SUSTAINABILITY REPORT 2007

ABOUT THIS REPORT

This is Antofagastas first Sustainability Report which focuses on the economic, environmental and social performance of the Group and its main operations and activities for the period 1 January to 31 December 2007. are based. The performance indicators within this Report relate only to operations which the Group controls in Chile. Information relating to environmental activities has been derived from systems which are under review. The international activities of the mining division are The Report covers the Groups principal operations and activities in Chile, where the majority of its activities currently at an early stage of development and so are not material to this report and information on these has This Report has been prepared under the guidelines of Global Reporting Initiative (GRI) using the October 2006 version, G3. The application level of the guidelines adopted for this first Report is level C. been provided for context only.

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The three business divisions of the Group, mining, transportation and water have carried out studies to understand the concerns and needs of local stakeholders, and the results of these studies have been taken into account in determining the scope of the Report.

a sustainable manner, combining respect for the rights of individuals and careful protection of the environment with the creation of economic value.

information within the Report has been presented in four sections. The first section provides general corporate information regarding the Antofagasta Group and the subsequent three sections provide economic, social and environmental information about each division.

The challenges and risks facing the Groups mining, transport and water divisions are very different and not always comparable and hence the economic, social and environmental

The Report sets out the Groups commitment to develop its business in

June 2008

ANTOFAGASTA PLC 3

CONTENTS 2
ABOUT THIS REPORT

6
ANTOFAGASTA PLC

9
INTERVIEW WITH THE CHAIRMAN

12
HISTORY OF ANTOFAGASTA PLC

14
ANTOFAGASTA PLC: MINING, TRANSPORT AND WATER

24
ANTOFAGASTA MINERALS

28
MESSAGE FROM CHIEF EXECUTIVE OFFICER

29
COPPER: A LOOK AT THE PRODUCTION PROCESS

31
OPERATIONS AND PROJECTS OF AMSA

38
THE ESPERANZA PROJECT

78
ANTOFAGASTA RAILWAY COMPANY

83
MESSAGE FROM THE GENERAL MANAGER

84
FCAB: TRANSPORT IN ANTOFAGASTA PLC

89
OPERATIONAL SAFETY

94
ENVIRONMENTAL MANAGEMENT AT FCAB

108 112 113 115 128

AGUAS DE ANTOFAGASTA MESSAGE FROM THE GENERAL MANAGER ADASA: LIFE IN THE DESERT WATER CYCLE RELATIONS WITH STAKEHOLDERS

134 135 138 139

GLOSSARY GRI CONTENT INDEX CONTACT INFORMATION FEEDBACK QUESTIONNAIRE

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16
ORGANISATIONAL STRUCTURE

18
COMMITMENT TO SUSTAINABILITY

20
RELATIONS WITH STAKEHOLDERS

22
ECONOMIC PERFORMANCE

44
SUSTAINABLE DEVELOPMENT AT AMSA

45
THE VALUE OF PEOPLE

55
ENVIRONMENTAL MANAGEMENT AT AMSA

69
COMMUNITY RELATIONS AT AMSA

100 101 105

EXCELLENCE IN SERVICE HUMAN RESOURCES COMMUNITY RELATIONS

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ANTOFA PLC

FACING THE CHALL OF SUSTAINABILIT

AGASTA

LENGES TY

Jean-Paul Luksic F., Chairman of Antofagasta plc

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BELIEF IN SUSTAINABILITY
JEAN-PAUL LUKSIC F. CHAIRMAN OF ANTOFAGASTA PLC

Antofagasta plc has recently experienced significant growth and expansion. How does the Group incorporate the issue of sustainability in its development?
The Group integrates the concept of sustainability in both future projects and existing operations, ensuring that through good management practice our aim of sustainable growth is implemented and carried out. Our aim is to create better economic, social and environmental conditions in the regions in which we carry out our activities. We believe that the development

of Antofagastas businesses in a responsible manner contributes to the growth and creation of value for society as a whole.

Our listing on the London Stock Exchange (LSE) with its good reputation for sustainability reporting sets a very high standard for us in compliance and disclosure, which we welcome. In the local Chilean environment, the consumption of energy and water presents significant challenges for the Group. As a mining company, one of our sustainability priorities is to ensure that we have sufficient mineral resources. To that end, we have been placing more emphasis on exploration activities to identify new deposits and to develop new business opportunities.

What are the Groups main challenges in order to continue successful development in the future?
To understand the Groups challenges, one must first understand the context in which we are developing. Our current operations including mining, transportation, and water are located in Chile, but we have also begun to look at other countries, especially in relation to mining opportunities.

