes, and to the extent that in any such jurisdiction there may be attributed to CODELCO such an immunity (whether or not claimed), CODELCO will irrevocably agree not to claim and will irrevocably wave such immunity to the maximum extent permitted by law.
Article 226 of the Mining Code of Chile prohibits the attachment and judicial sale of a debtors mining concessions and installations and other goods permanently dedicated to exploration or extraction of minerals relating to those mining concessions, except with respect to mortgages. However, a debtor may consent to such attachment and sale, provided that the consent 1s given in the same judicial proceeding in which the attachment and sale is sought. The general waiver of immunity by CODELCO in the notes will not be effective with respect to immunity under Article 226. In addition, pursuant to the Constitution, mining concessions corresponding to mining deposits exploited by CODELCO upon its creation in 1976 may not be subject to attachment or to any act of disposition by CODELCO.
Further Issues of Notes
With respect to each series of notes, without the consent of the holders, CODELCO may create and issue additional notes with terms and conditions that are the same (or the same except as to scheduled interest payments prior to the time of issue of the additional notes) as the terms and conditions of such series of notes. CODELCO may consolidate the additional notes to form a single series with such notes; provided, however, that unless such additional notes are issued under a separate CUSIP number, such additional notes must be part of the same issue as the outstanding series of notes for U.S. federal income tax purposes, issued pursuant to a qualified reopening of the outstanding series of notes for U.S. federal income tax purposes, or issued with less than a de minimis amount of original issue discount.
130 TAXATION General
The following is a summary of certain Chilean tax and U.S. federal income tax considerations (and certain EU-related tax consequences) relating to the purchase, ownership and disposition of notes. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase the notes, and, except to the extent certain EU-related tax consequences are described below, 1t does not describe any tax consequences arising under the laws of any national, state, or local taxing jurisdiction other than the United States and Chile.
This summary is based on the tax laws of Chile and the United States as in effect on the date of this offering memorandum, as well as regulations, rulings and decisions of Chile and the United States available on or before such date and now in effect, and the provisions of the Treaty (as defined below). All of the foregoing 1s subject to change, which may apply retroactively and could affect the continued validity of this summary.
Prospective purchasers of the notes should consult their own tax advisors as to the Chilean, United States or other tax consequences of the purchase, ownership and disposition of the notes, taking into account the application of the tax considerations discussed below to their particular situation, as well as the application of state, local, foreign or other tax laws.
Chilean Taxation
The following is a general summary of the material consequences under Chilean tax law, as currently in effect, of an investment in the notes made by a Foreign Holder.
On December 19, 2023, the Treaty to Avoid Double Taxation signed between Chile and the United States in 2010 (modified by two reservations in June 2023 by the U.S. Senate) (the Treaty), came into force, after the United States notified Chile of the completion of the approval procedure. The Treaty should not provide a more beneficial tax treatment on withholding taxes than the established Chilean domestic law regarding interest payments made under the notes to foreign holders.
For purposes of this summary, the term Foreign Holder means (1) an individual not resident or domiciled in Chile or (11) a legal entity that 1s not incorporated under the laws of Chile, unless the notes are acquired by or assigned to a branch, agent, representative or a permanent establishment of such entity in Chile. For purposes of Chilean taxation, (a) an individual 1s a resident of Chile if such individual has remained in Chile, uninterruptedly or not, for a period or periods that in total exceed 183 days within a twelve-month period, and (b) an individual is domiciled in Chile if such individual resides in Chile with the actual or presumptive intention of remaining in Chile notwithstanding the time resided in Chile (the intention will be determined according to factual circumstances such as the acceptance of a long-term employment within Chile or the relocation of ones family to Chile, or 1f heshe has a principal place of business in Chile).
Under Chiles Income Tax Law, payments of interest or premium, if any, in respect of the notes to a Foreign Holder will generally be subject to a Chilean withholding tax assessed at a rate of 35.0%. However, interest and premium (analogous to interest) from bonds or debentures issued in foreign or local currency by companies Incorporated in Chile (1.e., CODELCO) are subject to a reduced tax rate of 4.0% (the Chilean Interest Withholding Tax.
A Foreign Holder will not be subject to any Chilean taxes in respect of payments of principal made by CODELCO with respect to the notes.
As described above, CODELCO has agreed, subject to specific exceptions and limitations, to pay to the holders of notes Additional Amounts in respect of the Chilean Interest Withholding Tax in order that any interest or premium the Foreign Holder receives, net of the Chilean Interest Withholding Tax, equals the amount which would have been received by such Foreign Holder in the absence of such withholding. See Description of Notes-Payment of Additional Amounts.
131 The Income Tax Law provides that a Foreign Holder 1s subject to income tax on Chilean source income.
Chilean source income is defined by the Income Tax Law as income arising from goods located in Chile or activities performed in Chile, regardless of the domicile or residence of the taxpayer. Article 11 of the Income Tax Law also states that bonds and other private or public securities issued in Chile by taxpayers domiciled, resident or established in Chile, such as CODELCO, will be deemed to be located in Chile. Consequently, as the notes are issued outside of Chile, capital gains arising from the disposition of the notes would not be deemed as Chilean source income.
Therefore, any capital gains realized by a Foreign Holder on the sale or other disposition of the notes issued outside of Chile should not be subject to any Chilean taxes.
A Foreign Holder will not be liable for estate, gift, inheritance or similar taxes with respect to 1ts holdings unless the notes held by a Foreign Holder are either located in Chile at the time of such Foreign Holders death, or, 1f the notes are not located in Chile at the time of a Foreign Holders death, 1f such notes were purchased or acquired with funds obtained from Chilean sources.
As a general rule, the issuance of the notes is subject to stamp tax at a rate of 0.066% per month or fraction thereof elapsed between the issuance and the maturity of the notes, calculated over the principal amount of the notes, with a maximum 0.8% stamp tax over the principal amount, which will be payable by CODELCO. If the stamp tax 1s not paid when due, Chiles stamp tax law imposes penalties (fines, interests, and inflation adjustments), which will also be payable by CODELCO. In addition, until such tax (and any penalty) 1s paid, Chilean courts would not enforce any action brought with respect to the notes. We have agreed to pay promptly such tax when due.
U.S. Federal Income Taxation
This summary of U.S. federal income tax considerations deals with U.S. Holders (as defined below) that will hold notes as capital assets and whose functional currency is the U.S. dollar. It does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular investor?s decision to purchase notes and generally does not address the tax treatment of U.S. Holders that may be subject to special tax rules, such as certain banks, tax-exempt entities, partnerships (or entities classified as partnerships for U.S. federal Income tax purposes) or partners therein, insurance companies, regulated investment companies, dealers in securities or currencies, traders in securities electing to mark to market, U.S. expatriates, U.S. Holders holding the notes in connection with a trade or business conducted outside the United States, nonresident alien individuals present in the United States for 183 days or more during a taxable year, or persons that will hold notes as part of an integrated investment (including a straddle) consisting of the notes and one or more other positions. This discussion only addresses U.S. Holders of notes that acquire such notes as part of the initial distribution at their issue price, which will equal the first price to the public (not including bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers) at which a substantial amount of the notes 1s sold for money.
As used in this section –U.S. Federal Income Taxation, the term U.S. Holder means a beneficial owner of a note that is a citizen or resident of the United States or a U.S. domestic corporation or that otherwise will be subject to U.S. federal income taxation on a net income basis in respect of the notes.
This summary 1s based on the U.S. Internal Revenue Code of 1986 (the Code, as amended to the date hereof, administrative pronouncements, judicial decisions, and final, temporary and proposed Treasury Regulations, changes to any of which subsequent to the date of this offering memorandum may affect the tax consequences described herein. Moreover, as described above, the Treaty may also affect the tax consequences described herein.
Investors should consult their own tax advisors in determining the tax consequences to them of purchasing, owning, and disposing of the notes, including the application in their particular circumstances of the U.S. federal income tax considerations discussed below, as well as the application of state, local, non-U.S. or other tax laws, the alternative minimum tax or the Medicare tax on net investment income or the special timing rules prescribed under section
451(b) of the Code and possible changes in tax laws.
Payments of Interest and Additional Amounts.
The gross amount of stated interest and Additional Amounts (1.e., without reduction for Chilean taxes withheld) will be taxable to a U.S. Holder as ordinary interest income at the time it accrues or is actually or constructively received in accordance with the holders method of accounting for U.S. federal income tax purposes.
132 It is expected, and this discussion assumes, that the notes will be issued without original issue discount (OID) for
U.S. federal income tax purposes. In general, however, 1f the notes are issued with OID at or above a de minimis threshold, a U.S. Holder will be required to include OID in gross income, as ordinary income, under a constant- yield method before the receipt of cash attributable to such income, regardless of the U.S. Holders regular method of accounting for U.S. federal income tax purposes.
Subject to generally applicable limitations and conditions, Chilean interest withholding tax paid at the appropriate rate applicable to the U.S. Holder may be eligible for credit against such U.S. Holder*s U.S. federal income tax liability. These generally applicable limitations and conditions include new requirements adopted by the IRS in regulations promulgated in December 2021 and any Chilean tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. Holder. In the case of a U.S. Holder that either (1) 1s eligible for, and properly elects, the benefits of the Treaty, or (11) consistently elects to apply a modified version of these rules under recently issued temporary guidance and complies with specific requirements set forth in such guidance, the Chilean tax on interest generally will be treated as meeting the new requirements and therefore as a creditable tax.
In the case of all other U.S. Holders, the application of these requirements to the Chilean tax on interest is uncertain and we have not determined whether these requirements have been met. Ifthe Chilean tax 1s not a creditable tax for a U.S. Holder or the U.S. Holder does not elect to claim a foreign tax credit for any foreign income taxes, the U.S.
Holder may be able to deduct the Chilean tax in computing the U.S. Holders taxable income for U.S. federal income tax purposes, subject to applicable limitations and requirements. Interest and Additional Amounts will constitute income from sources without the United States and, for U.S. Holders that validly claim foreign tax credits generally will constitute passive category income for foreign tax credit purposes.
The availability and calculation of foreign tax credits and deductions for foreign taxes may depend on a
U.S. Holders particular circumstances and involve the application of complex rules to those circumstances. The temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws the temporary guidance. U.S. Holders should consult their own tax advisors regarding the application of these rules to their particular situations.
Taxation of Dispositions. A U.S. Holder will generally recognize taxable gain or loss upon the sale, exchange, redemption or other taxable disposition of the notes in an amount equal to the difference between the amount realized upon such sale, exchange, redemption or other disposition (less any accrued interest and, in the case of a redemption, any Additional Amounts with respect to accrued interest, which will be taxable in the manner described above under –Taxation of Interest and Additional Amounts) and such U.S. Holders adjusted tax basis in those notes. A U.S. Holders adjusted tax basis in a note will generally equal the cost of the note to such Holder reduced by any amortizable bond premium previously amortized and increased by amounts includible in income by the holder as market discount. Subject to the market discount rules discussed below, such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the notes are held for more than one year. Certain non- corporate U.S. Holders (including individuals) may be eligible for a preferential rate in respect of long-term capital gain. The deduction of capital losses 1s subject to limitations.
Specified Foreign Financial Asset Reporting. Certain U.S. Holders that own specified foreign financial assets with an aggregate value in excess of U.S.$50,000 on the last day of the taxable year or U.S.$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. Specified foreign financial assets include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which would include the notes) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the notes in their particular circumstances.
Information Reporting and Backup Withholding. Payments of interest and Additional Amounts on the notes and sales or redemption proceeds that are made within the United States or through certain U.S.-related financial
133 intermediaries generally are subject to information reporting and to backup withholding unless the holder is an exempt recipient that, 1f required, establishes 1ts exemption or (11) in the case of backup withholding, the holder provides a correct taxpayer identification number and certifies that 1t is not subject to backup withholding.
Any amounts withheld under the backup withholding rules from a payment to a holder generally will be refunded (or credited against such holder?s U.S. federal income tax liability, 1f any), provided the required information 1s properly furnished to the IRS on a timely basis.
The Proposed European Financial Transaction Tax
On February 14, 2013, the European Commission published a proposal for a directive for a common financial transaction tax (the FTT) in Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain (the Participating Member States). Political consensus on a final directive for the FTT has not yet been achieved. Additional EU Member States may decide to participate andor certain of the Participating Member States (in addition to Estonia which meanwhile withdrew) may decide to withdraw.
Whether the FTT will ultimately be implemented and, 1f so, in what form, as well as the transactions that may be covered by it, is uncertain at this stage. If enacted, the FTT could apply under certain circumstances to transactions involving the notes. The mechanism by which the FTT would be applied and collected 1s not yet known, but ifthe FTT or any similar tax 1s adopted, transactions in the notes could be subject to higher costs, and the liquidity of the market for the notes may be diminished.
Prospective holders of the notes are advised to seek their own professional advice in relation to the consequences of the FTT that could be associated with subscribing for, purchasing, holding and disposing of the notes.
134 PLAN OF DISTRIBUTION
Subject to the terms and conditions of the purchase agreement among CODELCO, BOofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, and Santander US Capital Markets LLC, the initial purchasers have severally, and not jointly, agreed to purchase from the Company the following respective principal amounts of notes listed opposite their name below at the initial offering prices set forth on the cover page of this offering memorandum, less commissions:
Principal Amount of Principal Amount of Initial Purchasers 2035 notes 2055 notes BofA Securities, Inc. U.S.$ U.S.$ Citigroup Global Markets Inc. U.S.$ U.S.$
J.P. Morgan Securities LLC U.S.$ U.S.$ Santander US Capital Markets LLC U.S.$ U.S.$ Total U.S.S$ U.S.S$
The purchase agreement provides that the obligations of the several initial purchasers to purchase the notes offered hereby are subject to certain conditions precedent and that the initial purchasers will purchase all of the notes offered by this offering memorandum if any of these notes are purchased. The initial purchasers may use any of their affiliates to offer and sell any of the notes. The initial purchasers are offering the notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the notes, and other conditions contained in the purchase agreement, such as the receipt by the initial purchasers of officer?s certificates and legal opinions. The initial purchasers reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
After the initial offering, the initial purchasers may change the offering price and other selling terms.
CODELCO has agreed to indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the initial purchasers may be required to make in respect of any of these liabilities.
The notes have not been registered under the Securities Act. Each initial purchaser has agreed that 1t will offer or sell the notes only (1) in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act or (11) in offshore transactions in reliance on Regulation S under the Securities Act. The notes being offered and sold pursuant to Regulation S may not be offered, sold or delivered in the United States or to, or for the account or benefit of, any U.S. person, unless the notes are registered under the Securities Act or an exemption from, the registration requirements thereof 1s available. Resales of the notes are restricted as described under Transfer Restrictions.
Until forty (40) days after the later of the commencement of the offering and the closing date, any offer or sale of notes within the United States by a broker-dealer (whether or not participating in this offering) may violate the registration requirements of the Securities Act, unless such offer or sale 1s made pursuant to Rule 144A under the Securities Act or another available exemption from the registration requirements thereof. Terms used above have the meanings given to them by Regulation S and Rule 144A under the Securities Act.
CODELCO has agreed, that for a period of 30 days from the date of the purchase agreement, CODELCO will not, without prior consent of the initial purchasers, offer, sell or contract to sell, or otherwise dispose of (or enter into any transaction which 1s designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by CODELCO or any affiliate of CODELCO or any person in privity with CODELCO or any of its affiliates), directly or indirectly, or announce any public or broadly marketed offering of, any U.S. dollar-denominated debt securities issued or guaranteed by CODELCO in the international capital markets (other than the notes).
Each series of notes are a new 1ssue of securities without an established trading market. We intend to apply to list both series of notes on the Official List of the Luxembourg Stock Exchange; however, neither series of notes 135 have been listed yet. Both series of notes are expected to trade on the Euro MTF market of the Luxembourg Stock Exchange. See General Information-Listing. The initial purchasers may make a market in the notes after completion of the offering, but will not be obligated to do so and may discontinue any market-making activities at any time without notice. No assurance can be given as to the liquidity of the trading market for the notes or that an active market for the notes will develop. Ifan active public trading market for the notes does not develop, the market price and liquidity of the notes may be adversely affected. If notes of a series are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our operating performance and financial condition, general economic conditions and other factors.
In connection with the offering of each series of notes, the initial purchasers may engage in overallotment, stabilizing transactions and syndicate covering transactions. Overallotment involves sales in excess of the offering size, which creates a short position for the initial purchasers. Stabilizing transactions involve bids to purchase the notes in the open market for the purpose of pegging, fixing or maintaining the price of the notes. Syndicate covering transactions involve purchases of the notes in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions and syndicate covering transactions may cause the price of the notes to be higher than 1t would otherwise be in the absence of those transactions. If the initial purchasers engage in stabilizing or syndicate covering transactions, they may discontinue them at any time without notice.
The initial purchasers and their affiliates have performed and may in the future perform certain commercial banking, investment banking or advisory services for us from time to time for which they have received customary fees and expenses. The initial purchasers may, from time to time, continue to engage in transactions with and perform services for us in the ordinary course of their business.
In addition, in the ordinary course of their business activities, the initial purchasers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities andor instruments of ours or our affiliates. Certain of the initial purchasers or their affiliates that have a lending relationship with us routinely hedge, and certain other of those initial purchasers or their affiliates that have a lending relationship with us may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, such initial purchasers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the notes offered hereby. Any such short positions could adversely affect future trading prices of the notes offered hereby.
The initial purchasers and their affiliates may also make investment recommendations andor publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to customer that they acquire, long andor short positions in such securities and instruments.
Delivery of the notes is expected on or about January 13, 2025, which will be the third business day following the date of pricing of the notes (this settlement cycle being referred to as T+3). Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally are required to settle in one business day, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes prior to the business day prior to delivery of the notes hereunder will be required, by virtue of the fact that the notes initially may settle in T+3, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement.
Purchasers of the notes who wish to trade notes prior to the business day before their date of delivery hereunder should consult their own advisor.
Notice to Prospective Investors in the European Economic Area (EEA)
The notes are not intended to be offered, sold or otherwise made available to and will not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who 1s one (or more) of:
(1) a retail client as defined in point (11) of Article 4(1) of MIFID IT;
(11) a customer within the meaning of the Insurance Distribution Directive, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or
136
(111) not a qualified investor as defined in the Prospectus Regulation.
Consequently, no key information document required by Regulation (EU) No 12862014 (as amended, the PRIIPs Regulation) for offering or selling the notes or otherwise making them available to retail investors in the EEA, has been prepared and therefore offering or selling the notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
Notice to Prospective Investors in the United Kingdom
The notes are not intended to be offered, sold or otherwise made available to and will not be offered, sold or otherwise made available to any retail investor in the UK. For these purposes, a retail investor means a person who 1s one (or more) of:
(1) A retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017565 as 1t forms part of domestic law by virtue of the EUWA; or
(11) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the FSMA) and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 6002014 as it forms part of domestic law by virtue of the EUWA,; or
(111) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms a part of UK domestic law by virtue of the EUWA.
Consequently, no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue ofthe EUWA (the UK PRIIPs Regulation) for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.
This offering memorandum is for distribution only to and is directed only at (1) persons who are outside the United Kingdom or (11) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (111) high net worth companies and other persons to whom 1t may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). The notes are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such notes will be engaged in only with relevant persons. Any person who 1s not a relevant person should not act or rely on this document or any of 1ts contents.
Notice to Prospective Investors in Canada
The notes may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages 1f this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchasers province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchasers province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the initial purchasers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
137 Notice to Prospective Investors in Brazil
The offer and sale of the notes have not been and will not be registered with the Brazilian Securities Commission (comissáo de valores mobiliarios, or CVM) and, therefore, will not be carried out by any means that would constitute a public offering in Brazil under CVM Resolution No 160, dated 13 July 2022, as amended (CVM Resolution 160) or unauthorized distribution under Brazilian laws and regulations. The notes will be authorized for trading on organized non-Brazilian securities markets and may only be offered to Brazilian professional investors (as defined by applicable CVM regulation), who may only acquire the notes through a non-Brazilian account, with settlement outside Brazil in non-Brazilian currency. The trading of the notes on regulated securities markets in Brazil 1s prohibited.
Notice to Prospective Investors in Hong Kong
The notes may not be offered or sold in Hong Kong by means of any document other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the SFO) and any rules made under the SFO Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that ordinance; and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which 1s directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except 1f permitted to do so under the securities laws of Hong Kong) other than with respect to the notes which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the SFO and any rules made under that ordinance.
Notice to Prospective Investors in Italy
The offer of the notes has not been registered with the Commissione Nazionale per le Societa e la Borsa (Italian Securities and Exchange Commission, or the CONSOB) pursuant to Italian securities legislation and, accordingly, the notes may not be offered, sold or distributed to the public in the Republic of Italy (Italy) nor may copies of this offering memorandum or of any other document relating to the notes be distributed in Italy, except:
(1) to investitori qualificati (qualified investors), as defined in Article 2, paragraph (e) of the Prospectus Regulation as implemented by Article 34-ter of CONSOB Regulation No.11971 of May 14, 1999, as amended from time to time, (the Issuers Regulation); or
(11) in any other circumstances where an express exemption from compliance with the restrictions on offers to the public applies, as provided under Article 100 of the Italian Legislative Decree No.58 of February 24, 1998, as amended from time to time, (the Financial Services Act) and Article
34-ter of the Issuers Regulation.
Moreover, and subject to the foregoing, any offer, sale or delivery of the notes or distribution of copies of this offering memorandum or any other document relating to the notes in Italy under (1) or (11) above must be:
(1) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007, as amended from time to time, and Legislative Decree No. 385 of September 1, 1993, as amended from time to time (the Banking Act;
(11) in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to which the Bank of Italy may request information on the issue or the offer of securities in Italy; and
(111) in compliance with any other applicable laws and regulations or requirement imposed by the Bank of Italy, CONSOB or other Italian authority.
138 Any Investor purchasing the notes in this offering 1s solely responsible for ensuring that any offer or resale of the notes 1t purchased in the offering occurs in compliance with applicable Italian laws and regulations.
Notice to Prospective Investors in Japan
The notes have not been and will not be registered under the Financial Instruments and Exchange Act, and the notes have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan, except as pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan.
Notice to Prospective Investors in Singapore
This offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, of such notes, whether directly or indirectly, to persons in Singapore other than (1) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (11) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or
(111) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the notes are subseribed or purchased under Section 275 of the SFA by a relevant person which is:
(1) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which 1s owned by one or more individuals, each of whom is an accredited investor; or
(11) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA, except:
(1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), or to any person arising from an offer referred to in Section 275(1A), or Section 276(41(1(B) of the SFA;
(11) where no consideration is or will be given for the transfer;
(111) where the transfer is by operation of law; (1v) as specified in Section 276(7) of the SFA; or (v) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.
Notification under Section 309(B)(1)(c) of the SFA. The Company has determined that the Securities are (A) prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and (B) Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
Notice to Prospective Investors in Switzerland
The notes may not be publicly offered, directly or indirectly, in Switzerland within the meaning of the
139 Swiss Financial Services Act (FinSA) and no application has or will be made to admit the notes to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither this document nor any other offering or marketing material relating to the notes, constitutes or will constitute a prospectus pursuant to the FinSA, and neither this document nor any other offering or marketing material relating to the notes may be publicly distributed or otherwise made publicly available in Switzerland.
Notice to Prospective Investors in Chile
The notes may not be offered or sold in Chile, directly or indirectly, by means of a Public Offer (as defined under Law No. 18,045 and regulations from the CMF). Chilean institutional investors (such as banks, pension funds and insurance companies) are required to comply with specific restrictions relating to the purchase of the notes. Pursuant to Chilean law, a public offering of securities 1s an offering that is addressed to the general public or to certain specific categories or groups thereof. Considering that the definition of public offering 1s quite broad, even an offering addressed to a small group of investors may be considered to be addressed to a certain specific category or group of the public and therefore be considered public under applicable law. On June 27, 2012, the CMF issued Norma de Carácter General No. 336 (General Rule No. 336, hereinafter NCG 336), which 1s intended to govern the private offering of securities in Chile. NCG 336 provides that the offering of securities that meet the conditions described therein shall not be considered public offerings in Chile and shall be exempted from complying with the general rules applicable to public offerings.
The following information is provided to prospective investors pursuant to NCG 336:
l. Date of commencement of the offer: January 8, 2025. The offer of the notes is subject to CMF rule (norma de carácter general) No. 336, dated June 27, 2012, as amended, issued by the CMF.
2. The subject matter of this offer are securities not registered with the securities registry (registro de valores) or the foreign securities registry (registro de valores extranjeros) kept by the CMF. As a consequence, the notes are not subject to the oversight of the CMF.
3. Since the notes are not registered in Chile, the issuer 1s not obliged to provide public information about the notes in Chile.
4. The notes shall not be subject to public offering in Chile unless registered with the relevant securities registry kept by the CMF.
Notice to Prospective Investors in China
The notes are not being offered or sold and may not be offered or sold, directly or indirectly, in the Peoples Republic of China (the PRC) (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted by the securities laws of the PRC.
Notice to Prospective Investors in the Dubai International Financial Centre
This offering memorandum relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority (DFSA). This offering memorandum is intended for distribution only to persons of a type specified in the Markets Rules 2012 of the DFSA. It must not be delivered to, or relied on by, any other person.
The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this offering memorandum nor taken steps to verify the information set forth herein and has no responsibility for this offering memorandum. The notes to which this offering memorandum relates may be 1lliquid andor subject to restrictions on their resale. Prospective purchasers of the notes offered should conduct their own due diligence on the notes. If you do not understand the contents of this offering memorandum, you should consult an authorized financial advisor.
Notice to Prospective Investors in Taiwan
The notes have not been and will not be registered with the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and the notes may not be sold, issued or offered within Tarwan through a public offering or in a circumstance which constitutes an offer within the meaning of the Securities and
140 Exchange Act of Taiwan requiring registration or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate the offering and sale of the notes in Taiwan.
Notice to Prospective Investors in the Republic of Korea
The notes have not been and will not be offered, delivered or sold directly or indirectly in Korea or to any resident of Korea except as otherwise permitted under applicable Korean laws and regulations.
141 TRANSFER RESTRICTIONS
The notes have not been and will not be registered under the Securities Act or with any securities regulatory authority in any jurisdiction and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons except that notes may be offered or sold to (1) Qualified Institutional Buyers (QIBs) in reliance upon the exemption from the registration requirement of the Securities Act provided by Rule 144A and (11) persons other than U.S. persons as such term is defined in Regulation S under the Securities Act (Foreign Purchasers) in offshore transactions in reliance upon Regulation $.
(1)
(11) (iii) (1v) (v) (vi)
Each purchaser of the notes that is not a Foreign Purchaser will be deemed to: represent that 1t is purchasing the notes for its own account or an account with respect to which it exercises sole investment discretion and that 1t and any such account is a QIB and is aware that the sale to 1t is being made in reliance on Rule 144A; acknowledge that the notes have not been and will not be registered under the Securities Act or with any securities regulatory authority in any jurisdiction and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below; agree that 1f 1t should resell or otherwise transfer the securities, 1t will do so only pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, in each case in accordance with all applicable securities laws of the states of the United States or any other applicable jurisdiction; agree that 1t will deliver to each person to whom it transfers notes notice of any restrictions on transfer of such notes; agree that 1t 1s not an affiliate (within the meaning of Rule 144 under the Securities Act) of the Bank; and acknowledge that CODELCO, the trustee, the initial purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements. If it is acquiring any notes for the account of one or more QIBs, 1t represents that 1t has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account. If any of the acknowledgements, representations or agreements 1t 1s deemed to have been made by the purchase of notes is no longer accurate, 1t will promptly notify CODELCO and the initial purchasers.
Each 144A Global Note will bear the following legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR ANY STATE SECURITIES LAW. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MA Y BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (RULE 144A)) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT OR (B) IT IS A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)4)G) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTES EVIDENCED HEREBY UNDER RULE 144(d) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER SUCH NOTES EXCEPT IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
142 THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND ONLY (A) TO THE ISSUER OR A SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE SELLER REASONABLY BELTEVES IS A QUALTFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALITFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION (IF APPLICABLE). PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (E) ABOVE, THE COMPANY RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THIS NOTE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. THIS LEGEND WILL BE REMOVED ONLY AT THE OPTION OF THE ISSUER.
Each purchaser of notes that is a Foreign Purchaser will be deemed to:
(1) represent that 1t is purchasing the notes for 1ts own account or an account for which 1t exercises sole investment discretion and that 1t and any such account is a Foreign Purchaser that is outside the United States and acknowledge that the notes have not been and will not be registered under the Securities Act or with any securities regulatory authority in any jurisdiction and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below; and
(11) agree that 1f 1t should resell or otherwise transfer the notes prior to the expiration of a restricted period (defined as 40 days after the later ofthe commencement of the offering and the closing date with respect to the notes), 1t will do so only (aX(1) outside the United States in compliance with Rule 904 under the Securities Act or (2) to a QIB in compliance with Rule 144A, and (b) in accordance with all applicable securities laws of the states of the United States or any other applicable jurisdiction.
Each Regulation S Global Note will bear the following legend:
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES REGULATORY AGENCY IN ANY JURISDICTION, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS SECURITY IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. PRIOR TO THE EXPIRATION OF A 40-DAY RESTRICTED PERIOD OR SUCH LATER DATE AS THE COMPANY MAY NOTIFY TO THE TRUSTEE, THIS SECURITY, OR ANY BENEFICIAL INTEREST HEREIN, MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED EXCEPT (A)J(1) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (2) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN COMPLIANCE WITH RULE 144A, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION.
The transfer or exchange of a beneficial interest in a Regulation S Global Note for a beneficial interest in a corresponding 144A Global Note prior to the expiration of the restricted period will be made only in accordance
143 with applicable procedures upon receipt by the trustee of a duly completed certificate from the transferor to the effect that such transfer is being made in accordance with Rule 144A under the Securities Act. Such written certification will no longer be required after the expiration of the restricted period. The transfer or exchange of a beneficial interests in a Rule 144A Global Note for a corresponding beneficial interest in a Regulation S Global Note, whether before or after the expiration of the restricted period, will be made only upon receipt by the trustee of a written certification from the transferor to the effect that such transfer is being made in accordance with Regulation S under the Securities Act.
For so long as the notes are listed on the Luxembourg Stock Exchange, 1f the notes are ever issued in certificated form: . Certificated Notes will be delivered by the trustee as described in this offering memorandum and at the offices of the paying agent; and . holders of notes in certificated form will be able to transfer or exchange their notes at the offices of the transfer agent.
Any resale or other transfer, or attempted resale of other transfer, made other than in compliance with the above stated restrictions shall not be recognized by us.
For further discussion of the requirements (including the presentation of transfer certificates) under the indenture to effect exchanges or transfers of interests in Global Notes, see Description of Notes-Registration, Form and Delivery-Certain Book-Entry Procedures for the Global Notes.
We have prepared this offering memorandum solely for use in connection with the offer and sale of the notes outside the United States, for the private placement of the notes in the United States and for the listing on the Luxembourg Stock Exchange. We and the initial purchasers reserve the right to reject any offer to purchase, in whole or in part, for any reason, or to sell less than the amount of notes offered pursuant to Rule 144A under the Securities Act. This offering memorandum does not constitute an offer to any person in the United States other than any QIB under the Securities Act to whom an offer has been made directly by the initial purchasers or an affiliate of the initial purchasers.
Each purchaser of notes must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, offers or sells notes or possesses or distributes this offering memorandum or any part of it and must obtain any consent, approval or permission required by it for the purchase, offer or sale by 1t of notes under the laws and regulations in force in any jurisdiction to which it 1s subject or in which 1t makes such purchases, offers or resales, and neither the Company nor the initial purchasers shall have any responsibility therefor.
144 VALIDITY OF THE NOTES
The validity of the notes will be passed upon for CODELCO by Cleary Gottlieb Steen £ Hamilton LLP, New York, New York, United States counsel for CODELCO, and by Carey y Cía. Ltda., Chilean counsel to CODELCO, and for the initial purchasers by Allen Overy Shearman Sterling US LLP, special New York, New York, United States counsel for the initial purchasers, and by Garrigues Chile Limitada, special Chilean counsel for the initial purchasers. Cleary Gottlieb Steen 8 Hamilton LLP may rely without independent investigation as to all matters of Chilean law on Carey y Cía. Ltda., and Allen Overy Shearman Sterling US LLP may rely without independent investigation as to all matters of Chilean law on Garrigues Chile Limitada.
145 INDEPENDENT AUDITORS
The financial statements of CODELCO and its subsidiaries as of and for the years ended December 31, 2023 and 2022, and as of and for the years ended December 31, 2022 and 2021, included in this offering memorandum, have been audited by PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada, independent auditors, as stated in their report appearing herein.
146 GLOSSARY OF CERTAIN MINING TERMS
Andesite: A fine-grained volcanic rock, usually dark grey in color, with an average composition of
50.0-60.0% sulphur dioxide.
Anode Copper: Blister copper that has undergone further refinement to remove impurities. In an anode furnace, the blister copper 1s blown with air and a hydrocarbon redundant to upgrade its purity to approximately 99.5% copper.
It is then cast into keystone-shaped slabs that are shipped to an electrolytic refinery.
Anodic Slime: Á product with a high content of precious metals that settles on the bottom of an electrolytic cell in the copper refinery during the production of copper cathodes. The product is called anode, or anodic, slime due to 1ts muddy appearance. Anode slimes have a high commercial value based on their precious metals content (silver, gold, platinum and palladium).
Blister Copper: Copper that has been cast after passing through a converter. Blister copper is approximately 99.0% copper and takes its name from the blisters that form on the surface during cooling.
Breccia: A rock conglomerate made up of highly angular coarse fragments.
Calcopyrite: A combination of copper and iron sulfide with a metallic yellow-gold color, containing 34.7% copper,
30.0% iron and 26.0% sulfur.
Cathode: Copper produced by an electrochemical refining process that has been melted and cast into cakes, billets, wire bars or rods usually weighing approximately 90kg.
Concentration: The process by which crushed and ground ore is separated into metal concentrates and reject material through processes such as flotation. Concentrates are shipped to a smelter for further processing.
Concentrator: A plant where concentration takes place.
Converter: A plant that conducts a principal phase of the smelting process, blowing oxygen-enriched air through, molten metal, causing oxidation and the removal of sulfur and other impurities. In the case of copper, the product of this process 1s blister copper.
Copper Concentrate: A product of the concentrator usually containing 25.0% to 30.0% copper. It is the raw feed material for smelting.
Copper Grade: The concentration of copper in a given volume of rock, usually expressed as a percentage.
Dacite: A fine-grained volcanic rock similar in composition to andesite but containing a greater abundance of quartz crystals that are frequently visible to the naked eye.
Development: Activities related to the building of infrastructure and the stripping and opening of mineral deposits, commencing when economically recoverable reserves can reasonably be estimated to exist and generally continuing until commercial production begins.
Diorite: A dark, coarsely crystalline igneous rock, similar in composition to granite that is composed principally of silica, alumina, calcium and iron.
Electrolytic Refining: Electrochemical refining of copper anodes. Copper anodes are placed between layers of refined copper sheets in a tank through which an acid copper sulfate solution is circulated. A low voltage current is introduced, causing the transfer of copper from the anodes to the pure copper sheets, and producing 99.98% copper cathodes. Impurities, often containing precious metals, settle to the bottom of the tank.
Electrowinning: The process of directly recovering copper from solution by the action of electric currents.
147 Exploration: Activities associated with ascertaining the existence, location, extent or quality of a mineral deposit.
Fine Copper: 99.99% pure copper obtained through metallurgical processes.
Flotation: Á process of copper concentrate production in which mineral particles attach themselves to the bubbles in an oily froth and rise to the surface, where they are skimmed off. This process is used primarily for the concentration of sulfide ores.
Flux: A high grade silica, which reacts with iron oxides formed during smelting and converting stages to create a molten slag.
Geological Resources (measured, indicated and inferred): Concentrations or occurrences of materials in such form, quantity (tonnage and ore grade) and quality, based on specific geological evidence and knowledge, which allows for the calculation of the amount, ore grade and quality of the material with some level of confidence.
Grade A Copper: Electrolytic copper, in the form of cathodes, that (1) 1s at least 99.99% pure, (11) meets the LMEs highest standards for copper quality, and (111) 1s named in the LME-approved list of brands of Grade A copper.
Indicated Resources (geological or mineral resources): Resources about which CODELCOs knowledge is substantial but less extensive than 1ts knowledge of measured resources.
Inferred Resources (geological or mineral resources): Resources about which CODELCOs knowledge is only indirect.
Intrusion: Á geologic processes in which magmatic material flows to the earth?s surface through pre-existing rocks.
Leached Capping: An abundant mass of iron oxide concentrated in the upper zones of a porphyry copper deposit.
Leaching: The process of extracting a soluble metallic compound from an ore by selectively dissolving it in a suitable solvent.
Matte: A high density liquid that is produced during the concentrate fusion stage of the pyro-metallurgical process.
Matte Sulfide: A high density liquid containing copper and iron sulfides that is produced of the concentrate fusion stage of the pyro-metallurgical process.
Measured Resources (geological or mineral resources): Resources about which CODELCOs knowledge 1s both extensive and direct.
Milling: A treatment process in which ore is ground into a fine powder.
Mine: Mines are the source of mineral -bearing material found near the surface or deep in the ground.
Mineral Deposit: A mineralized underground body that has been probed by a sufficient number of closely -spaced drill holes andor underground sampling measurements to support an estimate of sufficient tonnage and ore grade to warrant further exploration or development. Mineral deposits or mineralized materials do not qualify as commercially minable ore reserves (í.e., proved reserves or probable reserves), as prescribed under standards of the
U.S. Bureau of Mines Circular 831 0f£ 1980, until a final and comprehensive economic, technical, and legal feasibility study based upon the test results has been concluded.
Mineral Resources (measured, indicated and inferred): Geological resources about which CODELCO has achieved increased knowledge and which enable CODELCO to generate a long-term mining plan for the exploitation of such resources.
Mineralization: A deposit of rock containing one or more minerals for which the economics of recovery have not yet been established.
148 Molybdenum: A metallic element, grayish in color, that resembles chromium and tungsten in many properties, and 1s used especially in strengthening and hardening steel.
Ore: A mineral or aggregate of minerals from which metal can be economically mined or extracted.
Ore Grade: The average amount of metal expressed as a percentage or in ounces per metric ton.
Ore Deposit: Category including all geological resources, mineral resources and ore reserves.
Ore Reserves: The economically mineable part of a mineral resource.
Ounces: Unit of weight. A troy ounce equals 31,103 grams or 1.097 avoirdupois ounces.
Outokumpu Flash Furnace: Pyro-metallurgical technology used to smelt copper concentrate.
Overburden: The alluvium and rock that must be removed in order to expose an ore deposit.
Oxide Ore: Metalliferous minerals altered by weathering, surface waters, and their conversion, partly or wholly, into oxides, carbonates, or sulfates.
Pierce Smith Converter: Horizontal furnace to remove impurities from white metal by oxidation.
Porphyry: Rock with siliceous minerals and fine-medium grained size.
Porphyry-type Ore Body: Deposit of porphyric rocks with economic mineralization.
Probable Ore Reserves: Ore reserves about which CODELCOs knowledge is substantial but less extensive than 1ts knowledge of proved ore reserves.
Proved Ore Reserves: Ore reserves about which CODELCOs knowledge 1s both extensive and direct. Quantities of proved ore reserves are computed from dimensions revealed in outcrops, trenches, workings or drill holes, and grade and quality are computed from the results of detailed sampling. Sites for inspection, sampling and measurement of proved ore reserves are spaced so closely together, and the geologic character of the ore 1s so well defined, that 1ts size, shape, depth and mineral content are well established.
Reclamation: The process of restoring mined land to a condition established by applicable law. Reclamation standards vary widely, but usually address issues of ground and surface water, topsoil, final slope gradients, overburden and revegetation.
Refining: The purification of crude metallic substances.
Reverberatory Furnace: A furnace with a shallow hearth and a ceiling that reflects flames toward the hearth or radiates heat toward the surface of the charge.
Rod Mill: A large rotating cylinder in which metal rods are used for grinding ore.
Slag: A residue of the smelting process containing iron and other impurities, which the Company disposes of with 1ts other industrial solid waste.
Smelting: A pyro-metallurgical process in which metal is separated by fusion from those impurities with which it may be chemically combined or physically mixed.
Solvent Extraction: A method of separating one or more substances from a chemical solution by treatment with a suitable organic solvent.
149 Subvertical: Amount of waste material removed during mining per metric ton of ore extracted in a near-vertical spatial orientation.
Sulfide Ore: Ore characterized by the inclusion of metal in the crystal structure of a sulfide mineral.
Tabular: Having a near-rectangular geometric configuration close to a rectangular shape.
Tailings: Finely ground rock from which valuable minerals have been extracted by concentration.
Teniente Converter: A horizontal rotary furnace into which matte, concentrates and flux are placed, and through which oxygen-rich air is blown to provide sufficient heat to smelt the concentrates. Off-gases are captured and transported to the acid plant.
Teniente Modified Converter: An advanced pyro-metallurgical technology used to smelt copper concentrate.
Ton: A unit of weight. One metric ton equals 2,204.6 pounds. One short ton equals 2,000 pounds. Unless otherwise specified in this document, tons refers to metric tons.
Tourmaline: A dark-green hydrosilicate that exists in altered rock zones in some ore deposits.
150 GENERAL INFORMATION Authorization
The Ministry of Finance of Chile authorized CODELCO to commence negotiations to issue bonds abroad through Resolution (Oficio Ordinario) No. 1,713 dated November 13, 2024. The Ministry of Finance of Chile authorized the issuance of the notes by Resolution No. 2,029 dated December 30, 2024.
CODELCO*s Board of Directors authorized the issuance of the notes in 1ts ordinary session of November 28, 2024 by means of Reserved Agreement No. 492024. CODELCO has obtained all other consents and authorizations necessary under Chilean law for the issuance of the notes.
Litigation CODELCO is not involved in any litigation or arbitration proceeding which 1s material in the context of the issuance of the notes. CODELCO is not aware of any material litigation or arbitration proceeding that is pending or threatened.
Clearing
CODELCO has applied to have the notes accepted into DTCs book-entry settlement system. The notes have been accepted for clearance through the clearing systems of Euroclear System and Clearstream Banking, S.A.
The securities codes for the 2035 notes are:
CUSIP Number ISIN Number Rule 144A Global Note 21987B BL1 US21987BBL18 Regulation S Global Note P3143N BVS USP3143NBVS57 The securities codes for the 2055 notes are: CUSIP Number ISIN Number Rule 144A Global Note 21987B BM9 US21987BBM90 Regulation S Global Note P3143N BW3 USP3143NBW31
Listing
CODELCO has initially appointed The Bank of New York Mellon, as trustee, paying agent, transfer agent and registrar.
Copies of the indenture may be made available upon reasonable request during usual business hours on any weekday (excluding Saturday, Sundays and public holidays) at the offices of the trustee at 240 Greenwich Street, New York, New York 10286.
Financial Position
There has been no material adverse change in CODELCO”s financial position and prospects since the date of the last financial information included in the offering memorandum.
151 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page No.
Interim consolidated financial statements as of September 30, 2024 Interim consolidated statements of financial pOSItION……ccccccnnncoonnnccnnnnnnnnnnnonoccnnnnnnnnonononncccnnnnnns F-6 Interim consolidated statements OÍ INCOME. ..cccccnnnnnoonccnnnnnnnnnnnnonoconnnnnnnnnnnnnncnnnnnnnnnnnnanrcncnnnnnnnnnnnns F-8 Interim consolidated statements of comprehensive INCOME ccccoooncnoocccnnnnnnnnnnoncccnnnnnnnnnnnononccnnnnnns F-9 Interim consolidated statements of changes IM eQqUIÍY ..ooooooonnnncnccnnnonnnnnnnnnnnononononnnnonanonnnnnnnnnnnnos F-10 Interim consolidated statements Of cash ÍÍOWS ………..cccccccnnnooonncccnnnnnnnnononoconnnnnnnnnananoconnnnnnnnnnoos F-12 Notes to the interim consolidated financial StatementS……..cccccccnnnonnoonccnnnnnnnnnnnononoconnnannnnnoninonss F-13
Consolidated financial statements as of December 31, 2023 and independent auditor?s report
Independent auditor’s report from PricewaterhouseCoopers
Consultores, Auditores y Compañía LiMitada…ooooococcccocononooonoooonnnnononononononononononnnnnononononononns F-111 Consolidated statements of financial pOSItION …….ooooonccnnnnnnnnnnononnncnnnnnnnnnonononocnnnnononononinccnnnnnnss F-116 Consolidated statements OL INCOME ..ccccccccccnnnnnnnonnnnnnnnnnnnnnnnnnnnnnnnononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnannnnns F-118 Consolidated statements of comprehensive INCOME …ooooooonnnnnnnnnnnnnnnnoncccnnnnnnnnonncconnnnnnnnnnnanncnns F-119 Consolidated statements of changes IM OQUIÍY ….occccccnccnncnnnnnnnnncnnnnonononnnncnnnnnnonnnnnnnnnononnnnnananaos F-120 Consolidated statements Of cash ÍÍOWS ……ooooooonnnnnnncccnnnnnnnnnonononononnononncnnnncnnnonnnnnnnnnononnnnnananoos F-122 Notes to the consolidated financial Statements …….ooooonnnnnnccnnnnnnnnnnnnnonononononononnnnnnncnnnnnnononononoss F-123
Consolidated financial statements as of December 31, 2022 and independent auditor?s report
Independent auditor’s report from PricewaterhouseCoopers
Consultores, Auditores y Compañía LiMitada…ooooococcccocononooonoooonnnnononononononononononnnnnononononononns F-228 Consolidated statements of financial pOSItION …..ooccccnnnnnnnnnonnncnnnnnnnnonononoccnnnnnnnnnnnnnnrcccnnnnnnnnnnnos F-234 Consolidated statements OL INCOME .ococcccccnnnnnnnnnnnnonononononononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss F-236 Consolidated statements of comprehensive INCOME .ooccccnnnnnnnnnnnoncnnnnnnnnnnnnonocccnnnnnonnnnnnnncccnnnnnns F-237 Consolidated statements of changes IM eQUItY ….cccccccnncccnnonnnoonnnnnnnnnnnnnnnnnnnnnonononnnnnnnannnnnnnnnnnnos F-238 Consolidated statements Of cash TÍOWS ………occcccccccccnonocononononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnonananncnnnnnnnnos F-240 Notes to the consolidated financial StatementS ……occccccccnnnnnnnnnnononononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnos F-241 CORPORACION NACIONAL DEL COBRE DE CHILE
Interim Consolidated Financial Statements As of September 30, 2024.
F-2 CODELCO – CHILE
Interim Consolidated financial statements as of September 30, 2024 (A free translation from the original in Spanish)
F-3 INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION INTERIM CONSOLIDATED STATEMENTS OF INCOME INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS ,
1.
= N =PON>
SAA DPDNINRAoD0NnN>
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS ……..ccccccccccccnnnnnnnnnnoccco conc ccccncccnonooo GENERAL INFORMATION ……..ooccccccccccococonononononnononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnns Corporate informati0N………………..ooooooononconononononononannonononcnnnononnnnnononnnonononononnnonononononononnn no nro non non nnnonnnnnns 13 Basis of presentation of the consolidated financial statements ………………………ccccccccccccccccncnccccicicininons 14 SIGNIFICANT ACCOUNTING POLICIES. …………….ooooooccccccccocccnoonnoconononononcononononoononnno nono nnnnnnnnnnnnnnoos Significant judgments and key estimates ………………..oooooooooocccccccococonononanananannonononononoconononananano nono nononoss 15 Significant accounting policies ……………………..oooooooooononoccccnoconononanananananonononcnnncccnononananan ono nonnnnnncnccnnnnn 19 New standards and interpretations adopted by the Corporation ………………………0ooooooooooooonocccccccccononono 37 New accounting pronO0UNCEMENÍS ……………oocccccnnncncnnnonononononononononononononnnnnnnnnnnnnnnnonnnnnnnnnnnnnnnnononnnnnininoss 38 EXPLANATORY NOTES …………..coccccccccccccnncncnnncnonononononononononononononnnononononononnnnnnonononnnnnnnnnnnnnonononononess Cash and cash equivalentS ………………….oooooooooocononooonoooonooonocnnnnonnononononononnonnnnnnnnononnnnononononnnnnnnnnnonnnnnns 40 Trade and other receivables………………….oooooocnnnnnnnnnnnnnnnnnnnnnnnnnananananannnnnnnnnnnnnnnn nr nn n nn rn nr n nn narran 40 Balances and transactions with related parties ………………………oooocccccccccccnononcnnnnnnnacccoccccnononcnnncnnnonononos 42 INVENÍOFIES……………oocccccncnnnnncnononononononononono non n nn nn nn nn nn nn nn nn nn nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnss 47 Income taxes and deferred taxes……………oooooococooononoccccccconoconanonanononnnnncncnccnononannnnn nono nononnnnncccnononannnnnnnns 48 Current and non-current tax assets and liabilities……………………………o.ooooooonoconnnnncccccccnonononanananananno nono 51 Property, plant and equipMent………………ccccccccccccncnonononononononononononononononononnnnnononononononnnnnnnnononononininininoss 52 CTA 55 Investments accounted for using the equity method ………………….oooooooooccccccccccccccononanananananonononononocononos 56 SUDSINIAri8sS………………occcocccnonnonononooncncnocococonononanan nono nonnnnnnncoconononnnannnnnnnnnnnnnnnnnnononnnnnnnn nono nnnnnnnnncninonon 62 Other current non-+financial assSets…………………..ooooooooooonccccocococononanananananonononnnccccononnnanana nono nonnnnnnnncccnonos 62 Current and non-current financial assets ………………………ooooccccccnonononanananananononococonononananan ono nonnnnnnnncccnonos 63 Other financial liabilities ……………………………ooooooococonononncccccnocononananananananonnnnnonococnononananan ono nnnnnnonococononos 64 Fair Value of financial assets and liabilitiesS ………………………….o.onnnnccccnnnnononococococonononanananananncnnnnnonononons 72 Market value hierarchy for items at market value……………………..oooooooooooooncccccccccconononananananonononononoccnonon 73 Trade and other accounts payable ……………………ooooccccccnnnnnnnnnncncnono nano nana n oran nn nn nn n nn n nn n nn rn 74 Other proviSiONS………………..oooooooccocccnnncnnnncnnnonononononnnnnononononononononnnnonononnnnnnnnnnnnnononononnnnnnnn nn nono nnnnnnnnnnnns 75 Employee benefitS ……………………..occccccccnonononononanononocococononananano nono nnnnnnnnocccnononnnnnnnnnnnnnnnnnnnnnoconnnnnanannnnns 76 EQUÍÍY ….ooooccccccccccccccccccccccc nn rn nr nn nn nn nn nnnnnnnnnnnnnnnnnnonininininoss 80 Re VeO0Ue coo arar rn nn O nn nn nro nnnnnnnnnnnnnnnnnnnnnnnnnoss 82 EXpenses Dy NAtUTE ……………..occccccccccnncnnnnnnnnnnnnnnnnnononononononononononnnnnnnononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnninenoss 83 ASSet IMPAiTMenNt………..cocccccccoocononococococonocononononononononinococococononononononnnnnnnnnronncnncnnnnnnnnnnnnnnnnnanarrnccccnnnnnnnns 83 Other income and ExXpenSesS………….oooooooooooooooooooooconononononononnnnnnnnnnnnnnnnnnnnnonnnonononono nono non nono non no nono nnnnnnnnnns 83 FINANCE COSTS ………ooocccccccccccoconoconononononono nono nn r nn nn nn nn nn non nnnnnnnnnnnnnnnnnnnnnnnnenininenenoss 85 Operating SEgMentS ………….oooooonocoooooocccccnococonononananann nono nnncccoconononnnnnnn non nn nnnnnnnonocononnnnnnnnnnnnnnnnnnenenicononn 85 Exchange difference …………………..ooccccccocononononononcnonocococonononannn nono nonnnnnnnnconononnnnnnno non nnnnnnnnncccnononnnnnnnnnns 91 Statement Of Cash fÍOWS……………………….cccccccccnncnnononanananonococonononananann nono nonnnnnnnccnnonannnannn ono nnnnnnnncccnononn 91 RiSk MANnageMent………….occccccnnnnnnnnnnnnnnnnnnononononononononononnnononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnoninnnnninoss 91 Derivatives CONtTActsS …………………oooccccccccnnnnnnnnnnnnnnnnnnnononononononononononnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnininineness 96
CONTENT
INTERIM CONSOLIDATED FINANCIAL STATEMENTS (A free translation from the original in Spanish)
30.
31.
32.
33.
34,
35.
Contingencies and restrictiONS …………………….coooocononoooonccccccocononananananan nono nononcccconononannnn ono nnnnnnnnncnccnnnns 98 ¡E 103 Balance in foreign CUTTENCY ………….ccccccccnnononononononcnonococonononanannn nono nnnnononononononannnnnnnnnnnnnnnnnnnnccnnnnnnnnnnnnns 104 SANCÍIONS ………..ooooccccccccccnononnnnnonanononononoccconononnnnnnn non nnnnnnnnnnnccnonnnnnnnnnnnnnnrnnnnnnnnnononnnnnnnnnnnnnnnnnnnnnnnnncinonns 106 The ENVITONMeNt.ooooo ccoo ccoo cccococanono nano no nono n nono nono n nn nn 106 Subsequent EVenNtS…………..oooooocoooococooooooooooooonononononnnnononnonononononnnnnnnonn nono no nnnnnn nn nono nono nono nnnnnnn nro nnnnnnnnnns 109
F-5 CORPORACIÓN NACIONAL DEL COBRE DE CHILE
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of September 30, 2024 (unaudited) and December 31, 2023 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Hote 9-30-2024 12-31-2023 NW Assots Current assets Caáh 00d Cuañ equerolerás 1 1,672 204 1,342 043 Gir correrá franca asas 12 186.814 12 Olber Suirerd pon-linancad asjets 39 595 48 580 Trode and olher current reco abies 2 2,590,223 3,405,668 Accounts recorabdo bom related ends. 3 18,769 34.657 Current nventones 4 2.637 884 2.455, 01 Cuan lar añdets 6 2.003 2.640 Total current assats 7,089,642 7,269,281| Non-cureni a95els Other non-currenl Manr igacia 11 655,081 107 436 Olbel non-curent noo brarcal 155015 13,317 13 488 Mon currend accounis recersabíe 2 78.689 m 272 Arcoiris reivbble born relaled partes 3 224 224 Non-currerd mentes 4 512,145 404 747 Imeslrrerds accounird dor usar; equity method 9 2. 951,195 2 460,598 Ininglls assats other han poodwl 39,123 39 660 Property, plani and equpnen! 1 37,012,557 Y 622,5 Irwestmeni property 981 081 Fhiod- use avsels 8 398,387 390.756 Nos ureni la maels 6 897 864 575,604 Oeterod ina micta 5 98,332 103,530 Tolál non-curreni a5sets 42,557,895 39,586,967 Total assate 49,647,537 46876,248
The accompanying notes are an integral part of these interim consolidated financial statements.
F-6 CORPORACIÓN NACIONAL DEL COBRE DE CHILE INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of September 30, 2024 (unaudited) and December 31, 2023 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 9-30-2024 12-31-2023 NO Equity and liabilities Liabilities Current liabilities Other financial liabilities 12 1,021,902 892,121 Lease liabilities 8 158,929 133,729 Trade and other payables 15 2,175,870 1,789,892 Accounts payable to related entities 3 138,769 172,434 Other short-term provisions 16 788,178 899,489 Current tax liabilities, current 6 20,026 14,414 Current provisions for employee benefits 17 421,740 480,740 Other non-financial liabilities 42848 41,164 Total current liabilities 4,767,867 4,383,983 Non-current liabilities Other financial liabilities 13 21,340,569 19,549,117 Lease liabilities 8 259,009 269,044 Non-current payables 949 994 Other long-term provisions 17 2,442,833 2,332,643 Deferred tax liabilities 9 8,941,743 8,241,800 Non-current provisions for employee benefits 18 1,031,557 1,053,430 Other non-financial liabilities 2,669 2,628 Total non-current liabilities 33,615,329 31,445,616 Total liabilities 38,383,196 35,829,599 Equity Share capital 9,619,423 9,619,423 Accumulated losses (699,691) (909,651) Other reserves 19.a 9,633,413 9,639,923 Equity attributable to owners of parent 10,553,145 10,349,695 Non-controlling interests 19.b 711,196 696,954 Total equity 11,264,341 11,046,649 Total liabilities and equity 49,647,537 46,876,248
The accompanying notes are an integral part of these interim consolidated financial statements.
CORPORACIÓN NACIONAL DEL COBRE DE CHILE
INTERIM CONSOLIDATED STATEMENTS OF INCOME For the nine and three -month periods ended September 30, 2024 and 2023 (unaudited) (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 1-1-2024 1-1-2023 7-1-2024 7-1-2023 N? 9-30-2024 9-30-2023 9-30-2024 9-30-2023
Revenue 20 12,314,933 12,218,396 4,283,430 3,929,414 Cost of sales (9,231,435) (9,898,852) (3,278,931) (3,133,945) Gross margin 3,083,498 2,319,544 1,004,499 795,469 Other income 23.a 62,802 64,581 3,011 11,291 Distribution costs (17,158) (16,235) (6,905) 1,211 Administrative expenses (370,181) (392,994) (113,664) (124,273) Other expenses by function 23.b (1,752,316) (1,476,620) (613,505) (505,593) Other gains 33,814 23,212 11,078 8,706 Gains from operating activities 1,040,459 521,488 284,514 186,811 Finance income 104,935 69,700 30,076 22,635 Finance costs 24 (686,020) (570,413) (220,386) (187,411) Impairment and reversal of impairment losses determined in accordance with IFRS 9 (663) 1,598 (1,038) (29) Share of net profit of associates and joint ventures accounted for using the equity method 9 84,429 (134,279) 2,439 (127,686) Exchange losses 26 69,104 36,394 (136,068) 345,732 [Income (Loss) for the period before tax 612,244 (75,552) (40,463) 240,052 Income tax expense 5 (384,832) 94,064 (14,467) (81,232) [Net income (Loss) for the period 227,412 18,512 (54,930) 158,820 Profit (Loss) attributable to:
Owners of the parent 265,384 (135,597) 101,087 (149,714)
Non-controlling interests 18.b 16,958 (4,711) 9,188 (4,384) [Net income (Loss) for the period 227,412 18,512 (54,930) 158,820|
The accompanying notes are an integral part of these interim consolidated financial statements.
F-8 CORPORACIÓN NACIONAL DEL COBRE DE CHILE INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the nine and three -month periods ended September 30, 2024 and 2023 (unaudited) (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 1-1-2024 1-1-2023 7-1-2024 7-1-2023 N? 9-30-2024 9-30-2023 9-30-2024 9-30-2023 Profit 227,412 18,512 (54,930) 158,820 Comprehensive income Components of comprehensive income that will not be reclassified to profit or loss for the period, before taxes Comprehensive (loss) income, before income taxes, gains from remeasurement of defined 18 911 (5,869) 440 2.091 benefit plans Share of comprehensive income of associates and joint ventures accounted for using the 35 equity method that will not be reclassified to profit or loss for the period, before taxes (35) Total other comprehensive income that will not be reclassified to profit or loss for the period, before taxes 911 (5,304) 440 2,091 Components of comprehensive income that will be reclassified to profit or loss for the period, before taxes Exchange differences on translation (Losses) on foreign exchange translation differences, before income taxes (661) (3,604) 3,699 (9,254) Cash Flow Hedges Gains (Losses) On Cash Flow Hedges BeforeTax (17,282) 5,646 (21,448) 4,971 Comprehensive Income That Will Be Reclassified To Profit Or Loss Before Tax (17,943) 2,042 (17,749) (4,283) Comprehensive income before taxes, foreign exchange translation differences (17,032) (3,862) (17,309) (2,192) Income tax related to components comprehensive income Income taxes related to remeasurements of defined benefit comprehensive income plans 5 (685) 4,200 (330) (1,396) Income taxes related to components of comprehensive income that will not be reclassified to profit or loss for the period (685) 4,200 (330) (1,396) Income taxes related to components of comprehensive income that will be reclassified to profit or loss for the period Income taxes related to comprehensive income cash flow hedges 5 11,234 (3,670) 13,942 (3,231) Income taxes related to components of comprehensive income that will be reclassified to profit or loss for the period 11,234 (3,670) 13,942 (3,231) Comprehensive income (6,483) (3,332) (3,697) (6,819) Total comprehensive income 220,929 15,180 (58,627) 152,001 Comprehensive income, attributable to Comprehensive income attributable to owners of parent 206,687 62,807 (59,911) 194,917 Comprehensive income attributable to non-controlling interests 14,242 (47,627) (2,716) (42,916) [Total comprehensive income 220,929 15,180 (58,627) 152,001
The accompanying notes are an integral part of these interim consolidated financial statements.
F-9 CORPORACIÓN NACIONAL DEL COBRE DE CHILE INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the periods between January 1 and September 30, 2024 and 2023 (unaudited) (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Reserve on Reserve of 9300 Sc | a ec | asesinan | Coen | clas el Y arcade e | Tea translation plans Note 19 Note 19
Opening balance at 1-1-2024 5,619,423 (8,782) (1,095) (272,779) 5,922,579] 5,639,923 (909,651) 10,349,695 696,954 11,046,649] Changes in equity Profit (loss) 213,170 213,170 14,242 227,412 Other comprehensive income (661) (6,048) 226 (6,483) (6,483) (6,483) Total comprehensive income (661) (6,048) 226 (6,483) 206,687 14,242 220,929 Decrease through transfers and other changes, equity 7 2,026 (2,053) (27) (3,210) (3,237) (3,237) Increase (decrease) in equity (661) (6,048) 2,252 (2,053) (6,510) 209,960| 203,450| 14,242 217,692 Closing balance at 9-30-2024 5,619,423 (9,443) (7,143) (270,527) 5,920,526| 5,633,413 (699,691)] 10,553,145] 711,196| 11,264,341
The accompanying notes are an integral part of these interim consolidated financial statements.
F-10 CORPORACIÓN NACIONAL DEL COBRE DE CHILE
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the periods between January 1 and September 30, 2024 and 2023 (unaudited) (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Reserve on Reserve of 920202 a e a a no? | Teens translation plans Note 19 Note 19
Opening balance at 1-1-2023 5,619,423 (7,030) 3,831 (262,465) 5,925,090] 5,659,426] (538,367) 10,740,482 914,083 11,654,565 Changes in equity Profit (loss) 66,139 66,139 (47,627) 18,512 Other comprehensive income (3,604) 1,976 (1,669) (35) (3,332) (3,332) y (3,332) Total comprehensive income (3,604) 1,976 (1,669) (35) (3,332) 62,807 (47,627) 15,180 Increase through transfers and other changes, equity y y – (433) (433) 3,680 3,247 (1) 3,246 Increase (decrease) in equity (3,604) 1,976| (1,669) (468) (3,765 69,819] 66,054 (47,628) 18,426] Closing balance at 9-30-2023 5,619,423 (10,634) 5,807| (264,134) 5,924,622 5,655,661 (468,548) 10,806,536] 866,455 11,672,991|
The accompanying notes are an integral part of these interim consolidated financial statements.
Corporación Nacional del Cobre de Chile
CORPORACIÓN NACIONAL DEL COBRE DE CHILE
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine-month periods ended September 30, 2024 and 2023 (unaudited) (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Hat 1.3.2034 110033 ue 030-704. 43201
Cañh Ros tom ¡used ij opertog activities Paco len rt 0 JOOOS al Md SCI rl A A Pp 230.04 25550 Epa de tupcdan: br ponés art tareas e LS PRE O o DN eds IAH) (1311244 (e LA Ara de O q CA CUE Ica Sac | paa ¡a (1P038í A a a 1140 11510)
Cash ños hom jused in] lreseiio] ais A A 1495 25, ¡ DES) Pto Ol par LT O a AA 0124001 [rarrés! racer] 107,558 5.07 Diar can la o (108, 533) 4587 a ds his, a
Cauh ños hon (used lo) fimancing activities dsoute hor Leger lea ar bcodi EJ 0000 AMA Vol. LEFT A 10.000 2000 fas aróurt tor tan ed Lord; A E Panero sl oem 44d Dondi (5565671 (54M ep dy pa oera e Ihabries pda] Ce ER CA Jere] DA Por cant oa, a e AC ACP o 1040708 LO AA A as Ettect ol exchange ate changes 09 ch 30d ca6h equivadents Ed He roango M0 Chuegés 0 23ER O OA E MSN 153051 Mat lacrezir (decrerio) a cash 20d 34h aquéradentr P0025t 1057100 Zash da carh ya or 2 Despacio ol paro) : EST Cash and cash equirmente al end of perivd 1 153154 1055
The accompanying notes are an integral part of these interim consolidated financial statements.
F-12
Corporación Nacional del Cobre de Chile
CORPORACIÓN NACIONAL DEL COBRE DE CHILE NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023 (Monetary values in thousands of United States dollars, unless another currency or unit is indicated)
Il. GENERAL INFORMATION
1. Corporate information
Corporación Nacional del Cobre de Chile (hereinafter referred to as Codelco or the Corporation), is, in Management’s opinion, the largest copper producer in the world.
Codelco’s most important product is refined copper, primarily in the form of cathodes. The Corporation also produces copper concentrates, blister and anode copper and by-products such as molybdenum, anode slime and sulfuric acid.
The Corporation trades its products based on a policy aimed to sell refined copper to manufacturers or producers of semi-manufactured products.
These products contribute to diverse fields of community development, particularly those intended to improve areas such as public health, energy efficiency, and sustainable development, among others.
The Corporation is registered under Securities Registry No. 785 of the Chilean Commission for the Financial Market (the CMF) and is subject to its supervision. According to Article No.
10 of Law No. 20392 (related to the new Corporate Governance of Codelco), such supervision shall be on the same terms as publicly traded companies, notwithstanding the provisions in Decree Law (D.L.) No.1349 of 1976, which created the Comisión Chilena del Cobre (Chilean Copper Commission).
Codelco’s head office is in Santiago, Chile, at 1270 Huérfanos Street, telephone number (56-
2) 26903000.
Codelco was incorporated through D.L. No. 1350 of 1976, which is the statutory decree applicable to the Corporation. In accordance with the statutory decree, Codelco is a government-owned mining, industrial and commercial company, which is a separate legal entity with its own equity. Codelco Chile currently carries out its mining business through its Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina, El Teniente and Ventanas divisions.
The Corporation also carries out similar activities in other mining deposits in association with third parties.
During 2024, the Corporation enters the lithium business with the acquisition of Lithium Power International Limited “LPI”. This acquisition will make the Blanco Project viable through synergies with the Corporation’s assets and permits in the Salar de Maricunga, and thus
F-13 Corporación Nacional del Cobre de Chile develop a world-class lithium project. Additionally, in May 2024, Codelco signed an association agreement with Sociedad Química y Minera de Chile S.A. (SQM), which establishes the conditions to implement a public-private partnership for the development of mining, productive and commercial activities related to the exploration and exploitation of certain mining properties located in the Salar de Atacama, Antofagasta Region.
In accordance with letter e) of Article 10 of Law No. 20392, Codelco is governed by its organic standards set forth in Decree Law No. 1350 (D.L. No. 1350) and that of its by-laws, and in matters not covered by them and, insofar as they are compatible and do not contradict the provisions of such standards, by the rules that govern publicly traded companies and the common laws as applicable to them.
In accordance with D.L. No. 1350 Section IV related to the Company’s Exchange and Budget Regulations. Codelco’s financial activities are conducted following an annual budgeting program that is composed of an Operations Budget, an Investment Budget, and a Debt Amortization Budget.
The income obtained by Codelco in each period is subject to the tax regime established in Article 26 of D.L. N*1,350, which refers to Decree Laws N* 824, on Income Tax, of 1974, and N*2398 (Article 2), of 1978, which are applicable to Codelco. lt is also subject to the terms of Law No. 20026 of 2005 on Specific Tax on Mining, which was in force until December 31,
2023. As of January 1, 2024, the Corporation will begin to apply Law No. 21591 on mining royalties.
According to Law No. 13196, the return on foreign currency of the Corporation’s foreign sales (real income), of its copper production, including its by-products, is taxed at 10%. The effectiveness of this obligation for Codelco is specified in the explanatory note in section !!l.
23 letter c) of this report.
The subsidiaries whose financial statements are included in these consolidated financial statements correspond to companies located in Chile and abroad, which are detailed in Note
11.2.d.
The associates, all located in Chile, are detailed in the explanatory note in section 111.9.
2. Basis of presentation of the consolidated financial statements
The interim consolidated statements of financial position as of September 30, 2024 and the consolidated statements of financial position as of December 31, 2023, the interim consolidated statement of income, comprehensive income, changes in equity and cash flows for the nine-month and three-month periods ended September 30, 2024 and 2023 have been prepared in accordance with International Accounting Standard No. 34 (IAS 34) * Interim Financial Reporting, incorporated in the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (hereinafter “lASB).
Corporación Nacional del Cobre de Chile
The consolidated financial statements (unaudited) of the Corporation are presented in thousands of United States dollar (U.S. dollar).
Responsibility for information and estimates made
The Board of Directors of the Corporation has been informed of the information included in these interim consolidated financial statements (unaudited) and expressly declared its responsibility for the consistent and reliable nature of the information included as of September 30, 2024, which financial statements fully comply with IFRS. These unaudited interim consolidated financial statements as of September 30, 2024 were approved by the Board of Directors at a meeting held on October 30, 2024.
Accounting policies
These unaudited interim consolidated financial statements reflect the financial position of Codelco and subsidiaries as of September 30, 2024 and December 31, 2023, as well as the results of their operations, changes in equity and cash flows for the nine-month periods ended September 30, 2024 and 2023, and their related notes, all prepared and presented in accordance with lAS 34 Interim financial information, considering the respective presentation regulations of the Financial Market Commission (CMF)”.
Il. SIGNIFICANT ACCOUNTING POLICIES
1. Significant judgments and key estimates
These interim consolidated financial statements (unaudited), the use of certain critical accounting estimates and assumptions that affect the amounts of assets and liabilities recognized as of the date of the financial statements and the amounts of revenue and expenses recognized during the reporting period is required. Such preparation also requires the Corporation’s Management to exercise its judgment in the process of applying the Corporation’s accounting policies. The areas involving a greater degree of judgment or complexity or areas in which the assumptions and estimates are significant for the consolidated financial statements are described as follows:
a) Useful economic lives and residual values of property, plant and equipment: the useful lives and residual values of property, plant and equipment that are used for calculating depreciation are determined based on technical studies prepared by internal specialists. The technical studies consider specific factors related to the use of assets.
Where there are indications that the useful lives of these assets or their residual values may have changed from previous estimates, this should be done using technical estimates to determine the impact of any changes.
b) Ore reserves: the measurements of ore reserves are based on estimates of the ore resources that are legally and economically exploitable and reflect the technical and
F-15 Corporación Nacional del Cobre de Chile environmental considerations of the Corporation regarding the amount of resources that could be exploited and sold at prices exceeding the total cost associated with the extraction and processing.
The Corporation applies judgment in determining the ore reserves, and as such, possible changes in these estimates might significantly impact the estimates of net revenues over time. In addition, these changes might lead to modifications in usage estimates, which might have an effect on depreciation and amortization expense, calculation of stripping cost adjustments, determination of impairment losses, expected future disbursements related to decommissioning and restoration obligations, long term defined benefits plans’ accounting and the accounting for financial derivative instruments.
The Corporation estimates its reserves and mineral resources based on the information certified by the Competent Persons internal and external of the Corporation, who are defined and regulated according to Law No. 20235. These estimates correspond to the application of the Certification Code of Ore Reserves, Resources and Exploration, issued by the Mining Committee which was instituted through the law.
Notwithstanding the foregoing, the Corporation periodically reviews its estimation models, supported by experts who, in some divisions, also certify the reserves determined from these models.
Impairment of non-financial assets: the Corporation reviews the carrying amount of its non-financial assets to determine whether there ¡is any indication that the carrying amount may not be recoverable. If any such indicator exists, the recoverable amount of the assets is estimated to determine the extent of the impairment loss. In testing impairment, the assets are grouped into cash generating units (“CGUs) to which the assets belong, if applicable. The recoverable amount of these CGUs ¡is calculated as the present value of the expected future cash flows from such assets, considering a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Ifthe recoverable amount of the assets is lower than their carrying amount, an impairment loss is recognized.
The Corporation defines the CGUs and also estimates the timing and cash flows that such CGUs will generate. Subsequent changes in the grouping of the CGU, or changes in the assumptions supporting the estimates of cash flows or the discount rate, may impact the carrying amounts of the corresponding assets.
Estimates of assumptions influencing the calculation of cash flows, such as the price of copper or treatment charges and refining charges, among others, are determined based on studies conducted by the Corporation using uniform criteria over different periods. Any change in these criteria may have an impact on the recoverable amount of the assets being tested for impairment.
F-16
Corporación Nacional del Cobre de Chile
The Corporation has assessed and defined that the CGUs are constituted at the level of each of its current operating divisions, with the exception of the Ventanas Division Smelter and Refinery operations, which are analyzed separately.
In assessing impairment in subsidiaries and associates, the Corporation uses the higher of value in use or fair value less costs to determine the recoverable amount. This recoverable amount may consider elements such as Life of Mine (LOM), reserves andor mining resources, among others, for mining operation evaluations. In addition, the evaluation may incorporate market variables such as for example, the price of copper and other commodities, cost of production inputs, exchange rates, discount rates and other market information for long-term asset valuation.
d) Provisions for decommissioning and site restoration costs: when a disruption is caused by the ongoing development or production of a mining property, an obligation to incur decommissioning and restoration costs arises. Costs are estimated based on a formal closure plan and are reassessed as of each reporting period or as of the date such obligations become known. The initial estimate of decommissioning and site restoration costs is recognized as property, plant, and equipment in accordance with IAS 16, and simultaneously a liability in accordance with |AS 37, is recorded.
For these purposes, a defined list of mine sites, facilities and other equipment are studied under this process, considering the engineering level profile, the cubic meters of assets that will be subject to removal and restoration, weighted by a structure of market prices of goods and services, reflecting the best current knowledge related to carrying out such activities, as well as techniques and more efficient construction procedures to date. In the process of valuation of these activities, the assumptions of the exchange rate for tradable goods and services are made, as well as a discount rate, which considers the time value of money and the risks associated with the liabilities, which is determined based, where applicable, on the currency in which disbursements are expected to be made.
The liability amounts recognized at the end of each reporting date represent management’s best estimate of the present value of the future decommissioning and site restoration costs. Changes in the estimate of the liability because of changes in the estimated future costs or in the discount rate are added to or deducted from the respective asset cost. The amount deducted from the cost of the asset shall not exceed it carrying amount. lfa decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in profit or loss.
If the adjustment results in an addition to the cost of the asset, Codelco considers whether this is an indicator that the new carrying amount of the asset may not be fully recoverable.
If such an indicator exists, Codelco tests the asset for impairment by estimating its recoverable amount, and accounts for any impairment loss in accordance with |AS 36.
Costs arising from the installation of a plant or other site preparation work, discounted to their net present value, are provided for and capitalized at the beginning of each project as soon as the obligation to incur such costs arises. These decommissioning costs are
F-17
Corporación Nacional del Cobre de Chile
9)
h)
1) charged to net income over the life of the mine, through depreciation of the corresponding asset. Depreciation expense is included in cost of sales, while the discount in the provision is included in finance costs.
Provisions for employee benefits: Provisions for employee benefits related to severance payments and health benefits for services rendered by the employees are determined based on actuarial calculations using the projected unit credit method and are recognized in other comprehensive income or s (depending on the accounting standards applicable) on an accrual basis
The Corporation uses assumptions to determine the best estimate of future obligations related to these benefits. Such estimates, as well as assumptions, are determined by management using the assistance of external actuaries. These assumptions include demographic assumptions, discount rate and expected salary increases and rotation levels, among other factors.
Accruals for open invoices: the Corporation uses information on future copper prices, through which it recognizes adjustments to its revenues and trade receivables, due to the conditions in provisional pricing arrangements. These adjustments are updated monthly, See Notes 2 q) Revenue from contracts with customers of Note 2 Significant accounting policies below.
Fair value of derivatives and other financial instruments: management may use its judgment to choose an adequate and proper valuation method for financial instruments that are not quoted in an active market. In the case of derivative financial instruments, assumptions are based on observable market inputs, adjusted depending on factors specific to the instruments among others.
Lawsuits and contingencies: The Corporation assesses the probability of lawsuits and contingency losses on an ongoing basis according to estimates performed by its legal advisors. For cases in which management and the Corporation’s legal advisors believe that a loss is not probable of occurring or where probable, may not be estimated reliably, no provisions are recognized. When it is considered more likely than not that a loss is probable and it may be reliably estimated, a provision is recognized.
Application of IFRS 16: includes the following:
– Estimation of the lease term
– Determine if it is reasonably certain that an extension or termination option will be exercised.
– Determination of the appropriate rate to discount lease payments
Revenue recognition: the Corporation determines appropriate revenue recognition for its contracts with customers by analyzing the type, terms and conditions of each contract or agreement with a customer.
F-18
Corporación Nacional del Cobre de Chile
As part of the analysis, the management must make judgments about whether an agreement or contract is legally enforceable, and whether the agreement includes separate performance obligations. In addition, estimates are required to allocate the total price of the transaction to each performance obligation based on the stand-alone selling price of the promised goods or services underlying each performance obligation. (The Corporation applies the constraint on variable consideration as defined in IFRS 15, if applicable).
k) Stripping costs – Costs incurred in removing mine waste materials (overburden) in open pits that are in production, that provide access to mineral deposits, are recognized in property, plant, and equipment, when the following criteria set out in IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine are met:
– Itis probable that the future economic benefits associated with the stripping activity will flow to the entity.
– It is possible to identify the components of an ore body for which access has been improved because of the stripping activity, and
– The costs relating to that stripping activity can be measured reliably.
The stripping costs are amortized based on the production units of production extracted from the ore body related to the specific stripping activity which generated this amount.
Although the abovementioned estimates have been made based on the best information available as of the date of issuance of these interim consolidated financial statements (unaudited), it is possible that new developments could lead the Corporation to modify these estimates in the future. Such modifications, if any, would be adjusted prospectively, recognizing the effects of the change in estimate in future consolidated financial statements, as required by IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
2. Significant accounting policies
a. Period covered: The accompanying consolidated financial statements of Corporación Nacional del Cobre de Chile include the following statements:
– Interim Consolidated Statement of Financial Position as of September 30, 2024 (unaudited) and Consolidated Statement of Financial Position as of December 31, 2023.
– Interim Consolidated Statement of Income (unaudited) for the nine and three -month periods ended September 30, 2024 and 2023.
– Interim Consolidated Statements of Comprehensive Income (unaudited) for the nine and three -month periods ended September 30, 2024 and 2023.
– Interim Consolidated Statements of Changes in Equity (unaudited) for nine-month periods ended September 30, 2024 and 2023.
– Interim Consolidated Statements of Cash Flows (unaudited) for nine-month periods ended September 30, 2024 and 2023.
Corporación Nacional del Cobre de Chile
b. Basis of preparation – These interim consolidated financial statements (unaudited) of the Corporation as of September 30, 2024 have been prepared in accordance with the instructions of the Commission for the Financial Market which fully comply with International Financial Reporting Standards (IFRS) issued by the |ASB.
The consolidated statements of financial position as of December 31, 2023, and the statements of income, equity and cash flows for the nine-month period ended September 30, 2023 (unaudited), which are included for comparative purposes, have been prepared in accordance with IFRS as issued by the lASB, on a basis consistent with the basis used for the same period ended September 30, 2024, except for the adoption of new IFRS standards and interpretations adopted by the Corporation as of September 30, 2024, which are disclosed in number 3 “New standards and interpretations adopted by the Corporation” in section ll of this report.
These interim consolidated financial statements (unaudited) have been prepared from accounting records held by the Company.
c. Functional currency – The functional currency of Codelco is the U.S. dollar, which is the currency of the primary economic environment in which the Corporation operates and the currency in which it receives ¡ts revenues.
The functional currency of subsidiaries, associates, and joint ventures is the currency of the primary economic environment in which those entities operate and the currency in which they receive their revenues. For those subsidiaries and associates that are an extension of the operations of Codelco (entities that are not self-sustaining and whose main transactions are with Codelco); the functional currency is also the U.S. dollar.
The presentation currency of Codelco’s interim consolidated financial statements (unaudited) is the U.S. dollar.
d. Basis of consolidation – The financial statements comprise the consolidated statements of the Corporation and its subsidiaries.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Corporation obtains control, and continue to be consolidated until the date such control ceases. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement from the date the Corporation gains control until the date when the Corporation ceases to control the subsidiary.
The financial statements of the subsidiaries are prepared for the same reporting period as the Corporation, using consistent accounting policies.
All assets, liabilities, equity, income, expenses, and cash flows related to transactions between consolidated companies are fully eliminated on consolidation. The value of the non-controlling interest of shareholders in equity and in the results of subsidiaries ¡s presented, respectively, as “Non-controlling interests in the consolidated statement of
F-20 Corporación Nacional del Cobre de Chile financial position and “Income (loss) attributable to non-controlling interests” and “Comprehensive income (loss) attributable to non-controlling interests in the consolidated statements of income.
The following companies have been consolidated:
MC EA Tarpaper LD Ha COMA PAN Country pinccts A rn A nene | Direct | ist] Tala Palio A AA NC ope | mm] [teo] m0 | al Lota e 34 hdr ddr Hur SAL 115 io 2) loo Codelco sup Fo LIRA UNC 1) 00 00 hb 100 0 Era A A DA EJPL DEE 150 bl es] O Lega usó Wes | 1660 0.30 FA Lopes Macas LA] Enpura 08P 105 160 E! Poma |Eodetos Erirgta Carpe mba Ctura Ea edo – | 16606 10050 | Fra Conte Degapor PL AGA aL > 10 60 30 Erro Cds AA tra ¡ph 15D 120 59 105 00 e] Form Costa Caradá Cart 18D mod] 1% 156 bb mob 0 Lor crm. re Cramer barda 13D HN 155 06 1005 E pim Espai a rs pl dl E Ela Se Edo” USC 11m (ou bx “0 E Cobras Prapeccio Uirana us BE, 175% dl o 5150 | E cana LL El OA O A dí 116055 1 no ar Fer 3000 > | ticcacós Cirricadoss de Perra: ri CLP La sl io TA | aru [codecs Tes SpA Cada LSO DO AS E tl nu: 1) 0 E la E A id ar da 1 00 Ea A E A A Ce cLP 03 . IE ab 1020 E A Cid; uc PA q 1 100 00 A A A E ra LP O 313 115 oo e Y A A E Lua cLP rin) 0 ra dm a 78 54 DES [Caria ds peas ica E Marco Ap Cie CLP – | 150-009 105 00 50 | A E E 5 Fla LED A 10 ob E
1330) 0d [erricora de Tot Dl Cria usó 00] ma adi] da] A ra USD RT 33 Pos 1 2) A ia us5 1 00 – ali e 3 A A E da usf Er E oe ar A a E Cua uE re Tes ara FO a? | Cairo Ss Exprcaicads VW Sar Lor ZA Cr LA Hno 10 0 e +] 110001 | Carra Eso 17 dla a na Trad. ao + ar 1287 08) OA Chis or . . , 1414 PT jua napa de Loderz Spa Tu ELP 110 LEA 1023 Mime cagas Done de decos Médicos Forero LEA Pia CUP Mm 06 E DG A A A rág ap e E e mi PEO y O, de a A er Hi e md de m3 4414 [Lar ss Miro ELA Didi uo: 150 5 1% 105% 7 A rá de Ch Ep Cha LE ud 1 00 TIA Parar 5pd ¡Ha usb 105 ada] $ 5 Hd e Posa error Cid Epa Chas usb 1 00 Jr MA 5 Sar Bueco Eh Car vit 150 se dei
For the purposes of these interim consolidated financial statements, subsidiaries, associates, acquisitions and disposals are defined as follows:
– – Subsidiaries: A subsidiary is an entity over which the Corporation has control. Control is exercised if, and only if, the following elements are present: (i) power to govern the operating and financial policies to obtain benefits from their activities; (ii) exposure or
F-21 Corporación Nacional del Cobre de Chile rights to the variable returns of these companies; and (iii) ability to use the power to influence the amount of returns.
The Corporation reassesses whether it controls a subsidiary if facts and circumstances indicate that there are changes to one or more of the elements of control listed above.
The consolidated financial statements include all assets, liabilities, revenues, expenses, and cash flows of Codelco and its subsidiaries, after eliminating all inter- company balances and transactions.
Associates: Án associate is an entity over which Codelco has significant influence.
Significant influence is the power to participate in the financial and operating policy decisions of the associate but is not control or joint control over those policies.
Codelco’s interest ownership in associates is recognized in the consolidated financial statements under the equity method. Under this method, the initial investment ¡s recognized at cost and adjusted thereafter to recognize changes in Codelco’s share of the comprehensive income of the associate, less any impairment losses or other changes to the investment in net assets of the associate.
The Corporation adjusts the proportional gains or losses obtained by the associate after acquisition to take into account the effects that may exist in the depreciation of the fair value of the assets considered at the date of acquisition.
Acquisitions and disposals: The result of businesses acquired are incorporated in the consolidated financial statements from the date when control is obtained; the results of businesses sold during the period are included in the consolidated financial statements up to the effective date of disposal. Gains or losses on disposal is the difference between the sale proceeds (net of expenses) and the carrying amount of the net assets attributable to the ownership interest that has been sold (and, where applicable, the associated cumulative translation adjustment).
If control is lost over a subsidiary, the retained ownership interest in the investment will be recognized at its fair value.
At the acquisition date of an investment in a subsidiary, associate or joint venture, any excess of the cost of the investment (consideration transferred) plus the amount of the non-controlling interest in the acquiree plus the fair value of any previously held equity interest in the acquiree, where applicable, over Codelco’s share of the net fair value of the identifiable assets and acquired liabilities is recognized as goodwill. Any excess of Codelco’s share of the net fair value of the identifiable assets and acquired liabilities over the consideration transferred, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.
F-22 Corporación Nacional del Cobre de Chile
e. Foreign currency transactions and reporting currency conversion – Transactions in currencies other than the Corporation’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, foreign currency transactions denominated in foreign currencies are converted at the rates prevailing at that date. Gains and losses due to the effect of foreign currency transactions are included in the consolidated statement of income for the period within “Exchange gains (losses) in foreign currencies.
At the end of the reporting period, monetary assets and liabilities denominated in Unidades de Fomento (“UF”) have been denominated in US$, considering the exchange rates in effect at the end of each period (9-30-2024: US$ 42,23; 12-31-2023: US$ 41.94; 9-30-2023 US$ 40,42 ). Expenses and income in local currency have been expressed in dollars at the observed exchange rate, corresponding to the date of the accounting record of each transaction.
The translation of the financial statements of subsidiaries, associates and jointly controlled entities, whose functional currency is different from Codelco’s presentation currency, is performed as follows for consolidation purposes:
– Assets and liabilities are converted using the prevailing exchange rate on the reporting date.
– Income and expenses for each statement of income are translated at average exchange rates for the period.
– All resulting exchange differences are recognized in comprehensive income and accumulated in equity under the heading Reserve on exchange differences on translation.
The exchange rates used in each reporting period were as follows:
Aelaarable | Closing echara Libra
410-4474 | le. 39.47] 530-4023
MATT a po A!
50 1 SES | 3 I ¿PLA 2534 DI BR 3 1195 020811 1 16500 050 EUA Mi Il lr E PA ¡ TE 5 E ur.
2 Sa MEL a IjaLa . Md pe rh
ES 77 Sa a A UN pr o a las o , 14:
f. Offsetting balances and transactions – As a general standard, assets and liabilities, revenue, and expenses, are not offset in the financial statements, except for those cases in which offsetting is required or is allowed by a standard and the presentation reflects the substance of the transaction.
F-23 Corporación Nacional del Cobre de Chile
Income or expenses arising from transactions which, for contractual or legal reasons, permit the possibility of offsetting and which the Corporation intends to liquidate for their net value or realize the assets and settle the liabilities simultaneously, are stated net in the statement of income.
g. Property, plant and equipment and depreciation – ltems of property, plant and equipment are initially recognized at cost. After initial recognition, they are measured at cost, less any accumulated depreciation and any accumulated impairment losses.
The cost of property, plant and equipment includes the costs of expansion, modernization or improvements that represent an increase in productivity, capacity or efficiency, or an increase in the useful life of the assets, and are capitalized as an increase in the cost of the related assets.
The assets included in property, plant and equipment are depreciated, as a general rule, using the units of production method, when the activity performed by the asset is directly attributable to the mine production process. In other cases, a straight-line depreciation criterion is used.
The assets included in property, plant and equipment and certain intangibles (software) are depreciated over their economic useful lives, as described below:
Category Useful life Land Not depreciated Land on mine site Unit of production Buildings Straight-line over 20-50 years
Buildings in underground mine levels
Units of production level
Vehicles
Straight-line over 3-7 years
Plant and equipment Unit of production Smelters Unit of production Refineries Unit of production Mining rights Unit of production Support equipment Unit of production Intangibles – software Straight-line over 8 years Open pit and underground mine development | Unit of production
Estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and any change in estimates is recognized prospectively.
Additionally, depreciation methods and estimated useful lives of assets, especially plants, facilities and infrastructure may be revised at the end of each year or during the year according to changes in the structure of reserves of the Corporation and productive long- term plans updated as of that date.
F-24 Corporación Nacional del Cobre de Chile
This review may be made at any time if the conditions of ore reserves change significantly because of new known information, confirmed, and officially released by the Corporation.
The gain or loss resulting from the disposal or retirement of an asset is calculated as the difference between the price obtained on disposal and the value recorded in the books, recognizing the charge or credit to income for the period.
Construction in progress includes the amounts invested in the construction of property, plant and equipment and in mining development projects. Construction in progress is transferred to assets in operation once the testing period has ended and when they are ready for use; at that point, depreciation begins to be recognized.
Borrowing costs that are directly attributable to the acquisition or construction of assets that require a substantial period before they are ready for use or sale are capitalized as part of the cost of the corresponding items of property, plant, and equipment.
The ore deposits owned by the Corporation are recorded in the accounting records at US$1. Notwithstanding the above, those reserves and resources acquired as part of acquisition of entities accounted for as business combinations, are recognized at their fair value.
h. Intangible assets – The Corporation initially recognizes these assets at acquisition cost.
The cost is amortized systematically over their useful lives, except in the case of assets with indefinite useful lives, which are not amortized, and are assessed for impairment at least once a year and, in any case, whenever there is an indication that impairment may have occurred. At the end of each reporting period, these assets are measured at their cost less any accumulated amortization (when applicable) and any accumulated impairment losses.
The expenditures for the development of Technology and Innovation Projects are recognized as intangible assets at their cost and are considered to have indefinite useful lives. Recognition applies, if and only if, all the following have been demonstrated:
– – The technical feasibility of completing the intangible asset so that it will be available for use or sale;
– – The intention to complete the intangible asset is to use or sell it;
– – The ability to use or sell the intangible asset;
– – That the intangible asset will generate probable future economic benefits;
– – The availability of adequate technical, financial, and other resources to complete the development and to use or sell the intangible asset; and
– – The disbursement attributable to the intangible asset during its development can be reliably appraised
Research expenses for technology and innovation projects are recognized in profit or loss when incurred.
F-25 Corporación Nacional del Cobre de Chile
Impairment of property, plant and equipment and intangible assets – Property, plant and equipment and intangible assets with finite useful lives are reviewed for impairment to verify whether there is any indication that the carrying amount may not be recoverable. lf such an indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment to be recorded.
For intangible assets with indefinite useful lives, their recoverable amounts are annually estimated at the end of each reporting period.
When an asset does not generate cash flows that are independent from other assets, Codelco determines the recoverable amount of the CGU to which the asset belongs.
The Corporation has defined each of its divisions as a cash generating unit
Recoverable amount of an asset is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. On the other hand, the fair value less cost of disposal is usually determined for operational assets considering the Life of Mine (‘LOM), based on a model of discounted cash flows, while the assets not included in LOM as resources and potential resources to exploit are measured by using a market model of multiples for comparable transactions.
If the recoverable amount of an asset or CGU is estimated to be less than it is carrying amount, an impairment loss is recognized immediately in profit or loss, reducing the carrying amount to its recoverable amount. In the event of a subsequent reversal of the impairment, the carrying amount is increased to the revised estimate of the recoverable amount, but to the extent that it does not exceed the carrying amount that would have been determined had no impairment been previously recognized.
The estimates of future cash flow for a CGU are based on future production forecasts, future prices of basic products and future production costs. Under IAS 36 Impairment of Assets, there are certain restrictions for future cash flows estimates related to future restructurings and future cost efficiencies. When calculating value in use, it is also necessary to base the calculations on the spot exchange rate at the date of calculation
j. Expenditures for exploration and evaluation of mineral resources, mine development and mining operations – The Corporation has defined an accounting policy for each of these expenditures.
Development expenses for deposits under exploitation whose purpose is to maintain production levels are recognized in profit or loss when incurred.
Exploration and evaluation costs such as: drillings of deposits, including expenses necessary to locate new mineralized areas and engineering studies to determine their
F-26
Corporación Nacional del Cobre de Chile potential for commercial exploitation are recognized in profit or loss, normally at the pre- feasibility stage.
Pre-operating and mine development expenses (normally after feasibility engineering is reached) incurred during the execution of a project and until its start-up are capitalized and amortized in relation to the future production of the mine. These costs include stripping of waste material, constructing the mine’s infrastructure and other works carried out prior to the production phase.
Finally, costs for defining of new areas or deposit areas in exploitation and of mining operations (PP8E) are recognized in property, plant and equipment and are amortized through profit or loss over the period during which the benefits are obtained.
k. Income taxes and deferred taxes – Codelco and its Chilean subsidiaries recognize annually income taxes based on the net taxable income determined as per the standards established in the Income Tax Law and Article 2 of D.L. 2398, Codelco also recognizes the specific tax on mining activities referred to in Law No 20026 of 2005, until December 31, 2023, and the Mining Royalty Tax referred to in Law No. 21590, as from January 1, 2024.
lts foreign subsidiaries recognize income taxes according to the tax regulations of the respective countries.
In addition, Codelco’s taxable income in each period is subject to the tax regime established in Article 26 of D.L. No. 1350, and it must pay the encumbrances in March, June, September, and December of each year, based on a provisional tax calculation.
The deferred taxes arising from temporary differences and other events that create differences between the accounting and tax bases of assets and liabilities, are recorded in accordance with the standards established in lAS 12 Income tax.
Deferred taxes are also recognized for undistributed profits of subsidiaries and associates, at the remittance tax rate on dividends paid by these companies to the Corporation.
I. Inventories – Inventories are measured at cost when such does not exceed net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale (¡.e., marketing, sales, and distribution expenses). Costs of inventories are determined according to the following methods:
– Finished products and products in process: These inventories are measured at their average production cost determined using the absorption costing method, including labor, depreciation of fixed assets, amortization of intangibles and indirect costs of each period. Inventories of products in process are classified in current and non-current, according to the normal cycle of operation
F-27 Corporación Nacional del Cobre de Chile
– Materials in warehouse: These inventories are valued at acquisition cost and the Corporation determines an allowance for obsolescence considering that slow-moving materials in the warehouse remain in stock.
– – Materials in transit: These inventories are measured at cost incurred at the end of reporting period. Any difference because of an estimate of net realizable value of the inventories lower than it carrying amount is recognized in profit or loss.
m. Dividends – In accordance with Article 6 of D.L. 1350, the Corporation has a mandatory obligation to distribute its net income as presented in the financial statements. The payment obligation is recognized on an accrual basis.
n. Employee benefits – Codelco recognizes a provision for employee benefits when there is a present obligation (legal or constructive) as a result of services rendered by its employees.
The employment contracts stipulate, subject to compliance with certain conditions, the payment of an employee severance indemnity when an employment contract ends. In general, this corresponds to one monthly salary per year of service and considers the components of the final remuneration which are contractually defined as the basis for the indemnity. This employee benefit has been classified as a defined benefit plan.
Codelco has also agreed to post-employment medical care benefits for certain retirees.
This employee benefit has been classified as a defined benefit plan.
These plans continue to be unfunded as of September 30, 2024.
The employee severance indemnity and the post-employment medical plan obligations are determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. The defined benefit plan obligations recognized in the statement of financial position represent the present value of the accrued obligations.
Actuarial gains and losses are recognized immediately in other comprehensive income and will not be reclassified to profit or loss.
The Corporation’s management uses assumptions to determine the best estimate of these benefits. The assumptions include an annual discount rate, expected increases in salaries and turnover rate, among other factors.
In accordance with its operating optimization programs to reduce costs and increase labor productivity by incorporating new current technologies andor better management practices, the Corporation has established employee retirement programs by amending certain employment contracts or collective union agreements to include benefits encouraging employees to early retire, for which the necessary provisions are made based on the accrued obligation at current value. In case of employee retirement programs which involve multi-year periods, the accrued obligations are updated using a discount rate
F-28 Corporación Nacional del Cobre de Chile determined based on financial instruments denominated in the same currency and similar maturities that will be used to pay the obligations.
o. Provisions for decommissioning and site restoration costs – The Corporation recognizes a provision for the estimated future costs of decommissioning and restoration of mining projects in development or production when a mining activity causes a disruption under a constructive or legal obligation. Costs are estimated on the basis of a formal closure plan and cost estimates are annually reviewed.
Costs arising from the obligation to dismantle a plant installation or other site preparation work, discounted to their present value, are provided for and capitalized at the beginning of each project or at the origin of the constructive or legal obligation as soon as the obligation to incur such costs arises.
These decommissioning and restoration costs are recorded in income through the depreciation of the asset that gave rise to such cost, and the use of the provision is made when the decommissioning materializes. Subsequent changes in estimates of decommissioning-related liabilities are added to or deducted from the costs of the related assets in the period in which the adjustment is made.
Other restoration costs, outside the scope of lAS 16, Property, Plant and Equipment, are provided for at their present value against operating results and the use of the provision is made in the period in which the restoration work is performed.
The accretion of the discount on a closure liability due to the passage of time is recognized as a finance expense in the statement of income.
p. Leases – The Corporation evaluates ¡ts contracts at initial application to determine whether they contain a lease The Corporation recognizes a right-of-use asset and a corresponding liability for lease with respect to all lease agreements in which Codelco is the lessee, except for short-term leases (defined as a lease with a lease term of twelve months or less) and leases of low-value assets. For these leases, the Corporation recognizes the lease payments as an operating cost on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which the economic benefits of the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the commencement date, discounted using the interest rate implicit in the lease. lf this rate cannot be easily determined, the Corporation uses the incremental borrowing rate.
The incremental rate for loans used by Codelco is determined by estimating the interest rate that the Corporation would have to pay for borrowing the necessary funds to obtain an asset of an equivalent nature similar in value to the right-of-use asset of the respective lease, in a similar economic environment over a similar term.
F-29 Corporación Nacional del Cobre de Chile
Lease payments included in the measurement of the lease liability mainly include fixed payments, variable payments that depend on an index or a rate and the exercise price of a purchase option. Variable payments that do not depend on an index or a rate are excluded.
The lease liability is subsequently measured as follows: the carrying amount increased to reflect the interest on the lease liability (using the effective rate method) and the carrying amount is reduced to reflect the lease payments made.
The Corporation revalues the lease liability as to the discount rate (and makes the corresponding adjustments to the asset for respective right of use) through a modified discount rate when:
There is a change in the term of the lease, or There is a change in the assessment of an option to purchase the underlying asset, or There is a change in an index or rate which generates a change in cash flows.
Right-of-use assets comprise the amount of the present value of payments not made at the contract inception date, and lease payments made before or up to the inception date, less lease incentives received and any initial direct costs incurred plus other decommissioning and site restoration costs. The right-of-use assets are subsequently measured at cost less accumulated depreciation and accumulated losses due to impairment.
When the Corporation incurs a cost obligation to dismantle or remove a leased asset, restore the location in which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured in accordance with IAS 37. Costs are included in the corresponding right-of-use asset unless those costs are incurred to produce inventories.
The right-of-use assets are depreciated during the shorter period between the term of the lease and the useful life of the underlying asset. If a lease transfers the ownership of the underlying asset or the cost of the right-of-use asset reflects that the Corporation expects to exercise its option to purchase, the right-of-use asset is depreciated over the useful life of the underlying asset. Depreciation is made from the start date of the lease.
The Corporation applies IAS 36 to determine if a right-of-use asset is impaired and recognizes any impairment loss identified, as described in the accounting policy for Property, plant and equipment.
q. Revenue from Contracts with Customers – Revenue is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to customers.
– – Sale of mineral goods and or by-products: Contracts with customers for the sale of mineral goods and or by-products include the performance obligation for the
F-30 Corporación Nacional del Cobre de Chile delivery of the physical goods and the associated transportation service, at the place agreed with the customers. The Corporation recognizes revenue from the sale of goods when the performance obligation is satisfied according to the shipment or dispatch of the products, in accordance with the agreed conditions, such revenue being subject to variations related to the content and or sale price at the date of its liquidation. Notwithstanding the foregoing, there are some contracts where the performance obligation is satisfied when there is receipt of the product instead of the buyers corresponding destination, thus recognizing revenue at the time of said transfer. When services of transport of goods are provided, the Corporation recognizes revenue when the service obligation is satisfied.
Sales that have discounts associated with volume subject to compliance with goals are recognized net, estimating the probability that the volume target will be reached.
Sales contracts include a provisional price at the shipment date. The final price is generally based on the London Metals Exchange (“LME”) price. Revenue from sales of copper is measured using estimates of the future spread of metal prices on the LME andor the spot price at the date of shipment, with subsequent adjustments made upon final pricing recognized as revenue. The terms of sales contracts with customers contain provisional pricing arrangements whereby the selling price for metal concentrate is based on prevailing spot prices on a specified future date after shipment to the customer (the quotation period). Consequently, the final price is set at the dates indicated in the contracts. Adjustments to provisional sale prices occur based on movements in quoted market prices on the LME up to the date of final pricing. The period between provisional invoicing and final pricing is typically between one and nine months. Changes in fair value over the quotation period and until final pricing are estimated by reference to forward market prices for applicable metals.
As indicated in the note related to hedging policies in the market of metal derivatives, the Corporation enters into operations in the market of metal derivatives. Gains and losses from those which are fair value hedges contracts are recognized as revenues.
– Rendering of services: Additionally, the Corporation recognizes revenue for rendering services, which are mainly related to the processing of minerals bought from third parties. Revenue from rendering of services is recognized when the amounts can be measured reliably and when the services have been provided.
r. Derivatives contracts – Codelco uses derivative financial instruments to reduce the risk of fluctuations in sales prices of its products and of exchange rates.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently measured to their fair value at the end of each reporting period.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and
F-31 Corporación Nacional del Cobre de Chile accumulated in equity under the item “Cash flow hedge reserve. The gain or loss relating to the ineffective portion is immediately recognized in profit or loss and included in the Finance cost or Finance income line items, depending on the effect of such ineffectiveness. The amount recognized in comprehensive income ¡s reclassified to income, in the same line in which the effects generated by the hedged item are recorded once the results of the hedged transactions are recorded in the same line or until the maturity date of such transactions.
A hedge is considered highly effective when it meets the requirements of IFRS 9. At the time of discontinuation of the hedge contract or the associated designated accounting and according to the circumstances of each case, the accumulated gainloss on the derivative instrument remains in equity until the hedge transaction occurs, or if discontinuation is expected to occur, the amount in equity is reclassified to profit or loss.
The total fair value of hedging derivatives is classified as non-current financial asset or liability, ifthe remaining maturity of the hedged item ¡is greater than twelve months, and as current financial asset or liability if the remaining maturity of the hedged item is less than twelve months.
The derivative contracts held by the Corporation have been entered into to apply the risk hedging policies and are accounted for as indicated below:
– – Hedging policies for exchange rate risk: The Corporation enters into exchange rate derivatives to hedge exchange rate variations between the U.S. dollar and the currencies of transactions the Corporation undertakes. In accordance with the policies established by the Board of Directors, these hedge transactions are only entered into when there are recognized assets or liabilities, forecasts of highly probable transactions or firm commitments. The Corporation does not enter into derivative transactions for non-hedging purposes.
– Hedging policies for metal market prices risk: In accordance with the policies established by the Board of Directors, the Corporation entered into derivative contracts to reduce the inherent risks in the fluctuations of metal prices.
Hedging policies seek to protect expected cash flows from product sales operations by adjusting, when necessary, physical sales contracts to its commercial policy. When the sales commitments are fulfilled and the metal derivative contracts are settled, there ¡s an offset between the results of the sales transactions and the results of hedging using metal derivatives.
Hedging transactions carried out by the Corporation in the metal derivatives market are not undertaken for speculative purposes.