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How, according to the current situation, is sustainability seen from the energy perspective?
As other mining companies have done, the Group has been acquiring back-up capacity in anticipation of possible energy rationing in 2008 as the two grids, one in the north and the other serving central Chile and the south, could face shortages. In addition to this we have also been implementing internal energy-efficiency measures for some years now, including the use of clean technologies.

geothermal energy and have acquired an exploration concession south of Santiago. In early 2008 we also signed a memorandum of understanding with Empresa Nacional de Petroleo, a company with significant experience in geothermal exploration. We have also begun exploring opportunities in electricity generation through wind or solar power in our mining districts where we can take advantage in particular of the high level of sun exposure in northern Chile.

What were the highlights of the year 2007?

Are alternative energies within Antofagasta plcs plans?

The search for effective technological solutions which allow us to ensure the profitability and sustainability of our businesses in a manner respectful of the environment fits absolutely within our vision of sustainable development. We have begun initial exploratory efforts in Undoubtedly the biggest milestone in 2007 was the completion of the feasibility study for the Esperanza project and its approval by the Board; the project will require an investment of US$1.9 billion. In addition, we submitted an Environmental Impact Assessment and decided to include a partner in the development of the Sierra Gorda mining district. This resulted in an agreement in 2008 with

ANTOFAGASTA PLC 10

Marubeni Corporation, whereby it would acquire 30% of Minera El Tesoro and Minera Esperanza, including both the current Esperanza project and the neighbouring Telgrafo deposit. We expect this transaction to close in the third quarter of 2008. During 2007 we completed an extensive drilling programme at Reko Diq in Pakistan with very positive results which led us to begin a feasibility study in early 2008.

among local communities, enabling them to understand what is involved and what opportunities it can bring. Our vision is to contribute to these communities through our presence there, with mining development being

a catalyst for progress and improved quality of life while at the same time protecting the environment.

What is the Groups vision, from a perspective of sustainability, of the development of activities outside Chile?
As a Group, we are always looking for potential mineral resources around the world. Currently, the resources of greatest interest tend to be found in countries without a history of mining. This means that we need to focus not only on significant effort in exploration, but also on raising awareness of mining development

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THE HISTOR OF ANTOFAG

A LONG ROAD OF WO

ANTOFAGASTA PLC 12

RY GASTA PLC:

ORK AND VISION

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Freight and passenger services between Calama, Chile, and Oruro, Bolivia Truck Railway

cubic metres of sold

Sewage treatment
* ** Source: Statistics for Copper and Other Minerals 1988-2007, Comisin Chilena del Cobre Transport volumes including Chile and Bolivia

Sale of potable and crude water

Note: the data presented considers all the Group, including international activities

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MINING, TRANSPORTATION AND WATER

US$ 806 million

8,682
5,372 3,310

6,611 workers in Chile: contractors Own employees and

3,310 1,392 1,909
1,450 2,677

Principal export destinations

America

Europe

1,658 workers in Chile: contractors Own employees and

Services to the mining industry vs. other services

Railway

Train

Mining services

Other services

413 workers: including contractors own employees and

Water distribution and sewage disposal in the Antofagasta Region

Employees

Contractors

Unregulated

Regulated

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ORGANISATIONAL STRUCTURE
Antofagasta plc is incorporated in the United Kingdom and listed on the London Stock Exchange, with its principal operations in Chile. A description of the organisational structure of Antofagasta plc and its corporate governance can be found in its 2007 Annual Report on pages 64 to 71.*

*The Annual Report is available from the Group website, www.antofagasta.co.uk, through the link Downloads Annual

Report 2007.

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Management structure of business divisions

Responsibility for development and implementation of strategic and financial goals is delegated to senior management. The chief executive officer for each division reports to his divisional board and the Chairman of the Group. The board of each business division meets monthly to consider strategic, operational and risk management matters. The Board of Antofagasta plc oversees these divisional boards and provides strategic guidance. Although there is no formal mechanism for employees to submit recommendations to the Boards, the companies maintain and encourage an open door policy, enabling employees to express their concerns and comments.

The Board has adopted a Corporate Code of Ethics which is aimed at all employees and contractors. The Code of Ethics sets the guidelines for all employees behaviour, highlighting the importance of honesty, integrity and commitment, and warning of potential conflicts of interest and independence. The Group strives to apply high standards of performance and respond effectively to challenges related to quality, the environment and employee health and safety. In compliance with the corporate governance requirements of the Combined Code, the Group has implemented a system for risk management which is applied at both operational and corporate levels and which monitors and warns of possible incidents which could affect performance in the areas mentioned above. Each division, operation and project develops and implements its own risk map.