– Embedded derivatives: The Corporation has established a procedure that allows for evaluation of the existence of embedded derivatives in financial and non-financial contracts. Where there is an embedded derivative, and the host contract is not a
F-32 Corporación Nacional del Cobre de Chile financial instrument and the characteristics and risks of the embedded derivative are not closely related to the host contract, the derivative is required to be recognized separately.
s. Segment reporting – The Corporation has defined its Divisions as its operating segments in accordance with the requirements of IFRS 8, Operating Segments. The mining deposits in operation, where the Corporation conducts its extractive and processing activities are managed by the following Divisions: Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina and El Teniente. In addition, the smelting and refining activities are managed at the Ventanas Division. From June 2023 the Ventanas Division only manages the refining area. All these Divisions have a separate operational management, which reports to the Chief Executive Officer, through the North and South- Central Vice-President of Operations, respectively. Main revenue and expenses items controlled by the Head Office are allocated to the Divisions.
t. Presentation of Financial Statements – For purposes of lAS 1 Presentation of Financial Statements, the Corporation presents its statement of financial position classified as “current and non-current” and its statements of income “by function and cash flows using the direct method.
u. Current and non-current financial assets – The Corporation determines the classification of its financial assets at the time of initial recognition and reviews it at each closing date.
The classification depends on the business model in which the investments are managed and the contractual characteristics of their cash flows.
The Corporation’s financial assets are classified into the following categories:
– – Atfair value through profit or loss: Initial recognition: This category includes those financial assets that do not qualify in the business model to collect contractual cash flows, nor do such cash flows come exclusively from capital and interest. These instruments are initially recognized at fair value.
Subsequent recognition: Their subsequent recognition is at fair value, recording in the consolidated statement of comprehensive income, in the line Other gains (losses) any changes in fair value.
– – Amortized cost: Initial recognition: This category includes those financial assets that qualify in the business model and that are held for the purpose of collecting contractual cash flows and that meet the “Solely Payment of Principal and Interest” (SPPI) criterion. This category includes certain Trade and other current receivables, and the loans included in other non-current financial assets.
Subsequent recognition: These (debt) instruments are subsequently measured at amortized cost using the effective interest method. The amortized cost of a financial
F-33 Corporación Nacional del Cobre de Chile asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any impairment allowance.
Interest income is recognized in profit or loss and is calculated by applying the effective interest rate to the gross carrying amount of a financial asset. For financial assets measured at amortized cost that are not part of a designated hedging relationship, exchange differences are recognized in profit or loss in the Foreign exchange difference line item.
– – Atfair value through other comprehensive income: Initial measurement: Financial assets that meet the criteria “Solely payments of principal and interest” (SPPI) are classified in this category and must be maintained within a business model both to collect the cash flows and to sell the financial assets.
These instruments are initially recognized at fair value. In this section, investments in equity instruments are also included.
Subsequent recognition: Their subsequent valuation is at fair value. Interest income calculated using the effective interest rate method, foreign exchange gains and losses, impairment, and dividends are recognized in income. Other net gains and losses are recognized in other comprehensive income. On derecognition, the gains and losses accumulated in comprehensive income while for investments in equity instruments, their reclassification is recorded in retained earnings. Codelco has irrevocably elected to present subsequent changes in the fair value of the investment in equity instruments in other comprehensive income.
v. Financial liabilities – Financial liabilities are initially recognized at fair value net of transaction costs. Subsequent to their initial recognition, the valuation of the financial llabilities will depend on their classification, within which the following categories are distinguished:
– – Financial liabilities at fair value through profit or loss: This category includes financial liabilities defined as held for trading.
Changes in fair value associated with own credit risk are recorded in other comprehensive income unless doing so creates an accounting mismatch.
– – Financial liabilities measured at amortized cost: This category includes all financial liabilities other than those measured at fair value through profit or loss.
The Corporation includes in this category bonds, obligations and other current payables.
These financial liabilities are measured using the effective interest rate method, recognizing interest expense based on the effective rate.
F-34 Corporación Nacional del Cobre de Chile
The method of the effective interest rate corresponds to the method of calculating the amortized cost of a financial liability and the allocation of interest expenses during the corresponding period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period, to the net carrying amount on initial recognition.
Trade and other current payables are financial liabilities that do not explicitly accrue interest and are recognized at their nominal value, which approximates ¡ts fair value.
Financial liabilities are derecognized when the liabilities are paid or expire.
w. Impairment of financial assets – The Corporation measures the loss allowance at an amount equal to lifetime expected credit losses for certain of its trade receivables. For these, it uses the simplified approach as required under |FRS 9.
The provision matrix is based on the Corporation’s historical credit loss experience over the expected life of such trade receivables and is adjusted for forward-looking estimates considering the most relevant macroeconomic factors that affect bad debts.
Other accounts receivable and other financial assets are reviewed using reasonable and sustainable information that is available without cost or disproportionate effort in accordance with IFRS 9 to determine the credit risk of the respective financial assets. A provision for impairment losses on trade receivables and other financial assets is established when there is objective evidence that the amounts due may not be fully recovered.
X. Statement of cash flows – The statement of cash flows reflects changes in cash that took place during the period, determined under the direct method. The Corporation has defined the following:
– Cash flows: Inflows and outflows of cash or cash equivalents, which are defined as highly liquid investments maturing in less than three months with a low risk of changes in value.
– – Operating activities: Are the principal revenue-producing activities of the Corporation and other activities that are not investing or financing activities.
– Investing activities: These are the acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.
– Financing activities: These are activities that result in changes in the size and composition of net equity and borrowings of the Corporation.
Bank overdrafts are classified as external resources in current liabilities.
F-35 Corporación Nacional del Cobre de Chile
y.
dd.
Law No. 13196 – Under this law, the return in foreign currency of sales abroad of the Corporation’s actual income from its copper production, including by-products, is taxed at
10%. The amount recognized for this concept is presented in the statement of income within the line item Other expenses by function. (Note 111.23 letter c).
Cost of sales – Cost of sales is determined according to the absorption costing method, including the direct and indirect costs, depreciation, amortization and any other expenses directly attributable to the production process.
Classification of current and non-current balances – In the consolidated statement of financial position, the balances are classified according to their maturities, that is, as current for those with a maturity equal to or less than twelve months and as non-current for those with a greater maturity. Where there are obligations whose maturity is less than twelve months, but whose long-term refinancing is insured upon a decision by the Corporation whose intention is to refinance, through credit agreements available unconditionally with long-term maturity, these could be classified as non-current liabilities.
F-36
Corporación Nacional del Cobre de Chile
3. New standards and interpretations adopted by the Corporation
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those applied in the preparation of the Corporation’s annual consolidated financial statements for the year ended December 31, 2023, except for the adoption of new standards, interpretations and amendments, effective from January 1, 2024, which are:
a) Classification of Liabilities as Current or Non-Current (Amendments to lAS 1)
The amendments aim to promote coherence in applying its requirements by helping companies to determine whether, in the statement of financial position, debts and other liabilities with an uncertain settlement date must be classified as current (maturing or potentially maturing in one year or less) or not current. It is important to note that this amendment must be applied retrospectively and early application is permitted.
b) Lease liability on a sale and leaseback (Amendments to IFRS 16)
The amendment clarifies how a lessee subsequently measures sale and leaseback transactions that meet the requirements of IFRS 15 to be accounted for as a sale.
c) Non-current liabilities with covenants (Amendments to lAS 1) The amendment clarifies how the conditions that an entity must meet within twelve months after the reporting period affect the classification of a liability.
d) Suppliers financial agreements (Amendments to lAS 7 and IFRS 7) The amendments add disclosure requirements and “signaling within the existing disclosure requirements, which request entities to provide qualitative and quantitative information on suppliers financing arrangements.
The application of these amendments had no impact on the Corporation’s consolidated financial statements, but may affect the accounting for future transactions or arrangements.
F-37 Corporación Nacional del Cobre de Chile
4. New accounting pronouncements
The following new standards, amendments and interpretations had been issued by the lASB, but their application is not yet mandatory:
New IFRS Date of mandatory Summary application Lack of interchangeability | Annual filing and reporting | The amendments contain Amendments to lAS 21) periods beginning on or after| guidance to specify when a
January 1, 2025. Not yet currency is exchangeable and how approved for use in the EU. [to determine the exchange rate when it is not.
Modifications to SASB Annual reporting periods The amendments remove and standards to improve their beginning on or after January 1, | replace jurisdiction-specific international applicability 2025. Will not be approved for | references and definitions in the use in the EU. SASB standards, without materially altering industries, topics or metrics.
Presentation and disclosures in | Applicable for annual periods Not yet approved for use in the EU financial statements IFRS 18 | beginning on or after January 1, | |IFRS 18 includes requirements for all
2027. entities applying IFRS for the presentation and disclosure of
Not yet approved for use inthe information in the financial
EU statements.
Subsidiaries without public Applicable for annual periods IFRS 19 specifies the disclosure accountability: IFRS 19 beginning on or after January 1, | requirements that a subsidiary may disclosures. 2027. apply instead of the disclosure requirements of other IFRS
Not yet approved for use in the Accounting Standards.
EU
F-38 Corporación Nacional del Cobre de Chile
Amendments to IFRS 9 and Annual reporting periods The amendments address issues
IFRS 7 relating to the beginning on or after January 1, | identified during the post- classification and measurement | 2026. implementation review of the of financial instruments. classification and measurement Not yet approved for use in the | requirements of IFRS 9 Financial EU Instruments.
Annual Improvements to IFRS | Annual reporting periods starting | The pronouncement includes the Accounting Standards – on or after 1 January 2026. following amendments:
Volume 11 Not yet approved for use in the | IFRS 1: Hedge accounting by a first-
EU. time adopter.
IFRS 7: Gain or loss on derecognition of accounts disclosure of the deferred difference between fair value and transaction price introduction and disclosures about credit risk.
IFRS 9: Derecognition of lease llabilities by lessee at transaction price.
IFRS 10: Determination of a “de facto agent” lAS 7: Cost method.
Management is currently evaluating the impact of the adoption of these new regulations and modifications. lt is not expected to have a significant impact on the consolidated financial statements.
F-39 Corporación Nacional del Cobre de Chile
III… EXPLANATORY NOTES
1. Cash and cash equivalents
The detail of cash and cash equivalents as of September 30, 2024 and December 31, 2023, is as follows: Item 9-30-2024 12-31-2023 ThUS$ ThUS$ Cash on hand 139 1,030 Bank balances 1,005,563 618,501 Deposits 596,695 698,085 Mutual funds – Money market 19,897 24, 427 Total cash and cash equivalents 1,622,294 1,342,043
Interest on time deposits is recognized on an accrual basis using the contractual interest rate of each of these instruments.
The Corporation does not hold any significant amounts of cash and cash equivalents that have a restriction on use.
Cash and cash equivalents meet the low credit risk exemption under |FRS 9. The classification of time deposits meet the requirements of 7.
2. Trade and other receivables
a) Trade and other receivables
The following table sets forth trade and other receivables balances, with their corresponding expected credit loss provision:
Item Current Non-current
9-30-2024 12-31-2023 9-30-2024 12-31-2023 ThUsS$ ThUS$ ThUS$ ThUsS$
Trade receivables (1) 2,134,393 2,719,360
Allowance for doubtful accounts (3) (1,682) (1,591)
Subtotal trade receivables, net 2,132,711 2,717,769 – – Other accounts receivable (2) 475,169 714,925 78,689 71,272 Allowance for doubtful accounts (3) (27,657) (27,026) – – Other other accounts receivable, net 447,512 687,899 78,689 71,272 Total 2,580,223 3,405,668 78,689 71,272
(1) Trade receivables correspond to the sales of copper and its by-products, those that in general are sold in cash or bank credit notes.
(2) Other receivables mainly consist of the following items:
F-40
Corporación Nacional del Cobre de Chile
Remaining tax credit susceptible to refund VAT and other taxes receivable, amounting to ThUS$241,637 and ThUS$ 414,058 as of September 30, 2024 and December 31, 2023, respectively.
Receivables owed by the Corporation’s personnel, for short-term and long- term current loans of ThUS$83,923 and ThUS$75,741, respectively (as of December 31, 2023 ThUS$83,778 and ThUS$70,079, respectively), both deducted monthly from their salaries. Mortgage loans granted to the Corporation’s personnel amounting to ThUS$24,187, which are mainly long- term, are with mortgage guarantees (as of December 31, 2023 ThUS$26,604).
Advances to suppliers and contractors, to be deducted from the respective payment statements for ThUS$95,022 and ThUS$117,332 as of September 30, 2024 and December 31, 2023, respectively.
Accounts receivable for factory services to ENAMI. These services for the year 2024 amounted to ThUS$1,127. Additionally, in order to complement the commercial commitments between Codelco and ENAMI, the Corporation purchases copper concentrate and by-products and sells cathodes to ENAMI.
Both Codelco and ENAMI are companies owned by the State of Chile.
(3) The Corporation recognizes an expected credit loss provision based on its expected credit loss model.
The reconciliation of changes in the expected credit loss provision, were as follows: leen aa | 11100 mes ‘ its
Opáning balance 67 | TA
Meza Me] 3610 has A
Letal ÁCIDO dr Movement cubo! ma | 1537)
Closing balance | 2330 | 20,617
The balance of past due but not impaired balances is as follows:
Agatng SOM | 12312070 ThE ES: | ev Ea O plas | ñ l am INM E da Eh Ciet le MEL | mul Total urprorriionsd part-dus debt | 2601 | 1H
F-41
Corporación Nacional del Cobre de Chile
b) Accruals for open sales invoices
The Corporation adjusts its revenues and trade receivable balances, based on future copper prices through the recognition of an accrual for open sales invoices.
When future price of copper is lower than the provisional invoicing price, the accrual is presented in the statement of financial position as follows:
For those customers that have due balances with the Corporation, the accrual is presented as a deduction from the line item trade and other current receivables.
For those customers that do not have due balances with the Corporation, the accrual is presented in the line item trade and other current payables.
When the future copper price is higher than the provisional invoicing price, the accrual ¡is added to the line item trade and other current receivables.
Accordingly, as of September 30, 2024, a positive provision of ThUS$125,120 was recorded in the account Trade and other receivables for provisions for unfinished sales invoices. As of December 31, 2023 it was a positive provision of ThUS$83,778.
As of September 30, 2024 and December 31, 2023, the negative provision for unfinished invoices, associated with clients that do not maintain balances owed to Codelco, was reclassified to the Trade payables item of current liabilities, ThUS$3,464 and ThUS$1, respectively, which added to the balance presented in the Trade debtors and other accounts receivable item, total a positive net provision of ThUS$121,656 and ThUS$83,777, respectively.
3. Balances and transactions with related parties
a) Transactions with related persons
In accordance with Law on New Corporate Governance, the members of Codelco’s Board are, in terms of transactions with related persons, subject to the provisions of Title XVI of Law on Corporations, which sets the requirements regarding transactions with related parties in publicly traded companies and their subsidiaries.
Notwithstanding the foregoing, pursuant to the provisions of the final paragraph of Article 147 b) of Title XVI, which contains exceptions to the approval process for transactions with related parties, the Corporation has established a general policy over customary transactions (which was communicated through a significant event notice to the CMF), that defines customary transactions as those carried out with its related parties in the normal course of business, which contributes to the social interest and are necessary to the normal development of Codelco’s activities.
F-42 Corporación Nacional del Cobre de Chile
Likewise, consistent with the referred to above standard, the Corporation has implemented as part of its internal regulatory framework, a specific policy dealing with business between related persons and companies with Codelco’s executives. Codelco’s Corporate Policy No.18 (“CCP No. 18), the latest version currently in force, was approved by the Chief Executive Officer and the Board of Directors.
Accordingly, Codelco without the authorization required in CCP No. 18 and of the Board of Directors, as required by Law or by the Corporation by-laws, shall not enter into any contracts or agreements involving one or more Directors, its Chief Executive Officer, the members of Division’s Managing Committees, Vice-presidents, Legal Counsel, General Auditor, Division Chief Executive Officers, Advisors of Senior Management, employees who must make recommendations andor have the authority to award tenders, assignments of purchases andor contracting goods and services, and employees in management positions (up to fourth hierarchical level in the organization), including their spouses, children and other relatives up to second degree of relation, with a direct interest, represented by third parties or on behalf of another person. Likewise, CCP No. 18 requires administrators of Corporation’s contracts to declare all related persons and disqualify himselfherself if any related persons are involved within the field of hisher job responsibilities.
This prohibition also includes the companies in which such administrators are involved through ownership or management, either directly or through representation of other natural persons or legal entities, as well as those individuals who also have ownership or management in those companies.
The Board of Directors has been informed and approved certain transactions as defined in CCP No. 18.
These operations include those shown in the following table, for the total amounts mentioned, which must be executed within the time periods specified in each contract:
F-43 Corporación Nacional del Cobre de Chile | | 13M 114 Pida 111445 FURA | UR | A A AS Et Ml cido “pa ia – O e al E ed 134 TH.33 E A Soon . MiS =| .
Aj hermas Sr 5 TAEMGA | Cóla ¡tgsccata bie 120 y . 4 SA 003061500 | Codo JEsplagan salas Sarria WS j WMirrda a A Darro 20 A – LE (CIO impar Lis Ltd TELMO) | Cós [Employes sais Garcia -| um . – arre de Capacitación y Becwación dore rx A Sirrimi Po] vd 1 sal oa ges [ita ray de SAG MOS | Cha Empieyes ist lec ss . .
PA Dr Lia LE Mir? uG4 | Cháp ¡Al A . 1 – .
Corral rgor taras TP O00JOOA | Calo Ecce her Ja .
mas [asp por 3d EA Beren . : – ¿ Ds Eta Mali 54 MUNDI? | Cilp ¡Alea Sei Fr . Da – ¡Eat Pepita CE La MUSOUIT+J | Dile [Espleytos visto Sm ‘ Adi] : om pera de Dora E TUOBCsiDS | Cada Epia orto Jena! pa , m rico y hear Bai y Lata eta y Gr bo DTS E aida y – leyera Lt GUABLENCA O Cia Epica mel hacen E . .
bio A ACI 2004 – .
¡ o cd q Tide pl id te an ae ps det : .
ari rt ds a Pod Gr a AFTIS? | Oda mes DSrrori 2, m a 138 sane Saraiaca 84 MOGU1Erd | Cia PEN Ecce ess FA Bl mas .l Wrerma decian 34 DASODOS | Codo ¡AB hr | | | – reg Crán $1 PUROS | Cua Eneas | eri | am | mas bat de aa ES Td MUA OO | Ca ar Tar rá, 54 308 paa! But Eco e ra IO | Cod mae a ,| ú Uardacon brad eins | Faria Sr | : a a o Ar MA A o | : raras Zoriraclr Sap co Ed a Sar a o Je su ra 11104 PAPA ARA NA E A Ha +. 18 478 El tere da Dotes LAA MIMO? | Cua die Bro Ed a! ‘ so : ¿De mt y Ey A Ge ‘ | en Jara 5, dao: | Os Ferial Dear Lara Jl 1 ” 4% Era HITEOS | Cuán Esityió mástva Sea | MN 81) EN E ron 75 MG 137 Ha Aspa Cda Da QA a Exe Sepa ‘ ‘ Leda Cat Cda 54 A Surpiea +| Al Loop Findior Sarecon de Marierirmants Egugos de Lecaráa 394 TIA | Os iia Daga dl e rl Mr PL E A Saori ‘ Mz 1d Magotema Cin $ A EA: EA La DA .| Maridacioaa ES mia E Suppósn $4 .
Moss Cares Tp Ed A A | ‘| A! 115 Motor Sci 5d A A) mn! , Mera cs deriva A Sericia .
ud da EN M0 i>? | Cla Pr ol Grace roca HR] .| Má Pre 3d PAÑOH DOS | Cia Essolayist melee lanar, y $ ra Dd WET e Expo A heces | El : : 5 (3 mps Coral Leds MO] De Esper ron | .| : : Sareca csm Janet? Maguraras $25 KEMOOO) Coda Epia ts tario . ‘ E o De cita ,| eN : Sra nm a rr Ur rd AP A error +| 34M á 1 EE A Serra rel mm =z * Soceaad Syria Mirra E sorbo A E *| o . .
Ac lr dd A Faraón Mx | A 2719 de Ciemat Sd MTI Dile Esplats senti hits ,| i : .
sola olor Arterin Tda 54 TSG Cada Esplopa Lera me E) : 3 Tora hora y Comaiciar: Cra UPA MU Ea a lao | ars E 00 I
b) Key Management of the Corporation
In accordance with the policy established by the Board of Directors and its related regulations, the transactions with the Directors, the Chief Executive Officer, Vice Presidents, Corporate Auditor, the members of the Divisional Management Committees and Divisional General Managers shall be approved by the Board of Directors.
F-44 Corporación Nacional del Cobre de Chile
During the nine and three-month periods ended September 30, 2024 and 2023, the members of the Board of Directors have received the following amounts as per diems, salaries and fees:
12024 | 11.20%) | 74-205 | 7.4200 Tarpapet BD maracion FI0 020952078 +10 101493 H 05 mano e Douro y Matera sl ricas be A ss Ta z HE e [a Hr e ra Ma 1 . ] bh rios $ 3 lpm, lp Fl do Eráriry Cirrus FUI PE Pob ¡Discos Diepuior loa = eo Neu 151 Ae A jean Íino Vino “aa Ela 56311274 Fil aman di re Essrd dl de | era le = Y ¿ uabra Vorerey rea | 107001 154. Hs | lesdoio Ary | . .l ra oo aia Ad MA Pis Leeciol Era de 5d . | A As Herria H IIVETPA e ¡re ¿ps der – tel daa Larrea errámeda 14 25 FTP 3 |, Dencra Ferdi r1 A, ta add lag bd Ad Juá LL er le P e .
do EA a l Ei Tré ¡A ron e rad Amore buenas 5 PA “rl Cad ERAN ls ma – xi
The Ministry of Finance through Supreme Decree No. 233, dated February 09, 2022, established the compensation for the Corporation’s Directors. The compensation to Board of Director members ¡is as follows:
a. The Directors of Codelco will receive a fixed monthly compensation of Ch$4,413,071 (four million four hundred thirteen thousand seventy-one Chilean pesos) for meeting attendance. The payment of the monthly compensation requires at least one meeting attendance each month.
b. The Chairman of the Board will receive a fixed monthly compensation of Ch$8,826,140 (eight million eight hundred and twenty-six thousand one hundred and forty Chilean pesos).
c. Each member of the Directors” Committee, whether the one referred to in Article 50 bis) of Law No. 18046 or another established by the Corporation by-laws, will receive a fixed additional monthly compensation of Ch$1,471,022 (one million four hundred and seventy- one thousand and twenty-two Chilean pesos) for meeting attendance, regardless of the number of committees of which they are members. In addition, the Chairman of the Directors Committee will receive a fixed monthly compensation of Ch$2,942,047 (two million nine hundred and forty-two thousand- and forty-seven-pesos Chilean pesos).
d. The compensation established in the legal text is effective for a period of two years, as from March 1, 2022, and will not be adjusted during said period
On the other hand, the short-term benefits to key management of the Corporation expensed during the nine-month periods ended September 30, 2024 and 2023, were ThUS$8,694 and ThUS$11,512 respectively.
The methodology to determine the remuneration of key management was approved by the Board of Directors at a meeting held on January 29, 2003.
F-45 Corporación Nacional del Cobre de Chile
During the nine months ended September 30, 2024 and 2023, severance payments and other payments associated with the retirement of Codelco’s senior executives were ThUS$1,302 and ThUS$1,269, respectively.
There were no payments for other non-current benefits during the periods ended September 30, 2024 and 2023, other than those mentioned in the preceding paragraph.
There are no share-based payment plans.
Transactions with companies in which Codelco has ownership interest
The Corporation undertakes commercial and financial transactions that are necessary for its activities with its subsidiaries, associates and joint ventures (related parties). The financial transactions correspond mainly to loans granted (mercantile current accounts).
Commercial transactions with related companies mainly consist of purchasessales of products or rendering of services carried out under market conditions and prices, which do not bear any interest or indexation.
The Corporation does not make expected credit loss provision accounts on the main items receivable from its related companies since these have been subscribed with the relevant safeguards in the respective debt agreements.
The detail of accounts receivable and payable between the Corporation and its related parties as of September 30, 2024 and December 31, 2023 is as follows:
Accounts receivable from related entities: | Ciareni | MOR TRA =] 6 – 5 Lamparas M0 Mo | q. [upre A E pm [usa] sera [| una 34 g | ori A 0 0 RI O la A A e a a A AE “3% SO Sl par | ruido dl Cr 8 | Em am sl 16m Ñ A O a 2. i wn | on las lorena [ore rt o | Faz a 134 L E | 5 A Marzo Es A md dal | rá DN l | Pia]
1 – . E Ll bi Pra. eb ma mear | dos | ed Accounts payable to related entities:
T . | | . ral | dor rar | : a Eragues HE ts ma pena dl raid ara E 7 Pa – “ME | A od | bear midi a al . o a _ . ma – a – -_-_-_- – O E A A o A ! al ap 3 ||
FE” Ms a raja ra q!
O BEE B
A A A AE a [usas Lira E
A A] MPA
F-46 Corporación Nacional del Cobre de Chile
The following table sets forth the transactions carried out between the Corporation and its related entities during the the nine and three -month periods ended September 30, 2024 and 2023 are detailed below:
EN 77 |
| 1.1.2041 | ¡0 1111 | | a ia MR 50670 sm |
– 2 ¡Po FP – da -.
! mí ms E br ei A | | O | muaa ers eta: Mo 11 prensa da rage a posi |
A upre FEA Pan *l Leia , | Ae Pr popa
EE | Bn 15 | A Pre N 1H “ez | EARL A Ll A A | o | E e E E
Anota A > a e PD Li 7 ari Aa tl ‘ Fl Í A Ea? Llar a 9 o o La a Pda a | Ham | FA ! ¿1 | AA E LP a | ul (¿qa m1] Mos E 1 CHA ‘ a | ¡1 ia | e A A Tm | $ + Lar] | TN bis |
A a E MA | a | an Ar] a NL 15] = Fe i 10d ” Hed Cad jc a De A Aa pa | uE ir 1 | ls 15% | | ati Por Pa e ar ms | Ci AP A | dl | a
Era a MA [A | Cua Cul 1 a hit” E 1 if | 500] TE a e ri E A | mm Y, i 1 L L | mida? ir AE A A AP A dl a Y “súa En ¿N uy “ul ¿F e e a ¡a Par in E a [pr ad | a e 3 *| = | LN] cd 3] | id E MA Ra CARA EA o PUE AA A | Cra ¿4 1 lh4l Add MERA e E | HET eo EE 4] a a a TA Mr Y er A rl car | te Jn hau til mp del al A a. Hal ña | Ens a A po ll vá Sr ¿E | Ca dl il Le] pda dl | me] ls | ml o ls AAA it y ais at la ln dá mi | pl ha ‘| ta 8 L | | A A A | Cm 4] La a | au HE? Er | Er | j
d) Additional information
The purchasesales of products transactions with Anglo American Sur S.A., are regular business activity transactions to buysell copper and other products. On the other hand, there are certain transactions related to the contract entered into with the subsidiary Inversiones Mineras Nueva Acrux SpA (whose non-controlling shareholder is Mitsui) and Anglo American Sur S.A., under which the latter agreed to sell a portion of its annual copper output to said subsidiary.
4. Inventories
Inventories as of September 30, 2024 and December 31, 2023 are detailed as follows:
CPI MOS -CUMIEO! hee 0-36:302 pra | msm | Main Tre Te TUS TS [Frases prosa JJ GnS ru ps cti nt Ei lic o Po m prono AT 150171 St. Hi3 de a Soblatal product process, 164 paraa] tamara] bras] anar Olano e que téscrzio AP DINA 1.000.434 1.033034
A Er OOOO DAT [ARE N 1H Y511
Bitter rte in arta ami clhta NOA 1 ss 117 |
ECM Mat PAT? ¿ES 70 A] asa fal
Inventories recognized in cost of sales during the nine-month periods ended September 30, 2024 and 2023, correspond to finished products and amount to ThUS$9,217,249 and ThUS$9,879,696 respectively, which do not consider the cost of processing services of ThUS$14,186 and ThUS$19,156, respectively.
F-47 Corporación Nacional del Cobre de Chile
During the nine-month period ended September 30, 2024, US$43,687 was reclassified from the inventory item for strategic inventories to the property, plant and equipment item.
The reconciliation of changes in the allowance for obsolescence is detailed below: eeapnt ppLOSELcenca prorigon | 3.10.P004 12-11-20 MALES EE: ¡Coen tarea (1P0 200) 11 3.1649 lorena PAE E MOTA Y a ys ICinng balance | (MARS ¡UA
During the nine-month periods ended September 30, 2024 and 2023, inventory write-offs of ThUS$6,852 and ThUS$8,475, respectively, were recognized.
At September 30, 2024 the provision for net realizable value of copper and its effect on income was ThUS$21,868 and a profit of ThUS$14,778 respectively (profit of TRUS$1,532 for the same period 2023). As of December 31, 2023, the net realizable value provision was ThUS$36,645.
As of September 30, 2024 and 2023, there are no unrealized gains or losses recognized for purchase and sale transactions of inventories with related parties.
As of September 30, 2024 and 2023, there are no inventories pledged as security for liabilities.
5. Income taxes and deferred taxes
a) Deferred tax assets and liabilities
Deferred taxes are presented in the Statement of Financial Position as follows: ¡Dotar ras 0 4-24 19-31-2471 rus TUS MOPACAMNBAT ESAS 53 101 5K Me 1541 7ds 1 341,400 Total deferced Lames pel 1411 LAERITÓ
The following table shows the deferred tax opening, net, classified as assets or liabilities according to the nature of the temporary differences:
F-48 Corporación Nacional del Cobre de Chile |Doterred taa a554tr 0-30-202 123100) | TH£5EE TE PMC 00701 Dd 170 ¡Tao da EI 4H 20170 COMPIZ ATA PON e A 1454] 155 ore 1.15 10.023 Votal detected Laa assetg _ CEI ofárred 132 HAbitines LIA 4-4.00 must Teusá Aste CEPEDA 1,410,153 5% DI [Crarpé mn property, sant and Oquicónet UAT | 308 154 Tao cn earn acu BEAT 208,449 ¡FA vB Cl BOGUIBO MEA a CUR 160,259 WA RES [Cedar ecos des dl atlas 50 UI maes Era Atte 17538 014 Tre, Tan 112 Tata dólerred tax Iratities 10:595,012 10.575.124
b) The effect of deferred taxes recognized in comprehensive income ¡s detailed as follows:
A 3-10:2073 L A ear hdj 11,¿H eo ThE Dra El dns 63 4,300 A a
c) Composition of income tax (expense) AA 11-340 A 1) | Conqostion M-30-2054 15.20 arms | mz 151 mus Tay did a mill ANA vh.317 Tr ¡O A e sd 21.7231| ¿SU FUE: 51 al o ATI LEb t 15 TL el ¿13| Ñ ¡1 Total income Lar prapenvel CARA aloe | 114,64, (mara
F-49
Corporación Nacional del Cobre de Chile
d) The following table sets forth the reconciliation of the effective tax rate: > EJET4
.. 1, O pd olor O ¡iaa ] A oia O O A O IA 0 A a =p A A TE – Ap =P TAE AT 7 Pra PA 1 Tia ¡ah A A A TO E A FA LL Lu a] E k a Ar A A ro E 4 [Foral acourtdr AI a ET
15500) ho LAOS DAA 1D Pri ar | 50 Er | di dr | Pote 20 PR o a id úl se 18 p rá . mE l Fa o ar A lua P E LO AER 15 EIA 4154 1.4 FOUB pida 71 ol A A y a -, teni, A => pl par 11
– MT A e O A EA
>. le Le a Cad Ji ja *1 bl pr e Pe O TA e lira lr e jo YE [ TOTAL, PRECIO TU ET A
The Corporation has applied a rate of 25% to calculate deferred income tax and first category income tax. As a state company, the Corporation is classified as those companies of article 14 letter G of the Income Tax Law, incorporated in the Tax Reform Law No. 21210 of February 24, 2020, maintaining the General Regime of Taxation. Meanwhile, the national subsidiaries and associates, by default, have applied the Partially Integrated taxation system with a rate of 27% for both years. Foreign subsidiaries and associates have applied the tax rates in force in their respective countries.
Article 2 of Decree Law 2398 establishes an additional 40% income tax rate on the Corporation’s taxable income plus the share of retained earnings of companies not organized as corporations or joint stock companies and the dividends actually received from the latter.
On September 2, 2020, Law No. 21256 was published in the Official Journal, for the tax measures that are part of the emergency plan for economic reactivation. According to Article No. 3, added Article No. 23 bis of Law 21210, incorporating a temporary depreciation regime that allows full and instant depreciation of fixed assets and that is in force for acquisitions carried out between September 1, 2020, and December 31, 2022.
As a state company, the Corporation as a taxpayer that pays taxes based on effective income and complete accounting, availed itself of the indicated benefit as of tax year 2022.
F-50 Corporación Nacional del Cobre de Chile
Mining Taxes
On August 10, 2023, Law No. 21591 on Mining Royalty was published in the Official Gazette, effective as of January 1, 2024. The law establishes that the new mining royalty tax is comprised of two components: The ad valorem component and the mining margin component. The ad valorem component corresponds to 1% of copper sales and applies to miners whose copper sales represent more than 50% of total sales. The mining margin component applies a rate of between 8% and 26% on mining operating margins in the range of 20% to 80%.
Codelco has recognized in its third quarter financial statements the following effects for each component of the new Mining Royalty:
– Mining Margin Component: For the third quarter, a net deferred tax liability of US$62,680 was determined, which is presented in income tax expenses.
– Ad Valorem Component: For this same period, an Ad Valorem component of ThUS$84,744 was determined as a higher liability for this concept. lt is presented in current liabilities, other provisions, in the statement of financial position and in other expenses by function, in the statement of income (see notes 17 and 23, respectively).
6. Current and non-current tax assets and liabilities
The current tax balance is presented net of monthly provisional payments as an asset or llability in Current Taxes determined as indicated in section Il. Main accounting policies,
2.k): Current tax assets 9-30-202 12-34-2028 ThUS$ ThUS$ Recoverable taxes 2,093 2,620 Total current tax assets 2,093 2,620 Current tax liabilities 9-30-202 12-34-2028 ThUS$ ThUS$ Provisión PPM 13,147 11,188 Tax provision 6,879 3,226 Total current tax liabilities 20,026 14,414 Non-current tax assets 9-30-202 12-34-2028 ThUS$ ThUS$ Non-current tax assets 897,864 875,604 Total non-current tax assets 897,864 875,604
The total amount of current tax assets (non-current) does not consider the provision for the ad valorem component of the Mining Royalty of Law No. 21591, for US$ 84,744, indicated in note 5 and which is part of the Other Provisions item.
F-51 Corporación Nacional del Cobre de Chile
7. Property, plant and equipment
a) The items of property, plant and equipment as of September 30, 2024 and December 31, 2023, are as follows: ¡Property plaet hed eprpeetl ppoon 13414841 TILA EUR Dion er pera ps (E- E Paid ¿dee A 11) SE ar ¿4514 a ro 0 rd Peer | Ds 141 cs end ía ás | han Mor 9 bc, IMF | 1251.44 A 13 | + mm vai INEA 1 | 7 OA Aa * men cn | A) rs FA | TES Ica arepa PL ad Epa, ptr ULSA | AO Pepito PIT la e AAA Al e 0 ALA 141. 7003 , Li… Y _. ME 2 nm E 140.1 E AT Da IA | A q pl A 5 | af EE More aero 1804 HUA | 80491 PLAN A a dl | a Me re Y Ea | “us eee A TE “a E LA LE 241 property panal bed 40 pared ¡00 mae Depa h0a 465031 CTN po + 307008 (1H 9 fo Pal sap ÁIO DA UI | FAT NAT de 04 108 | FDA 418 amo 3pun sd AHEAD Ape A a pa Ji A der; cd bic: ae Mira is 4.04 Jia sde art MA 47 pe LL Arne sn LA | 45075 Jue operan anar | 1666441 E 8 Pi A | 158510 ¿ar Mr tas | ad do [loca ope pue nd Pjoprrera er PS Mee
F-52 Corporación Nacional del Cobre de Chile
b) Movements in property, plant and equipment
Praia 2 te LI al A == A e E Ss jar pa cel pp a a e a A is e, e, A
A A A A A A
0 ee e cr lp pl pie gn pep je pl e tó le pr A A A
PR PER O FIA ra a ir a a ps | sl real Ci ic 3 AA e Par Jarl e oca e UA equpreal : A = MA RUTA pl b PO A a E A E TA a A E A a ii a li al ad lim al da pls e dl
A, MA E AT ELA a o od il y e prenti e sad) ¡ OS llas tE E pa ¿Ed Fr]
F-53 Corporación Nacional del Cobre de Chile
C)
The balance of construction in progress is directly associated with the operating activities of the Corporation and relates to the acquisition of equipment for projects in construction and associated costs for their completion.
The Corporation has signed insurance policies to cover the possible risks to which the various property, plant and equipment items are subject, as well as the possible claims that may arise for the period of its activities. Such policies sufficiently cover the risks to which they are subject in Management’s opinion.
Capitalized interest costs during the nine-month periods ended September 30, 2024 and 2023 amounted to ThUS$241425 and ThUS$174,965, respectively. The annual capitalization rate was 4.95% and 4.7% at September 30, 2024 and 2023, respectively.
Expenses on exploration and drilling of deposits recognized in profit or loss and the cash outflows disbursed for the same concepts are presented in the following table:
Eipeeditcre ón PERDIO pd diiling resorroir 440 | 03
PILI 130-2073 | miss Fiel dt PR
Isi rio ir e pera 5 q | 517 [Cot oficoss ¡sboria] e 4 Pb The detail of “Other assets” under “Property, plant and equipment is as follows: Other assets. nel | 38.30.2024 12.31.0023
TrUSS TALISS
Mirung procares boo he purchase cl Anglo Ambrncan Sur S.A 260.000 250.000 tae Prot Asa: ] ¿ad $14 Marienances aro 0her mago! Mpar 110,203 55237 Orar Acces – Cacara Pan 7576 16-708 Cher 1.553 6.559 Other asseta, nel 620 149 350204
(1) Corresponds to the assets acquired in the purchase of the company Lithium Power International Limited in 2024. The value assigned to such assets was determined based on the consideration paid in the purchase transaction, plus transaction costs.
The Corporation currently has no ownership restrictions relating to assets belonging to Property, plant and equipment, except for leased assets whose legal title corresponds to the lessor.
Codelco has not pledged property, plant and equipment as collateral for debt obligations.
F-54
Corporación Nacional del Cobre de Chile
9. Leases
8.1 Right-of-use assets
As of September 30, 2024 and December 31, 2023, the breakdown of the right of use asset category ¡s: o LIA | 120 _- E 104 238 EAS 60d o A 198 067 190 156
Movements during the nine-month periods ended September 30, 2024 and year ended December 31, 2023 are as follows:
Recoocilanon ol cren in Rot 01 ge Areta Ly | Min Tha musa
Opening balince 074 det ed lr A 130.55 11037 Depracuion MIT001) (155,088) Pi a! a e 1 El Pri. rr ess (e 1043 Total cacreemente AL, (15.05 [Closiag balance ETA 300 758
The composition by asset class is as follows:
Pig? od amo ar e, dj IGAC QA | 0.1120) 1 _TMAA mLrsd sulirr PT 3.0% Lama EA e Pel EE ALA 115,108 EE:
Fuclrwe quad rs an 250 Literaria 116.69 112.18 Es EA Total 08 187 | 390 PSA
8.2 Liabilities for current and non-current leases
As of September 30, 2024 and December 31, 2023, the payment commitments for leasing operations are summarized in the following table:
TT : 12-31-22 A a Bo a. dl li a. Ey Prod Pera tod da? mal Atl ¡SAA ar A Feb Ls dnd Cr ATA honran 0 sr ar iJh aaa AT 14 10% Lu ¡lu 5ao 2 [a an * qu a E 1259 BIEN Hot id brisa 143 0 Que Y ira 1 3 par ua de el resta | PT ey Li tt pla ap 1 ph 3 NT 31508 pex tm ETT pue dr ad pa Nal 135% 55 Epa fa | ¡UA 405,8 soi € BF La a4p PE 450 41 pda 24d, Mu Ibi DEL PO 0 A E
F-55 Corporación Nacional del Cobre de Chile
Leasing operations are generated by service contracts, mainly for facilities, buildings, plants and equipment.
The expense related to short-term leases, low-value assets and variable leases not included in the measurement of lease liabilities, during the nine-month periods ended September 30, 2024 and 2023, is presented in the following table:
1-1.2024 11-207) ¡Leañe ciperse 9.-10:20%4 9-310-20723 UmSS THUSS ¡Shader le : 2 158 (2254 Lo adae seta 5643 CY Vanable ases pol nluded de De mepgurnemend ql lesope hub | 566 111 A 1E5S TOTAL 716,144 611520
9. Investments accounted for using the equity method
The value of the investment and the accrued results of investments accounted for using the equity method are presented below:
Pero Larra a op dera Per dee rei Er o
OTI] 154 EM 11-20 primo ] Mam dez rn Fuera Ds Proa 1-3 112 FIL 1151-30 ETS PIERO SE PEO 5 ! 5 ] Tal | TEAERS y Pia J Teal ] 1 ] TRAS J Aa A ¡ar al A gA 177 í ¡TA i ¡2 : A A FE 5 HE E e Fa dr Cra EZ 1 1 q Ta j á gras rs E COL: Al Lx lj 1 1 me EC HE: a ] LL El nr A id e La al E A $4 a Es a ¡ “ha Pr pd EA A ads =l | SS l ls] – Í A di UA “y . L– ho] PAL AL EL E O A | CP
a) Associates Nuevo Cobre S.A. (Former Agua de la Falda S.A.)
On November 8, 2023 the strategic association between Codelco and Nuevo Cobre S.A.
(Former Agua de la Falda S.A.) was formalized, where the company changes its corporate name.
As of September 30, 2024, Codelco holds a 42.26% ownership interest in Nuevo Cobre
S.A. (Former Agua de la Falda S.A.), with the remaining 57.74% owned by Minera Rio Tinto.
The corporate purpose of this company is to exploit deposits of gold and other minerals, in the Atacama region of Chile.
F-56 Corporación Nacional del Cobre de Chile
Sociedad Contractual Minera El Abra
Sociedad Contractual Minera El Abra was incorporated in 1994. As of September 30, 2024, Codelco holds a 49% ownership interest, with the remaining 51% owned by Cyprus El Abra Corporation, a subsidiary of Freeport-McMoRan Copper á Gold Inc.
The company business activities involve the extraction, production and selling of copper cathodes.
Sociedad Contractual Minera Purén
As of September 30, 2024, Codelco holds a 35% ownership interest, with the remaining 65% owned by Compañía Minera Mantos de Oro.
This company’s corporate purpose is to explore, identify, survey, investigate, develop and exploit mining deposits in order to extract, produce and process minerals.
Inca de Oro S.A.
On September 1, 2009, Codelco’s Board of Directors authorized the incorporation of a new company aimed to develop studies allowing the continuity of the Inca de Oro Project, which is a wholly-owned subsidiary of Codelco.
September 30, 2024, Codelco holds a 33.85% ownership interest in this company (PanAust IDO Ltda. has 66.15%).
Planta Recuperadora de Metales SpA
On December 3, 2012, Planta Recuperadora Metales SpA was incorporated by Codelco, which held a 100% ownership interest in this company.
In 2014, LS-Nikko Copper Inc. was incorporated into the ownership of this company.
As of September 30, 2024, Codelco holds a 34% interest in the capital stock of Planta Recuperadora de Metales SpA, with control remaining with LS-Nikko Copper Inc. based on the elements of control described in the shareholders’ agreement.
The principal business activity of the company is the processing of intermediate products of the refining and processing of copper and other metals aiming to recover copper, other metals and other sub products, their transformation to commercial products and the selling and distribution of all classes of goods or inputs derived from such process.
F-57 Corporación Nacional del Cobre de Chile
Anglo American Sur S.A.
The principal activities of the Company are the exploration, extraction, exploitation, production, processing and trading of minerals, concentrates, precipitates, copper bars and all metallic and non-metallic minerals, all fossil substances and liquid and gaseous hydrocarbons. This includes the exploration, exploitation and use of all natural energy sources capable of industrial use and the products or by-products obtained, as well as any other related, connected or complementary activities on which the shareholders agree.
On August 24, 2012, Codelco recognized the acquisition of ownership interest in Anglo American Sur S.A. which resulted in the initial recognition of the cost of the investment for TRUS$ 6,490,000 that corresponded to the proportionate share (29.5%) of the net fair value of the identifiable assets and liabilities acquired.
In determining the share of the fair value of the identifiable assets and liabilities acquired, the Corporation considered the resources and mineral reserves that could be measured reliably. As part of this updating process, and applying the valuation criteria indicated above, the fair value of the assets acquired and liabilities assumed of Anglo American Sur S.A. as of that date amounted to US$ 22,646 million, which in the proportion acquired by Inversiones Mineras Becrux SpA (29.5%) results in an investment at fair value of US $ 6,681 million at the acquisition date.
The allocation of the purchase price at fair value between the identifiable assets and llabilities was prepared by management using its best estimate and considering all relevant and available information at the acquisition date of Anglo American Sur S.A.
The Corporation used a discounted cash flows model to estimate cash flow projections, based on the life of mine. These projections were based on estimated production and future prices of minerals, operating costs and capital costs, among other estimates made at the date of acquisition. Additionally, proven and probable resources to explore were not included in the mine plan, therefore, they were valued separately using a market model. Such resources are included in item “Mineral Resources.
As of December 31, 2015, the Corporation identified indicators of impairment in the operating units of Anglo American Sur S.A. Consequently, and with the purpose of making the corresponding adjustments to the investment in this associate, the Corporation estimated ¡ts recoverable amount, considering the additional value of the assets identified at the date of acquisition of the investment.
In determining the recoverable amount, the Corporation applied the methodology of fair value less costs of disposal. The recoverable amount of the operating units was determined based on the life of mine by using a discounted cash flow model whose main assumptions included ore reserves declared by the associate, copper price, supply costs, foreign exchange rates, discount rate and market information for the long-term asset valuation. The discount rate used was an annual rate of 8% after taxes.
F-58 Corporación Nacional del Cobre de Chile
Furthermore, the resources not included in the mining plan (LOM) have been valued using a multiples market approach for comparable transactions. Such methodology is consistent with the methodologies used at the acquisition date, which is described in the previous paragraph.
Following recognition of the equity in earnings of the associate in accordance with the above details.
As of September 30, 2024, control on Anglo American Sur S.A. is held by Inversiones Anglo American Sur S.A. with 50.06%, while one of the companies that make up the non- controlling interest is Inversiones Mineras Becrux SpA., which is controlled by Codelco with 67.80% of the shares, and which exercises significant influence over Anglo American Sur S.A. with 29.5%.
As of December 31, 2023, the Corporation performed an evaluation of the value of its investment associated with Anglo American Sur S.A. and determined that the recoverable amount of the asset is less than the carrying value recorded, recognizing an impairment of ThUS$ 522,448 on the identifiable assets of the associate, which is recognized under the line Equity in earnings (losses) of associates and joint ventures accounted for using equity method in the statements of comprehensive income for the year 2023. The aforementioned impairment loss resulted from lower projected production and cost performance.
The recoverable amount for impairment purposes mentioned above was calculated using the fair value methodology less costs of disposal. The recoverable amount of the operating units was determined based on the life of mine by using a discounted cash flow model whose main assumptions included ore reserves declared by the associate, copper price, supply costs, foreign exchange rates, discount rate and market information for the long-term asset valuation. The discount rate used was annual rate of 6.77% after taxes.
Furthermore, the proven reserves not included in the mining plan (LOM), as well as the probable reserves to explore, have been valued using a multiples market approach for comparable transactions.
Subsequent to the recognition of the equity in earnings (losses) of the associate as detailed above, no indications are observed that would require additional impairment of the recoverable amount of the investment held in Anglo American Sur S.A.
Kairos S.A.
September 30, 2024, the control of the company lies in Honeywell Chile S.A. which owns 60% of the shares while Codelco owns the remaining 40%.
The purpose of the company is to provide automation and control services for industrial and mining activities and to provide technology and software licenses.
F-59 Corporación Nacional del Cobre de Chile
The following tables present the assets and liabilities as of September 30, 2024 and December 31, 2023 of investments in associates, as well as their respective results during the nine and three-month periods ended September 30, 2024 and 2023 and the main movements in investments as of that date.
$-30-2074 | 1231-2003 | pita url Moli TnuÍSS THUSS ¡Cuenend asueto 1420.083 174855 | Nora ass bd 507 0 SA | Cuererd habilita 1089388 | 1144753 | [Noe cment babunbes 2300020 | 2250.791
11:20 1-1-2023 71.204 7-1-2073 Profis Losa) 430-2024 | 930-2023 | 910704 | $30.2023 Thuss ThLi54 Thus5 THUS3 Remus 247752] 2398904 HAT 63.880 ¡Dedary experdes (2215.50 (2510081 – (158581 – (653070 Pepi Losa) lor he peñod ¿qa (111,405 ASA (31,792 142064 | 14212 Movement Investment in Associates] 230-2034 | 9.39:3091 MAperi balance AMARA] CIA | Cormbubor. ¿45 | Nel income loe he penod 4442 1H27H [Compreherdae mocme (38) Qihes Eh 41 ¡Ciosing balance 2951195 | 133,203 |
The following tables present a detail of the assets and liabilities of the most significant associates as of September 30, 2024 and December 31, 2023, as well as their respective results during the nine-month periods ended September 30, 2024 and 2023:
Anglo American Sur S.A.
00 | 141-000 Arerteand las TRES muiaS Carrer e 64000 E 000 [oe ral ossets Eli6c0] – ibi bos Cia bortes o Rc rd leida | MODO | 1557 000 Ma | mam | iaa | 1533 Profe joan) añ0.3034 | 2303073 | Mata | 8.30:0093 ThUES TmuSs5 TiniES TH55s Cria 1 E nta pesa q e 41-501 0001 ¡1011501 5% 240) (ud Prodi A a dar e per 141 500% das] CA (UBA;
F-60 Corporación Nacional del Cobre de Chile
Sociedad Contractual Minera El Abra ¡Assoto and lisbllltion 0-10-2024 | 12-31-2023 | Thuss THUSS | ICurer abs Ñ MATA 4 155) Ion cumeni ases 141,160 102 hab! ¡Currerd Latuibes 141,875 1236581 [Non-cuerani hatilibes MOT A 309.5 15!
11-202 1:1-2023 | 7.4-20024 7-1-2023 | Profit (hos) 39-30-2034 | 9302023 | 930304 | 930-2073 TAUS$ Thus$5 THUS5 ThuSs5 ¡Revenge 55,2% 638,.281| 2205 H ¿13 104 ¡rán ar expenses and other] – (6070071] (504845) (208231 (200,334 Prall lor the pera 17.660 33444 la 278 12770
b) Additional information on unrealized profits
Codelco carries out copper purchase and sale operations with Sociedad Contractual Minera El Abra. As of September 30, 2024 and 2023, the value of finished products under the Inventories caption did not present balances for unrealized profit provision.
As of September 30, 2024 and December 31, 2023, the Corporation maintains a balance for unrealized profits from the purchase of LNG terminal rights of use from Sociedad Contractual Minera El Abra for ThuS$2,042 and ThUS$2,123 respectively.
c) Share of profit or loss for the period
The income before taxes, corresponding to the proportion of Anglo American Sur SA’s results recognized for the period ended September 30, 2024, was a profit of ThuS$41,595 (loss of ThUS$23,749 for the period ended September 30, 2023). There were no adjustments to said inconme for the period ended September 30, 2024, associated with the fair value of the net assets of this company recognized at the acquisition date, whether due to depreciation, write-offs or other types of adjustments. For the period January – September 2023, lower income effects of ThUS$ 7,012 were recognized for the depreciation of the fair value of net assets, and TRUS$ 120,759 for the adjustment to the deferred tax liability associated with the effect of the new Royalty Law (Law No. 21,591) on the aforementioned fair values of net assets. (both effects are reducing the item “Share of profits (losses) of associates and joint ventures accounted for using the equity method” of the consolidated income before taxes).
F-61 Corporación Nacional del Cobre de Chile
10. Subsidiaries
The following tables set forth a detail of assets, liabilities and profit (loss) of the Corporation’s subsidiaries, prior to consolidation adjustments:
1231-03
Prof (Loss) lor Te panod
11. Other current non-financial assets
Assets and llabilitica pin ThUSS muss currar? axser mos | T05B ¡Hon-ourrert ass et 304505 ra (Ciprian? dabas ¿45 05 2507 Non-ouyrrent hables 56,13 550. 058
112026 | 11203 | 7.1202 7-1-2043 Profit (1683) 93020 | 9302023 | 2102024 | 970.22 Thuss TMuUSS muss | TRuSS came 20 Í 51050 sarosrl| 181418! [oranary expenses an2 ore eras] imosisos | mar] ass 23 551 ATI: (ra, | BT
As of September 30, 2024 and December 31, 2023, the composition of other non-current financial assets is as follows:
Other financial assets, non-current 09-30-2024 12-31-2023 ThUS$ ThUS$
Investment Quebrada Blanca S.A. (1) 520,000
Investment in shares 1,123 1,153
Other derivatives 30,138 101,762
Other derivatives 3,820 4,521
Total 555,081 107,436
(1) On September 5, 2024, the acquisition of the preferred series B shares held by ENAMI in Compañía Minera Teck Quebrada Blanca SA was completed for a total consideration of ThUS$520,000. As of September 30, 2024, an amount of ThUS$182,000 has been settled in cash, with the remaining balance of ThUS$338,000 to be paid within a period of 120 days (see note 16).
F-62 Corporación Nacional del Cobre de Chile
12. Current and non-current financial assets
Current and non-current financial assets included in the statement of financial position are as follows: A FT a j + Sar HE) Tar Lar lar Ha E 0 ds pde po TL “m A E a E rm e es pura tE ir q sr AD SA A Pula Lp o | PUES dd Mara d Lal el a FREE ed A E a Mi e HA A LEMON 13d EH A FE Hr A A e Y nm be A ig Ta cb ee Laa AA PE E A] PT 24 ¿3d Te E DT A 1 MT ¿pd ee 1143414 ce EA A A == Edil db Sa A OT, 134 M4 LE sl 14045 1 MAL 5 Ó4bU ib
13.11.1021 | is ya | : Total fincas! Cincirioa in alalesrent 0) Pocao la quer inn Hrs | Aso A A | a E A A 0 ol a Teod e: Teri Hr aL: EN, E LA PA 1 7 INT EA M0 04d Tidon dl DA DUERMO 201 7 1 H4 4091 1,005 died (hi A pá ro] Far [E ara roce E it rt EN pus? don – COR A PITO UAT PT, 31 PH [yr ESTAR AL hs be td Dee Po Gara Irons ave EL 1] mtre] nó ! TOTAL d 145 Ed 151010651 ” 101 150 de 143
– – Fair value through profit or loss: As of September 30, 2024 and December 31, 2023, this category includes unfinished product sales invoices. Section 11.2.q.
– Fair value through comprehensive income: This category includes investments in equity instruments (see note 11).
– – Amortized cost: lt corresponds to financial assets held within a business model whose objective is to hold financial assets to collect contractual cash flows that are solely payments of principal and interest on the principal outstanding. These assets are not quoted in an active market.
The effects on profit or loss recognized for these assets are mainly from financial income and exchange differences from balances denominated in currencies other than the functional currency.
F-63 Corporación Nacional del Cobre de Chile
No material impairments were recognized in trade and other receivables.
– – Derivatives for Hedging: Corresponds to the balance for changes in the fair value of derivative contracts to cover existing transactions (cash flow hedges) and that affect profit or loss when transactions are settled or when, to the extent required by accounting standards, a compensation effect is charged (credited) to the income statement. The detail of derivative hedging transactions ¡is included in the Note 29.
As of September 30, 2024 and December 31, 2023 there were no reclassifications between the different categories of financial instruments.
13. Other financial liabilities Other financial liabilities consist of loans with financial institutions and bond issuance obligations, which are recorded by the Corporation at amortized cost using the effective interest rate method.
The following tables set forth other currentnon-current financial liabilities:
AL ree Cu091 0011 Mon qunieril ed PA E o H Pasad FALTA Fra da te j Tmuusi Era pr 1H PU AA Mm 111557 Na] naaa | OTI | DF YE n 20 ZE sont 4r1 225 4 5i4 MITA MaS ados ¡Lágaora E Ni A E 0141 m0 be Paria ct | Hz e Tecm | m3 1 bb 1071007 20 1754,05 14h 31 140 54%
1-1. A [mana : Ciirrñs Mon. Cuiter! Amorctued 1hedg=0 tolal Armoriued Hed3urz oral cos de trirnes. cosi debia LE TRES AER Ts aos | SS | IA bo ear er 11 10 | M Io ¡ 154 2e7 l 1554 tt Sound pofgac= 10548 PH 17 | | A AA A 118,462 MEA 106 5U00Ó TA WA APO . Bo BE | MES loas TB.¿4W 110,084 1521 541 514 j 5 60) | 17448 91
– Bond obligations:
On May 10, 2005, the Corporation issued and placed bonds in the domestic market for a nominal amount of UF 6,900,000 of a single series labeled Series B, which consists of 6,900
F-64 Corporación Nacional del Cobre de Chile bonds for UF 1,000 each. These bonds are payable in a single installment on April 1, 2025, at an annual interest rate of 4% and semi-annual interest payments.
On September 21, 2005, the Corporation issued and placed bonds in the U.S. market under Rule 144-A and Regulation S, for a nominal amount of ThUS$500,000. These bonds are payable in a single installment on September 21, 2035, at an annual interest rate of 5.6250% and semi-annual interest payments.
On October 19, 2006, the Corporation issued and placed bonds in the U.S. market under Rule
144-A and Regulation S, for a nominal amount of ThUS$500,000. These bonds are payable in a single installment on October 24, 2036, at an annual interest rate of 6.15% and semi- annual interest payments.
On July 17, 2012, the Corporation issued and placed bonds in the U.S. market, under Rule
144-A and Regulation S, for a total nominal amount of TRUS$2,000,000, a part of which, was divided into two parts, one of which has already been amortized in 2022, while the other part is due to mature on July 17, 2042, corresponding to an amount of ThUS$750,000 atan annual interest rate of 4.25%.
On August 13, 2013, the Corporation issued and placed bonds in the U.S. market, under Rule
144-A and Regulation S, for a nominal amount of ThUS$750,000, payable in a single installment on August 13, 2023, at an annual interest rate of 4.5% and semi-annual interest payments. On August 22, 2017, February 12 and February 26, 2019 and October 8 and 22, 2019 principal in the amounts of ThUS$162,502, ThUS$228,674 and ThUS$270, ThUS$23,128 and ThUS$555 respectively, was paid. On May 6, 2020, the remaining principal due was increased for a nominal amount of ThUS$131,000, reaching a total of ThUS$465,871 with an annual coupon of 4.50%. On December 16, 2020, principal was paid in the amounts of ThuS$79,688, October 22, 2021 amounting to TRUS$157,965 and August 13, 2023 for the remaining balance of ThUS$228,218.
On October 18, 2013, the Corporation issued and placed bonds in the U.S. market, under Rule
144-A and Regulation S, for a nominal amount of ThUS$950,000, payable in a single installment on October 18, 2043, at an annual interest rate of 5.625% and semi-annual interest payments.
On July 9, 2014, the Corporation issued and placed bonds in the international financial markets, under Rule 144-A and Regulation $, for a nominal of EUR$600,000,000, payable in a single installment on July 9, 2024, at an annual interest rate of 2.25% and annual interest payments. On October 22, 2021, capital was amortized in the amount of ThEUR$200,116, reaching a total of TNREUR$399,884.
On November 4, 2014, the Corporation issued and placed bonds in the U.S. market, under Rule 144-A and Regulation S, for a nominal amount of ThUS$980,000, payable in a single installment on November 4, 2044, at an annual interest rate of 4.875% and semi-annual interest payments.
F-65 Corporación Nacional del Cobre de Chile
On September 16, 2015, the Corporation issued and placed bonds in the U.S. market, under Rule 144-A and Regulation S, for a nominal amount of ThUS$2,000,000, payable in a single installment on September 16, 2025, at an annual interest rate of 4.5% and semi-annual interest payments. On August 22, 2017 and February 12, 2019, principal was paid for an amount of ThUS$378,655 and ThUS$552,754 respectively. On December 22, 2020, capital was amortized in the amount of ThUS$392,499. On January 7, 2021, capital was amortized in the amount of ThUS$5,000. On October 22, 2021, principal was amortized in the amount of ThUS$273,867, reaching a total amount of ThUS$397,235.
On August 24, 2016, the Corporation issued and placed bonds in the domestic market for a nominal amount of UF 10,000,000 of a single series labeled Series C, which consists of 20,000 bonds for UF 500 each. These bonds are payable in a single installment on August 24, 2026, at an annual interest rate of 2.5% and semi-annual interest payments.
On August 1, 2017, the Corporation issued and placed bonds in the North American market, under standard 144-A and Regulation S, for a total nominal amount of ThUS$ 2,750,000. One portion corresponds to an amount of ThUS$ 1,500,000, maturing on August 1, 2027 with an annual coupon rate of interest of 3.625% and semi-annual interest. On December 22, 2020 and January 7, 2021, principal was paid in the amount of thUS$ 227,154 and ThUS$5,000 respectively. The other portion contemplates a maturity date of August 1, 2047, corresponding to an amount of ThUS$ 1,250,000 with an annual coupon of 4.5% and semi-annual interest payments.
On May 18, 2018, Codelco issued a bond for US$600 million with 30-year maturity in the market of Formosa, Taiwan. The bond issued is denominated in US dollars, had a yield of
4.89% and a prepayment option at the issue value that can be exercised from the fifth year onwards at its par value.
On February 5, 2019, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation $, for a total nominal amount of ThUS$1,300,000, which maturity will be 5 February 2049 with a coupon of 4.375% per annum and interest payments on a semi-annual basis.
On July 22, 2019, the Corporation made a bond issue and placement, Regulation S, for a nominal amount of AUD $ 70,000,000, whose maturity will be in a single installment on July 22, 2039, with a coupon of 3.58% annual and interest payment annually.
On August 23, 2019, the Corporation made a bond issue and placement, Regulation S, for a nominal amount of ThUS$130,000, whose maturity will be in a single installment on August 23, 2029, with a coupon of 2.869% annual and interest payment semiannually.
On September 30, 2019, the Corporation made an issue and placement of bonds in the North American market, under rule 144-A and Regulation S, for a total nominal amount of ThUS$2,000,000 whose maturity will be, under one tranche, on September 30, 2029 corresponding to an amount of ThUS$1,100,000 with a 3% annual coupon. The other tranche contemplates a maturity on January 30, 2050, corresponding to an amount of TRUS$900,000.
On January 14, 2020 and October 22, 2021, a capital increase was made for a nominal amount
F-66 Corporación Nacional del Cobre de Chile of ThUS$1,000,000 and ThUS$780,000, respectively, reaching a total amount of ThUS$2,780,000 with a coupon of 3.70% per annum.
On November 7, 2019, the Corporation made a bond issue and placement, Regulation $, for a nominal amount of HKD$ 500,000,000, whose maturity will be in a single installment on November 7, 2034, with a coupon of 2.84% annual and interest payment annually.
On January 14, 2020, the Corporation issued and placed bonds in the North American market, under rule 144-A and Regulation S, for a nominal amount of ThUS $ 1,000,000, the maturity of which will be in a single installment on 14 January 2030, with a coupon of 3.15% per annum and payment of interest every six months.
On May 6, 2020, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation S, for a nominal amount of TRUS$800,000 whose maturity will be in a single installment on January 15, 2031, with a coupon of 3.75% per annum and interest paid every six months.
On December 14, 2020, the Corporation carried out an issuance and placement of bonds in the North American market, under standard 144-A and Regulation S, for a total nominal amount of ThUS$500,000 whose maturity will be in a single installment on January 15, 2051, with a coupon of 3.15% per annum and interest payment on a semi-annual basis.
On February 2, 2023, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation S, for a total nominal amount of ThUS$ 900,000 whose maturity will be in a single installment on February 2, 2033, with a coupon of 5.125% per annum and interest paid every six months.
On September 8, 2023, the Corporation issued bonds in the U.S. market under Rule 144-A and Regulation S for a total nominal amount of ThUS$2,000,000 maturing on January 8, 2034 for an amount of ThUS$1,300,000 with a coupon of 5.95% per annum, and on September 8, 2053, for an amount of TRUS$700,000 with a coupon of 6.30% per annum, which, on January 26, 2024, underwent a capital increase for a nominal amount of TRUS$ 500,000, reaching a total of TRUS$ 1,200,000. Both notes contemplate semiannual interest payments.
On January 26, 2024, the Corporation issued and placed bonds in the North American market, under rule 144-A and Regulation S, for a total nominal amount of ThUS $ 1,500,000, the maturity of which will be in a single installment on 26 January 2036, with a coupon of 6.44% per annum and payment of interest every six months.
As of September 30, 2024 and December 31, 2023, the Corporation is not required to comply with any financial covenants related to borrowings from financial institutions and bond obligations.
Financial debt commissions and expenses:
Transaction costs incurred in obtaining financial resources are deducted from the loan proceeds and are amortized using the effective interest rate.
F-67 Corporación Nacional del Cobre de Chile
As of September 30, 2024, the details of loans from financial institutions and bond obligations are as follows:
– => CTA == Fora or : Caren Mr lero A AE haa O A mas HE | re | a | ie | may | rra 1 Una E yn Poma? Pra | lees Cr Lercarencrs de DONE A a PL000- 00 | dt | are ITA FIT 145% E E cerca La Diaera Tre Lepra Caras MI ¿A 2 HOJ | di | Cris E FA ar Fo a ya ba Cl dear rs Cro A cos | misa | Gerry | ¿HA Fri arm e Ly Era ura haa ¿red ña E NIZA | ara 4 Ica | dile | Cuareria d TA ry 3 drá HT TA Lar ¡yaa Pl a Cri Espa Cárddó TILA aL a] sados | acuer | Gare 1 EF Fs Ano ajja E caiga Er iaa A] MH | rre 3 1050 | derma | arar 1434 His 30% did 0, A A A A A _- A AA ias lp ar l Lupin! Iba a ra O a Bco 8 hasi bad A a e MÁ A OOO A Da El ds uE 160000 “Umm | der errar de Ed q 57 A .
A His Pa A | LAO A | rr d ds ari, M0 a
BOM E Ca SD A Ems JE A I y e hr 156 dy Dar
E Lab Ata ip na A | ar | rra | LA ari 7 15 149
Fead | Lisdreitaara > $ E] OI | der | ara | DEA ¿0 Has md
A ma | ns ua | | a | rr | 00% yu | 1 Data
A O E 1d 000. Part ¡58 11250100 | wir | mir E 1h 1h TA Sab Er
A bn Ñ ¡nu LA AA | ar A To 3 rx 27315 TA
WEAFIOS | Losantos] qUe ta run 58 | daa | a | 00 h Ji ‘ 4d det aid
O $20 1524 tum o] Lira | ae | rr dos, En Er 4d) | DTO
FIJA | armes 15″ Dub ds – A IA Era, ¿An 141 340
Wasi) | Luis dd 11 2 Pass ¡158 de O | e || he Lis 4 ia Tui 165 de dla FEO | LAA HALA A da 1 Mala ” jor pa 25 | Lies | rm e, Lan Era 1.441 48
A 1434 a) Fa 1568 GEA | ¿pa | mr Ús E tds dr ta aEDy L tn E-E> de E toa] aa | Da, 15Y%, | añ und
A adsl ten E] Eo | da | rr | ers ES a 34 Fon
MWMAFEÓS | Lario ri Fa A] ¡nál A e Ed 3 Mm HA tu 1.48
MMARROS | Laetos] 19544 Laa y | a | rr Er, na 1.508 A
HIA EJO Y LISTO EE] Pad 1648 LM] ue, | 157% 47 rs 135 11
16-43 3 lar o Pod iria a ivan | éákr A dpi El] Ms ha
IMAFROS | Listo] CH HA ho Loa |MECAOIO | mn | nr | A 44 usar | A
Marga | Lerida nj Pi E | EVA | as 477% dir mie] 30) pa?
A 25 15-FEl Laa 1 Mb OLA A 54 37yu 113 das vid
A a FL Faál MA ALIÓ AVR | Ar edo ta 4431 | 15F ada
EN, EPA dvd HTA
Nominal and effective interest rates presented above correspond to annual rates.
F-68
Corporación Nacional del Cobre de Chile
As of December 31, 2023, the details of loans from financial institutions and bond obligations are as follows:
1415 AÑ | Pa bo
Tapa dl 7 sua, a nr aa. AA por rm rta pur Ena Pm Parar ho a o da rr GALO sr 8 EE RA ai 0 TA tii raro Í ¿is ie A Lor a PA Ob Lp 3031 FE unid 4d 0 0 A ais E Por, 4 arma nu a is La a Cep “aa RA ¡araña ma DA a rt Pr 4 tera dar 213 Laa q a Ca EPA VERA] veas LAMA Kumar ie ET rr 4 E rs, dad ET lr ad A E 5131-2201 ri 1] E Y = Paba at ta. ta ” 1 CU En 1 mu! mam]
La m2 | ¡gh Bra tl AI Lar 4 Er Muay | tetas | Cr e o TS pan pr PA 44d BEI S Le sua] A A > A sen ara ra E a pá Cin E 4 dl Dr rr Lao pu ¡Fa mui isla EA A Aa O ¿DD 2200 Ad LI 4 Mods As 3j4 A 17 PT Ena 0 o A | y 5 adn 250 Cal ma 0. rs. 147 dd e lila PGA | A E Fab | A 1 da 1000 00 ea a bis 0 sl 1 1 e dd PLA a ei RL] Dear | util elo o Bd: LT, A ¡Um ¿E Lia CJ LES d JN A] EA Pu | 154 1 O TOS el ab A a hn. hoi MO sir Fa 64d FDA] TA e He dE 104 1 E MO MA RT, E PA mus Ls, inci mia idd PEGO Laa Han ip E HL Dd 2 y MT 1 hs. ANA ra a 1645 4145 ¿iia a Hate ¡nal EL AAA; lar dra Ar a 7 uan OS lia PEJE a] 4% dm Dip La FA 3050. NIG JO A A 4 pep. 17 a ¡A as A >El lei es Ds de e E E] Ha + A ñ il e lidá POT E A ion Pa A Ma ¡RE a a 2 pra. fdea 407 108 inó ELA a roda Ja il rl da BA e A de 1 1 OS as ¿a FrRER Vasa La MAA A dl tab y a pu pa rl an ima PIJA Lar PEA E Dz A Pa a ETA 0 4 A ae td ra Lala PND ¡ai AE Pará ol HET ts rr ara | Lis 1 2 UA a iia PEJE A 1d Judd a e) il Dn 1 La 143 4 pr “na ANS Lila sr ap paa + Ea a] 1 1 A a 10 1 Pd 150 175 Ha tad A Tar dh da ram 8 Jm pl 2 pan, ¡A 10%. 457% 1418 Ana par A e Es e Ñ ui del 1 M0 lo alT; Ta 43 d Um Bo a | 1 A.
lia ENTE Lei rr ira Pag A ¿HE Ligar A hs hila, di de 240 0 ió a 203 LD aC e HEN il 8 la A e jr, 35y4 A 148 17d ¡Ed PERA pb ENE Page 1 Tr E Eb Lamar Ma rra 13 Eds, 1 Ya pá Tora sr mé 15
Nominal and effective interest rates presented above correspond to annual rates.
F-69 Corporación Nacional del Cobre de Chile
The undiscounted amounts that the Corporation will have to disburse to settle the obligations with financial institutions, are as follows: ] 1758 5070 api LIA E q – ts | is | Ta Tierna to Der Tela nom
y. de 28 tr 16m er a A ps ru r 14% dera ie ca, Tamada ¿50 Ps UU ar a del PA e des Lidia le Cada Lia Ps. dra Core Lar eb ¿ER Pira q A So ¿rr dr hr] A pu 1, a A hd sra d de. An rr 144 6 FEO OE Ni ] isis SS TA a Pri A 168 p Ars 16 ia A LINA dnd a e Ga ara La de EA TE yor Jm a ET 1d 6 EA BO od 1. 17, Ta ir 14d d PDA E ¿1d La E 13m AP 14 5 5] 10054 Jon ES amd, To eri ld a E Le ‘. 48 Lo PLA, Bars IT dde a o ¿194 55 iia e dee | tu. cs Jara a Las de A Ma a ide 4354 Lar rr ibi PES A 3 a) $ mi 4 dls a dt LEA PD Judd PSN 571% 41 A bed A RED E Sd al d 73% a ra a dt M4 FO 7048 ISA ay 41. A rr Ide de PRA SS FDA 236 dere dá YA an Mo Abd MOD 2060 058 ¿mu 350% A A Jl d ra, q 10% A a A pa ¿a IÓN HA Focal TU IL IEEE EEES O E E Ve ¡ | OH CODEC F03 O 350, Dem rra >| Fon J fabiocsl Tus : , [CHO RA 2 0 A MO IC Ez M0 LÓr2oca| – wioeb 1 Bucal Palrñd il 1. Fa 1,135 3arr| El Ka Fiol CEST |CINE ET CC ET 0 E ME E AE AE ¡Insirtetal RANA muaa] J 1432] ECT E Taca Truth Al | 1,Hrh4 AA
Nominal and effective interest rates presented above correspond to annual rates.
F-70 Corporación Nacional del Cobre de Chile
A E
-y o | ms | Espa ol Ja Fria. hd tara ir ut a bb á Ti Danny Lg, ti ns A 104 he a Ea A ¿e 4 ura. * pará Dre ¿118 dr á hh Mora Pd ¿8 11153 +00 TA ¿8 ¿Fra 100 pr 1 d es ho Fa vs ds Jm 7 PT 8 y Fire ña A] 13 HITA 11M Ta q $ PA ..m DA MET 4 re a La let ue 4 bits li HA DS AA
– ar en AA ra un PU 11% A ud aim d a ua ari de | Bam un amu 4 pa o]
010) ¿A d mr. ¡A us Hon Pi DAT
1) $ Miri 1 19 e 0] EA E | JA Tol PRISA aa Nu Tata Tm BONO CODEC 20d CC E A l Va E Subiatal TALE | EFE O E A OS Subcora Intrñb CAES “Do | | dar] Ar ad X PO O eii EELOTE CS MAC 0 E 77 – | Habia DE . y Talas PAUSA ECC E a 100
Nominal and effective interest rates presented above correspond to annual rates.
F-71
Corporación Nacional del Cobre de Chile
The following table details the changes in CODELCO’s liabilities classified as financing activities in the statement of cash flows, including changes in cash and non-cash changes during the nine-month periods ended September 30, 2024 and year ended December 31,
2023; Cargo a 00 ra a gprs, osea qEooe–A bss Ba ll aaa proa ao Cursa Heim) Lunes iva 55 cu e AA Mi di HIPS ds lirio | Hlgaa | haa harik huso mia | tasa | mamá “armb hermá hunda Esas Iran Pal FF PCE ATA ibi Al [ale 94 pr PUE Í | Ir Há 3 ds [lor cepa TE Lo | 1140 FAT TN 13H rue) LE]. FLIA a 1Et 5H 1041 a! A mn 112 FO na ii la 131 TA 1 J a, E ¡parar pá FA ca dj 1 7 sj Pim | mu Arias [cas 1 A A] , a A Liria. MERO E E A AA al all ie Lei el lr AER FAGiPar | pic 1irrá Him ri ET mita PA LH e 14H SAO ES | CAF ÓN AAA 1 as LY Labels dol Liar Facil da | del F iól + ili aria hist racing Acriiia ptr nos e a és as sora Sa SER GÚN Pidal Lai ] lata | miña | muaa | na | mua | nal bará ona husa narsh Fuarid parara bo Ira a UM POL dE 00 RT bid Lid” m0 | 14004 MÍ Ama ¡hope En a A “7-4 41H 15800! 14H] UTE Ir ao 1708 ur rn PO a as “10 PET DE [Erre Do haci dni Uy EM JE das | Pe HA raras 8501 nó rd Un Mad EA ur jar 1 da jon. Fi | Lia pas o O La gr e 0 A a a 0 a et EEE IEEE A AE AT A O A IES
(1) Financial costs include capitalized interest under lAS 23 of US$241,425 and
US$174,965 for the nine-month periods ended September 30, 2024 and 2023, respectively.
14. Fair Value of financial assets and liabilities
The fair value of financial assets other than equity instruments approximates their carrying value. Regarding equity instruments, see note 15.
Regarding financial liabilities, the following table shows a comparison as of September 30, 2024 between the carrying amount and the fair value of financial liabilities other than those whose carrying amount is a reasonable approximation of fair value:
Comparison booa valus ya lalr vabue : np A A 23 ol Sepiember 30, 2024 lorval :
RA _ A LL TAUS e
Enancag’ E a De
Bond cbgabora amcntoed col 20 144,06 | 1423407
F-72 Corporación Nacional del Cobre de Chile
15. Market value hierarchy for items at market value
Each of the market values calculated for the Corporation’s portfolio of financial instruments is supported by a calculation methodology and data inputs. An analysis of each of these methodologies has been carried out to determine to which of the following levels they can be assigned:
Level 1 corresponds to fair value measurement methodologies using market shares (unadjusted) in active markets to which the Corporation has access at the measurement date and considering identical Assets and Liabilities.
Level 2 corresponds to fair value measurement methodologies using quoted market price data, not included in Level 1, that are observable for the Assets and Liabilities measured, either directly (prices) or indirectly (derived from prices). For hybrid contracts without finalized price: sales of metals with provisional prices for the period are adjusted to the market price at the end of the period. Gains and losses arising from the market valuation of open sales are recognized through adjustments to revenue in the income statement and to trade accounts receivable in the balance sheet. The forward prices at the end of the period are used for the sales of copper. These forward prices are quoted market prices on the LME. For currency swaps: they are valued using a discounted cash flow analysis valuation model that includes observable credit spreads and using the yield curve applicable over the life of the instruments.
Level 3 corresponds to fair value measurement methodologies using valuation techniques that include data on the Assets and Liabilities valued, which are not based on significant observable market data.
Based on the methodologies, inputs, and definitions described above, the following market levels have been determined for the Corporation’s portfolio of financial instruments held as of September 30, 2024:
Financia! arts aro llabllibira aan lie 30-204 ¡clsañifng by harearó toy Larrál 1 Lear? Loral 3 Total
– AP PUE | TAUES | ThISS | Tnuss ¡Financial AAA ¡Rem AAA a Ara 5 OT 55007 lErors DEC] MAT 17318 1 ¡Petare A ALA Any | + Bo] bros but LO ¿cl AL nro $ put Pat Fran li bltbad lr Ft 5) COTA Ai 1735 ao | HEAR AAA E e | 3441)
(*) The transaction price is generally the best evidence of the initial fair value of an equity financial instrument. However, the Corporation may determine that the fair value of its equity
F-73
Corporación Nacional del Cobre de Chile instruments is different from the transaction price. This may occur when models are used to estimate the initial fair value of financial instruments. For these cases, the Corporation will account for the difference between the transaction amount and the fair value as a gain or loss only if the fair value is supported by a quoted price in an active market (Level 1 fair value hierarchy) or based on a valuation technique that uses only data from observable markets (Level 2 fair value hierarchy). As of September 30, 2024, in relation to its investment in equity instruments detailed in note 11, the Corporation is in the post-closing adjustment stage of the acquisition transaction, common in these purchase transactions. Therefore, with the information available to date, he fair value of the investment cannot be reliably determined in accordance with |IFRS provisions, making the transaction price its best approximation. No transfers were made between the different levels of the market hierarchy for the reporting period.
No transfers were made between the different levels of the market hierarchy for the reporting period.
16. Trade and other accounts payable
a. Details of trade accounts payable, sundry accounts payable and other current accounts payable are shown in the following table:
E Caarent e labilitis EPs l naozjoa | 131.307 MW Prures rra =- ==> asar 190 A Ep Era yr [atra MAS A pa a =p BLA E PTA pe 2 17 a e de PUDO a 50) HOM EZ Pl EPOCA Mr he a 58. 0 1 731
Pa O LA A TA paGó Toral E
Trade creditors mainly include operating accounts payable, and obligations associated with investment projects.
b. The following is a schedule of maturities of payments to trade creditors as of September 30, 2024, and December 31, 2023:
F-74 Corporación Nacional del Cobre de Chile
MET IS a l e Upa da | na las small] MO | tw apnea peros my oe A E MER 3 tá 4 $e $80 0 ui? EJ 7 eb Ñ rel : EE nd] li 110 . . a nd da] e | 1 Li] Lñ , au -| MAA cd dal Sra Y A ] La cr ar ¿AA ai rd 1 pu bli 10 – qn. li-130 f 11- -. ina a sam A . – Siro l Ad 1123 M” Lal me 4 343 HER Juá hy 11500 | 12 1 >l | AH 15 da 1d 15 q sj Ha | 15 Fimb 14 3478 En o A y pu 8 47 da A 1,138 49 447 já4 1 cdi cl Docena 14, MEE LI ATT l ‘ lr A 282 50 ca | mm. | mm. | Tela CATA proa cr] ce EA a El AA ie 643 ius Po 158 855 TIA bo a 138 ¿8 006 me | aa sr CO ug far | AA Eb E m3 | AE Te] ci al Decaimber 11, FET) ] Arras E carrer ar | 44: 2Je A E PR Es | | o | a | | a | fps =an1 Ar ] Ñ Ep MET 1,437 150 e 2 5LL 1,500 44 100 Ma | 107 LOT ae JH Al De HL e mr jur di Fa) 15% Fi 134 Ta o 1564 1344 21 15 47] musa 1433
17. Other provisions
The detail of other current and non-current provisions at the dates mentioned is as follows:
230-404 12-31-7071 31330H 17.1-403 Traiich Pauas Tus Tadssd
Cpu a Y 412 900 401009 : , Manor] “3813 DT Lamar 1d 13458 TEMA 011 7
Lo DIESE de Y A aora 21 742 pr pra at 43 939 an av (a AA AN A de 3410358 ¿20251 Legal pers E FET | Total PERA 250 449 2447 503 1307443
(1) Corresponds to provisions for purchases and services relating to the operation, not invoiced at the end of the period.
(2) Corresponds to provisions related to sales, which consider freight, stowage and unstowage expenses.
F-75 Corporación Nacional del Cobre de Chile
(3) Corresponds to provisions for future closure costs related mainly to tailings dams, closure of mine sites and other assets. This cost value is calculated at discounted present value, using cash flows relating to plans with an evaluation horizon ranging from 10 to 60 years. The rates used to discount future cash flows are calculated based on the Life of Mine *LOM of each of the operations, distinguishing rates in UF for those obligations in Chilean pesos and rates in
U.S. dollars for those obligations in U.S. dollars. These discount rates include the risks associated to the liability being determined, except for those included in the cash flows.
Below is a table with the discount rates used:
Eihebszoo ! %-10-2024 12-31:2033 Local Currency ¡Dollds Corrency | Local Cunency [Dol Currency oa Bate || Rate Rate _Fata, Jr Vr A ES 7 La ) 14% Pa A O A LA O O A Chugacinsa | ¿2 | a0m | zum TM Pacorira Tome ¿20 E pi, e rl a 15% SADO! PRA 1 DS HOM 15% Ternera a Fr | Y Eat 14% ES VermArEZ 30H | ¡30m |. 7145 317%
The Corporation determines and recognizes this liability in accordance with the accounting policy described in Note 2, letter 0) of section Il on Significant Accounting Policies.
The movement in Other provisions, non-current was as follows:
1-1-2024 1-1-2023
9-30-2024 12-31-2023 Movements Other Provision for : : Other Provisions, | Provision for site : : Provisions Contingencies Total y Contingencies Total site closure non-current closure non-current ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Opening balance 017 2,209,201 12,470 2,332,043 004 2,011,117 08,007 2,09,28 Closing provision adjustment 93,231 – 93,231 (426,298)| – (426,298) Financial expenses 45,689 – 45,689 56,617 – 56,617 Payment of liabilities – (5,557) (5,557) – (6,583) (6,583) Exchange rate difference (3) (3,642) (2,414) (6,059) (3) 35,328 (1,472) 33,853 Other increases (decreases) 41 (12,893) (4,262) (17,114) 16 (17,513) 12,823 (4,674) Closing balance 655 2,381,636 60,542 2,442,833 617 2,259,251 72,775 2,332,643
18. Employee benefits
d.
Provisions for post-employment benefits and other long-term benefits
Provision for post-employment benefits mainly corresponds to employee severance indemnities and medical care plans. The provision for severance indemnities recognizes the contractual obligation that the Corporation has with its employeesretirees. The provision for medical care plans recognizes the contractual obligation that the Corporation has with its retirees to cover their medical care costs. Both benefits operate within the regulatory
F-7
6
Corporación Nacional del Cobre de Chile framework set forth in the collective bargaining or other agreements between the Corporation and its employees.
These provisions are recorded in the statement of financial position at the present value of the estimated future obligations. The discount rate used is determined based on the rate of financial instruments corresponding to the same currency in which the obligations will be paid and with similar maturities.
The defined benefit obligations are denominated in Chilean pesos; therefore the Corporation is exposed to foreign exchange rate risk.
The results arising from adjustments and changes in actuarial variables are charged or credited to the statement of comprehensive income for the period in which they occur.
During the nine-month periods ended September 30, 2024, there were no relevant modifications to the post-employment benefit plans.
The following actuarial assumptions were used in the actuarial calculation of the defined benefit plans:
Assumptions 9-30-2024 12-31-2023 DNA Health plan NANO Health plan Annual nominal discount rate 5.44% 5.44% 5.44% 5.44% Voluntary Annual Turnover Rate for Retirement (Men) 5.30% 5.30% 5.30% 5.30% Voluntary Annual Turnover Rate for Retirement (Women) 5.90% 5.90% 5.90% 5.90% Salary Increase (real annual average) 4.59% – 4.59% – Future rate of long-term inflation 3.00% 3.00% 3.00% 3.00% Expected inflation health care rate 0.00% 5.78% 0.00% 5.78% Mortality tables used for projections CB20-RV20 | CB20-RV20 | CB20-RV20 | CB20-RV20 Average duration of future cash flows (years) 10.55 17.16 10.55 17.16 Expected Retirement Age (Men) 60 60 60 60 Expected Retirement Age (Women) 58 58 58 98
The discount rates correspond to the rates in the secondary market of government bonds issued in Chile. The projected annual inflation corresponds to an awareness above the long- term target publicly declared by the Central Bank of Chile and is derived from the market expectation as of December 31, 2023. The rotation rates have been determined after reviewing the Corporation’s own experience by studying the cumulative behavior of outflows over the last three years with respect to the current allocations. The expected rate of salary increases has been estimated using the long-term behavior of historical salaries paid by the Corporation. The mortality tables used were those issued by the CMF, which are considered an appropriate representation of the Chilean market given the lack of comparable statistical series to develop independent studies. The financial duration of the liabilities corresponds to the average maturity of the payment flows of the respective defined benefits.
b. The detail of current and non-current provisions for employment benefits as of the dates mentioned is as follows:
F-77 Corporación Nacional del Cobre de Chile
Employee benefits provisions Current Non-current
9-30-2024 | 12-31-2023 | 9-30-2024 | 12-31-2023 ThUS$ ThUsS$ ThUsS$ ThUsS$ Employees’ collective bargaining agreements 165,531 198,806 – – Severance indemnities 31,700 31,425 585,686 586,199 Bonus 32,140 39,209 – – Vacation 170,957 176,193 – – Medical care programs (1) 395 394 433,681 452,423 Retirement plans (2) 2,079 13,844 4,924 7,701 Other 18,938 20,869 7,266 7,107 Total 421,740 480,740 1,031,557 1,053,430
The reconciliation of the balances of the provisions for post-employment benefits is presented below:
1-1-2024 1-1-2023
9-30-2024 12-31-2023 Movements Retirement Health plan Retirement Health plan plan plan ThUs$ ThUS$ ThUs$ ThUs$
Opening balance 617,624 452,817 991,173 464,266 Service cost 47,318 19,709 84,657 17,029 Finance cost 9,928 7,368 10,255 8,070 Paid contributions (42,938) (44,114) (88,727) (46,448) Actuarial (gains) losses 43 (954) 34,330 4112 Subtotal 631,975 434,826 631,688 447,029 (Gains) Losses on foreign exchange rate (14,589) (750) (14,064) 5,788 Closing balance 617,386 434,076 617,624 452,817
The balance of the defined benefit liability as of September 30, 2024, comprises a portion of ThUS$31,700 and ThUS$395 for the severance indemnity and the medical care plan, respectively. As of September 30, 2025, a balance of ThUS$664,826 has been projected for the provision for severance indemnities and ThUS$422,814 for health benefits The flows of compensation payments during the next twelve months reach an expected monthly average of ThUS$2,642 for severance indemnities and ThUS$ 33 for health benefit plans.
The technical revaluation of the liability (actuarial gainloss defined under lAS19) for severance indemnities and health plan benefits as of September 30, 2024 has been performed with a charge to equity, which is broken down into an actuarial loss of ThUS$43 for severance indemnities and actuarial gain of ThUS$ 954, for the health plans.
The following is a review of the sensitivities of the provisions, when going from a medium scenario to a low or high scenario with unitary percentage variations, respectively, and both effects of reduction or increase on the book balance of these provisions:
F-78 Corporación Nacional del Cobre de Chile [Seserarce benefb lor pea 6 serve Ligas Alsdum | Hg | Redecion | Increme Fraroa dect on máeresl redes 5 10%, 54d 56% | AA Fesrcal eñecion he real Ne ge d Poorre 1 de 5, 4 80, pd t Ho Cemograpiic edeci of polb alabar de LENA | 565% | 0% 05% iemograptec ee on maripo, heles 00% | CRIADO] 25.00% | 00% | 000% aa A E Low Letorr 1 Hi | a Ferca ee on er A 5 1 543% | o | ¿55 251% Fregenal ed a aid e Alea 5% 57M 5 lA ¿UA Derogtaphe ele plansed rebramneni Se 5855 5058 250 |] 127 317 Ciemoyragta: ele or moria, Inbles: ¿5 00% CR20-RW20] 2500% | PTA 181%
c) Provisions for early retirement plans and termination bonuses
In accordance with its operating optimization programs to reduce costs and increase labor productivity by incorporating new current technologies andor better management practices, the Corporation has established employee retirement programs by amending certain employment contracts or collective union agreements to include benefits encouraging employees to early retire, for which the necessary provisions are made based on the accrued obligation at current value.
As of September 30, 2024 and as of December 31, 2023, there is a current balance of ThUS$2,079 for early retirement and conflict termination bonuses of which ThUS$ 13,844 respectively. Related non-current balances amount to ThUS$4,924 and ThUS$7,701, respectively. These amounts have been determined using a discount rate equivalent to that used for calculating employee benefits provisions and whose outstanding balances are part of the balances as of September 30, 2024 and as of December 31, 2023.
d) Employee benefits expenses
The employee benefit expenses recognized classified by nature are as follows:
11 FO | 1.1.073 3.2.47d P.1. 171
A A o EL] A 1h POr? á dd paja a. Tr
Ins EN Poird Pare, E A ia 1101.00 | LION a pese hen, – E AA E $ FR aj AT | ja Eur, “esa a BA mr EP 1,5009 | PM . Ma Do | a |, Le ao ll cr er. 118 | disen Facil EA
Dd ¡MAR 100 ay dy AUT AGE
F-79 Corporación Nacional del Cobre de Chile
19. Equity
The Corporation’s total equity as of September 30, 2024 is TRHUS$11,264,341 (as of December 31, 2023 ThUS$ 11,046,649 and as of September 30, 2023 ThUS$11,672,991).
In accordance with article 6 of Decree Law No. 1350 of 1976, it is established that, before March 30 of each year, the Board must approve the Corporation’s Business and Development Plan for the next three-year period. Taking that plan as a reference and keeping in mind the Corporation’s balance sheet for the immediately preceding year and aiming to ensure its competitiveness before June 30 of each year the amounts that the Corporation shall allocate to the formation of capitalization funds and reserves shall be determined by decree from the Ministries of Mining and Treasury.
Net income shown in the Statement of Financial Position, after deducting the amounts referred to in the previous paragraph, shall belong to the State and become part of the Nation’s general income.
On June 22, 2022, the Ministry of Finance agreed with the Corporation to a four-year average reinvestment plan of 30% of profits between 2021 and 2024, which will significantly contribute to the financing of Codelco’s investment plan, while considerably reducing its debt requirements. Consistent with the above, on the same date the Ministry of Finance issued exempt decree No. 194 authorizing the Corporation to allocate up to ThUS$582,750 of the net income from the balance sheet for the year 2021. In accordance with the provisions of exempt decree No. 4 of January 2023, these resources will be paid against the profits of 2022 and 2023, prior to the absorption of the excess of anticipated dividends of previous years and the interim dividends of 2022.
On July 17, 2023, the Ministry of Finance issued exempt decree No. 238 authorizing the Corporation to allocate up to ThUS$103,677 of the net income shown in the 2022 balance sheet to capitalization and reserve funds, which will be charged against the income for 2023 and subsequent years, until that amount is reached, and the final amount will be determined and recorded once the 2023 accounting period is closed and the final income for the year ¡is known.
As of December 31, 2023, a capitalization and reserve fund has been created amounting to ThUS$345,589. Balance outstanding as of September 30, 2024.
As of September 30, 2024, the Corporation has a balance in favor of advance dividends paid in prior years in excess of distributable earnings of ThUS$509,843. As of September 30, 2024 and December 31, 2023, there are no dividends payable.
The Consolidated Statement of Changes in Equity discloses the changes in the Corporation’s equity.
The movement and composition of other equity reserves is presented in the Consolidated Statement of Changes in Equity.
F-80 Corporación Nacional del Cobre de Chile
Reclassification adjustments from other comprehensive income to income for the years meant a loss of ThUS$6,189 and a profit of ThUS$818 during the nine-month periods ended
September 30, 2024 and 2023, respectively.
a) Other reserves
Details of other equity reserves are shown in the following table, according to the dates indicated for each case.
Other reserves 9-30-2024 | 12-31-2023 ThUus$ ThUS$ Reserve on exchange differences on translation (9,443) (8,782) Reserve of cash flow hedges (7,143) (1,095) Capitalization fund and reserves 9,307,983 9,307,983 Actuarial results reserve in defined benefit plans (270,927) (272,779) Fixed asset revaluation reserve Law 18110 year 1982 624 567 624 567 Other reserves (12,024) (9,971) Total other reserves 5,633,413 5,639,923
b) Non-controlling interests
The detail of non-controlling interests, included in total equity and total profit or loss, as of the dates mentioned, is as follows: e sa e mn – “.A y 8 5 1] …
Ls 1 Perea Cry maria H A a j Pref A ] [| 1 A UL 2) $0 FRA | 14.71.7925 RIMA | 14140 PAPA | PO PA | m A E PEA ] e 0 A] 33 ME ¡ 19 J0F1 ho l Fina | Tia]. trad | Trip Sad Frans Í
– E E. A 4 h AAA A MN EN rr fe al dl UN Pr, il A] : al | | ho | 1 I 2 na sa – E e , II – A ES o e e linia Fhi ea! | rr] as prin ¿E rá
The percentage of non-controlling interest over equity of Inversiones Mineras Becrux SpA generates a non-controlling interest in the subsidiary Inversiones Gacrux SpA. Regarding the latter company, the figures related to its statement of financial position, statement of income and statement of cash flows are as follows:
F-81 Corporación Nacional del Cobre de Chile
Aarta gel abi 21-700 17.41-31 HUSA Mus pira bc ip Ve has MEA e diana 121140,104 2.107,55 yiraes hice e 15407 VA atra Lal ds 402. 11d 200. PS [GH (loss) 0-12 14-073 e rt 210 2004 510 1071 hi JO 070 +10 3071 1nusá Emusé Tnid84 Muss CTA +14, 35m 100 30 | 4 5 AN a A o “EE ¡Ar E (ME 1651.:23 Lois tan Le da penca 4) TA (EP 1d A Cañó Hire 1.1701 11.54 LS 40 677 111594 Pra A A AO 10,85 41,48 “pr 20 in 00 el A, PP TA En? y ENS 19 20 Aa Fon 00 mi brinco a 312:
20. Revenue
Revenues from ordinary activities during the nine and three-month periods, ended September 30, 2024 and 2023, were as follows:
Item 1-1-2024 1-1-2023 7-1-2024 7-1-2023
9-30-2024 9-30-2023 9-30-2024 9-30-2023 ThUS$ ThUS$ ThUS$ ThUS$
Revenue from sales of own copper 10,350,070 9,802,323 3,702,892 3,236,709 Revenue from sales of third-party copper 1,024,111 1,207,664 299,957 320,798 Revenue from sales of molybdenum 516,646 725,966 178,699 212,061 Revenue from sales of other products 434,279 476,530 144,853 154,507 Profit (loss) in futures market (10,173) 5,913 (2,971) 5,289 Total 12,314,933 12,218,396 4,283,430 3,929,414
The Corporation’s revenue is recognized at a point in time.
The breakdown of revenue is presented in explanatory note No.25 Operating Segments.
F-82
Corporación Nacional del Cobre de Chile
21. Expenses by nature
Expenses by nature during the nine and three-month periods, ended September 30, 2024 and 2023, were as follows:
14.48
1.407) 1.1- ¿UPA A ll u-10 64 630 073 310 07 32-79-4435 LA Tribe Eh Poirot o e a | LI PR 111O77, del tad | (ia E [Doprecaanon yl ¡el MA JA ria dd A dere FIAR rE3| e ¡7 OS ¡HAS 144573181 PS (NO Mateo DOME qe es O EE | AIN CE 1 ota | paerarras] emana] paa só) (1397.007)
(1) Depreciation includes the expense of Property, plant and equipment and right-of-use assets (see note 7b and note 8.1).
22. Asset impairment
As of September 30, 2024 and 2023, there are no indications of impairments or reversals of impairment for other cash-generating units or associates.
23. Other income and expenses
Other income and expenses by function during during the nine-month periods ended September 30, 2024 and 2023, is detailed below:
a. Other income hee Tiima | puma | 71m | rima wma | suso | ar | 007 Tiaisl ibas Hars4 Maja Parla 0 or Lo q ap 1777 1 Le ro Lt d 1 14 17 Nip Ma ara a NETO 10D A Er, NE PACO SIGO, ROA $ 25.511 3 A 1 11:5ó4 3.368 75d a 63507 bAL5En | Tr me
F-83 Corporación Nacional del Cobre de Chile
b. Other expenses tina | tama | ram | 712 ¡osa 9192074 0 10.207) 2 10-¿074 9.10 2073 Tus; THuEs Thus$ Thiuss
Alamos ddo. 13506 – gotzao] maso] pace] 206500 Ly Mo 21591 ar. Foyary Ad Waite 62 HA (30, 55d) Peaaroh Brpenaaa 11] ¡1402131 107.823 ¡eb 635)] (11,338) donas Er Pe 09 8 tol Ear (229 2011 145 1124 5145, (0 4 Dosrg tupanza (2518) (24 (3381 ASE) E apridó poán 1 Do YS mo 18 e 11 1081 ¡4 108 (15781 [2818 ria dol mega pro (113001 (554; | a Lo 0r osposal of died BSSeE 1553 150.077 11605) (42 1397) o AE EN ¡va ro (11,357) 15771 (1,347) APA dr] ARO (a) (185 ui, (6.852) 8475 4.375) ¡106 WERO COAÍESCErEA (1 103) eN (0,0571. 1628 GRS de CONEA Rad PE Fog MPTODES. DAY PAOCUICIOS, ENPOl d | 208.807) (216,703) 27 Td 2.09 Ar eraros PORTO rd (14 054 110,879) (En (5 187, Car esperes ra] amen (rate a
Tots IRAN AM] | (00m studies and research and technological innovation expenses.
which do not establish a permanence condition.
the portion earned by employees in prior years.
(4) Break down .by division for this concept is as follows:
A -É TT tmm | mam |] mam | 71420
Division AT TRLIBA muss | muss THUS$ hrara 1 at
Chqacamara 16:20 (5320
Ventanas (77 (14,121) cn) ¡par bros, Hala : (12. 2834] 11,506
Sabador ¿0 165] (91 Eur | 126.544] 07347
Terarsie (5468) (85 45 (03) (20.25
Radoureo Forma | pot | J
AE ATTE MS 3 E A E
F-84
Study expenses include exploration expenses (see note 7 letter f), pre-investment Corresponds to disbursements for the closing of a collective bargaining process,
Corresponds to the restatement of severance indemnities liabilities associated with
Corporación Nacional del Cobre de Chile
c. LawNo. 13196
Law No. 13196 – Under this law, the return in foreign currency of sales abroad of the Corporation’s actual income from ¡ts copper production, including by-products, is taxed at
10%.
On September 26, 2019, Law No. 21174 was published, which repeals Law No. 13196 and establishes that the 10% tax (rate still in effect as of September 30, 2024) to the tax benefit provided by the Corporation will subsist for a period of nine years, decreasing from the tenth year 2.5% per year until reaching 0% at the beginning of the thirteenth year.
24. Finance costs
Finance costs during the three and nine and three-month periods ended September 30, 2024 and 2023, is detailed below hai 1:2074 | 11.307) e. 4. FRA 7.1.2
4-0 JOJh | € 20-200) a-10 MPa 6..18-$3).1 Mosa 3 Tiuofid Tru Eg Thiid dont ra 36 134) ¡0 51h 134 401, ¡3 FEF; Hato Car cai (5.9071) A 1ñ te 122% Ea A AAA AA A $901] Pat A: e 2 1 Porra ri cea UT OA EM] 0 10 HE , Cicorg pOFTROA a ÓaO dz id 42 FO 3d4TE 13.858 TA! ¡e Ra 21718 a 1 rd Pe | 10431 | 1054 aa! (570,411) (17% eb) MBA 0
25. Operating segments
In section ll “Significant Accounting Policies, it has been indicated that, for the purposes of IFRS 8, “Operating Segments, these are determined according to the Divisions that comprise Codelco. In addition, the Parent Company’s revenues and expenses are distributed among the defined segments.
The mining deposits in operation, where the Corporation conducts its extractive and processing activities are managed by the following Divisions: Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina and El Teniente. Ventanas is added to these divisions, which, until June 2023, operated only in the smelting and refining area and, as of that date, only in the refining area. All these Divisions have a separate operational management, which reports to the Chief Executive Officer through the Vice-President of Operations. The information on each Division and their corresponding mining deposits is as follows:
Chuquicamata Types of mine sites: Open pit mines and underground mines Operating: since 1915 Location: Calama, ll Region de Antofagasta. Chile F-85 Corporación Nacional del Cobre de Chile
Products: electro refined and electrowon cathodes and copper concentrate
Radomiro Tomic
Types of mine sites: Open pit mines
Operating: since 1997
Location: Calama, ll Region de Antofagasta. Chile
Products: electrowon copper cathodes and copper concentrate
Ministro Hales
Types of mine sites: Open pit mines
Operating: since 2014
Location: Calama, |! Region de Antofagasta. Chile.
Products: Calcined copper, copper concentrates
Gabriela Mistral
Types of mine sites: Open pit mines
Operating: since 2008
Location: Calama, Il Region de Antofagasta. Chile Products: Electrolytic (electro-obtained) cathodes
Salvador
Type of mines: Underground and open pit mines
Operating: since 1926
Location: Salvador, lll Region de Atacama. Chile.
Products: Electro refined and electrolytic (electro-obtained) copper cathodes and copper concentrate.
Andina
Type of mines: Underground and open pit mines Operating: since 1970
Location: Los Andes, V Region de Valparaíso. Chile.
Product: Copper concentrate
El Teniente
Type of mines: Underground mine
Operating: since 1905.
Location: Rancagua, VI Region del Libertador General Bernardo O’Higgins. Chile.
Products: copper concentrate and copper anodes.
Allocation of Head Office revenue and expenses
Main revenue and expenses items controlled by the Head Office are allocated to the Divisions based on following criteria.
Revenue and Cost of Sales of Head Office commercial transactions
F-86
Corporación Nacional del Cobre de Chile
b) e The results from commitments derived from the reception, processing andor purchase of concentrates from Codelco to Enami are distributed based on the ordinary income of each Division.
Finance Costs The financial costs are distributed in proportion to the mining project investments made by each Division.
Contribution to the Chilean Treasury under Law No. 13196 e The amount of the contribution is allocated and accounted for in proportion to the invoiced and recorded amounts for copper and sub-product exports of each Division, that are subject to the surcharge.
Tax income benefit (expense) e Income tax benefit (expense) Corporate income tax under D.L. 2.398 and the Royalty Mining Margin Tax (Specific Tax on Mining Activities until 2023) are allocated based on the income before income taxes of each Division, considering for this purpose the income and expenses allocation criteria of the Head Office and subsidiaries mentioned above.
e Other tax expenses are allocated in proportion to the corporate income tax, the Royalty Mining Margin Tax (Specific Tax on Mining Activities until 2023) and tax under D.L. 2.398 of each Division.
Transactions between segments
Transactions between segments mainly related to products processing services (or tolling services), are recognized as revenue for the segment rendering the tolling services and as the cost of sales for the segment that receives the service. Such recognition is made in the period in which these services are rendered, as well as ¡ts elimination in the consolidated corporate financial statements.
Additionally, the reallocation of the profit and loss assumed by Ventanas Division, associated with the corporate mineral processing contract between Codelco and Enami, in which a distribution is applied based on the revenue of each division is included as a transaction between segments.
Cash flows by segments
The operating segments defined by the Corporation, maintains a cash management function which refers mainly to operational activities that need to be covered periodically with funds constituted in each of these segments and whose amounts are not significant in relation to corporate balances of cash and cash equivalents.
Conversely, activities such as obtaining financing, investment and payment of relevant financial obligations are mainly based at the Head Office.
F-87
Corporación Nacional del Cobre de Chile
Br a da CO foro a od Pd par, E For a dl andar dor una Ol er AA Sort her PEA md
AP LA Trad.
¿3o$ tur ds Ae be 1H.
gar a PLOT us 04 ro BLA ape prob lol dl les al o APA! A isapi brisir Las l
AAADEO pEÉ. 0 –
G
Corporación Nacional del Cobre de Chile
F-89 Corporación Nacional del Cobre de Chile
The assets and liabilities related to each operating segment, including the Corporation’s corporate center (Head Office) as of September 30, 2024 and December 31, 2023, are detailed in the following tables:
Esa lic ema HWlepdi dsg. AS mon | 2 pue | Qrher . Tem mueso | food | mas | er | Am | A | | | | ME A 140 TES Pa | 27 0 e E A =a ¡4 A Y Ca ly [Mor ana O CAM ¿0074 100401 INHLADA 10H MAR mia 1527 AH q A agranda Ea E HIFI 5 de PA El a HL 0 a] PR A a Masai] DO] AMA a bacon] SA DGT] 1100] AO 14] 13115074 : Padorara b Toral e A Teno Mirador Edna rro pere a A Ú ula Cuba TUE NL Fmlrsó | TES | FMRE | TWUS Tm. 454 LLUÍS 11 4 ¡o rl Hao Bai +44 bd EA den a: 220 O e A a A] 47 ME ¡Earl 4507 HE LN 21014 4MO7TL o Correr tabla sE mai $4.42 14 Fred pus M0 1407 PRL]! ma 430.60 A 54154 ENT E JE Aj A PR TAO MMA AAPP HAL Revenues segregated by geographic area are as follows:
14.504 1.1207) 1-1-20H 14-KD Revenue per geographical aicas 9-30:M04 -30-3071 3-10050M 0 10.2044 Total ternas bom domesho cosiomes 70617] 150564 736 | 545 146 ¡Total revenue Írort foreigr custormase 10594418 | 10712788] 357 M0| 3390.83 Total 12314903 | 122183586 | 421400] – 3929414
1.1304 LD EA 11200 Rovenue per geographical aregs 0-39-M74 U-39-707) 5-10 J0M %-10-2071 ThLis4 IMANES has ATEN China 24531060 2336 163 fesd3r 21053 Sei ad da ¿124.074 ¿57 161 673650 19203 Eysope 414.54 | 1781 408 11552.281 IM 408 (menta apli 3118 148 1272341 3537 45 |Cves er] 6300] – ems501| 15837 Total 12314913 | 12218396 4281410 ¡| 1929414
During the nine-month periods ended September 30, 2024 and 2023, there was no revenue from ordinary activities from transactions with a single customer representing 10 percent or more of the Corporation’s revenue from ordinary activities.
F-90
Corporación Nacional del Cobre de Chile
26. Exchange difference
Exchange differences during the nine and three -month periods ended September 30, 2024 and 2023, are as follows:
1,1.40H 1.1.847 Po. 40 1-29] A E M0 PARA > 0 4073 E 4124 1-30 1044
Mi Tap CHA lAb Tra LS Sucrarge P Cilia 145 Pe 14443 12823 (25 $41.102 rra E Callao Hua? Pur Proa ra 540 ¡24,54 52 107 Est E Clio Peri E le Cra 14 E ¡00 Has Endings Cas Clic Corina Piano ona 13 ¿54 c1070 cepa Pate Cillenproe Ce ae e 1174: (24091 de AL Total Edi a deme vu 36 35 into | 145 153
27. Statement of cash flows
The following table shows the items that comprise other collections and payments from operating activities in the Statement of Cash Flows:
ET EN dit cod ion Ho pr in AAA 1 ME A 10 2071 mind musd SAT Hr IFA PARA 1 135 hol cdi omo la A ol le Total MEF ET
11-240 1-1-207) A A E 4-0. 2031 1.0 FAA Mos AQUA A TI A ¡o del A di re 26 1 LE SAY MN OU EA A A 11 42 SO 1, PO AAA Total (PARA G)| – [AAAFA TE
During the nine-month periods ended September 30, 2024 and 2023, no direct cash capital contributions were received.
28. Risk management
Corporación Nacional del Cobre de Chile has created instances within its organization that seek to generate strategies to minimize the financial risks to which it may be exposed.
The risks to which Codelco is exposed and a brief description of the management procedures that are carried out in each case, are described below.
F-91 Corporación Nacional del Cobre de Chile
a. Financial risks
* Exchange rate risk:
According to IFRS 7, exchange rate risk is understood to be the risk that arises from financial instruments that are denominated in foreign currencies, that is, a currency other than the Corporation’s functional currency (US dollar).
Codelco’s activities that generate this exposure correspond to funding in UF, accounts payable and receivable and provisions in Chilean pesos, other foreign currencies used in its business operations and obligations with employees.
Most transactions in currencies other than US$ are denominated in Chilean pesos. Also, there is another portion in Euro, which corresponds mainly to a long-term loan issued through the international market, which exchange rate risk is mitigated with hedging instruments (Swap).
Taking into consideration the financial assets and liabilities as of September 30, 2024 as the base, a fluctuation (positive or negative) of 10 Chilean pesos against the U.S. dollar (keeping the other variables constant), could affect profits before taxes by US$31 million in profit or loss, respectively. This result is obtained by identifying the main items (including assets and financial liabilities) denominated in foreign currencies in order to measure the impact on profit or loss that a variation of +- 10 Chilean pesos would have in terms of US$, with respect to the closing exchange rate at the end of the reporting period.
There are operating and investment expenses that are subject to price-level restatements associated with inflationary adjustments in the economic environment in which the Corporation operates. The Corporation periodically monitors the effects of these price-level restatements on its results in order to detect unusual situations that could have a significant financial impact.
Based on current conditions, the Corporation has not entered into, nor does it intend to enter into, derivative contracts specifically to hedge the effects discussed in the preceding paragraph.
If financial assets and liabilities are considered as of September 30, 2024, a 1% fluctuation (positive or negative) in the value of UF in Chilean pesos (with all other variables held constant) could affect the pre-tax result by an estimated US$14 million loss or gain, respectively. This result is obtained by identifying the main items affected by exchange differences, both financial assets and liabilities, in order to measure the impact on income that a 1% variation in the value of the UF, used at the date of presentation of the financial statements, would have.
* Interest rate risk This risk arises from interest rate fluctuations in Codelco’s investment and financing activities.
This movement can affect future cash flows or the market value of fixed rate financial instruments.
F-92 Corporación Nacional del Cobre de Chile
These rate variations refer to U.S. dollar variations, mostly with respect to the LIBOR rate. To manage this risk, Codelco maintains an adequate combination of fixed and variable rate debt, which is complemented by the possibility of using interest-rate derivatives to meet the strategic guidelines defined by Codelco’s Vice-Presidency of Finance lt is estimated that, based on net debt at September 30, 2024, a one percentage point change in the interest rates of credit financial liabilities subject to variable interest rates would result in a change in annual interest expense of approximately US$10 million, before taxes. This estimation is made by identifying the liabilities assigned variable interest, accrued at the end of the financial statements, which may vary with a change of one percentage point in variable interest rates
The concentration of obligations that Codelco maintains at fixed and variable rates at September 30, 2024, corresponds to a total of ThUS$20,154,067 and ThUS$2,079,149, respectively.
b. Market risk.
” Commodity price risk:
As a result of its commercial operations and activities, the Corporation’s income is mainly exposed to the volatility of copper prices and certain sub-products such as gold and silver.
Copper and molybdenum sales contracts generally establish provisional sales prices at the time of shipment of such products, while the final price will be considered based on a monthly average price determined by the market for future periods. At the reporting date, sales of provisionally priced products are adjusted to fair value and the effect is recorded in the results of operations for the period. Forward prices at the period-end are used for copper sales, while period-end average prices are used for molybdenum concentrate sales due to the absence of an assets futures market. (See Note 2.q) “Income from Activities Ordinary Procedures from Contracts with Customers of section |! Main Accounting Policies).
As of September 30, 2024, if the future price of copper fluctuates by + – 5% (with the other variables constant), the result would be +- US$207 million before taxes as a result of setting the mark to market of sales revenue to provisional prices in effect as of September 30, 2024 (MTMF 439). For the estimate indicated, all of those physical sales contracts were valued according to the monthly average immediately following the close of the financial statements, and proceeds to be estimated regarding what the final settlement price would be if there is a difference of + – 5% with respect to the future price known to date for this period
In order to protect cash flow and adjust, where necessary, its sales contracts to its trade policy, the Corporation holds operations in futures markets. At the end of the reporting period, these contracts are adjusted to fair value, recording this effect, at the settlement date of the hedging transactions as part of net product sales.
The Corporation has not entered into any hedging transactions with the specific purpose of hedging the price risk caused by fluctuations in prices of production inputs.
F-93 Corporación Nacional del Cobre de Chile
c. Liquidity risk
The Corporation ensures that it has sufficient resources, such as pre-approved credit lines (including refinancing), in order to meet short-term requirements, after considering the necessary working capital for its operations and any other commitments it has.
In this sense, the Corporation maintains resources at its disposal sufficient to meet its obligations, whether in cash, liquid financial instruments or credit facilities.
In addition, the Finance Department constantly monitors the Corporation’s cash flow projections based on short- and long-term projections and available financing alternatives. In addition, the Corporation estimates that it has enough headroom to increase the level of borrowing for the normal requirements of its operations and investments established in ¡ts development plan.
In this context, according to current existing commitments with creditors, the cash requirements to cover financial liabilities classified by maturity and presented in the statement of financial position are detailed as follows:
Maturty ol financial | Lesathan [Betecem ome] Over las of 30-08-2024 lyónt Fué yanre panrD FHUSi VALS PLE
Haras Bree Pura al era 1189) P CT 7 UREA EA ‘
Elcnda ad 159 18520395 | 15387 173
Cra? 28.110 873 ES?
Cha rarnciA imtnls AF
Torn eras] aseos | HTA
d. Credit risk
This risk comprises the possibility that a third party does not fulfill its contractual obligations, thereby causing a loss for the Corporation.
Given the Corporation’s sales policy, principally with cash and advance payments and bank letters of credit, the uncollectible of client debt balances is minimal. This is complemented by the familiarity the Corporation has with its clients and the length of time it has operated with them. Therefore, the credit risk of these transactions is not significant.
The indications with respect to the payment conditions to the Corporation are detailed in every sales contract and the negotiation management is under the charge of the Commercial Vice- Presidency.
In general, the Corporation’s other accounts receivable have a high credit quality according to the Corporation’s evaluations, based on each debtor’s solvency analysis and payment history.
The maximum exposure to credit risk as of September 30, 2024 is represented by the financial asset items presented in the Corporation’s Statement of Financial Position.
F-94 Corporación Nacional del Cobre de Chile
The Corporation’s accounts receivable does not include customers with balances that could be classified as a significant concentration of debt and would represent a material exposure for Codelco. This exposure is distributed among many clients and other counterparties.
In the customer items, the provisions, which are not significant, are included based on the review of the outstanding balances and characteristics of the clients, destined to cover eventual insolvencies.
Explanatory note 2 “Trade and other receivables shows past due and not provisioned balances.
The Corporation estimates that unimpaired amounts overdue over 30 days are recoverable based on clients historical payment behavior and their existing credit ratings.
As of September 30, 2024 and 2023, there are no receivable balances that have been renegotiated.
Codelco works with major banks, which have high national and international ratings, and continually assesses them; therefore, the risk that could affect the availability of the Corporation’s funds and financial instruments is not significant.
Also, in some cases, to minimize credit risk, the Corporation has contracted credit insurance policies through which it transfers to third parties the commercial risk associated with some aspects of its business.
During the nine-month periods ended September 30, 2024 and 2023, no guarantees have been executed in relation to ensure the collection of third party debt.
Personnel loans mainly relate to mortgage loans, according to programs included in union agreements, which are paid for through payroll discounts.
e. Other relevant risks
As a complement to the management of financial risks, during the year 2023 the corporation focused on the development of the capacity for the surveillance of strategic risks, in order to keep their treatment and exposure levels updated. In addition, it has monitored and reported those situations in which risks were trending upwards, which has allowed us to provide a holistic view to the Board of Directors regarding the most relevant issues. Initiatives to strengthen the company’s risk culture also continued.
This is reinforced by the current corporate governance through which systematic reviews are held in corporate risk committees and quarterly board committee meetings.
Our risk management program considers that risk predisposition and risks may change over time, requiring management actions to respond to these changes according to the context.
F-95 Corporación Nacional del Cobre de Chile
Information regarding the main risks considered by Codelco is included in the Annual Report as of 2022.
29. Derivatives contracts.
The Corporation has entered transactions to hedge cash flows, to minimize the risk of foreign exchange rate variations and sales price variations, detailed as follows:
a. Exchange rate hedge
The Corporation maintains an exposure associated with ¡ts foreign exchange hedging operations, the balance of which corresponds to a net deferred tax profit recognized in equity amounting to ThUS$ 5,210 as of September 30, 2024.
The following table shows details of the fair value and other information of the financial hedges contracted by the Corporation:
September 30, 2024 | ] ] y [| Fiemncial | | | Mig | liga | Frei Arorfaso Hell ner Pira óo iio Bl Ea | | | daa | Emo | Hedgir ¡bobo rr ¿5H | INLET | FALEES TILA mri53 PUES TELS | Ea LE cio 0 F* hire lord rarcr rra E A tn si El fa do A P Moran Lordor ErarcA siria > PEL Dr En A Ji DA | ma | 4 | | [Sc EX A HAL PDA Há a a me 174 ae pa | | Lom PET 0 A HE pura PO ¡Ea 5 ra = a | Mo | un | a | E e A o E Ll _- E – 1 -b . E La + ¡Pola ca ón | FIT Aa | Hiiria | dé) va ELA December 31, 2023 ¡ : it T : | Fisaseial | Arda ces | Pais dra Haig Mer Api erro y pal A des DA e dei ber de, erp | Enifjraerrarol | | paa MI NI E od ll mi e uE “Y e] | JA | a 03 | ” | A] Sr ELA DL rad 1 A sm í Fl al | a FA EA | 1 a | 12 Pu! | 412 A A su ! añ | 3 | ; u ro do A Pr | sm dor rar rar sE ñ A y! 115 45 HA] ñ er | 425310 | 4 Lipeyws de a pro Pu 5 ja 3 dr dh 3 ! . | 1] Í A A | MO i- 473 A | _H mo | el 200 | us | : ¡Feb | LAA | LEFIEA, | E A E
As of September 30, 2024, the Corporation has no cash collateral balances.
The current methodology for valuing currency swaps uses the bootstrapping technique based on mid-swap rates to construct (zero) curves in functional currencies other than the functional currency and US$, respectively, based on market information.
The notional amounts held by the Corporation for financial derivatives are detailed below:
F-96 Corporación Nacional del Cobre de Chile | | Metsonal mece ol crosració mito nal matar a tr ñ e AA | | “La E har HE T Total | | | Total September 10, 034 | Curoos | |1b93 yeara |Jio Spear Over d pra | | daa | dea current | – á | POA-CUIEA A ms | muss | muss TN TO (Corency denares 2 ||| UN AM RA ¿HA | 4 A AA
Noanal ampontofcoctracte arte lina mart se PMI o o A y mo – Less han Cer Tota! | | Toba | | Va] lidia Diver Eprdra 5 diya dea cultere | i2n-currer PUES | THUSS LES: | USE | THIS MLS | TRUE
Oecember 31, DIA | Cumenty m n omo ma 5 a m | Compre demas | 055 |
200 31,192 El 200 SES TAB 145057]
b. Cash flows hedging contracts and commercial policy adjustment
The Corporation trades in the copper, gold and silver derivative markets and records its results upon termination. These results are added to or deducted from sales revenues. As of September 30, 2024, these operations generated a lower net realized result of T1hUS$13,943.
b.1. Commercial flexibility operations of copper contracts lts objective is to adjust the price of sales to the Corporation’s sales policy, which is defined according to the London Metal Exchange. As of September 30, 2024, the Corporation has copper derivative transactions associated with 270,135 metric tons of fine copper. These hedging transactions are performed as part of the Corporation’s commercial policy.
The current contracts as of September 30, 2024, present a negative balance of ThUS$35,518 and their final result will only be known at their maturity, offsetting the hedging transactions with revenue from the sale of the hedged products.
Operations completed between January 1 and September 30, 2024, generated a net negative effect in results of ThUS$14,326, corresponding to values for physical sales contracts for a negative amount of ThUS$10,556 and values for physical purchase contracts for a negative amount of ThUS$3,770.
b.2. Trade operations of current gold and silver contracts.
As of September 30, 2024, the Corporation has derivative contracts for gold amounting to OZT 2,813 and silver amounting to OZT 59,050.
The contracts in force at September 30, 2024 show a positive exposure of ThUS$ 224, the final result of which will only be known at maturity of these operations, after offsetting between the hedging operations and the income from the sale of the hedged products.
These hedging operations expire in November 2024.
As of September 30, 2024, the Corporation has completed gold and silver operations, which generated a net positive effect on income of ThUS$383 corresponding to the value of physical sales contracts.
F-97 Corporación Nacional del Cobre de Chile
b.3. Cash flow hedging operations backed by future production
The Corporation has no outstanding transactions as of September 30, 2024, arising from these operations, which protect future cash flows by locking in price levels for the sale of part of its production
The following tables set forth the maturities of metal hedging activities, as referred to in point b above:
September 30, 2024 Maturity date ThUS$ 2024 2025 2026 2027 2028 Upcoming Total Flex com cobre (asset) – 1,173 – 1,173 Flex com cobre (liability) (7,658) (26,116) (2,917) (36,691) Flex com GoldSilver 224 – – 224 Price setting – 7 Metal options – – – 7 Total (7,434) (24,943) (2,917) (35,294) December 31, 2024 Maturity date ThUS$ 2024 2025 2026 2027 2028 Upcoming Total
Flex com cobre (asset) – 2 2 Flex com cobre (liability) (3,310) (1,577) (4,887) Flex com GoldSilver 3 – 3 Price setting – 7 Metal options – – 7 Total (3,307) (1,575) (4,882) September 30, 2024 Maturity date
All figures in thousands of metric tonsounces 2024 2025 2026 2027 2028 Upcoming Total Copper Futures [MT] 41.710 197.175 31.250 270.133 GoldSilver Futures [ThOZ] 61.863 – – 61.863 Copper price setting [MT] – Copper options [MT] December 31, 2023 Maturity date
All figures in thousands of metric tonsounces 2024 2025 2026 2027 2028 Upcoming Total Copper Futures [MT] 219.025 32.000 251.023 GoldSilver Futures [ThOZ] 41.891 – 41.891 Copper price setting [MT] – Copper options [MT]
30. Contingencies and restrictions
a) Lawsuits and contingencies
There are various lawsuits and legal actions initiated by or against the Corporation, which derive from its operations and the industry in which it operates. In general, these are civil, tax, labor and mining litigations, all related to the Corporation’s activities.
In the opinion of Management and its legal advisors, the lawsuits where the Corporation is being sued and could have negative results do not represent significant loss contingencies or cash flows. Codelco defends its rights and makes use of all the corresponding legal and procedural instances and resources.
The most relevant lawsuits filed by Codelco relate to the following matters:
– Tax Proceedings: There is a tax proceeding for liquidation No.141 of tax year 2015 and Exempt Resolution No. 89 of 2016 issued by the Internal Revenue Service (Sl!), for which the
F-98 Corporación Nacional del Cobre de Chile
Corporation presented the corresponding appeals, which were received and resolved in favor of the Tax and Customs Courts, a resolution that was appealed by the SII.
– Labor lawsuits: Labor proceedings brought by the workers against the Corporation, regard to occupational diseases, labor accidents and other matters.
– Mining proceedings and others arising from the operation: The Corporation has been participating, and will probably continue to participate, as plaintiff and defendant in given court proceedings involving its mining operation and activities, through which it seeks to exercise certain actions or set up certain defenses in relation to given mining concessions that have been established or are in the process of being established, as well as also with regard to its other activities. These proceedings currently do not involve any given amount and do not have any essential effect on Codelco’s development.
As of September 30, 2024, there are arbitration lawsuits pending final judgment, between Codelco and Consorcio Belaz Movitec SpA. and Codelco and between and Obras Subterráneas S.A., Agencia en Chile (OSSA).
During the nine-month periods ended September 30, 2024, there are no lawsuits or other proceedings representing 10 percent or more of the Corporation’s total outstanding lawsuits.
At the date of issuance of these interim consolidated financial statements, the Codelco faces various lawsuits and legal actions against it for a total of approximately ThUS$435,854 corresponding to 1,061 cases, with an estimated loss amount of ThUS$60,532. According to the estimate made by the legal advisors of the Corporation, 877 cases, which represent
82.66% of the universe, have associated probable loss results amounting to ThUS$60,532 (Additionally, with the same probable results, there are 3 cases for ThUS$10 ThUS arising from subsidiaries). There are also 135 cases, representing 11.72% for an amount of ThUS$ 327, for which it is less likely than not, that the ruling will be against the Corporation. For the remaining 49 cases, representing 4.62% for an amount of ThUS$ 21, the Corporation’s legal advisors consider an unfavorable result to be remote.
For litigation with probable loss and its costs, there are the necessary provisions, which are recorded as contingency provisions.
b) Other commitments.
. Law No. 19993 dated December 17, 2004, authorized the purchase of the Refinery and Smelter Las Ventanas assets from ENAMI, establishing that the Corporation must ensure that the smelting and refining capacity required is maintained, without any restriction and limitation, for treating the products of the small and medium mining sector sent by ENAMI, under the form of toll production or another form agreed upon by the parties. (See paragraph described in number ix, where the modification of this law is mentioned).
I. Obligations with the public for bond issues means that the Corporation must meet certain restrictions related to limits on pledges and leaseback transactions on its principal assets and on its ownership interest in subsidiaries.
The Corporation has complied with these conditions as of September 30, 2024 and 2023.
F-99 Corporación Nacional del Cobre de Chile ti. On January 20, 2010, the Corporation signed two energy supply contracts with Colbún
S.A., which includes energy and power sales and purchases for a total of 510 MW of power.
The contract provides a discount for that unconsumed energy from Codelco’s SIC divisions with respect to the amount of contracted power. The discount is equivalent to the value of the sale of that energy on the spot market.
The contracted power for supplying these Divisions is comprised by two contracts: ” Contract No.1 for 176 MW, current until December 2029.
* Contract No.2 for 334 MW, current until December 2044. This contract is based on energy production from Colbún’s Santa María thermal power station, which is currently in operation.
This plant is coal-fired, and therefore the electric energy tariff rate applied for the energy supplied to Codelco is linked to the price of coal.
Both of these contracts comply with Codelco’s long-term energy and power requirements from the SIC of approximately 510 MW.
Through these contracts, which operate through take or pay, the Corporation agrees to pay for the contracted energy and Colbún undertakes to relimburse at market price the energy not consumed by Codelco
On October 27, 2022, Codelco signed an amendment to the contract, which, among other aspects, will allow replacing the coal-based electricity supply with a renewable energy supply.
This transformation will be implemented gradually, and as of January 1, 2026 the contract will be for 1,000 GWhyear of renewable energy.
iv. For the electric power supply of the Chuquicamata’s work center, the following contracts are maintained:
For the electric power supply of the Chuquicamata’s work center, there are three contracts: Contract with Engie for a 15-year term as from January 2010, that is maturing in December 2024, for 200 MW capacity, and another contract for a 200 MW capacity which was signed in January 2018 and will be effective as of January 2025 with maturity in December 2035.
Contract with CTA effective as from 2012 for 80 MW capacity, maturity in 2032.
On May 3, 2024, Codelco signed amendment No. 5 to the contract with CTA, whereby the parties agree to commercial changes to the contract, along with decarbonization of the contract as of 2026.
v. On August 26, 2011, Codelco signed two energy supply contracts with AESGener. The first one for the Minister Hales division for a 99 MW capacity and the second contract for the Radomiro Tomic work center, for a maximum capacity of 145 MW. Both contracts will mature in 2028.
In December 2022, the respective agreements were renegotiated and signed. The agreement implies the modification of the original contracts and a new renewable sources contract effective from 2023 to 2040.
F-100 Corporación Nacional del Cobre de Chile vi. On February 28, 2024, Codelco signed three corporate electricity supply contracts based on renewable energy with the companies Atlas Energía Dos SpA, Colbún S.A. and Innergex Energía Renovable SpA, which start their supply on January 1, 2026 and have a termination date of December 31, 2040. The contract with Atlas Energía Dos is for 375 GWhyear of energy, the contract with Colbún is for 1100 GWhyear of energy and finally the contract with Innergex Energía Renovable is for 390 GWhyear of energy.
vi. On November 11, 2011, Law No. 20551 was published in the Official Journal, which regulates the tasks and closure of mining facilities. Additionally, on November 22, 2012, the Supreme Decree No. 41 of the Minister of Mining, which approves the Regulations of this Law, was published in the Official Gazette.
This law requires the Corporation, among other requirements, to provide financial guarantees to the State to ensure the implementation of closure plans. lt also establishes the obligation to make contributions to a fund which aims to cover the costs of post-closure activities.
The Corporation, in accordance with the regulations, delivered in 2014 to the National Geology and Mining Service (SERNAGEOMIN) the mine closure plans for each of the eight divisions of Codelco. These closure plans were developed under the transitional regime of the Law, specified for mining companies affected by the general application procedure, which are those with extraction capacity > 10,000 tonsmonth, and that at the date of entry into force of the Law were in operation, and with a closure plan previously approved under the Mining Safety Regulation D.S. No. 132.
All these transitional closure plans were approved in 2015 in accordance with the provisions established in the Law.
The law also established the obligation to update these closure plans, under the conditions of the general regime of the law, which incorporates new and greater requirements for the closure plans, five years after its entry into force, ¡.e. in 2020 in the case of Codelco. This calendar was brought forward to 2019 due to operational particularities for the Chuquicamata and Ventanas Divisions, and postponed to 2021 by SERNAGEOMIÍN, due to the COVID19 pandemic for the entire industry, and therefore for all other divisions.
In compliance with this new schedule, Codelco approved in 2021 the updated closure plans for the El Teniente, Radomiro Tomic, Ministro Hales and Gabriela Mistral Divisions, and as of December 31, 2021, the approval of the updated plans for the Salvador and Andina Divisions is in process. During the year 2022, Codelco obtained the approval of the updated closure plans of the Salvador and Andina divisions. The Corporation has provided the corresponding guarantees committed in all the approved closure plans, in accordance with the latest updates in force.
As of September 30, 2024, the Corporation has agreed guarantees for an annual amount of UF 80,496,051 to comply with the aforementioned Law No. 20551 (see note No. 31).
vii… On August 24, 2012, Codelco through its subsidiary Inversiones Mineras Nueva Acrux SpA (Nueva Acrux) (whose minority shareholder is Mitsui), signed a contract with Anglo American Sur S.A. Under this contract, Codelco agreed to sell a portion of its annual copper production to the mentioned subsidiary, who in turn agrees to purchase such production.
F-101 Corporación Nacional del Cobre de Chile
Such annual portion is determined by the share of Codelco’s indirect subsidiary, Inversiones Mineras Becrux SpA (also shared ownership with Mitsui), maintained for the shares of Anglo- American Sur S.A.
In turn, the subsidiary Nueva Acrux agrees to sell to Mitsui, the products purchased under the agreement described in the preceding paragraphs.
The contract expiration will occur when the shareholders agreement of Anglo-American Sur
S.A. ends or other events related to the completion of mining activities of the company take place.
Xx. On June 17, 2022, Codelco’s Board of Directors agreed to move forward with preparations to cease operation of the Ventanas Smelter, subject to parliament amending Law No. 19993 within a limited period of time, whose scope referred exclusively to the smelter and not to the refinery or other operations of the Ventanas Division. For this measure to be carried out, it required the amendment and approval by the Executive and the Legislature of Law No. 19993, which obliged the Corporation to smelt the minerals of Empresa Nacional de Minería (ENAMI) at the Ventanas Smelter.
On March 6, 2023, Congress approved the modification of the aforementioned law, allowing this obligation to be fulfilled by other smelters and refineries of Codelco Chile.
Later, in May, the National Geology and Mining Service (Sernageomin) authorized Codelco the temporary closure plan for the Ventanas smelter, which will have an initial duration of two years, extendable for another three, during which time engineering will be developed and permits will be processed to move on to the definitive closure stage, which considers, among other actions, the dismantling of the smelter facilities.
On May 31, 2023, the Ventanas smelter furnaces were shut down.
F-102 Corporación Nacional del Cobre de Chile
31. Guarantees
The Corporation as a result of its activities has received and given guarantees.
The following tables list the main guarantees given to financial institutions:
Direct Guarantees provided to Financial Institutions and other
Creditor of the guarantee Type of guarantee 30-09-2024 12-31-2023 Currency Maturity Quantity ThUS$ ThUS$
Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement UF 17-mar-25 1 1,267 1,258 Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement CLP 17-mar-25 1 18,169 18,595 Consorcio Aeropuerto Calama Parking UF 30-nov-23 1 – 4 Road management Construction project UF 02-ene-24 8 28 Road management Construction project UF 08-abr-24 1 4 Road management Construction project UF 01-mar-24 4 12 Road management Construction project UF 31-jul-24 1 – 8 Road management Construction project UF 02-may-25 2 978 972 Road management Construction project UF 30-dic-24 1 489 486 Road management Construction project UF 17-may-24 1 – 3 Road management Construction project UF 19-j¡un-24 1 5 General Directorate of Maritime Territory and Merchant Marine [Maritime concession CLP 24-mar-24 1 9 General Directorate of Maritime Territory and Merchant Marine [Maritime concession CLP 01-mar-24 1 1,203 Engie Energia Chile S.A. Water Supply Project CLP 02-sept-24 2 – 453 Ministry of National Assets Project of explotation UF 10-jun-24 6 48 48 Ministry of National Assets Project of explotation CLP 26-feb-24 22 176 Ministry of Public Works Construction project UF 29-jul-24 1 – 43 Ministry of Public Works Construction project UF 15-dic-24 1 573 569 Ministry of Public Works Construction project UF 22-ene-25 1 271 269 Ministry of Public Works Construction project UF 13-sept-25 1 1,115 1,107 Ministry of Public Works Construction project UF 28-sept-25 1 577 573 Ministry of Public Works Construction project UF 19-dic-25 1 842 836 Ministry of Public Works Construction project UF 31-dic-24 1 24,979 24,809 Ministry of Public Works Construction project UF 10-mar-25 1 3,573 3,549 Ministry of Public Works Construction project UF 30-abr-26 1 413 – Ministerio de Obras Públicas Proyecto de construcción UF 30-jun-25 1 3
Ministerio de Obras Públicas Proyecto de construcción UF 01-jul-26 1 2,315
Sernageomin Environment UF 19-sept-24 1 68,888 61,530 Sernageomin Environment UF 11-nov-24 3 349,544 347,159 Sernageomin Environment UF 14-nov-24 2 210,448 209,011 Sernageomin Environment UF 27-nov-24 5 345,951 307,049 Sernageomin Environment UF 02-dic-24 9 944,964 938,514 Sernageomin Environment UF 16-dic-24 2 164,815 120,635 Sernageomin Environment UF 17-feb-25 4 429,530 379,876 Sernageomin Environment UF 03-may-25 11 885,336 785,308 General Treasury of the Republic Maritime concession CLP 30-jun-24 1 – 54 Municipality of Santiago Project of explotation CLP 01-oct-24 1 73 74 Municipality of Santiago Project of explotation CLP 31-dic-25 1 31 llustre Municipalidad de Santiago Proyecto de explotación CLP 31-oct-25 1 73
Antofagasta Railway Company PLC Proyecto de construcción UF 14-abr-25 1 164
Total 3,455,429 3,204,229
As for the documents received as collateral, they cover mainly obligations of suppliers and contractors related to the various development projects. At September 30, 2024 and December 31, 2023, the balance of these guarantees is ThUS$1,271,848 and ThUS$1,152,203, respectively.
F-103
Corporación Nacional del Cobre de Chile
32. Balance in foreign currency
a. Assets by Currency $ 10-200%4 Cañar pun der neto añ PotigA Cutter y US Dobara Expos a q uE TOTAL cab ¡Current aarecta Cash and ca euaerán 1467 305 E Ha do 110 311 – 1.647 794 Ciber bnanciad asta ummm (107 3 70131056 yA 614 [Other nun rua 3 Are 11 97 14 4 105 di Y Sn Trade and or reo able CuITer ZO NTE 150,053 7 40,112 1106 2.600.273 Agocigaés meceivable bom mia d ATA Caen 1 FR = 18 100 MATES CUTErA 7 037.654 , 7.037 604 Cuero Lás arc _1145 E ” Eu? – E 0 Asi zucrert aerea 5064, 187 > 10T4M1 COC CE EC 0 Mon
F-104
Corporación Nacional del Cobre de Chile
b. Liability by type of currency: q HOP 2222. a Mt mien hd loctign cutrrosy abit 15% Cialara Ena CRE yá UF TOTAL vu 782.151 1,0791,07 156 ON Par 158,579 27D 3341 21.200 18,047 2,175,816 s > 130,746
11.0F5 +69 Wii aer 14 044 TEE 178 au +b 135 20.025 E 411,740 11,000
441 10, 116 34.308 14550 ‘ ut ua Prasa (167557 143 É Al E E
12-11-3093 ra e A TOTAL o e A -) 1531 a y BEZADA 445 10448 10 1 FER. Y 34 766 E CA IA E : m3 i 177 404 o O o A AT : y mé | LATA Ta mE 12 0r2 41,564.
157412) 1510) M0 ATA] MARANT LA . 603 141 730 Ai 65 64d
e) 155 444
1.OAB.OTE 355 10m] (2114643.
1.719 44 mp ¿M1 2.241.800 310 A 0 A 300 _ IN ANO F0090d 2075! HAGA, p3004 E E CT
F-105 Corporación Nacional del Cobre de Chile
33. Sanctions
As of September 30, 2024 and December 31, 2024, neither Codelco Chile or its Directors and Managers have been sanctioned by the CMF or any other administrative authorities.
34, The environment
Each of Codelco’s operations is subject to national, regional and local regulations related to protection of the environment and natural resources, including standards relating to water, air, noise and disposal and transportation of dangerous residues, among others. Chile has introduced environmental regulations that have obligated companies, including Codelco, to carry out programs to reduce, control or eliminate relevant environmental impacts. Codelco has executed and shall continue to execute a series of environmental projects to comply with these regulations.
Pursuant to the Letter of Values approved in 2024, Codelco is governed by a series of internal policies and regulations that frame its commitment to the environment, among which is the Corporate Sustainable Development Policy (2021).
Under a Corporate Environmental Management System, the divisions, structure their efforts in order to comply with the commitments assumed by the corporation’s environmental policies, incorporating elements of planning, operating, verifying and reviewing activities. As of September 30, 2024, Codelco ¡is certified under the ISO 14001:2015 Standard, which is applicable to all its divisions.
To comply with the Circular No. 1901 of 2008 of the CMF, the details of the Corporation’s main expenditures related to the environment during the periods from January 1 to September 30, 2024 and 2023, respectively, and the projected future expenses are stated below:
F-106 Corporación Nacional del Cobre de Chile
Aa Pc ¡Preta | TEE Ar Lagar Ep dica Liria L hi Fire 14 Larrea ar a | dea Lada, Par ade hirarria uy Cree Lie perdi Man EE A brurta 114] ds E A A 5h BES Laden | risa Pan pr hire Mr Faria A A 51 Codete Chis [[saurearas SonarT pocos 20 Capard CA depara eb Lrderr: Le on rene ee nd bale Pp A e rape Sn rl ap erT LE Ludoto Cil HS Hard Subido Hr PLA e Me Apo ari al PLATE 15 Cade Ch pÓ A A A hprarrsn E LS Peg pla rl epa eo Casbedoo: Minis rr Da ae] > A Pa] Fodar> Cds He lors [olaa Capar hype LO Mr OA A RT Codere Chis pú or o “rachard | aderjo “ambos Sara * a) M4 44 AS o ¡rl A al Chau JO [A uu MS Codeco Cr [Lale Epa dal MA AA A A ia di Device: Eli O ai Sa id a a An A pers M0) Laperar A PA rin [axbaioo Er O La 1 MA Aa 10 A A OS de pri van ha e e E Lali hr ¡Fl DA ra Pl PA lara y arre] : Aaa Er tal del pap e AA] LAAARTO: | Pa re A EA Pares ¿EY mu Et DAA A AA Ladies, | Pú A dp Pur 11504. gl A rl rl er Le deja Dir Ta | 2005 Pre 54 Li Lp] pri 1 hrs 3” Lepe ¡ral red pr £Lja horarios Fo Mi Lar Lcd orar Ala page de a 7 ML E PE 25 ad Pr 11054 Fepareja e in rar pr 561 honra 10% E Cp 14 arar] E Pos A AAA 2508 hpapoxl e Men Arcs pl a AAA E MPA la A. Pepa ri al Pero mi PEA 14) pr np ari are $11 Corqaaed Asi Ira panic r i paros dba Ear Ars quetard epaprere 15 Cunard Bepr Separa pp LA VA ais Fr La Prats a dl A Hs Mi pr 3H La Fr lil dla a 11 Br ge ¡ia rl re 40 LS cul ET
F-107 | usa) eh
Huan 120400
17 1154 a 15 sm 11411
1 1
EIIEASNDEDS
ARRE dE: Corporación Nacional del Cobre de Chile
Olarra HDD Bula de ae a A PR Campary Pepi rusos Progaas ars TAS pa lei TL Tru Firmas tr rat l Colaira Ci E A [pue | dr Pope pr nl rr de | pra Callas tri La parda dl) PU erro aran ar AE 206 Cabrio Ch (có par es Lu rl A ¿5 | ee Cotisicó Cha Hp E rpra ER Esper qu nr ERE 2 Loto Lar kh pri Me E ¿eje ¡ray hai 25 | ya Caja, Cd A A e a Pegar, [il al a a a (dea Char ere jad gr A er lao Prop part Al ear uN e PO Au Cde Lia dj er ces de Viper di rg JM har q ¡ll pd ar e nu Cade Td Ad ir De ep a har Ajay [el al e e A depa. rl ds Propia ut E An E | An Coba (Td A ly e E pogo plat hemos Pqary par and e oa E Codero Chis ASA LOTES rip PAPA | A ue Más impa PERL A AA 170 Hu Niirar Derbi: 4 EE] SAT Mara Lada Ch más b paren 14d len A E] FL Cudeco Chin resta e poga 13 Urra Dr and Ja Codae Lie FTE un e paren | – Enperdir A – Lp Codo Chia FE ÁAFT AAE p N Corp ; ho Pepa don al peer 6rÍ Fu) Codelco Cha Aran oa il ron Auro CA E poqum uy har Pope pai rl TE sl 5 j ista leo 1814 atar Ju e TN 15 Erperda a ‘ 24 Limo Cda ¿Sta TN EE | Eure arman 1155 ga Codaro Cha E | lr pr ME igor prin pr 1145 FU Code Lhá T plage boo Lia Erirrafiya pe din raro Ai? e Yodo Lt dr RAE er A A A Laa Pp pl ar His BA rr ¡ LE] dd a Vimida ¿alias Dl | dl ad h pra m0 reo qe ay lar 14 PLA ¿de La mai] Brin ] ml Prep qu A – ¿q Coba Ut 4 pda NN sul [serás A La] i 20 Cale Fil Aer me, E pue lta Há Pl [0 rl ipod el 434 qa | JA Tanta Diviaiaa rl | A 2.
abr Credo hm 7 pues LEN lena A 31 FLA Could Che páara le pue Me] Expande FAR An 1 FIA Corea, Ciria E E pra ce har Mopary tal ren Ao adaid ne a ar Parado Cda 04 a pupa uE hi pan parta por? . Pd ¿ui sa Dra. eno 34 201 , Limia MT E atra gan rre 48 Liam IAEA ms dl Mas dra Li PO A pogo a | amb Mp perio m FE Ea A y Ecometóaa | main un ‘ Ha 3 de Porra nto de Modbeas | rada Vid epa A A A dl? Ei hit born A cp rn A 1501560 | TN 7 A E a noto Lar + hi O O e – A A | ] visas AMA Ie |
F-108
Corporación Nacional del Cobre de Chile
35. Subsequent Events
Management of the Corporation is not aware of other significant events of a financial nature or of any other nature that could affect these financial statements, occurring between October 1, 2024, and the date of issue of these interim consolidated financial statements as October 30, 2024.
Rubén Alvarado Vigar Alejandro Sanhueza Díaz
Chief Executive Officer Chief Financial Officer Juan Ogas Cabrera Cristóbal Parrao Cartagena Accounting Manager Accounting Director
F-109
CORPORACION NACIONAL DEL COBRE DE CHILE
Consolidated Financial Statements as of December 31, 2023.
F-110 ú- pwe
INDEPENDENT AUDITOR’S REPORT (A free translation from the original in Spanish)
Santiago, March 28, 2024
To the President and Directors of Corporación Nacional del Cobre de Chile
Opinion
We have audited the consolidated financial statements of Corporación Nacional del Cobre de Chile and its subsidiaries (the Corporation), which comprise the consolidated statements of financial position as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audits in accordance with Generally Accepted Auditing Standards in Chile. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit ofthe Consolidated Financial Statements section of our report. We are required to be independent of the Corporation and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Corporation’s ability to continue as a going concern for a foreseeable future.
PAC Chile, Av. Andrés Dedo 2714 – piso 5. Las Condes – Santiago, Chribe ROT 81513.4001 | Teléfono: (362129400000 | www.pwe.él
F-111 ú- pwe
Santiago, March 28, 2024 Corporación Nacional del Cobre de Chile 2
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not guarantee that an audit conducted in accordance with Generally Accepted Auditing Standards in Chile will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with Generally Accepted Auditing Standards in Chile, we: o Exercise professional judgment and maintain professional skepticism throughout the audit.
o Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
o Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control. Accordingly, no such opinion is expressed.
o Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
o Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Corporation’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and any internal control significant deficiency and material weakness that we identified during the audit.
DocuSigned by:
CIAO uan Cxeor Pitta DEC 64 RUT: 14.709.125-7
F-112 CODELCO – CHILE
Consolidated financial statements as of December 31, 2023 (A free translation from the original in Spanish)
F-113 CONTENT
CONSOLIDATED FINANCIAL STATEMENTS (A free translation from the original in Spanish)
INDEPENDENT AUDITOR’S REPORT …….ooooccccccccccccccccccccccococococococonocononononononoononononnononononononnnnncnncnnccncccncnonoss 2 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION …..occcocccocccciccccccinccicocicccicccoccocococcosoconoconoronoranoranoranoroos 5 CONSOLIDATED STATEMENTS OF INCOME ….cocccccccccciccciccincccnccinorinocooconocinoconoconoronconononoranoran orar ccoo rr crn occ o ranananens 7 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME……ccccccccccccicccicccicccocconocinocoocnoconococorooccnoconocinoos 8 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY …..occcccccccccciccocccicociccciccccociocconocoocoooconoconorocorsocosocononinoss 9 CONSOLIDATED STATEMENTS OF CASH FLOWS cioonccccccccconccicocicocnccnocinocicocicocaoconoconocooconccononanoranorrcro cra nncncans 11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT S ….coccccccoccccicconccinocicocicococcoooconoconorocconornoranorancrsncraos 12
|. GENERAL INFORMATIÓN ….ccoccococccoscccicccnccinocinocicoconococconoronorooconoranoro nono c rr onan oran 12 1, Corporate informatiON………..cooccocicnionnoonoonccncnnconconcon nan non nor corn con cn nor narrar narco nro nera 12
2. Basis of presentation of the consolidated financial statements………….ooooccoccooroncconcnoroncconcooronocones 13 Il… SIGNIFICANT ACCOUNTING POLICIES ………occcocccoiccccccccccococococcconoccooococooconoconoronoconoroncrorcanoron cano nanoranaranonos 14
1. Significant judgments and key estimates………..oocoocccccnocnocnonconcconcnoroncconcnoronoconconconoronrnnronccnoronconocnns 14
2. Significant accounting policies ………….ooomooccocnooroncconnnoroncconcnoroncconroorononoornoronccooronronoronrnnronccnornronocnos 21
3. New standards and interpretations adopted by the Corporation ………….ooococcoocnocnccoccoccnccoccnccornoroos 39
4. New accounting pronoUNCeMentS ……cooccccnccncnccncnocnccncnococcnrnonocnorncnornornrnornonarcornrnornonarnocrnarocoononnss 41 Il. EXPLANATORY NOTES ….ooccocccocccoccocccicocicconoconoconorooconoronorororo occ oran oran arrancar 44
1. Cash and cash equivalents…………oooocooccocnornocnocnocnonoocnocnoroccncnnonornornornornornornnrnornnrnnrncrncncncncornnronss 44
2. Trade and other receivables ………….oocoocoocnocoocnccnccnocccnccncccnoconrnornnrnornornornornornorncrnoncccnrcccrnnronen 44
3. Balances and transactions with related parties………….ooococrocnocnocnocnonnoronronrnoroocnoccococcnonconccornrnarons 46
4. INVENtoOril8sS …..coocccoccoccocnncnncnononrnonocnnonncnnccnccncnncnnronrnnrnnrnornornornorncnncnncnncnncnnrnnrnarnernorncrnccnccnccnccnccccncnns 52
5. Income taxes and deferred taxes……ocooccoocconoconononononoconocnnccnaconaconoronoronoroncrnncrnaconaronaronoronoroncconcnnanos 53
6. Current and non-current tax assets and liabilities ……………..ooooocoorooroormommsrmsmmsrorirorscrcccocccccoronrnnos 55
7. Property, plant and equipment ………cooccccnccnnconcnncnoconcnoconcnorocnncnnoncnornornnrnnrnornornornorocrnorocnncnorcnrnarons 56
8. LeOQsesS coccococcococonconoconcoroconcoroconcoroconnnroconrnrconnnrcnnnnrronnnrcnnonronnnnnrornnonronnnonroroncnrroncnrornncnrorcccnnoroconoss 59 9, Investments accounted for using the equity method …………..oocooccoccnoccnccnoconccnoconcccccnaronccncconcnocconons 60
10. Subsidiaries …….ooocooccccnnonoocnncnnononcnnccnoronconccnoroncnncnnornnconcrnornacnncnnornnconcnnornacnnccnornncnnccnarnnconccnaroncnncnnos 66
11. Current and non-current financial assets ………..o.oooccccnoocnoonoornncnnnnnoroncconcnoronccooronronoconrnnconccooronconcnnos 67
12. Other financial liabilities……………….oooooorooccocnooroncnonnooronoconcooronccoorooroncnoorooronoronronrnncroornnrnnccnoroncononnos 68
13. Fair Value of financial assets and liabilities ………………ooooroorooccocnonnoscconcooroocccconrosccoccooroncccoconcnocnonons 77
14. Market value hierarchy for items at market value …………..ooocoococcconccnccoononccnoconronccoccnoronccncconcnocconens 78
15. Trade and other accounts payable…………….ooooocoocccnoccccnncnoconcnocnoronrnornnrnoroornornornorocrnccncnoccrnronrnnrns 79
16. Other provisiONsS………ooocooccocnccccnocnncnncnocnorooronrnnrnnrnornornornornrncrnnornorno ron rnnrnnrnnrnnrnnrnornorncrcncnrnrnnrnnss 80
17. Employee bDenefitS……….ooooccoocooconccnocnoconccnoconconcconcnnroncconronroncnnornnrnonnnoronrncrnoronrnrroornarnncnaronrnnonoens 81 18 EQUIÍE Y ….occoccocnonocnococoncnocornocnonocnonornornr coro no ro rro coronar orar nero no rro rnrnornonnrnorrnernonnrnorrnornonarcoccnarnccononnss 84 19, ReVeNnue cococcocococcococonconoconcoroconcoroconcnroconrorornnonrcnnnnrrononrcnnonrornnnnrrnnonronnncnroroncnroroncnroncccnrorcccnnaroconoss 87
20. EXpenses by Nature ….coocccccccncccncnocnccnccnconcnocnornoronrnornornornorno roo rnn ro norno ron ron rnnrnornnrnnrnoronrnonncncnrcnrnarons 87
21. NS E 87
22. Other income and expenses ..oococcccccnccnccoconcnnconcnocnornoroncnornnrnornnnornornornnrnornornornornnrnnrnorncncncnrnnronrnnss 88
23. FINANCE COSTS …ooccocccccocnncnncnnnnonnonnonnccnccncnncnncnncnnronrnnrnnrnornnrnornorncnncnncnncnnrnnrnnrnarnarnorncnnccnccnccnccnccnccnnnns 90
24. Operating SegmentS ……coccoccccncnccnocncnocncnncnonocnornonornornrnornonornornrnornonsrnornrnornonsrnornonernonsrnorncnarnonarnonnons 90
25. Exchange difference ………oocccocooconcconcnnroncconconconcconrnnroncnnornnroncrnornoroncrooronrnnrrnoronrnrroornarnnrccronrnnocoens 98
26. Statement Of cash fÍOWS …………oooccooccoonccononononononcconccnaccnoronoronoronoroncrnncnnarcnoronoronoronoroncrnaccnaronaronoronos 98
27. Risk Management …ocoocnccnccnccnccnncnocnocnncncnncnncnornornnrnnrnornornorno roo rnn ro nornornnrnnrnnrnornornnrnornornorcncnrcornarons 99
28. Derivatives CONtractS. …..oocooccoccocnocnonncnnnnnonnonncnncnnccnccnccnccnccncnnrnnrnnrnnrnarnornornornornccnccnccnccnccnccnccncnnnons 103
F-114
29.
30.
31.
32.
33.
34.
Contingencies and restrictiONS………..ooooocooroornornoroncnonnorccocnncnocnornoroornornornornornoroornorncrncnncnoccrnnronen 106
GUArante8S…ococcccccococococncnccocococarorrnonononococarararnrnononococorararnrnononoconocorararnrnenonocococararnrnonanccccccacacaranns 111 Balance in foreign CUFrrenCy …..occccccnccnncnnccnncnncnncconcnnnnnononrnoronoronrnoronornornnronoronrnnrnnoronronroncrnarnnrononnns 113 SANCtiONS…..cocoocnccocnocncnocnocornonocnornonornornrnoro nono rnone ro norno rro nero ror nero nnrnornrnorrnernonarnornonornccsrnocncnarnons 115 The envirOonMent…..ococccccncnnccncnncnncnncnnrnornnrnornornornornorooro rr non no rnn rro ron rnnrnornornornornoroorncrcnrnrosrnaronrnns 115 Subsequent events …..oococcnccnccnccncnocnnonoccornoronrnornornornorno roo rornrocnor no rnn ron rnornornornnrnornnrnnnncnncnrcrnaronen 118
F-115 CORPORACIÓN NACIONAL DEL COBRE DE CHILE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of December 31, 2023 and 2022 (In thousands of US dollars – ThUS$) (A free translation from the original in Spanish)
Note 12-31-2023 12-31-2022 NO Assets Current assets Cash and cash equivalents 1 1,342,043 1,026,727 Other current financial assets 11 12 1,451 Other current non-financial assets 48,580 36,989 Trade and other current receivables 2 3,405,668 3,386,785 Accounts receivable from related entities 3 34,657 31,756 Current inventories 4 2,455,701 2,300,909 Current tax assets 6 2,620 10,226 Total current assets 7,289,281 6,794,843 Non-current assets Other non-current financial assets 11 107,436 105,518 Other non-current non-financial assets 13,488 13,615 Non-current accounts receivable 2 71,272 88,906 Accounts receivable from related parties. 3 224 224 Non-current inventories 4 494 747 603,446 Investments accounted for using equity method 9 2,866,698 3,927,323 Intangible assets other than goodwil| 39,660 42,687 Property, plant and equipment 7 34,622,971 32,309,530 Investment property 981 981 Right-of-use assets 8 390,706 405,843 Non-current tax assets 6 879,604 748,611 Deferred tax assets 5 103,530 95,705 Total non-current assets 39,586,967 37,942,389 Total assets 46,876,248 44,737,232
The accompanying notes are an integral part of these consolidated financial statements.
F-116
CORPORACIÓN NACIONAL DEL COBRE DE CHILE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of December 31, 2023 and 2022 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Mota 12-31-2023 12-31-2762 kh Equity and llablilira Llabititien Guerent Gabiítica a nan A ra 1 Eu? 1 Ara dl ss liadidna ñ LA 7 175 AI ¡rad al pavabikes 16 11768. 233 1 TI53A Accowia payable do rébalnó emos 5 TE 178.614 Dios adñer lem PAOBICrz E ms de Mi BEA Ciara o lbs cuen ñ li 41d ml Y aru provaona dar VINO Dei 1 250 740 349 285 Eme nocneneiaTabibes dls 430 Teta! cuen ab DEC UL Noa-currem binblbries War rancia 5h fca 17 18119 16 500 423 cesta | Dimnes á 295 144 ¿40 0 an mae pides a] e Otra limgdemi prono 1Ó LU Ad FEO TA bird há Bali bbs 5 6.441 0 309.008 MONA PONAEOA Or ErojO pas bepets IF 143 450 1041 107 Mrs rn ici Me _ -_ A Total ran-eurrerd llalniltiies A PAE Total Hablados UB29050 33082507 Equiry Sam unn O 5619. 47 Arcimilicad hosts HO EY) (598 487) DML SenteS Ba SANZ 50 4d
– Enlty aftrbutabiato.ounara 0 parent RA (ADA Neoncorimáng imentala th 405 5 19,003 Total eoralty 11,046,545 11,541,566 Total llabólliies and equity 46,076,248 44 737,292
The accompanying notes are an integral part of these consolidated financial statements.
F-117 CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF INCOME For the years ended December 31, 2023 and 2022 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 1-1-2023 1-1-2022 NO 12-31-2023 12-31-2022
Revenue 19 16,393,229 17,018,409 Cost of sales (13,273,343) (12,284,652) Gross margin 3,119,886 4,733,757 Other income 22.a 93,039 64,731 Distribution costs (29,497) (17,151) Administrative expenses (544,162) (502,313) Other expenses by function 22.b (2,062,806) (2,103,316) Other gains 43,046 29,782 Gains from operating activities 623,506 2,205,490 Finance income 99,091 47,245 Finance costs 23 (778,910) (569,060) Impairment and reversal of impairment losses determined in accordance with IFRS 9 2,279 (2,648) Share of net profit of associates and joint ventures accounted for using the equity method 9 (658,118) 51,991 Exchange losses 29 (44,963) (237,777) [Income for the period before tax (757,155) 1,495,241 Income tax expense 5 165,916 (1,133,670) Profit (Loss) From Continuing Operations (591,239) 361,571 Net income for the period (591,239) 361,571 Profit (Loss) attributable to:
Owners of the parent (374,974) 345,589
Non-controlling interests 18.b (216,265) 15,982 [Net income for the period (591,239) 361,571
The accompanying notes are an integral part of these consolidated financial statements.
F-118 CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2023 and 2022 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
1-1-2023 1-1-2022
12-31-2023 12-31-2022 Profit (591,239) 361,571 Comprehensive income Components of comprehensive income that will not be reclassified to profit or loss for the period, before taxes Comprehensive (loss) income, before income taxes, gains from remeasurement of (38,442) (8.870) defined benefit plans Share of comprehensive income of associates and joint ventures accounted for using (2.794) (5,268) the equity method that will not be reclassified to profit or loss for the period, before taxes Total other comprehensive income that will not be reclassified to profit or loss (41,236) (14,138) for the period, before taxes Components of comprehensive income that will be reclassified to profit or loss for the period, before taxes Exchange differences on translation (Losses) on foreign exchange translation differences, before income taxes (1,752) (809) Cash Flow Hedges Gains (Losses) On Cash Flow Hedges BeforeTax (14,074) 100,244 Comprehensive Income That Will Be Reclassified To Profit Or Loss Before Tax (15,826) 99,435 Comprehensive income before taxes, foreign exchange translation differences (57,062) 85,297 Income tax related to components comprehensive income Income taxes related to remeasurements of defined benefit comprehensive income 28,128 5,978 plans Income taxes related to components of comprehensive income that will not be os 28,128 5,978 reclassified to profit or loss for the period Income taxes related to components of comprehensive income that will be reclassified to profit or loss for the period Income taxes related to comprehensive income cash flow hedges 9,148 (65,159) Income taxes related to components of comprehensive income that will be os ] 9,148 (65,159) reclassified to profit or loss for the period Comprehensive income (19,786) 26,116 Total comprehensive income (611,025) 387,687 Comprehensive income, attributable to Comprehensive income attributable to owners of parent (393,896) 373,294 Comprehensive income attributable to non-controlling interests (217,129) 14,393 [Total comprehensive income (611,025) 387,687
The accompanying notes are an integral part of these consolidated financial statements.
F-119 CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2023 and 2022 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Reserve on Reserve of Equity attributable exchange Reserves of cash | remeasurement Total Retained Non-controlling
12-31-2023 Share capital Other reserves to owners of Total equity differences on flowhedges – | of defined benefit other reserves | earnings (losses) em interests translation plans po Note 18 Note 18
Opening balance at 01-01-2023 5,619,423 (7,030) 3,931 (262,465) 5,925,090 5,659,426 (538,367) 10,740,482 914,083 11,654,565 Changes in equity Loss (374,974) (374,974) (216,265) (591,239) Comprehensive income (1,752) (4,926) (10,314) (1,930) (18,922) (18,922) (864) (19,786) Profit (loss) (1,752) (4,926) (10,314) (1,930) (18,922) (393,896) (217,129) (611,025) Increase through transfers and other changes, equity – – – (581) (581) 3,690 3,109 3,109 Increase (decrease) in equity – (1,752) (4,926) (10,314) (2,511) (19,503) (371,284) (390,787) (217,129) (607,916) Closing balance at 12-31-2023 5,619,423 (8,782) (1,095) (272,779) 5,922,579| 5,639,923 (909,651) 10,349,695 696,954 11,046,649
The accompanying notes are an integral part of these consolidated financial statements.
F-120
CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2023 and 2022 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Pi Ap Eipat, dt A Fria [ar PA A
11-31-2077 e A) |prtcraa A A Mei ra 1 ao Vet 4Jaty rabo
The accompanying notes are an integral part of these consolidated financial statements.
F-121 Corporación Nacional del Cobre de Chile
CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2023 and 2022 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Mt 11-292 1-1-2072 WM? 13-20 – 1214077
Cashifiows ros (ue in) omeratino action Cinses dl cab teo tropa mm dc Recrmi tem sáles dl pos nd rr AR Eh PELAR 14 5% A Ciber Gun nece lps lt tral aries di ¿100.45 7.355 000 Pagitenda bi uppeteó do poa nl pero IN Payment iaa a behad Gl pros (1058 37H) (0,155,081 A A A Ai AI Al Chili ers ev ELA Eicire as lio yal ¡484 (47) (11,575 [Mel cash Bis Acum nero rt IAE 4 Yab B50 Cañhillois iron pues in) irettino activities Ciber cun páptier lnecgu re epa or detó resruters clotecemias 5) 4257 Puchi ul peopeidi pl Sri mreal dba (4 307] cia roo a, 175 a A – IO [lcd e ae tai chema E EN CaohMowa Fee (us in) incl acres lirouria bom lt ro bodas Ent] bombo 3400.006 rocha Pon seua berto 316,000 Todd vete rom long en Mas rd hera 3 FAO Loñtind Gon pajytiiero ¡DUE E, 01351 | asp VOD pUrrterm MESES 141,600 Mredrttta penal (258:8001 Inia ql FUEL M0 a 5H A AAA 121 3071 152618] [Mel rie Mi sc Paco lcd ART 10504 2871 Wines (desraaso| in cash ari ca equrrainnte befono in oñect ol chema 13230 DABA EMvel Of Exchange Rato Chinges On Casb And Casb Equivalonia Ec al ercrange tá chompes co past and. cio nta DE o Motjnergasa [decreasa] in cosa nrya cast aguilvalante __AA”A”””+IIIIIIIIIMIMMANA O Cash ea conh equieslons al beytse nl gen PRA AAA Cashand conh equivalente a ond of period >) AO Am
The accompanying notes are an integral part of these consolidated financial statements.
F-122 Corporación Nacional del Cobre de Chile
CORPORACIÓN NACIONAL DEL COBRE DE CHILE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2023 AND DECEMBER 31, 2022 (Monetary values in thousands of United States dollars, unless another currency or unit is indicated)
GENERAL INFORMATION
Corporate information
Corporación Nacional del Cobre de Chile (hereinafter referred to as Codelco or the Corporation), is, in Management’s opinion, the largest copper producer in the world.
Codelco’s most important product is refined copper, primarily in the form of cathodes. The Corporation also produces copper concentrates, blister and anode copper and by-products such as molybdenum, anode slime and sulfuric acid.
The Corporation trades its products based on a policy aimed to sell refined copper to manufacturers or producers of semi-manufactured products.
These products contribute to diverse fields of community development, particularly those intended to improve areas such as public health, energy efficiency, and sustainable development, among others.
The Corporation is registered under Securities Registry No. 785 of the Chilean Commission for the Financial Market (the CMF) and is subject to its supervision. According to Article No.
10 of Law No. 20392 (related to the new Corporate Governance of Codelco), such supervision shall be on the same terms as publicly traded companies, notwithstanding the provisions in Decree Law (D.L.) No.1349 of 1976, which created the Comisión Chilena del Cobre (Chilean Copper Commission).
Codelco’s head office is in Santiago, Chile, at 1270 Huérfanos Street, telephone number (56-
2) 26903000.
Codelco was incorporated through D.L. No. 1350 of 1976, which is the statutory decree applicable to the Corporation. In accordance with the statutory decree, Codelco is a government-owned mining, industrial and commercial company, which is a separate legal entity with its own equity. Codelco Chile currently carries out its mining business through its Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina, El Teniente and Ventanas divisions.
The Corporation also carries out similar activities in other mining deposits in association with third parties.
In accordance with letter e) of Article 10 of Law No. 20392, Codelco is governed by its organic standards set forth in Decree Law No. 1350 (D.L. No. 1350) and that of its by-laws, and in matters not covered by them and, insofar as they are compatible and do not contradict the
F-123 Corporación Nacional del Cobre de Chile provisions of such standards, by the rules that govern publicly traded companies and the common laws as applicable to them.
In accordance with D.L. No. 1350 Section IV related to the Company’s Exchange and Budget Regulations. Codelco’s financial activities are conducted following an annual budgeting program that is composed of an Operations Budget, an Investment Budget, and a Debt Amortization Budget.
The income obtained by Codelco in each period is subject to the tax regime established in Article 26 of D.L. N*1,350, which refers to Decree Laws N* 824, on Income Tax, of 1974, and N*2,398 (Article 2), of 1978, which are applicable to Codelco. It is also subject to the terms of Law No. 20,026 of 2005 on Specific Tax on Mining, which was in force until December 31,
2023. As of January 1, 2024, the Corporation will begin to apply Law No. 21,591 on mining royalties.
According to Law No. 13196, the return on foreign currency of the Corporation’s foreign sales (real income), of its copper production, including its by-products, is taxed at 10% and method of payment and the duration of this obligation for Codelco, which are detailed in Note 111.22 letter c) of this report.
The subsidiaries whose financial statements are included in these consolidated financial statements correspond to companies located in Chile and abroad, which are detailed in Note
11.2.d.
The associates, all located in Chile, are detailed in the explanatory note in section 111.9.
2. Basis of presentation of the consolidated financial statements
The consolidated statements of financial position as of December 31, 2023 and 2022, the consolidated statements of income, statements of comprehensive income, statements of changes in equity and cash flows for the years ended December 31, 2023 and 2022 have been prepared in accordance with International Accounting Standard No. 1 (IAS 1) “Presentation of Financial Statements, incorporated in the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (hereinafter “|ASB).
These consolidated financial statements include all information and disclosures required in annual financial statements.
The consolidated financial statements (unaudited) of the Corporation are presented in thousands of United States dollar (U.S. dollar).
F-124 Corporación Nacional del Cobre de Chile
Responsibility for information and estimates made
The Board of Directors of the Corporation has been informed of the information included in these consolidated financial statements (unaudited) and expressly declared its responsibility for the consistent and reliable nature of the information included as of December 31, 2023, which financial statements fully comply with IFRS. These consolidated financial statements as of December 31, 2023 were approved by the Board of Directors at a meeting held on March
28, 2024.
Accounting policies
These consolidated financial statements reflect the financial position of Codelco and affiliates as of December 31, 2023 and 2022, as well as the results of their operations, changes in equity and cash flows for the years ended December 31, 2023 and 2022, and their related notes, all prepared and presented in accordance with lAS 1 “Presentation of Financial Statements, considering the respective presentation regulations of the Financial Market Commission (CMPF?”.
Il. SIGNIFICANT ACCOUNTING POLICIES
1. Significant judgments and key estimates
In preparing these consolidated financial statements, the use of certain critical accounting estimates and assumptions that affect the amounts of assets and liabilities recognized as of the date of the financial statements and the amounts of revenue and expenses recognized during the reporting period is required. Such preparation also requires the Corporation’s Management to exercise its judgment in the process of applying the Corporation’s accounting policies. The areas involving a greater degree of judgment or complexity or areas in which the assumptions and estimates are significant for the consolidated financial statements are described as follows:
a) Useful economic lives and residual values of property, plant and equipment: the useful lives and residual values of property, plant and equipment that are used for calculating depreciation are determined based on technical studies prepared by internal specialists. The technical studies consider specific factors related to the use of assets.
Where there are indications that the useful lives of these assets or their residual values may have changed from previous estimates, this should be done using technical estimates to determine the impact of any changes.
b) Ore reserves: the measurements of ore reserves are based on estimates of the ore resources that are legally and economically exploitable and reflect the technical and environmental considerations of the Corporation regarding the amount of resources that could be exploited and sold at prices exceeding the total cost associated with the extraction and processing.
F-125 Corporación Nacional del Cobre de Chile
The Corporation applies judgment in determining the ore reserves, and as such, possible changes in these estimates might significantly impact the estimates of net revenues over time. In addition, these changes might lead to modifications in usage estimates, which might have an effect on depreciation and amortization expense, calculation of stripping cost adjustments, determination of impairment losses, expected future disbursements related to decommissioning and restoration obligations, long term defined benefits plans’ accounting and the accounting for financial derivative instruments.
The Corporation estimates its reserves and mineral resources based on the information certified by the Competent Persons internal and external of the Corporation, who are defined and regulated according to Law No. 20235. These estimates correspond to the application of the Certification Code of Ore Reserves, Resources and Exploration, issued by the Mining Committee which was instituted through the law.
Notwithstanding the foregoing, the Corporation periodically reviews its estimation models, supported by experts who, in some divisions, also certify the reserves determined from these models.
Impairment of non-financial assets: the Corporation reviews the carrying amount of its non-financial assets to determine whether there is any indication that the carrying amount may not be recoverable. If any such indicator exists, the recoverable amount of the assets is estimated to determine the extent of the impairment loss. In testing impairment, the assets are grouped into cash generating units (“CGUs) to which the assets belong, if applicable. The recoverable amount of these CGUs is calculated as the present value of the expected future cash flows from such assets, considering a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of the assets is lower than their carrying amount, an impairment loss is recognized.
The Corporation defines the CGUs and also estimates the timing and cash flows that such CGUs will generate. Subsequent changes in the grouping of the CGU, or changes in the assumptions supporting the estimates of cash flows or the discount rate, may impact the carrying amounts of the corresponding assets.
Estimates of assumptions influencing the calculation of cash flows, such as the price of copper or treatment charges and refining charges, among others, are determined based on studies conducted by the Corporation using uniform criteria over different periods. Any change in these criteria may have an impact on the recoverable amount of the assets being tested for impairment.
The Corporation has assessed and defined that the CGUs are constituted at the level of each of its current operating divisions, with the exception of the Ventanas Division Smelter and Refinery operations, which are analyzed separately.
F-126
Corporación Nacional del Cobre de Chile
In assessing impairment in subsidiaries and associates, the Corporation uses the higher of value in use or fair value less costs to determine the recoverable amount. This recoverable amount may consider elements such as Life of Mine (LOM), reserves andor mining resources, among others, for mining operation evaluations. In addition, the evaluation may incorporate market variables such as for example, the price of copper and other commodities, cost of production inputs, exchange rates, discount rates and other market information for long-term asset valuation.
d) Provisions for decommissioning and site restoration costs: when a disruption is caused by the ongoing development or production of a mining property, an obligation to incur decommissioning and restoration costs arises. Costs are estimated based on a formal closure plan and are reassessed as of each reporting period or as of the date such obligations become known. The initial estimate of decommissioning and site restoration costs is recognized as property, plant, and equipment in accordance with IAS 16, and simultaneously a liability in accordance with IAS 37, is recorded.
For these purposes, a defined list of mine sites, facilities and other equipment are studied under this process, considering the engineering level profile, the cubic meters of assets that will be subject to removal and restoration, weighted by a structure of market prices of goods and services, reflecting the best current knowledge related to carrying out such activities, as well as techniques and more efficient construction procedures to date. In the process of valuation of these activities, the assumptions of the exchange rate for tradable goods and services are made, as well as a discount rate, which considers the time value of money and the risks associated with the liabilities, which is determined based, where applicable, on the currency in which disbursements are expected to be made.
The liability amounts recognized at the end of each reporting date represent management’s best estimate of the present value of the future decommissioning and site restoration costs. Changes in the estimate of the liability because of changes in the estimated future costs or in the discount rate are added to or deducted from the respective asset cost. The amount deducted from the cost of the asset shall not exceed it carrying amount. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in profit or loss.
If the adjustment results in an addition to the cost of the asset, Codelco considers whether this is an indicator that the new carrying amount of the asset may not be fully recoverable.
If such an indicator exists, Codelco tests the asset for impairment by estimating its recoverable amount, and accounts for any impairment loss in accordance with |AS 36.
Costs arising from the installation of a plant or other site preparation work, discounted to their net present value, are provided for and capitalized at the beginning of each project as soon as the obligation to incur such costs arises. These decommissioning costs are charged to net income over the life of the mine, through depreciation of the corresponding asset. Depreciation expense is included in cost of sales, while the discount in the provision is included in finance costs.
F-127 Corporación Nacional del Cobre de Chile
e)
9)
h)
1)
Provisions for employee benefits: Provisions for employee benefits related to severance payments and health benefits for services rendered by the employees are determined based on actuarial calculations using the projected unit credit method and are recognized in other comprehensive income or s (depending on the accounting standards applicable) on an accrual basis
The Corporation uses assumptions to determine the best estimate of future obligations related to these benefits. Such estimates, as well as assumptions, are determined by management using the assistance of external actuaries. These assumptions include demographic assumptions, discount rate and expected salary increases and rotation levels, among other factors.
Accruals for open invoices: the Corporation uses information on future copper prices, through which it recognizes adjustments to its revenues and trade receivables, due to the conditions in provisional pricing arrangements. These adjustments are updated monthly, See Notes 2 q) Revenue from contracts with customers of Note 2 Significant accounting policies below.
Fair value of derivatives and other financial instruments: management may use its judgment to choose an adequate and proper valuation method for financial instruments that are not quoted in an active market. In the case of derivative financial instruments, assumptions are based on observable market inputs, adjusted depending on factors specific to the instruments among others.
Lawsuits and contingencies: The Corporation assesses the probability of lawsuits and contingency losses on an ongoing basis according to estimates performed by its legal advisors. For cases in which management and the Corporation’s legal advisors believe that a loss is not probable of occurring or where probable, may not be estimated reliably, no provisions are recognized. When it is considered more likely than not that a loss is probable and it may be reliably estimated, a provision is recognized.
Application of IFRS 16: includes the following:
– Estimation of the lease term
– Determine ¡f it is reasonably certain that an extension or termination option will be exercised.
– Determination of the appropriate rate to discount lease payments
Revenue recognition: the Corporation determines appropriate revenue recognition for its contracts with customers by analyzing the type, terms and conditions of each contract or agreement with a customer.
As part of the analysis, the management must make judgments about whether an agreement or contract is legally enforceable, and whether the agreement includes separate performance obligations. In addition, estimates are required to allocate the total price of the transaction to each performance obligation based on the stand-alone selling price of the promised goods or services underlying each performance obligation. (The
F-128
Corporación Nacional del Cobre de Chile
Corporation applies the constraint on variable consideration as defined in IFRS 15, if applicable).
k) Stripping costs – Costs incurred in removing mine waste materials (overburden) in open pits that are in production, that provide access to mineral deposits, are recognized in property, plant, and equipment, when the following criteria set out in IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine are met:
– Itis probable that the future economic benefits associated with the stripping activity wil| flow to the entity.
– It is possible to identify the components of an ore body for which access has been improved because of the stripping activity, and
– The costs relating to that stripping activity can be measured reliably.
The stripping costs are amortized based on the production units of production extracted from the ore body related to the specific stripping activity which generated this amount.
Although the abovementioned estimates have been made based on the best information available as of the date of issuance of these consolidated financial statements (unaudited), it is possible that new developments could lead the Corporation to modify these estimates in the future. Such modifications, if any, would be adjusted prospectively, recognizing the effects of the change in estimate in future consolidated financial statements, as required by lAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
2. Significant accounting policies
a. Period covered: The accompanying consolidated financial statements of Corporación Nacional del Cobre de Chile include the following statements:
– – Consolidated Statement of Financial Position as of December 31, 2023 and 2022.
– – Consolidated Statement of Income for the years ended December 31, 2023 and 2022.
– – Consolidated Statements of Comprehensive Income for the years ended December 31, 2023 and 2022.
– – Consolidated Statements of Changes in Equity for the years ended December 31, 2023 and 2022.
– -Consolidated Statements of Cash Flows for the years ended December 31, 2023 and
2022.
b. Basis of preparation – These consolidated financial statements of the Corporation as of December 31, 2023 have been prepared in accordance with the instructions of the Commission for the Financial Market which fully comply with International Financial Reporting Standards (IFRS) issued by the lASB.
The consolidated statements of financial position as of December 31, 2022, and the statements of income and the statements of equity and cash flows for the year ended
F-129 Corporación Nacional del Cobre de Chile
December 31, 2022, which are included for comparative purposes, have been prepared in accordance with IFRS as issued by the lASB, on a basis consistent with the basis used for the same period ended December 31, 2023, except for the adoption of new |FRS standards and interpretations adopted by the Corporation as of December 31, 2023, which are disclosed in number 3 “New standards and interpretations adopted by the Corporation in section ll of this report.
These consolidated financial statements have been prepared from accounting records held by the Company.
c. Functional currency – The functional currency of Codelco is the U.S. dollar, which ¡is the currency of the primary economic environment in which the Corporation operates and the currency in which it receives ¡ts revenues.
The functional currency of subsidiaries, associates, and joint ventures is the currency of the primary economic environment in which those entities operate and the currency in which they receive their revenues. For those subsidiaries and associates that are an extension of the operations of Codelco (entities that are not self-sustaining and whose main transactions are with Codelco); the functional currency is also the U.S. dollar.
The presentation currency of Codelco’s consolidated financial statements is the U.S. dollar.
d. Basis of consolidation – The financial statements comprise the consolidated statements of the Corporation and its affiliates.
Affiliates are fully consolidated from the date of acquisition, being the date on which the Corporation obtains control, and continue to be consolidated until the date such control ceases. Specifically, income and expenses of an affiliate acquired or disposed of during the year are included in the consolidated statement from the date the Corporation gains control until the date when the Corporation ceases to control the subsidiary.
The financial statements of the affiliates are prepared for the same reporting period as the Corporation, using consistent accounting policies.
All assets, liabilities, equity, income, expenses, and cash flows related to transactions between consolidated companies are fully eliminated on consolidation. The value of the non-controlling interest of shareholders in equity and in the results of affiliates is presented, respectively, as “Non-controlling interests in the consolidated statement of financial position and “Income (loss) attributable to non-controlling interests and “Comprehensive income (loss) attributable to non-controlling interests in the consolidated statements of income.
F-130 Corporación Nacional del Cobre de Chile
The following companies have been consolidated: [ Cutcior | E La A PS Tan prorper PO Ka COMPANY Couriry | % Cenar a Ñ Dire Miel Toti Tu Fara Ce eppir mito Cuyo] CA fifa a +0 nO E Farriza Ad de ral rra Brida Pl NÓ 00 HO du 10000 Fra Candaca: Erp lar UA UE 060 patea “IX For ode Horta Lim a EURO tada . 1003 E Fan Caos Lia a LED 16 0 1115 E 00 AS Codo Serra Lamiiod rr Gpe 0 00 1602 eb Fam Codere irc Corps Lao] Cra HS mo HO Le 200 Fan A FAO 150 ue yy an 100; ha. Codos ULA e LESA LE 120 0 Ja 0 E AX Pon cr rd Cira uo bo 2 00 10058 EXC Fotrr EConmutiri Lorea] Larra Hara NED 160000 100% 150 AS ¡monaco Vier Anda nados EMSARE SA, Ecoador LED Fo 1060 me Fara ao rape Mirar Brazil ax 0310 q 1 00 E E [re 150 Sy 00 yy Jan 10006 E E Cam LP sE E | OS EE q? HIGAS Circa Sa mer rta Lia LP RO 00% 104 adi A E AS Cm ELA [fátaa 100% 1450) 541900? o Porno Meios 54 LE A “u gp! Ma med SE A ao Te SpA Cia LED Cd | Ga AN Ledo + E a e a [tae 150 Xx 10 yy Jar 1006 SE1001L | Circa o Barca BA PAR LP de E : Li 4d e FEO Pe 054 5223 ¡a de Haas ica lo Plan 1 a Cia a – AE ON 10053 para lie A o o [fam 150 [fui] VE 600 dE A WAI e A, LE LED DS 30 MA me TE ey td e Par de Mid La. Cm LE a 00m hilos, Uli fi PEPE [erre Orar Bph Lan 153 pida) , 150 0% 50 AP A AAA Creo LEO br mM tE 7 TEMTAMEERO | Sarral Sara Cia 10 57 80 8 E. E ia] [Leto Ersoaicades Médica Eu Lonas LJ0a [fam FA (00-00 10 0 00 Msi, [Coma Deorca Lar Hire A LP A AL: MA mo rd E RE Fad Cñan QP Ed TA | id bra de Codecs Ls Léae [LF pida] 100.0% 5 TA Ya iia, [Crea de ras Llódcos Pre Lila Core ar + Du == 2 e A A A Cin OP Y 3 5 A FED A [Fem 11P Ms 0 Ein a ÓN) 157% 1044 sae de Mir ra EA LE LED pao TM me Ae ERES A Cómm LE Da hilos MTS [das T prir E Like LT 158 00 156 0%
For the purposes of these consolidated financial statements, affiliates, associates, acquisitions and disposals are defined as follows:
Affiliates: An affiliate is an entity over which the Corporation has control. Control is exercised if, and only if, the following elements are present: (i) power to govern the operating and financial policies to obtain benefits from their activities; (11) exposure or rights to the variable returns of these companies; and (iii) ability to use the power to influence the amount of returns.
The Corporation reassesses whether it controls an affiliate if facts and circumstances indicate that there are changes to one or more of the elements of control listed above.
The consolidated financial statements include all assets, liabilities, revenues, expenses, and cash flows of Codelco and its affiliates, after eliminating all inter- company balances and transactions.
F-131 Corporación Nacional del Cobre de Chile
– Associates: Án associate is an entity over which Codelco has significant influence.
Significant influence is the power to participate in the financial and operating policy decisions of the associate but is not control or joint control over those policies.
Codelco’s interest ownership in associates is recognized in the consolidated financial statements under the equity method. Under this method, the initial investment ¡s recognized at cost and adjusted thereafter to recognize changes in Codelco’s share of the comprehensive income of the associate, less any impairment losses or other changes to the investment in net assets of the associate.
The Corporation adjusts the proportional gains or losses obtained by the associate after acquisition to take into account the effects that may exist in the depreciation of the fair value of the assets considered at the date of acquisition.
– Acquisitions and disposals: The result of businesses acquired are incorporated in the consolidated financial statements from the date when control is obtained; the results of businesses sold during the period are included in the consolidated financial statements up to the effective date of disposal. Gains or losses on disposal is the difference between the sale proceeds (net of expenses) and the carrying amount of the net assets attributable to the ownership interest that has been sold (and, where applicable, the associated cumulative translation adjustment).
If control is lost over a subsidiary, the retained ownership interest in the investment wil| be recognized at its fair value.
At the acquisition date of an investment in a subsidiary, associate or joint venture, any excess of the cost of the investment (consideration transferred) plus the amount of the non-controlling interest in the acquiree plus the fair value of any previously held equity interest in the acquiree, where applicable, over Codelco’s share of the net fair value of the identifiable assets and acquired liabilities is recognized as goodwill. Any excess of Codelco’s share of the net fair value of the identifiable assets and acquired liabilities over the consideration transferred, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.
e. Foreign currency transactions and reporting currency conversion – Transactions in currencies other than the Corporation’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, foreign currency transactions denominated in foreign currencies are converted at the rates prevailing at that date. Gains and losses due to the effect of foreign currency transactions are included in the consolidated statement of income for the period within “Exchange gains (losses) in foreign currencies.
At the end of the reporting period, monetary assets and liabilities denominated in Unidades de Fomento (“UF”) have been denominated in US$, considering the exchange rates in effect at the end of each period (12-31-2023: US$ 41.94; 12-31-2022: US$ 41.02)
F-132 Corporación Nacional del Cobre de Chile
Expenses and income in local currency have been expressed in dollars at the observed exchange rate, corresponding to the date of the accounting record of each transaction.
The translation of the financial statements of affiliates associates and jointly controlled entities, whose functional currency is different from Codelco’s presentation currency, is performed as follows for consolidation purposes:
– Assets and liabilities are converted using the prevailing exchange rate on the reporting date.
– Income and expenses for each statement of income are translated at average exchange rates for the period.
– All resulting exchange differences are recognized in comprehensive income and accumulated in equity under the heading Reserve on exchange differences on translation.
The exchange rates used in each reporting period were as follows: ¡Relationship Closing exchange rates
12-31-2023 12-31-2022 IS0rELP 1.00 11 | 00 |, usa 124385 | 20602 uSsO BRL 0020613 0 19923 USDIEURO 1105095 OF OO USD AUD 0068315 059120 USO ¿HKD 112603 01262 USHER 134040 014452
f. Offsetting balances and transactions – Ás a general standard, assets and liabilities, revenue, and expenses, are not offset in the financial statements, except for those cases in which offsetting is required or is allowed by a standard and the presentation reflects the substance of the transaction.
Income or expenses arising from transactions which, for contractual or legal reasons, permit the possibility of offsetting and which the Corporation intends to liquidate for their net value or realize the assets and settle the liabilities simultaneously, are stated net in the statement of income.
g. Property, plant and equipment and depreciation – ltems of property, plant and equipment are initially recognized at cost. After initial recognition, they are measured at cost, less any accumulated depreciation and any accumulated impairment losses.
The cost of property, plant and equipment includes the costs of expansion, modernization or improvements that represent an increase in productivity, capacity or efficiency, or an
F-133 Corporación Nacional del Cobre de Chile increase in the useful life of the assets, and are capitalized as an increase in the cost of the related assets.
The assets included in property, plant and equipment are depreciated, as a general rule, using the units of production method, when the activity performed by the asset ¡is directly attributable to the mine production process. In other cases, a straight-line depreciation criterion is used.
The assets included in property, plant and equipment and certain intangibles (software) are depreciated over their economic useful lives, as described below:
Category Useful life Land Not depreciated Land on mine site Unit of production Buildings Straight-line over 20-50 years Buildings in underground mine levels Units of production level Vehicles Straight-line over 3-7 years Plant and equipment Unit of production Smelters Unit of production Refineries Unit of production Mining rights Unit of production Support equipment Unit of production Intangibles – software Straight-line over 8 years Open pit and underground mine development | Unit of production
Estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and any change in estimates is recognized prospectively.
Additionally, depreciation methods and estimated useful lives of assets, especially plants, facilities and infrastructure may be revised at the end of each year or during the year according to changes in the structure of reserves of the Corporation and productive long- term plans updated as of that date.
This review may be made at any time if the conditions of ore reserves change significantly because of new known information, confirmed, and officially released by the Corporation.
The gain or loss resulting from the disposal or retirement of an asset is calculated as the difference between the price obtained on disposal and the value recorded in the books, recognizing the charge or credit to income for the period.
Construction in progress includes the amounts invested in the construction of property, plant and equipment and in mining development projects. Construction in progress is transferred to assets in operation once the testing period has ended and when they are ready for use; at that point, depreciation begins to be recognized.
F-134 Corporación Nacional del Cobre de Chile
Borrowing costs that are directly attributable to the acquisition or construction of assets that require a substantial period before they are ready for use or sale are capitalized as part of the cost of the corresponding items of property, plant, and equipment.
The ore deposits owned by the Corporation are recorded in the accounting records at US$1. Notwithstanding the above, those reserves and resources acquired as part of acquisition of entities accounted for as business combinations, are recognized at their fair value.
h. Intangible assets – The Corporation initially recognizes these assets at acquisition cost.
The cost is amortized systematically over their useful lives, except in the case of assets with indefinite useful lives, which are not amortized, and are assessed for impairment at least once a year and, in any case, whenever there ¡is an indication that impairment may have occurred. At the end of each reporting period, these assets are measured at their cost less any accumulated amortization (when applicable) and any accumulated impairment losses.
The expenditures for the development of Technology and Innovation Projects are recognized as intangible assets at their cost and are considered to have indefinite useful lives. Recognition applies, if and only if, all the following have been demonstrated:
– – The technical feasibility of completing the intangible asset so that it will be available for use or sale;
– – The intention to complete the intangible asset is to use or sell it;
– – The ability to use or sell the intangible asset;
– – That the intangible asset will generate probable future economic benefits;
– – The availability of adequate technical, financial, and other resources to complete the development and to use or sell the intangible asset; and
– – The disbursement attributable to the intangible asset during its development can be reliably appraised
Research expenses for technology and innovation projects are recognized in profit or loss when incurred.
i. Impairment of property, plant and equipment and intangible assets – Property, plant and equipment and intangible assets with finite useful lives are reviewed for impairment to verify whether there is any indication that the carrying amount may not be recoverable. If such an indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment to be recorded.
For intangible assets with indefinite useful lives, their recoverable amounts are annually estimated at the end of each reporting period.
When an asset does not generate cash flows that are independent from other assets, Codelco determines the recoverable amount of the CGU to which the asset belongs.
F-135 Corporación Nacional del Cobre de Chile
The Corporation has defined each of its divisions as a cash generating unit
Recoverable amount of an asset is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. On the other hand, the fair value less cost of disposal is usually determined for operational assets considering the Life of Mine (‘LOM), based on a model of discounted cash flows, while the assets not included in LOM as resources and potential resources to exploit are measured by using a market model of multiples for comparable transactions.
If the recoverable amount of an asset or CGU is estimated to be less than it is carrying amount, an impairment loss is recognized immediately in profit or loss, reducing the carrying amount to its recoverable amount. In the event of a subsequent reversal of the impairment, the carrying amount is increased to the revised estimate of the recoverable amount, but to the extent that it does not exceed the carrying amount that would have been determined had no impairment been previously recognized.
The estimates of future cash flow for a CGU are based on future production forecasts, future prices of basic products and future production costs. Under |AS 36 Impairment of Assets, there are certain restrictions for future cash flows estimates related to future restructurings and future cost efficiencies. When calculating value in use, it is also necessary to base the calculations on the spot exchange rate at the date of calculation
j. Expenditures for exploration and evaluation of mineral resources, mine development and mining operations – The Corporation has defined an accounting policy for each of these expenditures.
Development expenses for deposits under exploitation whose purpose is to maintain production levels are recognized in profit or loss when incurred.
Exploration and evaluation costs such as: drillings of deposits, including expenses necessary to locate new mineralized areas and engineering studies to determine their potential for commercial exploitation are recognized in profit or loss, normally at the pre- feasibility stage.
Pre-operating and mine development expenses (normally after feasibility engineering is reached) incurred during the execution of a project and until its start-up are capitalized and amortized in relation to the future production of the mine. These costs include stripping of waste material, constructing the mine’s infrastructure and other works carried out prior to the production phase.
Finally, costs for defining of new areas or deposit areas in exploitation and of mining operations (PP8E) are recognized in property, plant and equipment and are amortized through profit or loss over the period during which the benefits are obtained.
F-136 Corporación Nacional del Cobre de Chile
k. Income taxes and deferred taxes – Codelco and its Chilean affiliates recognize annually income taxes based on the net taxable income determined as per the standards established in the Income Tax Law and Article 2 of D.L. 2398, Codelco also recognizes the specific tax on mining activities referred to in Law No 20026 of 2005, until December 31, 2023, and the Mining Royalty Tax referred to in Law No. 21,590, as from January 1, 2024.
lts foreign affiliates recognize income taxes according to the tax regulations of the respective countries.
In addition, Codelco’s taxable income in each period is subject to the tax regime established in Article 26 of D.L. No. 1350, and it must pay the encumbrances in March, June, September, and December of each year, based on a provisional tax calculation.
The deferred taxes arising from temporary differences and other events that create differences between the accounting and tax bases of assets and liabilities, are recorded in accordance with the standards established in lAS 12 Income tax.
Deferred taxes are also recognized for undistributed profits of subsidiaries and associates, at the remittance tax rate on dividends paid by these companies to the Corporation.
|. Inventories – Inventories are measured at cost when such does not exceed net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale (¡.e., marketing, sales, and distribution expenses). Costs of inventories are determined according to the following methods:
– Finished products and products in process: These inventories are measured at their average production cost determined using the absorption costing method, including labor, depreciation of fixed assets, amortization of intangibles and indirect costs of each period. Inventories of products in process are classified in current and non-current, according to the normal cycle of operation
– Materials in warehouse: These inventories are valued at acquisition cost and the Corporation determines an allowance for obsolescence considering that slow-moving materials in the warehouse remain in stock.
– – Materials in transit: These inventories are measured at cost incurred at the end of reporting period. Any difference because of an estimate of net realizable value of the inventories lower than it carrying amount is recognized in profit or loss.
m. Dividends – In accordance with Article 6 of D.L. 1350, the Corporation has a mandatory obligation to distribute its net income as presented in the financial statements. The payment obligation is recognized on an accrual basis.
n. Employee benefits – Codelco recognizes a provision for employee benefits when there is a present obligation (legal or constructive) as a result of services rendered by its employees.
F-137 Corporación Nacional del Cobre de Chile
The employment contracts stipulate, subject to compliance with certain conditions, the payment of an employee severance indemnity when an employment contract ends. In general, this corresponds to one monthly salary per year of service and considers the components of the final remuneration which are contractually defined as the basis for the indemnity. This employee benefit has been classified as a defined benefit plan.
Codelco has also agreed to post-employment medical care benefits for certain retirees.
This employee benefit has been classified as a defined benefit plan.
These plans continue to be unfunded as of December 31, 2023.
The employee severance indemnity and the post-employment medical plan obligations are determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. The defined benefit plan obligations recognized in the statement of financial position represent the present value of the accrued obligations.
Actuarial gains and losses are recognized immediately in other comprehensive income and will not be reclassified to profit or loss.
The Corporation’s management uses assumptions to determine the best estimate of these benefits. The assumptions include an annual discount rate, expected increases in salaries and turnover rate, among other factors.
In accordance with its operating optimization programs to reduce costs and increase labor productivity by incorporating new current technologies andor better management practices, the Corporation has established employee retirement programs by amending certain employment contracts or collective union agreements to include benefits encouraging employees to early retire, for which the necessary provisions are made based on the accrued obligation at current value. In case of employee retirement programs which involve multi-year periods, the accrued obligations are updated using a discount rate determined based on financial instruments denominated in the same currency and similar maturities that will be used to pay the obligations.
o. Provisions for decommissioning and site restoration costs – The Corporation recognizes a provision for the estimated future costs of decommissioning and restoration of mining projects in development or production when a mining activity causes a disruption under a constructive or legal obligation. Costs are estimated on the basis of a formal closure plan and cost estimates are annually reviewed.
Costs arising from the obligation to dismantle a plant installation or other site preparation work, discounted to their present value, are provided for and capitalized at the beginning of each project or at the origin of the constructive or legal obligation as soon as the obligation to incur such costs arises.
These decommissioning and restoration costs are recorded in income through the depreciation of the asset that gave rise to such cost, and the use of the provision is made
F-138 Corporación Nacional del Cobre de Chile when the decommissioning materializes. Subsequent changes in estimates of decommissioning-related liabilities are added to or deducted from the costs of the related assets in the period in which the adjustment is made.
Other restoration costs, outside the scope of lAS 16, Property, Plant and Equipment, are provided for at their present value against operating results and the use of the provision is made in the period in which the restoration work is performed.
The accretion of the discount on a closure liability due to the passage of time is recognized as a finance expense in the statement of income.
p. Leases – The Corporation evaluates its contracts at initial application to determine whether they contain a lease The Corporation recognizes a right-of-use asset and a corresponding liability for lease with respect to all lease agreements in which Codelco is the lessee, except for short-term leases (defined as a lease with a lease term of twelve months or less) and leases of low-value assets. For these leases, the Corporation recognizes the lease payments as an operating cost on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which the economic benefits of the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the commencement date, discounted using the interest rate implicit in the lease. lf this rate cannot be easily determined, the Corporation uses the incremental borrowing rate.
The incremental rate for loans used by Codelco is determined by estimating the interest rate that the Corporation would have to pay for borrowing the necessary funds to obtain an asset of an equivalent nature similar in value to the right-of-use asset of the respective lease, in a similar economic environment over a similar term.
Lease payments included in the measurement of the lease liability mainly include fixed payments, variable payments that depend on an index or a rate and the exercise price of a purchase option. Variable payments that do not depend on an index or a rate are excluded.
The lease liability is subsequently measured as follows: the carrying amount increased to reflect the interest on the lease liability (using the effective rate method) and the carrying amount is reduced to reflect the lease payments made.
The Corporation revalues the lease liability as to the discount rate (and makes the corresponding adjustments to the asset for respective right of use) through a modified discount rate when:
There is a change in the term of the lease, or
There is a change in the assessment of an option to purchase the underlying asset, or There is a change in an index or rate which generates a change in cash flows.
F-139 Corporación Nacional del Cobre de Chile
Right-of-use assets comprise the amount of the present value of payments not made at the contract inception date, and lease payments made before or up to the inception date, less lease incentives received and any initial direct costs incurred plus other decommissioning and site restoration costs. The right-of-use assets are subsequently measured at cost less accumulated depreciation and accumulated losses due to impairment.
When the Corporation incurs a cost obligation to dismantle or remove a leased asset, restore the location in which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured in accordance with IAS 37. Costs are included in the corresponding right-of-use asset unless those costs are incurred to produce inventories.
The right-of-use assets are depreciated during the shorter period between the term of the lease and the useful life of the underlying asset. lf a lease transfers the ownership of the underlying asset or the cost of the right-of-use asset reflects that the Corporation expects to exercise its option to purchase, the right-of-use asset is depreciated over the useful life of the underlying asset. Depreciation is made from the start date of the lease.
The Corporation applies IAS 36 to determine if a right-of-use asset is impaired and recognizes any impairment loss identified, as described in the accounting policy for Property, plant and equipment.
q. Revenue from Contracts with Customers – Revenue ¡is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to customers.
– Sale of mineral goods and or by-products: Contracts with customers for the sale of mineral goods and or by-products include the performance obligation for the delivery of the physical goods and the associated transportation service, at the place agreed with the customers. The Corporation recognizes revenue from the sale of goods when the performance obligation is satisfied according to the shipment or dispatch of the products, in accordance with the agreed conditions, such revenue being subject to variations related to the content and or sale price at the date of its liquidation. Notwithstanding the foregoing, there are some contracts where the performance obligation is satisfied when there is receipt of the product instead of the buyers corresponding destination, thus recognizing revenue at the time of said transfer. When services of transport of goods are provided, the Corporation recognizes revenue when the service obligation is satisfied.
Sales that have discounts associated with volume subject to compliance with goals are recognized net, estimating the probability that the volume target will be reached.
Sales contracts include a provisional price at the shipment date. The final price is generally based on the London Metals Exchange (LME) price. Revenue from sales
F-140 Corporación Nacional del Cobre de Chile of copper is measured using estimates of the future spread of metal prices on the LME andor the spot price at the date of shipment, with subsequent adjustments made upon final pricing recognized as revenue. The terms of sales contracts with customers contain provisional pricing arrangements whereby the selling price for metal concentrate is based on prevailing spot prices on a specified future date after shipment to the customer (the quotation period). Consequently, the final price is set at the dates indicated in the contracts. Adjustments to provisional sale prices occur based on movements in quoted market prices on the LME up to the date of final pricing. The period between provisional invoicing and final pricing is typically between one and nine months. Changes in fair value over the quotation period and until final pricing are estimated by reference to forward market prices for applicable metals.
As indicated in the note related to hedging policies in the market of metal derivatives, the Corporation enters into operations in the market of metal derivatives. Gains and losses from those which are fair value hedges contracts are recognized as revenues.
– Rendering of services: Additionally, the Corporation recognizes revenue for rendering services, which are mainly related to the processing of minerals bought from third parties. Revenue from rendering of services is recognized when the amounts can be measured reliably and when the services have been provided.
r. Derivatives contracts – Codelco uses derivative financial instruments to reduce the risk of fluctuations in sales prices of its products and of exchange rates.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently measured to their fair value at the end of each reporting period.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated in equity under the item “Cash flow hedge reserve. The gain or loss relating to the ineffective portion is immediately recognized in profit or loss and included in the Finance cost or Finance income line items, depending on the effect of such ineffectiveness. The amount recognized in comprehensive income is reclassified to income, in the same line in which the effects generated by the hedged item are recorded once the results of the hedged transactions are recorded in the same line or until the maturity date of such transactions.
A hedge is considered highly effective when it meets the requirements of IFRS 9. At the time of discontinuation of the hedge contract or the associated designated accounting and according to the circumstances of each case, the accumulated gainloss on the derivative instrument remains in equity until the hedge transaction occurs, or if discontinuation is expected to occur, the amount in equity is reclassified to profit or loss.
The total fair value of hedging derivatives is classified as non-current financial asset or liability, if the remaining maturity of the hedged item is greater than twelve months, and as
F-141 Corporación Nacional del Cobre de Chile current financial asset or liability if the remaining maturity of the hedged item ¡s less than twelve months.
The derivative contracts held by the Corporation have been entered into to apply the risk hedging policies and are accounted for as indicated below:
– – Hedging policies for exchange rate risk: The Corporation enters into exchange rate derivatives to hedge exchange rate variations between the U.S. dollar and the currencies of transactions the Corporation undertakes. In accordance with the policies established by the Board of Directors, these hedge transactions are only entered into when there are recognized assets or liabilities, forecasts of highly probable transactions or firm commitments. The Corporation does not enter into derivative transactions for non-hedging purposes.
– Hedging policies for metal market prices risk: In accordance with the policies established by the Board of Directors, the Corporation entered into derivative contracts to reduce the inherent risks in the fluctuations of metal prices.
Hedging policies seek to protect expected cash flows from product sales operations by adjusting, when necessary, physical sales contracts to its commercial policy. When the sales commitments are fulfilled and the metal derivative contracts are settled, there is an offset between the results of the sales transactions and the results of hedging using metal derivatives.
Hedging transactions carried out by the Corporation in the metal derivatives market are not undertaken for speculative purposes.
– Embedded derivatives: The Corporation has established a procedure that allows for evaluation of the existence of embedded derivatives in financial and non-financial contracts. Where there is an embedded derivative, and the host contract is not a financial instrument and the characteristics and risks of the embedded derivative are not closely related to the host contract, the derivative is required to be recognized separately.
s. Financial information by segment – The Corporation has defined its Divisions as its operating segments in accordance with the requirements of IFRS 8, Operating Segments.
The mining deposits in operation, where the Corporation conducts its extractive and processing activities are managed by the following Divisions: Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina and El Teniente. In addition, the smelting and refining activities are managed at the Ventanas Division. From June 2023 the Ventanas Division only manages the refining area. All these Divisions have a separate operational management, which reports to the Chief Executive Officer, through the North and South-Central Vice-President of Operations, respectively. Income and expenses of the Head Office are allocated to the defined operating segments.
F-142 Corporación Nacional del Cobre de Chile
t. Presentation of Financial Statements – For purposes of lAS 1 Presentation of Financial Statements, the Corporation presents its statement of financial position classified as “current and non-current” and its statements of income “by function” and cash flows using the direct method.
u. Current and non-current financial assets – The Corporation determines the classification of its financial assets at the time of initial recognition and reviews it at each closing date.
The classification depends on the business model in which the investments are managed and the contractual characteristics of their cash flows.
The Corporation’s financial assets are classified into the following categories:
At fair value through profit or loss:
Initial recognition: This category includes those financial assets that do not qualify in the business model to collect contractual cash flows, nor do such cash flows come exclusively from capital and interest. These instruments are initially recognized at fair value.
Subsequent recognition: Their subsequent recognition is at fair value, recording in the consolidated statement of comprehensive income, in the line Other gains (losses)’ any changes in fair value.
Amortized cost:
Initial recognition: This category includes those financial assets that qualify in the business model and that are held for the purpose of collecting contractual cash flows and that meet the “Solely Payment of Principal and Interest” (SPPI) criterion. This category includes certain Trade and other current receivables, and the loans included in other non-current financial assets.
Subsequent recognition: These (debt) instruments are subsequently measured at amortized cost using the effective interest method. The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any impairment allowance.
Interest income is recognized in profit or loss and is calculated by applying the effective interest rate to the gross carrying amount of a financial asset. For financial assets measured at amortized cost that are not part of a designated hedging relationship, exchange differences are recognized in profit or loss in the Foreign exchange difference line item.
At fair value through other comprehensive income:
Initial measurement: Financial assets that meet the criteria “Solely payments of principal and interest” (SPP) are classified in this category and must be maintained
F-143
Corporación Nacional del Cobre de Chile within a business model both to collect the cash flows and to sell the financial assets.
These instruments are initially recognized at fair value.
Subsequent recognition: Their subsequent valuation is at fair value. Interest income calculated using the effective interest rate method, foreign exchange gains and losses and impairment are recognized in income. Other net gains and losses are recognized in other comprehensive income. On derecognition, the gains and losses accumulated in other comprehensive income for debt instruments are reclassified to income.
Codelco did not irrevocably choose to designate any equity financial instruments (assets) at fair value with effect on other comprehensive income.
v. Financial liabilities – Financial liabilities are initially recognized at fair value net of transaction costs. Subsequent to their initial recognition, the valuation of the financial llabilities will depend on their classification, within which the following categories are distinguished:
– – Financial liabilities at fair value through profit or loss: This category includes financial liabilities defined as held for trading.
Changes in fair value associated with own credit risk are recorded in other comprehensive income unless doing so creates an accounting mismatch.
– – Financial liabilities measured at amortized cost: This category includes all financial llabilities other than those measured at fair value through profit or loss.
The Corporation includes in this category bonds, obligations and other current payables.
These financial liabilities are measured using the effective interest rate method, recognizing interest expense based on the effective rate.
The method of the effective interest rate corresponds to the method of calculating the amortized cost of a financial liability and the allocation of interest expenses during the corresponding period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period, to the net carrying amount on initial recognition.
Trade and other current payables are financial liabilities that do not explicitly accrue interest and are recognized at their nominal value, which approximates ¡ts fair value.
Financial liabilities are derecognized when the liabilities are paid or expire.
w. Impairment of financial assets – The Corporation measures the loss allowance at an amount equal to lifetime expected credit losses for certain of its trade receivables. For these, it uses the simplified approach as required under |FRS 9.
F-144 Corporación Nacional del Cobre de Chile
y.
dd.
The provision matrix is based on the Corporation ‘s historical credit loss experience over the expected life of such trade receivables and is adjusted for forward-looking estimates considering the most relevant macroeconomic factors that affect bad debts.
Other accounts receivable and other financial assets are reviewed using reasonable and sustainable information that is available without cost or disproportionate effort in accordance with |IFRS 9 to determine the credit risk of the respective financial assets. A provision for impairment losses on trade receivables and other financial assets is established when there is objective evidence that the amounts due may not be fully recovered.