This process has been in place for several years and helps the Group identify its most significant risks by looking at both the likelihood of an event occurring and the losses it would entail. The risk map process also involves the development of an action plan to implement risk prevention measures. Group risk management information is held in an online system which is regularly updated. Each Group operation separately evaluates the implementation of management systems for quality, environmental issues and occupational health and safety. The management system certifications in place for each business division are shown in their respective sections of this Report.

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COMMITMENT TO SUSTAINABILITY

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Currently, with the Group facing new challenges from its expansion and international growth, a review is being carried out into how it incorporates sustainability issues into its governance systems.

During 2007, the Groups mission, vision, values and policies were reviewed and Principles for Sustainable Development were developed for the Group. These were endorsed by the Board in early 2008.

As part of this process, two workshops were held in which representatives from the Groups operations discussed these issues with corporate vice presidents and Board members.

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Relations with stakeholders

Relations with stakeholders are managed independently by each company. Each company has conducted a process of identification and analysis of stakeholders which is described in the corresponding section for each business division, on pages 69, 105 and 128. At Group level, stakeholders comprise investors (through the listing on the London Stock Exchange), authorities in countries in which the Groups activities are conducted, customers, industrial associations and trade unions. Companies and projects have their own planning process for social, community and public affairs through opinion polls and public consultation (at both early and formal stages), both to ensure compliance with legal requirements as well as to improve management. Similarly, AMSA takes account of the national context of its business, having initiated in 2007 a market research study in the Antofagasta, Coquimbo and Metropolitan Regions which

will be repeated annually. In particular, this study (MORI, January 2008 Report) provides an indication of how well the Group and its activities are known both at a local as well as national level. It helps identify the need to establish clear and timely relationships with various stakeholders.

Antofagasta Railway

Minera El Tesoro

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Awards
During 2007, several Group companies received awards and/or recognition for their contribution to good management and health, safety and environmental practices both at a regional and national level.

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ECONOMIC PERFORMANCE:
CONTRIBUTION TO REGIONAL DEVELOPMENT

ANTOFAGASTA II REGION

COQUIMBO IV REGION

Tropic of Capricorn

Atacama Salt Plain

Pacific Ocean

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The Groups operations and projects in Chile are located in the Antofagasta and Coquimbo Regions, where they have a significant impact on economic and social development.

locally and the majority of contractors in both regions are also local companies. This focus on local employment is one of many initiatives by Group companies to support local community development; others include various programmes to attract investment, mining, assisting the start-up of small companies and other commercial activities into each region. In 2007, total remuneration amounted to US$140.5

The following table shows the distribution of economic value generated by the Group during 2007:

Current Group operations represent approximately 10% of regional GDP in the Antofagasta Region and approximately 15% in the Coquimbo Region. The strong presence of the Groups companies in these Regions has significant impact on employment levels. Group companies have actively promoted local employment: 70% of the Groups employees in its operations in the Antofagasta Region are employed

million. In all its business divisions, starting salaries are above the minimum wage in Chile (US$288.42 at December 2007). In the mining division, this differential is particularly significant with starting salaries over four times the national minimum wage. Regional development is encouraged through the supply of services and materials largely being provided by local companies.

Figures expressed in million dollars

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ANTOFA MINERA

MINING FOR THE

AGASTA ALS
ST

E 21 CENTURY

 ANTOFAGASTA PLC 27

THE ROAD TO SUSTAINABILITY

MESSAGE FROM MARCELO AWAD, CHIEF EXECUTIVE OFFICER OF ANTOFAGASTA MINERALS S.A.
and social considerations in our management model and processes to make mining a potential catalyst for change and a key factor in sustainable development. We have adopted this approach across our operations and projects where we aim to apply high standards in management, production and environmental and social matters. The path we are following is, however, a long term process. This year, the Antofagasta Minerals S.A. (AMSA) has experienced significant growth in the past ten years. In order to manage this successfully, we have considered it critical to integrate environmental preparation of the Groups Principles for Sustainable Development was a key milestone for AMSA with more detailed social and environmental policies to be added over time. Marcelo Awad A.
CHIEF EXECUTIVE OFFICER

This Sustainability Report shows our commitment to sustainable mining through the development of an economically successful business. We also strive for operational excellence, to be aware of our obligations to individuals, to respect the environment and to make a contribution to society under clear ethical guidelines. We hope it demonstrates our vision of sustainable mining to create value for society as a whole.