Statement of cash flows – The statement of cash flows reflects changes in cash that took place during the period, determined under the direct method. The Corporation has defined the following:
– Cash flows: Inflows and outflows of cash or cash equivalents, which are defined as highly liquid investments maturing in less than three months with a low risk of changes in value.
– – Operating activities: Are the principal revenue-producing activities of the Corporation and other activities that are not investing or financing activities.
– Investing activities: These are the acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.
– Financing activities: These are activities that result in changes in the size and composition of net equity and borrowings of the Corporation.
Bank overdrafts are classified as external resources in current liabilities.
Law No. 13196 – Under this law, the return in foreign currency of sales abroad of the Corporation’s actual income from its copper production, including by-products, is taxed at
10%. The amount recognized for this concept is presented in the statement of income within the line item Other expenses by function. (Note 111.22 letter c)).
Cost of sales – Cost of sales is determined according to the absorption costing method, including the direct and indirect costs, depreciation, amortization and any other expenses directly attributable to the production process.
Classification of current and non-current balances – In the consolidated statement of financial position, the balances are classified according to their maturities, that is, as current for those with a maturity equal to or less than twelve months and as non-current for those with a greater maturity. Where there are obligations whose maturity is less than twelve months, but whose long-term refinancing is insured upon a decision by the Corporation whose intention is to refinance, through credit agreements available unconditionally with long-term maturity, these could be classified as non-current liabilities.
F-145
Corporación Nacional del Cobre de Chile
3. New standards and interpretations adopted by the Corporation
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those applied in the preparation of the Corporation’s annual consolidated financial statements for the year ended December 31, 2022, except for the adoption of new standards, interpretations and amendments, effective from January 1, 2023, which are:
a) Amendment to IFRS 17
Amends IFRS 17 to address concerns and implementation challenges identified after the publication of IFRS 17 Insurance Contracts in 2017. The main changes include: vi.
vil.
vill.
Deferral of the date of initial application of IFRS 17 for two years for annual periods beginning on or after January 1, 2023.
li. Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage, as well as optional scope exclusion for loan contracts that transfer significant insurance risk
Recognition of insurance acquisition cash flows related to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognized in an acquired business.
Clarification of the application of IFRS 17 in financial statements that permit an accounting policy choice at a reporting entity level
Clarification of the application of the contractual service margin (CSM) attributable to the investment performance service and the investment-related service and changes to the related disclosure requirements
Extension of risk mitigation option to include reinsurance contracts held and non- financial derivatives
Amendments to Requiring an entity that at initial recognition recognizes losses on onerous insurance contracts issued to also recognize a gain on reinsurance contracts held
Simplified presentation of insurance contracts in the statement of financial position for entities to present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts
Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.
b) Information to disclose on accounting policies. (Amendments to IAS 1 and IFRS 2 document)
The amendments require an entity to disclose its material accounting policies. The additional amendments explain how an entity can identify a material accounting policy.
Examples are added of when an accounting policy ¡is likely to be material. To support the amendment, the Board has also developed guidance and examples to explain and
F-146 Corporación Nacional del Cobre de Chile demonstrate the application of the “four-step materiality process” described in the IFRS 2
Practice Statement.
c) Definition of accounting estimates (amendments to lAS 8)
The amendments replace the definition of a change in accounting estimates. According to the new definition, accounting estimates are “monetary amounts in the financial statements that are subject to measurement uncertainty. Entities develop accounting estimates ¡f accounting policies require financial statement items to be measured in a manner that involves measurement uncertainty. The amendments clarify that a change in accounting estimate resulting from new information or new developments is not the correction of an error.
d) Deferred Taxes Related to Assets and Liabilities Arising from a One-Time Transaction.
(Amendments to lAS 12)
The amendments clarify that the exemption from initial recognition does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition.
The application of these amendments had no impact on the Corporation’s consolidated financial statements, but may affect the accounting for future transactions or arrangements.
4. New accounting pronouncements
The following new standards, amendments and interpretations had been issued by the |ASB, but their application is not yet mandatory:
New IFRS
Date of mandatory application
Summary
Classification of Liabilities as Current or Non-Current (Amendments to lAS 1)
Annual periods beginning on or after January 1, 2024
The amendments aim to promote coherence in applying its requirements by helping companies to determine whether, in the statement of financial position, debts and other liabilities with an uncertain settlement date must be classified as current (maturing or potentially maturing in one year or less) or not current.
lt is important to note that this amendment must be applied retrospectively and early application is permitted.
F-147
Corporación Nacional del Cobre de Chile
Initial Application of IFRS 17 and IFRS 9 – Comparative
Information (Amendment to IFRS 17)
An entity that chooses to apply the amendment shall apply it when it first applies IFRS 17.
The amendment allows entities applying IFRS 17 and IFRS 9 for the first time to present comparative information on a financial asset as if the classification and measurement requirements of IFRS 9 had been previously applied to that financial asset.
Lease liability on a sale and leaseback (Amendments to IFRS 16)
Annual reporting periods beginning on or after January 1, 2024
The amendment clarifies how a lessee subsequently measures sale and leaseback transactions that meet the requirements of IFRS 15 to be accounted for as a sale.
Non-current liabilities with covenants (Amendments to IAS 1
Annual reporting periods beginning on or after January 1, 2024
The amendment clarifies how the conditions that an entity must meet within twelve months after the reporting period affect the classification of a liability.
Suppliers financial agreements (Amendments to IAS 7 and IFRS 7)
Annual reporting periods beginning on or after January 1, 2024
The amendments add disclosure requirements and “signaling’ within the existing disclosure requirements, which request entities to provide qualitative and quantitative information on suppliers financing arrangements.
F-148
Corporación Nacional del Cobre de Chile
General requirements for disclosure of financial information related to sustainability (IFRS S1)
Annual periods beginning on January 1, 2024 Early application is permitted.
This Standard requires disclosure of information about all risks and opportunities related to sustainability that could reasonably be expected to affect an entity’s cash flows, access to finance or cost of capital in the short, medium or long term. For the purposes of this Standard, these risks and opportunities are collectively referred to as “sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s prospects.
This Standard also prescribes how financial disclosures related to sustainability should be prepared and reported. lt establishes general requirements for the content and presentation of those disclosures so that the information disclosed is useful to key users in making decisions related to the provision of resources to the entity.
Climate-related disclosures (IFRS S2)
Annual periods beginning on January 1, 2024 Early application is permitted.
This Standard requires disclosure of information about risks and opportunities related to climate that could reasonably be expected to affect an entitys cash flows, access to finance or cost of capital in the short, medium or long term.
For the purposes of this Standard, these risks and opportunities are collectively referred to as climate- related risks and opportunities that could reasonably be expected to affect the entity’s prospects”.
F-149
Corporación Nacional del Cobre de Chile a. ¿8
Lack of interchangeability Annual filing and reporting The amendments contain Amendments to lAS 21) periods beginning on or after | guidance to specify when a January 1, 2025. Not yet currency is exchangeable and how approved for use in the EU. to determine the exchange rate when it is not.
Modifications to SASB Annual reporting periods The amendments remove and replace standards to improve their beginning on or after January 1, | Jurisdiction-specific_ references and international applicability 2025. Will notbe approved for | definitions in the SASB standards, use in the EU without materially altering industries, topics or metrics.
Management is currently evaluating the impact of the adoption of these new regulations and modifications. lt is not expected to have a significant impact on the consolidated financial statements.
F-150 Corporación Nacional del Cobre de Chile
III. EXPLANATORY NOTES
1. Cash and cash equivalents
The detail of cash and cash equivalents as of December 31, 2023 and December 31, 2022, is as follows: lem 1231-2023 | 12.31.2022 LS HLIss Cash on hand IE) na Ela Enrlisirecioa 618-501 522050 Diepcads EA JAS ar Ptitol Mura – Alorairy mauricio | en 17 ! ¿306 Total cash and cash equiralents | A ALO 11025 IT
Interest on time deposits is recognized on an accrual basis using the contractual interest rate of each of these instruments.
The Corporation does not hold any significant amounts of cash and cash equivalents that have a restriction on use.
Cash and cash equivalents meet the low credit risk exemption under |FRS 9. The classification of time deposits complies with the requirements of 7.
2. Trade and other receivables
a) Trade and other receivables
The following table sets forth trade and other receivables balances, with their corresponding allowances for doubtful accounts:
Ham Cuirent Ron-curren
1231-2023) 1231-2022 | 12:31.023 | 1231-2027 | THUSS ALIS LESS | TRUSE Trade mcensibles (11. ¿muxo l susu o Alowanos lor doublfdl acocante (3) [1,591 (40% Subtotal trade recelvables, not 2,117,791 2590434 . .
(Mier arcos recerrabde (71 14 0% | 191 38 | na E 906 Aowince dor dad accorats (3 (77 005) (25 09 | Qiher olor secounts recebvabia mot | 287897 406150). Mdr2 | 883506 | Total 3,405,659 3,146,735 FLAT En 06
(1) Trade receivables correspond to the sales of copper and its by-products, those that in general are sold in cash or through bank transfers.
F-151
Corporación Nacional del Cobre de Chile
(2) Other receivables mainly consist of the following items:
Remaining tax credit susceptible to refund VAT and other taxes receivable, amounting to ThUS$ 414,058 and ThUS$ 216,218 as of December 31, 2023 and December 31, 2022, respectively.
Receivables owed by the Corporation’s personnel, for short-term and long- term current loans of ThUS$83,778 and ThUS$70,079, respectively (as of December 31, 2022 ThUS$99,229 and ThUS$88,175, respectively), both deducted monthly from their salaries. Mortgage loans granted to the Corporation’s personnel amounting to ThUS$26,604, which are mainly long- term, are backed by mortgage guarantees (as of December 31, 2022 ThUS$29,320).
Advances to suppliers and contractors, to be deducted from the respective payment statements for ThUS$117,332 and ThUS$101,665 as of December 31, 2023 and December 31, 2022, respectively.
Accounts receivable for services from the Ventanas Smelter to ENAMI. These services for the third quarter of the year 2023 amounted to ThUS$14,510.
Additionally, in order to complement the commercial commitments between Codelco and ENAMI, the Corporation purchases copper concentrate and by- products and sells cathodes to ENAMI. Both Codelco and ENAMI are companies owned by the State of Chile.
(3) The Corporation recognizes an allowance for doubtful accounts based on its expected credit loss model.
The reconciliation of changes in the allowance for doubtful accounts for the years ended December 31, 2023 and December 31, 2022, were as follows: lem 12-34-2023 | 12-31-2022 TnLiSS us Opening balance 29,129 19,257 roregaeas 36t6 | 9584 Dicharges | apqáicabora (4 1281] (112) Morement, subtotal (542) 9,872 Closing balance 28.617 | 29,129
The balance of past due but not impaired balances is as follows: | Again 34-12-2003 | 314122077 | A A MN E a aya EEx | 00 daa lam ñ 1114 MR | ‘ ES | AY | Total unprovisaoned panic detss 7. E 7 060
F-152 Corporación Nacional del Cobre de Chile
b) Accruals for open sales invoices
The Corporation adjusts its revenues and trade receivable balances, based on future copper prices through the recognition of an accrual for open sales invoices.
When future price of copper is lower than the provisional invoicing price, the accrual is presented in the statement of financial position as follows:
– For those customers that have due balances with the Corporation, the accrual is presented as a deduction from the line item trade and other current receivables.
– Forthose customers that do not have due balances with the Corporation, the accrual is presented in the line item trade and other current payables.
When the future copper price is higher than the provisional invoicing price, the accrual is added to the line item trade and other current receivables.
Accordingly, as of December 31, 2023, a positive provision of ThUS$83,778 was recorded in the account Trade and other receivables for provisions for unfinished sales invoices. As of December 31, 2022 it was a positive provision of TRUS$31,327.
As of December 31, 2023, ThUS$ 1 of negative provision for open invoices associated with customers who do not have balances due to Codelco was reclassified to Trade payables of current liabilities, which added to the balance presented in Trade and other receivables, totaled a net positive provision of ThUS$ 83,777. As of December 31, 2022, the reclassification of negative unfinished invoices, associated with customers who do not maintain balances due to Codelco, was ThUS$1,458, which added to the balance presented in Trade and other receivables, totaled a positive net provision of ThUS$29,869.
3. Balances and transactions with related parties
a) Transactions with related persons
In accordance with Law on New Corporate Governance, the members of Codelco’s Board are, in terms of transactions with related persons, subject to the provisions of Title XVI of Law on Corporations, which sets the requirements regarding transactions with related parties in publicly traded companies and their subsidiaries.
Notwithstanding the foregoing, pursuant to the provisions of the final paragraph of Article 147 b) of Title XVI, which contains exceptions to the approval process for transactions with related parties, the Corporation has established a general policy over customary transactions (which was communicated through a significant event notice to the CMF), that defines customary transactions as those carried out with its related parties in the normal course of business, which contributes to the social interest and are necessary to the normal development of Codelco’s activities.
F-153 Corporación Nacional del Cobre de Chile
Likewise, consistent with the referred to above standard, the Corporation has implemented as part of its internal regulatory framework, a specific policy dealing with business between related persons and companies with Codelco’s executives. Codelco’s Corporate Policy No.18 (“CCP No. 18), the latest version currently in force, was approved by the Chief Executive Officer and the Board of Directors.
Accordingly, Codelco without the authorization required in CCP No. 18 and of the Board of Directors, as required by Law or by the Corporation by-laws, shall not enter into any contracts or agreements involving one or more Directors, its Chief Executive Officer, the members of Division’s Managing Committees, Vice-presidents, Legal Counsel, General Auditor, Division Chief Executive Officers, Advisors of Senior Management, employees who must make recommendations andor have the authority to award tenders, assignments of purchases andor contracting goods and services, and employees in management positions (up to fourth hierarchical level in the organization), including their spouses, children and other relatives up to second degree of relation, with a direct interest, represented by third parties or on behalf of another person. Likewise, CCP No. 18 requires administrators of Corporation’s contracts to declare all related persons and disqualify himselfherself if any related persons are involved within the field of hisher job responsibilities.
This prohibition also includes the companies in which such administrators are involved through ownership or management, either directly or through representation of other natural persons or legal entities, as well as those individuals who also have ownership or management in those companies.
The Board of Directors has been informed and approved certain transactions as defined in CCP No. 18.
These operations include those shown in the following table, for the total amounts mentioned, which must be executed within the time periods specified in each contract:
F-154 Corporación Nacional del Cobre de Chile
1-1-2023 1-1-2022 Company Taxpayer ID No. | Country | Nature of relationship | Transaction description 12-31-2023 | 12-31-2022
Amount Amount
ThUS$ ThUS$ Adelanta Asesorías y Servicios Ltda 76.425.905-K Chile [Relative of employee Services 975 135 Anglo American Sur S.A. 77.762.940-9 Chile |Coligada Supplies 18 Besalco Maquinarias S.A: 79.633.220-4 Chile [Relative of employee Services 32,068 – Buses JM Pullman S.A. 78.502.770-1 Chile [Relative of employee Services 11,631 CDZ Ingeniería Uno Ltda 77.535.292-2 Chile [Relative of employee Services 20,750 8,511 Centro de Capacitación y Recreación Radomiro Tomic. 79.985.590-7 Chile [Other related parties Services 784 – Centro de Especialidades Médicas Río Blanco Ltda. 76.064.682-2 Chile |Subsidiary Services 5,346 Centro de Especialidades Médicas San Lorenzo Ltda. 76.124.156-7 Chile |Subsidiary Services 447 Clínica Río Blanco S.A. 99.573.600-4 Chile |Subsidiary Services 1,273 Clinica San Lorenzo Ltda. 88.497.100-4 Chile |Subsidiary Services 113 – Codelco Shanghai Company Limited. Extranjera China |Subsidiary Services 5,316 – Comercial e Import. Villanueva Ltda 77.000.200-1 Chile [Relative of employee Supplies 1,523 1,281 Comercial Easy Import S.A. 76.421.167-7 Chile [Relative of employee Services 6 – Compass Catering S.A. 96.651 .910-K Chile [Relative of employee Services 1,257 Complejo Portuario Mejillones S.A. 96.819.040-7 Chile |Subsidiary Services 14,527 Consorcio Ingeniería CDZ Ltda 76.926.371-3 Chile [Relative of employee Services 25,652 – Constructora Domingo Villanueva Arancibia S.A. 96.846.150-8 Chile [Relative of employee Services 6,468 Consultor Ingenieria de Proyectos ltda. 77.060.510-5 Chile [Relative of employee Services 272 – Consultorias y Asesorias Auditorias y Capacitación Guerra y Guerra ltda 76.168.106-0 Chile [Relative of employee Supplies 5 – Costella Proyectos 76.282.588-0 Chile [Relative of employee Services 3,423 Ecometales Limited agencia en Chile. 59.087.530-9 Chile |Subsidiary Services and Supplies 491,196 14,252 Emin Ingeniería y Construcción S.A. 79.527.230-5 Chile [Relative of employee Supplies – 56,547 Empresa de prestación de Servicios Rodolfo Figueroa Valle 76.877.220-7 Chile [Relative of employee Services 5,470 – Empresa Nacional de Telecomunicaciones S.A. 92.580.000-7 Chile [Relative of employee Services – 415 Enaex Servicios S.A. 76.041.871-4 Chile |Relative of Director’s Supplies 791 71,215 Exploraciones Mineras Andinas S.A. 99.569.520-0 Chile |Subsidiary Services 406,470 – Finning Chile S.A. 91.489.000-4 Chile [Relative of employee Services and Supplies 429,385 46,595 Fluor Chile Ingeniería y Construcción S.A. 89.999.900-5 Chile [Relative of employee Services – 9,285 Fundación de Salud El Teniente. 70.905.700-6 Chile |Subsidiary Services 21,213 101 Fundación Orquesta Sinfónica Infantil de los Andes. 65.018.784-9 Chile |Founder Services – 212 Georock S.A. 77.842.840-7 Chile [Relative of employee Services – 26,400 Hatch Ingenieros y Consultores Ltda. 78.784 480-4 Chile [Relative of employee Services 50 – Industrial y Comercial Artimatemb Ltda. 76.108.720-7 Chile [Relative of employee Supplies 48 Ingeniería y Construcción Fenix Ltda 76.134.977-5 Chile [Relative of employee Supplies – 1,112 Ingeniería y Construcción Sigdo Koppers S.A. 91.915.000-9 Chile [Relative of employee Services and Supplies 167,315 76,085 Inversiones Cratos Ltda 76.617.441-8 Chile [Relative of Director’s Services 4,236 – ISalud Isapre de Codelco Ltda 76.334.370-7 Chile [Relative of employee Services 195,151 JM Dyvinetz consultoria y servicios ltda. 77.393.290-5 Chile [Associate Services 501 – Janssen S.A. 81.198.100-1 Chile [Relative of employee Supplies 13,787 2,369 JRI Ingeniería S.A. 96.611.930-6 Chile |Relative of Director’s Services 24,109 19,388 Kairos Mining S.A. 76.781.030-K Chile [Relative of employee Services 4,530 – Kronox Chile Spa 76.242.181-K Chile |Subsidiary Supplies 1 – Linde Gas Chile S.A. 90.100.000-K Chile [Relative of employee Supplies 4406 439 Loop Redsur Servicios de Mantenimiento Equipos de Levante SPA 77.126.529-1 Chile [Relative of employee Supplies 4 – Lucas Blandford Maquinarias SPA 76.213.738-0 Chile [Relative of employee Supplies 185 10 Magotteaux Chile S.A. 78.307.010-3 Chile [Relative of employee Supplies 292 – Manufacturas AC Ltda 77.439.350-1 Chile [Relative of Director’s Supplies 14 80 Marsol S.A. 91.443.000-3 Chile [Relative of employee Supplies – 273 Metso Outotec Chile SpA 93.077 .000-0 Chile [Relative of employee Services and Supplies 51,828 74,326 MI Robotic Solutions S.A. 76.869.100-2 Chile [Relative of employee Services and Supplies 121 609 NTT Data Chile S.A. 96.886.110-7 Chile [Relative of employee Services 4.814 424 Nueva Ancor Tecmin S.A. 76.411.929-0 Chile [Relative of Director’s Supplies – 424 Previred S.A. 96.929.390-0 Chile [Relative of employee Services 57 Primser S.A. 76.753.160-5 Chile [Relative of employee Supplies 29 Servicio Lucas Blandford Maquinarias SPA 92.606.000-7 Chile [Relative of employee Services 4 Servicios Geologicos Geodatos S.A. 88.152.200-4 Chile [Relative of employee Services 1,995 Servicios para la mantención Minera E Industrial S.M.A.SPA 76.169.625-4 Chile [Relative of employee Services 3,634 SK Godelius S.A. 76.167.834-5 Chile [Relative of employee Services 525 Soc. S y S Ingenieria Ltda. 79.592.060-9 Chile [Relative of Director’s Services 329 Sociedad Contractual Minera El Abra. 96.701.340-4 Chile [Associate Supplies 82 – Softline International Chile SPA 76.232.892-5 Chile [Relative of Director’s Supplies 4 Symnetics S.A. 77.812.640-0 Chile [Relative of employee Services 3,374 Tecno Fast S.A. 76.320.186-4 Chile [Relative of employee Services 79,789 44 041 Termoequipos SpA 78.123.830-9 Chile [Relative of employee Supplies 2 117 Veolia Soluciones Ambientales Chile S.A. 77.441.870-9 Chile [Relative of employee Supplies 28 17,103 Wortey Ingenieria y Construcción Chile SPA 96.588.850-0 Chile [Relative of employee Services 66,043 –
F-155
Corporación Nacional del Cobre de Chile
b) Key Management of the Corporation
In accordance with the policy established by the Board of Directors and its related regulations, the transactions with the Directors, the Chief Executive Officer, Vice Presidents, Corporate Auditor, the members of the Divisional Management Committees and Divisional General Managers shall be approved by the Board of Directors.
During the years ended December 31, 2023 and 2022, the members of the Board of Directors have received the following amounts as per diems, salaries and fees:
11-20 11.732 Tepapds bir 11-11413 | n- AD ús ripica ral arar iia ‘
Ecumtry Pratura e! retalraa be y . , nm.
e da A Ek yl i . -.
A TA FAA 1. Fe a A vidad Lira Ra lr As Tela ehaTo a rie dara? Fiat LE fas bd
The Ministry of Finance through Supreme Decree No. 233, dated February 09, 2022, established the compensation for the Corporation’s Directors. The compensation to Board of Director members ¡is as follows:
a. The Directors of Codelco will receive a fixed monthly compensation of Ch$4,413,071 (four million four hundred thirteen thousand seventy-one Chilean pesos) for meeting attendance. The payment of the monthly compensation requires at least one meeting attendance each month.
b. The Chairman of the Board will receive a fixed monthly compensation of Ch$8,826,140 (eight million eight hundred and twenty-six thousand one hundred and forty Chilean pesos).
c. Each member of the Directors Committee, whether the one referred to in Article 50 bis) of Law No. 18046 or another established by the Corporation by-laws, will receive a fixed additional monthly compensation of Ch$1,471,022 (one million four hundred and seventy- one thousand and twenty-two Chilean pesos) for meeting attendance, regardless of the number of committees of which they are members. In addition, the Chairman of the Directors Committee will receive a fixed monthly compensation of Ch$2,942,047 (two million nine hundred and forty-two thousand- and forty-seven-pesos Chilean pesos).
d. The compensation established in the legal text is effective for a period of two years, as from March 1, 2022, and will not be adjusted during said period.
F-156 Corporación Nacional del Cobre de Chile
On the other hand, the short-term benefits to key management of the Corporation expensed during the years ended December 31, 2023 and 2022, were ThUS$ 13,603 and ThUS$ 13,368, respectively.
The methodology to determine the remuneration of key management was approved by the Board of Directors at a meeting held on January 29, 2003.
During the years ended December 31, 2023, severance payments and other payments associated with the retirement of Codelco’s senior executives were ThUS$ 2,414. (For the period January – December 2022 they were ThUS$ 1,501).
There were no payments for other non-current benefits during the years ended December 31, 2023 and 2022, other than those mentioned in the preceding paragraph.
There are no share-based payment plans.
Transactions with companies in which Codelco has ownership interest
The Corporation undertakes commercial and financial transactions that are necessary for its activities with its subsidiaries, associates and joint ventures (related parties). The financial transactions correspond mainly to loans granted (mercantile current accounts).
Commercial transactions with related companies mainly consist of purchasessales of products or rendering of services carried out under market conditions and prices, which do not bear any interest or indexation.
The Corporation does not make allowances for doubtful accounts on the main items receivable from its related companies since these have been subscribed with the relevant safeguards in the respective debt agreements.
The detail of accounts receivable and payable between the Corporation and ¡ts related parties as of December 31, 2023 and December 31, 2022 is as follows:
Accounts receivable from related entities:
SA c FE! Cora re NA AE TE rar dal qn 7
Coro pl ELN lips hr air e EE mu H
F-157 Corporación Nacional del Cobre de Chile
Accounts payable to related entities:
Curtesl Í Mor carrard
Terpeper 1D Ma Ue A. Matorm al ral mbr sa 11-200 E 121-200 ca T TER A L- A dra y Sd | A | Ls | FER A E Ea ma | | 8 Tol id Sos Caca lr El PLN ¿O f5n aX a EXA Para Fetuarádora de Matar A Ph A ad 158 113 A EA Pulso A A | Pas; | A LE | ql | m3.
“otalón lo PRADA MAA
The following table sets forth the transactions carried out between the Corporation and its related entities during the years ended December 31, 2023 and 2022 are detailed below:
1-1-2023 1-1-2022
12-31-2023 12-31-2022 Effect on Effect on Taxpayer ID No. Company Transaction description Country Currency Amount income Amount income (charge)credit (charge)credit ThUS$ ThUS$ ThUS$ ThUS$
96.801.450-1 [Nuevo Cobre S.A. (Ex – Agua de la Falda S.|Sales of services Chile CLP 2 2 2 2
96.801.450-1 [Nuevo Cobre S.A. (Ex – Agua de la Falda S.|Contribution Chile US$ 245 – 257
77.762.940-9 [Anglo American Sur S.A. Dividends received Chile US$ – – 138,445 –
77.762.940-9 [Anglo American Sur S.A. Product sales Chile US$ 36,058 36,058 52,307 52,307
77.762.940-9 [Anglo American Sur S.A. Other sales Chile CLP 1,581 1,581 3,614 3,614
77.762.940-9 [Anglo American Sur S.A. Product purchase Chile US$ 666,321 (666,321) 781,019 (781,019)
76.063.022-5 |Inca de Oro S.A. Payments on account of the company Chile CLP 137 – 125 (8)
77.781.030-K [Kairos Mining Services Chile CLP 11,262 (11,262) 11,064 (11,064)
77.781.030-K [Kairos Mining Sales of services Chile CLP 1 1 1 1
76.255.054-7 [Planta Recuperadora de Metales SpA Services Chile US$ 22,570 (22,570) 23,045 (23,045)
76.255.054-7 |Planta Recuperadora de Metales SpA Other sales Chile CLP 7,405 7,405 6,347 6,347
76.255.054-7 |Planta Recuperadora de Metales SpA Product sales Chile CLP 144 144 305 305
96.701.340-4 |Soc. Contractual Minera El Abra Dividends received Chile US$ – – 25,174 –
96.701.340-4 |Soc. Contractual Minera El Abra Product purchase Chile US$ 418,651 (418,651) 383,923 (383,923)
96.701.340-4 [|Soc. Contractual Minera El Abra Product sales Chile US$ 24,771 24,771 65,461 65,461
96.701.340-4 [|Soc. Contractual Minera El Abra Other sales Chile US$ 1,493 1,493 1,501 1,501
96.701.340-4 |Soc. Contractual Minera El Abra Commissions received Chile US$ 123 123 112 112
96.701.340-4 [Soc. Contractual Minera El Abra Other purchases Chile US$ 1,055 (1,055) 447 (447)
d) Additional information
The purchasesales of products transactions with Anglo American Sur S.A., are regular business activity transactions to buysell copper and other products. On the other hand, there are certain transactions related to the contract entered into with the subsidiary Inversiones Mineras Nueva Acrux SpA (whose non-controlling shareholder is Mitsui) and Anglo American Sur S.A., under which the latter agreed to sell a portion of its annual copper output to said subsidiary.
F-158 Corporación Nacional del Cobre de Chile
4. Inventories
Inventories as of December 31, 2023 and December 31, 2022 are detailed as follows: a o carr ] e Ed | 121140 LAA PAra A ES has Ho Pa]
Eoabas prat y 10, laa 51 | : | Subt hadidad pala ar | yl ELA Pr pl Ju pl 24d 11a fe dl ai ¡de a PEr ¡Soblcta prodarts ln procna A IA 8.8 SUR MA la da mt pl ra a O nn mu vr HER vell [Sadie ma e artis cla, ro | Bel ur TAS A ¡Pai EFD 20 at ¿04 854 End Pd ACA
Inventories recognized in cost of sales during the years ended December 31, 2023 and 2022, correspond to finished products and amount to ThUS$13,277,319 and ThUS$12,262,740 respectively, which do not consider the cost of processing services of ThUS$24,673 and ThUS$21,912, respectively.
For the years ended December 31, 2023 and 2022, the Corporation has not reclassified strategic inventories to Property, Plant and Equipment.
The reconciliation of changes in the allowance for obsolescence ¡is detailed below:
Norarari chsciicarnos PERRA 12-34-2073 | 123002007 THUSS Tis Opera rita 17215) 1154531] WM A A a ai dal ¡pee MAA ¡Ciasing balance AI
During years ended December 31, 2023 and 2022, inventory write-offs of ThUS$13,248 and ThUS$13,287, respectively, were recognized.
At December 31, 2023 the provision for net realizable value of copper and its effect on income was ThUS$ 36,645 and a profit of TRUS$17,889 respectively (loss of ThUS$45,397 for the same period 2022). As of December 31, 2022, the net realizable value provision was ThUS$54,535.
As of December 31, 2023 and 2022, there are no unrealized gains or losses recognized for purchase and sale transactions of inventories with related parties.
As of December 31, 2023 and 2022, there are no inventories pledged as security for liabilities.
F-159 Corporación Nacional del Cobre de Chile
5. Income taxes and deferred taxes
a) Deferred tax assets and liabilities
Deferred taxes are presented in the Statement of Financial Position as follows:
Deferred tanes 12-11-2071 12-11-2072 us$ THusS Mon-curtmat puts 103,530 0%, 105 Non -urregd abad 3 241 800 8.451.528 ¡Total deferred taxes, net 8,135,270 266.723
The following table shows the deferred tax opening, net, classified as assets or liabilities according to the nature of the temporary differences:
Delerred tia resetó 12-11-2073 12-31-2072 THIS THuss5 Prormors 1,789 384 yA 1,045 Toa loss 55, 175 117.004 Contradis lor Bue mghi do ue ritos 11 54% AE Cihor 10,443 2416 Total delerred taz asaety 2,486 854 1,969,065 ¡Deferred taz Latrllitima 121-2071 12-31.2072 a a US TAS Accaleralad deprocoton 9,220,081 Bor rr Charge in property, plan and pqupcrec 1,395,156 L637 493 Via on pera acbady 605 44% 70 Fas vals df aoqueed munarad cinra 169 089 169 000 Cheer) mocrme uu al subs ianes A 18.011 Huidgeg demitras 33,013 56 248 Wahuabon cl severarca rekertes CEM 30 Total deferred tax liabilities. 10,525,124 10,335_280
b) The effect of deferred taxes recognized in comprehensive income ¡is detailed as follows:
Difetred Laxe ll conri ne
Cant Pal Po pe Lit dae dd pira,
Total delerred taras rat afacie compebeniire soi.
F-160 mt
EN
1291-2603 | 1731200 st |, a 14h | ml 30m a |
3 15
199, (ty
Corporación Nacional del Cobre de Chile
c) Composition of income tax (expense)
112073 | 1.4202 Comipardiica | 1231-2023 12.34-2077 ( = EN | res | muss [Exacto Mar elf A AE art lar VaprrrE ¡24 FF WAR Cera – | e O E | Total incneno tas (asaperme] (1316 1 (110316701
d) The following table sets forth the reconciliation of the effective tax rate:
02513001 e | im ja ! Ta di q, his Hr adds de, Ai, Tatw | | Moli Lo A El A) A A Has lr Ear EJT EE Lp dl 1d JE PIES PA al | Vio > dl > per Pi ire a Va. – A un hy fam , ¡lero rre A rr RA mia ra ad A L; ! Mo la. al al, ma pp y i E a ul B E A E A PL j E AA O AAA A NTE y [TOTAL ERA AL = E TE PH ¡simio +45 FIN LL 3-07 á lala Lao j ln a ¿Ys a! yan q Epi E, he, Tela ALE LL MA A “RES “ER? ciar mota Am ir LEA BEE TVE AN se | – Y ls + Sr po pr A a ñ | A m4 ¡as Ae d AA e A 4 TI em E YT SIA Mitin dl Elite ea Lagprea E > la Ha 1 0d di AL a A E Ti a: a | e de li | a ja SOTA AE MA E — AT LL TFTA) MEN TAL == == = a -PBRMI RU PA EA
The Corporation has applied a rate of 25% to calculate deferred income tax and first category income tax. As a state company, the Corporation is classified as those companies of article 14 letter G of the Income Tax Law, incorporated in the Tax Reform Law No. 21210 of February 24, 2020, maintaining the General Regime of Taxation. Meanwhile, the national subsidiaries and associates, by default, have applied the Partially Integrated taxation system with a rate of 27% for both years. Foreign subsidiaries and associates have applied the tax rates in force in their respective countries.
Article 2 of Decree Law No. 2398 establishes an additional 40% income tax rate on the Corporation’s taxable income plus the share of retained earnings of companies not organized as corporations or joint stock companies and the dividends actually received from the latter.
F-161 Corporación Nacional del Cobre de Chile
On September 2, 2020, Law No. 21256 was published in the Official Journal, for the tax measures that are part of the emergency plan for economic reactivation. According to Article No. 3, added Article No. 23 bis of Law No. 21210, incorporating a temporary depreciation regime that allows full and instant depreciation of fixed assets and that is in force for acquisitions carried out between September 1, 2020, and December 31, 2022. As a state company, the Corporation as a taxpayer that pays taxes based on effective income and complete accounting, availed itself of the indicated benefit as of tax year 2022.
Mining Taxes
On August 10, 2023, Law No. 21,591 on Mining Royalty was published in the Official Gazette, effective as of January 1, 2024.
The law establishes that the new mining royalty tax is comprised of two components: The ad valorem component and the mining margin component. The ad valorem component corresponds to 1% of copper sales and applies to miners whose copper sales represent more than 50% of total sales. The mining margin component applies a rate of between 8% and 26% on mining operating margins in the range of 20% to 80%. The compound base of the mining margin component is determined in a manner similar to the current Specific Tax on Mining Activities (IEAM). For this portion the Corporation will continue to assess deferred taxes. In addition, the regulation establishes a Maximum Potential Tax Burden, which will adjust the Mining Royalty tax, in the event that it exceeds 46.5% of the Adjusted Taxable Mining Operating Income.
A rate of 5% has been determined for the last year of application of the IEAM. Similarly, an average deferred tax reversal rate of 8% has been estimated for the mining margin component of the new Mining Royalty.
The JEAM, contained in the Income Tax Law, is repealed as of January 1, 2024. This is in line with the entry into force of the Mining Royalty, which introduces a new mining taxation as of the same date.
F-162 Corporación Nacional del Cobre de Chile
6. Current and non-current tax assets and liabilities
The current tax balance is presented net of monthly provisional payments as an asset or llability in Current Taxes determined as indicated in section II. Main accounting policies,
2.Kk):
12-31-2023 | 12-31-2072 Current 101 asueto | IhLS$ Mhis$ Total current tax s9sota 20 10,226
A m 12-31-2023 | 12-31-2022 Current laz Mabilitiea muss THUSS Prowaaón PPM 11 188 19,415 a promson 3276 | 1.9% Total current tax labilities 14414] – 26,309 andas | | 12-34-2023 | 12.31.2022 III TmLS$ TRUSS.
PASEAR TALE aaa) MBÓN ¡Total non-current tax assets MAUI
F-163
Corporación Nacional del Cobre de Chile
7. Property, plant and equipment
a) The items of property, plant and equipment as of December 31, 2023 and December 31, 2022, are as follows:
Property, plant and equipment, gross-: 12-31-2023 | 12-31-2022 THus$ THus$ Works in progress 1,891,913 6,426,233 Land 257,012 225,629 Bulkdings 6,999 8:03 6,858,811 Plant and equipment 22 000 441 21,425 224 Foefures and fííngs 51,832 47 241 Motor vehicles 2,251,668 2,128,955 Lands improvement 9 406,163 8,910,108 Mining operañons 10,905,593 10,798 033 Mine development 6,149,215 6,141 437 Other assets 933,030 9r7,378 Total property, plant and equipment, gross 67,396,670 63,939,049 Property, plant and equipment, accumulated depreciation 12-31-2023 | 12-31-2022 THus$ THus$ Works in progress – – Land 22,097 20,357 Bulkdings 3,945,132 3,661,920 Plant and equipment 13118373 121413755 Foefures and fííngs 46,561 45,565 Motor vehicles 1,902,451 1,707,545 Improwemernís to land 4 660 460 4 337 041 Mining operañons F, 336,680 f 616,069 Mine developmení 1,359,013 1,258,845 Other assets 982,826 009,422 Total property, plant and equipment, accumulated 32.774.099 31.629.519 depreciation Property, plant and equipment, net 12-31-2023 | 12-31-2022 THus$ THus$ Works in progress 1,891,913 6,426,233 Land 244,415 205,272 Buildings 3,154,671 3,196,891 Plant and equipmerí 8,982 068 9,011,469 Fodures and ngs 5,200 1.676 Motor vehicles 449 217 421 410 Improwemernis to land 4 745,703 4 5f3.067 Mining operañons 3,568,913 3,191,964 Mine development 9,390,202 4 882 592 Other assets 350,204 408,956 Total property, plant and equipment, net 34,622,571 32,309,530
F-164
Corporación Nacional del Cobre de Chile
b) Movements in property, plant and equipment
Moore Fred Ps Paga Land Mora dera pa AUT prajnas Land dald-gr asigna csmrlcarna ll. obs erecta, nprovamas | epurmions. | deeiapanod LA punto Ta aber property. paa! and aupa
A EA EN AA HASTA 155 Bet ER 1. E7El Dia ANT 1H 187100] E
A | => db Por Poor dr PLA CEPA IP O A 2H Q 7 1:D4) . Z – 65% Bl – Pal Al ¡re ase ¡e A A ar Gia (7 NA] A p1 e] 1 ¡Td +A AR ET Ala ¡NTRA pene ba opa s prolt or ua lr penca . , J : ] y , ; y ; : ere ¡dere a lr pres qe der ga pr port rt pre
PRA A ab A TACA TOTO ADA A AAA POE UI rn Ec di der e oe cr ra DU E A
His] e rar cd Heros pr el rd ja pre PR REN ne aqua Gu y A A o [race puta pt cdo ps Cy la ;
A A raras desa y gh ramas 10d id AGE EPA. AS TE GE A A A o rs de | lo inn cod ber A tops. rt rl RT y cafes ls a As ed ds pr q e Él IATA. DEPL FL TEA Ar nproras rre renos, proper, piel pr rappel E a il Lo id
EE basros
F-165 Corporación Nacional del Cobre de Chile
c)
The balance of construction in progress is directly associated with the operating activities of the Corporation and relates to the acquisition of equipment for projects in construction and associated costs for their completion.
The Corporation has signed insurance policies to cover the possible risks to which the various property, plant and equipment items are subject, as well as the possible claims that may arise for the period of its activities. Such policies sufficiently cover the risks to which they are subject in Management’s opinion.
Capitalized interest costs during the years ended December 31, 2023 and 2022 amounted to ThUS$ 246,136 and ThUS$289,501, respectively. The annual capitalization rate was 4.70% and 4.36% at December 31, 2023 and 2022, respectively.
Expenses on exploration and drilling of deposits recognized in profit or loss and the cash outflows disbursed for the same concepts are presented in the following table: ¡Experndlura on explorallon and dobling revoreodn 1.1:2073 11-4077
| 12.34.2023 | 1231-2072 FRLIS3 MELISS el matt Eos Pi pa adi? | O 07 ¡Cash outficas debursed 1.210 AA
The detail of “Other assets” under “Property, plant and equipment” is as follows: ¡Cóhea anitata nal 12-31-0023 | 13-31-77 | [| Thll5g | Th [Mr properties hom in portes of Argo Aroncan Sut SA 200 00 05) DO [he mienarnoes and A AOS FTROGOr HON 5 ¡Cr A: Carra Py A de ad lí Lol] LS ha [Dihes assets, pel | 150.100 [ IA
The Corporation currently has no ownership restrictions relating to assets belonging to Property, plant and equipment, except for leased assets whose legal title corresponds to the lessor.
Codelco has not pledged property, plant and equipment as collateral for debt obligations.
In accordance with the provisions of section ll. Significant accounting policies 2 1), relating to Impairment of property, plant and equipment and intangibles assets, and as indicated in note 21 Asset impairment, as of December 31, 2022, the Corporation recorded an impairment of the value of the Ventanas Smelter assets in the amount of ThUS$89,410 before tax.
F-166
Corporación Nacional del Cobre de Chile
9. Leases
8.1 Right-of-use assets
As of December 31, 2023 and December 31, 2022, the breakdown of the right of use asset category ¡s:
| 12-14-2023 | 12.31.2027 pre | mess | muss Rigbtobiuss 22401, 1043 555 505 11.937 | ¡iboluse amet accoruisted deprcator 5152] 310904 Total right-obuse asseta, nel 300,756 | – 5405
Movements for the years ended December 31, 2023 and year ended December 31, 2022 are as follows: ¡Reconciliation cf changes le Rght.ol-use Azsots | M320Zd | 1231-2032 ¡in Ecuzsnds el US$) THU | THU Gpering balance 405,843) – 361,539 boteages 140,362, 202.426 ¡Depreciaon (133 seal (150.24 lboeasa ¡decreasa) due to cbr changes 681 | (7,4671 ¡Retorenta nphi-ot use set (1042) (3811 Total movement (85087), 4304 ¡Closing balance. 0756] 00560 The composition by asset class ¡is as follows: ¡Right-olasa ossta, net by añaol class 12-31-2023 | 12-31-2022 | A Exidega 000 | 4745 led 259 308 ¡Pur ad apre M510 | – 174.085 ¡Fliatena and tenga EN 5 507 ¡osos vercion IM2.104 | – 2OLETA ¡Paghtoluse ez. 134106: 16838 ¡Total 300756: – 405H45
F-167 Corporación Nacional del Cobre de Chile
8.2 Liabilities for current and non-current leases
As of December 31, 2023 and December 31, 2022, the payment commitments for leasing operations are summarized in the following table:
I j I nm ¿0 lr | l] nl crear ad Mor ar La le E FR | -iMa a 1 A EFIA dat 15 ES MALE ALA HE fat lo 0 det 1% (5 HE ar q 4511 Edd O er ll 1004 Ur Pes, ! ql A? LA Ue 139 5d Br, VE A EI VID pad 117 Pda as? mi bo 17 l 141 anar pr o dl A rar mA SE + CAE 54 ER il | Vr A pr e ds dl a 2 FO M1 35381 E EE a azi 1EnL
1] . “. ) . 7) A da LS, re En (51 4d Lara Po E EA AE 1310531 a ap HE +T Fil do A Í Lal | B | ” ] a E “e Led Jl ¿5% 51:45 05 17] 40 EA 411.385
Leasing operations are generated by service contracts, mainly for facilities, buildings, plants and equipment.
The expense related to short-term leases, low-value assets and variable leases not included in the measurement of lease liabilities, during the years ended periods ended December 31, 2023 and 2022, is presented in the following table:
11203 | 11202 Lease expensa 12-31-2023 | 12-31-2022 A: Mmus$ ¡Shore lease: 14,487 | 95 Lc value assels d 145 Ez (Vanatso uáses $ aobdcó e he messurerneni Ol loas) tii O EXS UCM) | TOTAL | 965095] 919,360
9. Investments accounted for using the equity method
The value of the investment and the accrued results of investments accounted for using the equity method are presented below:
Share of Investment value Accrued Result Currency 1-1-2023 1-1-2022 Associates Taxpayer ID No. Functional 12-31-2023 12-31-2022 | 12-31-2023 12-31-2022 12-31-2023 12-31-2022 % % ThUS$ ThUS$ ThUS$ ThUS$ Nuevo Cobre S.A. (Ex – Agua de la Falda 96.801.450-1 USD 42.26% 42.26% 4,769 4 682 (157) (304) Anglo American Sur S.A. 77.762.940-9 USD 29.50% 29.50% 2,147,507 2,827,106 (676,921) 43,069 Inca de Oro S.A. 73.063.022-5 USD 33.85% 33.85% 12,399 12,506 (107) (162) Kairos Mining S.A. 76.781.030-K USD 40.00% 40.00% 99 44 – – Minera Purén SCM 76.028.880-2 USD 35.00% 35.00% 3,538 3,339 199 (535) Planta Recuperadora de Metales SpA 76.255.054-7 USD 34.00% 34.00% 18,396 16,346 2,064 1,863 Sociedad Contractual Minera El Abra 96.701.340-4 USD 49.00% 49.00% 679,990 663,300 16,804 8,060 TOTAL 2,866,698 3,527,323 (658,118) 51,991
F-168 Corporación Nacional del Cobre de Chile
a)
Associates
Nuevo Cobre S.A. (Former Agua de la Falda S.A.)
On November 8, 2023 the strategic association between Codelco and Nuevo Cobre S.A.
(Former Agua de la Falda S.A.) was formalized.
As of December 31, 2023, Codelco holds a 42.26% ownership interest in Nuevo Cobre
S.A. (Former Agua de la Falda S.A.), with the remaining 57.74% owned by Minera Rio Tinto.
The corporate purpose of this company is to exploit deposits of gold and other minerals, in the Atacama region of Chile.
Sociedad Contractual Minera El Abra
Sociedad Contractual Minera El Abra was incorporated in 1994. As of December 31, 2023, Codelco holds a 49% ownership interest, with the remaining 51% owned by Cyprus El Abra Corporation, a subsidiary of Freeport-McMoRan Copper á Gold Inc.
The company business activities involve the extraction, production and selling of copper cathodes.
Sociedad Contractual Minera Purén
As of December 31, 2023, Codelco holds a 39% ownership interest, with the remaining 65% owned by Compañía Minera Mantos de Oro.
This company’s corporate purpose is to explore, identify, survey, investigate, develop and exploit mining deposits in order to extract, produce and process minerals.
Inca de Oro S.A.
On September 1, 2009, Codelco’s Board of Directors authorized the incorporation of a new company aimed to develop studies allowing the continuity of the Inca de Oro Project, which is a wholly-owned subsidiary of Codelco.
December 31, 2023, Codelco holds a 33.85% ownership interest in this company (PanAust IDO Ltda. has 66.15%).
Planta Recuperadora de Metales SpA
On December 3, 2012, Planta Recuperadora Metales SpA was incorporated by Codelco, with 100% ownership held by the Corporation.
F-169
Corporación Nacional del Cobre de Chile
In 2014, LS-Nikko Copper Inc. was incorporated into the ownership of this company.
As of December 31, 2023, Codelco holds a 34% interest in the capital stock of Planta Recuperadora de Metales SpA, with control remaining with LS-Nikko Copper Inc. based on the elements of control described in the shareholders’ agreement.
The principal business activity of the company is the processing of intermediate products of the refining and processing of copper and other metals aiming to recover copper, other metals and other sub products, their transformation to commercial products and the selling and distribution of all classes of goods or inputs derived from such process.
Anglo American Sur S.A.
The principal activities of the Company are the exploration, extraction, exploitation, production, processing and trading of minerals, concentrates, precipitates, copper bars and all metallic and non-metallic minerals, all fossil substances and liquid and gaseous hydrocarbons. This includes the exploration, exploitation and use of all natural energy sources capable of industrial use and the products or by-products obtained, as well as any other related, connected or complementary activities on which the shareholders agree.
On August 24, 2012, Codelco recognized the acquisition of ownership interest in Anglo American Sur S.A. which resulted in the initial recognition of the cost of the investment for ThUS$ 6,490,000 that corresponded to the proportionate share (29.5%) of the net fair value of the identifiable assets and liabilities acquired.
In determining the share of the fair value of the identifiable assets and liabilities acquired, the Corporation considered the resources and mineral reserves that could be measured reliably. As part of this updating process, and applying the valuation criteria indicated above, the fair value of the assets acquired and liabilities assumed of Anglo American Sur S.A. as of that date amounted to US$ 22,646 million, which in the proportion acquired by Inversiones Mineras Becrux SpA (29.5%) results in an investment at fair value of US $ 6,681 million at the acquisition date.
The allocation of the purchase price at fair value between the identifiable assets and llabilities was prepared by management using its best estimate and considering all relevant and available information at the acquisition date of Anglo American Sur S.A.
F-170 Corporación Nacional del Cobre de Chile
The Corporation used a discounted cash flows model to estimate cash flow projections, based on the life of mine. These projections were based on estimated production and future prices of minerals, operating costs and capital costs, among other estimates made at the date of acquisition. Additionally, proven and probable resources to explore were not included in the mine plan, therefore, they were valued separately using a market model. Such resources are included in item “Mineral Resources.
As of December 31, 2015, the Corporation identified indicators of impairment in the operating units of Anglo American Sur S.A. Consequently, and with the purpose of making the corresponding adjustments to the investment in this associate, the Corporation estimated ¡ts recoverable amount, considering the additional value of the assets identified at the date of acquisition of the investment.
In determining the recoverable amount, the Corporation applied the methodology of fair value less costs of disposal. The recoverable amount of the operating units was determined based on the life of mine by using a discounted cash flow model whose main assumptions included ore reserves declared by the associate, copper price, supply costs, foreign exchange rates, discount rate and market information for the long-term asset valuation. The discount rate used was an annual rate of 8% after taxes.
Furthermore, the resources not included in the mining plan (LOM) have been valued using a multiples market approach for comparable transactions. Such methodology is consistent with the methodologies used at the acquisition date, which is described in the previous paragraph.
As of December 31, 2023, control on Anglo American Sur S.A. is held by Inversiones Anglo American Sur S.A. with 50.06%, while one of the companies that make up the non- controlling interest is Inversiones Mineras Becrux SpA., which is controlled by Codelco with 67.80% of the shares, and which exercises significant influence over Anglo American Sur S.A. with 29.5%.
As of December 31, 2023, the Corporation performed an evaluation of the value of its investment in the associate Anglo American Sur S.A. and determined that the recoverable amount of the asset is less than the carrying value recorded, recognizing an impairment of ThUS$ 522,448, which is recognized under the captionEquity in earnings (losses) of associates and joint ventures accounted for using equity method in the statement of comprehensive income for the year 2023. The aforementioned impairment loss resulted from lower than projected production and cost performance.
The recoverable amount of the investment in the associate was calculated using the fair value methodology less costs of disposal. The recoverable amount of the operating assets was determined based on the life of mine by using a discounted cash flow model whose main assumptions included ore reserves declared by the associate, copper price, supply costs, foreign exchange rates, discount rate and market information for the long- term asset valuation. The discount rate used was an annual rate of 6.77% after taxes.
Furthermore, the resources not included in the mining plan (LOM), as well as the potential
F-171 Corporación Nacional del Cobre de Chile resources to explore, have been valued using a multiples market approach for comparable transactions.
Subsequent to the recognition of the equity in earnings (losses) of the associate as detailed above, no indications are observed that would require additional impairment of the recoverable amount of the investment held in Anglo American Sur S.A.
Kairos S.A.
As of December 31, 2023, the control of the company lies in Honeywell Chile S.A. which owns 60% of the shares while Codelco owns the remaining 40%.
The purpose of the company is to provide automation and control services for industrial and mining activities and to provide technology and software licenses.
The following tables present the assets and liabilities as of December 31, 2023 and December 31, 2022 of investments in associates, as well as the main movements and their respective results during the years ended December 31, 2023 and 2022.
Assets and liabilities 12-31-2023 | 12-31-2022 ThUS$ ThUS$ Current assets 1,724,855 2,014,837 Non-current assets 6,290,388 6,048,672 Current liabilities 1,144,793 1,188,978 Non-current liabilities 2,296,791 2,146,339
1-1-2023 1-1-2022 Profit (loss) 12-31-2023 | 12-31-2022 ThUS$ ThUS$ Revenue 3,270,948 3,972,391 Ordinary expenses (3,417,008)| (3,376,515) Profit for the period (146,060) 195,836
1-1-2023 1-1-2022 Movement Investment in Associates 12-31-2023 12-31-2022 ThUS$ ThUS$ Opening balance 3,527,323 3,546,011 Contribution 245 297 Dividends – (65,445) Net income for the period (45,031) 51,991 Impairment Anglo American Sur S.A. (522,448) – Royalty effect on Anglo America Sur S.A (90,639) – Comprehensive income (2,794) (5,268) Other 42 (223) Closing balance 2,866,698 3,527,323
The following tables detail the assets and liabilities of the significant associates as of December 31, 2023 and 2022, as well as the main movements and their respective results during the years ended December 31, 2023 and 2022:
F-172 Corporación Nacional del Cobre de Chile
Anglo American Sur S.A.
j | 12312023 | 12:34:20%2 THUSg | ThUSS m Pa!
At 0d abbr
LUPO pedal 50 000 EM ‘e Saya pil 5 1 UN A a Curorl habibira 100% 104 105 de?
MOTA HEY MU 1818 4 lA | 110
Proñit (loas) 12-34-2073 1231-2002 | THUSS | THUBS Iieatitiar A RA ¿58 4d) LA cpu 4 pis Fl As E | (12.531 3481
Ta] ] 2 ¡Preta der He eno] 100 021 11003
Sociedad Contractual Minera El Abra haria ¿rd la hise, 12-31-2023 1231-02 | ThliSE_- TWUSs Carra ¡mili UA, 1ER ES Ae Bon cumrá aacir 1.071 Hay MT A ul | 101164 a 55 UA meri iaa | (MARNE A Al 14223 112022 Piort ns | 12-31-2073 1231-2472 | SALER TALE ¡Herria (2.05 444 PE MIT lr jas a pla E E ¡OL BER
Pri MT INE” “Ll it] A d EM
b) Additional information on unrealized profits
Codelco carries out copper purchase and sale operations with Sociedad Contractual Minera El Abra. As of December 31, 2023 and 2022, the value of finished products under the Inventories caption did not present balances for unrealized profit provision.
As of December 31, 2023 and 2022, the Corporation has unrealized gains on the purchase of LNG terminal use rights from Sociedad Contractual Minera El Abra. balance of ThUS$ 2,123 and ThUS$ 3,920, respectively.
c) Share of profit or loss for the period
The income before tax corresponding to the proportion on the income of Anglo American Sur S.A. recognized for the year ended December 31, 2023 was a loss of ThUS$ 54,897.
Codelco also recognized an adjustment to such income corresponding to the depreciation and write-offs of the fair values of the net assets of such company originated at the acquisition date which resulted in a lower income before tax of ThUS$ 8,937. In addition, Codelco recognized a loss of ThUS$90,639 for the deferred tax liability associated with the effect of the new Royalty Law (Law No. 21591) ) on the aforementioned fair values of the net assets and an impariment loss of ThUS$ 522,448. Those adjustments are deducted
F-173 Corporación Nacional del Cobre de Chile from “Equity in earnings (losses) of associates and joint ventures accounted for using the equity method in the consolidated statement of comprehensive income.
The income before tax corresponding to the proportion on the income of Anglo American Sur S.A. recognized for the year ended December 31, 2022 was a profit of ThUS$ 52,107 while the adjustment to such income corresponding to the depreciation and write-offs of the fair values of the net assets of such company recognized at the acquisition date, resulted in a lower income before tax of ThUS$ 9,038 and ¡is being deducted from Equity in earnings (losses) of associates and joint ventures accounted for using the equity method” in the consolidated statement of comprehensive income.
10. Subsidiaries
The following tables set forth a detail of assets, liabilities and profit (loss) of the Corporation’s subsidiaries, prior to consolidation adjustments: | iS 1:112033 | 123120% | AM | TU [Curro ee susds M5 BES 313 171 loe Set arts 21731651 1,448 1181 ICurrené habito 255 37 er SA ¡Hor curra | da : Jo 36 | d i JE 14203 | 11202 Profit (losm) 12-34-2073 12-31.2022 US$ | ass [COI 1378435 a 5 . FA ¡Ordrary iaporses and cir PER 46: 15143081 [Prat (Leo) [- peta ans! d6, 183
F-174 Corporación Nacional del Cobre de Chile
11. Current and non-current financial assets
Current and non-current financial assets included in the statement of financial position are as follows: ALA ¡Clerallicanón 1 atiserverl ol linencial porcion a PP A € Ton Prieta | jm die : LE Ulla Lies a rá cha va MLS 1=1153 AS ma Tuna La A nr ¡dy (314615 tu 541 rado and cos Cirta 1 aE 14 ts +91 343561 CA > CUAL POCA O Mn 01,473 li a Li 157 4 Mr raomelrocry ed tan roer ret a! 4d |] ¡be cure lcacaa rel 4 UF] ¡ir ná > comal ica ar A 3| 104 M6 TAE TOTAL 2009654 2.171.551 $ 101,60 4591.31
12-31-2022 Atfair value Total financial Classification in statement of financial position through profitor | Amortized cost Hedging derivatives assets loss Metal futures | Cross currency contracts swap ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Cash and cash equivalents 26,806 999,921 1,026,727 Trade and other current receivable 2,422,067 964,718 3,386,785 Non – current receivable 88,906 88,906 Currentreceivable from relates entities 31,756 31,756 Non – current receivable from related entities 224 224 Other current financial assets 1,364 87 1,451 Other non – current financial assets 4 983 100,535 105,518 TOTAL 2,448,873 2,091,872 87 100,535 4,641,367
As of December 31, 2022, the balance of the caption Other financial assets, current includes ThUS$ 1,315 invested in term deposit instruments with a maturity of more than 90 days.
– – Fair value through profit or loss: As of December 31, 2023 and December 31, 2022, this category includes unfinished product sales invoices. Section 11.2.g.
– – Amortized cost: lt corresponds to financial assets held within a business model whose objective is to hold financial assets to collect contractual cash flows that are solely payments of principal and interest on the principal outstanding. These assets are not quoted in an active market.
F-175
Corporación Nacional del Cobre de Chile
The effects on profit or loss recognized for these assets are mainly from financial income and exchange differences from balances denominated in currencies other than the functional currency.
No material impairments were recognized in trade and other receivables.
– – Derivatives for Hedging: Corresponds to the balance for changes in the fair value of derivative contracts to cover existing transactions (cash flow hedges) and that affect profit or loss when transactions are settled or when, to the extent required by accounting standards, a compensation effect is charged (credited) to the income statement. The detail of derivative hedging transactions ¡is included in the Note 28.
As of December 31, 2023 and December 31, 2022 there were no reclassifications between the different categories of financial instruments.
12. Other financial liabilities Other financial liabilities consist of loans with financial institutions and bond issuance obligations, which are recorded by the Corporation at amortized cost using the effective interest rate method.
The following tables set forth other currentnon-current financial liabilities:
12-31-2001 Pra Curr Hos-current E Total Hair Toral Minmatzed cat] dara dore col der walives AMES há bLA ss 11185 As ns Br 11 ria + ¡0-1 | LI Es + | E) 1414457 la rd ba 210059 A] 14 AA OO ve A TA lésdarg atásuibors 114 457 IA as 60d | ay [Mier ésa iio ” E AAA TS A Y, EA Potí 13,259 | 115550 A O 8604] Mati?
) . 12-31-2821 ss Lera Cure has ur erit | | Hg Tetal o IN 2 ¡Anroaced cost] derrita dsd co dermetires AMES | ii LIGA Nes,” IFLIES MS Scsi de a arden 1 | nl 270 100 | ar, 10 lord cbéganons 157 559 5 1 157.615 133750 sd Ob | > PA Fi 27] 27 Mier berri halle” El al A A EI O A | Pel 460550 | 35M O E E ATT TA | PE, 643, 121
F-176 Corporación Nacional del Cobre de Chile
Bond obligations:
On May 10, 2005, the Corporation issued and placed bonds in the domestic market for a nominal amount of UF 6,900,000 of a single series labeled Series B, which consists of 6,900 bonds for UF 1,000 each. These bonds are payable in a single installment on April 1, 2025, at an annual interest rate of 4% and semi-annual interest payments.
On September 21, 2005, the Corporation issued and placed bonds in the U.S. market under Rule 144-A and Regulation S, for a nominal amount of ThUS$500,000. These bonds are payable in a single installment on September 21, 2035, at an annual interest rate of 5.6250% and semi-annual interest payments.
On October 19, 2006, the Corporation issued and placed bonds in the U.S. market under Rule
144-A and Regulation S, for a nominal amount of ThUS$500,000. These bonds are payable in a single installment on October 24, 2036, at an annual interest rate of 6.15% and semi- annual interest payments.
On July 17, 2012, the Company issued and placed bonds in the U.S. market under Rule 144- A and Regulation $, for a nominal amount of ThUS$2,000,000. These bonds are payable in two installments. The first tranche on July 17, 2022 in the amount of ThUS$1,250,000 at a 3% annual interest rate. Principal repayments of this tranch were made on August 22, 2017 for ThUS$412,514, February 6, 2019 for ThUS$314,219, October 8 and 22, 2019 for ThUS$106,972 and ThUS$3,820, respectively, December 16, 2020 for ThUS$83,852 and June 17, 2022 for the remaining final balance. The second tranche matures on July 17, 2042 and is in the amount of ThUS$750,000 at an annual interest rate of 4.25%.
On August 13, 2013, the Corporation issued and placed bonds in the U.S. market, under Rule
144-A and Regulation S, for a nominal amount of ThUS$750,000, payable in a single installment on August 13, 2023, at an annual interest rate of 4.5% and semi-annual interest payments. On August 22, 2017, February 12 and February 26, 2019 and October 8 and 22, 2019 principal in the amounts of ThUS$162,502, ThUS$228,674 and ThUS$270, ThUS$23,128 and ThUS$555 respectively, was paid. On May 6, 2020, the remaining principal due was increased for a nominal amount of ThUS$131,000, reaching a total of ThUS$465,871 with an annual coupon of 4.50%. Principal was paid on the amounts of ThUS$ 79,688 on December 16, 2020, ThUS$ 157,965 on October 22, 2021 and for the remaining balance of
ThUS$ 228,818 on August 13, 2023.
On October 18, 2013, the Corporation issued and placed bonds in the U.S. market, under Rule
144-A and Regulation S, for a nominal amount of ThUS$950,000, payable in a single installment on October 18, 2043, at an annual interest rate of 5.625% and semi-annual interest payments.
On July 9, 2014, the Corporation issued and placed bonds in the international financial markets, under Rule 144-A and Regulation S, for a nominal of EUR$600,000,000, payable in a single installment on July 9, 2024, at an annual interest rate of 2.25% and annual interest
F-177 Corporación Nacional del Cobre de Chile payments. On October 22, 2021, capital was amortized in the amount of ThEUR$200,116, reaching a total of TNREUR$399,884.
On November 4, 2014, the Corporation issued and placed bonds in the U.S. market, under Rule 144-A and Regulation S, for a nominal amount of ThUS$980,000, payable in a single installment on November 4, 2044, at an annual interest rate of 4.8759% and semi-annual interest payments.
On September 16, 2015, the Corporation issued and placed bonds in the U.S. market, under Rule 144-A and Regulation S, for a nominal amount of ThUS$2,000,000, payable in a single installment on September 16, 2025, at an annual interest rate of 4.5% and semi-annual interest payments. On August 22, 2017 and February 12, 2019, principal was paid for an amount of ThUS$378,655 and ThUS$552,754 respectively. On December 22, 2020, capital was amortized in the amount of ThUS$392,499. On January 7, 2021, capital was amortized in the amount of ThUS$5,000. On October 22, 2021, principal was amortized in the amount of ThUS$273,867, reaching a total amount of ThUS$397,235.
On August 24, 2016, the Corporation issued and placed bonds in the domestic market for a nominal amount of UF 10,000,000 of a single series labeled Series C, which consists of 20,000 bonds for UF 500 each. These bonds are payable in a single installment on August 24, 2026, at an annual interest rate of 2.5% and semi-annual interest payments.
On August 1, 2017, the Corporation issued and placed bonds in the North American market, under standard 144-A and Regulation S, for a total nominal amount of ThUS$ 2,750,000. One portion corresponds to an amount of ThUS$ 1,500,000, maturing on August 1, 2027 with an annual coupon rate of interest of 3.625% and semi-annual interest. On December 22, 2020 and January 7, 2021, principal was paid in the amount of thUS$ 227,154 and ThUS$5,000 respectively. The other portion contemplates a maturity date of August 1, 2047, corresponding to an amount of ThUS$ 1,250,000 with an annual coupon of 4.5% and semi-annual interest payments.
On May 18, 2018, Codelco issued a bond for US$600 million with 30-year maturity in the market of Formosa, Taiwan. The bond issued is denominated in US dollars, had a yield of
4.89% and a prepayment option at the issue value that can be exercised from the fifth year onwards at its par value.
On February 5, 2019, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation $, for a total nominal amount of ThUS$1,300,000, which maturity will be 5 February 2049 with a coupon of 4.375% per annum and interest payments on a semi-annual basis.
On July 22, 2019, the Corporation made a bond issue and placement, Regulation S, for a nominal amount of AUD $ 70,000,000, whose maturity will be in a single installment on July 22, 2039, with a coupon of 3.58% annual and interest payment annually.
F-178 Corporación Nacional del Cobre de Chile
On August 23, 2019, the Corporation made a bond issue and placement, Regulation S, for a nominal amount of ThUS$130,000, whose maturity will be in a single installment on August 23, 2029, with a coupon of 2.869% annual and interest payment semiannually.
On September 30, 2019, the Corporation made an issue and placement of bonds in the North American market, under rule 144-A and Regulation S, for a total nominal amount of ThUS$2,000,000 whose maturity will be, under one tranche, on September 30, 2029 corresponding to an amount of ThUS$1,100,000 with a 3% annual coupon. The other tranche contemplates a maturity on January 30, 2050, corresponding to an amount of ThUS$900,000.
On January 14, 2020 and October 22, 2021, a capital increase was made for a nominal amount of ThUS$1,000,000 and ThUS$780,000, respectively, reaching a total amount of ThUS$2,780,000 with a coupon of 3.70% per annum.
On November 7, 2019, the Corporation made a bond issue and placement, Regulation S, for a nominal amount of HKD$ 500,000,000, whose maturity will be in a single installment on November 7, 2034, with a coupon of 2.84% annual and interest payment annually.
On January 14, 2020, the Corporation issued and placed bonds in the North American market, under rule 144-A and Regulation S, for a nominal amount of ThUS $ 1,000,000, the maturity of which will be in a single installment on 14 January 2030, with a coupon of 3.15% per annum and payment of interest every six months.
On May 6, 2020, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation S, for a nominal amount of ThUS$800,000 whose maturity will be in a single installment on January 15, 2031, with a coupon of 3.75% per annum and interest paid every six months.
On December 14, 2020, the Corporation carried out an issuance and placement of bonds in the North American market, under standard 144-A and Regulation S, for a total nominal amount of TRUS$500,000 whose maturity will be in a single installment on January 15, 2051, with a coupon of 3.15% per annum and interest payment on a semi-annual basis.
On February 2, 2023, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation $, for a total nominal amount of ThUS$ 900,000 whose maturity will be in a single installment on February 2, 2033, with a coupon of 5.125% per annum and interest paid every six months.
On September 8, 2023, the Corporation issued bonds in the U.S. market under Rule 144-A and Regulation $ for a total nominal amount of ThUS$2,000,000 maturing on January 8, 2034 for an amount of ThUS$1,300,000 with a coupon of 5.95% per annum, and on September 8, 2053, for an amount of ThUS$700,000 with a coupon of 6.30% per annum. Both notes contemplate semiannual interest payments.
As of December 31, 2023 and 2022, the Corporation is not required to comply with any financial covenants related to borrowings from financial institutions and bond obligations.
F-179 Corporación Nacional del Cobre de Chile
– Financial debt commissions and expenses:
Transaction costs incurred in obtaining financial resources are deducted from the loan proceeds and are amortized using the effective interest rate.
F-180 Corporación Nacional del Cobre de Chile
As of December 31, 2023, the details of loans from financial institutions and bond obligations are as follows:
AAA : ps PA A (E r DF A A 5 Lor Do Pa ar Lar Ar el úl o ru 4 Ma : A PO Comet | sion Menic=tp ii e | Diao Lalo Sa pa. PRA AAA AAA ca
Dye Ak | Lo a e a || AER a Il LEE AE Mir | da | Li Pq, PE] 23 H0r lr q. a Day ara os 19) CA 1 AL 0 AA a 1 A dl de Farga ¡A =D Fa Med | LH Ad a a As rd, 107 a EL] iq ra a el a MATA me al ad de a Le FE] 1 ur in o ¡Fla Sa Pa 7 am ES A rea l O MAI ¿A 2 FI | 11M ad = === O = == A ¡ ‘ CU Mir Erro
Fue HA paes Loser el Mepatanos Mularrg | misocataros | Carro Jer lo sae Prey Pierre Moearr=, ral Ie pura
Erre A 2D EG a hue – Hoja] aplar pr 3305 ¿a | ma
MC rub 213061 ci] yn AA | tr A A ¡Hat 4 de | ra 200 le.
cesa ME LIA A Dd] Er La O] a Mm – di + ón LE pa
Co A la E eo | a dee rr 315 LT LE “ml
1d A a ATT Enidab Lal | d EI | A) ¿Era á Pr NL E Pd
HEAD LE e Fada LEA 1,550 ¿Par | MA Le ¿ra 115 15,0%,
44d LA HITA ea [Es] a 1BOCC | A T Ón, La Lo a Eo dear
Mid EE A HIRE “ad ud E A e LA 11% 3 4 0t9 IF Tal
Los ado rn E 8 | a] dry | Armas de a A dis a LE
Se PL A 24 so Ja Boy 0 e Y Paty A 117 5.14 lá Li rd | tits 2] 14 | LA = Aa E imp PAD | TA ae a a! a HA, | E A Fi
Fut lar JN dem mi] a A A ¿ Ada ETA qui TN E] tddi E Mia A Pa e AE y iy MA 5 Le + id A
Br ELA | 1 Pt ed AULA] HA | ma Ms a An a it
Fiz Lair 43D, A] A | SADA] ir 1 ads Hd UN] LAA ET AA E AS NE] MAA | a Ea dl A ds ME? TU ll cab A a UE gr Le) LO OD A EUA] e ds $ IS mdd A]
A A 14-44 04 Fed LE MIC] a | ir d ss Lave Y Ml sj +31 ib LE ¡APT A Ese LB ¡AA AE dd arre Led E td. RES had e del il E (co | ear a e a aa dee La da MELIZ LT al Pd qe 4 300000 304 a bea ty a ura a a 10.yss 1 MD ALT
AS E TD -” LS LAIR | li de PA d ¿EA dre or E! HT | a A al ud e ci a Fra 32d ES
HA A [A MAA Past LON pa AN A mal LIA. cr Aia
UE Fue da
Nominal and effective interest rates presented above correspond to annual rates.
F-181 Corporación Nacional del Cobre de Chile
As of December 31, 2022, the details of loans from financial institutions and bond obligations are as follows:
SEE ‘ ! das comet
Lara E Co po gm ao Meri eee Curr | docena | Up e e | pic | Paraesca ? nido pad proa, cr OS Gigi ln e rn de A Y “Lp AN Tan rr pl JE 2 “E 7] A sl ias a 7 Tar CR UR mail 8 A Pe San 4 rs Ab cn UL ¿uu gan al el da Ta e a a | 100 bo na AN Jr 41 ñ 7 LO 20 La id añ – E mp a) e Ae vá al Lar As di ¿He Fe Had 1 lo [ES 1 | Fupióemii | mal | ció | Cm dc] [rl arpa ass Ca A A A ¡ e o mil mu dad parco: ET pra A TA a Di ibi 6 2047 1 a DA Era qEr (o Ea ao 44 AT lA 14% a bl lA 00 a] dl 2 bin Jl 90307 000 Mr RA 100% 1 Ti 21 mur o LE pa e Él 4 pa a Pa Ad hall ad e a ¿ere Ejes ma pio CODA Cs PAI Pan gl 2500 da hr a En 15 y ha a bla Bd a ei Pi 28 rico a EN – Lure a. ri tu ” ea | (- 4 E Je Mi 1,80 001 00% e Ia EA 107% 10% 1105 QA sua a ¡PA DA “ie Y O dry a a 17% vu nu E] tán a 11 a 1 – M- 2000 Fea 8 y AE A Ae A TA 19 e 1 141) A] bis Mi E Nao ro “A 00 o AN a 044) 1 1143 Mel dedo ay A pi 5 nadal – PERES A ra ¿Le ¿q sd al E ¿hd PT LE +05 Pis A aid dl RO a AF 1. en sl isa o | A Piar NA O Sl A a. Er e] ES 3 A A E Fa 001 005 A a a da. JA. rua dd isa da I2 a Lor 1: €. : Fri de HOC UIER 4 hora =P poa a Tu sd ty 5 Er ita a PS . EY Fa Sd mia UA e sn ir +4 1 la Low ed Pi LT +4 34-044 hise M4 oa de Ave a A 321% “4d A sa ¡o mado Él 4 =D e 154 Mall e a Fr as LL ES di E Ta UI Fra 18 10300 05% PLAN A ú A qm da EA Ub bla Pp a 372. Baca LL ” E de tol A RÁ am a Far 7 dl ra FA MT 11-000 Ena 8 E MO DO O 4 20 PA 7 LEA dal 2 0 A E] Wed DAA bin 54 La Mr RA 14) TR can | ae Ni a e vid AT
F-182 Corporación Nacional del Cobre de Chile
The undiscounted amounts that the Corporation will have to disburse to settle the obligations with financial institutions, are as follows:
12-31-2023 CURRENT NON-CURRENT Name Type of Interest rate Interest rate Type of Less than: Over Total One to Three to Over Total non- creditor currency effective nominal amortization 90 days 90 days current three years five years five years current
Banco Latinoamericano de Comercio US$ 7.10% 6.87% Semi-annual 5,236 5,236 85,400 – 85,400 Export Dev. Canada US$ 6.84% 6.78% Quarterly 5,087 15,261 20,348 40,696 315,261 395,957 Export Dev. Canada US$ 7.03% 6.85% Quarterly 5,198 15,652 20,850 41,700 341,797 – 383,457 Export Dev. Canada US$ 7.13% 6.87% Quarterly 5,264 15,679 20,943 41,772 41,829 315,393 398,994 Export Dev. Canada US$ 7.32% 7.03% Quarterly 8,987 26,765 35,792 71,309 71,407 651,702 794,418 BONO 144-A REG.S 2025 US$ 4.74% 4.50% Semi-annual 8,938 8,938 17,876 415,111 – – 415,111 BONO 144-A REG.S 2027 US$ 4.18% 3.63% Semi-annual 22,980 22,980 45,960 91,919 1,313,805 – 1,405,724 BONO REG.S 2029 US$ 2.97% 2.87% Semi-annual 1,865 1,865 3,730 7,459 7,459 133,730 148,648 BONO 144-A REG.S 2029 US$ 3.14% 3.00% Semi-annual 16,500 16,500 33,000 66,000 66,000 1,133,000 1,265,000 BONO 144-A REG.S 2030 US$ 3.28% 3.15% Semi-annual 15,750 15,750 31,500 63,000 63,000 1,047,250 1,173,250 BONO 144-A REG.S 2031 US$ 3.79% 3.75% Semi-annual 15,000 15,000 30,000 60,000 60,000 875,000 995,000 BONO 144-A REG.S 2033 US$ 5.27% 5.13% Semi-annual 23,063 23,063 46,126 92,250 92,250 1,107,563 1,292,063 BONO 144-A REG.S 2034 US$ 6.09% 5.95% Semi-annual 25,783 77,350 103,133 128,917 154,700 1,712,533 1,996,150 BONO 144-A REG.S 2035 US$ 5.78% 5.63% Semi-annual 14,063 14,063 28,126 56,290 56,290 696,875 809,375 BONO 144-A REG.S 2036 US$ 6.22% 6.15% Semi-annual – 30,750 30,750 61,500 61,500 746,000 869,000 BONO 144-A REG.S 2042 US$ 4.41% 4.25% Semi-annual 15,938 15,938 31,876 63,750 63,750 1,196,250 1,323,750 BONO 144-A REG.S 2043 US$ 5.76% 5.63% Semi-annual 53,438 53,438 106,875 106,875 1,751,563 1,965,313 BONO 144-A REG.S 2044 US$ 5.01% 4.88% Semi-annual – 47,775 47,775 95,550 95,550 1,744,400 1,935,500 BONO 144-A REG.S 2047 US$ 4.73% 4.50% Semi-annual 28,125 28,125 56,290 112,500 112,500 2,318,750 2,543,750 BONO 144 REG.S 2048 US$ 4.91% 4.85% Semi-annual 14,550 29,100 43,650 58,200 58,200 1,167,450 1,283,850 BONO 144-A REG.S 2049 US$ 4.97% 4.38% Semi-annual 28,438 28,438 56,876 113,750 113,750 2,465,938 2,693,438 BONO 144-A REG.S 2050 US$ 3.92% 3.70% Semi-annual 49,580 49,580 99,160 198,320 198,320 4,811,940 5,208,580 BONO 144-A REG.S 2051 US$ 3.75% 3.15% Semi-annual 7,875 7,875 15,750 31,500 31,500 854,375 917,375 BONO 144-A REG.S 2052 US$ 6.40% 6.30% Semi-annual 22,050 22,050 88,200 88,200 1,802,500 1,978,900 Total ThUS$ 312,984 587,171 900,155 2,191,928 3,513,863 26,532,212 32,238,003
BONO BCODE-B 2025 U.F. 3.24% 4.00% Semi-annual 138,000 138,000 276,000 7,038,000 7,038,000 BONO BCODE-C 2026 U.F. 1.78% 2.50% Semi-annual 124,228 124,228 248,456 10,496,913 10,496,913 Total U.F. 262,228 262,228 524,456 17,534,913 17,534,913
Subtotal ThUS$ 10,999 10,999 21,998 735,473 735,473 | BONO 144-A REG.S 2024 EUR | 2.47% | 2.20% Anual 408,881,3901| 408,881,390 – –
Subtotal ThUS$ 452,202 452,202 – – – – | BONO REG.S 2039 AUD | 3.65%] 3.58% Anual 2,506,000 2,506,000 5,012,000 5,012,000 97,566,0001 107,590,000 Subtotal ThUS$ 1,712 1,712 3,424 3,424 66,653 73,501 | BONO REG.S 2034 HKD | 2.929] 2.84% Anual 14,238,904 14,238,904 28,400,000 28,438,904| 585,238,904| 642,077,808 Subtotal ThUS$ 1,823 1,823 3,636| 3,641 74,932 82,209
Total ThUS$ 323,983 1,053,907 1,377,890 2,934,461 | 3,520,928 26,673,797 33,129,186
Nominal and effective interest rates presented above correspond to annual rates.
F-183
Corporación Nacional del Cobre de Chile
12-31-2022 CURRENT NON-CURRENT Creditor Type of Interest rate Interest rate Type of Less than: Over Total One to Three to Over Total non- name currency effective nominal amortization 90 days 90 days current three years five years five years current
Banco Latinoamericano de Comercio US$ 6.60% 6.38% Semi-annual 4,849 4,849 9,711 79,809 – 89,520 Export Dev. Canada US$ 5.85% 5.80% Quarterly 4,350 13,049 17,399 34,798 330,448 – 365,246 Export Dev. Canada US$ 5.73% 5.57% Quarterly 4,227 12,680 16,907 33,951 33,905 316,999 384,859 Export Dev. Canada US$ 5.83% 5.59% Quarterly 8,476 8,476 34,045 33,999 338,098 406,142 BONO 144-A REG.S 2023 US$ 4.37% 4.50% Semi-annual 5,135 233,353 238,488 – – – – BONO 144-A REG.S 2025 US$ 4.74% 4.50% Semi-annual 8,938 8,938 17,876 432,986 – – 432,986 BONO 144-A REG.S 2027 US$ 4.18% 3.63% Semi-annual 22,980 22,980 45,960 91,919 1,359,765 – 1,451,684 BONO REG.S 2029 US$ 2.97% 2.87% Semi-annual 1,865 1,865 3,730 7,459 7,459 137,459 152,377 BONO 144-A REG.S 2029 US$ 3.14% 3.00% Semi-annual 16,500 16,500 33,000 66,000 66,000 1,166,000 1,298,000 BONO 144-A REG.S 2030 US$ 3.28% 3.15% Semi-annual 15,750 15,750 31,500 63,000 63,000 1,078,750 1,204,750 BONO 144-A REG.S 2031 US$ 3.79% 3.75% Semi-annual 15,000 15,000 30,000 60,000 60,000 905,000 1,025,000 BONO 144-A REG.S 2035 US$ 5.78% 5.63% Semi-annual 14,063 14,063 28,126 56,250 56,250 725,000 837,500 BONO 144-A REG.S 2036 US$ 6.22% 6.15% Semi-annual – 30,750 30,750 61,500 61,500 776,750 899,750 BONO 144-A REG.S 2042 US$ 4.41% 4.25% Semi-annual 15,938 15,938 31,876 63,750 63,750 1,228,125 1,355,625 BONO 144-A REG.S 2043 US$ 5.76% 5.63% Semi-annual – 53,438 53,438 106,875 106,875 1,805,000 2,018,750 BONO 144-A REG.S 2044 US$ 5.01% 4.88% Semi-annual – 47,775 47,775 95,550 95,550 1,792,175 1,983,275 BONO 144-A REG.S 2047 US$ 4.73% 4.50% Semi-annual 28,125 28,125 56,250 112,500 112,500 2,375,000 2,600,000 BONO 144 REG.S 2048 US$ 4.91% 4.85% Semi-annual – 29,100 29,100 58,200 58,200 1,196,550 1,312,950 BONO 144-A REG.S 2049 US$ 4.97% 4.38% Semi-annual 28,438 28,438 56,876 113,750 113,750 2,522,813 2,750,313 BONO 144-A REG.S 2050 US$ 3.92% 3.70% Semi-annual 49,580 49,580 99,160 198,320 198,320 4,911,100 5,307,740 BONO 144-A REG.S 2051 US$ 3.75% 3.15% Semi-annual 7,875 7,875 15,750 31,500 31,500 870,125 933,125
Total ThUS$ 238,764 658,522 897,286 1,732,064 2,932,580 22,144,944 26,809,588
BONO BCODE-B 2025 UF. 3.24% 4.00% Semi-annual 138,000 138,000 276,000 7,314,000 – – 7,314,000 BONO BCODE-C 2026 UF. 1.78% 2.50% Semi-annual 124,228 124,228 248,456 496,913 10,248,457 – 10,745,370 Total U.F. 262,228 262,228 524,456 7,810,913 10,248,457 – 18,059,370
Subtotal ThUS$ 10,758 10,758| 21,516] 320,436| 420,435 – 740,871 | BONO 144-A REG.S 2024 EUR | 2.41% 2.25% Anual – 8,997,390] 8,997,390] 8,997,390] 399,884,000 + 408,881,390 Subtotal ThUS$ -| 9,629| 9,629| 9,629| 427,960 – 437,589 | BONO REG.S 2039 AUD | 3.65% 3.58% Anual – 2,506,000 2,506,000 5,012,000 5,012,000 100,072,0001 110,096,000 Subtotal ThUS$ – 1,707 1,707 3,414 3,414 68,170 74,998 | BONO REG.S 2034 HKD | 2.92% 2.84% Anual – 14,200,000 14,200,000 28,438,904 28,400,0001| 599,477,808| 656,316,712 Subtotal ThUS$ – 1,820] 1,820] 3,646| 3,641 76,855 84,142
Total ThUS$ 249,522 682,436| 931 958| 2,069,189] 3,788,030| 22,289,969| 28,147,188
Nominal and effective interest rates presented above correspond to annual rates.
F-184
Corporación Nacional del Cobre de Chile
The following table details the changes in CODELCO’s liabilities classified as financing activities in the statement of cash flows, including changes in cash and non-cash changes for the years ended December 31, 2023 and year ended December 31, 2022: e 0 A di Á + E AAA eryar ii a A ¡Io A A gs lr lia la Lea ro a AA pad cun A EDIC dir] pa ha per . Mi O A A. A E A A | cama, Be TENE E ki . ed ! le dl ES Y dad | Lu á X UTA La 41010 a” A”! 1. 11 LA E E-me co dl a A AA E ¡Ae de h 3] | La d em t = u , Y al de. . y m e a u o] AAA AAA E A E A MT A! | a a ELE E ‘ ; : ] A e rr j : | AA Esris pe pr LA el AAA -Á HE ALO lato _.. a! e o
… Fe – j o Ad la el Pa | MT A A. MA A. A AA y PA A UE st PE Ea La E. bi F WES ¡HA A le El na A yu Ab 5 de ATA Pa; TA d+ pu ES ql Ly ‘ di =D o de DA Far JE den A HA 1 L Ls 501 5 . o pr l e | AAA AA A PEL” MAA a FE MA EEN o EN “1080 Es | UE na] He PA
(1) The finance costs consider the capitalization of interest, which, as of December 31, 2023 and 2022, amounted to ThUS$ 246,136 and ThUS$ 289,501 respectively.
13. Fair Value of financial assets and liabilities
The carrying amount of financial assets is a reasonable approximation to their fair value, therefore, no additional disclosures are required in accordance with |FRS 7.
Regarding financial liabilities, the following table shows a comparison as of December 31, 2023 between the carrying amount and the fair value of financial liabilities other than those whose carrying amount is a reasonable approximation of fair value:
Comparison boca value va fal vulus Aa olE 34 2005 sl for| Bock value | Fair value ho MUS us Fosa Rabbit uan obio Anarbrsd Otal | 13 17 0565 1% 000 576
F-185 Corporación Nacional del Cobre de Chile
14, Market value hierarchy for items at market value
Each of the market values calculated for the Corporation’s portfolio of financial instruments is supported by a calculation methodology and data inputs. An analysis of each of these methodologies has been carried out to determine to which of the following levels they can be assigned:
– Level 1 corresponds to fair value measurement methodologies using market shares (unadjusted) in active markets to which the Corporation has access at the measurement date and considering identical Assets and Liabilities.
e Level 2 corresponds to fair value measurement methodologies using quoted market price data, not included in Level 1, that are observable for the Assets and Liabilities measured, either directly (prices) or indirectly (derived from prices). For hybrid contracts without finalized price: sales of metals with provisional prices for the period are adjusted to the market price at the end of the period. Gains and losses arising from the market valuation of open sales are recognized through adjustments to revenue in the income statement and to trade accounts receivable in the balance sheet. The forward prices at the end of the period are used for the sales of copper. These forward prices are quoted market prices on the LME. For currency swaps: they are valued using a discounted cash flow analysis valuation model that includes observable credit spreads and using the yield curve applicable over the life of the instruments.
– Level 3 corresponds to fair value measurement methodologies using valuation techniques that include data on the Assets and Liabilities valued, which are not based on significant observable market data.
Based on the methodologies, inputs, and definitions described above, the following market levels have been determined for the Corporation’s portfolio of financial instruments held as of December 31, 2023:
Financial ssteta añ labilitics 31 fair yalua ¡classifcd Ey hierarciry |
12-31-2071
Law 1 Lera! 2 Lerel J Total ThUS$ TMus$ | TRUS$ | TWUS$ ¡Financial axsels [Aye conicacte avth non-fmefazod pros ¿O 1 [03 cirio WAPA 101 1441 ñ0 IMhuriuad hunda shine MAR MA? áñla litis merirñcó | | i ¡Arancial Jabba ¡Mela lulures 030 314 ¡577 AN [Croma E FT vr] 11755] 117 here were no transfers between the different levels of market hierarchy for the reporting period.
F-186
Corporación Nacional del Cobre de Chile
15. Trade and other accounts payable
a. Details of trade accounts payable, sundry accounts payable and other current accounts payable are shown in the following table: lem 12-31-3023 12.31.2072 THUSs THuss
Trad crodilocs 1,502,166 1554, 277 Parables lo employees 22.307 20,975 Vihholdogs 105.347 94,143 Wiibokdrg uas ¿A al 18,480 Qlhes actourás paryable 85001 20,554 ¡Fotal 178882 | 11795%
Trade creditors mainly include operating accounts payable, and obligations associated with investment projects.
b. The following is a schedule of maturities of payments to trade creditors as of December 31, 2023, and December 31, 2022:
An at Deprrr UL DNI A A A E AA . .
sE ira] 4 pi. A- in E Mr Tb FA
– a En .- – id sn 54 Em a) Aa lar [ol de soto pá 2 de mu 2UL00E rm ¡Es TE Lal [ CAES LT E Juro] ao h 1 les den al sr 41 007 A ri da A -_– ; [eps E a pr ¡al 1 li un Mi. E 10140 ¡ll mor Tibia paar rea Cid E Eu] EN Ll ES | 41.181 1147 2 E 1 Y al | Epa ¿ Hd el 3043 ha e Da Als TY Ma! = + ha TA ‘6l MS Fa] da A m1 0) A] 181 E EL A Er J – Cro A rr rr a LAI SIE LS Ai: E a == li ps | Ala Telá mir _ Pé emma SF AT n? FA 18] A da Er 1,50% ea! TES 15h [$ Ki? 12 Mi] EA ha] ama EE : | HE de nes 7! 3 – E parace A ¡ralla de pa rñÁ iaa] A Fi a an 1 0. € |El a JO 4 Pia d E — MN n=) ha [a] Wi tra ru “TÉ Ap EE NM 1 LT, ma pe di IE pl Er l La] 7 Mia Lie rt ru ma! Pa til ET ES ee uns EII II IA E 151]
F-187 Corporación Nacional del Cobre de Chile
16. Other provisions
The detail of other current and non-current provisions at the dates mentioned is as follows:
Cher provision ¿Current . ¡Non-currecd
12.31.2023 12-31.2022 12.31.2023 [ 12.314-2097 MS TAO] MO TO Ses retalod pesemnona il] CC an] 558 Operaing (21 30,121 17.554 Lara Ma 151196 111, 195 1 Dibor iran 45435 39 00d 617 Ent Ciosun thactiurrreER mr end mkbraóca 3) Fa PIES Limp peocuadr” | 2175 64 007 Teal E A A rd 1619,12%
(1) Corresponds to provisions for purchases and services relating to the operation, not billed at year-end.
(2) Corresponds to sales-related accruals, which includes charges for freight, loading, and unloadino.
(3) Corresponds to provisions for future closure costs related mainly to tailings dams, mine site closures and other assets. This cost value is calculated at discounted present value, using flows associated with plans with an evaluation horizon ranging from 10 to 60 years. The rates used to discount future cash flows are calculated based on the Life of Mine “LOM” of each of the operations, distinguishing rates in UF for those obligations in Chilean pesos and rates in
U.S. dollars for those obligations in U.S. dollars. These discount rates include the risks associated with the liability being determined, except those included in the cash flows.
Below is a table with the discount rates used:
Divinizn 11313073 12:31:2027 Local Currency | Doftsr Currency | Local Currency | Dollar Currency
Rate Fito | Rate | Re Gabmala Malal 214% 3 15% 155% | 280% Andina 3405 o A E 0 [Merrasbro Mala 3 4% 3,19% E Chuquicamata 233%, 3.17% E Radomeo Tm 120% O AA 0) A Ealvador 220%, 305% | 16m | Za Temente 2145 Nr ARM 00000 A Ventanas 214% 312% 166% [260%
The Corporation determines and recognizes this liability in accordance with the accounting policy described in Note 2, letter p) on Significant Accounting Policies.
F-188 Corporación Nacional del Cobre de Chile
The movement in Other provisions, non-current was as follows:
4.1.5 ¡Sr
13.14 1075 30.71 Us rear He Peores lar |, z rbd Pont 0 Pr lr o,
A) A a ¡ci AED reia IF IrCIÓA Tom E CC O A IO O A A 0 di ai de ts $ 2 bi ” 1507 ¿KT 2d Lo LA Pres | , 11d 4 Í ie EA SA LA A vas Led l | (Pr il .. . . E | MN . JA! | sad, pS | la Ci pádraa 14 1150391 LA: ¿Hd | Al ¿M5 MA! ún 06! ] Md
17. Employee benefits
a. Provisions for post-employment benefits and other long-term benefits
Provision for post-employment benefits mainly corresponds to employee severance indemnities and medical care plans. The provision for severance indemnities recognizes the contractual obligation that the Corporation has with its employeesretirees. The provision for medical care plans recognizes the contractual obligation that the Corporation has with its retirees to cover their medical care costs. Both benefits operate within the regulatory framework set forth in the collective bargaining or other agreements between the Corporation and its employees.
These provisions are recorded in the statement of financial position at the present value of the estimated future obligations. The discount rate used is determined based on the rate of financial instruments corresponding to the same currency in which the obligations will be paid and with similar maturities.
The defined benefit obligations are denominated in Chilean pesos; therefore the Corporation is exposed to foreign exchange rate risk.
The results arising from adjustments and changes in actuarial variables are charged or credited to the statement of comprehensive income for the period in which they occur.
During the year ended December 31, 2023, there were no relevant modifications to the post- employment benefit plans.
F-189 Corporación Nacional del Cobre de Chile
The following actuarial assumptions were used in the actuarial calculation of the defined benefit plans:
Assumpllors 12-11-2023 12-31-2022 a 7 | 5, ah
Nes Headlñ pleno | Nil Heallh plan Annual nomad dacount rote 5 44% 54% 5.31% 531% Volurtary Armada Tienower Kale lor Retrement (Aen] A 5 30% 510% 510% Voluntery Ancud Tumnoe: Rate lor Relremeni (MWomén]] 560% B B0% 800% E Drs Salary increase [mal arral Aeerara] 4 55% 4 64%
+ulre rate ól londg.benm méáabon 3 OA 003 20 E Expecied milabon bellh care rabe 28%, 6.405 Moca y Coblos used lol propechona ¡CEB20-RW20:CE20RW2701C0B14.RW14 [0614-1414 Arsage duration ol Nimes cash Nos [years] O Es IFA E 6 5 40 Expectod Rebremen! Age (Men) 50 ol) Gm 6d) Expecied Rehremén! Age (Wornen) ¡| 8 1 5 o
The discount rates correspond to the rates in the secondary market of government bonds issued in Chile. The projected annual inflation corresponds to an awareness above the long- term target publicly declared by the Central Bank of Chile and is derived from the market expectation as of December 31, 2023. The rotation rates have been determined after reviewing the Corporation’s own experience by studying the cumulative behavior of outflows over the last three years with respect to the current allocations. The expected rate of salary increases has been estimated using the long-term behavior of historical salaries paid by the Corporation. The mortality tables used were those issued by the CMF, which are considered an appropriate representation of the Chilean market given the lack of comparable statistical series to develop independent studies. The financial duration of the liabilities corresponds to the average maturity of the payment flows of the respective defined benefits.
b. The detail of current and non-current provisions for employment benefits as of the dates mentioned is as follows:
Employee benefits provisions Current Mon-current
112:31:2023 | 12-34-2022 12312023 | 12-31.2027 _ Ñ a A A THus$ | Thus5
Employess Godecippe Errar] ausrierda | 1068 Pa 106 2565 |
Severinco remates 11.425 ¿3.04f 360, 144 5 A onu 39 200 20.758
Vecabon 1768394 175,957
Medica cara progress (4) 34 A 40242 463 883 ¡Rebremnen plans (2] 13.644 64-654 7701 1709
COitwer 21559 17.234 1107 7
TA Tola 480740] 544289] 10861430] 1041117
F-190 Corporación Nacional del Cobre de Chile
The reconciliation of the balances of the provisions for post-employment benefits is presented below: 1103 1-1-2027 | 12-31-2033 | 12-31-2073 Mov arar == Health plan | a Hasta plan Mia HS. | muss. | MS3 ¡Dparng baten sat] aman] Sitabi] 2890 IO OE rn Ar 1 112 481 Le ¡Fiance tal IFA | B,0uT | 15. ¿52 cds [Fat estiradas BF (40,448 TZ) (da 0451 lActuand igor! lotes 34.590 ama] f5z0m 61.687 ¡Subtotal 631,688 | 4arozo | 50350] 425775 (Garra) Lose on lora mofa rate | 10400 L 57881 .2 Sul 7d ¡Ciocing balance Y sirsza asansrT 5u11r3) 444,584
The balance of the defined benefit liability as of December 31, 2023, comprises a portion of ThUS$ 31,425 and ThUS$ 394 for the severance indemnity and the medical care plan, respectively. As of December 31, 2024, a balance of ThUS$ 668,758 has been projected for the provision for severance indemnities and ThUS$ 447,590 for health benefits The flows of compensation payments during the next twelve months reach an expected monthly average of ThUS$ 2,619 for severance indemnities and ThUS$ 33 for health benefit plans.
The technical revaluation of the liability (actuarial gainloss defined under lAS19) for severance indemnities and health plan benefits as of December 31, 2023 has been performed with a charge to equity, which is broken down into an actuarial gain of ThUS$ 34,330 for severance indemnities and actuarial loss of TRUS$ 4,112, for the health plans.
The following is a review of the sensitivities of the provisions, when going from a medium scenario to a low or high scenario with unitary percentage variations, respectively, and both effects of reduction or increase on the book balance of these provisions:
5 aaa Lara ad Pag? ARAS LUN [Ay Mói MF A 1 El
= . , , t ‘ Frei To im lr 1 > E” a AA E MESA A FUTTe A Miri dar 1 LEY ¡FAY | [airis a A Ara ñ | da! . e E , da, ] 047 1 | Cerrmgapta efe es merltátp labs | 200% | :30 na | | | A a E Ln Ara! uy pl ura A A A 10% EL 5 Eres 7 E9h a > | Fria PA Aga SS 1 LEA | traca cad arras] FER FIF FT] A e Ud 2.1 e 7] Y” TA
LOMA ce 2 O MAR a dj Ll EDO | ar FF
c) Provisions for early retirement plans and termination bonuses
In accordance with its operating optimization programs to reduce costs and increase labor productivity by incorporating new current technologies andor better management practices, the Corporation has established employee retirement programs by amending certain employment contracts or collective union agreements to include benefits encouraging
F-191 Corporación Nacional del Cobre de Chile employees to early retire, for which the necessary provisions are made based on the accrued obligation at current value.
As of December 31, 2023 and as of December 31, 2022, there is a current balance of ThUS$ 13,844 for early retirement and conflict termination bonuses of which ThUS$64,654 respectively. Related non-current balances amount to ThUS$7,701 and ThUS$7,703, respectively. These amounts have been determined using a discount rate equivalent to that used for calculating employee benefits provisions and whose outstanding balances are part of the balances as of December 31, 2023 and as of December 31, 2022.
d) Employee benefits expenses
The employee benefit expenses recognized classified by nature are as follows:
1-4-2073 t-1-¿0727 Expensas by Natura of Employes Benotita 12-31-2023 12-11-2022
ThUS$ Thus4 Hnnotda – Fx? wr, APPEARS 1 45 Bong Pra proforma A] 15-758 ¡Carty =ebronaad dara und cor rro lis 13 645 | Pe ¡Boris ira pues 0l sra | pd 5 ] EP ES | Total | 749,280] 15679760
18. Equity
The Corporation’s total equity as of December 31, 2023 is ThUS$ 11,046,649 (ThUS$ 11,654,565 as of December 31, 2022)
In accordance with article 6 of Decree Law No. 1350 of 1976, it is established that, before March 30 of each year, the Board must approve the Corporation’s Business and Development Plan for the next three-year period. Taking that plan as a reference and keeping in mind the Corporation’s balance sheet for the immediately preceding year and aiming to ensure ¡ts competitiveness before June 30 of each year the amounts that the Corporation shall allocate to the formation of capitalization funds and reserves shall be determined by decree from the Ministries of Mining and Treasury.
Net income shown in the Statement of Financial Position, after deducting the amounts referred to in the previous paragraph, shall belong to the State and become part of the Nation’s general income.
On June 22, 2022, the Ministry of Finance agreed with the Corporation to a four-year average reinvestment plan of 30% of profits between 2021 and 2024, which will significantly contribute to the financing of Codelco’s investment plan, while considerably reducing its debt requirements. Consistent with the above, on the same date the Ministry of Finance issued exempt decree No. 194 authorizing the Corporation to allocate up to ThUS$582,750 of the net income from the balance sheet for the year 2021. In accordance with the provisions of exempt decree No. 4 of January 2023, these resources will be paid against the profits of 2022 and
F-192 Corporación Nacional del Cobre de Chile
2023, prior to the absorption of the excess of anticipated dividends of previous years and the interim dividends of 2022.
On July 17, 2023, the Ministry of Finance issued exempt decree No. 238 authorizing the Corporation to allocate up to ThUS$103,677 of the net income shown in the 2022 balance sheet to capitalization and reserve funds, which will be charged against the income for 2023 and subsequent years, until that amount is reached, and the final amount will be determined and recorded once the 2023 accounting period is closed and the final income for the year is known.
As of December 31, 2022, a capitalization and reserve fund has been created amounting to ThUS$345,589. During 2023, no new capitalization and reserve fund was created.
As of December 31, 2023, the Corporation has a balance in favor of advance dividends paid in prior years in excess of distributable earnings of ThuS$509,843. As of December 31, 2023 and December 31, 2022, there are no dividends payable.
In the months of May and June 2022, dividends totaling TRUS$ 259,900 have been paid.
The Consolidated Statement of Changes in Equity discloses the changes in the Corporation’s equity.
The movement and composition of other equity reserves is presented in the Consolidated Statement of Changes in Equity.
Reclassification adjustments from other comprehensive income to income for the years meant a profit of TRUS$ 620 and a profit of TRUS$ 980 during years ended December 31, 2023 and 2022, respectively.
a) Other reserves
Details of other equity reserves are shown in the following table, according to the dates indicated for each case.
Co a IFR | 12-30-2200
EA hi5 rra dr ir rs dr [Laa idea dem Phi ¿ir
An Lol ml 4 que 1 e UE lt ds mara o abra rr pd ES A O h dl rr e A paro Laa 11190 4 NN [Eras os yola . En E ¿Hi Dota oibhter CESEFAEA | 363992) 3658 42%
F-193 Corporación Nacional del Cobre de Chile
b) Non-controlling interests
The detail of non-controlling interests, included in total equity and total profit or loss, as of the dates mentioned, is as follows:
Conpanias Hencoreroll ieear o pra A IS
1231-2007 | 12-31-2377 42-31-2071 12-31-10 141-2107 1-12 : si initzoas | 1731.56] A a. a] FASES ALTE O O E IA 0 A E ed | 55 A 2Li007 1216 JE] Ub WED LS | | ml e ALL] Total | Gio 4d BUD | UI 15 083
The percentage of non-controlling interest over equity of Inversiones Mineras Becrux SpA generates a non-controlling interest in the subsidiary Inversiones Gacrux SpA. which summarized financial information is as follows:
Sima ed lor 12-31-3044 17.30.2097 a -THLUIES TaLeBA ide A: 1 Exp ar 154 Figiaj tira rad MTS a Sail ha 11647? Er liderato 10 a ad o pri FEA tE Prorn abona! LA 11-203
1231-2013 E2-10-2827 py rmusg | rms Pur 73 4n4 ALE AT A alada ¡Pad FA A is sa 44 144 Cha icon 1-1-2033 AE
12-44-2071 12-11.2027 > FhLiES VES.
la als ron jad e a 16 Y1d 145% ¡Ped a rr Pa ir] A] PAT] a al Lan [bla + e arrá cd nl de e at PEA |
F-194 Corporación Nacional del Cobre de Chile
19. Revenue
Revenues from ordinary activities for the years ended December 31, 2023 and 2022, were as follows: lem 1.1-2023 1-1.2027 | 12-34-1023 | 12-31-2022
Thuss THUs$ Manara sli el Crrt CTA ‘ 14 Us 7.1 ABS Huvoriar hor sde al Bor par doppe 13095 A 0 Fonyar ut Posts bis el tico a? 707 1 HHN Auvetriá Nom sales l iba proicds Sl ae El PSA Prod (ia) 0 Atunes aria | 1 (4,0641 Total ‘ 16110288 | 17,018,409
The Corporation’s revenue is recognized at a point in time.
The breakdown of revenue is presented in explanatory note No.24 Operating Segments.
20. Expenses by nature
Expenses by nature for the years ended December 31, 2023 and 2022, were as follows:
1.1.2021 LIZ bm 12312073 12:31.2022
TL, | TUE Shia rin Y air a 577 1571 (100 LEE Darecaton (1 (2,21 3041 (2225 A Atl on (224 MERA HarWw diaria [4 HH. 523) (2,1 14098 Aires, errar rd cin TAS 05 505 258 | Total IIA BAT OI] – (12,804,116
(1) Depreciation includes the expense of Property, plant and equipment and right-of-use assets (see note 7b and note 8.1).
21. Asset impairment
As indicated in note 29 letter b) point x), the corporation made progressed in cease operation of the Ventanas Smelter, which as of December 31, 2021 was part, together with the Ventanas Refinery, of a single cash-generating unit called the Ventanas Division. The Corporation is evaluating the assets of both operations separately, leading to the definition that the Ventanas Smelter and Ventanas Refinery are, as of December 31, 2022, separate cash-generating units under lAS 36.
As of December 31, 2022, the Corporation performed a calculation of the recoverable amount of its Ventanas Smelter cash-generating unit, for purposes of testing the assets associated with the cash-generating unit for impairment. Since such recoverable amount is zero, when compared to the carrying amount of the cash-generating unit’s assets of ThUS$89,410, an
F-195 Corporación Nacional del Cobre de Chile
22.
impairment was determined for such amount, which was recorded in Other expenses in the statements of comprehensive income for the year 2022.
The recoverable amount determined corresponds to the value in use using a discount rate of
7.28% per year before taxes. The main variables used to determine the recoverable amount of this asset correspond to the price of rhenium, exchange rates and discount rates.
Also, as of December 31, 2022, the Corporation calculated the recoverable amount of its cash- generating unit related to the Ventanas refinery in order to test the assets associated with such cash-generating unit for impairment. The result of this calculation led to the conclusion that the recoverable amount is higher than the carrying amount of the cash-generating unit’s assets and, therefore, there is no impairment loss.
As of December 31, 2023 and 2022, there are no indications of additional impairments or reversals of impairment for other cash-generating units or associates.
Other income and expenses
Other income and expenses by function for the years ended December 31, 2023 and 2022, is detailed below:
a. Other income
Item 1-1-2023 1-1-2022
12-31-2023 12-31-2022
ThUS$ ThUS$ Penalties to suppliers 6,846 7,269 Delegated Administration 4,548 3,990 Miscellaneous sales (net) 22,934 21,495 Insurance compensation for accidents 30,019 41 Return of materials 374 945 Other miscellaneous income 23,318 30,995 Total 93,039 64,731
F-196
Corporación Nacional del Cobre de Chile
b. Other expenses
1-1-2023 1-1-2022 Item 12-31-2023 12-31-2022 ThUS$ ThUS$
Law No. 13196 (1,256,339) (1,273,425) Research expenses (1) (156,188) (99,994) Bonus for the end of collective bargaining (2) (24,922) (22,586) Closing costs (15,205) – Expense plan (see to note 17 letter c.) (33,846) (72,555) Write-off of investment projects (968) (2,020) Loss on disposal of fixed assets (111,097) (12,673) Health plans (see to note 17 letter a.) (17,029) (15,258) Compensation agreement framework agreement (2,697) (136,844) Impairment of assets (note 21) (89,410) Adjustment of inventory (13,248) (13,287) Material obsolescence (26,861) (22,264) Bad debts customers (59) Contingency expenses (14,723) (26,914) Fixed indirect costs, low production level (4) (302,671) (218,024) Adjustment severance indemnities (3) (31,417) (55,849) Other expenses (55,595) (42,154)
Total (2,062,806) (2,103,316)
(1) Study expenses include exploration expenses (see note 7 letter f), pre-investment studies and research and technological innovation expenses.
(2) Corresponds to disbursements for the closing of a collective bargaining process, which do not establish a permanence condition.
(3) Corresponds to the restatement of severance indemnities liabilities associated with the portion earned by employees in prior years.
(4) Break down .by division for this concept is as follows:
1-1-2023 1-1-2022 División 12-31-2023 12-31-2022
ThUS$ ThUS$ Andina (6,486) – Chuquicamata (73,700) (132,387) Ventanas (24,879) (38,858) Ministro Hales (12,283) (8,547) Gabriela Mistral (3,763) – Salvador (123,489) (39,136) Teniente (58,071) (3,096) Total fixed indirect costs, low production level (302,671) (218,024)
c. LawNo. 13196
Law No. 13196 – Under this law, the return in foreign currency of sales abroad of the Corporation’s actual income from its copper production, including by-products, is taxed at
10%.
On January 27, 2017, Law No. 20989, article 3, establishes changes in the application of Law No. 13196 as of January 1, 2018, through which the Corporation will deposit annually, no later than December 15 of each year, the funds established in article 1 in that law.
F-197 Corporación Nacional del Cobre de Chile
On September 26, 2019, Law No. 21174 was published, which repeals Law No. 13196 and establishes that the 10% tax to the tax benefit provided by the Corporation will subsist for a period of nine years, decreasing from the tenth year 2.5% per year until reaching 0% at the beginning of the thirteenth year. The validity of this law is as of January 1, 2020, maintaining the payment annually at a date no later than December 15 of each year
On March 23, 2020, the Ministry of Finance issued Ordinary Official Letter No. 843, modifying the payment modality of the resources related to Law No. 13.196 to meet national needs generated by the COVID-19 crisis. Said Official Letter establishes that, as of April 2020, the monthly transfer of the corresponding resources according to their registration shall be made within a term no later than the last day of the month following the month in which they are accounted for.
23. Finance costs
Finance costs for the years ended December 31, 2023 and 2022, are detailed in the following table: Item 1-1-2023 1-1-2022
12-31-2023 12-31-2022
ThUS$ ThUS$ Bond interest (947,293) (412,912) Bank loan interest (70,483) (18,149) Restatement of severance indemnity provision (10,255) (13,242) Restatement of other non-current provisions (8,070) (9,645) Closing provision update (96,617) (47,964) Other (86,192) (67,148) Total (778,910) (569,060)
24. Operating segments
In section | “Significant Accounting Policies, it has been indicated that, for the purposes of IFRS 8, “Operating Segments”, these are determined according to the Divisions that comprise Codelco. In addition, the Parent Company’s revenues and expenses are distributed among the defined segments.
The mining deposits in operation, where the Corporation conducts its extractive and processing activities are managed by the following Divisions: Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina and El Teniente. In addition, the smelting and refining activities are managed at the Ventanas Division and, from June 2023 onwards, in the refining area only. All these Divisions have a separate operational management, which reports to the Chief Executive Officer through the Vice-President of Operations. The information on each Division and their corresponding mining deposits is as follows:
F-198 Corporación Nacional del Cobre de Chile
Chuquicamata
Types of mine sites: Open pit mines and underground mines
Operating: since 1915
Location: Calama, Il Region de Antofagasta. Chile
Products: electro refined and electrowon cathodes and copper concentrate
Radomiro Tomic
Types of mine sites: Open pit mines
Operating: since 1997
Location: Calama, Il Region de Antofagasta. Chile
Products: electrowon copper cathodes and copper concentrate
Ministro Hales
Types of mine sites: Open pit mines
Operating: since 2014
Location: Calama, Il Region de Antofagasta. Chile.
Products: Calcined copper, copper concentrates
Gabriela Mistral
Types of mine sites: Open pit mines
Operating: since 2008
Location: Calama, Il Region de Antofagasta. Chile Products: Electrolytic (electro-obtained) cathodes
Salvador
Type of mines: Underground and open pit mines
Operating: since 1926
Location: Salvador, IIl Region de Atacama. Chile.
Products: Electro refined and electrolytic (electro-obtained) copper cathodes and copper concentrate.
Andina
Type of mines: Underground and open pit mines Operating: since 1970
Location: Los Andes, V Region de Valparaíso. Chile.
Product: Copper concentrate
El Teniente
Type of mines: Underground mine
Operating: since 1905.
Location: Rancagua, VI Region del Libertador General Bernardo O’Higgins. Chile.
Products: copper concentrate and copper anodes.
F-199 Corporación Nacional del Cobre de Chile
a) Allocation of Head Office revenue and expenses
Revenue and expenses controlled by the Head Office are allocated to the Divisions based on following criteria.
The main items are assigned based on the following criteria:
Revenue and Cost of Sales of Head Office commercial transactions e The allocation to the Divisions is made in proportion to the ordinary income of each of them.
Other income by function e Other income by function, associated and identified with each Division, is directly allocated.
e Recognition of realized profits and other income by way of subsidiaries are allocated in proportion to the revenues of each Division.
e Theremaining other income ¡is allocated in proportion to the aggregate of balances of other income and finance income of each Division.
Distribution costs e Expenses associated and identified with each Division are directly allocated.
e Distribution costs of subsidiaries are allocated in proportion to the revenues of each Division.
Administrative expenses e Expenses associated and identified with each Division are directly allocated.
e Administrative expenses recorded in cost centers associated with the sales function and administrative expenses of subsidiaries are allocated in proportion to the revenues of each Division.
e Administrative expenses recorded in cost centers associated with the supply function are allocated in proportion to inventory balances in warehouse in each Division.
e The remaining administrative expenses are allocated in proportion to operating cash outflows of each Division.
Other expenses, by function e Other expenses associated and identified with each Division are directly allocated.
e Expenses for pre-investment studies and other expenses by function of subsidiaries are allocated in proportion to the revenues of each Division.
Other Galns e Other gains associated and identified with each Division are directly allocated.
e Other gains of subsidiaries are allocated in proportion to the revenues of each Division
Finance Income e Finance income associated and identified with each Division is directly allocated.
e Finance income of subsidiaries is allocated in proportion to the revenues of each Division.
e Theremaining finance income is allocated in relation to the operating cash outflows of each Division.
F-200 Corporación Nacional del Cobre de Chile
Finance Costs e Finance costs associated and identified with each Division are directly allocated.
e Finance costs of subsidiaries are allocated in proportion to the revenues of each Division
Share in profit (loss) of associates and joint ventures accounted for using the equity method e The share in the profits or losses of associates and joint ventures identified with each particular Division is allocated on a straight-line basis.
Foreign exchange differences e Foreign exchange differences identifiable with each Division are directly allocated.
e Foreign exchange difference of subsidiaries is allocated in proportion to the revenues of each Division.
e The remaining foreign exchange differences are allocated in relation to operating cash outflows of each Division
Contribution to the Chilean Treasury under Law No. 13196 e The amount of the contribution is allocated and accounted for in proportion to the invoiced and recorded amounts for copper and sub-product exports of each Division, that are subject to the surcharge.
Tax income benefit (expense) e Income tax benefit (expense) Corporate income tax under D.L. 2398 and specific mining tax are allocated based on the income before income taxes of each Division, considering for this purpose the income and expenses allocation criteria of the Head Office and subsidiaries mentioned above.
e Other tax expenses are allocated in proportion to the corporate income tax, specific mining tax and tax under D.L. 2398 of each Division
F-201 Corporación Nacional del Cobre de Chile
b) Transactions between segments
Transactions between segments mainly related to products processing services (or tolling services), are recognized as revenue for the segment rendering the tolling services and as the cost of sales for the segment that receives the service. Such recognition is made in the period in which these services are rendered, as well as its elimination in the consolidated corporate financial statements.
Additionally, the reallocation of the profit and loss assumed by Ventanas Division, associated with the corporate mineral processing contract between Codelco and Enami, in which a distribution is applied based on the revenue of each division is included as a transaction between segments.
Cash flows by segments
The operating segments defined by the Corporation, maintains a cash management function which refers mainly to operational activities that need to be covered periodically with funds constituted in each of these segments and whose amounts are not significant in relation to corporate balances of cash and cash equivalents.
Conversely, activities such as obtaining financing, investment and payment of relevant financial obligations are mainly based at the Head Office.
F-202
Corporación Nacional del Cobre de Chile
Sagrera borre madri ol dat Duopar a tun sados dd Par party Copper : Yo 3d E MOT : ss hores dde ol ob paodo do : frorr luigos rrarkef
– han a ol dar cl ran opa”
A 000 sb 0
Sl ol tidad cd lar peodlacia ad ol do Bar errada
K IT! et rara, dy lunchon “hr Pa] Fran Ln Mm rapera by lncicr Mo MIR Ms pro (Nisria | 0 IT e] ima e dr FESS Shar ha proll (baso ol arcas ar art ventura: . pr e pad mba AS y AD Ly Ar TACA Praia (hom) pebare ra an La A
A A da . mn Cl e . L A PO e IC E
F-203
Erver 0101-2073 Saradar Andina A 6 lastra ll Habra | Total segurarés dotal Conpoldael TWUSH MUS THUSS THUSE TALES JE 1,107 459 2.387 639 247 587 Be 11) e 1314873 13 145 793
Corporación Nacional del Cobre de Chile lA
MBE] MIDI? | 775001 | idd 142 a ds 1 PB] 110037074
1565 dxara] 46767] (7250 (VEAN 502,131 CACA)
11,279,425)
5070) Ó 1550, DO cada
51541 PELAR
13.870
F-204 Corporación Nacional del Cobre de Chile
The assets and liabilities related to each operating segment, including the Corporation’s corporate center (Head Office) as of December 31, 2023 and December 31, 2022, are detailed in the following tables: == – 12:1:4017 , – Caingor) nl ca hádia | Ellamedo | Ventoso | QuMaks | Mide | Op [Eire | dl ¡A AA A AA AA | rua | O 1 IA 1 – AMI. TA e o 1.175 064 Mid META o e ta) iii 141 Md qa mal de ql e MA TH a A e] A el pd had ad NA Pag dra! 11H 14″ 8 lp 35 Er A qu dara a d nd ppal ri e ral an a: Hé 145. EG | ral a mo! Al ar la mr? Yala ‘ 51 660) na da A pit di O 107 ¿FA AA E 1271200 === O ado | 1 | e Logon A Ta do == ies 4 CAT Mr | Al E A E A A A A MA A A A nm MEA ADT NTE TR | 0 aL PAN Mi 497 HE O | A 60 ol Ñ FIA : CAER Jada Nes EL ZIWAHÍ. FM AMO mr pan] IT A 11 2 pr aL] ¡igual alitas 502 Mp] 200 | A pur rn 10 3] ral ME M3 FA ell DEA A Mo li TA ITA E IA E O. A LI A A TL Revenues segregated by geographic area are as follows:
1.1207) 1-1.2002 Rerenúe per prographical areas 12-14-2037 12-31-2022 ThuS5 THIS Vota tenen Ho corra, CUA IDIMOra 00% 769 3414 054 301 een brota loo users 14 1) Cu, 19 6014 155 Fotal 16,153,279 | 17,018,409 MI2073 1-1-2037 Rerenue per geographical areas 1231207) 12-11-2022 AO A A Cuna 3,000.397 3,300,124 Aeal ol Asia 3.009 420 3,270,193 Euinps 5,3182 007 5,380 740 Ava d 16% añ a o Pod Cities 870 004 1.073,139 pE Total 16,395,228 | -ATO1B ADO
During the years ended December 31, 2023 and 2022, there was no revenue from ordinary activities from transactions with a single customer representing 10 percent or more of the Corporation’s revenue from ordinary activities.
F-205 Corporación Nacional del Cobre de Chile
25. Exchange difference
Exchange differences for the years ended December 31, 2023 and 2022, are as follows:
Prot losa) from borelga exchange diHerences recognited in Aga inem coene
Thus$ Mus Exchange Fono Dilirence JAS Progr 14 054 Lan? Enhasrepe hab Li encon ¿ud? Plan Perra 13. ARI [dd EN] [Excharmá Eo Ddlsinmoco Mires br Mier Cicaien CAM rl 149 21 Exctrargs Pate Liorenoe Lonfrgaress Pronsor vara (53311 Enctaegys hilado Cienc Hue MA AM Total eschange diferente (44 5531 (537,FTA
26. Statement of cash flows
The following table shows the items that comprise other collections and payments from operating activities in the Statement of Cash Flows:
27.
11-207 1-4-2072 Other collections bmen operatino activities 13-34.2023 12-14-2022 TWUSE THU WA Fbhino ¿077 AN 105574355 Sra Enga WA med Cidra METIA Tata JUAS | 2305496
1.1-20253 1.1-2072 Qaher papmente boen operating activíles 16-34-2043 1231-2022 THUSE THUSS Coriibiubon lo CA resol Lo PITA 15 (12d 1235 (125 357] a AA Er=p LIZ) WA era cali srta tormes par (2180886811 11 PEF ANS _ Tata! (364,318), (3.063.391)
During the years ended December 31, 2023 and 2022, no direct cash capital contributions were received.
Risk management
Corporación Nacional del Cobre de Chile has created instances within its organization that seek to generate strategies to minimize the financial risks to which it may be exposed.
The risks to which Codelco is exposed and a brief description of the management procedures that are carried out in each case, are described below.
F-206 Corporación Nacional del Cobre de Chile
a. Financial risks
* Exchange rate risk:
According to |FRS 7, exchange rate risk is understood to be the risk that arises from financial instruments that are denominated in foreign currencies, that is, a currency other than the Corporation’s functional currency (US dollar).
Codelco’s activities that generate this exposure correspond to funding in UF, accounts payable and receivable and provisions in Chilean pesos, other foreign currencies used in its business operations and obligations with employees.
Most transactions in currencies other than US$ are denominated in Chilean pesos. Also, there is another portion in Euro, which corresponds mainly to a long-term loan issued through the international market, which exchange rate risk is mitigated with hedging instruments (Swap).
Taking into consideration the financial assets and liabilities as of December 31, 2023 as the base, a fluctuation (positive or negative) of 10 Chilean pesos against the U.S. dollar (keeping the other variables constant), could affect profits before taxes by US$ 41 million in profit or loss, respectively. This result is obtained by identifying the main items (including assets and financial liabilities) denominated in foreign currencies in order to measure the impact on profit or loss that a variation of +- 10 Chilean pesos would have in terms of US$, with respect to the closing exchange rate at the end of the reporting period.
There are operating and investment expenses that are subject to price-level restatements associated with inflationary adjustments in the economic environment in which the Corporation operates. The Corporation periodically monitors the effects of these price-level restatements on its results in order to detect unusual situations that could have a significant financial impact.
Based on current conditions, the Corporation has not entered into, nor does it intend to enter into, derivative contracts specifically to hedge the effects discussed in the preceding paragraph.
If financial assets and liabilities are considered as of December 31, 2023, a 1% fluctuation (positive or negative) in the value of UF in Chilean pesos (with all other variables held constant) could affect the pre-tax result by an estimated US$ 20 million loss or gain, respectively. This result is obtained by identifying the main items affected by exchange differences, both financial assets and liabilities, in order to measure the impact on income that a 1% variation in the value of the UF, used at the date of presentation of the financial statements, would have.
* Interest rate risk This risk arises from interest rate fluctuations in Codelco’s investment and financing activities.
This movement can affect future cash flows or the market value of fixed rate financial instruments.
F-207 Corporación Nacional del Cobre de Chile
These rate variations refer to U.S. dollar variations, mostly with respect to the LIBOR rate. To manage this risk, Codelco maintains an adequate combination of fixed and variable rate debt, which is complemented by the possibility of using interest-rate derivatives to meet the strategic guidelines defined by Codelco’s Vice-Presidency of Administration and Finance lt is estimated that, based on net debt at December 31, 2023, a one percentage point change in the interest rates of credit financial liabilities subject to variable interest rates would result in a change in annual interest expense of approximately US$ 14 million, before taxes. This estimation is made by identifying the liabilities assigned variable interest, accrued at the end of the financial statements, which may vary with a change of one percentage point in variable interest rates.
The concentration of obligations that Codelco maintains at fixed and variable rates at December 31, 2023, corresponds to a total of ThUS$ 18,717,055 and ThUS$ 1,481,047, respectively.
b. Market risk.
* Commodity price risk:
As a result of its commercial operations and activities, the Corporation’s income is mainly exposed to the volatility of copper prices and certain sub-products such as gold and silver.
Copper and molybdenum sales contracts generally establish provisional sales prices at the time of shipment of such products, while the final price will be considered based on a monthly average price determined by the market for future periods. At the reporting date, sales of provisionally priced products are adjusted to fair value and the effect is recorded in the results of operations for the period. Forward prices at the period-end are used for copper sales, while period-end average prices are used for molybdenum concentrate sales due to the absence of an assets futures market. (See Note 2.q) “Income from Activities Ordinary Procedures from Contracts with Customers of section |! Main Accounting Policies).
As of December 31, 2023, if the future price of copper fluctuates by + – 5% (with the other variables constant), the result would be +- US$231 million before taxes as a result of setting the mark to market of sales revenue to provisional prices in effect as of December 31, 2023 (MTMF 546). For the estimate indicated, all of those physical sales contracts were valued according to the monthly average immediately following the close of the financial statements, and proceeds to be estimated regarding what the final settlement price would be if there is a difference of + – 5% with respect to the future price known to date for this period
In order to protect cash flow and adjust, where necessary, its sales contracts to its trade policy, the Corporation holds operations in futures markets. At the end of the reporting period, these contracts are adjusted to fair value, recording this effect, at the settlement date of the hedging transactions as part of net product sales.
F-208 Corporación Nacional del Cobre de Chile
The Corporation has not entered into any hedging transactions with the specific purpose of hedging the price risk caused by fluctuations in prices of production inputs.
c. Liquidity risk
The Corporation ensures that it has sufficient resources, such as pre-approved credit lines (including refinancing), in order to meet short-term requirements, after considering the necessary working capital for its operations and any other commitments it has.
In this sense, the Corporation maintains resources at its disposal sufficient to meet its obligations, whether in cash, liquid financial instruments or credit facilities.
In addition, the Finance Department constantly monitors the Corporation’s cash flow projections based on short- and long-term projections and available financing alternatives. In addition, the Corporation estimates that it has enough headroom to increase the level of borrowing for the normal requirements of its operations and investments established in ¡ts development plan.
In this context, according to current existing commitments with creditors, the cash requirements to cover financial liabilities classified by maturity and presented in the statement of financial position are detailed as follows:
Maburdty of financial hablties Less than | Betwoen ono Cie as 01 12.31-2073 l year hee years years Mhi83 Thisa Thus3
Loara Iron financial entes | mio] 9amate] 461961 ionds 115,046 1570140 | 14.418, 86%
Dermabues 116 882 5509 ¡Ottror braraal kabibes 40 051 |
SS 2 y 352,1 2] 4,630,687 | 14 918,430
d. Credit risk
This risk comprises the possibility that a third party does not fulfill its contractual obligations, thereby causing a loss for the Corporation.
Given the Corporation’s sales policy, principally with cash and advance payments and bank letters of credit, the uncollectible of client debt balances is minimal. This is complemented by the familiarity the Corporation has with its clients and the length of time it has operated with them. Therefore, the credit risk of these transactions is not significant.
The indications with respect to the payment conditions to the Corporation are detailed in every sales contract and the negotiation management is under the charge of the Commercial Vice- Presidency.
In general, the Corporation’s other accounts receivable have a high credit quality according to the Corporation’s evaluations, based on each debtor’s solvency analysis and payment history.
F-209 Corporación Nacional del Cobre de Chile
The maximum exposure to credit risk as of December 31, 2023 is represented by the financial asset items presented in the Corporation’s Statement of Financial Position.
The Corporation’s accounts receivable does not include customers with balances that could be classified as a significant concentration of debt and would represent a material exposure for Codelco. This exposure is distributed among many clients and other counterparties.
In the customer items, the provisions, which are not significant, are included based on the review of the outstanding balances and characteristics of the clients, destined to cover eventual insolvencies.
Explanatory note 2 “Trade and other receivables shows past due and not provisioned balances.
The Corporation estimates that unimpaired amounts overdue over 30 days are recoverable based on clients historical payment behavior and their existing credit ratings.
As of December 31, 2023 and 2022, there are no receivable balances that have been renegotiated.
Codelco works with major banks, which have high national and international ratings, and continually assesses them; therefore, the risk that could affect the availability of the Corporation’s funds and financial instruments is not significant.
Also, in some cases, to minimize credit risk, the Corporation has contracted credit insurance policies through which it transfers to third parties the commercial risk associated with some aspects of ¡ts business.
During the years ended December 31, 2023 and 2022, no guarantees have been executed in relation to ensure the collection of third party debt.
Personnel loans mainly relate to mortgage loans, according to programs included in union agreements, which are paid for through payroll discounts.
e. Other relevant risks
In addition to exposure to financial risks, community relations, environmental, litigation and regulatory proceedings, during 2022 we defined strategic risks as risks or combination of risk events that may threaten the business model in the short or long term, structuring our model in a robust way to face the challenges that become more demanding each year, such as changes in social expectations, infrastructure and human development.
The model designed contemplates risks for at least the next three years and also some that would be relevant for a longer period. lt also considers monitoring emerging risks which are permanently monitored by the industry.
F-210 Corporación Nacional del Cobre de Chile
28.
Risks are permanently monitored to identify, address and oversee appropriate mitigation actions, with the support of the second line of defense established in Codelco’s corporate governance mainly through corporate risk management, working to provide assurance on the status of controls or drive the necessary behavior to achieve the expected status.
These definitions also consider risk appetite as the nature and extent of risk that the Corporation is willing to accept in relation to the achievement of its business and objectives.
The above factors in the probability and severity of the consequences of the materialization of a risk in the different areas of its impact.
Our risk management program considers that risk appetite and risks may change over time and may require management actions to respond to changes in the context. Information regarding the main risks considered by Codelco will be included in the Annual Report as of
2022.
Derivatives contracts.
The Corporation has entered transactions to hedge cash flows, to minimize the risk of foreign exchange rate variations and sales price variations, detailed as follows:
a. Exchange rate hedge
The Corporation maintains an exposure associated with ¡ts foreign exchange hedging operations, the balance of which corresponds to a net deferred tax profit recognized in equity amounting to TRUS$ 615 as of December 31, 2023.
The following table shows details of the fair value and other information of the financial hedges contracted by the Corporation:
Gajsabea H, 307
1 a cgabor Fasa usa date cede dan Hirb Ce MVadrt Corey Haiged dar Hurhgirmá bridge len dana ci eu | E | Dlls: O UL | TH ñ de La l E aa e pe JA Bis ¿ air
..o. FO pa PoL 10 da 7 d ni L ú | e El l Faro E a A . dl hr Y Fi Eariaria sl de EJ id rra 1 l Eh A | se E. a Li H 1 | ul | e loka pL 1714 A dd 17 ri MA Sá ¡earedrr 11, 3 pj LA z A pal ya Pio MibrTy Lurimód Hp peca sols fan | Portmsd rd! : qe – amado pd | Fi 13 Te ESp o A TEA : 8 HA Y =+ ¿0 O ZA! a qe 10d ¡un! Lory: | J Az hor dl ui do e m5 i l Lar 1 | = E po PR E PA 1 L E LE da , i l – 1 a E A Ed de Ls JE iz E: AO A sE PL =R ¿0 5] 1! a Ei 50 : ] pro ¿Hu road] É Td “1 fal, FX E . MA a Toll AT E E TE
F-211 Corporación Nacional del Cobre de Chile
As of December 31, 2023, the Corporation has no cash collateral balances.
The current methodology for valuing currency swaps uses the bootstrapping technique based on mid-swap rates to construct (zero) curves in functional currencies other than the functional currency and USD, respectively, based on market information.
The notional amounts held by the Corporation for financial derivatives are detailed below:
Modena! cura dl contrata a al mur] 3 Trial ron “camart Mer Md AS AU, MUI 10953 les
. , .
. e P .
| Cd ca ii dl ad P rr |MI e TP as cl 4 ‘
Cee Y MA | Comer o [Orea ICE ASES SR
VHesonal amarra pel qoricneta lts Pinal rar id Pi E | Tobal pre “(Over Pl daya Tatil curra | 116 3 paar Do 5 pá var ha
Fr canmari 1! PS EGEL! hus4 11053 TE y E3
PET 10d m7 ho 240 3H amis FET
Cipcómibaer 39, 2077 Camaná cl
b. Cash flows hedging contracts and commercial policy adjustment
The Corporation trades in the copper, gold and silver derivative markets and records its results upon termination. These results are added to or deducted from sales revenues. As of December 31, 2023, these operations generated a higher net realized result of TRUS$
3,338.
b.1. Commercial flexibility operations of copper contracts lts objective is to adjust the price of sales to the Corporation’s sales policy, which is defined according to the London Metal Exchange. As of December 31, 2023, the Corporation has copper derivative transactions associated with 251,025 metric tons of fine copper. These hedging transactions are performed as part of the Corporation’s commercial policy.
The current contracts as of December 31, 2023, present a negative balance of ThUS$ 4,889 and their final result will only be known at their maturity, offsetting the hedging transactions with revenue from the sale of the hedged products.
Operations completed between January 1 and December 31, 2023, generated a net positive effect in results of ThUS$ 2.803, corresponding to values for physical sales contracts for a positive amount of ThUS$ 3.746 and values for physical purchase contracts for a negative amount of TRUS$ 943.
b.2. Trade operations of current gold and silver contracts.
As of December 31, 2023, the Corporation has derivative contracts for gold at ThOZT 574 and for silver at ThOZT 41,317.
F-212 Corporación Nacional del Cobre de Chile
The contracts in force as of December 31, 2023 present a positive exposure of ThUS$ 3, the final result of which can only be known at the expiration of these operations, after the compensation between the hedging operations and the income from the sale of the protected products. These hedging operations expire up to February, 2024.
As of December 31, 2023, the Corporation has completed gold and silver operations, which generated a net positive effect on income of ThUS$535 corresponding to the value of physical sales contracts.
b.3. Cash flow hedging operations backed by future production The Corporation has no outstanding transactions as of December 31, 2023, arising from these operations, which protect future cash flows by locking in price levels for the sale of part of its production
The following tables set forth the maturities of metal hedging activities, as referred to in point b above: ¡December 31. 2035 Adabuirig deta > A HA MES Pal 1074 Merorat imtad Eb 001 CO a po j
5 td CC fo ¡nv ¡ns dl 17).
pu ón =” o ib mr pri
E vil QA 7 48 EA
December Y, 032 -Mturiy :
— – TAUSS ESAS Edd PUES Pa Tr Upon Tobi ra an al y? 1 be ts pi e y EE Ali E | a [lb kr Paleta racias [ “La e–1 dd lila
Elenco 11, 2079 erióna _ A All figares er icosan ol reetzic tora parce | _ 2 MECO Er Ir TA ce A 1 IO | da sul Fulcsrio [ULT] uE a ED 3, [15 sold is Filis es [Usd] 115%) 34 En ap ir y PT l ppp a ¡Deceeber 11 Pi, Miu der DAD Uiarao e Abcarnado cd mes bona cambie PEA SEE Ha ¿04 da isc Total copos Para [141] 113, 46 =*8 HE
A A A ¡EA ds Lucia A!
F-213 Corporación Nacional del Cobre de Chile
29. Contingencies and restrictions
a) Lawsuits and contingencies
There are various lawsuits and legal actions initiated by or against the Corporation, which derive from its operations and the industry in which it operates. In general, these are civil, tax, labor and mining litigations, all related to the Corporation’s activities.
In the opinion of Management and its legal advisors, the lawsuits where the Corporation is being sued and could have negative results do not represent significant loss contingencies or cash flows. Codelco defends its rights and makes use of all the corresponding legal and procedural instances and resources.
The most relevant lawsuits filed by Codelco relate to the following matters:
– Tax Proceedings: There is a tax proceeding for liquidation No.141 of tax year 2015 and Exempt Resolution No. 89 of 2016 issued by the Internal Revenue Service (Sl), for which the Corporation presented the corresponding appeals, which were received and resolved in favor of the Tax and Customs Courts, a resolution that was appealed by the SIl.
– Labor lawsuits: Labor proceedings brought by the workers against the Corporation, regard to occupational diseases, labor accidents and other matters.
– Mining proceedings and others arising from the operation: The Corporation has been participating, and will probably continue to participate, as plaintiff and defendant in given court proceedings involving its mining operation and activities, through which it seeks to exercise certain actions or set up certain defenses in relation to given mining concessions that have been established or are in the process of being established, as well as also with regard to its other activities. These proceedings currently do not involve any given amount and do not have any essential effect on Codelco’s development.
One of the arbitration lawsuits pending final judgment, as of December 31, 2023, is the one between Codelco and Consorcio Belaz Movitec SpA.
During the year ended December 31, 2023, there are no lawsuits or other proceedings representing 10 percent or more of the Corporation’s total outstanding lawsuits.
At the date of issuance of these financial statements, Corporación Nacional del Cobre faces various lawsuits and legal actions against it for a total of approximately ThUS$ 419,248 corresponding to 1,125 cases for ThUS$ 73,719. According to the estimate made by the Corporation’s legal advisors, there are 921 cases representing 81,87% of the total, on which a loss is probable for an amount of ThUS$ 72,775. There are also 145 cases, representing
12.89% for an amount of ThUS$361, on which there ¡is a less than probable likelinood that the Corporation will get an unfavorable sentence. For the remaining 59 cases, representing 5.24% for an amount of ThUS$583, the Corporation’s legal advisors believe that an unfavorable outcome ¡is unlikely.
F-214 Corporación Nacional del Cobre de Chile
– Lawsuit under administrative law: On August 2, 2017, a Nullity in Public Law claim was filed in the 25th Civil Court of Santiago against Audit Report No. 900 of 2016, issued by the General Comptrollership of the Republic on May 10, 2017.
Once the discussion and evidence stage concluded, the Santiago Civil Court, on September 11, 2020, delivered its judgment in which it dismissed the annulment action filed by the Corporation, condemning it to the respective costs of said lawsuit.
On October 27, 2020, the Corporation filed appeals and cassation in the form of the sentence of the 25th Civil Court of Santiago, which dismissed the Public Law nullity action filed by the Codelco against Report No. 900 of 2016 of the Comptroller General of the Republic.
In December 2022, the Corporation established a collaboration commitment with the Comptroller General of the Republic (CGR) to reinforce the principle of probity in regulation, applicable to the company regarding operations with related parties, establishing a framework for any contracts with related parties, safeguarding the legal status of the company and its business line, in addition to reinforcing controls for sensitive operations. This agreement with the Comptroller’s Office recognizes Codelco’s good practices and also improves controls for related party transactions. As a result of this agreement, litigation with the regulator has been terminated.
For litigation with probable loss and its costs, there are the necessary provisions, which are recorded as contingency provisions.
b) Other commitments.
I. Law No. 19993 dated December 17, 2004, authorized the purchase of the Refinery and Smelter Las Ventanas assets from ENAMI, establishing that the Corporation must ensure that the smelting and refining capacity required is maintained, without any restriction and limitation, for treating the products of the small and medium mining sector sent by ENAMI, under the form of toll production or another form agreed upon by the parties. (See paragraph described in number viii, where the modification of this law is mentioned).
I. Obligations with the public for bond issues means that the Corporation must meet certain restrictions related to limits on pledges and leaseback transactions on its principal assets and on its ownership interest in subsidiaries.
The Corporation has complied with these conditions as of December 31, 2023 and 2022.
li. On January 20, 2010, the Corporation signed two energy supply contracts with Colbún
S.A., which includes energy and power sales and purchases for a total of 510 MW of power.
The contract provides a discount for that unconsumed energy from Codelco’s SIC divisions with respect to the amount of contracted power. The discount is equivalent to the value of the sale of that energy on the spot market.
The contracted power for supplying these Divisions is comprised by two contracts:
F-215 Corporación Nacional del Cobre de Chile
* Contract No.1 for 176 MW, current until December 2029.
* Contract No.2 for 334 MW, current until December 2044. This contract is based on energy production from Colbún’s Santa María thermal power station, which is currently in operation.
This plant is coal-fired, and therefore the electric energy tariff rate applied for the energy supplied to Codelco is linked to the price of coal.
Both of these contracts comply with Codelco’s long-term energy and power requirements from the SIC of approximately 510 MW.
Through these contracts, which operate through take or pay, the Corporation agrees to pay for the contracted energy and Colbún undertakes to relimburse at market price the energy not consumed by Codelco
These contracts have maturity dates in 2029 and 2044.
On October 27, 2022, Codelco signed an amendment to the contract, which, among other aspects, will allow replacing the coal-based electricity supply with a renewable energy supply.
This transformation will be implemented gradually, and as of January 1, 2026 the contract will be for 1,000 GWhyear of renewable energy.
iv. For the electric power supply of the Chuquicamata’s work center, the following contracts are maintained:
For the electric power supply of the Chuquicamata’s work center, there are three contracts: Engie for a 15-year term from January 2010, that is maturing in December 2024, for 200 MW capacity, and another contract for a 200 MW capacity which was signed in January 2018 and will be effective as of January 2025 with maturity in December 2035.
CTA effective from 2012 for 89 MW capacity, maturity in 2032.
v. On August 26, 2011, Codelco signed two energy supply contracts with AESGener. The first one for the Minister Hales division for a 99 MW capacity and the second contract for the Radomiro Tomic work center, for a maximum capacity of 145 MW. Both contracts will mature in 2028.
In December 2022, the respective agreements were renegotiated and signed. The agreement implies the modification of the original contracts and a new renewable sources contract effective from 2023 to 2040.
vi. On November 11, 2011, Law No. 20551 was published in the Official Journal, which regulates the tasks and closure of mining facilities. Additionally, on November 22, 2012, the Supreme Decree No. 41 of the Minister of Mining, which approves the Regulations of this Law, was published in the Official Gazette.
This law requires the Corporation, among other requirements, to provide financial guarantees to the State to ensure the implementation of closure plans. lt also establishes the obligation to make contributions to a fund which aims to cover the costs of post-closure activities.
F-216 Corporación Nacional del Cobre de Chile
The Corporation, in accordance with the regulations, delivered in 2014 to the National Geology and Mining Service (SERNAGEOMIN) the mine closure plans for each of the eight divisions of Codelco. These closure plans were developed under the transitional regime of the Law, specified for mining companies affected by the general application procedure, which are those with extraction capacity > 10,000 tonsmonth, and that at the date of entry into force of the Law were in operation, and with a closure plan previously approved under the Mining Safety Regulation D.S. No. 132.
All these transitional closure plans were approved in 2015 in accordance with the provisions established in the Law.
The law also established the obligation to update these closure plans, under the conditions of the general regime of the law, which incorporates new and greater requirements for the closure plans, five years after ¡ts entry into force, ¡.e. in 2020 in the case of Codelco. This calendar was brought forward to 2019 due to operational particularities for the Chuquicamata and Ventanas Divisions, and postponed to 2021 by SERNAGEOMIN, due to the COVID19 pandemic for the entire industry, and therefore for all other divisions.
In compliance with this new schedule, Codelco approved in 2021 the updated closure plans for the El Teniente, Radomiro Tomic, Ministro Hales and Gabriela Mistral Divisions, and as of December 31, 2021, the approval of the updated plans for the Salvador and Andina Divisions is in process. During the year 2022, Codelco obtained the approval of the updated closure plans of the Salvador and Andina divisions. The Corporation has provided the corresponding guarantees committed in all the approved closure plans, in accordance with the latest updates in force.
As of December 31, 2023, the Corporation has agreed guarantees for an annual amount of UF 75,079,400 to comply with the aforementioned Law No. 20551 (see note No. 30).
vi. On August 24, 2012, Codelco through its subsidiary Inversiones Mineras Nueva Acrux SpA (Nueva Acrux) (whose minority shareholder is Mitsui), signed a contract with Anglo American Sur S.A. Under this contract, Codelco agreed to sell a portion of its annual copper production to the mentioned subsidiary, who in turn agrees to purchase such production.
Such annual portion is determined by the share of Codelco’s indirect subsidiary, Inversiones Mineras Becrux SpA (also shared ownership with Mitsui), maintained for the shares of Anglo- American Sur S.A.
In turn, the subsidiary Nueva Acrux agrees to sell to Mitsui, the products purchased under the agreement described in the preceding paragraphs.
The contract expiration will occur when the shareholders agreement of Anglo-American Sur
S.A. ends or other events related to the completion of mining activities of the company take place.
vili.On June 17, 2022, Codelco’s Board of Directors agreed to move forward with preparations to cease operation of the Ventanas Smelter, subject to parliament amending Law No. 19,993 within a limited period of time, whose scope referred exclusively to the smelter and not to the refinery or other operations of the Ventanas Division. For this measure to be carried out, it
F-217 Corporación Nacional del Cobre de Chile
30.
required the amendment and approval by the Executive and the Legislature of Law No. 19,993, which obliged the Corporation to smelt the minerals of Empresa Nacional de Minería (ENAMI) at the Ventanas Smelter.
On March 6, 2023, Congress approved the modification of the aforementioned law, allowing this obligation to be fulfilled by other smelters and refineries of Codelco
Later, in May 2023, the National Geology and Mining Service (Sernageomin) authorized Codelco the temporary closure plan for the Ventanas smelter, which will have an initial duration of two years, extendable for another three, during which time engineering will be developed and permits will be processed to move on to the definitive closure stage, which considers, among other actions, the dismantling of the smelter facilities.
On May 31, 2023, the Ventanas smelter furnaces were shut down.
Guarantees
The Corporation as a result of its activities has received and given guarantees.
The following tables list the main guarantees given to financial institutions:
F-218
A Corporación Nacional del Cobre de Chile
Direct Guarantees provided to Financial Institutions and other
Creditor of the guarantee Type of guarantee 12-31-2023 12-31-2022 Currency Maturity Quantity ThUS$ ThUS$
Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement UF Mar 15, 2023 1 – 1,231 Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement UF Mar 15, 2024 1 1,258 – Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement CLP Mar 15, 2023 1 – 19,057 Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement CLP Mar 15, 2024 1 18,595 – Consorcio Aeropuerto Calama Parking UF Nov 30, 2023 2 4 4 Road management Construction project UF Jan 21, 2022 1 Road management Construction project UF Jan 2, 2024 8 28 Road management Construction project UF Apr 8, 2024 2 4 4 Road management Construction project UF Mar 1, 2024 4 12 Road management Construction project UF Jul 31, 2024 1 8 Road management Construction project UF May 2, 2025 2 972 Road management Construction project UF Dec 30, 2024 1 486 Road management Construction project UF May 17, 2024 1 3 Road management Construction project UF Jun 19, 2024 1 5 Road management Project of explotation UF May 13, 2023 1 5 General Directorate of Maritime Territory and Merchant Marine Maritime concession CLP Mar 1, 2023 1 – 1,233 General Directorate of Maritime Territory and Merchant Marine Maritime concession CLP Mar 24, 2024 3 9 238 General Directorate of Maritime Territory and Merchant Marine Maritime concession CLP Mar 1, 2024 1 1,203 Engie Energia Chile S.A. Water Supply Project CLP Aug 31, 2023 1 – 234 Engie Energia Chile S.A. Water Supply Project CLP Oct 31, 2023 1 229 Engie Energia Chile S.A. Water Supply Project CLP Sep 2, 2024 2 453 – Ministry of National Assets Project of explotation UF May 13, 2023 1 8 Ministry of National Assets Project of explotation UF Jun 9, 2023 5 40 Ministry of National Assets Project of explotation UF Jun 10, 2024 6 48 – Ministry of National Assets Project of explotation CLP Feb 25, 2023 22 154 Ministry of National Assets Project of explotation CLP Feb 26, 2024 22 176 Ministry of Public Works Construction project UF Feb 3, 2023 1 3,471 Ministry of Public Works Construction project UF Oct 2, 2023 1 560 Ministry of Public Works Construction project UF Dec 31, 2023 1 – 818 Ministry of Public Works Construction project UF Jan 2, 2024 2 24,809 24,265 Ministry of Public Works Construction project UF Jul 29, 2024 2 43 42 Ministry of Public Works Construction project UF Dec 15, 2024 2 569 596 Ministry of Public Works Construction project UF Dec 31, 2022 1 – Ministry of Public Works Construction project UF Jan 22, 2025 1 269 Ministry of Public Works Construction project UF Mar 8, 2024 1 3,549 Ministry of Public Works Construction project UF Sep 13, 2025 1 1,107 Ministry of Public Works Construction project UF Sep 28, 2025 1 573 Ministry of Public Works Construction project UF Dec 19, 2025 1 836 Ministry of Public Works Construction project CLP Jan 22, 2025 1 Sernageomin Environment UF Feb 18, 2023 2 214,853 Sernageomin Environment UF May 3, 2023 8 678,422 Sernageomin Environment UF Sep 19, 2023 1 53,633 Sernageomin Environment UF Nov 14, 2023 1 181,252 Sernageomin Environment UF Nov 27, 2023 1 82,048 Sernageomin Environment UF Dec 2, 2023 5 561,862 Sernageomin Environment UF Dec 15, 2023 1 – 140,626 Sernageomin Environment UF Feb 17, 2024 3 379,876 – Sernageomin Environment UF May 3, 2024 9 785,308 Sernageomin Environment UF Sep 19, 2024 1 61,530 – Sernageomin Environment UF Nov 11, 2024 4 347,159 266,819 Sernageomin Environment UF Nov 14, 2024 2 209,011 – Sernageomin Environment UF Nov 27, 2024 5 307,049 202,882 Sernageomin Environment UF Dec 2, 2024 10 938,514 215,377 Sernageomin Environment UF Dec 16, 2024 1 120,635 General Treasury of the Republic Maritime concession CLP Jun 30, 2024 2 54 55 Municipality of Santiago Project of explotation CLP Apr 1, 2024 1 74 – Total 3,204,229 2,649,978
As for the documents received as collateral, they cover mainly obligations of suppliers and contractors related to the various development projects. At December 31, 2023 and 2022, the balance of these guarantees is ThUS$1,152,203 and ThUS$1,015,244, respectively.
F-219 Corporación Nacional del Cobre de Chile
31. Balance in foreign currency
a. Assets by Currency
EN e
VS Talar Esto a > AL, E A 90 E E ? on Ana 5% lo 3580 a A A PE TU ES) MES 205 Fo – – – FASE F=] n 217 E 3 LEA O EN TH A TAE ¿AAA . 15 561058 – 16 31% 157791 516 Pi 1157 – 165 ES sn CT A E AE AA EAAGIT 4d CT A
1231-2422 ‘ Cup Man bird Bonete rationid an foreign corremcy US labra Em UF. TOTAL A En
NTAZ 5 5d Er 14 Mo : a
143 á é A 1451
0 Yra q 1% d EXA ¿nr mba 118 ao 15 +
1.15 ‘ 15% pa ‘ ¿NOME
A
AE] CEE ON CA
15727125 1 A
Empero, punt ed ea E se MEAR — EIA Expired lar ió Ei 165 = ss laa $5 MA Ci! 50 16 108 Es MX Ea ¿0 EY! ToLa rara a ATA ” E E A marta CO E CA A
F-220 Corporación Nacional del Cobre de Chile
b. Liability by type of currency:
AE A National and dorsign currency habilite 145 Probar E mención 0 uE 7 TOTAL Cutter dLabiiia – Cies Moa labo CUE A 5? l 1] Ein Lisa habeis. LATER EZAO qn bz PO 158 113,739 Vado ed other papables cute 116,443 ¿4 160 178 337.55 140-590 1,719,057 Accoarts pontdás lo iloted eras, arar 171522 y12 17 AJA Cil horda AT DOAA 541 E 0 10477 q ¿o 159, 1839 ourttd Lale hal 14431 y NAS 14,414 Prossgra lor ermployse beñótts, camerr 3048 ATTES 450,740 Cab cdo dit ide CLAN Jr IO e ¡Ade 49,104 Total rara Ma bártiaa 24085745 114733 11.641 115.857 141507 d 21,003 A – ie
Obi arca tabiácos, DON41IT00 16,741.37 31.160 ¿USB A E Laso old noo curnerd 520) su HO 770 41,501 | 103 4d [Mor- currera prosas Po ra Sd Cies lnea aer proracerdn 1048:078 B4:675- TOD] 130 Ps 3H AO 19 ¿1341 4 241,400 Empiopes bara promsáces: Cc caera A M0 cdi A 1,053,430 Tobal rot beca lees, 10 Laser 230 __ DA 20 or non-current hatileios PA MOZ ES, 052 95906R 2320075] 31,449,618 [Toral Labios | INDBAATE – NA20S 15300 2DETBOS ¿461307] 150.58
A rd UE TOTAL AA En E | aña
5160) YA 606 4-00) 123150 142050 A a nar? 44550 pu 117785144 115 : ARO 174,673 52117 127 2421 85,663 14,55 El 1,47 13,509
1150) E Az Hon 4 E) 21100 mE 164 ¡1052 ¿MO 4,34 MEET A A E TE 15001070 (155 2,183 206505] -16,640:123 15% RE) 11% 145, 644 11.044 705,679 PA FUN : 104
1,134,434 . E 1079.78 445,170 En 17.555 3,441,004 Add 1 365562 1,949,117
¿2 25) 15 non cun PAMSIT (1360 HA DAD ON5ADO ZAPUÓOT] PATRIA ¡Tocal Lapóties [| 20575, 500 2077 A AAA 2306200] DARA
F-221 Corporación Nacional del Cobre de Chile
32.
33.
Sanctions
As of December 31, 2023 and 2022, neither Codelco Chile or its Directors and Managers have been sanctioned by the CMF or any other administrative authorities.
The environment
Each of Codelco’s operations is subject to national, regional and local regulations related to protection of the environment and natural resources, including standards relating to water, air, noise and disposal and transportation of dangerous residues, among others. Chile has introduced environmental regulations that have obligated companies, including Codelco, to carry out programs to reduce, control or eliminate relevant environmental impacts. Codelco has executed and shall continue to execute a series of environmental projects to comply with these regulations.
Pursuant to the Letter of Values approved in 2010, Codelco is governed by a series of internal policies and regulations that frame its commitment to the environment, among which is the Corporate Sustainable Development Policy (2021).
The environmental management systems of the divisions, structure their efforts in order to comply with the commitments assumed by the corporation’s environmental policies, incorporating elements of planning, operating, verifying and reviewing activities. As of December 31, 2023, Codelco is certified under the ISO 14001:2015 Standard, which is applicable to all its divisions.
To comply with the Circular No. 1901 of 2008 of the CMF, the details of the Corporation’s main expenditures related to the environment during the periods from January 1 to December 31, 2023 and 2022, respectively, and the projected future expenses are stated below.
F-222
Corporación Nacional del Cobre de Chile
12-31-2023 12-31-2022 Future committed Company Project name Project status ThUS$ Assets Expenditure Htem of Asset Destination Expenditure ThUS$ ThUS$ Estimated date
Chuquicamata Codelco Chile Acid plants In progress 25,010 Expenditure Operating expenditure 3,537 – 2023 Codelco Chile Solid waste In progress 2,022 Expenditure Operating expenditure 1,830 – 2023 Codelco Chile Tailings In progress 77,936 Expenditure Operating expenditure 69,689 – 2023 Codelco Chile Water treatment plant In progress 4,268 Expenditure Operating expenditure 35,186 – 2023 Codelco Chile Environmental monitoring In progress 887 Expenditure Operating expenditure 1,393 – 2023 Codelco Chile Normalization drainage system drill hole In progress 159 Asset Property, plant and equipment 66 4,315 2025 Codelco Chile Construction of thickened tallings Completed – Asset Property, plant and equipment 5,256 – 2022 Codelco Chile Standardization TKS Hazardous Substances Feed DS 43 In progress 15,713 Asset Property, plant and equipment 11,088 14,806 2025 Codelco Chile Construction IX stage Talabre tranque In progress 57,449 Asset Property, plant and equipment 14,015 483,767 2027 Codelco Chile Enable hydrogen well for In progress 742 Asset Property, plant and equipment 1 257 2024 Codelco Chile Mine Pile Dome Collapse Repair In progress 11,302 Asset Property, plant and equipment – 96,634 2025 Codelco Chile Construction of Thickened Tailings Talabre Stage 1 In progress 218 Asset Property, plant and equipment – 1,319,912 2027
Total Chuquicamata Division 195,706 142,061 1,919,691
Salvador Codelco Chile Improved integration of the gas process Completed – Asset Property, plant and equipment 10,205 – 2022 Codelco Chile Tailings In progress 9,557 Expenditure Operating expenditure 5,633 – 2023 Codelco Chile Acid plants In progress 92,852 Expenditure Operating expenditure 63,688 – 2023 Codelco Chile Solid waste In progress 962 Expenditure Operating expenditure 1,025 – 2023 Codelco Chile Water treatment plant In progress 1,645 Expenditure Operating expenditure 1,481 – 2023 Codelco Chile Riles and Wastewater Standard Completed – Asset Property, plant and equipment 432 – 2022 Codelco Chile Compliance with DS 43 storage of dangerous substances In progress 8,587 Asset Property, plant and equipment – 11,703 2024 Codelco Chile Commissioning Black Smoke In progress 516 Asset Property, plant and equipment – – 2023 Codelco Chile Standardization of Sulfuric Acid Supply In progress 125 Asset Property, plant and equipment 4,823 2024
Total Salvador Division 114,244 82,464 16,526
Andina Codelco Chile Solid waste In progress 3,337 Expenditure Operating expenditure 2,855 – 2023 Codelco Chile Water treatment plant In progress 5,767 Expenditure Operating expenditure 5,023 – 2023 Codelco Chile Tailings In progress 92,200 Expenditure Operating expenditure 93,556 – 2023 Codelco Chile Acid drainage In progress 53,104 Expenditure Operating expenditure 39,509 – 2023 Codelco Chile Environmental monitoring In progress 1,280 Expenditure Operating expenditure 1,184 – 2023 Codelco Chile Sustainabilty and extemal matters management In progress 2,489 Expenditure Operating expenditure 2,559 – 2023 Codelco Chile Excavation operation improvement In progress 1,543 Asset Property, plant and equipment 485 – 2023 Codelco Chile Water dispatch tunnel modification Completed – Asset Property, plant and equipment 707 – 2022 Codelco Chile Implementation of the catchment system for rafts tove In progress 1,965 Asset Property, plant and equipment 7,060 1,032 2023 Codelco Chile Dam Ovejeria: longitudinal drainage stage 8 Completed – Asset Property, plant and equipment 8,007 – 2022 Codelco Chile North extended ballast deposit In progress 90,972 Asset Property, plant and equipment 82,983 306,400 2025 Codelco Chile Standard Instruments Tranque Los Leones In progress 1,296 Asset Property, plant and equipment 69 3,843 2024 Codelco Chile Construction of spill contai t chamber In progress 9 Asset Property, plant and equipment 1,542 – 2023 Codelco Chile Recirculated water system ovj-cord dam In progress 6,717 Asset Property, plant and equipment 526 4,355 2024 Codelco Chile Replacement of transformers into oil In progress 431 Asset Property, plant and equipment 53 125 2023 Codelco Chile Replacement of transformers into oil In progress 3,074 Asset Property, plant and equipment – 11,440 2025 Codelco Chile Priority Structural Risks In progress 1,786 – 8,723 2025
Total Andina Division 265,970 246,745 335,918
Subtotal 575,920 471,270 2,272,135
F-223 Corporación Nacional del Cobre de Chile
31-12-2023 12-31-2022 Future committed Company i Project name Project status ThUS$ Assets Expenditure Item of Asset Destination Expenditure ThUS$ ThUS$ Estimated date El Teniente Codelco Chile Construction of 7th phase Carén dam In progress 79,982 Assets Property, plant and equipment 43,426 20,031 2023 Codelco Chile Acid plants In progress 108,801 Expenditure Operating expenditure 83,265 – 2023 Codelco Chile Solid waste In progress 4,236 Expenditure Operating expenditure 2,943 – 2023 Codelco Chile Water treatment plant In progress 14,657 Expenditure Operating expenditure 13,471 – 2023 Codelco Chile Tailings In progress 77,115 Expenditure Operating expenditure 49,730 – 2023 Codelco Chile Well construction and hydrogeology modification Colihue-Cauquenes In progress 8% Asset Property, plant and equipment 1,552 – 2023 Codelco Chile Caren reservoir stage 8 and 9 In progress 33,447 Asset Property, plant and equipment 18,814 338,414 2027 Codelco Chile Construction of Complementary Water Works Tranque Barahona 2 In progress 9,385 Assets Property, plant and equipment 6,115 34,072 2027 Codelco Chile Restoration Slaughterhouse Drive In progress 12,245 Asset Property, plant and equipment 6,260 29,841 2027 Codelco Chile Flow CEMS Acquisition In progress 174 Asset Property, plant and equipment 267 – 2023 Codelco Chile Standardization driving slurry and pulp In progress 305 Asset Property, plant and equipment – 8,474 2027 Codelco Chile Improvement of wastewater containment and impulse infrastructure In progress 69 Asset Property, plant and equipment – 2,295 2025 Total El Teniente Division 341,312 225,843 433,127 Gabriela Mistral Codelco Chile Environmental monitoring In progress – Expenditure Operating expenditure 2 – 2023 Codelco Chile Solid waste In progress 3,260 Expenditure Operating expenditure 2,018 – 2023 Codelco Chile Environmental consulting In progress – Expenditure Operating expenditure 4 – 2023 Codelco Chile Efluent treatment plant In progress 6 Expenditure Operating expenditure 1 – 2023 Codelco Chile Garbage dump extension phase VIII In progress 8,283 Asset Property, plant and equipment 13,188 – 2023 Total Gabriela Mistral Division 11,549 15,213 Ventanas Codelco Chile Acid plants In progress 17,964 Expenditure Operating expenditure 27,952 – 2023 Codelco Chile Solid waste In progress 1,340 Expenditure Operating expenditure 1,109 – 2023 Codelco Chile Environmental monitoring In progress 1,474 Expenditure Operating expenditure 1,450 – 2023 Codelco Chile Effluent treatment plant In progress 7,263 Expenditure Operating expenditure 6,326 – 2023 Codelco Chile Improved gas abatement collection Completed – Asset Property, plant and equipment 140 – 2022 Codelco Chile Standardization of the handling of hazardous substances Completed – Asset Property, plant and equipment 2,032 – 2022 Codelco Chile Standardization of CEMS Chimney PPAL and PAS In progress 109 Asset Property, plant and equipment 389 – 2023 Total Ventanas Division 28,150 39,398 Radomiro Tomic Codelco Chile Solid waste In progress 1,884 Expenditure Operating expenditure 951 – 2023 Codelco Chile Environmental monitoring In progress 127 Expenditure Operating expenditure 172 – 2023 Codelco Chile Effluent treatment plant In progress 1,325 Expenditure Operating expenditure 1,426 – 2023 Codelco Chile Construction of community works In progress 3,176 Asset Property, plant and equipment 1,434 32,618 2027 Total Radomiro Tomic Division 6,512 3,983 32,618 Ministro Hales Codelco Chile Solid waste In progress 2,735 Expenditure Operating expenditure 1,367 – 2023 Codelco Chile Effluent treatment plant In progress 207 Expenditure Operating expenditure 1% – 2023 Codelco Chile Silica shed extension and dome control room In progress 4,114 Asset Property, plant and equipment – 24,352 2024 Codelco Chile Plant Casino Construction In progress 659 Asset Property, plant and equipment – 14,578 2027 Total Ministro Hales Division 7,715 1,562 38,930 Ecometales Limited Ecometales Limited Smelting powders leaching plant In progress 1,336 Expenditure Operating expenditure 1,147 1,780 2024 Ecometales Limited Smelting powders leaching plant In progress 59 Expenditure Operating expenditure 61 36 2024 Subsidiary Ecometales Limited 1,395 1,208 1,816 Subtotal 396,633 287,207 506,491 Total 972,553 758,477 2,778,626
F-224 Corporación Nacional del Cobre de Chile
34. Subsequent Events
On January 23, 2024, the shareholders of Lithium Power International (LPI) approved the sale of its shares to the company Salar de Maricunga SpA, a subsidiary of Codelco. The acquisition was authorized by Codelco’s board of directors, in line with the National Lithium Strategy announced on April 20, 2023.
According to the timeline, the next step is for the Federal Court of Australia to validate and authorize the closing of the transaction, which is scheduled for February 13. Thus, the definitive completion of the transaction is expected for February 23, 2024.
In view of the above, the Reserved nature of the Fact informed by means of Notes PE-1442023 dated December 1, 2023 and PE-1472023, dated December 5, 2023 and extension communicated by means of Note PE-0012024 dated January 2, 2024 is hereby lifted.
On January 23, 2024, it is reported as an essential fact that Codelco completed today a successful international bond placement in New York.
The bond placement amounted to US$ 2,000 million for a 12-year term and the reopening of the 2093 bond, issued on September 8, 2023, with a yield of 6.447% and 6.746%, respectively. The rate represents a spread of 230 and 235 basis points over the U.S. Treasury bond of the equivalent term, respectively. More than 357 orders were received, from 310 investors, with an oversubscription of 3.75 times.
This operation is part of the Corporation’s need to finance its long-term investment plan. The issuance was led by BOFA, Citi, JP Morgan and Santander banks.
Accordingly, the Reserved nature of the event reported in Note PE-1452023 dated December 1, 2023 is lifted.
On January 25, 2024, in accordance with the provisions of Article 9 and the second paragraph of Article 10 of Law No. 18,045, details of the financing transaction carried out on January 23, 2024 are reported as an essential fact.
On January 26, 2024, the Corporation informed as an essential fact that Mr. Braim Chiple Cendegui has been appointed as Vice President of Marketing of Codelco, who will assume his position as of March 159, 2024.
On the same date, Mr. Cristóbal Fuenzalida Montero’s interim position as Vice President of Marketing was terminated.
On March 19, 2024, it is reported as an essential fact that Mr. José Sanhueza Reyes, Assistant
Vice President, will cease his functions in the Corporation due to voluntary resignation effective that same day.
F-225 Corporación Nacional del Cobre de Chile
The aforementioned position is eliminated from the organizational chart of the Corporation, as it has fulfilled its purpose of accompanying the organizational transition that meant the elimination of the Vice-Presidency of Smelting and Refinery.
On March 20, 2024, as an essential fact, itis reported, in relation to Corporación Nacional del Cobre de Chile (“Codelco”) and its businesses, that:
By means of an essential fact dated December 27, 2023, Codelco reported the signing of a memorandum of understanding with Sociedad Química y Minera de Chile S.A. (MOU) for the negotiation of a public-private partnership for the operation, exploration and exploitation of mining properties leased to Corporación de Fomento de la Producción in the Salar de Atacama and the commercialization of the products derived from such exploitation. According to the MOU, the parties would seek to sign the definitive partnership documents no later than March 31, 2024.
On this date, the parties have entered into an amendment to the MOU to establish May 31, 2024 as the new deadline for agreeing and signing the definitive partnership documents, without prejudice to the parties” commitment to attempt to reach a full agreement and signature before that date. lt should be reminded that, once the definitive partnership documents have been signed, certain conditions precedent (including those referred to in the MOU) must be met for the partnership to materialize and take effect.
The text of the amended MOU will be available to the public at www.codelco.com.
Management of the Corporation is not aware of other significant events of a financial nature or of any other nature that could affect these financial statements, occurring between January 1, 2024 and the date of issue of these consolidated financial statements as March 28, 2024.
Rubén Alvarado Vigar Alejandro Rivera Stambuk
Chief Executive Officer Chief Financial Officer Juan Ogas Cabrera Cristóbal Parrao Cartagena Accounting Manager Accounting Director
F-226 CORPORACION NACIONAL DEL COBRE DE CHILE
Consolidated Financial Statements as of December 31, 2022
F-227 u pwe
INDEPENDENT AUDITOR’S REPORT (A free translation from the original in Spanish)
Santiago, March 30, 2023
To the President and Directors of Corporación Nacional del Cobre de Chile
We have audited the accompanying consolidated financial statements of Corporación Nacional del Cobre de Chile and its subsidiaries, which comprise the consolidated statement of financial position as of December 31, 2022, and 2021, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Chile.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
F-228 y pwe | MO Chika, Av. Andres Hello 25 – po 5. Las Conde Santas, Chile
KUT: S815i9.4004 | Telófuna: (56:23) 20400000 | wie. pwe.él
F-229
A.
pwe
Santiago, March 30, 2023 Corporación Nacional del Cobre de Chile 2
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Corporación Nacional del Cobre de Chile and its subsidiaries as of December 31, 2022 and 2021, and the results of their operations and their cash flows for the years then ended in accordance with International Financial Reporting Standards.
Doc uSigned by: fai A ias
5C02B53ICODC264A1…
Juan Carlos Pitta De C.
RUT: 14.709-125-7 .
F-230
0)
CODELCO
CODELCO – CHILE
Consolidated financial statements as of December 31, 2022 (A free translation from the original in Spanish)
F-231 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS ,
1.
=- N = P-.oON>
SA DPDININRADNnN>
NN NNNNA a a 2d dd dd 2″ O NN 2£2ON>O0000 JJOO BAO0NnN o
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS o…ccocccccccocccicocicccicconccinocinocococococooconoronocoononornonanosss GENERAL INFORMA TlON….cccocccccccicccccccscconocinocinocinocacorocconconocononon ocn oran crono rro narrar arrancar Corporate inforMatiON………..ccocncnicnionocnncnnconocncrnconcon con can nor nor nor n conca cor nan nnr ronca rirrrn rr r rr rrrnrrrrrrrrrrrrrr 14 Basis of presentation of the consolidated financial statementS…………….cconconcnonnnnnnorncannorncnnnornroncornrrnnonnonnos 15 SIGNIFICANT ACCOUNTING POLICIES…………ccccocccoccccociccocococococccooconoconocococnornoonononoronoranoron can oraroraccanocioos Significant judgments and key estimates ……….ocoocccccocicnconacnonnonoonconcononnon nan nonconcr nro nar nar narran corro nrr narrar rra 16 Significant accounting policiesS………….occonioninnoononnocenccnccncnarnannoncrncrnco nor narrar nro nro nar nr nor rorrrnrrrrrrrrnrnrrr 20 New standards and interpretations adopted by the CorporatioN…………….ccoonocnccnccnccnconocnncnncnncrnconconcannannanos 38 New accounting pron0UNCEMENS ….ococccccccccconoonnannoncnononnconoonconconnanooo corn corran narrar nar nnr nro nro nro rn nnr neones 39 EXPLANATORY NOTES o.occocccoccocicconccinocinociccosoconoconoco nooo oconoron arcano rro rar narrar rr Cash and cash equivalentS ……….ocoococcnicnconicnconconconncnnocnor non con crn non nor narrar crono narrar rar rra narrar narrar 42 EEN A 42 Balances and transactions with related parties ………..cooccccnncccccnnocnccnnocnccnnanncrn nan norn nan nor o nar nor nar narrar narrar narcos 44 INVENÍOLFIES coccocccococacnccnconnornnannorn corno cor ronca rr 50 Income taxes and deferred taxesS……….ocooccccionicnocnnccnocnonconconcan nan nar nor nor crono rca nr nr nro nro nro narrar narrar rancia 51 Current and non-current tax assets and liabilitieS ……………cooononninninninnionnoocncnccrcrncrnrerrrnncrrcrrcrnrrnrrnrrn narran 53 Property, plant and equipMeNt…….ococccccccoccccnconcocnconcancconnanccon nan nono non ncnn non ncnn narrar nn narrar nr narrar narran 54 CANO 57 Investments accounted for using the equity method………….ccocconccnacncnnonconocnccncononnannanconconconor nro nor nar nar conconcn nos 58 SUDSIdIAri8sS ……ooooococcccnionconnonnononcrnconcrn non noo nor nor nc n rn nan nan Rae naa RR RRA RR RR RR RR RR RARE RR 64 Current and non-current financial assets ……….coocccccccnccnconconccnnannannacncrncn con con narrar nor nro nro rca nr narrar rro 64 Other financial liabilitieS……………….ooooononninnnnnnoniconoonacnornorncrnconcon nan nor nor nor ncrn can can narrar nor nro nro nr raro 66 Fair Value of financial assets and liabilitieS…………….c.occonconinnconccnccnccnconconcon non nornorncrncon cor non narrar nor ncrn cnn rr narran 75 Market value hierarchy for items at market value ………ooocooconcicnicnccnocnonnonconconcrnco non nor nan crn con co nor nro narrar nar noncancnnos 76 Trade and other accounts payable ………oocccccccocionoonnonnoononncononconnannancoo nor ncrnconcon nar nor corn corran rn nar narrar nro rra 77 Other provViSiONS……..cocoococcnoonconccnconcononnnancan non nor conc con cn nr nor nor nnr nc nn nr nana narrar narran near 78 Employee benefitS………oooocccciociccconccncononncnnonconcrnco nor nco non nar corno crncr nono crncrrrrrrrrrrrrrrrr 79 EQUÍÉY cocococcnccnonccononnconoonconnonnon con noon conc con narrar nono RE RE ER REE REE RED RSS R ERRE R RR RR RR RER AGRA RR RES RRE RRE RRE 83 ROVONUE ccncccocccocnocnconnorn narco 85 EXpenses Dy NAÍUTO coococcoccccococncocconconconconnonooonor noo n con cor nor non nooo conc R ER REE REE REE RRE R RR REE RRE ne narrar rra 85 ASSCt IMPAIIMeN cccccccccccccnacnnonononononanconc non nono non nor nnnnor nn narrar 86 Other income and expenses by functi0N ……..o.cocccciccconccncnnannoncononnconconon non non con conco nro narco nro corro nar rra 87 FINANCE COSÉS cococccccccocinoccccnnonccrn can nor ona r 88 Operating SegMeNtS….o.coconconcccnconccnonnannonconco noo noo non nnn narco co nro ncr non nr nono 89 Exchange difference …ooocooccccccocionionocncononnannonconcnco nor nor nan narco nc rr 96 Statement Of Cash fÍOWS………….ccoccococcnconconconocnconconcon nan non nor norn con con cr nn narrar nr nro corran narrar rra 96
N
O)
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS (A free translation from the original in Spanish)
F-232
27.
28.
29.
30.
31.
32.
33.
34,
SEE 96
DerivatiVeS CONTTACÉS. ….ooococcccconannccnconnocononnornnan nar onan nano nr nar nc 101 Contingencies and restrictiONS………ococcoconionincncncncnecrcrrcrncrncrrarnar nr corro nrr nro 103 ¡IN 109 Balance in foreign CUFTeNCY …ocooccccccnccncnnanconooncnco non non nan cnn conc n conc nnr narnia rcorcrncrnrrrrrrrrrrrrrrrr 111 A 113 The ENVIFON MON coccocccccccaccccnnonconccnn nono con conc cnn non ncon corn narnc nan cRnRRRRRRRRRRrrrrrrr 113 Subsequent EVenNtS …..ooococccccnocnconicnconconnannon noo non cnn non nn nar non ror nor nc nono nr narrar narrar 116
F-233 CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of December 31, 2022 and December 31, 2021 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 12-31-2022 12-31-2021 NO Assets Current assets Cash and cash equivalents 1 1,026,727 1,283,618 Other current financial assets 11 1,451 320,340 Other current non-financial assets 36,989 23,997 Trade and other current receivables 2 3,386,780 4,194,350 Accounts receivable from related entities, current 3 31,756 156,711 Current inventories 4 2,300,909 1,811,455 Current tax assets 6 10,226 11,438 Total current assets 6,794,843 7,801,909 Non-current assets Other non-current financial assets 11 105,518 38,283 Other non-current non-financial assets 13,615 1,621 Non-current accounts receivable 2 88,906 104,177 Accounts receivable from related parties, non-current 3 224 224 Non-current inventories 603,446 610,558 Investments accounted for using equity method 9 3,927,323 3,946,011 Intangible assets other than goodwill 42,687 43,311 Property, plant and equipment 7 32,309,530 30,449,893 Investment property 981 981 Right-of-use assets 8 405,843 361,939 Non-current tax assets 6 748,611 4,333 Deferred tax assets 9 95,705 94,995 Total non-current assets 37,942,389 35,255,526 Total assets 44,737,232 43,057,435
The accompanying notes are an integral part of these consolidated financial statements.
F-234
CORPORACIÓN NACIONAL DEL COBRE DE CHILE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of December 31, 2022 and December 31, 2021 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 12-31-2022 12-31-2021 NO Equity and liabilities Liabilities Current liabilities Other financial liabilities, current 12 470,437 605,203 Lease liabilities, current 8 125,190 112,104 Trade and other payables 15 1,779,538 1,497,429 Accounts payable to related entities, current 3 178,673 221,344 Other short-term provisions 16 761,665 742,027 Current tax liabilities, current 6 26,309 308,376 Current provisions for employee benefits 17 944,289 419,323 Other non-financial liabilities, current 34,384 33,071 Total current liabilities 3,920,485 3,938,877 Non-current liabilities Other financial liabilities, non-current 12 16,689,123 16,903,640 Lease liabilities, non-current 8 286,679 240,023 Non-current payables 1,062 1,065 Other long-term provisions 16 2,679,728 2,407,989 Deferred tax liabilities 9 8,461,928 7,004,523 Non-current provisions for employee benefits 17 1041117 934 542 Other non-financial liabilities, non-current 2,545 2,279 Total non-current liabilities 29,162,182 27,543,657 Total liabilities 33,082,667 31,482,534 Equity Share capital 9,619,423 9,619,423 Accumulated losses (538,367) (277,340) Other reserves 18.a 9,699,426 9,286,406 Equity attributable to owners of parent 10,740,482 10,628,489 Non-controlling interests 18.b 914,083 946,412 Total equity 11,654,565 11,574,901 Total liabilities and equity 44,737,232 43,057,435
The accompanying notes are an integral part of these consolidated financial statements.
F-235 CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF INCOME For the years ended December 31, 2022 and 2021 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 1-1-2022 1-1-2021 N? 12-31-2022 12-31-2021 Revenue 19 17,018,409 21,024,815 Cost of sales (12,284,652) (12,185,688) Gross margin 4,733,757 8,839,127 Other income 22.a 64,731 115,741 Distribution costs (17,151) (9,389) Administrative expenses (502,313) (459,278) Other expenses 22. (2,103,316) (2,717,007) Other gains 29,782 37,931 |Gains (losses) from operating activities 2,205,490 5,806,725| Finance income 47,245 13,657 Finance costs 23 (569,060) (641,009) Impairment of gains and reversal of impairment losses determined in accordance with IFRS 9 (2,648) (1,250) Equity in income of associates and joint ventures accounted for using the equity method 9 51,991 414,845 Exchange gains (losses) in foreign currencies 29 (237,777) 313,736 [Income for the period before tax 1,495,241 5,906,704 Income tax expense 5 (1,133,670) (3,855,336) [Net income for the period 361,571 2,051,368 Profit attributable to
Profit attributable to owners of the parent 345,989 1,942,486
Profit attributable to non-controlling interests 18.b 15,982 108,882 [Net income for the period 361,571 2,051,368
The accompanying notes are an integral part of these consolidated financial statements.
F-236 CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2022 and 2021 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 1-1-2022 1-1-2021 N? 12-31-2022 12-31-2021 Profit 361,571 2,051,368 Comprehensive income Components of comprehensive income that will not be reclassified to profit or loss for the period, before taxes Comprehensive income (loss), before income taxes, gains from remeasurement of defined 17 (8.870) 152.966 benefit plans Share of comprehensive income of associates and joint ventures accounted for using the (5,268) 9,228 equity method that will not be reclassified to profit or loss for the period, before taxes o nero Dn ereensivo income that will not be reclassified to profit or loss for (14,138) 162,194 Components of comprehensive income that will be reclassified to profit or loss for the period, before taxes Exchange differences on translation (Loss) gain on foreign exchange translation differences, before income taxes (809) (3,282) Comprehensive income (loss) before income taxes, foreign exchange translation (809) (3,282) differences Cash flows hedges Gains (losses) on cash flows hedges, before taxes 100,244 (97,835) | Comprehensive income, before tax, cash flow hedges 100,244 (97,835)|
Total comprehensive income that will be reclassified to profit or loss for the period, before taxes
Other components of comprehensive income, before taxes 85,297 61,077
99,435 (101,117)
Income tax related to components comprehensive income Income taxes related to remeasurements of defined benefit comprehensive income plans 5 5,978 (106,983)
Income taxes related to components of comprehensive income that will not be reclassified to profit or loss for the period
5,978 (106,983)
Income taxes related to components of comprehensive income that will be reclassified to profit or loss for the period Income taxes related to comprehensive income cash flow hedges 5 (65,159) 63,593 rclasifed to profit ross fort period (65.159) 63503 Comprehensive income 26,116 17,687 Total comprehensive income 387,687 2,069,055 Comprehensive income, attributable to
Comprehensive income attributable to owners of parent 373,294 1,957,836 Comprehensive income attributable to non-controlling interests 14,393 111,219 | Total comprehensive income 387,687 2,069,055 |
The accompanying notes are an integral part of these consolidated financial statements.
F-237 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2022 and 2021
Reserve on Reserve of Equity attributable exchange Reserves of cash | remeasurement Total Retained Non-controlling
12-31-2022 Share capital Other reserves to owners of Total equity differences on flow hedges | ofdefined benefit other reserves | earnings (losses) rent interests translation plans pe
Note 18 Note 18
Opening balance at 01-01-2022 5,619,423 (6,221) (31,254) (259,573) 5,583,454 5,286,406 (277,340) 10,628,489 946,412 11,574,901 Changes in equity
Net income 345,989 345,989 15,982 361,971 Other comprehensive income (loss) (809) 35,085 (2,892) (3,679) 27,705 27,705 (1,589) 26,116 Total comprehensive income (loss) (809) 35,085 (2,892) (3,679) 27,705 373,294 14,393 387,687 Dividends (259,900) (259,900) (259,900) (Decrease) Increase through transfers and other changes, equity – – – 345,315 345,315 (346,716) (1,401) (46,722) (48,123) Increase (decrease) in equity (809) 35,085 (2,892) 341,636] 373,020] (261,027) 111,993 (32,329) 79,664 Closing balance at 12-31-2022 5,619,423 (7,030) 3,831 (262,465) 5,925,090| 5,659,426] (538,367) 10,740,482 914,083 11,654,565
The accompanying notes are an integral part of these consolidated financial statements.
F-238 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2022 and 2021
Reserve on Reserve of Equity attributable exchange Reserves of cash | remeasurement Total Retained Non-controlling
12-31-2021 Share capital Other reserves to owners of Total equity differences on flow hedges – | of defined benefit other reserves | earnings (losses) arent interests translation plans P
Note 18 Note 18
Opening balance at 01-01-2021 5,619,423 (2,939) 2,988 (305,556) 5,582,329 5,276,822 (194,696) 10,701,549 924,942 11,626,491 Changes in equity
Net income 1,942,486 1,942,486 108,882 2,051,368 Other comprehensive income (loss) (3,282) (34,242) 45,983 6,891 15,350 15,350 2,337 17,687 Total comprehensive income (loss) (3,282) (34,242) 45,983 6,891 15,350 1,957,836 111,219 2,069,055 Dividends (2,033,206) (2,033,206) (2,033,206) (Decrease) Increase through transfers and other changes, equity – – – (5,766) (5,766) 8,076 2,310 (89,749) (87,439) Increase (decrease) in equity – (3,282) (34,242) 45,983 1,125 9,584 (82,644) (73,060) 21,470 (51,590) Closing balance at 12-31-2021 5,619,423 (6,221) (31,254) (259,573) 5,583,454 5,286,406 (277,340) 10,628,489 946,412 11,574,901
The accompanying notes are an integral part of these consolidated financial statements.
F-239
Corporación Nacional del Cobre de Chile
CORPORACIÓN NACIONAL DEL COBRE DE CHILE CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2022 and 2021 (In thousands of US dollars – TRUS$) (A free translation from the original in Spanish)
Note 1-1-2022 1-1-2021 N? 12-31-2022 12-31-2021
Cash flows from (used in) operating activities
Classes of cash receipts from operating activities
Receipts from sales of goods and rendering of services 17,999,563 20,084,649 Other cash receipts from operating activities 26 2,339,896 2,068,791 Payments to suppliers for goods and services (10,954,146) (9,734,039) Payments to and on behalf of employees (1,393,362) (1,679,583) Other cash payments from operating activities 26 (3,063,993) (3,140,663) Dividends received 163,619 270,892 Income tax (paid) (741,578) (1,978,516) [Net cash flow from operating activities 4 345,999 9,891,491 | Cash flows from (used in) investing activities
Other cash payments to acquire equity or debt instruments of other entities (257) (193) Purchases of property, plant and equipment (3,480,367) (2,822,001) Interest received 39,302 1,922 Other cash outflows 324,649 (66,901) Net cash flows used in investing activities (3,116,673) (2,881 573)| Cash flows from (used in) financing activities
Total amounts from long-term loans and bonds – 780,000 Payment ofloans and bonds (344,623) (1,444 310) Lease liability payments (141,780) (138,668) Dividends paid (259,900) (2,033,206) Interest paid (705,345) (765,662) Other cash outflows (52,619) (177,291) Net cash flows used in financing activities (1,504,267) (3,779,137) de Jrs (decrease) in cash and cash equivalents before the effect of exchange (274,941) (769,219) Effect of exchange rate changes on cash and cash equivalents
Effectofexchange rate changes on cash and cash equivalents 18,050 (54,656) Net increase (decrease) in cash and cash equivalents (256,891) (823,875) Cash and cash equivalents at beginning of period 1 1,283,618 2,107,493 Cash and cash equivalents at end of period 1 1,026,727 1,283,618
The accompanying notes are an integral part of these consolidated financial statements.
F-240 Corporación Nacional del Cobre de Chile
CORPORACIÓN NACIONAL DEL COBRE DE CHILE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND DECEMBER 31, 2021 (Monetary values in thousands of United States dollars, unless another currency or unit is indicated)
GENERAL INFORMATION
Corporate information
Corporación Nacional del Cobre de Chile (hereinafter referred to as Codelco or the Corporation), is, in Management’s opinion, the largest copper producer in the world.
Codelco’s most important product is refined copper, primarily in the form of cathodes. The Corporation also produces copper concentrates, blister and anode copper and by-products such as molybdenum, anode slime and sulfuric acid.
The Corporation trades its products based on a policy aimed to sell refined copper to manufacturers or producers of semi-manufactured products.
These products contribute to diverse fields of community development, particularly those intended to improve areas such as public health, energy efficiency, and sustainable development, among others.
The Corporation is registered under Securities Registry No. 785 of the Chilean Commission for the Financial Market (the CMF) and is subject to its supervision. According to Article No.
10 of Law No. 20392 (related to the new Corporate Governance of Codelco), such supervision shall be on the same terms as publicly traded companies, notwithstanding the provisions in Decree Law (D.L.) No.1349 of 1976, which created the Comisión Chilena del Cobre (Chilean Copper Commission).
Codelco’s head office is in Santiago, Chile, at 1270 Huérfanos Street, telephone number (56-
2) 26903000.
Codelco was incorporated through D.L. No. 1350 of 1976, which is the statutory decree applicable to the Corporation. In accordance with the statutory decree, Codelco is a government-owned mining, industrial and commercial company, which is a separate legal entity with its own equity. Codelco Chile currently carries out its mining business through its Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina, El Teniente and Ventanas divisions.
The Corporation also carries out similar activities in other mining deposits in association with third parties.
In accordance with letter e) of Article 10 of Law No. 20392, Codelco is governed by its organic standards set forth in Decree Law No. 1350 (D.L. No. 1350) and that of its by-laws, and in
F-241 Corporación Nacional del Cobre de Chile matters not covered by them and, insofar as they are compatible and do not contradict the provisions of such standards, by the rules that govern publicly traded companies and the common laws as applicable to them.
In accordance with D.L. No. 1350 Section IV related to the Company’s Exchange and Budget Regulations. Codelco’s financial activities are conducted following an annual budgeting program that is composed of an Operations Budget, an Investment Budget, and a Debt Amortization Budget.
The tax system applicable to Codelco’s taxable income is in accordance with Article 26 of D.
L. No.1350 which refers to Decree Law No. 824 on Income Tax of 1974 and Decree Law No.
2398 (Article 2) of 1978, as applicable. The Corporation’s taxable income ¡is also subject to a Specific Mining Tax in accordance with Law No. 20026 of 2005.
According to Law No. 13196, the return on foreign currency of the Corporation’s foreign sales (real income), of its copper production, including its by-products, is taxed at 10% and method of payment and the duration of this obligation for Codelco, which are detailed in Note 111.22 letter c) of this report.
The subsidiaries whose financial statements are included in these consolidated financial statements correspond to companies located in Chile and abroad, which are detailed in Note
11.2.d.
The associates located in Chile and abroad, are detailed in the Explanatory Notes Section ll! of Note 9.
2. Basis of presentation of the consolidated financial statements
The consolidated statements of financial position as of December 31, 2022 and 2021, the consolidated statements of income, statements of comprehensive income, statements of changes in equity and cash flows for the years ended December 31, 2022 and 2021 have been prepared under International Accounting Standard No. 1 (IAS 1) “Presentation of Financial Statements, incorporated in the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (hereinafter “lASB”)
These consolidated financial statements include all information and disclosures required in annual financial statements.
These consolidated financial statements have been prepared from accounting records maintained by the Corporation.
The consolidated financial statements of the Corporation are presented in thousands of United States dollar (U.S. dollar).
F-242 Corporación Nacional del Cobre de Chile
Responsibility for information and estimates made
The Board of Directors of the Corporation has been informed of the information included in these consolidated financial statements and expressly declared its responsibility for the consistent and reliable nature of the information included as of December 31, 2022, which financial statements fully comply with IFRS. These consolidated financial statements as of December 31, 2022 were approved by the Board of Directors at a meeting held on March 30,
2023.
Accounting policies
These consolidated financial statements reflect the financial position of Codelco and affiliates as of December 31, 2022 and 2021, as well as the results of their operations, changes in equity and cash flows for the years ended December 31, 2022 and 2021, and their related notes, all prepared and presented in accordance with lAS 1 “Presentation of Financial Statements, considering the respective presentation regulations of the Financial Market Commission (CMPF?”.
Il. SIGNIFICANT ACCOUNTING POLICIES
1. Significant judgments and key estimates
In preparing these consolidated financial statements, the use of certain critical accounting estimates and assumptions that affect the amounts of assets and liabilities recognized as of the date of the financial statements and the amounts of revenue and expenses recognized during the reporting period is required. Such preparation also requires the Corporation’s Management to exercise its judgment in the process of applying the Corporation’s accounting policies. The areas involving a greater degree of judgment or complexity or areas in which the assumptions and estimates are significant for the consolidated financial statements are described as follows:
a) Useful economic lives and residual values of property, plant and equipment: the useful lives and residual values of property, plant and equipment that are used for calculating depreciation are determined based on technical studies prepared by internal specialists. The technical studies consider specific factors related to the use of assets.
Where there are indications that the useful lives of these assets or their residual values may have changed from previous estimates, this should be done using technical estimates to determine the impact of any changes
b) Ore reserves: the measurements of ore reserves are based on estimates of the ore resources that are legally and economically exploitable and reflect the technical and environmental considerations of the Corporation regarding the amount of resources that
F-243 Corporación Nacional del Cobre de Chile could be exploited and sold at prices exceeding the total cost associated with the extraction and processing.
The Corporation applies judgment in determining the ore reserves, and as such, possible changes in these estimates might significantly impact the estimates of net revenues over time. In addition, these changes might lead to modifications in usage estimates, which might have an effect on depreciation and amortization expense, calculation of stripping cost adjustments, determination of impairment losses, expected future disbursements related to decommissioning and restoration obligations, long term defined benefits plans’ accounting and the accounting for financial derivative instruments.
The Corporation estimates its reserves and mineral resources based on the information certified by the Competent Persons internal and external of the Corporation, who are defined and regulated according to Law No. 20235. These estimates correspond to the application of the Certification Code of Ore Reserves, Resources and Exploration, issued by the Mining Committee which was instituted through the law.
Notwithstanding the foregoing, the Corporation periodically reviews its estimation models, supported by experts who, in some divisions, also certify the reserves determined from these models.
Impairment of non-financial assets: the Corporation reviews the carrying amount of its non-financial assets to determine whether there is any indication that the carrying amount may not be recoverable. If any such indicator exists, the recoverable amount of the assets is estimated to determine the extent of the impairment loss. In testing impairment, the assets are grouped into cash generating units (“CGUs) to which the assets belong, ¡f applicable. The recoverable amount of these CGUs is calculated as the present value of the expected future cash flows from such assets, considering a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of the assets is lower than their carrying amount, an impairment loss is recognized.
The Corporation defines the CGUs and also estimates the timing and cash flows that such CGUs will generate. Subsequent changes in the grouping of the CGU, or changes in the assumptions supporting the estimates of cash flows or the discount rate, may impact the carrying amounts of the corresponding assets.
Estimates of assumptions influencing the calculation of cash flows, such as the price of copper or treatment charges and refining charges, among others, are determined based on studies conducted by the Corporation using uniform criteria over different periods. Any change in these criteria may have an impact on the recoverable amount of the assets being tested for impairment.
The Corporation has assessed and defined that the CGUs are constituted at the level of each of its current operating divisions, with the exception of the Ventanas Division Smelter and Refinery operations, which are analyzed separately.
F-244
Corporación Nacional del Cobre de Chile
In assessing impairment in affiliates and associates, the Corporation uses the higher of value in use or fair value less costs to determine the recoverable amount. This recoverable amount may consider elements such as Life of Mine (LOM), reserves andor mining resources, among others, for mining operation evaluations. In addition, the evaluation may incorporate market variables such as, for example, the price of copper and other commodities, cost of production inputs, exchange rates, discount rates and other market information for long-term asset valuation.
d) Provisions for decommissioning and site restoration costs: when a disruption is caused by the ongoing development or production of a mining property, an obligation to incur decommissioning and restoration costs arises. Costs are estimated based on a formal closure plan and are reassessed as of each reporting period or as of the date such obligations become known. The initial estimate of decommissioning and site restoration costs is recognized as property, plant, and equipment in accordance with IAS 16, and simultaneously a liability in accordance with IAS 37, is recorded.
For these purposes, a defined list of mine sites, facilities and other equipment are studied under this process, considering the engineering level profile, the cubic meters of assets that will be subject to removal and restoration, weighted by a structure of market prices of goods and services, reflecting the best current knowledge related to carrying out such activities, as well as techniques and more efficient construction procedures to date. In the process of valuation of these activities, the assumptions of the exchange rate for tradable goods and services are made, as well as a discount rate, which considers the time value of money and the risks associated with the liabilities, which is determined based, where applicable, on the currency in which disbursements are expected to be made.
The liability amounts recognized at the end of each reporting date represent management’s best estimate of the present value of the future decommissioning and site restoration costs. Changes in the estimate of the liability because of changes in the estimated future costs or in the discount rate are added to or deducted from the respective asset cost. The amount deducted from the cost of the asset shall not exceed it carrying amount. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in profit or loss.
If the adjustment results in an addition to the cost of the asset, Codelco considers whether this is an indicator that the new carrying amount of the asset may not be fully recoverable.
If such an indicator exists, Codelco tests the asset for impairment by estimating its recoverable amount, and accounts for any impairment loss in accordance with |AS 36.
Costs arising from the installation of a plant or other site preparation work, discounted to their net present value, are provided for and capitalized at the beginning of each project as soon as the obligation to incur such costs arises. These decommissioning costs are charged to net income over the life of the mine, through depreciation of the corresponding asset. Depreciation expense is included in cost of sales, while the discount in the provision is included in finance costs.
F-245 Corporación Nacional del Cobre de Chile
e)
9)
h)
1)
Provisions for employee benefits: Provisions for employee benefits related to severance payments and health benefits for services rendered by the employees are determined based on actuarial calculations using the projected unit credit method and are recognized in other comprehensive income or s (depending on the accounting standards applicable) on an accrual basis
The Corporation uses assumptions to determine the best estimate of future obligations related to these benefits. Such estimates, as well as assumptions, are determined by management using the assistance of external actuaries. These assumptions include demographic assumptions, discount rate and expected salary increases and rotation levels, among other factors.
Accruals for open invoices: the Corporation uses information on future copper prices, through which it recognizes adjustments to its revenues and trade receivables, due to the conditions in provisional pricing arrangements. These adjustments are updated monthly, See Notes 2 q) Revenue from contracts with customers of Note 2 *Significant accounting policies below.
Fair value of derivatives and other financial instruments: management may use ¡ts judgment to choose an adequate and proper valuation method for financial instruments that are not quoted in an active market. In the case of derivative financial instruments, assumptions are based on observable market inputs, adjusted depending on factors specific to the instruments among others.
Lawsuits and contingencies: The Corporation assesses the probability of lawsuits and contingency losses on an ongoing basis according to estimates performed by its legal advisors. For cases in which management and the Corporation’s legal advisors believe that a loss is not probable of occurring or where probable, may not be estimated reliably, no provisions are recognized. When it is considered more likely than not that a loss ¡s probable and it may be reliably estimated, a provision is recognized.
Application of IFRS 16: includes the following:
– Estimation of the lease term
– Determine if it is reasonably certain that an extension or termination option will be exercised.
– Determination of the appropriate rate to discount lease payments
Revenue recognition: the Corporation determines appropriate revenue recognition for its contracts with customers by analyzing the type, terms and conditions of each contract or agreement with a customer.
As part of the analysis, the management must make judgments about whether an agreement or contract is legally enforceable, and whether the agreement includes separate performance obligations. In addition, estimates are required to allocate the total price of the transaction to each performance obligation based on the stand-alone selling
F-246
Corporación Nacional del Cobre de Chile price of the promised goods or services underlying each performance obligation. (The Corporation applies the constraint on variable consideration as defined in IFRS 15, if applicable).
k) Stripping costs – Costs incurred in removing mine waste materials (overburden) in open pits that are in production, that provide access to mineral deposits, are recognized in property, plant, and equipment, when the following criteria set out in IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine are met:
– Itis probable that the future economic benefits associated with the stripping activity wil| flow to the entity.
– It is possible to identify the components of an ore body for which access has been improved because of the stripping activity, and
– The costs relating to that stripping activity can be measured reliably.
The stripping costs are amortized based on the production units of production extracted from the ore body related to the specific stripping activity which generated this amount.
Although the abovementioned estimates have been made based on the best information available as of the date of issuance of these consolidated financial statements, it is possible that new developments could lead the Corporation to modify these estimates in the future.
Such modifications, if any, would be adjusted prospectively, recognizing the effects of the change in estimate in future consolidated financial statements, as required by lAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
2. Significant accounting policies
a. Period covered: The accompanying consolidated financial statements of Corporación Nacional del Cobre de Chile include the following statements:
– Consolidated Statements of Financial Position as of December 31, 2022 and 2021.
– Consolidated Statements of Comprehensive Income for the years ended December 31, 2022 and 2021.
– Consolidated Statements of Changes in Equity for the years ended December 31, 2022 and 2021.
– Consolidated Statements of Cash Flows for the years ended December 31, 2022 and
2021.
b. Basis of preparation – These consolidated financial statements of the Corporation as of December 31, 2022 have been prepared in accordance with the instructions of the Commission for the Financial Market which fully comply with International Financial Reporting Standards (IFRS) issued by the lASB.
The consolidated statements of financial position as of December 31, 2021 and statements of income for the year ended December 31, 2021, equity and cash flows for the year ended
F-247 Corporación Nacional del Cobre de Chile
December 31, 2021, which are included for comparative purposes, have been prepared in accordance with IFRS as issued by the lASB, on a basis consistent with the criteria used for the same period ended December 31, 2022, except for the adoption of new IFRS standards and interpretations adopted by the Corporation as of December 31, 2022, which are disclosed in number 3 “New standards and interpretations adopted by the Corporation” in section ll of this report.
These consolidated financial statements have been prepared from accounting records held by the Company.
c. Functional currency – The functional currency of Codelco is the U.S. dollar, which is the currency of the primary economic environment in which the Corporation operates and the currency in which it receives ¡ts revenues.
The functional currency of subsidiaries, associates, and joint ventures is the currency of the primary economic environment in which those entities operate and the currency in which they receive their revenues. For those subsidiaries and associates that are an extension of the operations of Codelco (entities that are not self-sustaining and whose main transactions are with Codelco); the functional currency is also the U.S. dollar.
The presentation currency of Codelco’s consolidated financial statements is the U.S. dollar.
d. Basis of consolidation – The financial statements comprise the consolidated statements of the Corporation and its affiliates.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Corporation obtains control, and continue to be consolidated until the date such control ceases. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement from the date the Corporation gains control until the date when the Corporation ceases to control the subsidiary.
The financial statements of the subsidiaries are prepared for the same reporting period as the Corporation, using consistent accounting policies
All assets, liabilities, equity, income, expenses, and cash flows related to transactions between consolidated companies are fully eliminated on consolidation. The value of the non-controlling interest of shareholders in equity and in the results of affiliates is presented, respectively, as “Non-controlling interests” in the consolidated statement of financial position and “Income (loss) attributable to non-controlling interests” and “Comprehensive income (loss) attributable to non-controlling interests in the consolidated statements of income.
F-248 Corporación Nacional del Cobre de Chile
The following companies have been consolidated: j 12-31-2022 12-31-2021 Functional – : Taxpayer ID No. COMPANY Country currency % Ownership % Ownership Direct Indirect | Total Total
Foreign Chile Copper Limited England GBP 100.00 – 100.00 100.00 Foreign Codelco do Brasil Mineracao Brazil BRL -| 100.00 100.00 100.00 Foreign Codelco Group Inc. USA US$ 100.00 – 100.00 100.00 Foreign Codelco Kupferhandel GmbH Germany EURO 100.00 – 100.00 100.00 Foreign Codelco Metals Inc. USA US$ -| 100.00 100.00 100.00 Foreign Codelco Services Limited England GBP -| 100.00 100.00 100.00 Foreign Codelco Shanghai Company Limited China RMB 100.00 – 100.00 100.00 Foreign Codelco Singapore P.L Singapore US$ 100.00 – 100.00 100.00 Foreign Codelco USA Inc. USA US$ -| 100.00 100.00 100.00 Foreign Codelco Canadá Canada US$ 100.00 0.00 100.00 100.00 Foreign Ecometales Limited Channel Islands US$ -| 100.00 100.00 100.00 Foreign Exploraciones Mineras Andinas Ecuador EMSAEC S.A. Ecuador US$ 100.00 100.00 100.00 Foreign Cobrex Prospeccao Mineral Brazil BRL – 51.00 51.00 51.00
78.860.780-6 |Compañía Contractual Minera Los Andes Chile US$ 99.97 0.03 100.00 100.00
81.767.200-0 [Asociación Garantizadora de Pensiones Chile CLP 96.69 – 96.69 96.69
88.497.100-4 [Clínica San Lorenzo Limitada Chile CLP 100.00 0.00 100.00 100.00
96.817.780-K [Inmobiliaria de Salud de Codelco SpA (Ex – SEHC Calama) Chile US$ – – – 100.00
99.556.950-7 |Inmobiliaria Red de Salud de Codelco SpA (Ex – Hospital del Cobre-Calama S.A.) Chile CLP 100.00 – 100.00 100.00
96.819.040-7 |Complejo Portuario Mejillones S.A. Chile US$ 99.99 0.01 100.00 100.00
96.991.180-9 [Codelco Tec SpA Chile US$ 99.91 0.09 100.00 100.00
99.569.520-0 [Exploraciones Mineras Andinas S.A. Chile US$ 99.90 0.10 100.00 100.00
99.573.600-4 [Clínica Río Blanco S.A. Chile CLP 100.00 – 100.00 100.00
76.064.682-2 [Centro de Especialidades Médicas Río Blanco Ltda. Chile CLP -| 100.00 100.00 100.00
77.773.260-9 [Inversiones Copperfield SpA Chile US$ 100.00 100.00 100.00
76.043.396-9 – [Innovaciones en Cobre S.A. Chile US$ 0.05 99.95 100.00 100.00
76.148.338-2 [Sociedad de Procesamiento de Molibdeno Ltda. Chile US$ 99.95 0.05 100.00 100.00
76.173.357-5 [Inversiones Gacrux SpA Chile US$ 100.00 – 100.00 100.00
76.231.838-5 [Inversiones Mineras Nueva Acrux SpA Chile US$ – 67.80 67.80 67.80
76.237.866-3 [Inversiones Mineras Los Leones SpA Chile US$ – – 100.00
76.173.783-K |Inversiones Mineras Becrux SpA Chile US$ 67.80 67.80 67.80
76.124.156-7 |Centro de Especialidades Médicas San Lorenzo Ltda. Chile US$ -| 100.00 100.00 100.00
76.255.061-K [Central Eléctrica Luz Minera SpA Chile US$ 100.00 – 100.00 100.00
70.905.700-6 – |Fusat Chile CLP – – – –
76.334.370-7 |Isalud Isapre de Codelco Ltda. Chile CLP 99.90 0.10 100.00 100.00
78.394.040-K [Centro de Servicios Médicos Porvenir Ltda. Chile CLP – 99.00 99.00 99.00
77.928.390-9 – [Inmobiliaria e Inversiones Rio Cipreces Ltda. Chile CLP 99.90 99.90 99.90
77.270.020-2 [Prestaciones de Servicios de la Salud Intersalud Ltda. Chile CLP – 99.00 99.00 99.00
76.754.301-8 [Salar de Maricunga SpA Chile CLP 100.00 – 100.00 100.00 acquisitions and disposals are defined as follows:
For the purposes of theseconsolidated financial statements, subsidiaries, associates,
Subsidiaries: Á subsidiary is an entity over which the Corporation has control. Control is exercised if, and only if, the following elements are present: (1) power to govern the operating and financial policies to obtain benefits from their activities; (li) exposure or rights to the variable returns of these companies; and (iii) ability to use the power to influence the amount of returns.
The Corporation reassesses whether it controls a subsidiary if facts and circumstances indicate that there are changes to one or more of the elements of control listed above.
The consolidated financial statements include all assets, liabilities, revenues, expenses, and cash flows of Codelco and its subsidiaries, after eliminating all inter- company balances and transactions.
F-249
Corporación Nacional del Cobre de Chile
– Associates: Án associate is an entity over which Codelco has significant influence.
Significant influence is the power to participate in the financial and operating policy decisions of the associate but is not control or joint control over those policies.
Codelco’s interest ownership in associates is recognized in the consolidated financial statements under the equity method. Under this method, the initial investment ¡s recognized at cost and adjusted thereafter to recognize changes in Codelco’s share of the comprehensive income of the associate, less any impairment losses or other changes to the investment in net assets of the associate.
The Corporation adjusts the proportional gains or losses obtained by the associate after acquisition to take into account the effects that may exist in the depreciation of the fair value of the assets considered at the date of acquisition.
– Acquisitions and disposals: the result of businesses acquired are incorporated in the consolidated financial statements from the date when control is obtained; the results of businesses sold during the period are included in the consolidated financial statements up to the effective date of disposal. Gains or losses on disposal is the difference between the sale proceeds (net of expenses) and the carrying amount of the net assets attributable to the ownership interest that has been sold (and, where applicable, the associated cumulative translation adjustment).
If control is lost over a subsidiary, the retained ownership interest in the investment wil| be recognized at its fair value.
At the acquisition date of an investment in a subsidiary, associate or joint venture, any excess of the cost of the investment (consideration transferred) plus the amount of the non-controlling interest in the acquiree plus the fair value of any previously held equity interest in the acquiree, where applicable, over Codelco’s share of the net fair value of the identifiable assets and acquired liabilities is recognized as goodwill. Any excess of Codelco’s share of the net fair value of the identifiable assets and acquired liabilities over the consideration transferred, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.
e. Foreign currency transactions and reporting currency conversion – Transactions in currencies other than the Corporation’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, foreign currency transactions denominated in foreign currencies are converted at the rates prevailing at that date. Gains and losses due to the effect of foreign currency transactions are included in the consolidated statement of income for the period within “Exchange gains (losses) in foreign currencies.
At the end of the reporting period, monetary assets and liabilities denominated in Unidades de Fomento (“UF”) have been denominated in US$, considering the exchange rates in effect at the end of each period (12-31-2022: US$ 41.02; 12-31-2021: US$ 36.69)
F-250 Corporación Nacional del Cobre de Chile
Expenses and income in local currency have been expressed in dollars at the observed exchange rate, corresponding to the date of the accounting record of each transaction.
The translation of the financial statements of affiliated associates and jointly controlled entities, whose functional currency is different from Codelco’s presentation currency, is performed as follows for consolidation purposes:
– Assets and liabilities are converted using the prevailing exchange rate on the reporting date.
– Income and expenses for each statement of income are translated at average exchange rates for the period.
– All resulting exchange differences are recognized in comprehensive income and accumulated in equity under the heading Reserve on exchange differences on translation.
The exchange rates used in each reporting period were as follows:
Relationship [Closing exchange rates
12-31-2022 | 12-31-2021
USD CLP 0.00117 0.00118 USD GBP 1.20802 1.34880 USD BRL 0.18923 0.17957 USD EURO 1.07021 1.13135 USD AUD 0.68120 0.72480 USD HKD 0.12820 0.12821 USD RMB 0.14452 0.15680
f. Offsetting balances and transactions – As a general standard, assets and liabilities, revenue, and expenses, are not offset in the financial statements, except for those cases in which offsetting is required or is allowed by a standard and the presentation reflects the substance of the transaction.
Income or expenses arising from transactions which, for contractual or legal reasons, permit the possibility of offsetting and which the Corporation intends to liquidate for their net value or realize the assets and settle the liabilities simultaneously, are stated net in the statement of income.
g. Property, plant and equipment and depreciation – ltems of property, plant and equipment are initially recognized at cost. After initial recognition, they are measured at cost, less any accumulated depreciation and any accumulated impairment losses.
The cost of property, plant and equipment includes the costs of expansion, modernization or improvements that represent an increase in productivity, capacity or efficiency, or an
F-251 Corporación Nacional del Cobre de Chile increase in the useful life of the assets, and are capitalized as an increase in the cost of the related assets.
The assets included in property, plant and equipment are depreciated, as a general rule, using the units of production method, when the activity performed by the asset is directly attributable to the mine production process. In other cases, a straight-line depreciation criterion is used.