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COPPER:

A LOOK AT THE PRODUCTION PROCESS

Antofagasta Minerals S.A. (AMSA) is the corporate centre for the mining division. It is responsible for the Groups mining companies, controlling their operations and marketing their output, and has overall responsibility for exploration programmes and project development. AMSAs operations, which are located in the Antofagasta and Coquimbo Regions, produce copper and molybdenum from ore extracted from open-pit and underground mines. The copper production process involves various stages, depending on the type of ore - sulphide or oxide whether copper concentrate or copper cathodes are produced.

Copper production process

Extraction
The ore is extracted from an open pit or underground mine, loaded on to trucks and transported to the crushing area.

Crushing and milling

The ore is subjected to a process of fragmentation or crushing and then milled to produce mineral particles of a uniform size.

Production

Production of concentrate

3a Flotation

Production of copper cathodes

The milled ore is transported to a concentrator plant at which, via a physicochemical process, copper concentrate is separated from the remaining materials contained in the ore.

3b Leaching

The crushed ore is deposited in heaps which are then sprayed by sprinklers containing an acid solution of water and sulphuric acid, forming copper sulphate solution (Cu SO4).

4a Filtration

The copper concentrate is transported from the concentrator plant to a filtration plant where water is extracted, leaving it with an approximate humidity content of 9%*. *

4b Solvent-

extraction

The solution is collected by a drainage system, passing through a solvent extraction process in which the copper in the solution is converted into rich electrolyte soluction.

5b Electrowinning

5a Shipping

The copper concentrate is then transported to the port, by pipeline where it is de-watered and loaded for export.

At this stage, a direct current is applied to the solution, causing the copper to be collected on stainless steel plates. The final product is a high quality copper cathode.

6b Shipping

The cathodes are transported by rail and road to ports, where they are loaded for export.

* At Los Pelambres, the filtered water is disposed of by evapotranspiration using eucalyptus forests nearby.

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AMSAs mining operations are dedicated to the production of either copper concentrate or copper cathodes, establishing high standards of quality for both their processes and products. The implementation of Quality Management Systems has been evaluated in the Groups three mining operations. Los

Pelambres now has ISO 9001 certification for its exploration, extraction, mineral processing, transport and concentrate loading activities. At Michilla, implementation of ISO 9001 is to begin in 2008. El Tesoro began its process in 2007 and hopes to obtain certification in 2008.

Copper
An essential part of our lives HEALTH Necessary for health as an essential component in the human diet, enabling the body to function correctly. Valued in the health sector for its antibacterial properties. TECHNOLOGY Present in communications and computer technology as an essential component in complex technological products. ELECTRICAL INDUSTRY A highly efficient medium for the transmission and distribution of electricity. CONSTRUCTION Used in construction as a corrosion-resistant element with high thermal conductivity. MECHANICAL INDUSTRY Required in the metal-mechanical industry for its high capacity for incorporation into alloys, its malleability, and its ability to adapt to various temperatures.

AMSA disseminates information about the uses and properties of copper at the Andrnico Luksic Abaroa Centre, located at Punta Chungo in the community of Los Vilos. More information can be found at www.centroandronicoluksic.cl.

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OPERATIONS AND PROJECTS OF AMSA

AMSA has three mining operations in Chile: Michilla, Los Pelambres and El Tesoro, owned 74%, 60% and 100% respectively as at December 2007. AMSA is also developing Esperanza, which received environmental approval in June 2008 following the evaluation of its Environmental Impact Assessment. The Groups mining businesses depends on new reserves and deposits which can be developed. AMSA carries out exploration in Chile and internationally in order to secure future growth. In Chile, the Groups focus is on seeking to increase resources in the areas around its Los Pelambres, El Tesoro, Michilla and Esperanza deposits. Promising results have been obtained in the Sierra Gorda district, where

El Tesoro and Esperanza are located.

Located in the Antofagasta Region, near Mejillones, about 25 kilometres from the coast and at an altitude of 800 metres above sea level, Michilla S.A. was formed from the merger of Compaa Minera Carolina de Michilla and Compaa Minera Lince in 1993. It is the only operation that has both open-pit and underground mines, which requires high standards in infrastructure, safety and training. In 1997, Michilla became the first private sector mine in Chile to have its brand of copper cathodes (MIC-T and MIC-P) registered on the London Metal Exchange and it exceeded its design capacity in 1998 with cathode production of 51,121 tonnes. Michilla is currently engaged in exploration activity which may allow it to

AMSA in the Antofagasta Region

ANTOFAGASTA PLC 31

extend its mine life. A feasibility study started in 2008 at Antucoya, which is located approximately 45 kilometres from Michilla. The company operates a shipping terminal located in Caleta Michilla where sulphuric acid is delivered for use at the mine. The terminal has complied with the International Ship and Port Facility Security Code since July 2004.