The assets included in property, plant and equipment and certain intangibles (software) are depreciated over their economic useful lives, as described below:
Category Useful life
Land Not depreciated Land on mine site Unit of production Buildings Straight-line over 20-50 years Buildings in underground mine levels Units of production level Vehicles Straight-line over 3-7 years Plant and equipment Unit of production Smelters Unit of production Refineries Unit of production Mining rights Unit of production Support equipment Unit of production Intangibles – software Straight-line over 8 years a pit and underground mine Unit of production evelopment
Estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and any change in estimates is recognized prospectively.
Additionally, depreciation methods and estimated useful lives of assets, especially plants, facilities and infrastructure may be revised at the end of each year or during the year according to changes in the structure of reserves of the Corporation and productive long- term plans updated as of that date.
This review may be made at any time if the conditions of ore reserves change significantly because of new known information, confirmed, and officially released by the Corporation.
The gain or loss resulting from the disposal or retirement of an asset is calculated as the difference between the price obtained on disposal and the value recorded in the books, recognizing the charge or credit to income for the period.
Construction in progress includes the amounts invested in the construction of property, plant and equipment and in mining development projects. Construction in progress is transferred to assets in operation once the testing period has ended and when they are ready for use; at that point, depreciation begins to be recognized.
F-252 Corporación Nacional del Cobre de Chile
Borrowing costs that are directly attributable to the acquisition or construction of assets that require a substantial period before they are ready for use or sale are capitalized as part of the cost of the corresponding items of property, plant, and equipment.
The ore deposits owned by the Corporation are recorded in the accounting records at US$1. Notwithstanding the above, those reserves and resources acquired as part of acquisition of entities accounted for as business combinations, are recognized at their fair value.
h. Intangible assets – The Corporation ¡nitially recognizes these assets at acquisition cost.
The cost is amortized systematically over their useful lives, except in the case of assets with indefinite useful lives, which are not amortized, and are assessed for impairment at least once a year and, in any case, whenever there is an indication that impairment may have occurred. At the end of each reporting period, these assets are measured at their cost less any accumulated amortization (when applicable) and any accumulated impairment losses.
The main intangible assets are described as follows:
Research and Technological Development and Innovation Expenditures: The expenditures for the development of Technology and Innovation Projects are recognized as intangible assets at their cost and are considered to have indefinite useful lives.
Development expenses for technology and innovation projects are recognized as intangible assets at cost, if and only if, all the following have been demonstrated
– – The technical feasibility of completing the intangible asset so that it will be available for use or sale;
– The intention to complete the intangible asset is to use or sell it;
– – The ability to use or sell the intangible asset;
– – That the intangible asset will generate probable future economic benefits;
– – The availability of adequate technical, financial, and other resources to complete the development and to use or sell the intangible asset; and
– – The disbursement attributable to the intangible asset during its development can be reliably appraised
Research expenses for technology and innovation projects are recognized in profit or loss when incurred.
i. Impairment of property, plant and equipment and intangible assets – Property, plant and equipment and intangible assets with finite useful lives are reviewed for impairment to verify whether there is any indication that the carrying amount may not be recoverable. If such an indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment to be recorded.
F-253 Corporación Nacional del Cobre de Chile
For intangible assets with indefinite useful lives, their recoverable amounts are annually estimated at the end of each reporting period.
When an asset does not generate cash flows that are independent from other assets, Codelco determines the recoverable amount of the CGU to which the asset belongs.
The Corporation has defined each of its divisions as a cash generating unit
Recoverable amount of an asset is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. On the other hand, the fair value less cost of disposal is usually determined for operational assets considering the Life of Mine (‘LOM), based on a model of discounted cash flows, while the assets not included in LOM as resources and potential resources to exploit are measured by using a market model of multiples for comparable transactions.
If the recoverable amount of an asset or CGU is estimated to be less than it is carrying amount, an impairment loss is recognized immediately in profit or loss, reducing the carrying amount to its recoverable amount. In the event of a subsequent reversal of the impairment, the carrying amount is increased to the revised estimate of the recoverable amount, but to the extent that it does not exceed the carrying amount that would have been determined had no impairment been previously recognized.
The estimates of future cash flow for a CGU are based on future production forecasts, future prices of basic products and future production costs. Under IAS 36 Impairment of Assets, there are certain restrictions for future cash flows estimates related to future restructurings and future cost efficiencies. When calculating value in use, it is also necessary to base the calculations on the spot exchange rate at the date of calculation
j. Expenditures for exploration and evaluation of mineral resources, mine development and mining operations – The Corporation has defined an accounting policy for each of these expenditures.
Development expenses for deposits under exploitation whose purpose is to maintain production levels are recognized in profit or loss when incurred.
Exploration and evaluation costs such as: drillings of deposits, including expenses necessary to locate new mineralized areas and engineering studies to determine their potential for commercial exploitation are recognized in profit or loss, normally at the pre- feasibility stage.
Pre-operating and mine development expenses (normally after feasibility engineering is reached) incurred during the execution of a project and until its start-up are capitalized and amortized in relation to the future production of the mine. These costs include stripping of
F-254 Corporación Nacional del Cobre de Chile waste material, constructing the mine’s infrastructure and other works carried out prior to the production phase.
Finally, costs for defining of new areas or deposit areas in exploitation and of mining operations (PP8E) are recognized in property, plant and equipment and are amortized through profit or loss over the period during which the benefits are obtained.
k. Income taxes and deferred taxes – Codelco and its Chilean subsidiaries recognize annually income taxes based on the net taxable income determined as per the standards established in the Income Tax Law and Article 2 of D.L. 2398, as well as the specific tax on mining referred to in Law No 20026 of 2005. lts foreign subsidiaries recognize income taxes according to the tax regulations in each country.
In addition, Codelco’s taxable income in each period is subject to the tax regime established in Article 26 of D.L. No. 1350, which states that tax payments will be made on March, June, September, and December of each year, based on a provisional tax calculation.
The deferred taxes arising from temporary differences and other events that create differences between the accounting and tax bases of assets and liabilities, are recorded in accordance with the standards established in lAS 12 Income tax.
Deferred taxes are also recognized for undistributed profits of subsidiaries and associates, originated by withholding tax rates on remittances of dividends paid out by such companies to the Corporation.
|. Inventories – Inventories are measured at cost when such does not exceed net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale (¡.e., marketing, sales, and distribution expenses). Costs of inventories are determined according to the following methods:
– Finished products and products in process: These inventories are measured at their average production cost determined using the absorption costing method, including labor, depreciation of fixed assets, amortization of intangibles and indirect costs of each period. Inventories of products in process are classified in current and non-current, according to the normal cycle of operation
– Materials in warehouse: These inventories are valued at acquisition cost and the Corporation determines an allowance for obsolescence considering that slow-moving materials in the warehouse remain in stock.
– – Materials in transit: These inventories are measured at cost incurred at the end of reporting period. Any difference because of an estimate of net realizable value of the inventories lower than it carrying amount is recognized in profit or loss.
F-255 Corporación Nacional del Cobre de Chile
m. Dividends — In accordance with Article 6 of D.L. 1350, the Corporation has a mandatory obligation to distribute its net income as presented in the financial statements. The payment obligation is recognized on an accrual basis.
n. Employee benefits – Codelco recognizes a provision for employee benefits when there is a present obligation (legal or constructive) as a result of services rendered by its employees.
The employment contracts stipulate, subject to compliance with certain conditions, the payment of an employee severance indemnity when an employment contract ends. In general, this corresponds to one monthly salary per year of service and considers the components of the final remuneration which are contractually defined as the basis for the indemnity. This employee benefit has been classified as a defined benefit plan.
Codelco has also agreed to post-employment medical care benefits for certain retirees.
This employee benefit has been classified as a defined benefit plan.
These plans continue to be unfunded as of December 31, 2022.
The employee severance indemnity and the post-employment medical plan obligations are determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. The defined benefit plan obligations recognized in the statement of financial position represent the present value of the accrued obligations.
Actuarial gains and losses are recognized immediately in other comprehensive income and will not be reclassified to profit or loss.
The Corporation’s management uses assumptions to determine the best estimate of these benefits. The assumptions include an annual discount rate, expected increases in salaries and turnover rate, among other factors.
In accordance with its operating optimization programs to reduce costs and increase labor productivity by incorporating new current technologies andor better management practices, the Corporation has established employee retirement programs by amending certain employment contracts or collective union agreements to include benefits encouraging employees to early retire, for which the necessary provisions are made based on the accrued obligation at current value. In case of employee retirement programs which involve multi-year periods, the accrued obligations are updated using a discount rate determined based on financial instruments denominated in the same currency and similar maturities that will be used to pay the obligations.
o. Provisions for decommissioning and site restoration costs – The Corporation recognizes a provision for the estimated future costs of decommissioning and restoration of mining projects in development or production when a mining activity causes a disruption under a constructive or legal obligation. Costs are estimated on the basis of a formal closure plan and cost estimates are annually reviewed.
F-256 Corporación Nacional del Cobre de Chile
Costs arising from the obligation to dismantle a plant installation or other site preparation work, discounted to their present value, are provided for and capitalized at the beginning of each project or at the origin of the constructive or legal obligation as soon as the obligation to incur such costs arises.
These decommissioning and restoration costs are recorded in income through the depreciation of the asset that gave rise to such cost, and the use of the provision is made when the decommissioning materializes. Subsequent changes in estimates of decommissioning-related liabilities are added to or deducted from the costs of the related assets in the period in which the adjustment is made.
Other restoration costs, outside the scope of lAS 16, Property, Plant and Equipment, are provided for at their present value against operating results and the use of the provision is made in the period in which the restoration work is performed.
The accretion of the discount on a closure liability due to the passage of time is recognized as a finance expense in the statement of income.
p. Leases – The Corporation evaluates its contracts at initial application to determine whether they contain a lease The Corporation recognizes a right-of-use asset and a corresponding liability for lease with respect to all lease agreements in which Codelco is the lessee, except for short-term leases (defined as a lease with a lease term of 12 months or less) and leases of low-value assets. For these leases, the Corporation recognizes the lease payments as an operating cost on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which the economic benefits of the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the commencement date, discounted using the interest rate implicit in the lease. lf this rate cannot be easily determined, the Corporation uses the incremental borrowing rate.
The incremental rate for loans used by Codelco is determined by estimating the interest rate that the Corporation would have to pay for borrowing the necessary funds to obtain an asset of an equivalent nature similar in value to the right-of-use asset of the respective lease, in a similar economic environment over a similar term.
Lease payments included in the measurement of the lease liability mainly include fixed payments, variable payments that depend on an index or a rate and the exercise price of a purchase option. Variable payments that do not depend on an index or a rate are excluded.
The lease liability is subsequently measured as follows: the carrying amount increased to reflect the interest on the lease liability (using the effective rate method) and the carrying amount is reduced to reflect the lease payments made.
F-257 Corporación Nacional del Cobre de Chile
The Corporation revalues the lease liability as to the discount rate (and makes the corresponding adjustments to the asset for respective right of use) through a modified discount rate when:
There is a change in the term of the lease, or There is a change in the assessment of an option to purchase the underlying asset, or There is a change in an index or rate which generates a change in cash flows.
Right-of-use assets comprise the amount of the present value of payments not made at the contract inception date, and lease payments made before or up to the inception date, less lease incentives received and any initial direct costs incurred plus other decommissioning and site restoration costs. The right-of-use assets are subsequently measured at cost less accumulated depreciation and accumulated losses due to impairment.
When the Corporation incurs a cost obligation to dismantle or remove a leased asset, restore the location in which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured in accordance with lAS 37. Costs are included in the corresponding right-of-use asset unless those costs are incurred to produce inventories.
The right-of-use assets are depreciated during the shorter period between the term of the lease and the useful life of the underlying asset. If a lease transfers the ownership of the underlying asset or the cost of the right-of-use asset reflects that the Corporation expects to exercise its option to purchase, the right-of-use asset is depreciated over the useful life of the underlying asset. Depreciation is made from the start date of the lease.
The Corporation applies IAS 36 to determine if a right-of-use asset is impaired and recognizes any impairment loss identified, as described in the accounting policy for Property, plant and equipment.
q. Revenue from Contracts with Customers – Revenue ¡is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to customers.
– Sale of mineral goods and or by-products: Contracts with customers for the sale of mineral goods and or by-products include the performance obligation for the delivery of the physical goods and the associated transportation service, at the place agreed with the customers. The Corporation recognizes revenue from the sale of goods when the performance obligation is satisfied according to the shipment or dispatch of the products, in accordance with the agreed conditions, such revenue being subject to variations related to the content and or sale price at the date of its liquidation. Notwithstanding the foregoing, there are some contracts where the performance obligation is satisfied when there ¡is receipt of the product instead of the buyers corresponding destination, thus recognizing revenue at the time of said
F-258 Corporación Nacional del Cobre de Chile transfer. When services of transport of goods are provided, the Corporation recognizes revenue when the service obligation is satisfied.
Sales that have discounts associated with volume subject to compliance with goals are recognized net, estimating the probability that the volume target will be reached.
Sales contracts include a provisional price at the shipment date. The final price is generally based on the London Metals Exchange (“LME) price. Revenue from sales of copper is measured using estimates of the future spread of metal prices on the LME andor the spot price at the date of shipment, with subsequent adjustments made upon final pricing recognized as revenue. The terms of sales contracts with customers contain provisional pricing arrangements whereby the selling price for metal concentrate is based on prevailing spot prices on a specified future date after shipment to the customer (the quotation period). Consequently, the final price is set at the dates indicated in the contracts. Adjustments to provisional sale prices occur based on movements in quoted market prices on the LME up to the date of final pricing. The period between provisional invoicing and final pricing is typically between one and nine months. Changes in fair value over the quotation period and until final pricing are estimated by reference to forward market prices for applicable metals.
As indicated in the note related to hedging policies in the market of metal derivatives, the Corporation enters into operations in the market of metal derivatives. Gains and losses from those which are fair value hedges contracts are recognized as revenues.
– Rendering of services: Additionally, the Corporation recognizes revenue for rendering services, which are mainly related to the processing of minerals bought from third parties. Revenue from rendering of services is recognized when the amounts can be measured reliably and when the services have been provided.
r. Derivatives contracts – Codelco uses derivative financial instruments to reduce the risk of fluctuations in sales prices of its products and of exchange rates.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently measured to their fair value at the end of each reporting period.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated in equity under the item “Cash flow hedge reserve. The gain or loss relating to the ineffective portion is immediately recognized in profit or loss and included in the Finance cost or Finance income line items, depending on the effect of such ineffectiveness. The amount recognized in comprehensive income is reclassified to income, in the same line in which the effects generated by the hedged item are recorded once the results of the hedged transactions are recorded in the same line or until the maturity date of such transactions.
F-259 Corporación Nacional del Cobre de Chile
A hedge is considered highly effective when ¡it meets the requirements of |IFRS 9. At the time of discontinuation of the hedge contract or the associated designated accounting and according to the circumstances of each case, the accumulated gainloss on the derivative instrument remains in equity until the hedge transaction occurs, or if discontinuation is expected to occur, the amount in equity is reclassified to profit or loss.
The total fair value of hedging derivatives is classified as non-current financial asset or llability, if the remaining maturity of the hedged item ¡is greater than 12 months, and as current financial asset or liability if the remaining maturity of the hedged ¡item ¡s less than 12 months.
The derivative contracts held by the Corporation have been entered into to apply the risk hedging policies and are accounted for as indicated below:
– – Hedging policies for exchange rate risk: The Corporation enters into exchange rate derivatives to hedge exchange rate variations between the U.S. dollar and the currencies of transactions the Corporation undertakes. In accordance with the policies established by the Board of Directors, these hedge transactions are only entered into when there are recognized assets or liabilities, forecasts of highly probable transactions or firm commitments. The Corporation does not enter into derivative transactions for non-hedging purposes.
– Hedging policies for metal market prices risk: In accordance with the policies established by the Board of Directors, the Corporation entered into derivative contracts to reduce the inherent risks in the fluctuations of metal prices.
Hedging policies seek to protect expected cash flows from product sales operations by adjusting, when necessary, physical sales contracts to its commercial policy. When the sales commitments are fulfilled and the metal derivative contracts are settled, there is an offset between the results of the sales transactions and the results of hedging using metal derivatives.
Hedging transactions carried out by the Corporation in the metal derivatives market are not undertaken for speculative purposes.
– Embedded derivatives: The Corporation has established a procedure that allows for evaluation of the existence of embedded derivatives in financial and non-financial contracts. Where there is an embedded derivative, and the host contract is not a financial instrument and the characteristics and risks of the embedded derivative are not closely related to the host contract, the derivative is required to be recognized separately.
s. Financial information by segment – The Corporation has defined its Divisions as ¡ts operating segments in accordance with the requirements of IFRS 8, Operating Segments.
The mining deposits in operation, where the Corporation conducts its extractive and processing activities are managed by the following Divisions: Chuquicamata, Radomiro
F-260 Corporación Nacional del Cobre de Chile
Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina and El Teniente. In addition, the smelting and refining activities are managed at the Ventanas Division. All these Divisions have a separate operational management, which reports to the Chief Executive Officer, through the North and South-Central Vice-President of Operations, respectively. Income and expenses of the Head Office are allocated to the defined operating segments.
t. Presentation of Financial Statements – For purposes of lAS 1 Presentation of Financial Statements, the Corporation presents its statement of financial position classified as “current and non-current” and its statements of income “by function” and cash flows using the direct method.
u. Current and non-current financial assets – The Corporation determines the classification of its financial assets at the time of initial recognition and reviews it at each closing date.
The classification depends on the business model in which the investments are managed and the contractual characteristics of their cash flows.
The Corporation’s financial assets are classified into the following categories:
– – Atfair value through profit or loss: Initial recognition: This category includes those financial assets that do not qualify in the business model to collect contractual cash flows, nor do such cash flows come exclusively from capital and interest. These instruments are initially recognized at fair value.
Subsequent recognition: Their subsequent recognition is at fair value, recording in the consolidated statement of comprehensive income, in the line Other gains (losses)’ any changes in fair value.
– – Amortized cost: Initial recognition: This category includes those financial assets that qualify in the business model and that are held for the purpose of collecting contractual cash flows and that meet the “Solely Payment of Principal and Interest” (SPP’I) criterion. This category includes certain Trade and other current receivables, and the loans included in other non-current financial assets.
Subsequent recognition: These (debt) instruments are subsequently measured at amortized cost using the effective interest method. The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any impairment allowance.
Interest income is recognized in profit or loss and is calculated by applying the effective interest rate to the gross carrying amount of a financial asset. For financial assets measured at amortized cost that are not part of a designated hedging relationship,
F-261 Corporación Nacional del Cobre de Chile exchange differences are recognized in profit or loss in the Foreign exchange difference line item.
– Atfair value through other comprehensive income: Initial measurement: Financial assets that meet the criteria “Solely payments of principal and interest” (SPPI) are classified in this category and must be maintained within a business model both to collect the cash flows and to sell the financial assets.
These instruments are initially recognized at fair value.
Subsequent recognition: Their subsequent valuation is at fair value. Interest income calculated using the effective interest rate method, foreign exchange gains and losses and impairment are recognized in income. Other net gains and losses are recognized in other comprehensive income. On derecognition, the gains and losses accumulated in other comprehensive income for debt instruments are reclassified to income.
Codelco did not irrevocably choose to designate any equity financial instruments (assets) at fair value with effect on other comprehensive income.
v. Financial liabilities – Financial liabilities are initially recognized at fair value net of transaction costs. Subsequent to their initial recognition, the valuation of the financial llabilities will depend on their classification, within which the following categories are distinguished:
– – Financial liabilities at fair value through profit or loss: This category includes financial liabilities defined as held for trading.
Changes in fair value associated with own credit risk are recorded in other comprehensive income unless doing so creates an accounting mismatch.
– – Financial liabilities measured at amortized cost: This category includes all financial llabilities other than those measured at fair value through profit or loss.
The Corporation includes in this category bonds, obligations and other current payables.
These financial liabilities are measured using the effective interest rate method, recognizing interest expense based on the effective rate.
The method of the effective interest rate corresponds to the method of calculating the amortized cost of a financial liability and the allocation of interest expenses during the corresponding period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period, to the net carrying amount on initial recognition.
Trade and other current payables are financial liabilities that do not explicitly accrue interest and are recognized at their nominal value, which approximates ¡ts fair value.
F-262 Corporación Nacional del Cobre de Chile
Financial liabilities are derecognized when the liabilities are paid or expire.
w. Impairment of financial assets – The Corporation measures the loss allowance at an amount equal to lifetime expected credit losses for certain of its trade receivables. For these, it uses the simplified approach as required under |FRS 9.
The provision matrix is based on the Corporation’s historical credit loss experience over the expected life of such trade receivables and is adjusted for forward-looking estimates considering the most relevant macroeconomic factors that affect bad debts.
Other accounts receivable and other financial assets are reviewed using reasonable and sustainable information that is available without cost or disproportionate effort in accordance with IFRS 9 to determine the credit risk of the respective financial assets. A provision for impairment losses on trade receivables and other financial assets is established when there is objective evidence that the amounts due may not be fully recovered.
X. Cash and cash equivalents – The statement of cash flows reflects changes in cash that took place during the period, determined under the direct method. The Corporation has defined the following:
– Cash flows: Inflows and outflows of cash or cash equivalents, which are defined as highly liquid investments maturing in less than three months with a low risk of changes in value.
– – Operating activities: Are the principal revenue-producing activities of the Corporation and other activities that are not investing or financing activities.
– Investing activities: These are the acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.
– Financing activities: These are activities that result in changes in the size and composition of net equity and borrowings of the Corporation.
Bank overdrafts are classified as external resources in current liabilities.
y. Law No. 13196 – Under this law, the return in foreign currency of sales abroad of the Corporation’s actual income from its copper production, including by-products, is taxed at
10%. The amount recognized for this concept is presented in the statement of income within the line item Other expenses by function. (Note 111.22 letter c)).
z. Cost of sales – Cost of sales is determined according to the absorption costing method, including the direct and indirect costs, depreciation, amortization and any other expenses directly attributable to the production process.
F-263
Corporación Nacional del Cobre de Chile aa. Classification of current and non-current balances – In the consolidated statement of financial position, the balances are classified according to their maturities, that is, as current for those with a maturity equal to or less than twelve months and as non-current for those with a greater maturity. Where there are obligations whose maturity is less than twelve months, but whose long-term refinancing is insured upon a decision by the Corporation whose intention is to refinance, through credit agreements available unconditionally with long-term maturity, these could be classified as non-current liabilities.
F-264 Corporación Nacional del Cobre de Chile
3.
New standards and interpretations adopted by the Corporation
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those applied in the preparation of the Corporation’s annual consolidated financial statements for the year ended December 31, 2021, except for the adoption of new standards, interpretations and amendments, effective from January 1, 2022, which are:
a)
Reference to the Conceptual Framework – Amendments to IFRS 3:
Reference to Conceptual Framework 2018 instead of 1989. Additionally, for transactions within the scope of lAS 37 or IFRIC 21, an acquirer will apply IAS 37 or IFRIC 1 (instead of Conceptual Framework) to identify liabilities assumed in a business combination. Finally, a statement is added so that an acquirer does not recognize contingent assets acquired in a business combination.
Property, Plant and Equipment – Revenue before Intended Use (Amendments to IAS 16)
The income and costs from the sale of items produced while the asset is taken to the location and necessary condition of operation foreseen by the administration, are recognized in results. lt is not allowed to affect the cost of the asset by revenues and costs of such sales.
Onerous Contracts – Costs of Fulfilling a Contract (Amendments to lAS 37) lt is specified that the cost of fulfilling a contract includes “costs that are directly related to the contract”, which are those that either may be incremental costs of fulfilling that contract or an allocation of other costs that are directly related to fulfill the contracts.
Annual Improvements to IFRS Standards 2018-2020
a) IFRS 1 First-time Adoption of IFRS: Allows an affiliate to apply paragraph D16 (a) to measure cumulative translation differences using the amounts reported by its parent, based on the date of transition to IFRS of its parent.
b) IFRS 9 Financial Instruments: clarifies what fees are included when applying the *10 percent test in paragraph B3.3.6.
c) IFRS 16 Leases: removes from lllustrative Example 13, the illustration of the relimbursement of improvements to the leased asset made by the lessor.
d) IAS 41 Agriculture: removes the requirement in paragraph 22 to exclude tax cash flows when measuring the fair value of a biological asset using the present value technique.
The application of these amendments had no impact on the Corporation’s consolidated financial statements, but may affect the accounting for future transactions or arrangements.
F-265
Corporación Nacional del Cobre de Chile
4. New accounting pronouncements
The following new standards, amendments and interpretations had been issued by the |ASB, but their application is not yet mandatory:
New IFRS Date of mandatory Summary application IFRS 17, Insurance | Annual periods beginning on | Establishes the principles for the Contracts or after January 1, 2023 recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with discretional participating features and supersedes IFRS 4 Insurance contracts.
Classification of Liabilities as Current or Non-Current (Amendments to lAS 1)
Annual periods beginning on or after January 1, 2024
The amendments aim to promote coherence in applying its requirements by helping companies to determine whether, in the statement of financial position, debts and other liabilities with an uncertain settlement date must be classified as current (maturing or potentially maturing in one year or less) or not current.
lt is important to note that this amendment must be applied retrospectively and early application is permitted.
Disclosures on accounting policies (Amendments to lAS 1 and IFRS 2 Practice Statement)
Annual periods beginning on or after January 1, 2023
The amendments require an entity to disclose its material accounting policies.
The additional amendments explain how an entity can identify a material accounting policy.
Examples are added of when an accounting policy is likely to be material. To support the amendment, the Board has also developed guidance and examples to explain and demonstrate the application of the “four-step materiality process described in the IFRS 2 Practice Statement
F-266
Corporación Nacional del Cobre de Chile
New IFRS
Date of mandatory application
Definition of accounting estimates (amendments to ¡AS 8)
Annual periods beginning on or after January 1, 2023
Summary The amendments replace the definition of a change in accounting estimates. According to the new definition, accounting estimates are “monetary amounts in the financial statements that are subject to measurement uncertainty. Entities develop accounting estimates if accounting policies require that financial statement items be measured in a manner that involves measurement uncertainty. The amendments clarify that a change in the accounting estimate resulting from new information or new developments ¡is not a correction of an error.
Deferred tax related to assets and liabilities arising from a single transaction.
(amendments to lAS 12)
Annual periods beginning on or after January 1, 2023
The amendments clarify that the exemption from initial recognition does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition.
Initial Application of|FRS 17 and IFRS 9 – Comparative Information (Amendment to IFRS 17)
An entity that chooses to apply the amendment shall apply it when it first applies IFRS 17
The amendment permits entities applying IFRS 17 and IFRS 9 for the first time at the same time to present comparative information about a financial asset as if the classification and measurement requirements of IFRS 9 had been applied previously to that financial asset.
F-267
Corporación Nacional del Cobre de Chile
New IFRS
Date of mandatory application
Summary
Lease liability on a sale and leaseback (Amendments to IFRS 16)
Annual reporting periods beginning on or after January 1, 2024
The amendment clarifies how a lessee subsequently measures sale and leaseback transactions that meet the requirements of IFRS 15 to be accounted for as a sale.
Non-current liabilities with covenants (Amendments to IAS 1
Annual reporting periods beginning on or after January 1, 2024
The amendment clarifies how the conditions that an entity must meet within twelve months after the reporting period affect the classification of a liability.
Management is currently evaluating the impact of the adoption of these new regulations and modifications. lt is not expected to have a significant impact on the consolidated financial statements.
F-268
Corporación Nacional del Cobre de Chile
III. EXPLANATORY NOTES
1. Cash and cash equivalents
The detail of cash and cash equivalents as of December 31, 2022 and December 31, 2021, is as follows: Item 12-31-2022 | 12-31-2021 ThUS$ ThUus$ Cash on hand 113 890 Bank balances 922,050 611,861 Deposits 477,798 649,955 Mutual funds – Money market 26,806 19,142 Repurchase agreements – 1,770 Total cash and cash equivalents 1,026,727 | 1,283,618
Interest on time deposits is recognized on an accrual basis using the contractual interest rate of each of these instruments.
The Corporation does not hold any significant amounts of cash and cash equivalents that have a restriction on use.
Cash and cash equivalents meet the low credit risk exemption under |FRS 9. The classification of time deposits complies with the requirements of 7.
2. Trade and other receivables
a) Trade and other receivables
The following table sets forth trade and other receivables balances, with their corresponding allowances for doubtful accounts:
Item Current Non-current
12-31-2022 | 12-31-2021 | 12-31-2022 | 12-31-2021
ThUS$ ThUS$ ThUS$ ThUS$
Trade receivables (1) 2,934,533 | 3,752,997 Allowance for doubtful accounts (3) (4,098) (11,410) Subtotal trade receivables, net 2,930,435 | 3,741,587 – – Other accounts receivable (2) 481,381 460,610 88,906 104,177 Allowance for doubtful accounts (3) (25,031) (7,847) – – Other other accounts receivable, net 456,350 452,763 88,906 104,177 Total 3,386,785 | 4,194,350 88,906 104,177
(1) Trade receivables correspond to the sales of copper and its by-products, those that in general are sold in cash or through bank transfers.
F-269 Corporación Nacional del Cobre de Chile
(2) Other receivables mainly consist of the following items: e Remaining tax credit susceptible to refund VAT and other taxes receivable, amounting to ThUS$ 216,218 and ThUS$ 132,674 as of December 31, 2022 and 2021, respectively.
e Receivables owed by the Corporation’s personnel, for short-term and long- term current loans of ThUS$99,229 and ThUS$88,175, respectively (as of December 31, 2021 ThUS$117,081 and ThUS$99,448, respectively), both deducted monthly from their salaries. Mortgage loans granted to the Corporation’s personnel amounting to ThUS$29,320, which are mainly long- term, are backed by mortgage guarantees (as of December 31, 2021 ThUS$28,086).
e Advances to suppliers and contractors, to be deducted from the respective payment statements for ThUS$101,665 and ThUS$185,051 as of December 31, 2022 and 2021, respectively.
e Accounts receivable for services from the Ventanas Smelter to ENAMI. These services for the year 2022 amounted to ThUS$22,452. Additionally, in order to complement the commercial commitments between Codelco and ENAMI, the Corporation purchases copper concentrate and by-products and sells cathodes to ENAMI. Both Codelco and ENAMI are companies owned by the State of Chile.
(3) The Corporation recognizes an allowance for doubtful accounts based on its expected credit loss model.
The reconciliation of changes in the allowance for doubtful accounts for the years ended December 31, 2022 and 2021, were as follows:
Item 12-31-2022 12-31-2021 ThUS$ ThUS$ Opening balance 19,257 16,979 Increases 9,872 2,278 Movement, subtotal 9,872 2,278 Closing balance 29,129 19,257
The balance of past due but not impaired balances is as follows:
Ageing 12-31-2022 | 12-31-2021 ThUsS$ ThUsS$ Less than 90 days 9,760 4.030 90 days – 1 year 1,114 1,304 Over 1 year 206 5,977 Total unprovisioned past-due debt 7,080 11,311
F-270
Corporación Nacional del Cobre de Chile
b) Accruals for open sales invoices
The Corporation adjusts its revenues and trade receivable balances, based on future copper prices through the recognition of an accrual for open sales invoices.
When future price of copper is lower than the provisional invoicing price, the accrual ¡is presented in the statement of financial position as follows:
– For those customers that have due balances with the Corporation, the accrual is presented as a deduction from the line item trade and other current receivables.
– Forthose customers that do not have due balances with the Corporation, the accrual is presented in the line item trade and other current payables.
When the future copper price is higher than the provisional invoicing price, the accrual is added to the line item trade and other current receivables.
Accordingly, as of December 31, 2022, a positive provision of ThUS$31,327 was recorded in the account Trade and other receivables for provisions for unfinished sales invoices. As of December 31, 2021 it was a positive provision of TRUS$ 187,541
As of December 31, 2022, ThUS$ 1,458 of negative provision for open invoices associated with customers who do not have balances due to Codelco was reclassified to Trade payables of current liabilities, which added to the balance presented in Trade and other receivables, totaled a net negative provision of ThUS$ 29,869.
3. Balances and transactions with related parties
a) Transactions with related persons
In accordance with Law on New Corporate Governance, the members of Codelco’s Board are, in terms of transactions with related persons, subject to the provisions of Title XVI of Law on Corporations, which sets the requirements regarding transactions with related parties in publicly traded companies and their subsidiaries.
Notwithstanding the foregoing, pursuant to the provisions of the final paragraph of Article 147 b) of Title XVI, which contains exceptions to the approval process for transactions with related parties, the Corporation has established a general policy over customary transactions (which was communicated through a significant event notice to the CMF), that defines customary transactions as those carried out with its related parties in the normal course of business, which contributes to the social interest and are necessary to the normal development of Codelco’s activities.
Likewise, consistent with the referred to above standard, the Corporation has implemented as part of its internal regulatory framework, a specific policy dealing with business between
F-271 Corporación Nacional del Cobre de Chile related persons and companies with Codelco’s executives. Codelco’s Corporate Policy No.18 (“CCP No. 18), the latest version currently in force, was approved by the Chief Executive Officer and the Board of Directors.
Accordingly, Codelco without the authorization required in CCP No. 18 and of the Board of Directors, as required by Law or by the Corporation by-laws, shall not enter into any contracts or agreements involving one or more Directors, its Chief Executive Officer, the members of Division’s Managing Committees, Vice-presidents, Legal Counsel, General Auditor, Division Chief Executive Officers, Advisors of Senior Management, employees who must make recommendations andor have the authority to award tenders, assignments of purchases andor contracting goods and services, and employees in management positions (up to fourth hierarchical level in the organization), including their spouses, children and other relatives up to second degree of relation, with a direct interest, represented by third parties or on behalf of another person. Likewise, CCP No. 18 requires administrators of Corporation’s contracts to declare all related persons and disqualify himselfherself if any related persons are involved within the field of hisher job responsibilities.
This prohibition also includes the companies in which such administrators are involved through ownership or management, either directly or through representation of other natural persons or legal entities, as well as those individuals who also have ownership or management in those companies.
The Board of Directors has been informed and approved certain transactions as defined in CCP No. 18.
These operations include those shown in the following table, for the total amounts mentioned, which must be executed within the time periods specified in each contract:
F-272 Corporación Nacional del Cobre de Chile
1-1-2022 1-1-2021 Company Taxpayer ID No. | Country | Nature of relationship | Transaction description 12-31-2022 | 12-31-2021
Amount Amount
ThUS$ ThUS$ Anglo American Sur S.A. 77.762.940-9 Chile [Associate Supplies 22 Centro de Capacitación y Recreación Radomiro Tomic. 79.985.590-7 Chile [Other related parties Services 1,589 Centro de Especialidades Médicas Río Blanco Ltda. 76.064.682-2 Chile |[Subsidiary Services 5,346 – Centro de Especialidades Médicas San Lorenzo Ltda. 76.124.156-7 Chile |Subsidiary Services 447 387 Clínica Río Blanco S.A. 99.573.600-4 Chile |Subsidiary Services 1,273 – Clinica San Lorenzo Ltda. 88.497.100-4 Chile |Subsidiary Services – 426 Ecometales Limited agencia en Chile. 59.087.530-9 Chile |Subsidiary Services and Supplies 14,252 661 Empresa Nacional de Telecomunicaciones S.A. 92.580.000-7 Chile [Relative of employee Services 415 Finning Chile S.A. 91.489.000-4 Chile [Relative of employee Services and Supplies 46,595 – Fismidth S.A. 89.664.200-6 Chile [Relative of employee Supplies – 23,695 Fundación de Salud El Teniente. 70.905.700-6 Chile |Subsidiary Services 101 6,583 Fundación Orquesta Sinfónica Infantil de los Andes. 65.018.784-9 Chile |Founder Services 212 105 Industrial y Comercial Artimatemb Ltda. 76.108.720-7 Chile [Relative of employee Supplies 48 180 ISalud Isapre de Codelco Ltda 76.334.370-7 Chile |Subsidiary Services 15,122 Kairos Mining S.A. 76.781.030-K Chile [Associate Services – 13,332 Linde Gas Chile S.A. 90.100.000-K Chile [Relative of employee Supplies 439 36 Marsol S.A. 91.443.000-3 Chile [Relative of employee Supplies 273 – Nueva Ancor Tecmin S.A. 76.411.929-0 Chile [Relative of employee Supplies 424 4 Sociedad Contractual Minera El Abra. 96.701.340-4 Chile [Associate Supplies 2 Sonda S.A. 83.628.100-4 Chile [Relative of employee Services – 2,408 Suez Medioambiente Chile S.A. 77.441.870-9 Chile [Relative of employee Supplies 17,103 98 Manufacturas AC Ltda 77.439.350-1 Chile [Relative of employee Supplies 80 123 MI Robotic Solutions S.A. 76.869.100-2 Chile [Relative of employee Services and Supplies 609 396 Tecno Fast S.A. 76.320.186-4 Chile [Relative of employee Services 44 041 19,394 Termoequipos SpA 78.123.830-9 Chile [Relative of employee Supplies 117 4 Comercial e Import. Villanueva Ltda 77.000.200-1 Chile [Relative of employee Supplies 1,281 834 Deloitte Advisory SpA 76.863.650-8 Chile [Relative of employee Services – 77 Fluor Chile Ingeniería y Construcción S.A. 89.595.900-5 Chile [Relative of employee Services 9,285 – Sitrans Servicios Integrados de transporte Ltda 96.500.950-7 Chile [Relative of Director Services 2,800 Symnetics S.A. 77.812.640-0 Chile [Relative of employee Services 3,374 1,019 Constructora Domingo Villanueva Arancibia S.A. 96.846.150-8 Chile [Relative of employee Services 6,468 5,860 Metso Outotec Chile SpA 93.077.000-0 Chile [Relative of employee Services and Supplies 74,326 138,565 Ingeniería y Construcción Fenix Ltda 76.134.977-5 Chile [Relative of employee Supplies 1,112 910 Janssen SA. 81.198.100-1 Chile [Relative of Director Supplies 2,369 98 Enaex Servicios S.A. 76.041.871-4 Chile [Relative of Director Supplies 71,215 9 CAID S.A. 76.069.751-6 Chile [Relative of employee Supplies 4 Consultorías, Asesorías, Auditorías y Capacitación Guerra y Guerra Ltda 76.168.106-0 Chile [Relative of employee Services 437 Consorcio Cruz y Davila – Zañartu Ingeniería Ltda 76.381.335-5 Chile [Relative of employee Services – 5,280 Costella Proyectos 76.282.588-0 Chile [Relative of employee Services 3,423 18,177 Buses JM Pullman S.A. 78.502.770-1 Chile [Relative of employee Services 11,631 – Adelanta Asesorías y Servicios Ltda 76.425.905-K Chile [Relative of employee Services 135 Emin Ingeniería y Construcción S.A. 79.527.230-5 Chile [Relative of employee Supplies 56,547 JRI Ingeniería S.A. 96.611.930-6 Chile [Relative of employee Services 19,388 Georock S.A. 77.842.840-7 Chile [Relative of employee Services 26,400 CDZ Ingeniería Uno Ltda 77.535.292-2 Chile [Relative of employee Services 8,511 Softline International Chile SPA 76.232.892-5 Chile [Relative of Director Supplies 4 Ingeniería y Construcción Sigdo Koppers S.A. 91.915.000-9 Chile [Relative of employee Services and Supplies 76,085 Lucas Blandford Maquinarias SpA 76.213.738-0 Chile [Relative of employee Services 10
Key Management of the Corporation
In accordance with the policy established by the Board of Directors and its related regulations, the transactions with the Directors, the Chief Executive Officer, Vice Presidents, Corporate Auditor, the members of the Divisional Management Committees and Divisional General Managers shall be approved by the Board of Directors.
During the years ended December 31, 2022 and 2021, the members of the Board of
Directors have received the following amounts as per diems, salaries and fees:
F-273
Corporación Nacional del Cobre de Chile
1-1-2022 1-1-2021 Name e yer ID Country Nature of relationship Transaction 1231-2022 12342041
o. description Amount Amount ThUS$ ThUS$ Blas Tomic Errázuriz 5.390.891-8 Chile Director Directors fee 38 Ghassan Dayoub Pseli 14.695.762-5 Chile Director Directors fee 23 Ghassan Dayoub Pseli 14.695.762-5 Chile Director Payroll 45 Hernán de Solminihac Tampier | 6.263.304-2 Chile Director Directors fee 28 87 Isidoro Palma Penco 4.754.025-9 Chile Director Directors fee 101 101 Juan Benavides Feliú 5.633.221-9 Chile an ofthe Board ol Directors fee 32 130 Juan Morales Jaramillo 5.078.923-3 Chile Director Directors fee 80 87 Paul Schiodtz Obilinovich 7.170.719-9 Chile Director Directors fee 30 Rodrigo Cerda Norambuena 12.454.621-4 Chile Director Directors fee 7 Felipe Larraín Bascuñán 7.012.075-5 Chile Director Directors fee 28 64 Pedro Errázuriz Domínguez 7.051.188-6 Chile Director Directors fee 80 56 Patricia Núñez Figueroa 9.761.676-0 Chile Director Directors fee 80 56 Máximo Pacheco Matte 6.371.887-4 Chile an ote Bordo actors fee 99 Josefina Montenegro Aravena | 10.780.138-3 Chile Director Directors fee 52 Alejandra Wood Huidobro 7.204.368-5 Chile Director Directors fee 51 Nelson Cáceres Hernandez 14.379.277-3 Chile Director Directors fee 51 Nelson Cáceres Hernandez 14.379.277-3 Chile Director Payroll 40
The Ministry of Finance through Supreme Decree No. 233, dated February 09, 2022, established the compensation for the Corporation’s Directors. The compensation to Board of Director members ¡is as follows:
a. The Directors of Codelco will receive a fixed monthly compensation of Ch$4,413,071 (four million four hundred thirteen thousand seventy-one Chilean pesos) for meeting attendance. The payment of the monthly compensation requires at least one meeting attendance each month.
b. The Chairman of the Board will receive a fixed monthly compensation of Ch$8,826,140 (eight million eight hundred and twenty-six thousand one hundred and forty Chilean pesos).
c. Each member of the Directors” Committee, whether the one referred to in Article 50 bis) of Law No. 18046 or another established by the Corporation by-laws, will receive a fixed additional monthly compensation of Ch$1,471,022 (one million four hundred and seventy- one thousand and twenty-two Chilean pesos) for meeting attendance, regardless of the number of committees of which they are members. In addition, the Chairman of the Directors” Committee will receive a fixed monthly compensation of Ch$2,942,047 (two million nine hundred and forty-two thousand- and forty-seven-pesos Chilean pesos) for meeting attendance
d. The compensation established in the legal text is effective for a period of two years, as from March 1, 2022, and will not be adjusted during said period
F-274 Corporación Nacional del Cobre de Chile
On the other hand, the short-term benefits to key management of the Corporation expensed during the years ended December 31, 2022 and 2021, were ThUS$ 13,368 and ThUS$ 13,213, respectively.
The methodology to determine the remuneration of key management was approved by the Board of Directors at a meeting held on January 29, 2003.
During the years ended December 31, 2022 and 2021, severance indemnity payments and other payments associated with the retirement of Codelco’s senior executives were ThUS$ 1,501 and ThUS$ 237, respectively.
There were no payments for other non-current benefits during the years ended December 31, 2022 and 2021, other than those mentioned in the preceding paragraph.
There are no share-based payment plans.
Transactions with companies in which Codelco has ownership interest
The Corporation undertakes commercial and financial transactions that are necessary for its activities with its subsidiaries, associates and joint ventures (related parties). The financial transactions correspond mainly to loans granted (mercantile current accounts).
Commercial transactions with related companies mainly consist of purchasessales of products or rendering of services carried out under market conditions and prices, which do not bear any interest or indexation.
The Corporation does not make allowances for doubtful accounts on the main items receivable from its related companies since these have been subscribed with the relevant safeguards in the respective debt agreements.
The detail of accounts receivable and payable between the Corporation and its related parties as of December 31, 2022 and December 31, 2021 is as follows:
Accounts receivable from related entities:
Current Non-current
Country of Currency of
Taxpayer ID No. Name origin Nature of relationship readjustment
12-31-2022 | 12-31-2021 | 12-31-2022 | 12-31-2021 ThUS$ ThUS$ ThUS$ ThUS$
77.762.940-9 [Anglo American Sur S.A. Chile Associate US$ 27,566 147,238
76.063.022-5 [Inca de Oro S.A. Chile Associate US$ 908 505
76.255.054-7 [Planta Recuperadora de Metales SpA Chile Associate US$ – 1,319
96.701.340-4 [Sociedad Contractual Minera El Abra Chile Associate US$ 3,277 1,869
96.801.450-1 [Agua de la Falda S.A. Chile Associate US$ 5 5 224
76.028.880-2 |Sociedad Contractual Minera Puren Chile Associate US$ – 5,775
224
Total 31,756 156,711 224
224
F-275
Corporación Nacional del Cobre de Chile
Accounts payable to related entities:
Current Non-current Taxpayer ID No. Name Mid Nature of relationship Dr 12-31-2022 | 12-34-2021 | 12-31-2022 | 12-31-2021 ThUS$ ThUS$ ThUS$ ThUS$
77.762.940-9 |Anglo American Sur S.A. Chile Associate US$ 138,330 183,973
96.701.340-4 [Sociedad Contractual Minera El Abra Chile Associate US$ 38,381 35,145
76.255.054-7 |Planta Recuperadora de Metales SpA Chile Associate US$ 979 20
76.781.030-K |Kairos Mining S.A. Chile Associate US$ 983 2,206 Totales 178,673 221,344
The following table sets forth the transactions carried out between the Corporation and its related entities during the years ended December 31, 2022 and 2021 are detailed below:
1-1-2022 1-1-2021
12-31-2022 12-31-2021 Effect on Effect on Taxpayer ID No. Company Transaction description Country Currency Amount tarado di Amount tarado di t t ThUusS$ ThUS$ ThUS$ ThUusS$
96.801.450-1 [Agua de la Falda S.A. Sale of services Chile CLP 2 2 1 1
96.801.450-1 [Agua de la Falda S.A. Contribution Chile US$ 257 193
77.762.940-9 [Anglo American Sur S.A. Dividends received Chile US$ 138,445 270,577
77.762.940-9 [Anglo American Sur S.A. Dividends receivable Chile US$ – – 98,172 –
77.762.940-9 [Anglo American Sur S.A. Product sales Chile US$ 52,307 52,307 181,450 181,450
77.762.940-9 [Anglo American Sur S.A. Other sales Chile CLP 3,614 3,614 14,168 14,168
77.762.940-9 [Anglo American Sur S.A. Product purchase Chile US$ 781,019 (781,019)| 1,037,558 | (1,037,558)
76.063.022-5 [Inca de Oro S.A. Payments on account of the company Chile CLP 125 8 56 –
77.781.030-K |Kairos Mining Services Chile CLP 11,064 (11,064) 11,645 (11,645)
77.781.030-K [Kairos Mining Sale of services Chile CLP 1 1 1 1
77.781.030-K [Kairos Mining Dividends received Chile US$ – – 78
76.255.054-7 |Planta Recuperadora de Metales SpA | Interest on loan Chile US$ – – 133 133
76.255.054-7 |Planta Recuperadora de Metales SpA |Services Chile US$ 23,045 (23,045) 18,667 (18,667)
76.255.054-7 [Planta Recuperadora de Metales SpA [Other sales Chile CLP 6,347 6,347
76.255.054-7 [Planta Recuperadora de Metales SpA [Product sales Chile CLP 305 305 5,327 5,327
76.255.054-7 |Planta Recuperadora de Metales SpA [Loan recovery Chile US$ 5,440
76.028.880-2 |Sociedad Contractual Minera Puren [Dividends received Chile US$ 19
76.028.880-2 |Sociedad Contractual Minera Puren [Decrease in capital Chile US$ 5,775
96.701.340-4 |Soc. Contractual Minera El Abra Dividends received Chile US$ 25,174 217
96.701.340-4 |Soc. Contractual Minera El Abra Product purchase Chile US$ 383,923 (383,923) 341,968 (341,968)
96.701.340-4 |Soc. Contractual Minera El Abra Product sales Chile US$ 65,461 65,461 19,821 19,821
96.701.340-4 |Soc. Contractual Minera El Abra Other sales Chile US$ 1,501 1,501 1,493 1,493
96.701.340-4 |Soc. Contractual Minera El Abra Commissions received Chile US$ 112 112 87 87
96.701.340-4 |Soc. Contractual Minera El Abra Other purchases Chile US$ 447 (447) 65 (65)
d) Additional information
The purchasesales of products transactions with Anglo American Sur S.A., are regular business activity transactions to buysell copper and other products. On the other hand, there are certain transactions related to the contract entered into with the subsidiary Inversiones Mineras Nueva Acrux SpA (whose non-controlling shareholder is Mitsui) and Anglo American Sur S.A., under which the latter agreed to sell a portion of its annual copper output to said subsidiary.
F-276 Corporación Nacional del Cobre de Chile
4. Inventories
Inventories as of December 31, 2022 and December 31, 2021 are detailed as follows:
Current Non-current Item 12-31-2022 12-31-2021 12-31-2022 12-31-2021 ThUS$ ThUS$ ThUS$ ThUS$ Finished products 154,351 111,516 Subtotal finished products, net 154,351 111,516 – – Products in process 1,425,443 1,109,373 603,446 610,558 Subtotal products in process, net 1,425,443 1,109,373 603,446 610,558 Materials in warehouse and others 893,879 799,157 Adjustment for obsolescence provision (172,764) (164,591) Subtotal materials in warehouse and other, net 721,115 590,566 – – Total inventories 2,300,909 1,811,455 603,446 610,558
Inventories recognized in cost of sales during the years ended December 31, 2022 and 2021, correspond to finished products and amount to ThUS$12,262,740 and ThUS$12,165,733, which do not consider the cost of processing services of ThUS$21,912 and ThUS$19,954, respectively.
For the years ended December 31, 2022 and 2021, the Corporation has not reclassified strategic inventories to Property, Plant and Equipment.
The reconciliation of changes in the allowance for obsolescence is detailed below:
Movement obsolescence provision 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Opening balance (164,591) (171,947) (Decrease) Increase in provision (8,173) 1,396 Closing balance (172,764) (164,591)
During the years ended December 31, 2022 and 2021, inventory write-offs of ThUS$13,287 and ThUS$37,865, respectively, were recognized.
At December 31, 2022 the provision for net realizable value of copper and its effect on income during the period January to December 2022 was ThUS$ 54.535 and a loss of ThUS$45.397 respectively (profit of ThUS$18.075 for the same period 2021). As of December 31, 2021, the net realizable value provision was ThUS$9,137.
As of December 31, 2022 and 2021, there are no unrealized gains or losses recognized for purchase and sale transactions of inventories with related parties.
As of December 31, 2022 and December 31, 2021, there are no inventories pledged as security for liabilities.
F-277 Corporación Nacional del Cobre de Chile
5. Income taxes and deferred taxes
a) Deferred tax assets and liabilities
Deferred taxes are presented in the Statement of Financial Position as follows:
Deferred taxes 12-31-2022 12-31-2021 ThUS$ ThUS$ Non-current assets 95,705 94,595 Non-current liabilities 8,461 928 7,004,523 Total deferred taxes, net 8,366,223 6,909,928
The following table shows the deferred tax opening, net, classified as assets or liabilities according to the nature of the temporary differences:
Deferred tax assets 12-31-2022 12-31-2021 ThUS$ ThUS$ Provisions 1,841,045 1,541,835 Tax loss 117,004 114,961 Contracts for the right to use assets 8,600 (5,153) Other 2,416 (4,079) Total deferred tax assets 1,969,065 1,647,564 Deferred tax liabilities 12-31-2022 12-31-2021 ThUS$ ThUS$ Accelerated depreciation 8,087,772 6,405,256 Change in property, plant and equipment 1,637,493 1,714,652 Tax on mining activity 362,717 342,926 Fair value of acquired mineral claims 169,000 70,178 Deferred income taxes of subsidiaries 19,017 10,770 Hedging derivatives 3,041 (7,454) Valuation of severance indemnities 96,248 21,164 Total deferred tax liabilities 10,335,288 8,557,492
b) The effect of deferred taxes recognized in comprehensive income is detailed as follows:
Deferred taxes that affected comprehensive income 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Cash flow hedge (65,159) 63,593 Defined benefit plans 5,978 | (106,983) Total deferred taxes that affected comprehensive income (59,181)| (43,390)
F-278
Corporación Nacional del Cobre de Chile
c) Composition of income tax (expense)
1-1-2022 1-1-2021 Composition 12-31-2022 | 12-31-2021
ThUS$ ThUS$ Deferred tax effect (911,197)| (1,369,042) Current tax expense (222,472)| (2,490,089) Adjustments previous periods 3,798 Others (1) (3) Total income tax (expense) (1,133,670) (3,855,336)
d) The following table sets forth the reconciliation of the effective tax rate:
12-31-2022 ltems Taxable base Tax Rate
25% 40% 5.00% 25% Addit. 40% 5.00% Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$
Tax effect on income before income taxes 1,472,127 1,472,127 1,472,127 (368,032) (588,851) (73,606) (1,030,489)
Tax effect on income before income tax subsidiaries 23,114 23,114 23,114 (5,779) (9,246) (1,156) (16,181)
Tax effect on consolidated income before income tax 1,495,241 1,495,241 1,495,241 (373,811) (598,097) (74,762) (1 046,670)
Permanent differences
Corporate income tax (25%) (164,181) 41,045 41,045
Specific tax on state-owned companies art, 2? D.L. 2.398 (40%) 136,615 (54,646) (54,646)
Specific tax on mining activity 1,468,004 (73,399) (73,399)
TOTAL INCOME TAX (332,766) (652,743) (148,161) (1 133,670)
12-31-2021 ltems Taxable base Tax Rate
25% 40% 5.09% 25% Addit. 40% 5.09% Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$
Tax effect on income before income taxes 5,822,100 5,822,100 5,822,100 (1,455,525) (2,328,840) (291,105) (4,075,470)
Tax effect on income before income tax subsidiaries 84,604 84,604 84,604 (21,151) (33,842) (4,230) (59,223)
Tax effect on consolidated income before income tax 5,906,704 5,906,704 5,906,704 (1,476,676) (2,362,682) (295,335) (4,134,693)
Permanent differences
Corporate income tax (25%) (713,552) 178,388 178,388
Specific tax on state-owned companies art. 2 D.L. 2.398 (40%) (323,471) 129,388 129,388
Specific tax on mining activity 644,356 (32,218) (32,218)
Differences from prior years’ taxes 3,799 | TOTAL INCOME TAX (1,298,288) (2,233,294) (327,553) (3,855,336)
The Corporation has applied a rate of 25% to calculate deferred income tax and first category income tax. As a state company, the Corporation is classified as those companies of article 14 letter G of the Income Tax Law, incorporated in the Tax Reform Law No. 21210 of February 24, 2020, maintaining the General Regime of Taxation. Meanwhile, the national subsidiaries and associates, by default, have applied the Partially Integrated taxation system with a rate of 27% for both years. Foreign subsidiaries and associates have applied the tax rates in force in their respective countries.
Article 2 of Decree Law No. 2398 establishes an additional 40% income tax rate on the Corporation’s taxable income plus the share of retained earnings of companies not organized as corporations or joint stock companies and the dividends actually received from the latter.
F-279 Corporación Nacional del Cobre de Chile
For the Specific Tax on Mining Activities, in accordance with Law No. 204609, a rate of 5% has been estimated as of December 31, 2022.
On September 2, 2020, Law No. 21256 was published in the Official Journal, for the tax measures that are part of the emergency plan for economic reactivation. According to Article No. 3, added Article No. 23 bis of Law No. 21210, incorporating a temporary depreciation regime that allows full and instant depreciation of fixed assets and that is in force for acquisitions carried out between June 1, 2020, and December 31, 2022. As a state company, the Corporation as a taxpayer that pays taxes based on effective income and complete accounting, availed itself of the indicated benefit as of tax year 2022.
6. Current and non-current tax assets and liabilities
The current tax balance is presented net of monthly provisional payments as an asset or llability in Current Taxes determined as indicated in section II. Main accounting policies,
2.1): Current tax assets 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Recoverable taxes 10,226 11,438 Total current tax assets 10,226 11,438 Current tax liabilities 12-31-2022 | 12-31-2041 ThUS$ ThUS$ Provisión PPM 24,315 14,742 Tax provision 1,994 293,634 Total current tax liabilities 26,309 308,376 Non-current tax assets 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Non-current tax assets 748,611 4,333 Total non-current tax assets 748,611 4,333
F-280
Corporación Nacional del Cobre de Chile
7. Property, plant and equipment
a) The items of property, plant and equipment as of December 31, 2022 and December 31,2021, are as follows:
Property, plant and equipment, gross: 12-31-2022 12-31-2021 ThUS$ ThUS$ Works in progress 6,420,233 6,809,931 Land 225,629 369,484 Buildings 6,858,811 6,269,026 Plantand equipment 21,425,224 20,291,671 Fixtures and fittings 47,241 47,618 Motor vehicles 2,128,955 2,086,993 Lands improvement 8,910,108 7,949,671 Mining operations 10,798,033 10,026,052 Mine development 6,141,437 5,612,654 Other assets 977,378 976,656 Total property, plant and equipment, gross 63,939,049 60,099,356 Property, plant and equipment, accumulated depreciation 12-31-2022 12-31-2021 ThUS$ ThUS$ Works in progress – – Land 20,357 17,949 Buildings 3,661,920 3,500,094 Plantand equipment 12,413,755 11,794,536 Fixtures and fittings 45,969 44 294 Motor vehicles 1,707,945 1,622,813 Improvements to land 4,337,041 4,034,574 Mining operations 7,616,069 6,966,153 Mine development 1,258,845 1,148,161 Other assets 568,422 520,889 Total property, plant and equipment, accumulated depreciation 31,629,519 29,649,463 Property, plant and equipment, net 12-31-2022 12-31-2021 ThUS$ ThUS$ Works in progress 6,420,233 6,809,931 Land 205,272 351,535 Buildings 3,196,891 2,768,932 Plantand equipment 9,011,469 8,497,135 Fixtures and fittings 1,676 3,324 Motor vehicles 421,410 463,780 Improvements to land 4,573,067 3,915,097 Mining operations 3,181,964 3,059,899 Mine development 4,882,992 4 464,493 Other assets 408,956 455,767 Total property, plant and equipment, net 32,309,530 30,449,893
F-281
Corporación Nacional del Cobre de Chile
b) Movements in property, plant and equipment
M Works i Pl Fi Mini Mi : ovements orKs Land Buildings ant and : ixed Motor vehicles : Land “9 me Other assets Total (in thousands of US$) progress equipment installations 8 improvement operations development Reconciliation of changes in property, plant and equipment Property, plant and equipment at beginning of period Opening balance 1-1-2022 6,869,931 351,535 2,768,932 8,497,135 3,324 463,780 3,515,097 3,059,899 4 464 493 455,767 30,449,893 Changes in property, plant and equipment Increases other than those resulting from business combinations, property, plant and 3.603.401 618 8 418,670 80 4.022.779 equipment Depreciation, property, plant and equipment – (2,408) (162,231) (687,029) (1,464) (100,350) (306,733) (669,680) (99,092) (47,671) (2,076,658) Impairment losses recognized in profit or loss for the period (89,410) – – 7 7 – – 7 – 7 (89,410) Increase (decrease) through transfers and other changes, property, plant and equipment Increases (decreases) due to transfers from construction in progress, property, plant and equioment (2,984,191) 602 352,692 1,228,772 63,412 906,804 398,530 32,609 770 Increases (decreases) due to other changes, property, plant and equipment (971,588) (144,457) 238,591 (21,926) (19) (2) 457,899 (25,455) 484,582 34 17,619 nease [Becreaso) through transfers and other changes, property, plant and (3,955,779) (143,855) 591,243 1,206,846 (19) 63,410 1,364,703 373,075 517,191 804 17,619 equipme Disposals and retirements of service, property, plant and equipment Retirements, property, plant and equipment (1,910) (1,053) (6,101) (173) (5,430) (26) (14,693) Disposals and retirements of service, property, plant and equipment (1,910) . (1,053) (6,101) (173) (5,430) . . . (26) (14,693) Increase (decrease) in property, plant and equipment (443,698) (146,263) 427,959 514,334 (1,648) (42,370) 1,057,970 122,065 418,099 (46,811) 1,859,637 Property, plant and equipment at end of period Closing balance 12-31-2022 6,426,233 | 205,272 3,196,891 9,011,469 1,676 421,410 4,573,067 3,181,964 4,882,592 408,956 32,309,530 : Movements Works in Land Buildings Plant and : Fixed Motor vehicles |. Land Mining Mine Other assets Total (in thousands of US$) progress equipment installations 8 improvement operations development Reconciliation of changes in property, plant and equipment Property, plant and equipment at beginning of period Opening balance 1-1-2021 6,391,278 370,368 2,877,686 8,597,454 5,202 529,737 3,094,164 3,050,266 3,991,916 643,834 29,551,905 Changes in property, plant and equipment A other than those resulting from business combinations, property, plant and 2.888.970 613 3,143 216 Ñ 480 318,795 1.874 621 3,214,742 Depreciation, property, plant and equipment – (4,815) (175,128) (645,816) (2,018) (100,083) (310,779) (703,986) (118,571) (46,569) (2,107,765) Impairment losses recognized in profit or loss for the period 5,684 (66,218) (57,760) (15) y (6,006) y y 7 (124,315) Increase (decrease) through transfers and other changes, property, plant and equipment Increases (decreases) due to transfers from construction in progress, property, plant and equipment (2,293,773) 108,383 569,413 38,496 716,474 867,234 (7,572) 1,345 Increases (decreases) due to other changes, property, plantand equipment 29,469 (14,018) 25,120 41,241 (41) (224) 20,810 (472,410) 596,846 (1,458) 225,335 O AS through transfers and other changes, property, plant and (2,264,304) (14,018) 133,503 610,654 (41) 38,272 737,284 394,824 589,274 (113) 225,335 Disposals and retirements of service, property, plant and equipment Retirements, property, plant and equipment (151,697) (1,524) (10,540) (20) (4,174) (48) (142,006) (310,009) Disposals and retirements of service, property, plant and equipment (151,697) – (1,524) (10,540) (20) (4,174) (48) – – (142,006) (310,009) Increase (decrease) in property, plant and equipment 478,653 (18,833) (108,754) (100,319) (1,878) (65,957) 420,933 9,633 472,577 (188,067) 897,988 Property, plant and equipment at end of period Closing balance 12-31-2021 6,869,931 351,535 2,768,932 | 8,497,135 3,324 463,780| 3,515,097 3,059,899 4,464,493 455,767 30,449,893
F-282
Corporación Nacional del Cobre de Chile
c)
The balance of construction in progress is directly associated with the operating activities of the Corporation and relates to the acquisition of equipment for projects in construction and associated costs for their completion.
The Corporation has signed insurance policies to cover the possible risks to which the various property, plant and equipment items are subject, as well as the possible claims that may arise for the period of its activities. Such policies sufficiently cover the risks to which they are subject in Management’s opinion.
Capitalized interest costs for the years ended December 31, 2022 and 2021 amounted to ThUS$ 289,501 and ThUS$ 236,693, respectively. The annual capitalization rate was
4.36% and 4.09% at December 31, 2022 and 2021, respectively.
Expenses on exploration and drilling of deposits recognized in profit or loss and the cash outflows disbursed for the same concepts are presented in the following table:
Expenditure on exploration and drilling resorvoirs 1-1-2021 1-1-2021
12-31-2022 | 12-31-2021
ThUS$ ThUS$ Net income for the period 99,671 33,106 Cash outflows disbursed 67,904 41,005
The detail of “Other assets” under “Property, plant and equipment is as follows:
Other assets, net 12-31-2022 | 12-31-2021 ThUS$ ThUsS$ Mining properties from the purchase of Anglo American Sur S.A 260,000 260,000 Maintenances and other major repairs 117,569 153,132 Other Assets – Calama Plan 26,388 37,782 Other 4,999 4,853 Other assets, net 408,956 455,767
As of September 30, 2021, as a result of an update of the valuation of the mining properties acquired as part of the purchase of a stake in Anglo American in 2012, it was determined that the value of such asset is TRuS$260,000, which implied the recognition of a value adjustment of ThUS$142,000 in income before taxes.
The Corporation currently has no ownership restrictions relating to assets belonging to Property, plant and equipment, except for leased assets whose legal title corresponds to the lessor.
Codelco has not pledged property, plant and equipment as collateral for debt obligations.
In accordance with the provisions of section ll. Significant accounting policies 2 ¡), relating to Impairment of property, plant and equipment and intangibles assets, and as indicated in note 21 Asset impairment, as of December 31, 2022, the Corporation recorded an impairment of the value of the Ventanas Smelter assets in the amount of ThUS$89,410 before tax.
F-283 Corporación Nacional del Cobre de Chile
As of December 31, 2021, the subsidiary Sociedad de Procesamiento de Molibdeno Ltda.
recorded, an impairment of assets in the amount of ThUS$125,483 before taxes (see note
21)
8. Leases
8.1 Right-of-use assets
As of December 31, 2022 and December 31, 2021, the breakdown of the right of use asset category ¡s:
Detail 12-31-2022 12-31-2021 ThUS$ ThUsS$
Right-of-use assets, gross 922,837 898,083
Right-of-use assets, accumulated depreciation 916,994 496,944
Total right-of-use assets, net 405,843 361,539
Movements for the years ended December 31, 2022 and December 31, 2021 are as follows:
Reconciliation of changes in Right-of-use Assets 12-31-2022 12-31-2021 (in thousands of US$) ThUs$ ThUs$ Opening balance 361,539 461,040 Increases 202,426 83,679 Depreciation (150,294) (149,317) Impairment (1,168) Increase (decrease) due to other changes (7,447) (32,038) Increase (decrease) due to transfers and other changes, property, plant and (7,447) (32,038) equipment
Retirements, right-of-use assets (381) (657) Disposals and retirements of service, property, plant and equipment (381) (657) Total movements 44,304 (99,501) Closing balance 405,843 361,539 The composition by asset class is as follows:
12-31-2022 12-31-2021 Right-of-use assets, net, by asset class ThUS$ ThUS$ Buildings 6,248 8,124 Land 308 95 Plant and equipment 174,688 197,043 Fixtures and fittings 9,897 9,644 Motor vehicles 201,874 141,847 Right-of-use assets 16,828 8,86 Total 405,843 361,539
F-284
Corporación Nacional del Cobre de Chile
8.2 Liabilities for current and non-current leases
As of December 31, 2022 and December 31, 2021, the payment commitments for leasing operations are summarized in the following table:
12-31-2022 12-31-2021 Lease
Current and Non-current Gross Interest Equity Gross Interest Equity
ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ up to 90 days 44,526 (4,674) 39,852 39,744 (2,981) 32,763 more than 90 days up to 1 year 98,947 (13,609) 85,338 87,221 (7,880) 79,341 more than 1 year up to 2 years 106,699 (12,565) 94,134 97,429 (6,906) 90,523 over 2 years up to 3 years 85,401 (9,800) 75,601 62,310 (5,303) 57,007 over 3 years up to 4 years 55,460 (6,642) 48,818 54,482 (5,328) 49,154 over 4 years up to 5 years 27,725 (3,691) 24,034 24,910 (3,016) 21,894 more than 5 years 71,308 (27,216) 44,092 25,906 (4,461) 21,445 Total 490,066 (78,197) 411,869 388,002 (35,875) 352,127
Leasing operations are generated by service contracts, mainly for facilities, buildings, plants and equipment.
The expense related to short-term leases, low-value assets and variable leases not included in the measurement of lease liabilities, for the years ended December 31, 2022 and 2021, is presented in the following table:
9,
1-1-2022 1-1-2021 Lease expense 12-31-2022 | 12-31-2021 ThUs$ ThUS$ Short-term leases 9,633 7,979 Low value assets 827 7,969 Variable leases not included in the measurement of lease liabilities 908,900 1,036,267 TOTAL 919,360 1,051,415
Investments accounted for using the equity method
The value of the investment and the accrued results of investments accounted for using the equity method are presented below:
Share of Investment value Accrued profit (loss) Currency 1-1-2022 1-1-2021 Associates Taxpayer ID No. | Functional | 12-31-2022 | 12-31-2021 | 12-31-2022 | 12-31-2021 | 12-31-2022 | 12-31-2021 % % ThUS$ ThUS$ ThUS$ ThUS$ Agua de la Falda S.A. 96.801.450-1 US$ 42.26% 42.26% 4,682 4,988 (304) – Anglo American Sur S.A. 77.762.940-9 US$ 29.50% 29.50% 2,827,106 2,829,329 43,069 329,175 Inca de Oro SAA. 73.063.022-5 US$ 33.89% 33.89% 12,506 12,670 (162) (118) Kairos Mining S.A. 76.781.030-K US$ 40.00% 40.00% 44 44 – – Minera Purén SCM 76.028.880-2 US$ 35.00% 35.00% 3,338 3,873 (535) (266) Planta Recuperadora de Metales SpA 76.255.054-7 US$ 34.00% 34.00% 16,346 14,360 1,863 2,142 Sociedad Contractual Minera El Abra 96.701.340-4 US$ 49.00% 49.00% 663,301 680,747 8,060 83,912 TOTAL 3,527,323 3,546,011 51,991 414,845
F-285
Corporación Nacional del Cobre de Chile
a)
Associates Agua de la Falda S.A.
As of December 31, 2022, Codelco holds a 42.26% ownership interest in Agua de la Falda S.A., with the remaining 57.74% owned by Minera Meridian Limitada.
The corporate purpose of this company is to exploit deposits of gold and other minerals, in the third region of Chile.
Sociedad Contractual Minera El Abra
Sociedad Contractual Minera El Abra was incorporated in 1994. As of December 31, 2022, Codelco holds a 49% ownership interest, with the remaining 51% owned by Cyprus El Abra Corporation, a subsidiary of Freeport-McMoRan Copper 8 Gold Inc.
The company business activities involve the extraction, production and selling of copper cathodes.
Sociedad Contractual Minera Purén
As of December 31, 2022, Codelco holds a 39% ownership interest, with the remaining 65% owned by Compañía Minera Mantos de Oro.
This company’s corporate purpose is to explore, identify, survey, investigate, develop and exploit mining deposits in order to extract, produce and process minerals.
Inca de Oro S.A.
On June 1, 2009, Codelco’s Board of Directors authorized the incorporation of a new company aimed to develop studies allowing the continuity of the Inca de Oro Project, which is a wholly-owned subsidiary of Codelco.
December 31, 2022, Codelco holds a 33.85% ownership interest in this company (PanAust IDO Ltda. has 66.15%).
Planta Recuperadora de Metales SpA
On December 3, 2012, Planta Recuperadora Metales SpA was incorporated by Codelco, which held a 100% ownership interest in this company.
On July 7, 2014, Codelco reduced its ownership interest in Planta Recuperadora de
Metales SpA to 51%, with the remaining 49% ownership interest held by LS-Nikko Copper Inc.
F-286
Corporación Nacional del Cobre de Chile
On October 14, 2015, Codelco reduced its ownership interest in Planta Recuperadora de Metales SpA to 34%, with LS-Nikko Copper Inc, holding the remaining 66%.
December 31, 2022, LS-Nikko Copper Inc, is the controlling shareholder of this company based on the control elements set out in the shareholders’ agreement.
The principal business activity of the company is the processing of intermediate products of the refining and processing of copper and other metals aiming to recover copper, other metals and other sub products, their transformation to commercial products and the selling and distribution of all classes of goods or inputs derived from such process.
Anglo American Sur S.A.
The principal activities of the Company are the exploration, extraction, exploitation, production, processing and trading of minerals, concentrates, precipitates, copper bars and all metallic and non-metallic minerals, all fossil substances and liquid and gaseous hydrocarbons. This includes the exploration, exploitation and use of all natural energy sources capable of industrial use and the products or by-products obtained, as well as any other related, connected or complementary activities on which the shareholders agree.
On August 24, 2012, Codelco recognized the acquisition of ownership interest in Anglo American Sur S.A. which resulted in the initial recognition of the cost of the investment for ThUS$ 6,490,000 that corresponded to the proportionate share (29.5%) of the net fair value of the identifiable assets and liabilities acquired.
In determining the share of the fair value of the identifiable assets and liabilities acquired, the Corporation considered the resources and mineral reserves that could be measured reliably. As part of this updating process, and applying the valuation criteria indicated above, the fair value of the assets acquired and liabilities assumed of Anglo American Sur S.A. as of that date amounted to US$ 22,646 million, which in the proportion acquired by Inversiones Mineras Becrux SpA (29.5%) results in an investment at fair value of US $ 6,681 million at the acquisition date.
The allocation of the purchase price at fair value between the identifiable assets and llabilities was prepared by management using its best estimate and considering all relevant and available information at the acquisition date of Anglo American Sur S.A.
The Corporation used a discounted cash flows model to estimate cash flow projections, based on the life of mine. These projections were based on estimated production and future prices of minerals, operating costs and capital costs, among other estimates made at the date of acquisition. Additionally, proven and probable resources to explore were not included in the mine plan, therefore, they were valued separately using a market model. Such resources are included in item “Mineral Resources.
F-287 Corporación Nacional del Cobre de Chile
As of December 31, 2015, the Corporation identified indicators of impairment in the operating units of Anglo American Sur S.A. Consequently, and with the purpose of making the corresponding adjustments to the investment in this associate, the Corporation estimated its recoverable amount, considering the additional value of the assets identified at the date of acquisition of the investment.
In determining the recoverable amount, the Corporation applied the methodology of fair value less costs of disposal. The recoverable amount of the operating units was determined based on the life of mine by using a discounted cash flow model whose main assumptions included ore reserves declared by the associate, copper price, supply costs, foreign exchange rates, discount rate and market information for the long-term asset valuation. The discount rate used was annual rate of 8% after taxes.
Furthermore, the resources not included in the mining plan (LOM) have been valued using a multiples market approach for comparable transactions.
Such methodology is consistent with the methodologies used at the acquisition date, which is described in the previous paragraph.
As of December 31, 2022, control on Anglo American Sur S.A. is held by Inversiones Anglo American Sur S.A. with 50.06%, while one of the companies that make up the non- controlling interest is Inversiones Mineras Becrux SpA., which is controlled by Codelco with 67.80% of the shares, and which exercises significant influence over Anglo American Sur S.A. with 29.5%.
As of December 31, 2022, the Corporation evaluated the value of ¡ts investment in the associate Anglo American Sur S.A., determining that the recoverable amount of this asset approximates its book value, which is ThUS$2,827,107. The determination of the aforementioned recoverable amount is based on a valuation model that combines a discounted cash flow methodology for the valuation of proven and probable reserves and multiples of comparable transactions for the valuation of resources, which is sensitive to certain key assumptions and market variables. Á reasonably possible change of a 5 % decrease in copper price projections could represent an impairment of the investment in the associate of ThuS$181,632. A reasonably possible increase in the discount rate of 100 bps could generate an impairment of the investment in the associate of T1hUS$132,618.
Changes in the tax and regulatory framework or in the operation of the asset could generate future additional decreases or increases in the recoverable amount of the investment.
Kairos S.A.
Until before November 26, 2012, the Corporation held a 40% stake in conjunction with
Honeywell Chile S.A. who was the majority shareholder with 60% of the capital stock of Kairos Mining S.A.
F-288 Corporación Nacional del Cobre de Chile
On November 26, 2012, the Corporation sold part of its stake to Honeywell Chile SA, which implies that Codelco maintained a 5% interest as of December 31, 2012, while the remaining 95% was held Honeywell Chile S.A. The result of this pre-tax operation was ThUS$ 13.
On June 6, 2019, Codelco purchased 350 shares of Kairos Mining from Honeywell Chile
S.A., increasing its participation from 5% to 40%.
December 31, 2022, the control of the company lies in Honeywell Chile S.A. which owns 60% of the shares while Codelco owns the remaining 40%.
The purpose of the company is to provide automation and control services for industrial and mining activities and to provide technology and software licenses.
The following tables present the assets and liabilities as of December 31, 2022 and December 31, 2021 of investments in associates, as well as the main movements and their respective results for the years ended December 31, 2022 and 2021.
Assets and liabilities 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Current assets 2,014,837 2,456,750 Non-current assets 6,048,672 5,907,333 Current liabilities 1,188,578 1,282,822 Non-current liabilities 2,146,339 1,927,360
1-1-2022 1-1-2021 Profit (loss) 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Revenue 3,972,391 4,172,304 Ordinary expenses (3,376,515) (2,847,478) Profit for the period 195,836 1,324,826
1-1-2022 1-1-2021 Movement Investment in Associates | 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Opening balance 3,546,011 3,418,958 Contribution 297 193 Dividends (65,445) (291,647) Net income for the period 51,991 414,845 Comprehensive income (5,268) 9,228 Other (223) (5,566) Closing balance 3,527,323 3,546,011
The following tables detail the assets and liabilities of the significant associates as of December 31, 2022 and 2021, as well as the main movements and their respective results for the years ended December 31, 2022 and 2021:
F-289 Corporación Nacional del Cobre de Chile
Anglo American Sur S.A.
Assets and liabilities 12-34-2022 | 12-31-2041 ThUS$ ThUS$ Current assets 1,230,826 1,596,000 Non-current assets 4.890,300| 4,316,000 Current liabilities 1,035,447 | 1,121,000 Non-current liabilities 1,816,705 1,545,000
1-1-2022 1-1-2021 Profit (loss) 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Revenue 2,758,482 | 3,426,000 Ordinary expenses and other (2,581,848) | (2,277,000) Profit for the period 176,634 1,149,000 Sociedad Contractual Minera El Abra Assets and liabilities 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Current assets 791,431 800,169 Non-current assets 1,027,238 1,048,549 Current liabilities 130,665 145,145 Non-current liabilities 294,330 314,292
1-1-2022 1-1-2021 Profit (loss) 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Revenue 776,810 705,726 Ordinary expenses and other (760,362) (934,477) Profit for the period 16,448 171,249
b) Additional information on unrealized profits (losses)
Codelco carries out copper purchase and sale operations with Sociedad Contractual Minera El Abra. As of December 31, 2022 and December 31, 2021, the value of finished products under the Inventories caption did not present balances for unrealized profit provision.
As of December 31, 2022 and December 31, 2021, the Corporation has a balance of ThUS$3,920 for unrealized gains on the purchase of LNG terminal use rights from Sociedad Contractual Minera El Abra for TRUS$3.920.
c) Share of profit or loss for the period
The income before tax, corresponding to the proportion on the income of Anglo American Sur S.A. recognized for the period ended December 31, 2022, was a profit of TRUS$
F-290 Corporación Nacional del Cobre de Chile
52,107 (December 31, 2021, profit of TNUS$ 338,955) while the adjustment to such income corresponding to the depreciation and write-offs of the fair values of the net assets of such company recognized at the acquisition date, resulted in a lower income before tax of ThUS$ 9,038 (December 31, 2021 loss of ThUS$ 9,781) and is being deducted from “Equity in income of associates and joint ventures accounted for using the equity method” in the consolidated statement of comprehensive income.
10. Subsidiaries
The following tables set forth a detail of assets, liabilities and profit (loss) of the Corporation’s subsidiaries, prior to consolidation adjustments:
Assets and liabilities cd ThUS$ ThUS$ Current assets 433,023 530,415 Non-current assets 3,448,081 3,458,789 Current liabilities 297,899 608,927 Non-current liabilities 547,319 478,228
1-1-2022 1-1-2021 Profit (loss) 12-31-2022 12-31-2021 ThUS$ ThUS$ Income 1,571,510 2,096,185 Ordinary expenses and other (1,512,328) (1,822,438) Profit (Loss) 59,182 273,747
11. Current and non-current financial assets
Current and non-current financial assets included in the statement of financial position are as follows:
12-31-2022 Atfair value Total financial Classification in statement of financial position through profitor | Amortized cost Hedging derivatives assots loss Metal futures | Cross currency contracts swap ThUS$ Thus$ Thus$ Thus$ ThUS$ Cash and cash equivalents 26,806 999,921 1,026,727 Trade and other current receivable 2,422,067 964,718 3,386,785 Non – current receivable 88,906 88,906 Current receivable from relates entities 31,756 31,756 Non – current receivable from related entities 224 224 Other current financial assets 1,364 87 1,451 Other non – current financial assets 4,983 100,535 105,518 TOTAL 2,448,873 2,091,872 87 100,535 4,641,367
F-291
Corporación Nacional del Cobre de Chile
As of December 31, 2022, the balance of the caption Other financial assets, current includes ThUS$ 1,315 invested in term deposit instruments with a maturity of more than 90 days. As of December 31, 2021, the amount invested in this type of instrument was ThUS$ 320,275
12-31-2021 Atfair value l o Total financial Classification in statement of financial position through profitor | Amortized cost Hedging derivatives assets loss Metal futures | Cross currency contracts swap ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Cash and cash equivalents 19,142 1,264,476 1,283,618 Trade and other current receivable 3,039,967 1,154,383 4,194,350 Non – current receivable 104 177 104,177 Current receivable from relates entities 156,711 156,711 Non – current receivable from related entities 224 224 Other current financial assets 320,279 61 320,340 Other non – current financial assets 5,109 33,174 38,283 TOTAL 3,059,109 3,005,359 61 33,174 6,097,703
– – Fair value through profit or loss: As of December 31, 2022 and December 31, 2021, this category includes unfinished product sales invoices. Section 11.2.q.
– – Amortized cost: lt corresponds to financial assets held within a business model whose objective is to hold financial assets to collect contractual cash flows that are solely payments of principal and interest on the principal outstanding. These assets are not quoted in an active market.
The effects on profit or loss recognized for these assets are mainly from financial income and exchange differences from balances denominated in currencies other than the functional currency.
No material impairments were recognized in trade and other receivables.
– – Derivatives for Hedging: Corresponds to the balance for changes in the fair value of derivative contracts to cover existing transactions (cash flow hedges) and that affect profit or loss when transactions are settled or when, to the extent required by accounting standards, a compensation effect is charged (credited) to the income statement. The detail of derivative hedging transactions is included in the Note 28. As of December 31, 2022 and December 31, 2021 there were no reclassifications between the different categories of financial instruments.
F-292
Corporación Nacional del Cobre de Chile
12. Other financial liabilities
Other financial liabilities consist of loans with financial institutions and bond issuance obligations, which are recorded by the Corporation at amortized cost using the effective interest rate method.
The following tables set forth other currentnon-current financial liabilities:
12-31-2022 Items Current Non-current Amortized Hedging Total Amortized Hedging Total cost derivatives cost derivatives ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Loans from financial entities 8,945 8,945 970,160 970,160 Bond obligations 452,154 452,154 15,527,518 15,527,518 Hedging obligations 9,738 9,738 127,786 127,786 Other financial liabilities 63,609 63,609 Total 460,699 9,738 470,437 16,561,337 127,786 16,689,123
12-31-2021 Items Current Non-current Amortized Hedging Total Amortized Hedging Total Cost derivatives Cost derivatives ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Loans from financial entities 18,003 18,003 969,416 969,416 Bond obligations 557,411 557,411 15,696,670 15,696,670 Hedging obligations 29,789 29,789 186,611 186,611 Other financial liabilities 50,943 50,943 Total 575,414 29,789 605,203 16,717,029 186,611 16,903,640
– Loans from financial institutions:
The loans obtained by the Corporation aim to finance production operations.
In addition to the credits mentioned in the previous paragraph, Codelco, through the subsidiary company Inversiones Gacrux SpA., has a credit agreement with Oriente Copper Netherlands
B.V. since 2012 (a subsidiary of Mitsui 4 Co. Ltd.), which was subscribed to with the aim of allocating this financing to the acquisition of the shareholding of Anglo American Sur SA, by the subsidiary company Inversiones Mineras Becrux SpA. (Subsidiary of Inversiones Gacrux SpA.). This loan has no associated personal guarantees and its rate is fixed at 3.25% per year and has a duration of 20 years, being payable in 40 semiannual installments of principal and interest on unpaid balances.
On May 20, 2021 the total amount owed to Oriente Copper Netherlands B.V. was paid in full.
F-293
Corporación Nacional del Cobre de Chile
Bond obligations:
On May 10, 2005, the Corporation issued and placed bonds in the domestic market for a nominal amount of UF 6,900,000 of a single series labeled Series B, which consists of 6,900 bonds for UF 1,000 each. These bonds are payable in a single installment on April 1, 2025, at an annual interest rate of 4% and semi-annual interest payments.
On September 21, 2005, the Corporation issued and placed bonds in the U.S. market under Rule 144-A and Regulation S, for a nominal amount of ThUS$500,000. These bonds are payable in a single installment on September 21, 2035, at an annual interest rate of 5.6250% and semi-annual interest payments.
On October 19, 2006, the Corporation issued and placed bonds in the U.S. market under Rule
144-A and Regulation S, for a nominal amount of ThUS$500,000. These bonds are payable in a single installment on October 24, 2036, at an annual interest rate of 6.15% and semi- annual interest payments.
On November 3, 2011, the Corporation issued and placed bonds in the U.S. market under Rule 144-A and Regulation S, for a nominal amount of ThUS$1,150,000. These bonds are payable in a single installment on November 4, 2021, at an annual interest rate of 3.875% and semi-annual interest payments. On August 3, 2017, February 6, 2019 and October 2, 2019 and December 16, 2020, principal was paid for an amount of ThUS$665,226, ThUS$247,814,ThUS$9,979 and ThUS$14,361 respectively.
On July 17, 2012, the Company issued and placed bonds in the U.S. market under Rule 144- A and Regulation S, for a nominal amount of ThUS$2,000,000. These bonds are payable in two installments (i) the first tranche on July 17, 2022 in the amount of US$1,250,000 at a 3% annual interest rate. On August 22, 2017, February 6, 2019 October 8 and 22, 2019, and December 16, 2020 principal was paid in the amounts of ThUS$412,514, ThUS$314,2109, ThUS$106,972, ThUS$3,820 and thUS$83,852 respectively… And (ii) the other tranche matures on July 17, 2042 and is in the amount of ThUS$750,000 at an annual interest rate of
4.25%.
On August 13, 2013, the Corporation issued and placed bonds in the U.S. market, under Rule
144-A and Regulation S, for a nominal amount of ThUS$750,000, payable in a single installment on August 13, 2023, at an annual interest rate of 4.5% and semi-annual interest payments. On August 22, 2017, February 12 and February 26, 2019 and October 8 and 22, 2019principal in the amounts of ThUS$162,502, ThUS$228,674 and ThUS$270, ThUS$23,128 and ThUS$555 respectively, was paid. On May 6, 2020, the remaining principal due was increased for a nominal amount of ThUS$131,000, reaching a total of ThUS$465,871 with an annual coupon of 4.50%. On December 16, 2020 and October 22, 2021, principal was amortized in the amount of ThUS$79,688 and ThUS$157,965 respectively, reaching a total of ThUS$228,218.
On October 18, 2013, the Corporation issued and placed bonds in the U.S. market, under Rule
144-A and Regulation S, for a nominal amount of ThUS$950,000, payable in a single
F-294 Corporación Nacional del Cobre de Chile installment on October 18, 2043, at an annual interest rate of 5.625% and semi-annual interest payments.
On July 9, 2014, the Corporation issued and placed bonds in the international financial markets, under Rule 144-A and Regulation $, for a nominal of EUR$600,000,000, payable in a single installment on July 9, 2024, at an annual interest rate of 2.25% and annual interest payments. On October 22, 2021, capital was amortized in the amount of TAREUR$200,116, reaching a total of TNREUR$399,884.
On November 4, 2014, the Corporation issued and placed bonds in the U.S. market, under Rule 144-A and Regulation S, for a nominal amount of ThUS$980,000, payable in a single installment on November 4, 2044, at an annual interest rate of 4.875% and semi-annual interest payments.
On September 16, 2015, the Corporation issued and placed bonds in the U.S. market, under Rule 144-A and Regulation S, for a nominal amount of ThUS$2,000,000, payable in a single installment on September 16, 2025, at an annual interest rate of 4.5% and semi-annual interest payments. On August 22, 2017 and February 12, 2019, principal was paid for an amount of ThUS$378,655 and ThUS$552,754 respectively. On December 22, 2020, capital was amortized in the amount of ThUS$392,499. On January 7, 2021, capital was amortized in the amount of ThUS$5,000. On October 22, 2021, principal was amortized in the amount of ThUS$273,867, reaching a total amount of ThUS$397,235.
On August 24, 2016, the Corporation issued and placed bonds in the domestic market for a nominal amount of UF 10,000,000 of a single series labeled Series C, which consists of 20,000 bonds for UF 500 each. These bonds are payable in a single installment on August 24, 2026, at an annual interest rate of 2.5% and semi-annual interest payments.
On July 25, 2017, the Corporation made an offer in New York to buy its bonds issued in dollars with maturities between 2019 and 2025, repurchasing US$2,367 million.
Later, on August 1, 2017, the Corporation issued and placed bonds in the North American market, under standard 144-A and Regulation S, for a total nominal amount of ThUS$
2,750,000. One portion corresponds to an amount of ThUS$ 1,500,000, maturing on August 1, 2027 with an annual coupon rate of interest of 3.625% and semi-annual interest. On December 22, 2020and January 7, 2021, principal was paid in the amount of thUS$ 227,154 and ThUS$5,000 respectively. The other portion contemplates a maturity date of August 1, 2047, corresponding to an amount of ThUS$ 1,250,000 with an annual coupon of 4.5% and semi-annual interest payments.
As a result of these transactions, 86% of the funds from the new issue (US$2,367 million) were used to refinance old debt. The average interest rate of refinanced funds decreased from
4.36% to 4.02%.
On May 18, 2018, Codelco issued a bond for US$600 million with 30-year maturity in the market of Formosa, Taiwan. The bond issued is denominated in US dollars, had a yield of
F-295 Corporación Nacional del Cobre de Chile
4.89% and a prepayment option at the issue value that can be exercised from the fifth year onwards at its par value.
On January 28, 2019, the Corporation in New York made an offer to purchase ¡ts bonds issued in dollars with maturities between 2020 and 2025, repurchasing US$1,527 million.
Subsequently, on February 5, 2019, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation S, for a total nominal amount of ThUS$1,300,000, which maturity will be 5 February 2049 with a coupon of 4.375% per annum and interest payments on a semi-annual basis.
On July 22, 2019, the Corporation made a bond issue and placement, Regulation S, for a nominal amount of AUD $ 70,000,000, whose maturity will be in a single installment on July 22, 2039, with a coupon of 3.58% annual and interest payment annually.
On August 23, 2019, the Corporation made a bond issue and placement, Regulation S, for a nominal amount of ThUS$130,000, whose maturity will be in a single installment on August 23, 2029, with a coupon of 2.869% annual and interest payment semiannually.
On September 30, 2019, Codelco launched a tender offer for bonds maturing between 2020 and 2023, in which a repurchase amount of US$152 million was reached.
On September 30, 2019, the Corporation made an issue and placement of bonds in the North American market, under rule 144-A and Regulation S, for a total nominal amount of ThUS$2,000,000 whose maturity will be, under one tranche, on September 30, 2029 corresponding to an amount of ThUS$1,100,000 with a 3% annual coupon. The other tranche contemplates a maturity on January 30, 2050, corresponding to an amount of ThUS$900,000.
On January 14, 2020 and October 22, 2021, a capital increase was made for a nominal amount of ThUS$1,000,000 and ThUS$780,000, respectively, reaching a total amount of ThUS$2,780,000 with a coupon of 3.70% per annum.
On October 22, 2021, together with the aforementioned capital increase of ThUS$ 780.000 of the international bond maturing in 2050, a process of repurchase of bonds maturing in 2023 and 2025 in the amount of ThUS$431,832 and the repurchase of a Euro bond in the amount of MEUR$200,116 maturing in 2024 was concluded.
The effect recognized in income associated with this refinancing was a charge of US$23 million in after-tax income for the year 2021.
On January 14, 2020, the Corporation issued and placed bonds in the North American market, under rule 144-A and Regulation S, for a nominal amount of ThUS $ 1,000,000, the maturity of which will be in a single installment on 14 January 2030, with a coupon of 3.15% per annum and payment of interest every six months.
On May 6, 2020, the Corporation issued and placed bonds in the North American market, under Rule 144-A and Regulation $, for a nominal amount of ThUS$800,000 whose maturity
F-296 Corporación Nacional del Cobre de Chile will be in a single installment on January 15, 2031, with a coupon of 3.75% per annum and interest paid every six months.
On December 7, 2020, the Corporation made in New York an offer to purchase its bonds issued in dollars with maturities between 2021 and 2027, repurchasing ThUS$797, 554.
On December 14, 2020, the Corporation carried out an issuance and placement of bonds in the North American market, under standard 144-A and Regulation S, for a total nominal amount of ThUS$500,000 whose maturity will be in a single installment on January 15, 2051, with a coupon of 3.15% per annum and interest payment on a semi-annual basis.
As a result of these transactions, 100% of the funds from the new issuance (US$500 million) were used to refinance old debt. The average nominal rate of the refinanced funds decreased from 4.08% to 3.15%.
As of December 31, 2022 and 2021, the Corporation is not required to comply with any financial covenants related to borrowings from financial institutions and bond obligations.
Financial debt commissions and expenses:
Transaction costs incurred in obtaining financial resources are deducted from the loan proceeds and are amortized using the effective interest rate.
F-297 Corporación Nacional del Cobre de Chile
As of December 31, 2022, the details of loans from financial institutions and bond obligations are as follows:
Nominal and effective interest rates presented above correspond to annual rates.
12-31-2022
. . Current Non-current
Taxpayer ID No. Country , Loans from Institution Maturity Interest rate Currency Amount Type of Paymentof . Nominal . Effective balance balance financial entities contracted amortization Interest interest rate | interest rate
ThUS$ ThUsS$ Foreign Panama Bilateral Credit NN de 12-18-2026 | Variable US$ 75,000,000 | Vencimiento | Semestral 6.38% 6.50% 133 74,629 Foreign USA Bilateral Credit [Export Dev. Canada 08-12-2027 Variable US$ 300,000,000 | Vencimiento Trimestral 5.80% 5.85% 2,320 299,365 Foreign USA Bilateral Credit [Export Dev. Canada 10-25-2028 Variable US$ 300,000,000 | Vencimiento Trimestral 5.57% 5.73% 3,1111 298,900 Foreign USA Bilateral Credit [Export Dev. Canada 07-25-2029 Variable US$ 300,000,000 | Vencimiento Trimestral 5.59% 5.83% 2,981 297,266 TOTAL 8,545 970,160
. . Current Non-current
Bond obligations Country of Registration Maturity Interest rate Currency Amount Type of Payment of : Nominal . Effective balance balance contracted amortization Interest interest rate | interest rate
ThUS$ ThUsS$
144-A REG.S Luxemburgo 08-13-2023 Fixed US$ 750,000,000 | At Maturity Semi-annual 4.50% 4.37% 232,331 –
144-A REG.S Luxemburgo 07-09-2024 Fixed EUR 600,000,000 | At Maturity Annual 2.25% 2.47% 4,600 426,391 BCODE-B Chile 04-01-2025 Fixed U.F, 6,900,000 | At Maturity Semi-annual 4.00% 3.24% 2,831 287,127
144-A REG.S Luxemburgo 09-16-2025 Fixed US$ 2,000,000,000 | At Maturity Semi-annual 4.50% 4.74% 5,214 394,811 BCODE-C Chile 08-24-2026 Fixed U.F, 10,000,000 | At Maturity Semi-annual 2.50% 1.78% 3,596 419,382
144-A REG.S Luxemburgo 08-01-2027 Fixed US$ 1,500,000,000 | At Maturity Semi-annual 3.63% 4.18% 19,150 1,238,644 REG.S Luxemburgo 08-23-2029 Fixed US$ 130,000,000 | At Maturity Semi-annual 2.87% 2.97% 1,326 129,182
144-A REG.S Luxemburgo 09-30-2029 Fixed US$ 1,100,000,000 | At Maturity Semi-annual 3.00% 3.14% 8,342 1,090,629
144-A REG.S Luxemburgo 01-14-2030 Fixed US$ 1,000,000,000 | At Maturity Semi-annual 3.15% 3.28% 14,613 991,678
144-A REG.S Luxemburgo 01-15-2031 Fixed US$ 800,000,000 | At Maturity Semi-annual 3.75% 3.79% 13,833 797,556 REG.S Luxemburgo 11-07-2034 Fixed HKD 500,000,000 | At Maturity Annual 2.84% 2.92% 274 63,587
144-A REG.S Luxemburgo 09-21-2035 Fixed US$ 500,000,000 | At Maturity Semi-annual 5.63% 5.78% 7,813 493,130
144-A REG.S Luxemburgo 10-24-2036 Fixed US$ 500,000,000 | At Maturity Semi-annual 6.15% 6.22% 5,723 496,932 REG.S Luxemburgo 07-22-2039 Fixed AUD 70,000,000 | At Maturity Annual 3.58% 3.69% 754 47,258
144-A REG.S Luxemburgo 07-17-2042 Fixed US$ 750,000,000 | At Maturity Semi-annual 4.25% 4.41% 14,521 734,833
144-A REG.S Luxemburgo 10-18-2043 Fixed US$ 950,000,000 | At Maturity Semi-annual 5.63% 5.76% 10,836 934,639
144-A REG.S Luxemburgo 11-04-2044 Fixed US$ 980,000,000 | At Maturity Semi-annual 4.88% 5.01% 7,564 962,650
144-A REG.S Luxemburgo 08-01-2047 Fixed US$ 1,250,000,000 | At Maturity Semi-annual 4.50% 4.73% 23,438 1,208,467 144 – REG.S Taiwán 05-18-2048 Fixed US$ 600,000,000 | At Maturity Semi-annual 4.85% 4.91% 3,476 594,778
144-A REG.S Luxemburgo 02-05-2049 Fixed US$ 1,300,000,000 | At Maturity Semi-annual 4.38% 4.97% 23,066 1,188,182
144-A REG.S Luxemburgo 01-30-2050 Fixed US$ 2,680,000,000 | At Maturity Semi-annual 3.70% 3.92% 41,591 2,579,805
144-A REG.S Luxemburgo 01-15-2051 Fixed US$ 500,000,000 | At Maturity Semi-annual 3.15% 3.73% 7,262 447,857 TOTAL 452,154 15,527,518
F-298
Corporación Nacional del Cobre de Chile
As of December 31, 2021, the details of loans from financial institutions and bond obligations are as follows:
12-31-2021
: : . . Current Non-current Taxpayer ID No. Country Loans from financial Institution Maturity Interest Currency Amount Type of amortization Payment of , Nominal , Effective balance balance entities rate contracted Interest interestrate | interest rate ThUS$ ThUS$ l Half-yearly principal Foreign [Japón Bilateral Credit vapan Bank ntemationa! | 06-24-2022 | Variable | US$ 224,000,000 [payments from 2015to | Semi-amnual | 0.69% 0.85% 16,001 Cooperation the maturity of Foreign [Panama Bilateral Credit o OnOamecano de | 12-18:2026 | Variable | – USS 75,000,000 | At Maturity Semi-annual | – 1.52% 1.56% 28 74,547 Foreign EE.UU Bilateral Credit Export Dev. Canada 08-12-2027 | Variable US$ 300,000,000 | At Maturity Quarterly 1.27% 1.34% 520 299,230 Foreign EE.UU Bilateral Credit Export Dev. Canada 10-25-2028 | Variable US$ 300,000,000 | At Maturity Quarterly 1.34% 1.43% 748 298,723 Foreign EE.UU Bilateral Credit Export Dev. Canada 07-25-2029 | Variable US$ 300,000,000 | At Maturity Quarterly 1.34% 1.50% 706 296,916 TOTAL 18,003 969,416 o a . Interest Amount o Payment of Nominal Effective Current Non-current Bond obligations Country of Registration Maturity Currency Type of amortization , , balance balance rate contracted Interest interest rate | interest rate
ThUS$ ThUS$
144-A REG.S Luxemburgo 07-17-2022 | Fixed US$ 1,250,000,000 |At Maturity Semi-annual 3.00% 3.13% 332,870 –
144-A REG.S Luxemburgo 08-13-2023 | Fixed US$ 750,000,000 [At Maturity Semi-annual 4.50% 4.36% 5,693 228,670
144-A REG.S Luxemburgo 07-09-2024 | Fixed EUR 600,000,000 |At Maturity Annual 2.25% 2.47% 4,880 449,817 BCODE-B Chile 04-01-2025 | Fixed UF. 6,900,000 |At Maturity Semi-annual 4.00% 3.24% 2,574 259,036
144-A REG.S Luxemburgo 09-16-2025 | Fixed US$ 2,000,000,000 |At Maturity Semi-annual 4.50% 4.75% 5,203 393,990 BCODE-C Chile 08-24-2026 | Fixed U.F, 10,000,000 [At Maturity Semi-annual 2.50% 2.47% 3,196 378,561
144-A REG.S Luxemburgo 08-01-2027 | Fixed US$ 1,500,000,000 |At Maturity Semi-annual 3.63% 4.18% 19,108 1,232,979 REG.S Luxemburgo 08-23-2029 | Fixed US$ 130,000,000 |At Maturity Semi-annual 2.87% 2.97% 1,318 129,072
144-A REG.S Luxemburgo 09-30-2029 | Fixed US$ 1,100,000,000 |At Maturity Semi-annual 3.00% 3.14% 8,387 1,089,401
144-A REG.S Luxemburgo 01-14-2030 | Fixed US$ 1,000,000,000 |At Maturity Semi-annual 3.15% 3.28% 14,295 990,643
144-A REG.S Luxemburgo 01-15-2031 | Fixed US$ 800,000,000 [At Maturity Semi-annual 3.75% 3.79% 13,859 797,301 REG.S Luxemburgo 11-07-2034 | Fixed HKD 500,000,000 [At Maturity Annual 2.84% 2.92% 274 63,549
144-A REG.S Luxemburgo 09-21-2035 | Fixed US$ 500,000,000 [At Maturity Semi-annual 5.63% 5.78% 7,847 492,772
144-A REG.S Luxemburgo 10-24-2036 | Fixed US$ 500,000,000 [At Maturity Semi-annual 6.15% 6.22% 5,745 496,794 REG.S Luxemburgo 07-22-2039 | Fixed AUD 70,000,000 |At Maturity Annual 3.58% 3.69% 806 50,284
144-A REG.S Luxemburgo 07-17-2042 | Fixed US$ 750,000,000 [At Maturity Semi-annual 4.25% 4.41% 14,465 734,351
144-A REG.S Luxemburgo 10-18-2043 | Fixed US$ 950,000,000 [At Maturity Semi-annual 5.63% 5.76% 10,864 934,264
144-A REG.S Luxemburgo 11-04-2044 | Fixed US$ 980,000,000 [At Maturity Semi-annual 4.88% 5.01% 7,523 962,219
144-A REG.S Luxemburgo 08-01-2047 | Fixed US$ 1,250,000,000 |At Maturity Semi-annual 4.50% 4.73% 23,387 1,207,588 144 – REG.S Taiwán 05-18-2048 | Fixed US$ 600,000,000 [At Maturity Semi-annual 4.85% 4.91% 3,457 594.676
144-A REG.S Luxemburgo 02-05-2049 | Fixed US$ 1,300,000,000 |At Maturity Semi-annual 4.38% 4.97% 22,873 1,186,122
144-A REG.S Luxemburgo 01-30-2050 | Fixed US$ 2,680,000,000 |At Maturity Semi-annual 3.70% 3.93% 41,495 2,577,759
144-A REG.S Luxemburgo 01-15-2051 | Fixed US$ 500,000,000 [At Maturity Semi-annual 3.15% 3.75% 7,232 446,822 TOTAL 557,411 15,696,670
Nominal and effective interest rates presented above correspond to annual rates.