The El Tesoro mine, like Michilla, is located in the Antofagasta Region, at an altitude of 2,200 metres above sea level and 27 kilometres from the town of Sierra Gorda. El Tesoro began production in 2001. The Group had a 61% interest in El Tesoro until it increased its interest to 100% in 2006 through the acquisition of the Australian company Equatorial Mining. On 24 October 2007, the environmental authorities approved the Environmental Impact Declaration (DIA) for El Tesoros new project

ANTOFAGASTA PLC 32

Operational Continuity of Minera El Tesoro: Exploitation of Oxide Deposits in the Sierra Gorda District. The approval of the DIA allows development of the Tesoro North-East project, which is scheduled to come into operation in 2009. Project development began in early 2008 and included expansion of the original deposit to extend the mine life of the operation until year 2020. The current annual production level of around 90,000 tonnes of copper will be maintained in the short term. The cathodes produced are transported by road from the mine to a railway terminal at Los Arrieros; and then transported to Antofagasta for shipment worldwide. In April 2008, the Group signed an agreement with Marubeni Corporation, a Japanese company, whereby Marubeni would acquire a 30% interest in El Tesoro. This transaction is expected to be completed during the third quarter of 2008.

investment in El Tesoro, Marubeni has agreed to acquire a 30% interest in Minera Esperanza, including the Telegrafo deposit. This transaction is also expected to be completed during the third quarter of 2008. See case study on page 38.

Minera Esperanza
Esperanza will be AMSAs third mine in the Antofagasta Region. In addition to its

ANTOFAGASTA PLC 33

AMSA in the Coquimbo Region

Los Pelambres is located in the Coquimbo Region, high in the Andes and near Salamanca, about 240 kilometres northeast of Santiago. The mine comprises an open pit operation at an altitude of 3,100 to 3,600 metres above sea level. Los Pelambres is 60% owned by the Group and 40% by two Japanese consortia: Nippon Mining & Metals, Marubeni and Mitsui & Co, and Mitsubishi Materials and Mitsubishi Corp.

ANTOFAGASTA PLC 34

Los Pelambres is by far the biggest mine in the Group and produced nearly 290,000 tonnes of payable copper in 2007, making it the fifth largest copper producer in Chile. Los Pelambres has its own port terminal at Punta Chungo located to the north of Los Vilos Copper concentrate is stored, loaded and exported from the terminal which has complied with the International Ship and Port Security Code since June 2004.

Environmental Impact Assessment. More than 300 sectoral permits were also obtained for various aspects of the tailings dams construction and future operation. In May 2008, Los Pelambres and the claimants to the litigation concerning the validity of a sectoral permit by the Chilean Water Authority (Direccion General de Aguas) for the construction of the Mauro tailings dam reached a binding settlement concerning that and other related cases relating to

El Mauro
The main project now being developed at Los Pelambres is the Mauro tailings dam, located in the Pupio sector. The dam is intended to become operational in early 2009, which will enable Los Pelambres to continue with its future planned development. By December 2007, construction at El Mauro was 98.5% complete. Los Pelambres originally obtained environmental permission for the Mauro tailings dam in 2003 from the Regional Environmental Authority of Coquimbo following approval of its

water rights. Under the terms of this settlement, which were endorsed by the Chilean Supreme Court, the claimants agreed to withdraw their claims in this and other related cases concerning water rights which had been brought against various governmental authorities and (in one case) directly against Los Pelambres. The claimants also acknowledged that the Chilean Water Authority is the competent authority to issue the relevant sectoral permit. The settlement of these claims, which also included the lifting of an injunction in which Los Pelambres had been ordered to suspend

ANTOFAGASTA PLC 35

certain works which would directly affect the Pupio stream at El Mauro, enables Los Pelambres to complete construction of the Mauro tailings dam. A separate case remains outstanding in which a first instance court in Santiago upheld a claim in 2007 relating to a purchase agreement entered into in 1992 between two former owners of land in the area

of the Mauro tailings dam, in which the validity of that purchase agreement was challenged by the plaintiff seller. Los Pelambres, which acquired the land in 2001, participated in this trial to protect its interest and has appealed against this decision to the Court of Appeals of Santiago. The appeal has the effect of suspending the effect of the first instance resolution. In May 2007, the Court

rejected a second petition by the plaintiff in that case that works on the Mauro tailings dam should cease immediately, confirming Los Pelambres right to complete its construction. The court nevertheless held that operation of the dam by depositing tailings cannot commence. The Group remains confident that Los Pelambres legal title to the land in question will be upheld on appeal.