F-299
Corporación Nacional del Cobre de Chile
The undiscounted amounts that the Corporation will have to disburse to settle the obligations with financial institutions, are as follows:
12-31-2022 CURRENT NON-CURRENT Name Type of Interest rate Interest rate Type of Less than: Over Total One to Three to Over Total non- creditor currency effective nominal amortization 90 days 90 days current three years five years five years current
Banco Latinoamericano de Comercio US$ 6.60% 6.38% Semi-annual 4,849 4,849 9,711 79,809 89,520
Export Dev. Canada US$ 5.85% 5.80% Quarterly 4,350 13,049 17,399 34,798 330,448 365,246
Export Dev. Canada US$ 5.73% 5.57% Quarterly 4,227 12,680 16,907 33,951 33,905 316,999 384,855
Export Dev. Canada US$ 5.83% 5.59% Quarterly 8,476 8,476 34,045 33,999 338,098 406,142 BONO 144-A REG.S 2023 US$ 4.37% 4.50% Semi-annual 5,135 233,353 238,488
BONO 144-A REG.S 2025 US$ 4.74% 4.50% Semi-annual 8,938 8,938 17,876 432,986 432,986
BONO 144-A REG.S 2027 US$ 4.18% 3.63% Semi-annual 22,980 22,980 45,960 91,919 1,359,765 1,451,684
BONO REG.S 2029 US$ 2.97% 2.87% Semi-annual 1,865 1,865 3,730 7,459 7,459 137,459 152,377
BONO 144-A REG.S 2029 US$ 3.14% 3.00% Semi-annual 16,500 16,500 33,000 66,000 66,000 1,166,000 1,298,000
BONO 144-A REG.S 2030 US$ 3.28% 3.15% Semi-annual 15,750 15,750 31,500 63,000 63,000 1,078,750 1,204,750
BONO 144-A REG.S 2031 US$ 3.79% 3.75% Semi-annual 15,000 15,000 30,000 60,000 60,000 905,000 1,025,000
BONO 144-A REG.S 2035 US$ 5.78% 5.63% Semi-annual 14,063 14,063 28,126 56,250 56,250 725,000 837,500
BONO 144-A REG.S 2036 US$ 6.22% 6.15% Semi-annual 30,750 30,750 61,500 61,500 776,750 899,750
BONO 144-A REG.S 2042 US$ 4.41% 4.25% Semi-annual 15,938 15,938 31,876 63,750 63,750 1,228,125 1,355,625
BONO 144-A REG.S 2043 US$ 5.76% 5.63% Semi-annual 53,438 53,438 106,875 106,875 1,805,000 2,018,750
BONO 144-A REG.S 2044 US$ 5.01% 4.88% Semi-annual 47,775 47,775 95,550 95,550 1,792,175 1,983,275
BONO 144-A REG.S 2047 US$ 4.73% 4.50% Semi-annual 28,125 28,125 56,250 112,500 112,500 2,375,000 2,600,000
BONO 144 REG.S 2048 US$ 4.91% 4.85% Semi-annual 29,100 29,100 58,200 58,200 1,196,550 1,312,950
BONO 144-A REG.S 2049 US$ 4.97% 4.38% Semi-annual 28,438 28,438 56,876 113,750 113,750 2,522,813 2,750,313
BONO 144-A REG.S 2050 US$ 3.92% 3.70% Semi-annual 49,580 49,580 99,160 198,320 198,320 4,911,100 5,307,740
BONO 144-A REG.S 2051 US$ 3.75% 3.15% Semi-annual 7,875 7,875 15,750 31,500 31,500 870,125 933,125
Total MUS$ 238,764 658,522 897,286 1,732,064 2,932,580 22,144,944 26,809,588
BONO BCODE-B 2025 UF. 3.24% 4.00% Semi-annual 138,000 138,000 276,000 7,314,000 7,314,000
BONO BCODE-C 2026 UF. 1.78% 2.50% Semi-annual 124,228 124,228 248,456 496,913 10,248,457 10,745,370
Total U.F. 262,228 262,228 524,456 7,810,913 10,248,457 18,059,370
Subtotal MUS$ 10,758 10,758 21,516 320,436 420,435 – 740,871 | BONO 144-A REG.S 2024 EUR 2.47% 2.25% Anual 8,997,390 8,997,390 8,997,390| 399,884,000 408,881,390
Subtotal MUS$ – 9,629 9,629 9,629 427,960 – 437,589 | BONO REG.S 2039 AUD 3.65% 3.58% Anual 2,506,000 2,506,000 5,012,000 5,012,000 100,072,000| 110,096,000
Subtotal MUS$ . 1,707 1,707 3,414 3,414 68,170 74,998 | BONO REG.S 2034 HKD 2.92% 2.84% Anual 14,200,000 14,200,000 28,438,904 28,400,000| 599,477,808| 656,316,712
Subtotal MUS$ . 1,820 1,820 3,646 3,641 76,855| 84,142
Total MUS$ 249,522 682,436 931,958 2,069,189 3,788,030 22,289,969| 28,147,188
Nominal and effective interest rates presented above correspond to annual rates.
F-300
Corporación Nacional del Cobre de Chile
12-31-2021 CURRENT NON-CURRENT Creditor Type of Interest rate Interest rate Type of Less than: Over Total One to Three to Over Total non- name currency effective nominal amortization 90 days 90 days current three years five years five years current Japan Bank International Cooperation US$ 0.85% 0.69% Semi-annual 16,056 16,056 ; Banco Latinoamericano de Comercio US$ 1.66% 1.52% Semi-annual 1,153 1,153 2,310 77,297 79,607 Export Dev. Canada US$ 1.34% 1.27% Quarterly 976 2,896 3,872 7,753 7,743 302,896 318,392 Export Dev Canada US$ 1.43% 1.34% Quarterly 1,030 3,057 4,087 8,185 8,174 308,174 324,533 Export Dev Canada US$ 1.50% 1.34% Quarterly 1,030 1,030 8,185 314,242 322,427 BONO 144-A REG.S 2022 US$ 3.13% 3.00% Semi-annual 4,929 333,552 338,481 y BONO 144-A REG.S 2023 US$ 4.36% 4.50% Semi-annual 5,135 5,135 10,270 238,488 y 238,488 BONO 144-A REG.S 2025 US$ 4.75% 4.50% Semi-annual 8,938 17,876 26,814 415,111 y 415,111 BONO 144-A REG.S 2027 US$ 4.18% 3.63% Semi-annual 22,980 22,980 45,960 y 91,919 1,313,805 1,405,724 BONO REG.S 2029 US$ 2.97% 2.87% Semi-annual 1,865 1,865 3,730 7,459 7,459 141,189 156,107 BONO 144-A REG.S 2029 US$ 3.14% 3.00% Semi-annual 16,500 16,500 33,000 66,000 66,000 1,199,000 1,331,000 BONO 144-A REG.S 2030 US$ 3.28% 3.15% Semi-annual 15,750 15,750 31,500 63,000 63,000 1,110,250 1,236,250 BONO 144-A REG.S 2031 US$ 3.79% 3.75% Semi-annual 15,000 15,000 30,000 60,000 60,000 935,000 1,055,000 BONO 144-A REG.S 2035 US$ 5.78% 5.63% Semi-annual 14,063 14,063 28,126 56,250 56,250 753,125 865,625 BONO 144-A REG.S 2036 US$ 6.22% 6.15% Semi-annual 30,750 30,750 61,500 61,500 807,500 930,500 BONO 144-A REG.S 2042 US$ 4.41% 4.25% Semi-annual 15,938 15,938 31,876 63,750 63,750 1,260,000 1,387,500 BONO 144-A REG.S 2043 US$ 5.76% 5.63% Semi-annual 53,438 53,438 106,875 106,875 1,858,438 2,072,188 BONO 144-A REG.S 2044 US$ 5.01% 4.88% Semi-annual 47,775 47,775 95,550 95,550 1,839,950 2,031,050 BONO 144-A REG.S 2047 US$ 4.73% 4.50% Semi-annual 28,125 28,125 56,250 112,500 112,500 2,431,250 2,656,250 BONO 144 REG.S 2048 US$ 4.91% 4.85% Semi-annual 29,100 29,100 58,200 58,200 1,225,650 1,342,050 BONO 144-A REG.S 2049 US$ 4.97% 4.38% Semi-annual 28,438 28,438 56,876 113,750 113,750 2,579,688 2,807,188 BONO 144-A REG.S 2050 US$ 3.93% 3.70% Semi-annual 49,580 49,580 99,160 198,320 198,320 5,010,260 5,406,900 BONO 144-A REG.S 2051 US$ 3.75% 3.15% Semi-annual 7,875 7,875 15,750 31,500 31,500 885,875 948,875 Total MUS$ 237,122 757,932 995,054 1,351,390 1,703,083 24,276,292 27,330,765 BONO BCODE-B 2025 UF. 3.24% 4.00% Semi-annual 138,000 138,000 276,000 552,000 7,038,000 7,590,000 BONO BCODE-C 2026 UF. 2.47% 2.50% Semi-annual 124,228 124,229 248,457 496,913 10,496,914 10,993,827 Total U.F. 262,228 262,229 524,457 1,048,913 17,534,914 18,583,827 Subtotal MUS$ 9,621 9,621 19,242 38,485| 643,357 681,842 | BONO 144-A REG.S 2024 EUR | 2.47% 2.25% Anual 8,997,390 8,997,390 17,994,780| 399,884,000 417,878,780 Subtotal MUS$ 10,179] 10,179] 20,358| 452,409| 472,767 | BONO REG.S 2039 AUD | 3.65% 3.58% Anual 2,506,000 2,506,000 5,012,000 5,012,000 102,578,000 112,602,000 Subtotal MUS$ 1,816 1,816 3,633 3,633 74,349| 81,615 | BONO REG.S 2034 HKD | 2.92% 2.84% Anual 14,200,000 14,200,000 28,438,904 28,400,000 613,677,808] 670,516,712 Subtotal MUS$ 1,821 1,821 3,646| 3,641 78,680] 85,967 Total MUS$ 246,743 781,369] 1,028,112 1,417,51 2] 2,806,123 24,429,321| 28,652,956]
Nominal and effective interest rates presented above correspond to annual rates.
F-301
Corporación Nacional del Cobre de Chile
The table below details changes in CODELCO’s financing activities in the statement of cash flow, including both cash and non-cash changes for the years ended As of December 31,
2022, and 2021: Changes that do not represent cash flow , Financial , Debt expense , Opening balance at Cash flows of financing activities costs Exchange Fairvalue | deferred in Other Closing balance Liabilities for 1-1-2022 (1) difference adjustment | amortized at 12-31-2022 financing activities cost From Used Total ThUS$ ThUS$ ThUS$ ThUS$ | ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Loans from financial entities 987,419 (39,565) (39,565) 30,069 – – 754 28 978,705 Bond obligations 16,254,081 (985,946) (985,946) 658,553 45,740 – – 7,244 15,979,672 Hedging obligations 186,320 (24,457) (24,457) 18,032 27,506 (40,238) (33,164) 133,999 Dividends paid – (259,900) (259,900) – – – – – Financial assets for hedge derivatives (33,174) – – (73,246) (33,425) 39,310 (100,535) Leases 352,127 (141,780) (141,780) 25,036 13,175 – 163,311 411,869 Other 50,943 (52,619) (52,619) – – – – 65,335 63,659 Total liabilities on financing activities 17,797,716 -| (1,504,267)| (1,504,267) 731,690 13,175 (73,663)| 754 242,064 17,467,369 Changes that do not represent cash flow Financial Debt expense Liabilities for Opening balance at Cash flows of financing activities costs Exchange Fairvalue | deferred in Other Closing balance financing activities 1-1-2021 (1) difference adjustment | amortized at 12-31-2021 cost From Used Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Loans from financial entities 1,570,442 (588,253) (588,253) 24,074 – 1,494 (20,338) 987,419 Bond obligations 16,506,214 780,000 | (1,558,758) (778,758)| 670,017 (113,143) – – (30,249) 16,254,081 Hedging obligations 129,208 (62,960) (62,960) 25,316 84,188 8,828 1,740 186,320 Dividends paid – -| (2,033,206) (2,033,206) – – – – – Financial assets for hedge derivatives (127,502) – – 28,975 58,189 7,164 (33,174) Leases 485,008 (138,668) (138,668) 18,206 (38,535) – 26,116 352,127 Other 56,469 (177,292) (177,292) – – – – 171,766 50,943 Total liabilities on financing activities 18,619,839 780,000 | (4,559,137)| (3,779,137) 737,613 (38,515)| 67,017 1,494 156,199 17,797,716
(1) The finance costs consider the capitalization of interest, which, as of December 31, 2022 and 2021, amounted to ThUS$ 289,501 and ThUS$ 236,693 respectively.
13. Fair Value of financial assets and liabilities
The carrying amount of financial assets is a reasonable approximation to their fair value, therefore, no additional disclosures are required in accordance with |FRS 7.
Regarding financial liabilities, the following table shows a comparison as of December 31, 2022 between the carrying amount and the fair value of financial liabilities other than those whose carrying amount is a reasonable approximation of fair value:
Comparison book value vs fair value
Accounting treatment | Book value | Fair value As of December 31, 2022 | for valuation ThUS$ ThUsS$ Financial liabilities: Bond obligations Amortized cost 15,979,672 | 14,469,694
F-302
Corporación Nacional del Cobre de Chile
14, Market value hierarchy for items at market value
Each of the market values calculated for the Corporation’s portfolio of financial instruments is supported by a calculation methodology and data inputs. An analysis of each of these methodologies has been carried out to determine to which of the following levels they can be assigned:
– Level 1 corresponds to fair value measurement methodologies using market shares (unadjusted) in active markets to which the Corporation has access at the measurement date and considering identical Assets and Liabilities.
– Level 2 corresponds to fair value measurement methodologies using quoted market price data, not included in Level 1, that are observable for the Assets and Liabilities measured, either directly (prices) or indirectly (derived from prices). For hybrid contracts with no- finalized price: Provisionally priced metal sales for the period are marked-to-market at the end of the period. Gains and losses from the marking-tomarket of open sales are recognized through adjustments to revenue in the income statement and trade receivables in the balance sheet. Forward prices at the end of the period are used for copper sales. These forward prices are quoted market prices on LME. For cross-currency swaps: These are valued using a discounted cash flow analysis valuation model which includes observable credit spreads and using the applicable yield curve for the duration of the instruments.
– Level 3 corresponas to fair value measurement methodologies using valuation techniques that include data on the Assets and Liabilities valued, which are not based on significant observable market data.
Based on lhe melhiódologes, mputs, and delimbions described above, (he following mstkes levels have been delesmied lor he (orporabon’s porffollo ct inancial mstrumenis nekd as ol December 41 2022
Financial asesoria and llobliltiea al fabr value 113100 cin ifed by hiererchy Lowél 1 Levole Léwei3 Total THU3s ThUss This Thus3 Piramcial 330003 [Hyona coneacis wdh non Ansiced proa ¿422067 ¿AZ 057 Crta CANTEN A 100,535 100,535 Aud lunds iras 75508 76 204 Mos ÑÁLTES 0Opaci a7 F [Financial Aablibez: Ae AAA OMC ¿bit Ha; 354 Cross Curndot yá (33.869 113558
There were po lransters between The diferen! levels ot market merarchwy, dor Ine reportine prod
F-303 Corporación Nacional del Cobre de Chile
15. Trade and other accounts payable
a. Details of trade accounts payable, sundry accounts payable and other current accounts payable are shown in the following table:
Current Liabilities Item 12-31-2022 12-31-2021 ThUS$ ThUS$ Trade creditors 1,954,222 1,262,221 Payables to employees 20,925 19,691 Withholdings 94,742 97,252 Withholding taxes 18,985 48,139 Other accounts payable 90,664 70,126 Total 1,779,538 1,497,429
Trade creditors mainly include operating accounts payable, and obligations associated with investment projects.
b. The following is a schedule of maturities of payments to trade creditors as of December 31, 2022, and December 31, 2021:
As of December 31, 2022 Amounts according to payment terms Average Up to 30 366 and Creditors with current due date ¡de 31-60 | 61-90 | 91-120 | 121-365 an Total payment days over l period Goods 690,136 216 87 690,439 15.2 Services 628,575 7,106 131 635,812 16.6 Other 190,525 1,201 13 191,739 11.7 Total 1,509,236 8,523 231 1,517,990 16.5 As of December 31, 2022 Amounts according to payment terms Average Up to 30 366 and Suppliers with overdue payments pro 31-60 | 61-90 | 91-120 | 121-365 an Total payment days over l period Goods 16,642 509 1,104 712 776 260 20,003 527.3 Services 3,830 2,410 1,230 377 1,524 406 9,777 353.1 Other 218 266 255 253 117 5,343 6,452 480.1 Total 20,690 3,185 2,589 1,342 2,417 6,009 36,232 351.2 As of December 31, 2021 Amounts according to payment terms Average Up to 30 366 and Creditors with current due date pro 31-60 | 61-90 | 91-120 | 121-365 an Total payment days over l period Goods 523,424 150 49 30 24 523,677 15.0 Services 566,639 6,443 195 118 95 573,490 15.6 Other 137,003 1,158 71 – 138,232 13.2 Total 1,227,066 7,751 244 219 119 1,235,399 15.1 As of December 31, 2021 Amounts according to payment terms Average Up to 30 Suppliers with overdue payments pro 31-60 | 6-90 | 91-120 | 121-365 | no | og payment days over l period Goods 4,276 795 166 126 504 2,404 8,271 301.5 Services 6,513 2,182 651 115 2,432 1,436 13,329 338.4 Other 246 147 288 347 303 3,891 5,222 266.8 Total 11,035 3,124 1,105 588 3,239 7,731 26,822 285.3
F-304
Corporación Nacional del Cobre de Chile
16. Other provisions
The detail of other current and non-current provisions at the dates mentioned is as follows:
Other provisions Current Non-current
12-31-2022 12-31-2021 12-31-2022 12-31-2021 ThUS$ ThUS$ ThUS$ ThUS$
Sales-related provisions (1) 17,554 8,627 Operating (2) 579,020 523,177 Law No. 13196 129,582 151,509 Other provisions 39,004 58,714 604 496 Closure, decommissioning and restoration (3) – – 2,611,117 2,407,814 Legal proceedings – – 68,007 49,279
Total 761,665 742,027 2,679,728 2,457,585
(1) Corresponds to sales-related accruals, which includes charges for freight, loading, and unloading that were not invoiced at the end of the year.
(2) Corresponds to provisions made for customs duties, freight for acquisitions and electricity, among others.
(3) Corresponds to provisions for future closure costs related mainly to tailings dams, mine site closures and other assets. This cost value is calculated at discounted present value, using flows associated with plans with an evaluation horizon ranging from 10 to 60 years. The rates used to discount future cash flows are calculated based on the Life of Mine “LOM” of each of the operations, distinguishing rates in UF for those obligations in Chilean pesos and rates in
U.S. dollars for those obligations in U.S. dollars. These discount rates include the risks associated with the liability being determined, except those included in the cash flows.
Below is a table with the discount rates used:
Division 12-31-2022 12-31-2021 Local Currency | Dollar Currency | Local Currency | Dollar Currency
Rate Rate Rate Rate Gabriela Mistral 1.65% 2.83% 2.28% 0.51% Andina 1.65% 2.87% 2.64% 1.10% Ministro Hales 1.65% 2.87% 2.64% 1.10% Chuquicamata 1.66% 2.18% 2.13% 1.37% Radomiro Tomic 1.66% 2.76% 2.83% 1.56% Salvador 1.66% 2.76% 2.83% 1.56% Teniente 1.66% 2.69% 2.93% 1.78% Fundición Ventanas 1.66% 2.69% 2.93% 1.78%
The Corporation determines and recognizes this liability in accordance with the accounting policy described in Note 2, letter p) on Significant Accounting Policies.
F-305 Corporación Nacional del Cobre de Chile
Changes in Other provisions, were as follows:
1-1-2022
12-31-2022 Movements Other Provision for ] Provisions, j Contingencies Total site closure non-current ThUS$ ThUS$ ThUS$ ThUS$ Opening balance 496 2,407,814 49,275 2,457,585 Closing provision adjustment 15,310 – 15,310 Financial expenses 47,964 – 47,964 Payment of liabilities – – (7,024) (7,024) Exchange rate difference (1) 144 921 6,331 151,251 Other increases (decreases) 109 (4.892) 19,425 14,642 Closing balance 604 2,611,117 68,007 2,679,728 112021 12312021 Ch Other |Decommissioni anges provisions, ng and Contingencies Total non-current| restorations ThUS$ ThUS$ ThUS$ ThUS$
Opening balance 468 2,232,942 61,097 2,294,007 Closing provision adjustment 226,631 – 226,631 Financial expenses 24,105 – 24,105 Payment of liabilities – – (6,934) (6,934) Foreign currency translation (22) (74,600) (7,380) (82,002) Other increases (decreases) 50 (1,264) 2,492 1,278 closing balance 496 2,407,814 49,275 2,457,585
17. Employee benefits
a. Provisions for post-employment benefits and other long-term benefits
Provision for post-employment benefits mainly corresponds to employee severance indemnities and medical care plans. The provision for severance indemnities recognizes the contractual obligation that the Corporation has with its employeesretirees. The provision for medical care plans recognizes the contractual obligation that the Corporation has with its retirees to cover their medical care costs. Both benefits operate within the regulatory framework set forth in the collective bargaining or other agreements between the Corporation and its employees.
These provisions are recorded in the statement of financial position at the present value of the estimated future obligations. The discount rate used is determined based on the rate of financial instruments corresponding to the same currency in which the obligations will be paid and with similar maturities.
The defined benefit obligations are denominated in Chilean pesos; therefore the Corporation is exposed to foreign exchange rate risk.
F-306 Corporación Nacional del Cobre de Chile
The results arising from adjustments and changes in actuarial variables are charged or credited to the statement of comprehensive income for the period in which they occur.
During the year ended of December 31, 2022, there were no relevant modifications to the post-employment benefit plans.
The following actuarial assumptions were used in the actuarial calculation of the defined benefit plans:
Assumptions 12-31-2022 12-31-2021 Retirement Health plan Retirement Health plan plan plan Annual nominal discount rate 5.33% 5.33% 5.89% 5.89% Voluntary Annual Turnover Rate for Retirement (Men) 5.10% 5.10% 5.50% 5.50% Voluntary Annual Turnover Rate for Retirement (Women) 6.00% 6.00% 6.20% 6.20% Salary Increase (real annual average) 4.64% 4.64% 3.98% 0.00% Future rate of long-term inflation 3.60% 3.60% 3.10% 3.10% Expected inflation health care rate – 6.40% 0 5.88% Mortality tables used for projections CB14-RV14 | CB14-RV14 | CB14-RV14 | CB14-RV14 Average duration of future cash flows (years) 8.50 15.40 10.03 16.55 Expected Retirement Age (Men) 60 60 60 60 Expected Retirement Age (Women) 58 58 58 98
The discount rates correspond to the rates in the secondary market of government bonds issued in Chile. The projected annual inflation corresponds to an awareness above the long- term target publicly declared by the Central Bank of Chile and is derived from the market expectation as of December 31, 2022. The rotation rates have been determined after reviewing the Corporation’s own experience by studying the cumulative behavior of outflows over the last three years with respect to the current allocations. The expected rate of salary increases has been estimated using the long-term behavior of historical salaries paid by the Corporation. The mortality tables used were those issued by the CMF, which are considered an appropriate representation of the Chilean market given the lack of comparable statistical series to develop independent studies. The financial duration of the liabilities corresponds to the average maturity of the payment flows of the respective defined benefits.
b. The detail of current and non-current provisions for employment benefits as of the dates mentioned is as follows:
Employee benefits provisions Current Non-current
12-31-2022 | 12-31-2021 12-31-2022 | 12-31-2021 ThUS$ ThUS$ ThUS$ ThUS$ Employees’ collective bargaining agreements 196,256 185,708 – – Severance indemnities 29,047 19,447 962,126 932,044 Bonus 60,758 52,288 – – Vacation 179,957 141,683 – – Medical care programs (1) 383 358 463,883 388,697 Retirement plans (2) 64,604 4,346 7,703 7,918 Other 17,234 15,493 7,405 6,283 Total 544,289 419,323 1,041,117 934,542
F-307 Corporación Nacional del Cobre de Chile
(1) Corresponds to a provision recognized for the obligations with health care institutions as agreed with current and former employees.
(2) Corresponds to the provision made for those employees who have agreed, or are expected to agree, to retire in accordance with current employee termination plans.
The reconciliation of the balances of the provisions for post-employment benefits is presented below:
1-1-2022 1-1-2021
12-31-2022 12-31-2021 Movements js men Health plan |Retirement plan| Health plan ThUS$ ThUsS$ ThUsS$ ThUsS$ Opening balance 991,491 389,095 649,780 607,994 Service cost 112,489 15,258 76,972 15,402 Finance cost 13,242 9,645 6,219 9,773 Paid contributions (30,720) (49,045) (55,747) (41,112) Actuarial (gains) losses (52,992) 61,862 (20,341) (132,625) Subtotal 593,510 426,775 656,483 455,432 (Gains) Losses on foreign exchange rate (2,337) 37,491 (104,992) (66,377) Closing balance 591,173 464,266 551,491 389,055
The balance of the defined benefit liability as of December 31, 2022, comprises a portion of ThUS$ 29,047 and ThUS$ 383 for the severance indemnity and the medical care plan, respectively. As of December 31, 2023, a balance of ThUS$ 625,353 has been projected for the provision for severance indemnities and ThUS$ 448,430 for health benefits The flows of compensation payments during the next twelve months reach an expected monthly average of ThUS$ 2,421 for severance indemnities and TRUS$ 32 for health benefit plans.
Actuarial results are composed of the following items
12-31-2022 12-31-2021 Retirement | Health | Retirement | Health Technical remeasurements plan plan plan plan
ThUS$ ThUS$ ThUS$ ThUS$ Revaluation of demographic assumptions (1,071) – (1,173) (18,658) Revaluation of financial assumptions (50,388)| 58,550 (19,156)| (94,747) Revaluation by experience (1,533) 3,312 (12) (19,220) Total net effect (52,992) 61,862 (20,341)| (132,625)
The following is a review of the sensitivities of the provisions, when going from a medium scenario to a low or high scenario with unitary percentage variations, respectively, and both effects of reduction or increase on the book balance of these provisions:
F-308 Corporación Nacional del Cobre de Chile
Severance benefits for years of service Low Medium High Reduction | Increase Financial effect on interest rates 5.08% 9.33% 5.58% 1.14% -1.08% Financial effect on the real increase in income 4.39% 4.64% 4.89% -0.97% 1.02% Demographic effect of job rotations 4.69% 5.19% 5.69% 1.45% -2.58% Demographic effect on mortality tables -25.00% | CB14-RV14, Chile 25.00% -0.05% 0.08%
Health benefits and other Low Medium High Reduction | Increase Financial effect on interest rates 5.08% 9.33% 5.58% 2.99% -2.84% Financial effect on health infation 5.90% 6.40% 6.90% -2.41% 2.52% Demographic effect, planned retirement age 58 56 60 58 6260 4.08% 4.05% Demographic effect on mortality tables -25.00% | CB14-RV14, Chile 25.00% 9.48% -6.52%
c) Provisions for early retirement plans and termination bonuses
In accordance with its operating optimization programs to reduce costs and increase labor productivity by incorporating new current technologies andor better management practices, the Corporation has established employee retirement programs by amending certain employment contracts or collective union agreements to include benefits encouraging employees to early retire, for which the necessary provisions are made based on the accrued obligation at current value.
As of December 31, 2022 and 2021, there is a current balance of ThUS$64,654 for early retirement and conflict termination bonuses of which ThUS$48,266 correspond to the provision for the cost of the special retirement plan for workers of the Ventanas Smelter recognized in 2022 (for reasons explained in note No. 29 b) x)) and ThUS$4,346 correspond to conflict termination bonuses respectively. Related non-current balances amount to ThUS$7,703 and ThUS$7,518, respectively. These amounts have been determined using a discount rate equivalent to that used for calculating employee benefits provisions and whose outstanding balances are part of the balances as of December 31, 2022 and 2021.
d) Employee benefits expenses
The employee benefit expenses recognized classified by nature are as follows:
1-1-2022 1-1-2021 Expense by Nature of Employee Benefits 12-31-2022 12-31-2021
ThUS$ ThUS$ Benefits – Short term 1,429,458 1,414,643 Benefits – Post employment 15,298 15,402 Early retirement plans and conflict termination bonuses 12,999 24,157 Benefits for years of service 112,489 76,972 Total 1,629,760 1,530,774
F-309 Corporación Nacional del Cobre de Chile
18. Equity
The Corporation’s total equity as of December 31, 2022 is ThUS$ 11,654,565 (ThUS$ 11,574,901 as of December 31)
In accordance with article 6 of Decree Law No. 1350 of 1976, it is established that, before March 30 of each year, the Board must approve the Corporation’s Business and Development Plan for the next three-year period. Taking that plan as a reference and keeping in mind the Corporation’s balance sheet for the immediately preceding year and aiming to ensure its competitiveness before June 30 of each year the amounts that the Corporation shall allocate to the formation of capitalization funds and reserves shall be determined by decree from the Ministries of Mining and Treasury.
Net income shown in the Statement of Financial Position, after deducting the amounts referred to in the previous paragraph, shall belong to the State and become part of the Nation’s general income.
On June 22, 2022, the Ministry of Finance agreed with the Corporation to a four-year average reinvestment plan of 30% of profits between 2021 and 2024, which will significantly contribute to the financing of Codelco’s investment plan, while considerably reducing its debt requirements. Consistent with the above, on the same date the Ministry of Finance issued exempt decree No. 194 authorizing the Corporation to allocate up to ThUS$582,750 of the net income from the balance sheet for the year 2021 . These resources will be paid out of 2022 and 2023 earnings (see note No. 34), prior to the absorption of excess dividends paid in advance from previous years and interim dividends for 2022.
As of December 31, 2022, a capitalization and reserve fund has been created amounting to T1hUS$345,589.
During the year ended December 31, 2021, payments were made to the Treasury for a total of ThUS$ 2,033,206 for advance dividends charged to the profits of the period, which discounted from the dividends paid in excess in 2020, reflect a balance in favor of ThUS$249,943 as of December 31, 2021 for such concept.
In the months of May and June 2022, dividends totaling ThUS$ 259,900 have been paid. As of December 31, 2022, no dividends payable are recognized in respect of earnings for the period from January to December 2022.
The Consolidated Statement of Changes in Equity discloses the changes in the Corporation’s equity.
The movement and composition of other equity reserves is presented in the Consolidated Statement of Changes in Equity.
Reclassification adjustments from other comprehensive income to income for the years meant a loss of TRUS$ 980 and a loss of ThUS$ 5,594 for the years ended December 31, 2022 and 2021, respectively.
F-310 Corporación Nacional del Cobre de Chile
a) Other reserves
Details of other equity reserves are shown in the following table, according to the dates indicated for each case.
Other reserves 12-31-2022 | 12-31-2021 ThUS$ ThUS$ Reserve on exchange differences on translation (7,030) (6,221) Reserve of cash flow hedges 3,831 (31,254) Capitalization fund and reserves 5,307,983 4 962,393 Actuarial results reserve in defined benefit plans (262,465) (259,573) Fixed asset revaluation reserve Law 18110 year 1982 624,567 624,567 Other reserves (7,460) (3,506) Total other reserves 5,659,426 5,286,406
b) Non-controlling interests
The detail of non-controlling interests, included in total equity and total profit or loss, as of the dates mentioned, is as follows:
Companies Non-controlling interests Equity Profit
12-31-2022 | 12-31-2021 | 12-31-2022 | 12-31-2021 | 1-1-2022 1-1-2021
12-31-2022 | 12-31-2021 % % ThUS$ ThUS$ ThUS$ ThUS$ Inversiones Gacrux SpA 32.20% 32.20% 914,073 946,389 16,000 108,867 Other 10 23 (18) 15 Total 914,083 946,412 15,982 108,882
The percentage of non-controlling interest in Inversiones Mineras Becrux SpA (previously Inversiones Mineras Acrux SpA) generates a non-controlling interest in the subsidiary Inversiones Gacrux SpA, which presents the following figures relating to its statement of financial position, statement of income and cash flows:
Assets and liabilities 12-31-2022 12-31-2021 ThUS$ ThUS$ Current assets 159,164 304,053 Non-current assets 2,827,107 2,829,329 Current liabilities 139,792 186,350 Non-current liabilities 220,162 313,790 Profit (loss) 1-1-2022 1-1-2021
12-31-2022 12-31-2021 ThUS$ ThUS$ Income 836,472 1,392,387 Ordinary expenses and other (791,728) (1,055,538) Profit for the period 44 744 336,849
F-311 Corporación Nacional del Cobre de Chile
19. Revenue
Cash flows 1-1-2022 1-1-2021
12-31-2022 12-31-2021
ThUS$ ThUS$
Net cash flows from (used in) operating activities 138,695 304,472
Net cash flows from (used in) investing activities (894) 141
Net cash flows from (used in) financing activities (147,495) (335,828)
Revenues from ordinary activities for the years ended December 31, 2022 and 2021, were as follows:
Item 1-1-2022 1-1-2021
12-31-2022 12-31-2021
ThUS$ ThUS$ Revenue from sales ofown copper 13,852,816 17,734,887 Revenue from sales of third-party copper 1,639,824 1,845,486 Revenue from sales of molybdenum 835,881 734,379 Revenue from sales of other products 694,752 129,255 Profit (loss) in futures market (4,864) (19,192) Total 17,018,409 21,024,815
The Corporation’s revenue is recognized at a point in time.
The breakdown of revenue is presented in explanatory note No.24 Operating Segments.
20. Expenses by nature
Expenses by nature for the years ended December 31, 2022 and 2021 were as follows:
1-1-2022 1-1-2021 Item 12-31-2022 12-31-2021
ThUS$ ThUusS$ Short-term benefits to employees (1,429,458) (1,414,643) Depreciation (1) (2,226,952) (2,257,082) Amortization (332) (2,242) Raw Materials (2,341,149) (2,327,879) Materials, consumables and others (6,806,225) (6,652,509) Total (12,804,116) (12,654,355)
(1) Depreciation includes the expense of Property, plant and equipment and right-of-use assets (see note 7b and note 8.1).
F-312
Corporación Nacional del Cobre de Chile
21. Asset impairment
As indicated in note 29 letter b) point x), the Corporation has declared its intention to move forward with preparations to cease operation of the Ventanas Smelter, which as of December 31, 2021 was part, together with the Ventanas Refinery, of a single cash-generating unit called the Ventanas Division. The Corporation is evaluating the assets of both operations separately, leading to the definition that the Ventanas Smelter and Ventanas Refinery are, as of December 31, 2022, separate cash-generating units under lAS 36.
As of December 31, 2022, the Corporation performed a calculation of the recoverable amount of its Ventanas Smelter cash-generating unit, for purposes of testing the assets associated with the cash-generating unit for impairment. Since such recoverable amount is zero, when compared to the carrying amount of the cash-generating units assets of US$89,410, an impairment was determined for such amount, which was recorded in Other expenses in the statements of comprehensive income for the year 2022 (note 22 letter b).
The recoverable amount determined corresponds to the value in use using a discount rate of
7.28% per year before taxes. The main variables used to determine the recoverable amount of this asset correspond to the price of rhenium, exchange rates and discount rates.
Also, as of December 31, 2022, the Corporation calculated the recoverable amount of its cash- generating unit related to the Ventanas refinery in order to test the assets associated with such cash-generating unit for impairment. The result of this calculation led to the conclusion that the recoverable amount is higher than the carrying amount of the cash-generating unit’s assets and, therefore, there is no impairment loss.
As of December 31, 2021, the Corporation’s subsidiary “Sociedad de Procesamiento de Molibdeno tested the recoverable amount of its assets for impairment. The Company’s projected cash flows are highly dependent on rhenium price projections, which were adjusted downward in 2021, based on actual market prices. A recoverable amount of US$237 million was determined, which when compared to the carrying amount of the cash generating unit’s assets of US$362 million triggered an impairment of ThUS$125,483 (before tax), reducing Property, Plant and Equipment by ThUS$124,315 and Right-of-use assets by TRUS$1,168 as of December 31, 2021. The recoverable amount determined corresponds to the value in use using a discount rate of 7.24% per year before taxes. The main variables used to determine the recoverable amount of this asset correspond to the price of rhenium, exchange rates and discount rates.
As of December 31, 2022 and 2021, there are no indications of additional impairments or reversals of impairment for other cash-generating units or associates.
F-313 Corporación Nacional del Cobre de Chile
22. Other income and expenses
Other income and expenses by function for the years ended December 31, 2022 and 2021 is detailed below:
a. Other income
Item 1-1-2022 1-1-2021
12-31-2022 12-31-2021
ThUS$ ThUS$ Penalties to suppliers 7,265 5,055 Delegated Administration 3,990 4,142 Miscellaneous sales (net) 21,495 22,382 Insurance claims indemnities 41 21 Material Return 945 26,421 Gacrux debt prepayment result – 21,342 Other miscellaneous income 30,995 36,378 Total 64,731 115,741
b. Other expenses
1-1-2022 1-1-2021 Item 12-31-2022 12-31-2021 ThUS$ ThUS$
Law No. 13196 (1,273,425) (1,571,687) Research expenses (1) (99,994) (59,264) Bonus for the end of collective bargaining (2) (22,586) (253,364) Expense plan (see to note 17 letter c.) (72,555) (24,157) Mining property value adjustment – (142,000) Write-off of investment projects (2,020) (100,176) Loss on disposal of fixed assets (12,673) (67,991) Health plans (see to note 17 letter a.) (15,258) (15,402) Compensation agreement framework agreement (4) (136,844) – Impairment of assets (note 21) (89,410) (125,483) Adjustment of inventory (13,287) (37,865) Material obsolescence (22,264) (26,310) Bad debts customers (59) (1,557) Contingency expenses (26,914) (2,958) Fixed indirect costs, low production level (5) (218,024) (182,306) Energy contract adjustment – (20,151) Adjustment severance indemnities (3) (55,849) (39,820) Other expenses (42,154) (46,516) Total (2,103,316) (2,717,007)
(1) Study expenses include exploration expenses (see note 7 letter f), pre- investment studies and research and technological innovation expenses.
(2) Corresponds to disbursements for the closing of a collective bargaining process, which do not establish a permanence condition.
(3) Corresponds to the restatement of severance indemnities liabilities associated with the portion earned by employees in prior years.
(4) Corresponds mainly to payment limited to the agreement to update and improve the 2013 Framework Agreement that establishes benefits for contractor workers and in which Codelco acts as facilitator and guarantor.
F-314 Corporación Nacional del Cobre de Chile
(5) Break down .by division for this concept is as follows:
01-01-2022 01-01-2021
División 12-31-2022 12-31-2021 MUS$ MUS$
Andina (31,308) Chuquicamata (132,387) (127,526) Ventanas (38,858) – Ministro Hales (8,547) (941) Gabriela Mistral (6,546) Salvador (35,136) (15,985) Teniente (3,096) – Total fixed indirect costs, low production level (218,024) (182,306)
C.
Law No. 13196
Law No. 13196 – Under this law, the return in foreign currency of sales abroad of the Corporation’s actual income from its copper production, including by-products, is taxed at
10%.
On January 27, 2017, Law No. 20989, article 3, establishes changes in the application of Law No. 13196 as of January 1, 2018, through which the Corporation will deposit annually, no later than December 15 of each year, the funds established in article 1 in that law.
On September 26, 2019, Law No. 21174 was published, which repeals Law No. 13196 and establishes that the 10% tax to the tax benefit provided by the Corporation will subsist for a period of nine years, decreasing from the tenth year 2.5% per year until reaching 0% at the beginning of the thirteenth year. The validity of this law is as of January 1, 2020, maintaining the payment annually at a date no later than December 15 of each year
On March 23, 2020, the Ministry of Finance issued Ordinary Letter No. 843, which modifies the payment method of the funds related to Law No. 13196, in order to address funds to meet national needs generated by the COVID-19 crisis. Said Official Letter establishes the payment of funds owed to the Treasury for the application of Law No. 13196, equivalent to ThUS$240,168 (contribution for December 2019, January and February 2020), before March 31, 2020. Subsequently and from the month of April 2020, the Corporation should carry out the monthly transfer of the corresponding resources according to their recordkeeping, within a period not exceeding the last day of the month following its booking.
23. Finance costs
Finance costs for the years ended December 31, 2022 and 2021 are detailed in the following table:
F-315 Corporación Nacional del Cobre de Chile
Item 1-1-2022 1-1-2021
12-31-2022 12-31-2021
ThUS$ ThUS$ Bond interest (412,912) (535,108) Bank loan interest (12,475) (6,325) Restatement of severance indemnity provision (13,242) (6,219) Restatement of other non-current provisions (55,546) (28,860) Other (74,885) (64,497) Total (569,060) (641,009)
24. Operating segments
In section |! “Significant Accounting Policies, it has been indicated that, for the purposes of IFRS 8, “Operating Segments”, these are determined according to the Divisions that comprise Codelco. In addition, the Parent Company’s revenues and expenses are distributed among the defined segments.
The mining deposits in operation, where the Corporation conducts its extractive and processing activities are managed by the following Divisions: Chuquicamata, Radomiro Tomic, Ministro Hales, Gabriela Mistral, Salvador, Andina and El Teniente. In addition, the smelting and refining activities are managed at the Ventanas Division. All these Divisions have a separate operational management, which reports to the Chief Executive Officer, through the North and South-Central Vice-President of Operations, respectively. The information on each Division and their corresponding mining deposits is as follows:
Chuquicamata
Types of mine sites: Open pit mines and underground mines
Operating: since 1915
Location: Calama, Il Region de Antofagasta. Chile
Products: electro refined and electrowon cathodes and copper concentrate
Radomiro Tomic
Types of mine sites: Open pit mines
Operating: since 1997
Location: Calama, ll Region de Antofagasta. Chile
Products: electrowon copper cathodes and copper concentrate
Ministro Hales
Types of mine sites: Open pit mines
Operating: since 2014
Location: Calama, Il Region de Antofagasta. Chile.
Products: Calcined copper, copper concentrates
F-316 Corporación Nacional del Cobre de Chile
Gabriela Mistral
Types of mine sites: Open pit mines
Operating: since 2008
Location: Calama, Il Region de Antofagasta. Chile Products: Electrolytic (electro-obtained) cathodes
Salvador
Type of mines: Underground and open pit mines
Operating: since 1926
Location: Salvador, Ill Region de Atacama. Chile.
Products: Electro refined and electrolytic (electro-obtained) copper cathodes and copper concentrate.
Andina
Type of mines: Underground and open pit mines Operating: since 1970
Location: Los Andes, V Region de Valparaíso. Chile.
Product: Copper concentrate
El Teniente
Type of mines: Underground mine
Operating: since 1905.
Location: Rancagua, VI Region del Libertador General Bernardo O’Higgins. Chile.
Products: copper concentrate and copper anodes.
a) Allocation of Head Office revenue and expenses Revenue and expenses controlled by the Head Office are allocated to the Divisions based on following criteria.
The main items are assigned based on the following criteria:
Revenue and Cost of Sales of Head Office commercial transactions e The allocation to the Divisions is made in proportion to the ordinary income of each of them.
Other income by function e Other income by function, associated and identified with each Division, is directly allocated.
e Recognition of realized profits and other income by way of subsidiaries are allocated in proportion to the revenues of each Division.
e Theremaining other income ¡is allocated in proportion to the aggregate of balances of other income and finance income of each Division.
Distribution costs e Expenses associated and identified with each Division are directly allocated.
e Distribution costs of subsidiaries are allocated in proportion to the revenues of each Division.
F-317 Corporación Nacional del Cobre de Chile
Administrative expenses e Expenses associated and identified with each Division are directly allocated.
e Administrative expenses recorded in cost centers associated with the sales function and administrative expenses of subsidiaries are allocated in proportion to the revenues of each Division.
e Administrative expenses recorded in cost centers associated with the supply function are allocated in proportion to inventory balances in warehouse in each Division.
e The remaining administrative expenses are allocated in proportion to operating cash outflows of each Division.
Other expenses, by function e Other expenses associated and identified with each Division are directly allocated.
e Expenses for pre-investment studies and other expenses by function of subsidiaries are allocated in proportion to the revenues of each Division.
Other Gains e Other gains associated and identified with each Division are directly allocated.
e Other gains of subsidiaries are allocated in proportion to the revenues of each Division
Finance Income e Finance income associated and identified with each Division is directly allocated.
e Finance income of subsidiaries is allocated in proportion to the revenues of each Division.
e Theremaining finance income is allocated in relation to the operating cash outflows of each Division.
Finance Costs e Finance costs associated and identified with each Division are directly allocated.
e Finance costs of subsidiaries are allocated in proportion to the revenues of each Division
Share in profit (loss) of associates and joint ventures accounted for using the equity method e The share in the profits or losses of associates and joint ventures identified with each particular Division is allocated on a straight-line basis.
Foreign exchange differences e Foreign exchange differences identifiable with each Division are directly allocated.
e Foreign exchange difference of subsidiaries is allocated in proportion to the revenues of each Division.
e The remaining foreign exchange differences are allocated in relation to operating cash outflows of each Division
Contribution to the Chilean Treasury under Law No. 13196 e The amount of the contribution is allocated and accounted for in proportion to the invoiced and recorded amounts for copper and sub-product exports of each Division, that are subject to the surcharge.
F-318 Corporación Nacional del Cobre de Chile
b)
Tax income benefit (expense) e Income tax benefit (expense) Corporate income tax under D.L. 2398 and specific mining tax are allocated based on the income before income taxes of each Division, considering for this purpose the income and expenses allocation criteria of the Head Office and subsidiaries mentioned above.
e Other tax expenses are allocated in proportion to the corporate income tax, specific mining tax and tax under D.L. 2398 of each Division
Transactions between segments
Transactions between segments mainly related to products processing services (or tolling services), are recognized as revenue for the segment rendering the tolling services and as the cost of sales for the segment that receives the service. Such recognition is made in the period in which these services are rendered, as well as its elimination in the consolidated corporate financial statements.
Additionally, the reallocation of the profit and loss assumed by Ventanas Division, associated with the corporate mineral processing contract between Codelco and Enami, in which a distribution is applied based on the revenue of each division is included as a transaction between segments.
Cash flows by segments
The operating segments defined by the Corporation, maintains a cash management function which refers mainly to operational activities that need to be covered periodically with funds constituted in each of these segments and whose amounts are not significant in relation to corporate balances of cash and cash equivalents.
Conversely, activities such as obtaining financing, investment and payment of relevant financial obligations are mainly based at the Head Office.
F-319
Corporación Nacional del Cobre de Chile
From 01-01-2022 to 12-31-2022 Segments Chuquicamata | R.Tomic Salvador Andina El Teniente | Ventanas | G. Mistral M. Hales Total Other Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$
Revenue from sales of own copper 3,835,498 2,408,588 747,309 1,310,927 3,343,140 7,560 930,183 1,269,611 | 13,852,816 – | 13,852,816 Revenue from sales of third-party copper 2,041 – 14,744 – 63,065 – – 80,450 1,599,374 | 1,639,824 Revenue from sales of molyodenum 425,089 58,908 11,212 81,617 229,061 – – – 805,887 29,994 835,881 Revenue from sales of other products 185,350 – 92,404 5,628 167,501 176,848 3,704 59,155 690,700 4.052 694,752 Revenue from future market (407) 317 (1,581) 243 (4,678) (36) 918 346 (4,878) 14 (4,864) Revenue between segments 68,016 – 10,773 1,549 – 83,044 – – 163,382 (163,382) – Revenue 4,515,587 2,467,813 874,911 1,399,964 3,735,024 331,081 934,865 1,329,112 | 15,588,357 1,430,052 | 17,018,409 Cost of sales of own copper (3,093,040)| (1,710,771) (912,486) (979,957) (1,627,273) (8,546) (791,880) (817,019) (9,940,972) 9,509| (9,931,463) Cost of sales of third-party copper (3,200) (21,460) – – (67,348) – – (92,008) (1,554,709) (1,646,717) Cost of sales of molybddenum (88,367) (25,573) (4,062) (35,110) (44,144) – – – (197,256) (8,298) (205,554) Cost of sales of other products (177,139) (72,908) (755) (69,946) (167,902) (4,008) (4,542) (497,200) (3,718) (500,918) Cost of sales between segments (101,782) 1,415 (19,883) 22,515 13,796 (106,397) (1,635) 28,589 (163,382) 163,382 Cost of sales (3,463,528) (1,734,929) (1,030,799) (993,307)| (1,727,567) (350,193) (797,523) (792,972)| (10,890,818) (1,393,834)| (12,284,652) Gross profit (loss) 1,052,059 732,884 (155,888) 406,657 2,007,457 (19,112) 137,342 536,140 4,697,539 36,218 | 4,733,757 Other income, by function 19,992 2,497 4,535 5,912 3,676 4,438 2,651 736 44 437 20,294 64,731 Distribution costs (6,972) (1,127) (359) (1,854) – – (1,987) (12,299) (4,852) (17,151) Administrative expenses (40,973) (39,664) (22,169) (24,288) (88,344) (11,433) (29,827) (26,550) (283,248) (219,065) (502,313) Other expenses, by function (237,117) (38,122) (65,582) (41,368) (83,764) (183,898) (13,651) (22,105) (685,607) (144,284) (829,891) Law No. 13196 (393,521 (199,623) (73,929) (128,481) (277,034) (13,740) (91,164) (95,933) (1,273,425) (1,273,425) Other gains (losses) – – – – – – – – – 29,782 29,782 Finance income 698 285 40 (329) 89 94 16 (146) 1,554 45,691 47,245 Financial costs (232,446) (34,016) (6,198) (83,013) (144,008) (6,477) (18,386) (37,765) (962,309) (6,791) (569,060) Impairment loss under IFRS 9 – – – – – – – – – (2,648) (2,648) Share in the profit (loss) of associates and joint ventures
– – 1,042 1,744 512 – – – 3,298 48,693 51,991 accounted for using the equity method Exchange gains (losses) in foreign currencies (29,050) (14,919) (31,803) (67,471) (66,575) (2,341) (14,276) (10,103) (236,538) (1,239) (237,777) Profit (loss) before tax 132,670 409,322 (351,079) 69,004 1,350,962 (232,469) (27,295) 342,287 1,693,402 (198,161)] 1,495,241 Income tax expense (90,708) (279,922) 234,481 (56,525) (920,255) 159,105 17,921 (230,999)| (1,166,902) 33,232 | (1,133,670) Profit (loss) 41,962 129,400 (116,598) 12,479 430,707 (73,364) (9,374) 111,288 526,500 (164,929) 361,571
F-320 Corporación Nacional del Cobre de Chile
From 01-01-2021 to 12-31-2021
Segments Chuquicamata | R.Tomic Salvador Andina El Teniente | Ventanas | G. Mistral M. Hales Total Other Total segments Consolidated ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Revenue from sales of own copper 4,700,183 | 3,129,013 1,102,750] 1,610,530| 4,345,132 92,296 981,733| 1,773,250| 17,734,887 17,734,887 Revenue from sales of third-party copper 11,823 – – – 45,238 57,061 | 1,788,425 1,845,486 Revenue from sales of molybdenum 375,028 48,184 14,801 47,655 232,145 – 717,813 16,566 734,379 Revenue from sales of other products 219,978 99,629 4 427 138,166 194,953 – 67,764 724,917 4,338 129,295 Revenue from future market (4,641) (3,455) (57) (656) (7,739) 123 (2,149) (618) (19,192) (19,192) Revenue between segments 51,981 37,037 1,540 – 91,359 – 182,517 (182,517) – Revenue 5,354,352 | 3,173,742| 1,254,760| 1,663,496 | 4,707,704 423,969 979,584| 1,840,396| 19,398,003| 1,626,812 21,024,815 Costof sales of own copper (3,142,403) (1,361,141) (973,364) (900,132)] (1,864,150) (92,906) (555,744) (736,623) (9,626,463) 15,810 (9,610,653) Cost of sales of third-party copper (11,153) – – – – (43,719) (54,872) (1,768,554) (1,823,426) Costof sales of molyodenum (89,390) (19,289) (5,979) (22,573) (41,286) – (178,517) (16,666) (195,183) Costof sales of other products (159,798) (115,098) (635) (61,422) (204,783) – (10,504) (552,240) (4,186) (556,426 Costof sales between segments (128,994) 22,427 (43,084) 9,698 37,254 (123,670) (1,033) 44 885 (182,517) 182,517 – Cost of sales (3,531,738) (1,358,003) (1,137,525) (913,642)| (1,929,604) (465,078) (556,777) (702,242) (10,594,609) (1,591,079] (12,185,688) Gross profit (loss) 1,822,614 | 1,815,739 117,235 749,854| 2,778,100 (41,109) 422,807| 1,138,154| 8,803,394 35,733 8,839,127 Other income, by function 11,325 1,466 6,980 11,188 21,859 1,423 4,840 1,083 60,164 55,577 115,741 Distribution costs (3,146) (61) (521) (190) (910) (9) – (1,302) (6,139) (3,250) (9,389) Administrative expenses (33,210) (29,689) (20,680) (22,664) (81,503) (7,982) (24,557) (24,316) (244 601) (214,677) (459,278) Other expenses, by function (301,188) (54,221) (92,562) (159,481) (125,280) (2,741) (20,658) (31,418) (787,549) (357,771) (1,145,320) Law No. 13196 (455,450) (263,896) (108,347 (156,249) (348,681) (24,902) (96,571) (117,591) (1,571,687) (1,571,687) Other gains (losses) – – – 37,931 37,931 Finance income 135 10 71 51 1,077 119 15 (62) 1,416 12,241 13,657 Financial costs (245,404) (38,361) (17,784) (63,728) (190,713) (7,223) (14,547) (44,434) (622,194) (18,815) (641,009) Impairment loss under IFRS 9 (1,250) (1,250) Share in the profit (loss) ol associales and joint 857 1.180 3.703 5.740 409,105 414,845 ventures accounted for using the equity method Exchange gains (losses) in foreign currencies 85,310 31,306 23,110 43,415 100,742 16,136 18,766 21,648 340,433 (26,697) 313,736 Profit (loss) before tax 880,986| 1,462,293 (91,641) 403,376 | 2,158,394 (66,288) 290,095 941,762| 5,978,977 (72,273) 5,906,704 Income tax expenses (586,785) (980,145) 58,393 (299,289)] (1,440,972) 47,503 (194,277) (633,713)| (4,029,285) 173,949 (3,855,336) Profit (loss) 294,201 482,148 (33,248) 104,087 717,422 (18,785) 95,818 308,049 | 1,949,692 101,676 2,051,368
F-321 Corporación Nacional del Cobre de Chile
The assets and liabilities related to each operating segment, including the Corporation’s corporate center (Head Office) as of December 31, 2022 and December 31, 2021, are detailed in the following tables:
12-31-2022 Category Chuquicamata Radomiro Salvador Andina ElTeniente | Ventanas | G.Mistral M. Hales Other Total Tomic Consolidated ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Current assets 1489407] 946313] 614,161] 285883] 974,063 70,378] 345623] 462815] 106,200) 6,794,843 Non-current assets 9,738,307| 2,189,304| 1,786,089] 5,576,206] 8795911] 165786| 1007493| 3,346:994| 5,336,209| 37,942,389 Currentliabiliies 691,342) 2938301 302986| 257075] 512310] 122262] 153835| 143043] 1443,802| 3,920,485 Non-current liabilities 604,612 398,512 314,627 1,178,368 953,188 122,259 134,997 148,762| 25,306,857 29,162,182
12-31-2021 Category Chuquicamata Radomiro Salvador Andina ElTeniente | Ventanas | G.Mistral M. Hales Other Total Tomic Consolidated ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Current assets 1657948] 1009,317] 510,147] 392996| 1,219,506 66.487] 386,309] 482934] 2,076,265 7,801,909 Non-current assets 9,251627| 2085913] 1317660] 5404441] 8,112876| 214228] 1040,031| 3285526| 4543,224| 35,255,526 Currentliabiliies 692071] 230440] 204120| 232538] 5381455 95,733) 110,090] 146,358| 1689,072| 3,938,877 Non-current liabilities 574,123 295922) 345003| 1048434| 830,281 88,088] 147495] 153,782| 24051529| 27,543,657 Revenues segregated by geographic area are as follows:
1-1-2022 1-1-2021
Revenue per geographical areas 12-31-2022 | 12-31-2021
ThUS$ ThUS$
Total revenue from domestic customers 2,414,054 3,430,050
Total revenue from foreign customers 14,604,355 | 17,594,765
Total 17,018,409 | 21,024,815
1-1-2022 1-1-2021
Revenue per geographical areas 12-31-2022 | 12-31-2021
ThUS$ ThUS$
China 3,280,124 | 4,191,892
Rest of Asia 3,276,193 3,923,990
Europe 5,289,249 | 6,389,832
America 4,099,704 9,720,097
Other 1,073,139 1,199,404
Total 17,018,409 | 21,024,815
During the years ended December 31, 2022 and 2021, there is no revenue from ordinary activities from transactions with a single customer representing 10 percent or more of the Corporation’s revenue from ordinary activities.
F-322
Corporación Nacional del Cobre de Chile
25. Exchange difference
Exchange differences for the years ended December 31, 2022 and 2021 are as follows:
1-1-2022 1-1-2021 Profit (loss) conte anos differences 12-31-2022 | 12-31-2021 ThUusS$ ThUS$ Exchange Rate Difference lAS Provision 2,337 104,992 Exchange Rate Difference Health Plan Provision (37,491) 66,377 Exchange Rate Difference Provision for Mine Closure (144,921) 74,600 Exchange Rate Difference Contingencies Provision (6,331) 7,380 Exchange Rate Difference Other (51,371) 60,387 Total exchange difference (237,777) 313,736
26. Statement of cash flows
The following table shows the items that comprise other collections and payments from operating activities in the Statement of Cash Flows:
1-1-2022 1-1-2021 Other payments from operating activities 12-31-2022 12-31-2021 ThUS$ ThUS$ Contribution to Chilean treasury Law N*13.196 1,569,295 1,223,152 VAT and other similar taxes paid 766,601 845,999 Total 2,335,896 2,068,751
1-1-2022 1-1-2021 Other collections from operating activities 12-31-2022 12-31-2021 ThUS$ ThUS$ VAT Refund (1,295,352) (1,550,137) Sales hedge (1,302) (17,745) VAT and Others (1,767,339) (1,572,781) Total (3,063,993) (3,140,663)
During the years ended December 31, 2022 and 2021, no direct cash capital contributions were received.
27. Risk management
Corporación Nacional del Cobre de Chile has created instances within its organization that seek to generate strategies to minimize the financial risks to which it may be exposed.
The risks to which Codelco is exposed and a brief description of the management procedures that are carried out in each case, are described below.
F-323 Corporación Nacional del Cobre de Chile
a. Financial risks
* Exchange rate risk:
According to |FRS 7, exchange rate risk is understood to be the risk that arises from financial instruments that are denominated in foreign currencies, that is, a currency other than the Corporation’s functional currency (US dollar).
Codelco’s activities that generate this exposure correspond to funding in UF, accounts payable and receivable and provisions in Chilean pesos, other foreign currencies used in its business operations and obligations with employees.
Most transactions in currencies other than US$ are denominated in Chilean pesos. Also, there is another portion in Euro, which corresponds mainly to a long-term loan issued through the international market, which exchange rate risk is mitigated with hedging instruments (Swap).
Taking into consideration the financial assets and liabilities as of December 31, 2022 as the base, a fluctuation (positive or negative) of 10 Chilean pesos against the U.S. dollar (keeping the other variables constant), could affect profits before taxes by US$ 33 million in profit or loss, respectively. This result is obtained by identifying the main items (including assets and financial liabilities) denominated in foreign currencies in order to measure the impact on profit or loss that a variation of +- 10 Chilean pesos would have in terms of US$, with respect to the closing exchange rate at the end of the reporting period.
* Interest rate risk
This risk arises from interest rate fluctuations in Codelco’s investment and financing activities.
This movement can affect future cash flows or the market value of fixed rate financial instruments.
These rate variations refer to U.S. dollar variations, mostly with respect to the LIBOR rate. To manage this risk, Codelco maintains an adequate combination of fixed and variable rate debt, which is complemented by the possibility of using interest-rate derivatives to meet the strategic guidelines defined by Codelco’s Vice-Presidency of Administration and Finance lt is estimated that, based on net debt at December 31, 2022, a one percentage point change in the interest rates of credit financial liabilities subject to variable interest rates would result in a change in annual interest expense of approximately US$ 10 million, before taxes. This estimation is made by identifying the liabilities assigned variable interest, accrued at the end of the financial statements, which may vary with a change of one percentage point in variable interest rates
The concentration of obligations that Codelco maintains at fixed and variable rates at
December 31, 2022, corresponds to a total of ThUS$ 15,979,672 and ThUS$ 978,705, respectively.
F-324 Corporación Nacional del Cobre de Chile
b. Market risk.
* Commodity price risk:
As a result of its commercial operations and activities, the Corporation’s income is mainly exposed to the volatility of copper prices and certain sub-products such as gold and silver.
Copper and molybdenum sales contracts generally establish provisional sales prices at the time of shipment of such products, while the final price will be considered based on a monthly average price determined by the market for future periods. At the reporting date, sales of provisionally priced products are adjusted to fair value and the effect is recorded in the results of operations for the period. Forward prices at the period-end are used for copper sales, while period-end average prices are used for molybdenum concentrate sales due to the absence of an assets futures market. (See Note 2.q) “Income from Activities Ordinary Procedures from Contracts with Customers of section |! Main Accounting Policies).
As of December 31, 2022, if the future price of copper fluctuates by + – 5% (with the other variables constant), the result would be US$285 million before taxes as a result of setting the mark to market of sales revenue to provisional prices in effect as of December 31, 2022 (MTMF
684). For the estimate indicated, all of those physical sales contracts were valued according to the monthly average immediately following the close of the financial statements, and proceeds to be estimated regarding what the final settlement price would be if there is a difference of + – 5% with respect to the future price known to date for this period
In order to protect cash flow and adjust, where necessary, its sales contracts to ¡ts trade policy, the Corporation holds operations in futures markets. At the end of the reporting period, these contracts are adjusted to fair value, recording this effect, at the settlement date of the hedging transactions as part of net product sales.
The Corporation has not entered into any hedging transactions with the specific purpose of hedging the price risk caused by fluctuations in prices of production inputs.
c. Liquidity risk
The Corporation ensures that it has sufficient resources, such as pre-approved credit lines (including refinancing), in order to meet short-term requirements, after considering the necessary working capital for its operations and any other commitments it has.
In this sense, the Corporation maintains resources at its disposal sufficient to meet its obligations, whether in cash, liquid financial instruments or credit facilities.
In addition, the Finance Department constantly monitors the Corporation’s cash flow projections based on short- and long-term projections and available financing alternatives. In addition, the Corporation estimates that it has enough headroom to increase the level of borrowing for the normal requirements of its operations and investments established in its development plan.
F-325 Corporación Nacional del Cobre de Chile
In this context, according to current existing commitments with creditors, the cash requirements to cover financial liabilities classified by maturity and presented in the statement of financial position are detailed as follows:
Maturity of financial liabilities Lessthan |Between one Over as of 12-31-2022 1 year five years years ThUS$ ThUS$ ThUS$ Loans from financial entities 8,945 373,994 996,166 Bonds 452,154 | 2,766,355 | 12,761,163 Derivatives 9,738 120,202 1,984 Other financial liabilities 63,659 – Total 470,437 | 3,324,210 | 13,364,913
d. Credit risk
This risk comprises the possibility that a third party does not fulfill its contractual obligations, thereby causing a loss for the Corporation.
Given the Corporation’s sales policy, principally with cash and advance payments and bank letters of credit, the uncollectible of client debt balances is minimal. This is complemented by the familiarity the Corporation has with its clients and the length of time it has operated with them. Therefore, the credit risk of these transactions is not significant.
The indications with respect to the payment conditions to the Corporation are detailed in every sales contract and the negotiation management is under the charge of the Commercial Vice- Presidency.
In general, the Corporation’s other accounts receivable have a high credit quality according to the Corporation’s evaluations, based on each debtor’s solvency analysis and payment history.
The maximum exposure to credit risk as of December 31, 2022 is represented by the financial asset items presented in the Corporation’s Statement of Financial Position.
The Corporation’s accounts receivable does not include customers with balances that could be classified as a significant concentration of debt and would represent a material exposure for Codelco. This exposure is distributed among many clients and other counterparties.
In the customer items, the provisions, which are not significant, are included based on the review of the outstanding balances and characteristics of the clients, destined to cover eventual insolvencies.
Explanatory note 2 “Trade and other receivables shows past due and not provisioned balances.
F-326 Corporación Nacional del Cobre de Chile
The Corporation estimates that unimpaired amounts overdue over 30 days are recoverable based on clients historical payment behavior and their existing credit ratings.
As of December 31, 2022 and 2021, there are no receivable balances that have been renegotiated.
Codelco works with major banks, which have high national and international ratings, and continually assesses them; therefore, the risk that could affect the availability of the Corporation’s funds and financial instruments is not significant.
Also, in some cases, to minimize credit risk, the Corporation has contracted credit insurance policies through which it transfers to third parties the commercial risk associated with some aspects of ¡ts business.
During the years ended December 31, 2022 and 2021, no guarantees have been executed in relation to ensure the collection of third party debt.
Personnel loans mainly relate to mortgage loans, according to programs included in union agreements, which are paid for through payroll discounts.
e. Other relevant risks
In addition to exposure to financial risks, community relations, environmental, litigation and regulatory proceedings, during 2022 we defined strategic risks as risks or combination of risk events that may threaten the business model in the short or long term, structuring our model in a robust way to face the challenges that become more demanding each year, such as changes in social expectations, infrastructure and human development.
The model designed contemplates risks for at least the next three years and also some that would be relevant for a longer period. It also considers monitoring emerging risks which are permanently monitored by the industry.
Risks are permanently monitored to identify, address and oversee appropriate mitigation actions, with the support of the second line of defense established in Codelco’s corporate governance mainly through corporate risk management, working to provide assurance on the status of controls or drive the necessary behavior to achieve the expected status.
These definitions also consider risk appetite as the nature and extent of risk that the Corporation is willing to accept in relation to the achievement of its business and objectives.
The above factors in the probability and severity of the consequences of the materialization of a risk in the different areas of its impact.
Our risk management program considers that risk appetite and risks may change over time and may require management actions to respond to changes in the context. Information regarding the main risks considered by Codelco will be included in the Annual Report as of
2022.
F-327 Corporación Nacional del Cobre de Chile
28. Derivatives contracts.
The Corporation has entered transactions to hedge cash flows, to minimize the risk of foreign exchange rate variations and sales price variations, detailed as follows:
a. Exchange rate hedge
The Corporation maintains an exposure associated with ¡ts foreign exchange hedging operations, the balance of which corresponds to a net deferred tax loss recognized in equity amounting to ThUS$5,034 as of December 31, 2022.
The following table shows details of the fair value and other information of the financial hedges contracted by the Corporation:
December 31, 2022
Type of Financial Hedged item Bank derivative Maturity Currency | Hedged item obligat ‘on Fair value Asset Amortized contract Hedging hedged item cost instrument ThUS$ ThUS$ ThUS$ ThUS$ ThUS$
Bono UF Vcto. 2025 Credit Suisse (EE.UU) Swap 04-01-2025 US$ 283,067 208,519 79,226 296,104 (216,878) Bono EUR Vcto. 2024 Santander (Chile) Swap 07-09-2024 US$ 321,063 409,650 (89,573) 320,305 (409,878) Bono EUR Vcto. 2024 BNP Paribas (EE.UU) Swap 07-09-2024 US$ 106,897 136,402 (29,780) 106,646 (136,426) Bono UF Vcto. 2026 JP Morgan London Branch (Inglaterra) Swap 08-24-2026 US$ 410,242 406,212 21,309 423,278 (401,969) Bono AUD Vcto. 2039 Santander (Chile) Swap 07-22-2039 US$ 47,684 49,266 (6,656) 42,046 (48,702) Bono HKD Vcto. 2034 HSBC Bank PLC (Inglaterra) Swap 11-07-2034 US$ 64,100 63,792 (928) 59,795 (60,723) Total 1,233,053 1,273,841 (26,402)| 1,248,174 (1,274,576)] December 31, 2021
Type of Financial : :
Hedged item Bank derivative Maturity Currency | Hedged item obligat 1on Fair value Asset Amortized contract Hedging hedged item cost instrument ThUS$ ThUS$ ThUS$ ThUS$ ThUS$
Bono UF Vcto. 2025 Credit Suisse (EE.UU) Swap 04-01-2025 US$ 253,162 208,919 33,14 275,382 (242,208) Bono EUR Vcto. 2024 Santander (Chile) Swap 07-09-2024 US$ 339,405 409,650 (77,620 367,024 (444,644 Bono EUR Vcto. 2024 BNP Paribas (EE.UU) Swap 07-09-2024 US$ 113,004 409,680 (25,774 122,199 (147,973 Bono UF Vcto. 2026 JP Morgan London Branch (Inglaterra) Swap 08-24-2026 US$ 366,901 406,212 (68,670 381,758 (450,428 Bono AUD Vcto. 2039 Santander (Chile) Swap 07-22-2039 US$ 50,736 49,266 (4,539 59,373 (63,912 Bono HKD Vcto. 2034 HSBC Bank PLC (Inglaterra) Swap 11-07-2034 US$ 64,105 63,792 (2,375 73,709 (76,084 Total 1,187,313 1,547,119 (145,804 1,279,445 (1,425,249
As of December 31, 2022, the Corporation has no cash collateral balances.
The current methodology for valuing currency swaps uses the bootstrapping technique based on mid-swap rates to construct (zero) curves in functional currencies other than the functional currency and USD, respectively, based on market information.
F-328 Corporación Nacional del Cobre de Chile
The notional amounts held by the Corporation for financial derivatives are detailed below:
Notional amount of contracts with final maturity Less than Over 90 Total Total December 31, 2022 Currency 1to 3 years | 3to 5 years | Over 5 years 90 days days current non-current MUS$ MUS$ MUS$ MUS$ MUS$ MUS$ MUS$ Currency derivatives US$ 13,156 37,793 50,949 829,643 428,148 148,916 1,406,707 Notional amount of contracts with final maturity Less than Over 90 Total Total December 31, 2021 Currency 1to 3 years | 3to 5 years | Over 5 years 90 days days current non-current ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Currency derivatives US$ 13,156 48,151 61,307 941,941 656,931 152,775 1,751,647
b. Cash flows hedging contracts and commercial policy adjustment
The Corporation trades in the copper, gold and silver derivative markets and records its results upon termination. These results are added to or deducted from sales revenues. As of December 31, 2022, these operations generated a lower net realized result of TRUS$
4 639.
b.1. Commercial flexibility operations of copper contracts lts objective is to adjust the price of sales to the Corporation’s sales policy, which is defined according to the London Metal Exchange. As of December 31, 2022, the Corporation has copper derivative transactions associated with 277,675 metric tons of fine copper. These hedging transactions are performed as part of the Corporation’s commercial policy.
The current contracts as of December 31, 2022, present a negative balance of ThUS$ 3,438 and their final result will only be known at their maturity, offsetting the hedging transactions with revenue from the sale of the hedged products.
Operations completed between January 1 and December 31, 2022, generated a net negative effect in results of ThuS$ 4,539, corresponding to values for physical sales contracts for a negative amount of ThUS$ 4,764 and values for physical purchase contracts for a positive amount of ThUS$ 225.
b.2. Trade operations of current gold and silver contracts.
As of December 31, 2022, the Corporation does not have any gold and silver derivative contracts.
The operations completed between January 1 and December 31, 2022, generated a negative effect on results of ThUS$ 100, corresponding to values per physical sales contracts.
b.3. Cash flow hedging operations backed by future production
F-329 Corporación Nacional del Cobre de Chile
The Corporation has no outstanding transactions as of December 31, 2022, arising from these operations, which protect future cash flows by locking in price levels for the sale of part of its production
The following tables set forth the maturities of metal hedging activities, as referred to in point b above:
December 31, 2022 Maturity date ThUS$ 2023 2024 2025 2026 2027 Upcoming Total Flex com cobre (asset) 87 – – – – 87
Flex com cobre (liability) (2,676) (849) – – – – (3,525) Flex com GoldSilver – –
Price setting
Metal options – – – – – – – Total (2,589) (849) – – (3,438)
December 31, 2021 Maturity date
ThUS$ 2022 2023 2024 2025 2026 Upcoming Total Flex com cobre (asset) 61 – – – – – 61 Flex com cobre (liability) (22,056) (7,268) (363) – – – (29,687)
Flex com GoldSilver (393) – – – – – (393) Price setting –
Metal options – – – – – – – Total (22,388) (7,268) (363) – – – (30,019)
December 31, 2022 Maturity date All figures in thousands of metric tonslounces 2023 2024 2025 2026 2027 Upcoming Total
Copper Futures [MT] 244.175 33.500 – – – – 277.675 GoldSilver Futures [ThOZ] – –
Copper price setting [MT]
Copper options [MT]
December 31, 2021 Maturity date
All figures in thousands of metric tonslounces 2022 2023 2024 2025 2026 Upcoming Total Copper Futures [MT] 268.43 72.90 4.50 – – – 345.83 GoldSilver Futures [ThOZ] 15.98 – – – – – 15.98 Copper price setting [MT] Copper options [MT]
29. Contingencies and restrictions
a) Lawsuits and contingencies
There are various lawsuits and legal actions initiated by or against the Corporation, which derive from its operations and the industry in which it operates. In general, these are civil, tax, labor and mining litigations, all related to the Corporation’s activities.
In the opinion of Management and its legal advisors, the lawsuits where the Corporation is being sued and could have negative results do not represent significant loss contingencies or cash flows. Codelco defends its rights and makes use of all the corresponding legal and procedural instances and resources.
The most relevant lawsuits filed by Codelco relate to the following matters:
F-330 Corporación Nacional del Cobre de Chile
– Tax Proceedings: There is a tax proceeding for liquidation No.141 of tax year 2015 and Exempt Resolution No. 89 of 2016 issued by the Internal Revenue Service (Sl), for which the Corporation presented the corresponding appeals, which were received and resolved in favor of the Tax and Customs Courts, a resolution that was appealed by the SIl.
– Labor lawsuits: Labor proceedings brought by the workers against the Corporation, regard to occupational diseases, labor accidents and other matters.
– Mining proceedings and others arising from the operation: The Corporation has been participating, and will probably continue to participate, as plaintiff and defendant in given court proceedings involving its mining operation and activities, through which it seeks to exercise certain actions or set up certain defenses in relation to given mining concessions that have been established or are in the process of being established, as well as also with regard to its other activities. These proceedings currently do not involve any given amount and do not have any essential effect on Codelco’s development.
Some other procedures pending final judgment are the simultaneous claim for arbitration between Codelco, Santa Elvira S.A., Mining Services Group S.A. and Sociedad de Servicios para la Minería Limitada (collectively “Santa Elvira).
During the years ended December 31, 2022, there are no lawsuits or other proceedings representing 10 percent or more of the Corporation’s total outstanding lawsuits.
At the date of issuance of these financial statements, the Codelco faces various lawsuits and legal actions against it for a total of approximately US$101,333 million corresponding to 980 cases. According to the estimate made by the legal advisors of the Corporation, 777 causes, which represent 79.29% of the universe, have associated probable loss results amounting to ThUS$67,640 (additionally, with the same probable outcome, there are 5 causes for ThUS$367 from subsidiaries). There are also 160 cases, representing 16.33% for an amount of ThUS$33,672, for which it is less likely than not, that the ruling will be against the Corporation. For the remaining 43 cases, representing 4.39% for an amount of ThUS$ 21, the Corporation’s legal advisors consider an unfavorable result remote.
– Lawsuit under administrative law: On August 2, 2017, a Nullity in Public Law claim was filed in the 25th Civil Court of Santiago against Audit Report No. 900 of 2016, issued by the General Comptrollership of the Republic on May 10, 2017.
Once the discussion and evidence stage concluded, the Santiago Civil Court, on September 11, 2020, delivered its judgment in which it dismissed the annulment action filed by the Corporation, condemning it to the respective costs of said lawsuit.
On October 27, 2020, the Corporation filed appeals and cassation in the form of the sentence of the 25th Civil Court of Santiago, which dismissed the Public Law nullity action filed by the Codelco against Report No. 900 of 2016 of the Comptroller General of the Republic.
In December 2022, the Corporation established a collaboration commitment with the
Comptroller General of the Republic (CGR) to reinforce the principle of probity in regulation, applicable to the company regarding operations with related parties, establishing a frane
F-331 Corporación Nacional del Cobre de Chile for any contracts with related parties, safeguarding the legal status of the company and its business line, in addition to reinforcing controls for sensitive operations. This agreement with the Comptroller’s Office recognizes Codelco’s good practices and also improves controls for related party transactions. As a result of this agreement, litigation with the regulator has been terminated.
For litigation with probable loss and its costs, there are the necessary provisions, which are recorded as contingency provisions.
b) Other commitments.
. On May 31, 2005, Codelco, through its subsidiary Codelco International Ltd. signed an agreement with Minmetals to form a company, CuPIC, in which both companies have an equal equity interest. In addition, the terms of a 15-year sales contract for cathodes to the associated company were agreed, as well as a purchase contract from Minmetals to the latter for the same term and equal monthly shipments until completing the total amount of 836,250 metric tons. Each shipment shall be paid for by the buyer at a price formed by a fixed re- adjustable component plus a variable component, which depends on current copper prices at the time of shipment.
During the first quarter of 2006 and on the basis of the negotiated financial terms, financing contracts were formalized with the China Development Bank allowing CuPIC to make the US$550 million advance payment to Codelco in March 2006.
With regard to financial obligations incurred by the associate CuPIC with the China Development Bank, Codelco Chile and Codelco International Ltd, must meet certain commitments, mainly relating to the delivery of financial information. In addition, Codelco Chile must maintain 51% ownership of Codelco International Limited.
According to the Sponsor Agreement, dated March 8, 2006, the Codelco International Ltd.
subsidiary gave its participation in CUPIC as a guarantee to the China Development Bank.
Subsequently, on March 14, 2012, CuPIC paid off its debt to the abovementioned bank. As of December 31, 2017 Codelco, does not hold any indirect guarantee regarding its participation in this associated company.
On December 17, 2015, the Companys management presented a restructuring for the Supply Contract, which implies the removal of its share in CUPIC.
On April 7, 2016, the Corporation formalized the removal of its share in CUPIC, of which Codelco retained 50% ownership through the subsidiary Codelco International. Until that date, Codelco shared the ownership of the Company in the same proportion with the company Album Enterprises Limited (a subsidiary of Minmetals).
In order to realize the above-mentioned term of the shareholding, Codelco signed a set of agreements which formalized primarily the following issues:
F-332 Corporación Nacional del Cobre de Chile
Copper sales contract modifications from Codelco to CUPIC signed in 2006, which establishes the reduction of half of the outstanding tonnage to deliver to this company and in which Codelco pays to CUPIC the amount of ThUS$99,330.
Reduction of share capital in CuPIC, equivalent to the 50% of the Codelco International shares in said company and by which CuPIC repays to Codelco the amount of ThUS$99,330.
Waiver of Codelco to any dividends associated with the profits generated by CuPIC from January 1, 2016 and the date of signing the agreement.
Additionally, the cessation of dividends reception as a consequence of the removal of the Codelco share in the ownership of CuPIC since 2016, led to a reduction of the net profit estimated by Codelco until the end of the contract signed with that company.
At the close of the first semester of 2021, the Corporation delivered the last shipment associated with this sales contract.
li. Regarding the financing agreement signed on August 23, 2012, between the subsidiary, Gacrux Inversiones SpA and Mitsui 4 Co. Ltd. for the acquisition of the 24.5% stake in Anglo American Sur S.A. which was subsequently amended on October 31, 2012, a pledge is included over the shares that the subsidiary has on Acrux Inversiones SpA (shared participation with Mitsui and minority shareholder in Anglo American Sur S.A.), in order to ensure compliance with the obligations that the financial agreement contemplates.
This pledge extends to the right to collect and receive from Acrux dividends which have been agreed in the corresponding meetings of shareholders of the company and any other distributions paid or payable to Gacrux respect of the pledged shares.
On December 22, 2017 according to archive No. 12326 2017, it was established that, Gacrux, the Creditor and the Guarantee Agent, the latter representing the Guaranteed Parties, modified, by virtue of the Merger, the Contract of Pledge and the Modified Pledge Agreement as to the pledge on transferable securities and the commercial pledge, as well as the restrictions and prohibitions established in the Pledge Contract and in the Modified Pledge Contract, making it subject to , by virtue of the Merger, two thousand thirteen million two hundred and forty-five thousand four hundred and seventy-three shares pledge issued by Becrux, owned by Gacrux, hereinafter the “Pledged Becrux Shares.
On May 20, 2021, as a result of the prepayment of the obligations indicated above (see note
12), the pledges indicated in the preceding paragraph were raised.
li. Law No. 19993 dated December 17, 2004, authorized the purchase of the Refinery and Smelter Las Ventanas assets from ENAMI, establishing that the Corporation must ensure that the smelting and refining capacity required is maintained, without any restriction and limitation, for treating the products of the small and medium mining sector sent by ENAMI, under the form of toll production or another form agreed upon by the parties.
F-333 Corporación Nacional del Cobre de Chile
Iv. Obligations with the public for bond issues means that the Corporation must meet certain restrictions related to limits on pledges and leaseback transactions on its principal assets and on its ownership interest in subsidiaries.
The Corporation has complied with these conditions as of December 31, 2022 and 2021.
v. On January 20, 2010, the Corporation signed two energy supply contracts with Colbún
S.A., which includes energy and power sales and purchases for a total of 510 MW of power.
The contract provides a discount for that unconsumed energy from Codelco’s SIC divisions with respect to the amount of contracted power. The discount is equivalent to the value of the sale of that energy on the spot market.
The contracted power for supplying these Divisions is comprised by two contracts:
* Contract No.1 for 176 MW, current until December 2029.
* Contract No.2 for 334 MW, current until December 2044. This contract is based on energy production from Colbún’s Santa María thermal power station, which is currently in operation.
This plant is coal-fired, and therefore the electric energy tariff rate applied for the energy supplied to Codelco is linked to the price of coal.
Both of these contracts comply with Codelco’s long-term energy and power requirements from the SIC of approximately 510 MW.
Through these contracts, which operate through take or pay, the Corporation agrees to pay for the contracted energy and Colbún undertakes to reimburse at market price the energy not consumed by Codelco
These contracts have maturity dates in 2029 and 2044.
On October 27, 2022, Codelco signed an amendment to the contract, which, among other aspects, will allow replacing the coal-based electricity supply with a renewable energy supply.
This transformation will be implemented gradually, and as of January 1, 2026 the contract will be for 1,000 GWhyear of renewable energy.
vi. On November 6, 2009, Codelco signed the following long-term electric energy supply contracts with ELECTROANDINA S.A. (associate until January 2011), which matured in August 2017.
For the electric power supply of the Chuquicamata’s work center, there are three contracts: Engie for a 15-year term from January 2010, that is maturing in December 2024, for 200 MW capacity, and another contract for a 200 MW capacity which was signed in January 2018 and will be effective as of January 2025 with maturity in December 2035.
CTA effective from 2012 for 89 MW capacity, maturity in 2032.
vii. On August 26, 2011, Codelco signed two energy supply contracts with AESGener. The first one for the Minister Hales division for a 99 MW capacity and the second contract for the Radomiro Tomic work center, for a maximum capacity of 145 MW. Both contracts will mature in 2028.
F-334 Corporación Nacional del Cobre de Chile
In December 2022, the respective agreements were renegotiated and signed. The agreement implies the modification of the original contracts and a new renewable sources contract effective from 2023 to 2040.
vil. On November 11, 2011, Law No. 20551 was published in the Official Journal, which regulates the tasks and closure of mining facilities. Additionally, on November 22, 2012, the Supreme Decree No. 41 of the Minister of Mining, which approves the Regulations of this Law, was published in the Official Gazette.
This law requires the Corporation, among other requirements, to provide financial guarantees to the State to ensure the implementation of closure plans. It also establishes the obligation to make contributions to a fund which aims to cover the costs of post-closure activities.
The Corporation, in accordance with the regulations, delivered in 2014 to the National Geology and Mining Service (SERNAGEOMIN) the mine closure plans for each of the eight divisions of Codelco. These closure plans were developed under the transitional regime of the Law, specified for mining companies affected by the general application procedure, which are those with extraction capacity > 10,000 tonsmonth, and that at the date of entry into force of the Law were in operation, and with a closure plan previously approved under the Mining Safety Regulation D.S. No. 132.
All these transitional closure plans were approved in 2015 in accordance with the provisions established in the Law.
The law also established the obligation to update these closure plans, under the conditions of the general regime of the law, which incorporates new and greater requirements for the closure plans, five years after its entry into force, ¡.e. in 2020 in the case of Codelco. This calendar was brought forward to 2019 due to operational particularities for the Chuquicamata and Ventanas Divisions, and postponed to 2021 by SERNAGEOMIN, due to the COVID19 pandemic for the entire industry, and therefore for all other divisions.
In compliance with this new schedule, Codelco approved in 2021 the updated closure plans for the El Teniente, Radomiro Tomic, Ministro Hales and Gabriela Mistral Divisions, and as of December 31, 2021, the approval of the updated plans for the Salvador and Andina Divisions is in process. During the year 2022, Codelco obtained the approval of the updated closure plans of the Salvador and Andina divisions. The Corporation has provided the corresponding guarantees committed in all the approved closure plans, in accordance with the latest updates in force.
As of December 31, 2022, the Corporation has agreed guarantees for an annual amount of UF 63,322,955 to comply with the aforementioned Law No. 20.551 (see note No. 30).
ix. On August 24, 2012, Codelco through its subsidiary Inversiones Mineras Nueva Acrux SpA (Nueva Acrux) (whose minority shareholder is Mitsui), signed a contract with Anglo American Sur S.A. Under this contract, Codelco agreed to sell a portion of its annual copper production to the mentioned subsidiary, who in turn agrees to purchase such production.
F-335 Corporación Nacional del Cobre de Chile
Such annual portion is determined by the share of Codelco’s indirect subsidiary, Inversiones Mineras Becrux SpA (also shared ownership with Mitsui), maintained for the shares of Anglo- American Sur S.A.
In turn, the subsidiary Nueva Acrux agrees to sell to Mitsui, the products purchased under the agreement described in the preceding paragraphs.
The contract expiration will occur when the shareholders agreement of Anglo-American Sur
S.A. ends or other events related to the completion of mining activities of the company take place.
Xx. On June 17, 2022, Codelco’s Board of Directors agreed to move forward with preparations to cease operation of the Ventanas Smelter, subject to parliament amending Law No. 19993 within a limited period of time, a decision that applies exclusively to the smelter and not to the refinery or other operations of the Ventanas Division. This measure will require the amendment and approval by the Executive and the Legislature of Law No. 19993, which obliges the Corporation to smelt the minerals of Empresa Nacional de Minería (ENAMI) at the Ventanas Smelter.
As of December 31, the bill to amend the aforementioned law is advancing in the National Congress in its various legislative stages.
In the event that Law No. 19993 is modified, Codelco will be able to prepare and submit to Sernageomin a new closure plan for the Ventanas Smelter and move forward:
a) lInitiate proceedings before Sernageomin to obtain a permit for the temporary stoppage of the smelter.
b) Obtain environmental and sectoral permits from the relevant authorities for the definitive closure of the smelter.
c) Proceed with the dismantling of the plant, reuse of infrastructure, remediation, reclamation of areas and post-closure monitoring.
d) Execution of the special voluntary severance plan for employees.
30. Guarantees
The Corporation as a result of its activities has received and given guarantees.
The following tables list the main guarantees given to financial institutions:
F-336 Corporación Nacional del Cobre de Chile
Direct Guarantees provided to Financial Institutions and other
Creditor of the guarantee Type of guarantee 12-31-2022 12-31-2021 Currency Maturity Quantity ThUS$ ThUS$
Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement UF 15-mar-22 1 1,101 Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement UF 15-mar-23 1 1,231
Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement CLP 15-mar-22 1 19,309 Abogado Procurador Fiscal Carlos Felix Judicial agreement and settlement CLP 15-mar-23 1 19,057
Consorcio Aeropuerto Calama Parking UF 31-mar-22 1 3 Consorcio Aeropuerto Calama Parking UF 30-nov-23 1 4
Road management Construction project UF 21-ene-22 1 28 Road management Construction project UF 08-abr-24 1 4 4 Road management Project of explotation UF 13-may-23 1 5
General Directorate of Maritime Territory and Merchant Marine Maritime concession CLP 01-mar-22 1 1,249 General Directorate of Maritime Territory and Merchant Marine Maritime concession CLP 01-mar-23 1 1,233
General Directorate of Maritime Territory and Merchant Marine Maritime concession CLP 24-mar-24 2 238
Engie Energia Chile S.A. Water Supply Project CLP 31-ago-23 1 234 237 Engie Energia Chile S.A. Water Supply Project CLP 31-o0ct-23 1 229 232 Ministry of National Assets Project of explotation CLP 25-feb-22 22 154 Ministry of National Assets Project of explotation CLP 25-feb-23 22 154
Ministry of National Assets Project of explotation UF 31-mar-22 1 2 Ministry of National Assets Project of explotation UF 13-may-23 1 8 7 Ministry of National Assets Project of explotation UF 09-jun-23 5 40 35 Ministry of Public Works Construction project UF 31-dic-21 1 161 Ministry of Public Works Construction project UF 29-jul-22 1 38 Ministry of Public Works Construction project UF 03-feb-23 1 3,471
Ministry of Public Works Construction project UF 02-oct-23 1 560 501 Ministry of Public Works Construction project UF 31-dic-23 1 818 732 Ministry of Public Works Construction project UF 02-ene-24 1 24,265
Ministry of Public Works Construction project UF 29-jul-24 1 42
Ministry of Public Works Construction project UF 15-dic-24 1 556
Ministry of Public Works Construction project UF 31-dic-22 1 21,702 Sernageomin Environment UF 18-feb-22 2 168,240 Sernageomin Environment UF 03-may-22 1 170,909 Sernageomin Environment UF 18-feb-23 2 214,853
Sernageomin Environment UF 03-may-23 8 678,422
Sernageomin Environment UF 19-sept-23 1 53,633
Sernageomin Environment UF 11-nov-23 1 266,819
Sernageomin Environment UF 14-nov-23 1 181,252
Sernageomin Environment UF 27-nov-23 3 284,930
Sernageomin Environment UF 02-dic-23 6 777,239
Sernageomin Environment UF 15-dic-23 1 140,626
Sernageomin Environment UF 12-nov-22 1 210,252 Sernageomin Environment UF 15-nov-22 1 141,869 Sernageomin Environment UF 27-nov-22 3 209,112 Sernageomin Environment UF 02-dic-22 8 611,678 Sernageomin Environment UF 15-dic-22 2 108,743 Sernageomin Environment UF 07-oct-22 1 42,273 General Treasury ofthe Republic Maritime concession CLP 30-jun-24 1 55
General Treasury ofthe Republic Maritime concession CLP 21-oct-22 1 49 Total 2,649,978 1,708,620
As for the documents received as collateral, they cover mainly obligations of suppliers and contractors related to the various development projects. Below are given the amounts received as collateral, grouped according to the Operating Divisions that have received these amounts:
Guarantees received from third parties División 12-31-2022 12-31-2021 ThUS$ ThUS$
Andina 60 135 Chuquicamata 1 1 Casa Matriz 1,015,177 914,399 El Teniente – 427
Total 1,015,244 914,968
F-337 Corporación Nacional del Cobre de Chile
31. Balance in foreign currency
a. Assets by Currency
12-31-2022 Other Non- Assets national and foreign currency US Dollars Euros l indexed UF. TOTAL currencies Ch$ Current assets Cash and cash equivalents 877,345 5,944 8,722 134,716 – 1,026,727 Other financial assets, current 1,404 4 – 43 – 1,451 Other non-financial assets, current 33,107 378 171 3,329 4 36,989 Trade and other receivable, current 2,793,793 195,045 116 437,831 – 3,386,789 Accounts receivable from related entities, current 31,796 – – – – 31,796 Inventories, current 2,300,909 – – – – 2,300,909 Current tax assets 7,194 4 – 3,028 – 10,226 Total current assets 6,005,508 201,375 9,009 578,947 4 6,794,843 Non-current assets Investments accounted for using equity method 3,927,323 – – – – 3,927,323 Property, plant and equipment 32,305,393 – 100 4.037 – 32,309,530 Deferred tax assets 81,166 – 92 14,447 – 95,705 Other assets 1,660,336 – 1,861 332,509 15,129 2,009,831 Total non-current assets 37,574,218 – 2,053 350,989 15,129 37,942,389 Total assets 43,579,726 201,375 11,062 929,936 15,133 44,737,232
12-31-2021 Other Non- Assets national and foreign currency US Dollars Euros l indexed UF. TOTAL currencies ChS Current assets Cash and cash equivalents 1,175,963 6,218 11,399 90,038 – 1,283,618 Other financial assets, current 320,339 – – 1 – 320,340 Other non-financial assets, current 21,619 395 113 1,866 4 23,997 Trade and other receivable, current 3,980,436 185,429 788 427,697 – 4,194,350 Accounts receivable from related entities, current 156,711 – – – – 156,711 Inventories, current 1,811,455 – – – – 1,811,455 Current tax assets 6,646 98 – 4 694 – 11,438 Total current assets 7,073,169 192,140 12,300 524,296 4 7,801,909 Non-current assets Investments accounted for using equity method 3,946,011 – – – – 3,946,011 Property, plant and equipment 30,444,722 – 578 4,593 – 30,449,893 Deferred tax assets 78,667 – 2,409 13,473 – 94,595 Other assets 770,365 – 5,859 332,345 56,458 1,165,027 Total non-current assets 34,839,765 – 8,892 350,411 56,458 35,255,526 Total assets 41,912,934 192,140 21,192 874,707 – 56,462 43,057,435
F-338
Corporación Nacional del Cobre de Chile
b. Liability by type of currency:
12-31-2022 Other Non- National and foreign currency liabilities US Dollars Euros currencies indexed UF. TOTAL Ch$ Current liabilities Other financial liabilities, current 470,412 (13) 9 – 29 470,437 Lease liabilities, current 51,897 – 598 63,495 9,200 125,190 Trade and other payables, current 1,428,950 4 332 1,477 344 650 129 1,779,538 Accounts payable to related entities, current 177,690 – – 983 – 178,673 Other short-term provisions 752,117 127 – 9,421 – 761,665 Current tax liabilities 24,366 – 67 1,876 – 26,309 Provisions for employee benefits, current 1,982 – 207 542,100 – 544 289 Other non-financial liabilities, current 21,109 – 103 13,162 10 34,384 Total current liabilities 2,928,523 4,446 2,461 975,687 9,368 3,920,485 Non-current liabilities Other financial liabilities, non-current 15,961,020 (1,569) 23,163 – 706,509 16,689,123 Lease liabilities, non-current 105,882 – 1,128 148,644 31,025 286,679 Non-current payables 759 – – 303 – 1,062 Other long-term provisions 1,124 434 – – 81,889 1,473,405 2,679,728 Deferred tax liabilities 8,449 170 – 92 12,666 – 8,461,928 Employee benefit provision, non-current 3,420 – – 671,735 365,962 1,041,117 Total non-financial liabilities, non-current 2,292 – – 293 – 2,545 Total non-current liabilities 25,646,977 (1,569) 24,383 915,490 2,576,901 29,162,182 Total liabilities 28,575,500 2,877 26,844 1,891,177 2,586,269 33,082,667
12-31-2021 o Other Non- National and foreign currency liabilities US Dollars Euros currencies indexed UF. TOTAL Ch$ Current liabilities Other financial liabilities, current 605,223 (24) 13 – (9) 605,203 Lease liabilities, current 36,712 – 700 65,487 9,205 112,104 Trade and other payables, current 1,122,226 4 110 3,092 367,872 129 1,497,429 Accounts payable to related entities, current 221,344 – – – – 221,344 Other short-term provisions 732,501 784 – 8,742 – 742,027 Current tax liabilities 303,616 – 164 4 596 – 308,376 Provisions for employee benefits, current 2,223 – 804 416,296 – 419,323 Other non-financial liabilities, current 11,443 – 144 21,475 9 33,071 Total current liabilities 3,035,288 4,870 4,917 884,468 9,334 3,938,877 Non-current liabilities Other financial liabilities, non-current 16,636,544 (2,592) (1,008) – 270,696 16,903,640 Lease liabilities, non-current 90,458 – 1,046 115,356 33,163 240,023 Non-current payables 799 – – 306 – 1,065 Other long-term provisions 1,396,911 – – 43491 – 1017,183 2,457,585 Deferred tax liabilities 6,990,740 – 20 13,763 – 7,004,523 Employee benefit provision, non-current 11,002 – – 923,540 – 934,542 Total non-financial liabilities, non-current 2,035 – – 244 – 2,279 Total non-current liabilities 25,128,449 (2,592) 58 1,096,700 1,321,042 27,543,657 Total liabilities 28,163,737 2,278 4975 1,981,168 1,330,376 31,482,534
F-339
Corporación Nacional del Cobre de Chile
32.
33.
Sanctions
As of December 31, 2022 and 2021, neither Codelco Chile or its Directors and Managers have been sanctioned by the CMF or any other administrative authorities.
The environment
Each of Codelco’s operations is subject to national, regional and local regulations related to protection of the environment and natural resources, including standards relating to water, air, noise and disposal and transportation of dangerous residues, among others. Chile has introduced environmental regulations that have obligated companies, including Codelco, to carry out programs to reduce, control or eliminate relevant environmental impacts. Codelco has executed and shall continue to execute a series of environmental projects to comply with these regulations.
Pursuant to the Letter of Values approved in 2010, Codelco is governed by a series of internal policies and regulations that frame its commitment to the environment, among which is the Corporate Sustainable Development Policy (2021).
The environmental management systems of the divisions, structure their efforts in order to comply with the commitments assumed by the corporation’s environmental policies, incorporating elements of planning, operating, verifying and reviewing activities. As of December 31, 2022, Codelco is implementing a strategic change process in all divisions to manage the aspects and risks associated with environmental matters, under a corporate management system issued by Head Office, seeking to obtain the ISO 14001: 2015 certification.
To comply with the Circular No. 1901 of 2008 of the CMF, the details of the Corporation’s main expenditures related to the environment during the periods from January 1 to December 31, 2022 and 2021, respectively, and the projected future expenses are stated below.
F-340
Corporación Nacional del Cobre de Chile
Disbursements 12-31-2022 12-31-2021 Future committed disbursements Company Project name Project status ThUS$ Assets Expenditure lem of Asset Destination ThUS$ ThUS$ Estimated date Expenditure
Chuquicamata Codelco Chile Acid plants In progress 3,537 Expenditure Operating expenditure 14,508 2022 Codelco Chile Solid waste In progress 1,830 Expenditure Operating expenditure 1,265 2022 Codelco Chile Tailings In progress 69,689 Expenditure Operating expenditure 67,496 2022 Codelco Chile Water treatment plant In progress 35,186 Expenditure Operating expenditure 25,567 2022 Codelco Chile Environmental monitoring In progress 1,393 Expenditure Operating expenditure 1,285 – 2022 Codelco Chile Normalization drainage system drill hole In progress 66 Asset Property, plant and equipment 3 3,108 2023 Codelco Chile Normalization handling feeding powder transport Completed – Asset Property, plant and equipment 10,763 – 2021 Codelco Chile Construction thickened tailings Talabre In progress 5,256 Asset Property, plant and equipment 13,498 – 2022 Codelco Chile Standardization TKS Hazardous Substances Feed DS 43 In progress 11,088 Asset Property, plant and equipment 287 10,888 2023 Codelco Chile Construction IX stage Talabre tranque In progress 14,015 Asset Property, plant and equipment 533,873 2026 Codelco Chile Hydrogen well for In progress 1 Asset Property, plant and equipment – 942 2023
Total Chuquicamata Division 142,061 134,672 548,811
Salvador Codelco Chile Improved integration of the gas process In progress 10,205 Asset Property, plant and equipment 3,944 2022 Codelco Chile Tailings In progress 5,633 Expenditure Operating expenditure 4472 2022 Codelco Chile Acid plants In progress 63,688 Expenditure Operating expenditure 57,787 2022 Codelco Chile Solid waste In progress 1,025 Expenditure Operating expenditure 1,631 2022 Codelco Chile Water treatment plant In progress 1,481 Expenditure Operating expenditure 792 2022 Codelco Chile Bell replacement Completed Asset Property, plant and equipment 367 2021 Codelco Chile DRPA Emergency Completed Asset Property, plant and equipment 7,359 2021 Codelco Chile Compliance DS 43 storage dangerous substances Completed Asset Property, plant and equipment 692 2021 Codelco Chile Riles and Wastewater Standard In progress 432 Asset Property, plant and equipment 11 2022
Total Salvador Division 82,464 77,015
Andina Codelco Chile Construction canal outline DL east Completed Asset Property, plant and equipment 2,018 2021 Codelco Chile Valve and works rating Completed – Asset Property, plant and equipment 1,129 2021 Codelco Chile Solid waste In progress 2,855 Expenditure Operating expenditure 1,990 2022 Codelco Chile Water treatment plant In progress 5,023 Expenditure Operating expenditure 4,992 2022 Codelco Chile Tailings In progress 93,556 Expenditure Operating expenditure 86,414 2022 Codelco Chile Acid drainage In progress 39,509 Expenditure Operating expenditure 34,161 2022 Codelco Chile Environmental monitoring In progress 1,184 Expenditure Operating expenditure 1,009 2022 Codelco Chile Sustainability and external matters management In progress 2,559 Expenditure Operating expenditure 2,576 2022 Codelco Chile DLN conditioning works Completed Asset Property, plant and equipment 3,606 – 2021 Codelco Chile Excavation operation improvement In progress 485 Asset Property, plant and equipment 1,863 1,033 2023 Codelco Chile Water dispatch tunnel modification In progress 707 Asset Property, plant and equipment 2,995 – 2022 Codelco Chile Implementation of the catchment system for rafts tove In progress 7,060 Asset Property, plant and equipment 2,395 1,202 2023 Codelco Chile Dam Ovejeria: longitudinal drainage stage 8 In progress 8,007 Asset Property, plant and equipment 27,513 – 2022 Codelco Chile North extended ballast deposit In progress 82,983 Asset Property, plant and equipment 32,338 274,473 2025 Codelco Chile Standard Instruments Tranque Los Leones In progress 696 Asset Property, plant and equipment 68 2,558 2023 Codelco Chile Construction of spill containment chamber In progress 1,542 Asset Property, plant and equipment – 2022 Codelco Chile Recirculated water system ovj-cord dam In progress 526 Asset Property, plant and equipment 9,252 2024 Codelco Chile Replacement of transformers into dl In progress 53 Asset Property, plant and equipment – 338 2023
Total Andina Division 246,745 205,067 288,856 [Subtotal 411,270 416,754 837,667
F-341
Corporación Nacional del Cobre de Chile
Disbursements 12-31-2022 12-31-2021 Future committed disbursements Company Project name Project status ThUs$ Assets Expenditure Hem of e ThUs$ ThUs$ Estimated date [El Teniente Codelco Chile Construction of 7th phase Carén dam In progress 43,426 Assets Property, plant and equipment 56,802 103,575 2023 Codelco Chile Construction of slag treatment plant Completed – Asset Property, plant and equipment 2,136 – 2021 Codelco Chile Acid plants In progress 83,265 Expenditure Operating expenditure 72,928 2022 Codelco Chile Solid waste In progress 2,943 Expenditure Operating expenditure 3,081 2022 Codelco Chile Water treatment plant In progress 13,471 Expenditure Operating expenditure 14,682 2022 Codelco Chile Tailings In progress 49,730 Expenditure Operating expenditure 61,233 – 2022 Codelco Chile Well construction and hydrogeology modification Colihue-Cauquenes In progress 1,552 Asset Property, plant and equipment 2,755 1,241 2023 Codelco Chile Caren reservoir stage 8 and 9 In progress 18,814 Asset Property, plant and equipment 2,223 371,251 2027 Codelco Chile Construction of Complementary Water Works Tranque Barahona 2 In progress 6,115 Assets Property, plant and equipment 1,019 28,506 2024 Codelco Chile Restoration Slaughterhouse Drive In progress 6,260 Asset Property, plant and equipment 580 21,874 2024 Codelco Chile Flow CEMS Acquisition In progress 267 Asset Property, plant and equipment – 100 2023 Total El Teniente Division 225,843 217,439 526,547 Gabriela Mistral Codelco Chile Environmental monitoring In progress 2 Expenditure Operating expenditure 23 2022 Codelco Chile Solid waste In progress 2,018 Expenditure Operating expenditure 2,969 2022 Codelco Chile Environmental consultancy In progress 4 Expenditure Operating expenditure 51 2022 Codelco Chile Effluent treatment plant In progress 1 Expenditure Operating expenditure – – 2022 Codelco Chile Garbage dump extension phase VIII In progress 13,188 Asset Property, plant and equipment 9,138 11,920 2023 Total Gabriela Mistral Division 15,213 12,181 11,920 Ventanas Codelco Chile Acid plants In progress 27,952 Expenditure Operating expenditure 22,867 2022 Codelco Chile Solid waste In progress 1,109 Expenditure Operating expenditure 2,100 2022 Codelco Chile Environmental monitoring In progress 1,450 Expenditure Operating expenditure 1,527 2022 Codelco Chile Effluent treatment plant In progress 6,326 Expenditure Operating expenditure 5,793 2022 Codelco Chile Improved gas abatement collection In progress 140 Asset Property, plant and equipment 1,112 2022 Codelco Chile Critical Var monitoring implementation Completed – Asset Property, plant and equipment 531 2021 Codelco Chile Standardization of the handling of hazardous substances In progress 2,032 Asset Property, plant and equipment 3,700 – 2022 Codelco Chile Standardization of CEMS Chimney PPAL and PAS In progress 389 Asset Property, plant and equipment 54 71 2023 Total Ventanas Division 39,398 37,684 71 Radomiro Tomic Codelco Chile Solid waste In progress 951 Expenditure Operating expenditure 924 2022 Codelco Chile Environmental monitoring In progress 172 Expenditure Operating expenditure 99 2022 Codelco Chile Effluent treatment plant In progress 1,426 Expenditure Operating expenditure 720 2022 Codelco Chile Preliminary works water supply Completed – Asset Property, plant and equipment 4,714 – 2021 Codelco Chile Construction of community works In progress 1,434 Asset Property, plant and equipment – 36,830 2025 Total Radomiro Tomic Division 3,983 6,457 36,830 Ministro Hales Codelco Chile Solid waste In progress 1,367 Expenditure Operating expenditure 2,450 2022 Codelco Chile Effluent treatment plant In progress 195 Expenditure Operating expenditure 187 2022 Codelco Chile Implementation of pit aquifer monitoring Completed Asset Property, plant and equipment 399 2021 Total Ministro Hales Division 1,562 3,036 Ecometales Limited Ecometales Limited Smelting powders leaching plant In progress 1,147 Expenditure Operating expenditure 1,013 1,174 2023 Ecometales Limited Smelting powders leaching plant In progress 61 Expenditure Operating expenditure 7 40 2023 Subsidiary Ecometales Limited 1,208 1,020 1,214 Subtotal 287,207 277,817 576,582 [Total 758,477 694,571 1,414,249
F-342
Corporación Nacional del Cobre de Chile
34. Subsequent Events
On January 6, 2023, exempt decree No. 4 was issued amending the joint exempt decree of the Ministries of Finance and Mining No. 194, dated June 22, 2022, which authorizes the formation of capitalization and reserve funds in the Corporation. This amendment refers to the resources to be paid with charge to the profits of the years 2022 and 2023.
On January 30, 2023, it is reported as an essential fact that Codelco accessed the international financial markets through the issuance of bonds in New York.
The bond placement was for a total of US$900 million at a 10-year term with a yield of 5.133%. The rate represents a spread of 158 basis points over the U.S. Treasury bond of the equivalent term.
This operation is a new step in the sustainable financing of the investment portfolio, in accordance with the guidelines set by the Board of Directors, in terms of advancing in the materialization of structural projects and maintaining a solid financial position.
The issuance transaction was led by BNP Paribas, Bank of America, Banco Santander and Scotia Capital (USA) Inc.
On February 3, 2023, in accordance with the provisions of Article 9 and the second paragraph of Article 10 of Law No. 18,045, details of the financing transaction carried out on January 30, 2023 are reported as an essential fact.
On February 28, 2023, it is reported as an essential fact that, on the same date, Ms. Patricia Núñez Figueroa resigned as Director of Corporación Nacional del Cobre de Chile, in accordance with Article 8C letter b) of Decree Law 1,350.
On March 1, 2023, it is reported as an essential fact that H.E. the President of the Republic has appointed, Mr. Eduardo Bitrán Colodro and Mr. Ricardo Alvarez Fuentes as members of the Board of Directors of Codelco, as of May 11, 2023.
On March 6, 2023, the National Congress approved the modification of Law No. 19,993, which obliged the Corporation to smelt the minerals of Empresa Nacional de Minería (ENAMI) at the Ventanas Smelter.
On March 15, 2023, it is reported as an essential fact, the sad passing of Mr. Isidoro Palma Penco, director of the Corporation from 2015 to date, leaving his position vacant. The position of director shall be replaced, for the remainder of his term, in accordance with the rules established in the legislation in force.
F-343 Corporación Nacional del Cobre de Chile
On March 28, 2023, it is reported as an essential fact that H.E. the President of the Republic has appointed Ms. Isabel Marshall Lagarrigue as a member of the Board of Directors of Codelco, replacing former director Patricia Núñez until May 2025.
He has also appointed Mr. Eduardo Bitrán to replace the late director Isidoro Palma until May 12.
After that, he will assume a regular four-year term for which he was appointed through the Senior Public Management system.
Finally, it is noted that the decree containing the aforementioned appointments is in process.
On March 29, 2023, it is reported as an essential fact that Mr. Francisco Balsebre Olarán, General Manager of the Ministro Hales Division, will cease his functions in the Corporation, remaining in his position until April 29, 2023.
Management of the Corporation is not aware of other significant events of a financial nature or of any other nature that could affect these financial statements, occurring between January 1, 2023 and the date of issue of these consolidated financial statements as March 30, 2023.
André Sougarret Larroquete Alejandro Rivera Stambuk Chief Executive Officer Chief Financial Officer Juan Ogas Cabrera Cristóbal Parrao Cartagena Accounting Manager Accounting Director
F-344 THE ISSUER
Corporación Nacional del Cobre de Chile Huérfanos 1270 Santiago Republic of Chile Postal Code 8340424
TRUSTEE, PAYING AGENT, TRANSFER AGENT AND REGISTRAR
The Bank of New York Mellon 240 Greenwich Street New York, New York 10286 United States
LEGAL ADVISORS TO THE ISSUER
As to New York law As to Chilean law Cleary Gottlieb Steen £ Hamilton LLP Carey y Cía. Ltda.
One Liberty Plaza Isidora Goyenechea, 2800, Piso 43 New York, New York 10006 Las Condes, Santiago United States Republic of Chile Postal Code 7550647
LEGAL ADVISORS TO THE INITIAL PURCHASERS
As to New York law As to Chilean law Allen Overy Shearman Sterling US LLP Garrigues Chile Limitada 599 Lexington Avenue Isidora Goyenechea 3477, Piso 12 Las New York, New York 10022-6069 Las Condes, Santiago United States Republic of Chile Postal Code 7550106 INDEPENDENT AUDITORS
PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada Av. Andrés Bello 2711, Floor 5, Las Condes Santiago Chile Postal Code 7550611 Q
CODELCO
Corporación Nacional del Cobre de Chile
U.S.5750,000,000 6.330% Notes due 2035
U.S.5750,000,000 6.750% Notes due 2055
Offering Memorandum
Joint Book-Running Managers
BofA Securities Citigroup J.P. Morgan Santander
January 8, 2025 COMISIÓN PARA EL MERCADO FINANCIERO CHILE
ANEXO 3
PURCHASE AGREEMENT
COMISIÓN PARA EL MERCADO FINANCIERO 9 Execution Version
CORPORACIÓN NACIONAL DEL COBRE DE CHILE
U.S.$750,000,000 6.330% Notes due 2035
U.S.$750,000,000 6.780% Notes due 2055
BofA Securities, Inc.
One Bryant Park
New York, New York 10036 United States of America
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013 United States of America
J.P. Morgan Securities LLC 383 Madison Avenue
New York, New York 10179 United States of America and
Santander US Capital Markets LLC
437 Madison Avenue New York, New York 10022 United States of America
Purchase Agreement
As Representatives of the Initial Purchasers
Ladies and Gentlemen:
New York, New York January 8, 2025
Corporación Nacional del Cobre de Chile, a state-owned enterprise organized under the laws of Chile (the Company), proposes to issue and sell to the several purchasers named in SCHEDULE TI hereto (the Initial Purchasers), for which you (the Representatives) are acting as representatives, a U.S.$750,000,000 principal amount of its
6.330% Notes due 2035 (the 2035 Notes), and U.S.$ 750,000,000 principal amount of its
6.780% Notes due 2055 (the 2055 Notes, and collectively the 2035 Notes and the 2055 Notes, the Securities), to be issued pursuant to the indenture (the Original Indenture), dated February 5, 2019, among the Company, The Bank of New York Mellon, as trustee, paying agent, transfer agent and registrar (the Trustee), and The Bank of New York Mellon (Luxembourg)
S.A., as Luxembourg paying agent (the Luxembourg Agent), as supplemented by the fifteenth supplemental indenture to be dated January 13, 2025 (the fifteenth supplemental indenture and together with the Original Indenture, the Indenture). Unless otherwise specified, defined terms used herein shall have the meanings set forth in Section 21 hereof.
The sale of the Securities to the Initial Purchasers will be made without registration of the Securities under the Act in reliance upon exemptions from the registration requirements of the Act.
In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum, dated January 8, 2025 (including any and all exhibits thereto, the Preliminary Memorandum), and a final offering memorandum, dated January 8, 2025 (as amended or supplemented at the Execution Time, including any and all exhibits thereto, the Final Memorandum). For the purposes of this purchase agreement (this Agreement), Additional Written Offering Communication means any written communication (as defined In Rule 405 under the Act) that constitutes an offer to sell or a solicitation of an offer to buy the Securities other than the Preliminary Memorandum or the Final Memorandum, and Time of Sale Memorandum means the Preliminary Memorandum together with the pricing term sheets prepared by the Company substantially in the forms of Exhibit B-1 and Exhibit B-2 hereto and any Additional Written Offering Communications identified mn SCHEDULE ll hereto. Each of the Preliminary Memorandum, the Time of Sale Memorandum and the Final Memorandum sets forth certain information concerning the Company and the Securities. The Company hereby confirms that 1t has authorized the use of the Preliminary Memorandum, the Time of Sale Memorandum, the Final Memorandum and any Additional Written Offering Communications identified in SCHEDULE II hereto, and any amendment or supplement thereto, in connection with the offer and sale of the Securities by the Initial Purchasers.
Il. – Representations and Warranties. The Company represents and warrants to each Initial Purchaser as set forth below in this Section 1.
(a) The Time of Sale Memorandum, at the Execution Time, does not and, on the Closing Date, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Preliminary Memorandum, at the date thereof, did not, and the Final Memorandum, at the date thereof, did not and, on the Closing Date, will not (and any amendment or supplement thereto, at the date thereof, and at the Closing Date, will not), contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty as to any information contained in the Preliminary Memorandum, the Time of Sale Memorandum or the Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of the Initial Purchasers through the Representatives specifically for inclusion therein, 1t being understood that the only such information is set forth in Section 7(b) hereof.
(b) Except for the Additional Written Offering Communications, if any, identified in SCHEDULE ll hereto, and electronic road shows, 1f any, furnished to you
2 before first use, the Company has not prepared, used or referred to, and will not, without your prior consent, prepare, use or refer to, any Additional Written Offering Communication.
(c) Neither the Company, nor any of 1ts Affiliates, nor any person acting on 1ts or their behalf has, directly or indirectly, made offers or sales of any security (as defined in the Act), or solicited offers to buy or otherwise negotiated in respect of any security, which 1s or will be integrated with the sale of the Securities in a manner that would require the registration of the Securities under the Act.
(d) Neither the Company, nor any of 1ts Affiliates, nor any person acting on 1ts or their behalf, has, directly or indirectly, offered or sold the Securities in Chile or to any resident of Chile, except as permitted by applicable Chilean law.
(e) Neither the Company, nor any of 1ts Affiliates, nor any person acting on 1ts or their behalf has, directly or indirectly, offered, solicited offers to buy or sell any of the Securities by any form of general solicitation or general advertising (within the meaning of Regulation D) or in any manner involving a public offering (within the meaning of Section 4(a)(2) of the Act).
(f) The Securities satisfy the eligibility requirements of Rule 144A(d1(3) under the Act.
(g) The Company 1s a foreign 1ssuer (as defined in Regulation S), and neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf has engaged in any directed selling efforts (as defined in Regulation S) with respect to the Securities, except no such representation, warranty or agreement 1s made by the Company with respect to the Initial Purchasers.
(h) It is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers in the manner contemplated by this Agreement to register the Securities under the Act or to qualify the Indenture under the Trust Indenture Act.
(1) Each of the Company and its Affiliates, and any person acting on its or their behalf, has complied with the offering restrictions requirement of Regulation $.
(1) The Company 1s not, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in each of the Time of Sale Memorandum and the Final Memorandum will not be, required to register as an investment company within the meaning of the Investment Company Act.
(k) The Company has not paid or agreed to pay to any person any compensation for soliciting another to purchase any securities of the Company (except as contemplated by this Agreement).
(1) The Company has not taken, directly or indirectly, any action designed to cause or result in, or that has constituted or which might reasonably be expected to
3 constitute or cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
(m) Except as disclosed in each of the Time of Sale Memorandum and the Final Memorandum, there are no transaction, stamp or other issuance or transfer taxes or duties or other similar fees or withholdings or charges required to be paid in connection with the execution and delivery of this Agreement, the Indenture, the issuance or sale by the Company of the Securities or the enforcement of the Securities, other than (1) a 0.8% stamp tax on the incurrence of the indebtedness evidenced by the Securities, which will be paid by the Company upon the issuance of the Securities, and (11) a 44% withholding tax on interest payments, and all other payments deemed to be interest payments, with respect to the Securities to the extent paid to a person domiciled or residing outside of Chile. If thin capitalization rules apply, as described in the Time of Sale Memorandum and the Final Memorandum, such interest payments would be subject to a 35% penalty tax that would be payable by the Company. The withholding tax applicable to the interest payments made by the Company can be proportionally credited against such 35% penalty tax. Payments of fees, compensations, service payments, and reimbursement of costs contemplated in this Agreement or in the Indenture, made to persons domiciled or residing outside of Chile may be subject to a (1) withholding tax at a rate of up to 35%; provided, however, that any such payment may (A) be exempted from withholding tax 1f 1t 1s deemed a comisión mercantil pursuant to the Commercial Code of Chile and the interpretation of the Chilean Internal Revenue Service (Servicio de Impuestos Internos, Or the STD, (B) be subject to a 15% withholding tax 1f 1t 1s deemed payment for a professional or technical assistance service, provided that the payment 1s not made to a party organized, domiciled or resident in one of the countries which falls under the scope of article 41H of the Chilean Income Tax Law in which case the withholding tax rate would be 20%, and (C) benefit from a reduced withholding tax rate or may be exempted 1f there 1s a double taxation treaty in force between Chile and the country of such persons residency that contemplates a reduced or exempt regime applicable; or (11) value added tax (impuesto al valor agregado) 1n Chile provided that (A) such payments are exempt from withholding tax under domestic law or a double taxation treaty in force applicable and (B) such payments were made in consideration for a service that 1s deemed to be rendered or utilized in Chile. Capital gains arising from the sale or other dispositions of the Securities made by a person domiciled or residing outside of Chile should not be deemed as Chilean source income, and therefore, not subject to withholding tax in Chile.
(n) Any information provided by the Company pursuant to Section 5(7) hereof will not, at the date thereof, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(o) The Company has been duly created and 1s validly existing as a state-owned enterprise under the laws of Chile with corporate power and authority to issue and sell the Securities as contemplated hereby. Each of the Companys subsidiaries has been duly organized and 1s validly existing and in good standing under the laws of the1r respective
4 jurisdictions of organization and, together with the Company, have the corporate power to own or lease, as the case may be, and to operate their properties and conduct their business as described in the Time of Sale Memorandum and the Final Memorandum, and are duly qualified to transact business in each jurisdiction which requires such qualification, except to the extent that the failure to be so qualified to transact business would not have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business.
(p) The Company has no significant subsidiary as defined in Rule 1-02 of Regulation S-X pursuant to the Act.
(q) This Agreement has been duly authorized, executed and delivered by the Company; the Original Indenture has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery thereof by the Trustee, constitutes a valid and binding instrument enforceable against the Company 1n accordance with 1ts terms (subject, as to the enforcement of remedies, to applicable bankruptcy, liquidation, reorganization, insolvency, moratorium or other laws affecting creditors rights generally and general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law)); and the Indenture and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers under this Agreement, will have been duly executed and delivered by the Company and will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture (subject, as to the enforcement of remedies, to applicable bankruptcey, liquidation, reorganization, insolvency, moratorium or other laws affecting creditors rights generally and general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law)).
(r) The Securities and the Indenture will conform in all material respects to the descriptions thereof in the Final Memorandum.
(s) No consent, approval, authorization, filing with or order of any court or governmental agency or body 1s required in connection with the transactions contemplated herein, in the Indenture or in the Securities, except (1) such as may be required under the blue sky or securities laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Initial Purchasers in the manner contemplated herein and in each of the Time of Sale Memorandum and the Final Memorandum; and (11) the following authorizations and registrations required by Chilean law, which have been obtained and remain in full force and effect: (A) authorization granted by the President of Chile and by Decree of the Minister of Finance, whether general or specific, pursuant to Article 4 of Decree Law No. 2,349 of 1978 and pursuant to Decree No. 1,009 issued by the Ministry of Finance, published in the Official Gazette
5 on December 23, 1978, as renewed by Decree No. 1,408 dated October 30, 2024 and published in the Official Gazette on January 4, 2025; (B) authorization granted by the Minister of Finance to the Company to enter into negotiations relating to the issue of the Securities, pursuant to Decree Law No. 1,350 of 1976, as amended and pursuant to Ordinary Resolution No. 1,713 issued by the Ministry of Finance dated November 13, 2024; (C) authorization granted by the Minister of Finance to the Company to 1ssue the Securities, pursuant to Decree Law No. 1,350 of 1976, as amended and pursuant to Ordinary Resolution No. 2,029 issued by the Ministry of Finance dated December 30, 2024; and (D) the delivery to the Ministry of Finance and the Ministry of Mining for approval and possible review of the proposed annual budget and a debt amortization budget pursuant to Decree Law No. 1,350 of 1976, as amended.
(t) Neither the execution and delivery of the Indenture or this Agreement, the issue and sale of the Securities, nor the consummation of any other of the transactions herein or therein contemplated, nor the fulfillment of the terms hereof, thereof or of the Securities has conflicted or will conflict with, or has resulted or will result in, a default, breach or violation of or imposition of any lien, charge or encumbrance upon, any property or assets of the Company or any of 1ts subsidiaries (except, in the case of (1), (111) or (1v) below, for any such conflict, default, breach, violation or imposition as would not have a current or prospective material adverse effect on (x) the consummation of the transactions contemplated hereby or the rights of the holders of the Securities or (y) the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole) pursuant to (1) any provision of applicable law; (11) Decree Law No. 1,350 of 1976, as amended from time to time, and the Company?s by- laws, as restated in Decree No. 3 of January 13, 2012 and published in the Official Gazette on July 4, 2012, or the Estatutos of the Company; (111) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any of 1ts subsidiaries 1s a party or bound or to which 1ts respective property 1s subject; or (1v) any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any of 1ts subsidiaries of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company, any of its subsidiaries or their respective properties.
(u) The consolidated historical financial statements and schedules of the Company and its consolidated subsidiaries included in each of the Time of Sale Memorandum and the Final Memorandum present fairly in all material respects the financial condition, results of operations and cash flows of the Company as of the dates and for the periods indicated and have been prepared in conformity with International Financial Reporting Standards as adopted by the International Accounting Standards Board (IERS) in respect of full year periods for 2021, 2022 and 2023 and interim periods, in each case applied on a consistent basis throughout the periods involved (except as otherwise noted therein); the selected financial data set forth under the captions Summary Consolidated Financial Data and Selected Consolidated Financial Data in each of the Time of Sale Memorandum and the Final Memorandum fairly present, on the basis stated in each of the Time of Sale Memorandum and the Final Memorandum, the information included therein and have been prepared in conformity
6 with IEFRS in respect of full year periods for 2021, 2022 and 2023 and interim periods, 1n each case applied on a consistent basis throughout the periods involved (except as otherwise noted therein).
(v) There is no pending or threatened action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of 1ts subsidiaries or 1ts or their property that is not described in each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto), except for such proceedings that, 1£f the subject of an unfavorable decision, ruling or finding would not, singly or in the aggregate, have a current or prospective material adverse effect (1) on the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, or (11) on the power or ability of the Company to perform its obligations under this Agreement, the Indenture or the Securities or to consummate the transactions contemplated in each of the Time of Sale Memorandum and the Final Memorandum.
(w) No circumstance or other event has arisen that has caused or, with the glving of notice or the lapse of time, or both, would cause the Company to be in violation or default of: (1) any provision of Decree Law No. 1,350 of 1976, as amended, or 1ts Estatutos; (11) the terms of any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and 1ts subsidiaries, taken as a whole; or (111) any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, except for such contraventions as would not have a current or prospective material adverse effect on the Company or 1ts subsidiaries, taken as a whole.
(x) The Company and its subsidiaries possess all concessions, licenses, certificates, permits and other authorizations issued by the appropriate government and other regulatory authorities necessary to conduct their respective businesses, as described in each of the Time of Sale Memorandum and the Final Memorandum, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such concession, certificate, authorization or permit which, singly or in the aggregate, 1f the subject of an unfavorable decision, ruling or finding, would have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business.
(y) The Company and each of 1ts subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (1) transactions are executed in accordance with management’s general or specific authorizations; (11) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain asset accountability; (111) access to assets 1s permitted only in accordance with management’s general or specific authorization; and (1v) the recorded accountability for assets 1s compared to existing assets at reasonable intervals and appropriate action 1s taken with respect to any differences.
7 (z) The Company and 1ts subsidiaries have good and marketable title to all real property owned by them and good title to all other properties owned by them, including the Company?s mining concessions, mining rights and water rights, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except (1) such as are set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto) or (11) where the failure to have good title would not have a current or prospective material adverse effect on the condition (financial or otherwise), eamings business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business; all of the leases and subleases material to the business of the Company and its subsidiaries, taken as a whole, and under which the Company or any of 1ts subsidiaries holds properties described in each of the Time of Sale Memorandum and the Final Memorandum, are in full force and effect, except (1) where the failure to be in full force and effect would not have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, or
(11) such as are set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto); and none of the Company or its subsidiaries has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or any of 1ts subsidiaries to the continued possession of the leased or subleased premises under any such lease or sublease, except
(1) claims which are being contested by the Company or 1ts subsidiaries in good faith and which would not have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, or (11) such as are set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
(aa) PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada, who have audited the full-years 2021, 2022 and 2023 consolidated financial statements of the Company included in each of the Time of Sale Memorandum and the Final Memorandum, and conducted a limited review of the interim unaudited consolidated financial statements of the Company as of September 30, 2024 and for the nine-month period ended September 30, 2024 and 2023 included in each of the Time of Sale Memorandum and the Final Memorandum, are an independent audit firm with respect to the Company.
(bb) The Company and its subsidiaries (1) are in compliance with any and all applicable laws, regulations and approvals relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (Environmental Laws; (11) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (111) have not received notice of any
8 actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except (x) where such non-compliance with Environmental Laws, failure to rece1ve required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a current or prospective material adverse effect on the condition (financial or otherwise), eamings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, and (y) as described in each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
(cc) In the ordinary course of 1ts business, the Company periodically reviews the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries, in the course of which 1t identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties); on the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, singly or in the agegregate, have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
(dd) Since the respective dates as of which information is given in each of the Time of Sale Memorandum and the Final Memorandum, nothing has occurred giving rise to a current or prospective material adverse change in the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
(ee) Pursuant to Article 52 of Law No. 18,840 of 1989, the Organic Law of the Central Bank of Chile, as anended, and Decree Law No. 1,350 of 1976, as amended, the Company 1s exempt from the Central Bank of Chiles exchange regulations in connection with the issuance, placement and payments upon the Securities. The Company is entitled to make payments under the Securities with 1ts own available foreign currency obtained from its export operations and deposited with the Central Bank of Chile.
(ff) The Company has validly and irrevocably submitted to the non-exclusive jurisdiction of any state or federal court located in the City of New York, New York, has validly and irrevocably wa1ved, to the extent permitted by law, any objection to the venue of a proceeding in any such court and has validly and irrevocably appointed Cogency Global Inc. in New York City as 1ts authorized agent for service of process.
(ge) The Company has validly and irrevocably walved, pursuant to Section 17 hereof, and will have validly and irrevocably waived pursuant to the Indenture and the Securities, for itself and 1ts revenues and assets, to the extent permitted by applicable law, any immunity from suit, jurisdiction, attachment in aid or execution of a judgment or prior to a judgment, execution of a judgment or any other legal process with respect to 1ts obligations, respectively, under this Agreement, the Indenture and the Securities to which 1t may be entitled or become entitled whether or not claimed, including soverelgn immunity, except that (1) for the attachment and judicial sale of mining concessions and Installations and other goods permanently dedicated to exploration or extraction of minerals relating to such mining concessions, except with respect to mortgages, the consent of the Company will be required and shall be given in the same judicial proceeding in which the attachment and sale 1s sought (as set forth in Article 226 of the Mining Code of Chile); and (11) pursuant to the Chilean Constitution, the mining concessions corresponding to mining deposits exploited by the Company upon its creation in 1976 cannot be subject to attachment nor to any act of disposition by the Company. Each such walver 1s binding under Chilean law and remains in full force and effect.
(hh) The Company has an authorized capitalization as set forth in each of the Time of Sale Memorandum and the Final Memorandum under the heading Capitalization; and all the outstanding shares of capital stock or other equity interests of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party.
(1) Neither the Company nor any of 1ts subsidiaries nor, to the best knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of 1ts subsidiaries: (1) has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (11) has made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (111) has taken any action, directly or indirectly, that violated or 1s in violation of any provision of any applicable anti-bribery or anti-corruption law or regulation enacted in any jurisdiction, including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or under the Bribery Act of 2010 of the United Kingdom, or any other applicable anti-bribery or ant1- corruption laws; or (1v) has made any unlawful bribe, influence payment, kickback or other unlawful payment or gift of money or anything of value prohibited under any applicable law or regulation in connection with the Company. The Company has instituted, and maintains, policies and procedures designed to promote and achieve the Company and its subsidiaries? compliance with all applicable anti-bribery and ant1- corruption laws.
(11) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and
10 reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and applicable money laundering statutes of all jurisdictions, rules and regulations thereunder and related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the Money Laundering Laws), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of 1ts subsidiaries with respect to the Money Laundering Laws 1s pending or, to the best knowledge of the Company, threatened or contemplated.
(kk) Neither the Company, any of 1ts subsidiaries, nor any director or officer of the Company or any of its subsidiaries, nor to the knowledge of the Company, any agent, employee or affiliate (other than the Republic of Chile) of the Company or any of 1ts subsidiaries (1) 1s currently an individual or entity that 1s, or is owned or controlled or 1s acting on behalf of, one or more individuals or entities (other than the Republic of Chile) that are currently the subject of any sanctions administered or enforced by the United States (including administered or enforced by the Office of Foreign Assets Control of the
U.S. Department of the Treasury (OFAC or the U.S. Department of State), the European Union, His Majestys Treasury or the United Nations Security Council (collectively, the Sanctions), (11) 1s organized, located or a resident in a country or territory that is currently the subject of territorial Sanctions broadly prohibiting dealing with such country or territory (each such country, a Sanctioned Country, currently the Crimea, Kherson and Zaporizhzhya regions, the so-called Donetsk People?s Republic and the so-called Luhansk Peoples Republic regions of Ukraine, Cuba, Iran, North Korea or Syria, and such persons, Sanctioned Persons and each such person, a Sanctioned Person), or (111) will, directly or indirectly, use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity in any manner that would result in a violation of any Sanctions by, or would reasonably be expected to result in the Imposition of Sanctions against, any individual or entity participating in the offering, whether as underwriter, advisor, investor or otherwise. Nelther the Company nor any of 1ts subsidiaries has, to the knowledge of the Company, engaged in any dealings or transactions with or for the benefit of a Sanctioned Person, or with or in a Sanctioned Country, since April 24, 2019, that have resulted in a violation of Sanctions by, or the Imposition of Sanctions agarnst, the Company or the Initial Purchasers, nor does the Company or any of its subsidiaries have any plans to engage in dealings or transactions with or for the benefit of a Sanctioned Person, or with or in a Sanctioned Country, that would result in a violation of Sanctions by, or would reasonably be expected to result in the imposition of Sanctions against, the Company or the Initial Purchasers.
(11) No labor disturbance by or dispute with employees of the Company or any of 1ts subsidiaries exists or, to the best knowledge of the Company, 1s contemplated or threatened, and the Company 1s not aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of the Company?s subsidiaries principal suppliers, contractors or customers, except (x) as would not have a material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business and (y) as set forth in or contemplated in each of the
11 Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
(mm) The Company and 1ts subsidiaries have insurance covering their respective properties, operations, personnel and businesses, which insurance 1s in amounts and Insures against such losses and risks as are adequate to protect the Company and its subsidiaries and their respective businesses, except where any failure to have such insurance would not result in a material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business; and neither the Company nor any of 1ts subsidiaries has (1) received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (11) any reason to believe that 1t will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue 1ts business at a cost that would not result in a material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business.
(nn) Except as would not reasonably be expected to, individually or in the ageregate, result in a material adverse effect on the condition (financial or otherwise), eamings, business or properties of the Company and its subsidiaries, taken as a whole, the Company and its subsidiaries information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, data, and databases (collectively, IT Systems) are adequate for, and operate and perform as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted. The Company and 1ts subsidiaries have used commercially reasonable efforts to implement and maintain commercially reasonable controls, policies, procedures, and safeguards to maintain and protect their confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data (including all personal, personally identifiable, sensitive, confidential or regulated data (Personal Data)) used in connection with their businesses. Except as would not reasonably be expected to, individually or in the aggregate, result in a material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole, there have been no breaches, violations, outages or unauthorized uses of or accesses to the IT Systems or Personal Data, except for those that have been remedied without material cost or liability or the duty to notify any other person, nor any incidents under internal review or investigations relating to the same. Ne1ther the Company nor its subsidiaries have been notified of, and have no knowledge of any event or condition that could result in, any security breach or incident, unauthorized access or disclosure or other compromise to their IT Systems or Personal Data, except as would not reasonably be expected to, individually or in the ageregate, result in a material adverse effect on the condition (financial or otherwise), eamings, business or properties of the Company and its subsidiaries, taken as a whole.
Except as would not reasonably be expected to, individually or in the aggregate, result in a material adverse effect on the condition (financial or otherwise), earnings, business or
12 properties of the Company and its subsidiaries, taken as a whole, the Company and its subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.
Any certificate signed by any officer of the Company and delivered to the Representatives or counsel for the Initial Purchasers in connection with the offering of the Securities shall be deemed a representation and warranty by the Company, as to matters covered thereby, to each Initial Purchaser.
2. Purchase and Sale. (a) Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Company, at a purchase price of (1) 99.883% of the principal amount of the 2035 Notes, plus accrued interest, 1f any, from January 13, 2025 to the Closing Date (as defined below), and (11)
99.882% of the principal amount of the 2055 Notes, plus accrued interest, 1f any, from January 13, 2025 to the Closing Date (as defined below), the principal amount of Securities set forth opposite such Initial Purchaser?s name in SCHEDULE TI hereto.
(b) The Company acknowledges and agrees that the Initial Purchasers are acting solely in the capacity of an arms length contractual counterparty to the Company with respect to the offering of Securities contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other person. Additionally, no Initial Purchaser 1s advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with 1ts own advisors concerning such matters and shall be responsible for making 1ts own independent Investigation and appraisal of the transactions contemplated hereby, and the Initial Purchasers shall have no responsibility or liability to the Company with respect thereto.
Any review by the Initial Purchasers of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Initial Purchasers and shall not be on behalf of the Company. The Company acknowledges that none of the activities of the Initial Purchasers in connection with the offering of Securities constitutes a recommendation, investment advice or solicitation or any action by the Initial Purchasers with respect to the Company.
3. Delivery and Payment. Delivery of and payment for the Securities shall be made at 10:00 A.M., New York City time, on January 13, 2025 or at such time on such later date as the Representatives shall designate, which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 8 hereof (such date and time of delivery and payment for the Securities, including as so postponed, being herein called the Closing Date). Delivery of the Securities shall be made to the Representatives for the respective accounts of the several Initial Purchasers against payment by the several Initial Purchasers through the Representatives of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company.
13 Delivery of the Securities shall be made through the facilities of The Depository Trust Company (DTC) unless the Representatives shall otherwise instruct.
4. – Offermg by the Initial Purchasers. Each Initial Purchaser, severally and not jointly, represents and warrants to and agrees with the Company that: (a) It has not offered or sold, and will not offer or sell, any Securities except
(1) to persons it reasonably believes to be qualified institutional buyers (as defined in Rule 144A under the Act) and that, in connection with each such sale, 1t has taken or will take reasonable steps to ensure that the purchaser of such Securities 1s aware that such sale 1s being made in reliance on Rule 144A; or (11) in accordance with the restrictions set forth In Exhibrit A hereto.
(b) Neither 1t nor any person acting on 1ts behalf has made or will make offers or sales of the Securities in the United States by means of any form of general solicitation or general advertising (within the meaning of Regulation D) in the United States or in any manner involving a public offering within the meaning of Section 4(a)2) of the Act.
(c) Unless 1t has obtained or will obtain the prior written consent of the Company, 1t has not used, and will not use, or authorize use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than: (1) the Preliminary Memorandum, (11) the Time of Sale Memorandum; (111) the Final Memorandum; (1v) any Additional Written Offering Communications identified in SCHEDULE Il hereto; and (v) any Bloomberg or other customary electronic communications providing certain ratings or proposed terms of the Securities or relating to marketing, administrative or procedural matters in connection with the offering of the Securities.
5. Covenants of the Company. The Company agrees with each Initial Purchaser that: (a) The Company will furnish to each Initial Purchaser and to counsel for the Initial Purchasers, without charge, during the period referred to in paragraph (d) below, electronic copies of the materials contained in the Time of Sale Memorandum, the Final Memorandum and any amendments and supplements thereto as they may reasonably request.
(b) Before amending or supplementing the Preliminary Memorandum, the Time of Sale Memorandum or the Final Memorandum, the Company will furnish to the Initial Purchasers a copy of each such proposed amendment or supplement and will not use any such proposed amendment or supplement to which the Initial Purchasers reasonably object.
(c) The Company will furnish to each Initial Purchaser a copy of each proposed Additional Written Offering Communication to be prepared by or on behalf of, used by, or referred to by the Company and agrees not to use or refer to any proposed Additional Written Offering Communication to which the Initial Purchasers reasonably object.
14 (d) Ifat any time prior to the completion of the sale of the Securities by the Initial Purchasers (as determined by the Representatives), any event occurs as a result of which the Time of Sale Memorandum or the Final Memorandum, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any materlal fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or 1f 1t should be necessary to amend or supplement the Time of Sale Memorandum or the Final Memorandum to comply with applicable law, the Company promptly: (1) will notify the Representatives of any such event; (11) subject to the requirements of paragraph (b) of this Section 5, will prepare an amendment or supplement that will correct such statement or omission or effect such compliance; and (111) will supply any supplemented or amended Time of Sale Memorandum or the Final Memorandum to the several Initial Purchasers and counsel for the Initial Purchasers without charge in such quantities as they may reasonably request.
(e) The Company will arrange, 1f necessary, for the qualification of the Securities for sale by the Initial Purchasers under the laws of such jurisdictions as the Initial Purchasers may reasonably designate and will maintain such qualifications in effect so long as required for the sale of the Securities; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where 1t 1s not now so qualified or to take any action that would subject 1t to service of process in suits, other than those arising out of the offering or sale of the Securities, in any jurisdiction where 1t 1s not NOW so subject. The Company will promptly advise the Representatives of the rece1pt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.
(f) During the period of one year after the Closing Date, the Company will not resell, and will not permit any person that 1s an affiliate (as defined in Rule 144 under the Act) at the time of any contemplated resale or that has been an affiliate within the three months preceding such time to resell, any of the Securities that have been reacquired by any of them, except for Securities purchased by the Company or any of 1ts affiliates and resold in a transaction registered under the Act or in reliance of Regulation $.
(g) Neither the Company, nor any of 1ts Affiliates, nor any person acting on 1ts or their behalf will, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of the Securities under the Act.
(h) Neither the Company, nor any of 1ts Affiliates, nor any person acting on 1ts or their behalf will, directly or indirectly, make offers or sales of the Securities in Chile or to any resident of Chile, except as permitted by applicable Chilean law.
(1) Neither the Company, nor any of 1ts Affiliates, nor any person acting on 1ts or their behalf will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Act.
15
(1) So long as any of the Securities are restricted securities within the meaning of Rule 144(a)1(3) under the Act, the Company will, unless 1t becomes subject to and complies with Section 13 or 15(d) of the Exchange Act, or becomes exempt from such reporting requirements pursuant to, and complies with, Rule 12g3-2(b) under the Exchange Act, provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Act. This covenant 1s intended to be for the benefit of the holders, and the prospective purchasers designated by such holders, from time to time of such restricted securlties.
(k) Neither the Company, nor any of 1ts Affiliates, nor any person acting on 1ts or their behalf will engage in any directed selling efforts (as defined in Regulation S) with respect to the Securities.
(1) The Company will cooperate with the Representatives and use its best efforts to permit the Securities to be eligible for clearance and settlement through DTC, including 1ts indirect participants, Euroclear Bank S.A.N.V. (Euroclear) and Clearstream Banking, S.A. (Clearstream).
(m) The Company will use 1ts best efforts to effect the listing of the Securities on the Euro MTF market of the Luxembourg Stock Exchange and for so long as the Securities are outstanding, will file with the Euro MTF market of the Luxembourg Stock Exchange and any other governmental agency, authority or instrumentality in Luxembourg as may be required, such reports, documents, agreements and other information which may, from time to time, be required to be so filed; provided that the Company may, in 1ts reasonable discretion, de-list the Securities in the event that any European or national legislation becomes effective in Luxembourg in a manner that would require the Company to publish or produce financial statements according to accounting principles or standards that are different from IFRS or that would otherwise Impose requirements that the Company determines, in its reasonable discretion, are not reasonable.
(n) The Company will not for a period of 30 days following the Execution Time, without the prior written consent of the Representatives, offer, sell or contract to sell, or otherwise dispose of (or enter into any transaction which 1s designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any Affiliate of the Company or any person 1n privity with the Company or any Affiliate of the Company), directly or indirectly, or announce any public or broadly marketed offering of, any U.S. dollar-denominated debt securities issued or guaranteed by the Company in the international capital markets (other than the Securities).
(o) The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or which might reasonably be expected to constitute or cause or result in, under the Exchange Act or otherwise, the stabilization or
16 manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
(p) The Company agrees either to pay directly or to reimburse the Initial Purchasers, as the case may be, for the reasonable and documented expenses relating to the following matters: (1) the issuance of the Securities and the fees and expenses of the Trustee (including, without limitation, the fees of counsel for such trustee); (11) the preparation, printing and reproduction of each of the Preliminary Memorandum and Final Memorandum and each amendment or supplement to elther of them, including the pricing term sheet prepared by the Company and any Additional Written Offering Communications identified in SCHEDULE Il hereto; (111) the printing (and reproduction) and delivery (including postage, alr freight charges and charges for counting and packaging) of such copies of each of the Preliminary Memorandum and Final Memorandum, and all amendments or supplements to either of them, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Securities; (1v) the preparation, printing, authentication, issuance and delivery of certificates for the Securities, including any stamp or transfer taxes in connection with the original issuance and sale of the Securities; (v) the printing (and reproduction) and delivery of this Agreement, any blue sky memorandum and all other agreements or documents printed (or reproduced) and delivered in connection with the offering of the Securities; (vi) any registration or qualification of the Securities for offer and sale under the securities or blue sky laws of the several states (including filing fees and the reasonable fees and expenses of counsel for the Initial Purchasers relating to such registration and qualification); (vi1) the listing of the Securities with the Euro MTF market of the Luxembourg Stock Exchange (including the fees of the agent retained in connection with such listing); (vi11) the approval of the Securities for book-entry transfer by DTC, Euroclear and Clearstream; (1x) the rating of the Securities by rating agencies; (x) the expenses incurred by the Company or the Initial Purchasers in connection with presentations to prospective purchasers of the Securities; (x1) the fees and expenses of the Companys accountants; (x11) the fees and expenses of counsel (including local and special United States and Chilean counsels) for the Company; (x111) all other reasonable and documented expenses incurred by the Initial Purchasers in connection with the offering and sale of the Securities, except for the fees and expenses of counsels (including United States and Chilean counsels) for the Initial Purchasers; and (x1v) all other fees and expenses incident to the performance by the Company and the Initial Purchasers of their obligations hereunder; provided that, 1f the offering of the Securities (A) 1s not completed within twelve months because any condition to the obligations of the Initial Purchasers set forth in Section 6 hereof 1s not satisfied, because of any termination pursuant to Section 9 hereof or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Initial Purchasers, the Company shall pay directly all costs and expenses contemplated by this Section 5(p) or, to the extent the Initial Purchasers have borne such costs and expenses, shall reimburse the Initial Purchasers severally through the Representatives; and (B) is completed, the Initial Purchasers shall pay for all such costs and expenses of this Section 5(p) pro rata 1n proportion to each Initial Purchaser?s commitment to purchase Securities as listed 1n SCHEDULE TI hereto in accordance with Section 2(a) and this Section 5(p) (except for
17 the costs and expenses contemplated by 5(p)(U1x), S(pMxiJand S(pMx11), which shall be paid directly by the Company whether or not the offering of the Securities is completed), and the Company shall cover such costs and expenses of this Section 5(p) pursuant to Section 2(a).
(q) The Company will apply the net proceeds from the sale of the Securities substantially in accordance with the description set forth under the heading Use of Proceeds in each of the Time of Sale Memorandum and the Final Memorandum.
(r) The Company will not take any action or omit to take any action (such as 1ssuIng any press release relating to any Securities without an appropriate legend) which may result in the loss by any of the Initial Purchasers of the ability to rely on any stabilization safe harbor provided by the Financial Conduct Authority under the U.K.
Financial Services and Markets Act 2000 (the FSMA).
6. Conditions to the Obligations of the Initial Purchasers. The obligations of the Initial
Purchasers to purchase the Securities on the Closing Date shall be subject to the accuracy of the representations and warranties of the Company contained herein at the Execution Time and the Closing Date, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of 1ts obligations hereunder and to the following additional conditions: (a) The Company shall have requested and caused Cleary Gottlieb Steen ” Hamilton LLP, U.S. counsel for the Company, to furnish to the Representatives 1ts opinion, dated the Closing Date and addressed to the Representatives, substantially to the effect that:
(1) the Indenture has been duly executed and delivered by the Company under the laws of the State of New York and is a valid, binding and enforceable agreement of the Company; the Securities, when delivered to and paid for by the Initial Purchasers in accordance with this Agreement, will be the valid, binding and enforceable obligations of the Company, entitled to the benefits of the Indenture pursuant to which such Securities are to be issued; the statements set forth under the headings Description of Notes and Transfer Restrictions in the Time of Sale Memorandum and the Final Memorandum, insofar as such statements purport to summarize certain provisions of the Securities and the Indenture, provide a fair summary of such provisions; and the statements in Final Memorandum under the heading Plan of Distribution, insofar as such statements purport to summarize certain provisions of this Agreement, provide a fair summary of such provisions;
(1) this Agreement has been duly executed and delivered by the Company under the law of the State of New York;
(11) the statements made in each of the Time of Sale Memorandum and the Final Memorandum under the heading Taxation- U.S. Federal Income Taxation, insofar as such statements purport to summarize certain federal income tax laws of the United States, constitute a fair summary of the principal U.S.
18 federal income tax consequences of an investment in the Securities by a U.S.
Holder (as defined in each of the Time of Sale Memorandum and the Final Memorandum); (1v) the issuance and the sale of the Securities to the Initial Purchasers pursuant to this Agreement and the execution and delivery of this Agreement and the Indenture do not, and the performance by the Company of its obligations under this Agreement, the Indenture and the Securities will not, (A) require any consent, approval, authorization, registration or qualification of or with any governmental authority of the United States or the State of New York that in such counsels experience normally would be applicable to general business entities with respect to such issuance, sale or performance (but such counsel need express no opinion relating to United States federal securities laws or any state securities or blue sky laws other than as set forth in (v) and (vi) below); or (B) result in a violation of any United States federal or New York State law or published rule or regulation that in such counsels experience normally would be applicable to general business entities with respect to such issuance, sale or performance (but such counsel need not express any opinion relating to the United States federal securities laws or any state securities or blue sky laws, except as set forth in (v) and (v1) below); (v) noregistration of the Securities under the Act, and no qualification of the Indenture under the Trust Indenture Act, are required for the offer and sale of the Securities by the Company to the Initial Purchasers pursuant to and in the manner contemplated by this Agreement or by the Initial Purchasers as contemplated by this Agreement, the Time of Sale Memorandum and the Final Memorandum; (vi) no registration of the Company under the Investment Company Act 1s required for the offer and sale of the Securities by the Company in the manner contemplated herein and by each of the Time of Sale Memorandum and the Final Memorandum; and (vi) under the laws of the State of New Y ork relating to submission to jurisdiction, the Company, pursuant to Section 14 of this Agreement, Section 1.12 of the Indenture and the provisions of the Securities, has (a) validly and Irrevocably submitted to the non-exclusive personal jurisdiction of any New York state or U.S. federal court located in the Borough of Manhattan, the City of New Y ork, in any action arising out of or related to this Agreement that 1s brought by an Initial Purchaser or by any person who controls any Initial Purchaser, or in any action arising out of or related to the Indenture or the Securities that 1s brought by the holder of any Securities; (b) to the fullest extent permitted by law, validly and Irrevocably waived any objection to the venue of a proceeding in any such court and (c) validly appointed Cogency Global Inc., as 1ts authorized representative in the United States, and as 1ts authorized agent for the purpose described in Section 14 hereof, the Indenture and the Securities; and service of process upon such agent in a manner permitted by applicable law will be effective to confer valid
19 personal jurisdiction over the Company in any action arising under this Agreement, the Indenture or the Securities.
(b) The Company shall have requested and caused Cleary Gottlieb Steen ” Hamilton LLP, U.S. counsel for the Company, to furnish to the Representatives its letter, dated the Closing Date and addressed to the Representatives, substantially to the effect that no information has come to such counsels attention that causes 1t to believe that:
(1) the Time of Sale Memorandum (except the financial statements and schedules and other financial and statistical data included therein, the information therein relating to the Company?s ore reserves, as to which such counsel expresses no view), as of the Execution Time, contained any untrue statement ofa material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and
(1) the Final Memorandum (except the financial statements and schedules and other financial and statistical data included therein, the information therein relating to the Company?s ore reserves, as to which such counsel expresses no view), as of the Closing Date and the Execution Time, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
In rendering 1ts opinion under Section 6(a) hereof and furnishing its letter under Section 6(b) hereof, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the State of New York or federal laws of the United States, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Initial Purchasers; and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. References to the Final Memorandum in Section 6(a) and Section 6(b) include any amendment or supplement thereto at the Closing Date.
(c) The Company shall have requested and caused Carey y Cía. Ltda., Chilean counsel for the Company, to furnish to the Representatives its opinion, dated the Closing Date and addressed to the Representatives, substantially to the effect that:
(1) the Company has been duly created and 1s validly existing as a state- owned company under the laws of Chile, with full corporate power and authority to own or lease, as the case may be, and to operate 1ts properties, exercise 1ts mining concessions, mining rights and water rights, and conduct its business as described in each of the Time of Sale Memorandum and the Final Memorandum, and 1s duly qualified to do business under the laws of each jurisdiction which requires such qualification;
(1) the Indenture has been duly authorized, executed and delivered, and constitutes a legal, valid and binding instrument enforceable against the Company
20 In accordance with 1ts terms (subject, as to the enforcement of remedies, to applicable bankruptcy, liquidation, reorganization, insolvency, moratorium or other laws affecting creditors rights generally and general principles of equity, including, without limitation, concepts of materlality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law)); and the Securities have been duly and validly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers under this Agreement, will have been duly executed and delivered by the Company and will constitute legal, valid, binding and enforceable obligations of the Company entitled to the benefits of the Indenture (subject, as to the enforcement of remedies, to applicable bankruptey, liquidation, reorganization, insolvency, moratorium or other laws affecting creditors rights generally and general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law));
(11) the statements in each of the Time of Sale Memorandum and the Final Memorandum under the captions Presentation of Financial and Statistical Information, Enforceability of Civil Liabilities, Exchange Rates, Risk Factors-Risks Relating to CODELCOs Operations-CODELCOs compliance with environmental, health and safety laws may require increased costs, including capital commitments, and non-compliance may subject 1t to significant penalties, Risk Factors-KRisks Relating to CODELCOs Operations-Future compliance with a changing and complex regulation scheme may require changes in CODELCO*”s business, Risk Factors-Risks Relating to CODELCOs Operations-Labor disruptions involving CODELCOs employees or the employees of 1ts independent contractors could affect CODELCOs production levels and costs, Risk Factors-Risks Relating to CODELCOs Operations- CODELCO is subject to an extensive labor reform law -n effect since 2017- promulgated by the Government of Chile that could affect 1ts business and operating results, Risk Factors-Risks Relating to CODELCOs Relationship with the Government of Chile, Managements Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations for the Three Years Ended December 31, 2023 -Other expenses, Management’s Discussion and Analysis of Financial Condition and Results of Operations- Results of Operations for the Nine-Month Periods Ended September 30, 2024 and
2023–Forelgn exchange differences, Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations for the Nine-Month Periods Ended September 30, 2024 and 2023–Income tax expense, Managements Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations for the Three Years Ended December 31,
2023–Other expenses, Managements Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations for the Three Years Ended December 31, 2023–Income tax expense, Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Distributions to the Chilean Treasury, Regulatory Framework, Management, Related Party Transactions, Foreign Investment
21 and Exchange Controls in Chile and Taxation-Chilean Taxation, insofar as such statements constitute summaries of Chilean legal matters, documents or proceedings referred to therein, fairly summarize the matters therern; (1v) such counsel has no reason to believe that (A) at the Execution Time, the Time of Sale Memorandum contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or (B) at the Execution Time and on the Closing Date, the Final Memorandum contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (in each case, other than the financial statements and other financial information contained therein, as to which such counsel need express no opinion); (v) this Agreement has been duly authorized, executed and delivered by the Company; (vi) the Company has all requisite corporate power and authority, has taken all requisite corporate action and has received and 1s in compliance with all governmental, judicial and other authorizations, approvals and orders necessary to enter into and perform 1ts obligations under this Agreement and the Indenture and to issue and perform 1ts obligations under the Securities, and no consent, approval, authorization, filing with or order of any Chilean court or governmental agency or body 1s required in connection with the transactions contemplated herein, in the Indenture or in the Securities, except (1) such as may be required under the blue sky or securities laws of any jurisdiction in connection with the purchase and sale of the Securities by the Initial Purchasers in the manner contemplated in this Agreement, the Time of Sale Memorandum and the Final Memorandum, and (11) the following authorizations and registrations required by Chilean law, which have been obtained and remain in full force and effect: (A) authorization granted by the President of Chile and by Decree of the Minister of Finance, whether general or specific, pursuant to Article 4 of Decree Law
No. 2,349 of 1978 and pursuant to Decree No. 1,009 issued by the Ministry of Finance, published in the Official Gazette on December 23, 1978, as renewed by Decree No. 1,408 dated October 30, 2024, and published in the Official Gazette on January 4, 2025; (B) authorization granted by the Minister of Finance to the Company to enter into negotiations relating to the issue of the Securities, pursuant to Decree Law No. 1,350 of 1976, as amended and pursuant to Ordinary Resolution No. 1,713 issued by the Ministry of Finance dated November 13, 2024; (C) authorization granted by the Minister of Finance to the Company to issue the Securities, pursuant to Decree Law No. 1,350 of 1976, as amended and pursuant to Ordinary Resolution No. 2,029 issued by the Ministry of Finance dated December 30, 2024; and (D) the delivery to the Ministry of Finance and the Ministry of Mining for approval and possible review of the proposed annual budget and a debt amortization budget pursuant to Decree Law No. 1,350 of 1976, as amended.
22 (vi1) neither the execution and delivery of the Indenture or this Agreement, the issue and sale of the Securities, nor the consummation of any other of the transactions herein or therein contemplated, nor the fulfillment of the terms hereof, thereof or of the Securities will conflict with, or result in, a default, breach or violation of, or imposition of any lien, charge or encumbrance upon any property or asset of the Company or 1ts subsidiaries pursuant to, (1) any provision of applicable Chilean law; (11) Decree Law No. 1,350 of 1976, as amended from time to time, and the Companys by-laws, as restated in Decree No. 3 of January 13, 2012 and published in the Official Gazette on July 4, 2012, or the Estatutos of the Company; or (111) any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any of 1ts subsidiaries of any Chilean court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company, any of 1ts subsidiaries or any of the1r respective properties; (vi11) pursuant to Article 52 of the Organic Law of the Central Bank of Chile and Decree Law No. 1,350 of 1976, as amended, the Company 1s exempt from the Central Bank of Chiles regulations in connection with the issuance, placement and payments upon the Securities. The Company 1s entitled to make payments under the Securities with 1ts own available foreign currency obtained from its export operations and deposited with the Central Bank of Chile; (1x) except as disclosed in each of the Time of Sale Memorandum and the Final Memorandum, there are no transaction, stamp or other issuance or transfer taxes or duties or other similar fees or withholdings or charges required to be paid in connection with the execution and delivery of this Agreement, the Indenture, the issuance or sale by the Company of the Securities or the enforcement of the Securities, other than (1) a 0.8% stamp tax on the incurrence of the indebtedness evidenced by the Securities, which will be paid by the Company upon the issuance of the Securities, and (11) a 4% withholding tax on interest payments, and all other payments deemed to be interest payments, with respect to the Securities to the extent paid to a person domiciled or residing outside of Chile.
If thin capitalization rules apply, as described in the Time of Sale Memorandum and the Final Memorandum, such interest payments would be subject to a 35% penalty tax that would be payable by the Company. The withholding tax applicable to the interest payments made by the Company can be proportionally credited agalnst such 35% penalty tax. Payments of fees, compensations, service payments and reimbursement of costs contemplated in this Agreement or in the Indenture, made to persons domiciled or residing outside of Chile may be subject to a (1) withholding tax at a rate of up to 35%; provided, however, that any such payment may (A) be exempted from withholding tax 1f 1t 15 deemed a comisión mercantil pursuant to the Commercial Code of Chile and the interpretation of the Chilean Internal Revenue Service (Servicio de Impuestos Internos, or the SIT, (B) be subject to a 15% withholding tax 1f 1t 15 deemed payment for a professional or technical assistance service, provided that the payment 1s not made to a party organized, domiciled or resident in one of the countries which falls under the scope of article 41H of the Chilean Income Tax Law in which case the
23 withholding tax rate would be 20%, and (C) benefit from a reduced withholding tax rate or may be exempted 1f there is a double taxation treaty in force between Chile and the country of such persons residency that contemplates a reduced or exempt regime applicable; or (11) value added tax (impuesto al valor agregado) in Chile provided that (A) such payments are exempt from withholding tax under domestic law or a double taxation treaty in force applicable and (B) such payments were made in consideration for a service that 1s deemed to be rendered or utilized in Chile. Capital gains arising from the sale or other dispositions of the Securities made by a person domiciled or residing outside of Chile should not be deemed as Chilean source income, and therefore, not subject to withholding tax 1n Chile.
(x) none of the holders of the Securities, the Initial Purchasers or the Trustee will be deemed resident, domiciled, carrying on business or subject to any tax liability in Chile solely by reason of the holding of the Securities or the execution, delivery, performance or enforcement of this Agreement, the Indenture or the Securities, assuming that none of such persons 1s domiciled or is a resident of Chile or has a permanent establishment in Chile; (x1) the choice of law provisions set forth in Section 15 hereof, in the Indenture and in the Securities are legal, valid and binding under the laws of Chile and such counsel knows of no reason why the courts of Chile would not give effect to the choice of New York law as the proper law of this Agreement, of the Indenture and of the Securities; the Company has the legal capacity to sue and be sued in 1ts own name under the laws of Chile; the Company has been empowered by Decree No. 1,009 issued by the Ministry of Finance, published in the Official Gazette on December 23, 1978, as renewed by Decree No. 1,408 dated October 30, 2024, and published in the Official Gazette on January 4, 2025, to submit, and has irrevocably submitted, to the non-exclusive jurisdiction of the New York courts and has validly and irrevocably appointed Cogency Global Inc. as its authorized agent for the purpose described in Section 14 hereof, in the Indenture and in the Securities under the laws of Chile; the irrevocable submission of the Company to the non-exclusive jurisdiction of the New York courts and the walvers by the Company of any objection to the venue of the proceeding in a New Y ork court herein, in the Indenture and in the Securities are legal, valid and binding under the laws of Chile and such counsel knows of no reason why the courts of Chile would not give effect to such submission and walvers; service of process in the manner set forth in Section 14 hereof, in the Indenture and in the Securities will be effective to confer valid personal jurisdiction over the Company under the laws of Chile; and the courts in Chile will recognize as valid and final, and will enforce, any final and conclusive judgment against the Company obtained in a New York court arising out of or in relation to the obligations of the Company under this Agreement, the Indenture or the Securities, subject only to the conditions and qualifications described in each of the Time of Sale Memorandum and the Final Memorandum under the caption Enforceability of Civil Liabilities;
24 (x11) the Company has validly and irrevocably walved, pursuant to Section 17 hereof and to the provisions of the Indenture and the Securities for Itself and 1ts revenues and assets, to the full extent permitted by Chilean law, any immunity from suit, jurisdiction, attachment in aid or execution of a judgment or prior to a judgment, execution of a judgment or any other legal process with respect to 1ts obligations, respectively, under this Agreement, the Indenture and the Securities to which 1t may be entitled or become entitled whether or not claimed, including sovereign immunity, except that (1) for the attachment and judicial sale of mining concessions and installations and other goods permanently dedicated to exploration or extraction of minerals relating to such mining concessions, except with respect to mortgages, the consent of the Company will be required and shall be given in the same judicial proceeding in which the attachment and sale 1s sought (as set forth in Article 226 of the Mining Code of Chile); and (11) pursuant to the Chilean Constitution, the mining concessions corresponding to mining deposits exploited by the Company upon its creation in 1976 cannot be subject to attachment nor to any act of disposition by the Company. Each such walver 1s binding under Chilean law and remains in full force and effect; and (x111) this Agreement, the Indenture and the Securities are in proper legal form under the laws of Chile for the enforcement thereof against the Company in Chile without the need to obtain any other consent, approval or authorization, to file any notification or to take any further action on the part of the Initial Purchasers or the Trustee and to ensure the legality, validity, enforceability or admissibility in evidence of any of this Agreement, the Indenture and the Securities, and except for their translation into Spanish for their presentation to a Chilean court and subject to the payment of the applicable stamp tax, 1f any (and applicable readjustments and penalties, 1£ any), 1t 1s not necessary that any other document be filed or recorded with any court or other authority in Chile or that any stamp or similar tax be paid on or in respect of any such document or the Securities.
In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than Chile, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Initial Purchasers; and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. References to the Final Memorandum in this Section 6(c) include any amendment or supplement thereto at the Closing Date.
(d) The Company shall have requested and caused Macarena Vargas Losada, General Counsel of the Company, to furnish to the Representatives her opinion, dated the Closing Date and addressed to the Representatives, substantially to the effect that:
(1) the Company has been duly created and 1s validly existing as a state- owned company under the laws of Chile, with full corporate power and authority to own or lease, as the case may be, and to operate 1ts properties, exercise 1ts mining concessions, mining rights and water rights, and conduct its business as
25 described in each of the Time of Sale Memorandum and the Final Memorandum, and 1s duly qualified to do business under the laws of each jurisdiction which requires such qualification;
(1) the Indenture has been duly authorized, executed and delivered, and constitutes a legal, valid and binding instrument enforceable against the Company In accordance with 1ts terms (subject, as to the enforcement of remedies, to applicable bankruptcy, liquidation, reorganization, insolvency, moratorium or other laws affecting creditors rights generally and general principles of equity, including, without limitation, concepts of materlality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law)); and the Securities have been duly and validly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers under this Agreement, will have been duly executed and delivered by the Company and will constitute legal, valid, binding and enforceable obligations of the Company entitled to the benefits of the Indenture (subject, as to the enforcement of remedies, to applicable bankruptey, liquidation, reorganization, insolvency, moratorium or other laws affecting creditors rights generally and general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law));
(11) to the knowledge of such counsel, there is no pending or threatened action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of 1ts subsidiaries or its or their property that 1s not set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto), except for such proceedings that, 1f the subject of an unfavorable decision, ruling or finding, would not, singly or in the ageregate, have a current or prospective material adverse effect (1) on the condition (financial or otherwise), earnings, business or properties of the Company and 1ts subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, or (11) on the power or ability of the Company to perform 1ts obligations under this Agreement, the Indenture or the Securities or to consummate the transactions contemplated in each of the Time of Sale Memorandum and the Final Memorandum; (1v) the Company has an authorized capitalization as set forth in each of the Time of Sale Memorandum and the Final Memorandum under the heading Capitalization; and all the outstanding shares of capital stock or other equity interests of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party;
26 (v) such counsel has no reason to believe that (1) at the Execution Time, the Time of Sale Memorandum contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (11) at the Execution Time and on the Closing Date, the Final Memorandum contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (in each case, other than the financial statements and other financial information contained therein, as to which such counsel need express no opinion); (vi) this Agreement has been duly authorized, executed and delivered by the Company; (vi) the Company has all requisite corporate power and authority, has taken all requisite corporate action and has received and 1s in compliance with all governmental, judicial and other authorizations, approvals and orders necessary to enter into and perform 1ts obligations under this Agreement and the Indenture and to issue and perform 1ts obligations under the Securities, and no consent, approval, authorization, filing with or order of any Chilean court or governmental agency or body 1s required in connection with the transactions contemplated herein, in the Indenture or in the Securities, except (1) such as may be required under the blue sky or securities laws of any jurisdiction in connection with the purchase and sale of the Securities by the Initial Purchasers in the manner contemplated in this Agreement, the Time of Sale Memorandum and the Final Memorandum; and (11) the following authorizations and registrations required by Chilean law, which have been obtained and remain in full force and effect: (A) authorization granted by the President of Chile and by Decree of the Minister of Finance, whether general or specific, pursuant to Article 4 of Decree Law
No. 2,349 of 1978, and pursuant to Decree No. 1,009 issued by the Ministry of Finance, published in the Official Gazette on December 23, 1978, as renewed by Decree No. 1,408 dated October 30, 2024, and published in the Official Gazette on January 4, 2025; (B) authorization granted by the Minister of Finance to the Company to enter into negotiations relating to the issue of the Securities, pursuant to Decree Law No. 1,350 of 1976, as amended and pursuant to Ordinary Resolution No. 1,713 issued by the Ministry of Finance dated November 13, 2024; (C) authorization granted by the Minister of Finance to the Company to issue the Securities, pursuant to Decree Law No. 1,350 of 1976, as amended and pursuant to Ordinary Resolution No. 2,029 issued by the Ministry of Finance dated December 30, 2024; and (D) the delivery to the Ministry of Finance and the Ministry of Mining for approval and possible review of the proposed annual budget and a debt amortization budget pursuant to Decree Law No. 1,350 of 1976, as amended.
(v111) pursuant to Article 52 of the Organic Law of the Central Bank of Chile and Decree Law No. 1,350 of 1976, as amended, the Company 1s exempt from the Central Bank of Chiles regulations in connection with the issuance,
27 placement and payments upon the Securities. The Company 1s entitled to make payments under the Securities with 1ts own available foreign currency obtained from 1ts export operations and deposited with the Central Bank of Chile; (1x) nelther the execution and delivery of the Indenture or this Agreement, the issue and sale of the Securities, nor the consummation of any other of the transactions herein or therein contemplated, nor the fulfillment of the terms hereof or thereof will conflict with, result in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property or asset of the Company or any of 1ts subsidiaries pursuant to: (1) any provision of applicable law; (1) Decree Law No. 1,350 of 1976, as amended from time to time, and the Company?s by-laws, as restated in Decree No. 3 of January 13, 2012, or the Estatutos of the Company; (111) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any of 1ts subsidiaries 1s a party or bound or to which its respective property 1s subject; or (1v) any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any of 1ts subsidiaries of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company, any of its subsidiaries or any of their respective properties; (x) the statements in each of the Time of Sale Memorandum and the Final Memorandum under the captions Presentation of Financial and Statistical Information, Enforceability of Civil Liabilities, Exchange Rates, Risk Factors-Risks Relating to CODELCOs Operations-CODELCOs compliance with environmental, health and safety laws may require increased costs, including capital commitments, and non-compliance may subject 1t to significant penalties, Risk Factors-KRisks Relating to CODELCOs Operations-Future compliance with a changing and complex regulation scheme may require changes in CODELCO*Ss business, Risk Factors-Risks Relating to CODELCOs Operations-Labor disruptions involving CODELCOs employees or the employees of 1ts independent contractors could affect CODELCOs production levels and costs, Risk Factors-Risks Relating to CODELCOs Operations- CODELCO is subject to an extensive labor reform law -n effect since 2017- promulgated by the Government of Chile that could affect 1ts business and operating results, Risk Factors-Risks Relating to CODELCOs Relationship with the Government of Chile, Managements Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations for the Three Years Ended December 31, 2023-Other expenses, Management’s Discussion and Analysis of Financial Condition and Results of Operations- Results of Operations for the Nine-Month Periods Ended September 30, 2023 and 2024 -Forelgn exchange differences, Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations for the Nine-Month Periods Ended September 30, 2023 and 2024-Income tax expense, Management*s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations for the Three Years Ended December 31,
2023–Other expenses, Managements Discussion and Analysis of Financial
28
Condition and Results of Operations-Results of Operations for the Three Years Ended December 31, 2023–Income tax expense, Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Distributions to the Chilean Treasury, Regulatory Framework, Management, Related Party Transactions, Foreign Investment and Exchange Controls in Chile and Taxation-Chilean Taxation, insofar as such statements constitute summaries of Chilean legal matters, documents or proceedings referred to therein, fairly summarized the matters therein; (x1) no subsidiary of the Company 1s currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiarys capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary?s property or assets to the Company or any other subsidiary of the Company, except as described in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto); (x11) the Company and its subsidiaries possess all concessions, licenses, certificates, permits and other authorizations issued by the appropriate government and other regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such concession, certificate, authorization or permit which, singly or in the aggregate, 1f the subject of an unfavorable decision, ruling or finding, would have a current or prospective material adverse effect on the condition (financial or otherwise), eamings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business; (x111) the Company and its subsidiaries have good and marketable title to all real property owned by them and good title to all other properties owned by them, including the Company?s mining concessions, mining rights and water rights, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except (1) such as are set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto) or (11) where the failure to have good title would not have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business; all of the leases and subleases material to the business of the Company and its subsidiaries, taken as a whole, and under which the Company or any of its subsidiaries holds properties described in each of the Time of Sale Memorandum and the Final Memorandunm, are in full force and effect, except (1) where the failure to be in full force and effect would not have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole,
29 whether or not arising from transactions in the ordinary course of business, or (11) such as are set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto); and none of the Company or its subsidiaries has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or any of its subsidiaries to the continued possession of the leased or subleased premises under any such lease or sublease, except (1) claims which are being contested by the Company or 1ts subsidiaries in good faith and which would not have a current or prospective material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, or (11) such as are set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto); (x1v) the choice of law provisions set forth in Section 15 hereof, in the Indenture and in the Securities are legal, valid and binding under the laws of Chile and such counsel knows of no reason why the courts of Chile would not give effect to the choice of New York law as the proper law of this Agreement, of the Indenture and of the Securities; the Company has the legal capacity to sue and be sued in 1ts own name under the laws of Chile; the Company has been empowered by Decree No. 1,009 issued by the Ministry of Finance, published in the Official Gazette on December 23, 1978, as renewed by Decree No. 1,408 dated October 30, 2024, and published in the Official Gazette on January 4, 2025, to submit, and has irrevocably submitted, to the non-exclusive jurisdiction of the New York courts and has validly and irrevocably appointed Cogency Global Inc. as its authorized agent for the purpose described in Section 14 hereof, in the Indenture and in the Securities under the laws of Chile; the irrevocable submission of the Company to the non-exclusive jurisdiction of the New York courts and the walvers by the Company of any objection to the venue of the proceeding in a New Y ork court herein, in the Indenture and in the Securities are legal, valid and binding under the laws of Chile and such counsel knows of no reason why the courts of Chile would not give effect to such submission and walvers; service of process in the manner set forth in Section 14 hereof, in the Indenture and in the Securities will be effective to confer valid personal jurisdiction over the Company under the laws of Chile; and the courts in Chile will recognize as valid and final, and will enforce, any final and conclusive judgment against the Company obtained in a New York court arising out of or in relation to the obligations of the Company under this Agreement, the Indenture or the Securities, subject only to the conditions and qualifications described in each of the Time of Sale Memorandum and the Final Memorandum under the caption Enforceability of Civil Liabilities; (xv) to the knowledge of such counsel, the Company and its subsidiaries
(1) are in compliance with any and all Environmental Laws, (11) have received all permits, licenses or other approvals required of them under applicable
30 Environmental Laws to conduct their respective businesses and (111) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the agegregate, have a material adverse effect on the condition (financial or otherwise), eamings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business; (xv1) except as disclosed in each of the Time of Sale Memorandum and the Final Memorandum, there are no transaction, stamp or other issuance or transfer taxes or duties or other similar fees or withholdings or charges required to be paid in connection with the execution and delivery of this Agreement, the Indenture, the issuance or sale by the Company of the Securities or the enforcement of the Securities, other than (1) a 0.8% stamp tax on the incurrence of the indebtedness evidenced by the Securities, which will be paid by the Company upon the issuance of the Securities, and (11) a 4% withholding tax on interest payments, and all other payments deemed to be interest payments, with respect to the Securities to the extent paid to a person domiciled or residing outside of Chile.
If thin capitalization rules apply, as described in the Time of Sale Memorandum and the Final Memorandum, such interest payments would be subject to a 35% penalty tax that would be payable by the Company. The withholding tax applicable to the interest payments made by the Company can be proportionally credited against such 35% penalty tax. Payments of fees, compensations, service payments and reimbursement of costs contemplated in this Agreement or in the Indenture, made to persons domiciled or residing outside of Chile may be subject to a (1) withholding tax at a rate of up to 35%; provided, however, that any such payment may (A) be exempted from withholding tax 1f 1t 15 deemed a comisión mercantil pursuant to the Commercial Code of Chile and the interpretation of the Chilean Internal Revenue Service (Servicio de Impuestos Internos, or the SIT, (B) be subject to a 15% withholding tax 1f 1t 15 deemed payment for a professional or technical assistance service, provided that the payment 1s not made to a party organized, domiciled or resident in one of the countries which falls under the scope of article 41H of the Chilean Income Tax Law in which case the withholding tax rate would be 20%, and (C) benefit from a reduced withholding tax rate or may be exempted 1f there is a double taxation treaty in force between Chile and the country of such persons residency that contemplates a reduced or exempt regime applicable; or (11) value added tax (impuesto al valor agregado) in Chile provided that (A) such payments are exempt from withholding tax under domestic law or a double taxation treaty in force applicable and (B) such payments were made in consideration for a service that 1s deemed to be rendered or utilized in Chile. Capital gains arising from the sale or other dispositions of the Securities made by a person domiciled or residing outside of Chile should not be deemed as Chilean source income, and therefore, not subject to withholding tax in Chile.
31 (xv11) none of the holders of the Securities, the Initial Purchasers or the Trustee will be deemed resident, domiciled, carrying on business or subject to any tax liability in Chile solely by reason of the holding of the Securities or the execution, delivery, performance or enforcement of this Agreement, the Indenture or the Securities, assuming that none of such persons 1s domiciled or is a resident of Chile or has a permanent establishment in Chile; (xv111) the Company has validly and irrevocably walved pursuant to Section 17 hereof and to the provisions of the Indenture and the Securities for Itself and 1ts revenues and assets, to the full extent permitted by Chilean law, any immunity from suit, jurisdiction, attachment in aid or execution of a judgment or prior to a judgment, execution of a judgment or any other legal process with respect to 1ts obligations, respectively, under this Agreement, the Indenture and the Securities that 1t may be entitled or become entitled whether or not claimed, including sovereign immunity, except that (1) for the attachment and judicial sale of mining concessions and installations and other goods permanently dedicated to exploration or extraction of minerals relating to such mining concessions, except with respect to mortgages, the consent of the Company will be required and shall be given in the same judicial proceeding in which the attachment and sale 1s sought (as set forth in Article 226 of the Mining Code of Chile); and (11) pursuant to the Chilean Constitution, the mining concessions corresponding to mining deposits exploited by the Company upon its creation in 1976 cannot be subject to attachment nor to any act of disposition by the Company. Each such wailver 1s binding under Chilean law and remains in full force and effect; and (xix) this Agreement, the Indenture and the Securities are in proper legal form under the laws of Chile for the enforcement thereof against the Company in Chile without the need to obtain any other consent, approval or authorization, to file any notification or to take any further action on the part of the Initial Purchasers or the Trustee and to ensure the legality, validity, enforceability or admissibility in evidence of any of this Agreement, the Indenture and the Securities, and except for their translation into Spanish for their presentation to a Chilean court and subject to the payment of the applicable stamp tax, 1f any (and applicable readjustments and penalties, 1£ any), 1t 1s not necessary that any other document be filed or recorded with any court or other authority in Chile or that any stamp or similar tax be paid on or in respect of any such document or the Securities.
In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than Chile, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Initial Purchasers; and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. References to the Final Memorandum in this Section 6(d) include any amendment or supplement thereto at the Closing Date.
(e) The Representatives shall have received from Allen Overy Shearman
Sterling US LLP, U.S. counsel for the Representatives, such opinion or opinions, dated
32 the Closing Date and addressed to the Representatives, with respect to the issuance and sale of the Securities, the Indenture, the Time of Sale Memorandum and the Final Memorandum (as amended or supplemented at the Closing Date) and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.
(f) The Representatives shall have received from Garrigues Chile Limitada, special Chilean counsel for the Representatives, such opinion or opinions, dated the Closing Date and addressed to the Representatives, with respect to the issuance and sale of the Securities, the Indenture, the Time of Sale Memorandum, the Final Memorandum (as amended or supplemented at the Closing Date) and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.
(g) The Company shall have furnished to the Representatives a certificate of the Company, signed by the Head of Finance of the Company, dated the Closing Date, to the effect that the signatory of such certificate has carefully examined each of the Time of Sale Memorandum, the Final Memorandum, any amendment or supplement to the Final Memorandum and this Agreement and that:
(1) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as 1f made on the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; and
(1) since the date of the most recent financial statements included in each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto), there has been no development giving rise to a current or prospective material adverse change in the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated by each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
(h) At the Execution Time and at the Closing Date, the Company shall have requested and caused PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada, independent audit firm with respect to the Company, to furnish to the Representatives letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance satisfactory to the Representatives, containing statements and information of the type ordinarily included in accountants comfort letters to underwriters with respect to the full-years 2021, 2022 and 2023, the interim unaudited consolidated financial statements as of and for the nine months ended September 30, 2024 and 2023, and certain financial and other information contained in each of the
33 Preliminary Memorandum and the Final Memorandum; provided that the letter delivered on the Closing Date shall use a cut-off date not earlier than three business days prior to the date thereof.
References to the Final Memorandum in this Section 6(h) include any amendment or supplement thereto at the date of the applicable letter.
(1) Subsequent to the Execution Time or, 1f earlier, the dates as of which information 1s given in each of the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto), there shall not have been (1) any change or decrease specified in the letter or letters referred to in paragraph
6(h) of this Section 6; or (11) any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), business or properties of the Company and 1ts subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth or contemplated in the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto) the effect of which, in any case referred to in clause (1) or (11) above, 1s, in the reasonable judgment of the Representatives, so material and adverse as to make 1t impractical or inadvisable to proceed with the offering, sale or delivery of the Securities as contemplated by the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
(1) Subsequent to the Execution Time, there shall not have been any decrease in the rating accorded the Company or any of the Companys fore1ign-currency denominated debt securities by any nationally recognized statistical rating organization (as such term 1s defined in Section 3(a)(62) of the Exchange Act) or any notice given of any intended or potential decrease in any such rating or of a possible change in any such rating that does not indicate the direction of the possible change.
(k) Atthe Execution Time and on the Closing Date, the Representatives shall have recelved a written certificate executed by the Chief Financial Officer of the Company, in form and substance reasonably satisfactory to the Representatives, with respect to certain financial information contained in the Offering Memorandum.
(1) Prior to the Closing Date, the Company shall have furnished to the Representatives such further information, certificates and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or 1f any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not have been delivered in form and substance reasonably satisfactory to the Representatives and counsel for the Initial Purchasers, this Agreement and all obligations of the Initial Purchasers hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in writing.
34 The documents required to be delivered by this Section 6 will be delivered at the office of counsel for the Initial Purchasers, Allen Overy Shearman Sterling US LLP, at 599 Lexington Avenue, New York, New York 10022, on the Closing Date.
7. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Initial Purchaser, the directors, officers, employees, affiliates and agents of each Initial Purchaser and each person who controls any Initial Purchaser within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or any other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Time of Sale Memorandum, any Additional Written Offering Communication prepared by or on behalf of, used by, or referred to by the Company, any road show as defined in Rule 433(h) under the Act (a road show), or the Final Memorandum or any information provided by the Company to any holder or prospective purchaser of Securities pursuant to Section 5(3), or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Time of Sale Memorandum or the Final Memorandum, or in any amendment thereof or supplement thereto, or in any Additional Written Offering Communication, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Initial Purchasers through the Representatives specifically for inclusion therein.
(b) Each Initial Purchaser severally and not jointly agrees to indemnify and hold harmless the Company, each of its directors, each of 1ts officers, and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregong indemnity from the Company to each Initial Purchaser, but only with reference to information relating to such Initial Purchaser furnished to the Company in writing by or on behalf of such Initial Purchaser through the Representatives specifically for inclusion in the Time of Sale Memorandum, road show or the Final Memorandum (or in any amendment or supplement thereto). The indemnity agreement under this Section 7 will be in addition to any liability which any Initial Purchaser may otherwise have. The Company acknowledges that (1) the names of the Representatives set forth on the cover page, (11) the statements set forth in the last paragraph of the cover page regarding delivery of the Securities and (111) under the heading Plan of Distribution: (A) the names of the Representatives and the amounts in the table, (B) the single sentence following the second full paragraph regarding the purchase price, (C) the fifth sentence of the e1ghth paragraph regarding market making activities, (D) the ninth paragraph related to stabilization and syndicate covering transactions and (E) the third sentence of the eleventh paragraph regarding hedging activity, constitute the only
35 information furnished in writing by or on behalf of the Initial Purchasers for inclusion in the Time of Sale Memorandum or the Final Memorandum (or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof 1s to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (1) will not relieve 1t from liability under paragraphs (a) or (b) above unless and to the extent 1t did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantive rights and defenses; and
(11) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraphs (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party?s choice at the indemnifying party?s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel (including local counsel) retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party?s election to appornt counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel 1f (1) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (11) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to 1t andor other indemnified parties which are different from or additional to those available to the indemnifying party; (111) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (1v) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifyimg party. It is understood, however, that the indemnifying party shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one such separate firm of attorneys (in addition to any local counsel) at any time for all such indemnified parties and controlling persons, which firm shall be designated in writing by the indemnified parties. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding In respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent (1) includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding; and (11) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of an indemnified party.
36 (d) In the event that the indemnity provided in paragraphs (a) or (b) of this Section 7 1s unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the Initial Purchasers agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively Losses) to which the Company and one or more of the Initial Purchasers may be subject in such proportion as 1s appropriate to reflect the relative benefits recerved by the Company on the one hand and by the Initial Purchasers on the other from the offering of the Securities; provided, however, that in no case shall any Initial Purchaser (except as may be provided In any agreement among the Initial Purchasers relating to the offering of the Securities) be responsible for any amount in excess of the purchase discount or commission applicable to the Securities purchased by such Initial Purchaser hereunder. If the allocation provided by the immediately preceding sentence 1s unavailable for any reason, the Company and the Initial Purchasers shall contribute in such proportion as 1s appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and of the Initial Purchasers on the other in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) recerved by 1t, and benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions in each case set forth on the cover of the Final Memorandum. Relative fault shall be determined by reference to, among other things, (1) whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Company on the one hand or the Initial Purchasers on the other, (11) the intent of the parties and (111) their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Initial Purchasers agree that 1t would not be just and equitable 1f contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person who controls an Initial Purchaser within the meaning of either the Act or the Exchange Act and each director, officer, employee, affiliate and agent of an Initial Purchaser shall have the same rights to contribution as such Initial Purchaser, and each person who controls the Company within the meaning of either the Act or the Exchange Act and each officer and director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). Notwithstanding the provisions of this Section 7, no Initial Purchaser shall be required to contribute any amount in excess of the discounts received by such Initial Purchaser in connection with the Securities distributed by 1t. The Initial Purchasers obligations to contribute pursuant to this Section 7 are several, and not joint, in proportion to their respective commitments as set forth opposite their names in SCHEDULE Ll.
8. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail to purchase and pay for any of the Securities agreed to be purchased by such Initial Purchaser
37 hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective proportions which the principal amount of Securities set forth opposite their names in SCHEDULE TI hereto bears to the aggregate principal amount of Securities set forth opposite the names of all the remaining Initial Purchasers) the Securities which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase; provided, however, that in the event that the aggregate principal amount of Securities which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10% of the aggregate principal amount of Securities set forth in SCHEDULE TI hereto, the remaining Initial Purchasers shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and 1f such nondefaulting Initial Purchasers do not purchase all the Securities, this Agreement will terminate without liability to any nondefaulting Initial Purchaser or the Company. In the event of a default by any Initial Purchaser as set forth in this Section 8, the Closing Date shall be postponed for such period, not exceeding five Business Days, as the Representatives shall determine in order that the required changes in the Final Memorandum or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Initial Purchaser of its liability, 1f any, to the Company or any nondefaulting Initial Purchaser for damages occasioned by 1ts default hereunder.
9. – Termination. This Agreement shall be subject to termination in the absolute discretion of the Representatives, by notice given to the Company prior to delivery of and payment for the Securities, 1f at any time prior to such time (1) trading in securities generally on the Santiago Stock Exchange, the New York Stock Exchange or the Nasdaq National Market shall have been suspended or limited or minimum prices shall have been established on either such exchange or the Nasdaq National Market; (11) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market;
(111) a banking moratorium shall have been declared in New York either by federal or New York state authorities or in Chile by the Chilean Central Bank or other competent government regulator; or (1v) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets 1s such as to make it, in the reasonable judgment of the Representatives, impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities as contemplated by this Agreement, the Time of Sale Memorandum and the Final Memorandum (exclusive of any amendment or supplement thereto).
10. Representations, Covenants and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Initial Purchasers or the Company or any of the officers, directors or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections S(p) and 7 hereof shall survive the termination or cancellation of this Agreement.
38
11. Recognition of the U.S. Special Resolution Regimes.
(a) In the event that any Initial Purchaser that 1s a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Initial Purchaser of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S.
Special Resolution Regime 1f this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(b) In the event that any Initial Purchaser that 1s a Covered Entity or a BHC Act Affiliate of such Initial Purchaser becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised agalnst such Initial Purchaser are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime 1f this Agreement were governed by the laws of the United States or a state of the United States.
12. Notices. All communications hereunder will be in writing and effective only upon rece1pt, and, 1f sent to the Representatives, will be mailed, delivered or telefaxed to BofA Securities, Inc., at 114 W 47″ Street NY8-114-07-01, New York, New York 10036, Facsimile:
1-646-855-5958, Attention: High Grade Transaction ManagementLegal, Email: de.hg ua notices(Mbofa.com; Citigroup Global Markets Inc., at 388 Greenwich Street, New York, New York 10013, Attention: General Counsel, Facsimile: 1-646-291-1469; J.P. Morgan Securities LLC, at 383 Madison Avenue, New York, New York 10179; Attention: Latin America Debt Capital Markets; Santander US Capital Markets LLC, at 437 Madison Avenue, New York, NY 10022, Attention: Debt Capital Markets; E-mail: DCMAmericas(osantander.us; Facsimile:
1-212-407-0930, and, or, 1f sent to the Company, will be mailed or delivered to the Corporación Nacional del Cobre de Chile, co Macarena Vargas Losada as General Counsel (No.: 56-982-
339-427 email: macarena.vargas(wcodelco.cl; CodelcolIR(Wcodelco.cl) Huérfanos 1270, Santiago, Región Metropolitana, Chile, Postal Code 8340424, Attention: Legal Department.
13. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7 hereof, and, except as expressly set forth in Section 5(3) hereof, no other person will have any right or obligation hereunder.
14. Jurisdiction. The Company agrees that any suit, action or proceeding agarnst the Company brought by any Initial Purchaser, the directors, officers, employees, affiliates and agents of any Initial Purchaser, or by any person who controls any Initial Purchaser, arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any New York state or U.S. federal court located in the Borough of Manhattan, the City of New York, New York, and walves, to the extent legally permitted, any objection which 1t may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non- exclusive jurisdiction of such courts in any suit, action or proceeding. The Company has appointed Cogency Global Inc. as 1ts authorized agent (the Authorized Agent) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated herein which may be instituted in any state or federal court in the City of New York, New York, by any Initial Purchaser, the directors,
39 officers, employees, affiliates and agents of any Initial Purchaser, or by any person who controls any Initial Purchaser, and expressly accepts the non-exclusive jurisdiction of any such court in respect of any such suit, action or proceeding. The Company hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesald. Service of process upon the Authorized A gent shall be deemed, in every respect, effective service of process upon the Company. Notwithstanding the foregoing, any action arising out of or based upon this Agreement may be instituted by any Initial Purchaser, the directors, officers, employees, affiliates and agents of any Initial Purchaser, or by any person who controls any Initial Purchaser, in any court of competent jurisdiction in Chile. The Company hereby irrevocably waves trial by jury in any legal action or proceeding relating to this Agreement and for any counterclaim relating thereto. The Company acknowledges that each Initial Purchaser 1s entering into this Agreement in reliance upon such walver.
15. Applicable Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York.
16. Currency. Each reference in this Agreement to U.S. dollars (the relevant currency) is of the essence. To the fullest extent permitted by law, the obligation of the Company in respect of any amount due under this Agreement will, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the relevant currency that the party entitled to receive such payment may, in accordance with 1ts normal procedures, purchase with the sum paid in such other currency (after any premium and costs of exchange) on the Business Day immediately following the day on which such party recerives such payment. If the amount in the relevant currency that may be so purchased for any reason falls short of the amount originally due, the Company will pay such additional amounts, in the relevant currency, as may be necessary to compensate for the shortfall.
Any obligation of the Company not discharged by such payment will, to the fullest extent permitted by applicable law, be due as a separate and independent obligation and, until discharged as provided herein, will continue in full force and effect.
17. Waiver of Immunity. To the extent that the Company may be entitled in any jurisdiction in which judicial proceedings may at any time be commenced hereunder, to claim for Itself or 1ts revenues or assets any immunity, including sovereign immunity, from sultt, jurisdiction, attachment in aid of execution of a judgment or prior to a judgment, execution ofa judgment or any other legal process with respect to 1ts obligations hereunder, and to the extent that in any such jurisdiction there may be attributed to the Company such an immunity (whether or not claimed), the Company hereby irrevocably agrees not to claim and irrevocably waves such immunity to the maximum extent permitted by law, except that (1) for the attachment and judicial sale of mining concessions and installations and other goods permanently dedicated to exploration or extraction of minerals relating to such mining concessions, except with respect to mortgages, the consent of the Company will be required and shall be given in the same judicial proceeding in which the attachment and sale is sought (as set forth in Article 226 of the Mining Code of Chile); and (11) pursuant to the Chilean Constitution, the mining concessions
40 corresponding to mining deposits exploited by the Company upon its creation in 1976 cannot be subject to attachment nor to any act of disposition by the Company. Each such wailver 1s binding under Chilean law and remains in full force and effect. Notwithstanding the foregoing, any action based on this Agreement may be instituted by the Initial Purchasers in any competent court in Chile.
18. Payment Free and Clear. All payments to be made by the Company under this Agreement shall be paid free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature (including any amounts that result from the payment of fees, compensation or renmbursement of costs contemplated in this Agreement or in the Indenture), imposed by Chile, or by any department, agency or other political subdivision or taxing authority thereof, and all interest, penalties or similar liabilities with respect thereto (collectively, Chilean Taxes). If any Chilean Taxes are required by law to be deducted or withheld in connection with such payments, the Company will pay such additional amounts as may be necessary so that the full amount of such payment is received by the Initial Purchasers, except that no additional amounts shall be paid with respect to any such taxes, levies, imposts, duties, fees, assessments or charges
(1) imposed by reason of an Initial Purchaser or a current holder of any of the Securities having some connection with the jurisdiction imposing the tax other than solely as a result of 1ts participation as an Initial Purchaser hereunder or (11) imposed by the failure of an Initial Purchaser or a current holder of any of the Securities to comply with any certification, identification or other reporting requirement, 1f such compliance 1s required under applicable law as a precondition to relief or exemption from such taxes, levies, imposts, duties, fees, assessments or charges.
19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
20. Headings. The section headings used herein are for convenience only and shall not affect the construction hereof.
21. Definitions. The terms which follow, when used in this Agreement, shall have the meanings indicated.
Act shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
Affiliate shall have the meaning specified in Rule 501(b) of Regulation D.
Business Day shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in the City of New York, New York, U.S.A. or Santiago, Chile.
41 BHC Act Affiliate has the meaning assigned to the term affiliate 1n, and shall be interpreted in accordance with, 12 U.S.C. $ 1841(k).
Chile shall mean the Republic of Chile.
Commission shall mean the Securities and Exchange Commission.
Covered Entity means any of the following:
(1) a covered entity as that term 1s defined in, and interpreted in accordance with, 12 C.F.R. $ 252.82(b);
(11) a covered bank as that term 1s defined in, and interpreted in accordance with, 12 C.F.R. $ 47.3(b); or
(111) a covered FSI as that term 1s defined in, and interpreted in accordance with, 12 C.F.R. $ 382.2(b).
Default Right has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. $8 252.81, 47.2 or 382.1, as applicable.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
Execution Time shall mean 7:22 pm, New York City time, on January 8, 2025.
Investment Company Act shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission promulgated thereunder.
Regulation D shall mean Regulation D under the Act.
Regulation S shall mean Regulation S under the Act.
Trust Indenture Act shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder.
U.S. Special Resolution Regime means each of (1) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (11) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
22. Compliance with USA Patriot Act. In accordance with the requirements of the USA Patriot Act (Title lll of Pub. L. 107-56 (signed into law October 26, 2001)), the Initial Purchasers are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Initial Purchasers to properly identify their respective clients.
42 If the foregoing 1s in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement between the Company and the several Initial Purchasers.
Very truly yours, Corporación Nacional del Cobre de Chile
By: * > Name: Olivar Hernández Title: Head of Finance [Signature pageto Purchase Agreement] Fhe lorevong Agreement is hereby confirmed and accepted 15 01 he dare hist boe wrilien.
y:
Name. Maxim Volkow
Tule: Managing Director Uiieroup Global Markels Inc.
Br
Name:
Tithe.
JP Morgan Securities LLO
Hy: Mitre: Vitle:
Suntarider 15 Capitol Markets LEA y:
Armas: Title:
For hemecives and te o0her several Initial Purchasers named in Schedule 1 do Mie foregoe Agresmenl The foregoing Agreement 1s hereby confirmed and accepted as of the date first above written.
BofA Securities, Inc.
By:
Name: Title:
Citigroup Global Markets Inc.
‘ oy _ Ai da
Name: Adam D. Bordner Title: Managing Director
J.P. Morgan Securities LLC
By:
Name: Title:
Santander US Capital Markets LLC
By:
Name: Title:
For themselves and the other several Initial Purchasers named in Schedule I to the foregoing Agreement The foregoing Agreement 1s hereby confirmed and accepted as of the date first above written.
BofA Securities, Inc.
Ey:
Name: Title:
Citigroup Global Markets Inc.
Ey:
Name: Title:
J.P. Morgan Securities LLC By: [Arma LA
Name: Lañe Feler
Title: Executive Director
Santander US Capital Markets LLC
Ey:
Name: Title:
For themselves and the other several Initial Purchasers named in Schedule I to the foregomg Agreement The foregoing Agreement is hereby confirmed and accepted as of the date first above written.
BofA Securities, Inc.
By:
Name: Title:
Citigroup Global Markets Inc.
By:
Name: Title:
J.P. Morgan Securities LLC
By:
Name: Title:
Santander US Capital Markets LLC
– ph By: ==
Name: Richard Zobkiw Title: Executive Director
For themselves and the other several Initial Purchasers named in Schedule Ito the foregoing Agreement SCHEDULE lI
Principal Amount of 6.330% Principal Amount of 6.780%
Initial Purchasers Notes due 2035 Notes due 2055 BofA Securities, ÍnC. ……………….. U.S.$187,500,000 U.S.$187,500,000 Citigroup Global Markets Inc. ……… U.S.$187,500,000 U.S.$187,500,000
J.P. Morgan Securities LLC………… U.S.$187,500,000 U.S.$187,500,000 Santander US Capital Markets LLC… U.S.$187,500,000 U.S.$187,500,000
Total U.S.$750,000,000 U.S.$750,000,000 SCHEDULE II
Time of Sale Memorandum
1. Preliminary Memorandum, dated January 8, 2025.
2. Pricing Term Sheet, dated January 8, 2025, in the form set forth in Exhib1t B-1 hereto.
3. Pricing Term Sheet, dated January 8, 2025, in the form set forth in Exhibit B-2 hereto.
EXHIBIT A
Selling Restrictions for Offers and Sales outside the United States
(1) (a) The Securities have not been and will not be registered under the Act and may not be offered or sold within the United States or to, or for the account or benefit of,
U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act. Each Initial Purchaser represents and agrees that, except as permitted by Section 4(a)(1) of the Agreement to which this 1s an exhibit, 1t has not offered or sold, and will not offer or sell, any Securities constituting part of 1ts allotment to U.S. persons (which term shall not include dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)).
Accordingly, each Initial Purchaser represents and agrees that neither 1t, nor any of 1ts Affiliates nor any person acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities. Terms used in this paragraph have the meanings given to them by Regulation $.
(b) Each Initial Purchaser also represents and agrees that 1t has not entered and will not enter into any contractual arrangement with any distributor (as that term 1s defined by Regulation S) with respect to the distribution of the Securities, except with 1ts Affiliates or with the prior written consent of the Company.
(2) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that: (a) 1t has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in Investment activity (within the meaning of Section 21 of the FSMA) recerved by 1t in connection with the issue or sale of any Securities which are the subject of the offering contemplated by the Offering Memorandum in circumstances in which Section 21(1) of the FSMA does not apply to the Company; (b) 1t has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (the FSMA) with respect to anything done by 1t In relation to the Securities 1n, from or otherwise involving the United Kingdom; (c) 1t has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any notes to any retail investor in the European Economic Area. For the purposes of this provision:
A. the expression retail investor means a person who 1s one (or more) of the following:
(1) a retail client as defined in point (11) of Article 4(1) of Directive 201465EU (as amended, MiFID II); or
(11) a customer within the meaning of Directive (EU) 201697 (as amended, the Insurance Distribution Directive), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or
(11) nota qualified investor as defined in Regulation (EU) 20171129 (as amended, the Prospectus Regulation); and
B. the expression offer includes the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an Investor to decide to purchase or subscribe the notes; and (d) 1t has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any notes to any retail investor in the United Kingdom.
For the purposes of this provision:
A. the expression retail investor means a person who 1s one (or more) of the following:
(1) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017565 as 1t forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 ((EUWA); or
(11) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive (EU) 201697, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 6002014 as 1t forms part of domestic law by virtue of the EUWA; or
(11) nota qualified investor as defined in the Prospectus Regulation as 1t forms a part of UK domestic law by virtue of the EUWA.
EXHIBIT B-1
Corporación Nacional del Cobre de Chile
U.S.5750,000,000 6.330% Notes due 2035
Issuer:
Security Description: Type of Offering: Principal Amount: Maturity Date: Coupon:
Issue Price:
Yield to Maturity: Spread to Benchmark Treasury:
Benchmark Treasury:
Benchmark Treasury Price and Yield:
Gross Proceeds to Issuer:
Interest Payment Dates:
Trade Date:
Settlement Date:
Optional Redemption:
Tax Redemption:
Pricing Term Sheet
Corporación Nacional del Cobre de Chile
6.330% Notes due 2035 (the Notes) Rule 144A Regulation S
U.S.$750,000,000
January 13, 2035
6.330%
99.963% plus accrued interest, 1f any, from January 13, 2025
6.335%
+165 bps
4.250% due November 15, 2034
96-19; 4.685%
U.S.$749,722,500
January 13 and July 13 of each year, commencing on July 13, 2025. Interest accrues from January 13,
2025.
January 8, 2025
January 13, 2025 (I+-3)
Make-whole Call: Prior to October 13, 2034 (the date that 1s three months prior to the maturity date), at T+25 bps
Par Call: On or after October 13, 2034 (the date that 1s three months prior to the maturity date)
The Notes are redeemable at the option of the Issuer in Whole, but not in part, at any time at the principal amount thereof, plus accrued and unpaid interest and any additional amounts due thereon 1f, as a result of a Additional Amounts:
Day Count Convention: Minimum Denominations: Expected Listing:
Issuer Ratings*:
Issue Ratings*:
Joint Book-Running Managers:
144A CUSIP ISIN:
Regulation S CUSIP ISIN: change in the laws or regulations affecting Chilean taxation that 1s announced or becomes effective on or after the date of the agreement to purchase the Notes, the Issuer becomes obligated to pay additional amounts on interest payments on the Notes in respect of withholding or deduction of Chilean tax at a rate in excess of 4%.
In the event of withholding on account of certain taxes imposed by Chile, the Issuer will pay additional amounts.
30 360
U.S.$200,000 U.S.$1,000
Luxembourg Euro MTF
Baal, negative BBB+, stable (Moodys S£P) Baal BBB+ (Moodys S£P)
BofA Securities, Inc.
Citigroup Global Markets Inc.
J.P. Morgan Securities LLC
Santander US Capital Markets LLC
21987B BL1 US21987BBL18
P3143N BVS5 USP3143NBV57
*A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
This communication is intended for the sole use of the person to whom 1t is provided by the sender.
The Notes have not been registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and are being offered only (1) to qualified institutional buyers under Rule 144A of the Securities Act and (ii) outside the United States in compliance with Regulation S under the Securities Act.
Delivery of the Notes is expected on or about January 13, 2025, which will be the third business day following the date of pricing of the Notes (this settlement cycle being referred to as T+3). Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally are required to settle in one business day, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes prior to the delivery of the Notes may be required, by virtue of the fact that the Notes initially will settle in T+3, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to trade Notes prior to their date of delivery hereunder should consult their own advisor.
The information in this term sheet supplements the Preliminary Offering Memorandum and supersedes the information in the Preliminary Offering Memorandum to the extent inconsistent with the information in the Preliminary Offering Memorandum. This term sheet should be read in conjunction with the Preliminary Offering Memorandum.
The Notes to which this pricing term sheet relates are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (EEA). For these purposes, a retail investor means a person who 1s one (or more) of: (1) a retail client as defined in point (11) of Article 4(1) of Directive 201465EU (as amended, MIFID IP); (11) a customer within the meaning of Directive 201697EU (as amended, the IDD), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MIFID II; or (111) not a qualified investor as defined in Regulation (EU) 20171129 (as amended or superseded, the Prospectus Regulation). Consequently, no key information document required by Regulation No 12862014EU (as amended, the PRIIPs Regulation) for offering or selling any securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling any securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
This pricing term sheet 1s only being distributed to, and is only directed at, persons who are outside the United Kingdom or persons in the United Kingdom that are (1) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (11) high net worth entities, and other persons to whom 1t may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a relevant person). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of 1ts contents.
The Notes to which this pricing term sheet relates are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom. For these purposes, a retail investor means a person who 1s one (or more) of: (1) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 20175653 as 1t forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the EUWA); (11) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the FSMA) and any rules or regulations made under the FSMA to implement IDD, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 6002014 as 1t forms part of domestic law by virtue of the EUWA; or (111) not a qualified investor as defined in Article 2 of the Prospectus Regulation as 1t forms part of domestic law by virtue of the EUWA.
Consequently, no key information document required by the PRIPs Regulation as 1t forms part of domestic law by virtue ofthe EUWA (the UK PRIIPs Regulation) for offering or selling any securities or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling any securities or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.
ANY DISCLAIMER OR OTHER NOTICE THAT MAY APPEAR BELOW IS NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMER OR NOTICE WAS AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT BY BLOOMBERG OR ANOTHER E-MAIL SYSTEM.
EXHIBIT B-2
Corporación Nacional del Cobre de Chile
U.S.5750,000,000 6.780% Notes due 2055
Issuer:
Security Description: Type of Offering: Principal Amount:
Maturity Date: Coupon:
Issue Price:
Yield to Maturity: Spread to Benchmark Treasury:
Benchmark Treasury:
Benchmark Treasury Price and Yield:
Gross Proceeds to Issuer:
Interest Payment Dates:
Trade Date:
Settlement Date:
Optional Redemption:
Tax Redemption:
Pricing Term Sheet
Corporación Nacional del Cobre de Chile
6.780% Notes due 2055 (the Notes) Rule 144A Regulation S
U.S.$750,000,000
January 13, 2055
6.780%
99.962% plus accrued interest, 1f any, from January 13, 2025
6.783%
+185 bps
4.250% due August 15, 2054
89-13+; 4.933%
U.S.$749,715,000
January 13 and July 13 of each year, commencing on July 13, 2025. Interest accrues from January 13,
2025.
January 8, 2025
January 13, 2025 (I+-3)
Make-whole Call: Prior to July 13, 2054 (the date that is six months prior to the maturity date), at T+30 bps
Par Call: On or after July 13, 2054 (the date that 1s six months prior to the maturity date)
The Notes are redeemable at the option of the Issuer in Whole, but not in part, at any time at the principal amount thereof, plus accrued and unpaid interest and any additional amounts due thereon 1f, as a result of a Additional Amounts:
Day Count Convention: Minimum Denominations: Expected Listing:
Issuer Ratings*:
Issue Ratings*:
Joint Book-Running Managers:
144A CUSIP ISIN:
Regulation S CUSIP ISIN: change in the laws or regulations affecting Chilean taxation that 1s announced or becomes effective on or after the date of the agreement to purchase the Notes, the Issuer becomes obligated to pay additional amounts on interest payments on the Notes in respect of withholding or deduction of Chilean tax at a rate in excess of 4%.
In the event of withholding on account of certain taxes imposed by Chile, the Issuer will pay additional amounts.
30 360
U.S.$200,000 U.S.$1,000
Luxembourg Euro MTF
Baal, negative BBB+, stable (Moodys S£P) Baal BBB+ (Moodys S£P)
BofA Securities, Inc.
Citigroup Global Markets Inc.
J.P. Morgan Securities LLC
Santander US Capital Markets LLC
21987B BM09 US21987BBM90
P3143N BW3 USP3143NBW31
*A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
This communication is intended for the sole use of the person to whom 1t is provided by the sender.
The Notes have not been registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and are being offered only (1) to qualified institutional buyers under Rule 144A of the Securities Act and (ii) outside the United States in compliance with Regulation S under the Securities Act.
Delivery of the Notes is expected on or about January 13, 2025, which will be the third business day following the date of pricing of the Notes (this settlement cycle being referred to as T+3). Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally are required to settle in one business day, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes prior to the delivery of the Notes may be required, by virtue of the fact that the Notes initially will settle in T+3, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to trade Notes prior to their date of delivery hereunder should consult their own advisor.
The information in this term sheet supplements the Preliminary Offering Memorandum and supersedes the information in the Preliminary Offering Memorandum to the extent inconsistent with the information in the Preliminary Offering Memorandum. This term sheet should be read in conjunction with the Preliminary Offering Memorandum.
The Notes to which this pricing term sheet relates are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (EEA). For these purposes, a retail investor means a person who 1s one (or more) of: (1) a retail client as defined in point (11) of Article 4(1) of Directive 201465EU (as amended, MIFID IP); (11) a customer within the meaning of Directive 201697EU (as amended, the IDD), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MIFID II; or (111) not a qualified investor as defined in Regulation (EU) 20171129 (as amended or superseded, the Prospectus Regulation). Consequently, no key information document required by Regulation No 12862014EU (as amended, the PRIIPs Regulation) for offering or selling any securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling any securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
This pricing term sheet 1s only being distributed to, and is only directed at, persons who are outside the United Kingdom or persons in the United Kingdom that are (1) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (11) high net worth entities, and other persons to whom 1t may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a relevant person). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of 1ts contents.
The Notes to which this pricing term sheet relates are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom. For these purposes, a retail investor means a person who 1s one (or more) of: (1) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 20175653 as 1t forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the EUWA); (11) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the FSMA) and any rules or regulations made under the FSMA to implement IDD, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 6002014 as 1t forms part of domestic law by virtue of the EUWA; or (111) not a qualified investor as defined in Article 2 of the Prospectus Regulation as 1t forms part of domestic law by virtue of the EUWA.
Consequently, no key information document required by the PRIPs Regulation as 1t forms part of domestic law by virtue ofthe EUWA (the UK PRIIPs Regulation) for offering or selling any securities or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling any securities or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.
ANY DISCLAIMER OR OTHER NOTICE THAT MAY APPEAR BELOW IS NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMER OR NOTICE WAS AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT BY BLOOMBERG OR ANOTHER E-MAIL SYSTEM.
Link al archivo en CMFChile: https://www.cmfchile.cl/sitio/aplic/serdoc/ver_sgd.php?s567=ecce54adf7728fbd5905f7c7f952e6f8VFdwQmVVNVVRWGhOUkVGNVRVUk5NRTFSUFQwPQ==&secuencia=-1&t=1736817001