ANTOFAGASTA PLC 36

Expansion and internationalisation

The growth of Antofagasta has been partly due to exploration which has increased the Groups resource base and has led to the development of projects such as Esperanza. AMSA has also continued exploration activity in Chile

and Latin America and, has an exploration office in Peru. In 2006, the Group acquired 100% of Tethyan Copper Company Limited (Tethyan), an Austrailan company, which held exploration licences for the Reko Diq deposit in Pakistan. Later that year, the Group formed a 50:50 joint venture with Barrick Gold Corporation, a Canadian resources company. The joint venture

began a feasibility study for Reko Diq in early 2008. AMSA also entered into a joint venture with TEAL Explorations and Mining to develop exploration activity in Zambia.

ANTOFAGASTA PLC 37

THE ESPERANZA PROJECT:

SUSTAINABLE MANAGEMENT

100%
Use of sea water in all processes

ANTOFAGASTA PLC 38

Production expected to begin in the fourth quarter of

2010

estimated annual production of

195,000t
tonnes of payable copper
in the first ten years

1.9
billion
total estimated investment

US$

ANTOFAGASTA PLC 39

The project
The Esperanza project provides an example of AMSAs commitment to sustainable development. This is reflected in its care for the environment, respect for and contribution to development in neighbouring communities and in high safety standards, while seeking to produce copper concentrate of high quality. The project involves the mining and processing of ore to produce concentrate containing copper and gold as well as molybdenum concentrate in later years transportation of the concentrate to ports, loading and shipment. The project, located in the Antofagasta Region, covers the area from the Esperanza sector (32 kilometres from the town of Sierra Gorda) where the mine and future concentrate

plant are located, to Michilla, where the concentrate will be stored for shipment. Project development costs are estimated at approximately US$1.9 billion. The project involves the use of new and innovative processes for a large-scale mining operation in Chile including using 100% sea water. Production is scheduled to begin by the end of 2010, with annual production during the first ten years estimated to be approximately 195,000 tons of payable copper, 229,000 ounces of gold and 1,556,000 ounces of silver. Molybdenum production is expected to begin from 2015. The Esperanza project is not immune from the challenges presented by Chiles energy shortages and

the project has entered into an agreement for its energy needs from new power plants being built in the north of Chile. In August 2007, an Environmental Impact Assessment (EIA) for the project was submitted to the regional environmental authority for the Antofagasta Region (COREMA), this was approved in June 2008. This can be seen at www. proyectomineroesperanza.cl. The project had previously received provisional environmental approvals which allowed certain early works to be commenced in the first half of 2008. As stated, operations are expected to begin in the final quarter of 2010.

Project Esperanza
2007 2008 2009 2010 2011

august
Presentation of Environmental Impact Study

september
Community consultation

1st quarter
Initial work begins

june
Approval of Environmental Impact Study

3rd quarter
Contruction begins

4 th quarter
Operation begins

1- Available at www.mineraesperanza.cl

ANTOFAGASTA PLC 40

100% of its water needs to be satisfied by seawater transported by pipeline to the mine. Dams for water storage.

Desalination both on the coast and at Esperanza to supply potable water requirements.

ESPERANZA MINE

Concentrator plant

Brine for dust control

tor tra en line nc Co pipe

Brine Concentrate for wharf

u Aq

ed

uc

Inland desalination plant

Esperanzas people
The Pacific Seawater in-take personnel (including employees and specialist contractors).

The preservation of the environment is also the protection of the business

Using 100% seawater

Seawater

Project area

workforce approximately during the construction (2008-2010), rising to more than 10,000 at the peak.

The Pacific

REGION II
Desalinated water

ANTOFAGASTA PLC 41

Use of thickened tailings: an environmental innovation

of the thickened tailings allows water present in the solution to evaporate easily in the desert climate while the nature of the earth in the areas where the thickened tailings are deposited prevents contaminated water seeping into the soil.

The community initiatives are focused on fostering development without creating dependency. Growing with Esperanza has been created as a programme to generate development opportunities for local residents and to offer better working conditions for the local labour force. The proposed

Cultural heritage: protection of archaeological findings

Ammonites and other fossils Concentrate production leaves a residue which consists of earth, minerals, water and rock, commonly referred to as tailings, which is typically 50% solid and 50% liquid. This waste is then placed in a tailings dam. The Esperanza project is taking an innovative approach to managing its tailings in view of the prevailing meteorological and geographic conditions in the Atacama Desert by using an environmentally sound system known as thickened tailings. This system will reduce water consumption and the level of emissions and will ensure a high level of stability for the tailings both during and after the cessation of the operations. The consistency have been found in the area where tailings are deposited and at the processing plant. The Council for National Monuments has been notified of this and an Archaeological Management Plan is currently in development. The plan will incorporate identification and protection of affected sites, development of an excavation schedule, ongoing monitoring of the sites and induction programmes for employees and contractors.

initiatives include: Pre-employment courses for 1,000 young people in Sierra Gorda, Mejillones and Antofagasta to equip them to apply for jobs offered by the Esperanza project or its contractors. Courses to develop business skills including customer service, business management and other businessrelated skills to foster the development of entrepreneurial activities. A programme for teachers, lawyers, school children, pupils, university students and other community members near the project, aimed at strengthening family values, preventing teenage pregnancies and discouraging alcohol and drug abuse.

Commitment with the community

The Esperanza project has initiated dialogue with local communities so as to understand their expectations and needs.

ANTOFAGASTA PLC 42

A road safety programme focusing on the specific road safety risks around the construction and operation of a mining project.

The construction phase of the Esperanza project, from 2008 to 2010, will need a workforce of up to 10,000. Once the project becomes operational, it is expected that a permanent workforce of approximately 1,500 will be required. After Esperanza becomes operational, the Group

will continue to support development in this region, fostering economic growth, protecting the environment and offering opportunities for employment and other social development.

Programme to support the local fishing industry in Caleta Michilla from where the concentrate will be shipped.

ANTOFAGASTA PLC 43

SUSTAINABLE DEVELOPMENT IN AMSA

AMSAs mining operations incorporate sustainability procedures into their management practices. These include setting strategic objectives on environmental and social issues. One outcome from this process has been the creation of a Corporate Affairs Department, with responsibility for legal, environmental and public relations as well as corporate social responsibility issues. From inception, the Corporate Affairs Department has collaborated with the other departments at AMSA to identify and support its management on their key issues relating to environmental and social performance.

ANTOFAGASTA PLC 44

THE VALUE OF PEOPLE

A distinctive and common factor in all the mining operations is the importance given to the value of people, seeking to ensure that each employee develops his or her full working potential. Promoting local employment has been an ongoing concern for AMSA and all operations seek to give preference to local employees, thereby contributing to fostering regional employment. 82% of all employees in Michilla and El Tesoro are from the Antofagasta Region.

By way of example, El Tesoro focused on hiring local labour to develop its new project Tesoro North-East, recruiting employees from Calama, Antofagasta and Sierra Gorda for its workforce. This included training more than 80 people on how to operate heavy equipment at the Centre for Mining Technology. Subsequently, one group was assigned to El Tesoro and another to Esperanza. 58% of Los Pelambres employees are from the Coquimbo Region.

Equal opportunities
In accordance with the International Labour Organisation (ILO) Convention 111 on Discrimination (Employment and Occupation), the Group does not engage in any form of discriminatory conduct. In 2007, El Tesoro became the first Chilean mining company to sign a Best Practices in Employment agreement with the National Womens Service (SERNAM), committing it to implement a series of initiatives promoting gender equality in the workplace. No incident

Employees Contractors
Figures by December 31st, 2007

459 1,450

530 862

633 2,677

1,622 4,989

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AMSAs approach to contractor relationships involves treating the contractor as a strategic partner and agreeing explicit, measurable contract deliverables. Close attention is paid to ensuring that both legal requirements and internal standards are met. This is confirmed through annual audits focusing on labour laws, environmental and health and safety issues. Following an audit, action plans are developed to monitor and address areas of non-compliance. Another initiative has been to create a performance agreement for each business contract signed with contractor companies; this is a yearly agreement and allows employees from contractor companies to participate in the results achieved. of discrimination have been reported in any of AMSAs operations. many companies were required to hire as company employees those who had previously been contractors. As the relationship between AMSAs mining companies and their contractors was already in line with industry best practice before the legislation was implemented, no substantial changes were required in order to comply with this. The Human Resources Department at AMSA awards a Labour Management Prize every year to contractors at its three mining operations. This is to encourage the high standards that are required to ensure compliance with employment and occupational health and safety legislation as well as good practice in contractor

Relations with contractors

In January 2007, new legislation came into effect in Chile (Law 20123) to regulate temporary labour contracts and the employment of contractors. As a result,

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relationships. The prize is based on an annual audit of compliance with employment legislation in which winners must score at least 97% in the audit. In 2007, 4,522 employees from 123 companies were assessed. An audit of compliance with occupational health and safety legislation was also included for the first time in 2007 in which winners need to score 90% or more.

AMSAs operations encourage regional development through practices concerning their suppliers, many of them local businesses. Los Pelambres implemented Supplier Development Programmes more than five years ago which focus on improving administration, implementation and certification of standards ISO 9001, ISO 14001 and OHSAS 18001, improving both the management and quality of services provided by the companies.

Occupational health and safety

The health and safety of employees is a priority for AMSAs mining operations. All of AMSAs operations have implemented health and safety management systems which have received OHSAS 18001 creditation. These systems help risk prevention and reduce the likelihood of accidents. Managing health and safety is not just about meeting legal requirements though; AMSAs companies aim

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to go beyond compliance and apply best practice standards wherever possible. The Groups concern for health extends to all those who can be affected by its mining activities, including employees, contractors, their families and local community members. Some of the initiatives taken within the area of occupational health include: Development of occupational health systems which meet the requirements of the OHSAS 18001 health and safety management system. A focus on detecting occupational illnesses associated with working at mining sites. The programmes implemented to date have had encouraging results and have included work to help prevent silicosis (in line with the national programme for the eradication of this disease); prevention of hearing loss, bone, joint and muscle disorders; prevention of skin disorders caused by exposure to ultra

violet rays; prevention of bronchopneumonia caused by exposure to organic and inorganic gases; fatigue and sleep disorders and programmes have been established for ergonomics and mental awareness. Development of occupational health check programmes including voluntary examinations and personal follow-up for employees. Routine examinations for employees and local community members. Recommendations on lifestyle choices including diet and exercise. Development of health education programmes for employees and subcontractors, in addition to the prevention programmes mentioned above. Los Pelambres, with its integrated health programme, has been able to monitor trends in workplace health, detect cases of illness at an early stage and initiate appropriate, timely

treatment. The programme is being extended to include contractors and 40% of them were included by December 2007. Los Pelambres has also taken the initiative to develop a noise reduction plan. This plan applies to the concentration plant and aims to reduce the noise levels to which the workforce is exposed, thereby also reducing the associated risks of hearing loss. The Ministry of Health and the Regional Ministerial Secretariat (SEREMI) for Health in the Coquimbo Region have reviewed and accredited the workplace health standards of companies in the region. In December 2007, Los Pelambres received official accreditation from the Ministry of Health as a Level 1 Healthy Workplace, through the Regional Health Authority and the Ministry for Employment and Social Welfare. This has been achieved as a voluntary participant undertaking a process of continuous improvement in the quality of the working environment. The improvements include implementing preventative actions and promoting health issues that exceed legal requirements regarding

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health matters, food safety, safe disposal of liquid and solid waste and occupational health, hygiene and safety protection. Los Pelambres is one of only 13 companies in Chile to have received the accreditation at this level.

and promote a culture of safety among employees and contractors. All the initiatives mentioned above are implemented with the support and involvement of senior management and the Board. Health and safety issues are also discussed

working practices. During 2007, the Groups mining operations continued to maintain and develop their safety culture and management programmes. During the year Los Pelambres had two significant activities. The first was a review of its processes and their associated risks, called Hazop Operational Workshops, which resulted in changes currently being implemented. The second initiative was a programme, Equal Unions, designed to increase the involvement of workforce in safety management and work issues by including contractors with less than 25 employees, around the Los Pelambres area. Other initiatives included 12 selfrun workshops involving 699

El Tesoro was the first mining company in the country to be accredited as a Level 2 Champion of Occupational Health. This initiative is intended to improve workplace conditions for both employees and contractors. The accreditation was given in August 2007 by the Regional Ministerial Secretaries for Health, Employment and Social Welfare. During 2007, Michilla updated its processes for managing occupational health. The anticipated outcome of this process is a programme that can be submitted to the authorities for implementation in 2008.

each month at the board meetings for each mining company. The Board has a target of zero fatal accidents. Regrettably, in 2007 one fatal accident occurred at Michilla, caused by the overturning of a truck. Regular training courses are held for both employees and contractors, to raise awareness and reinforce a proactive attitude to safe

Lost time injury frequency rate

Mining operations carry inherent risks related to the different stages of the life cycles of operations and the various aspects of production processes. AMSA seeks to provide a safe working environment

All injury frequency rate Severity rate

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supervisors and employees and internal audits of all contractors on labour and risk prevention). At El Tesoro, the principal activity was focused around campaigns promoting self-care and programmes discussing psychosocial hazards. During the year, the role of the Joint Hygiene and Safety Panel was upgraded which resulted in improving attitudes to risk management. At Michilla, the profile of the Joint Worksite Committee was improved. This Committee subsequently made changes to its structure which improved many areas including

communication and training. As a result of the certification of the health and occupational management system, there has been an emphasis on enhancing the administration of the system and developing a computer programme to improve control and monitoring.

good labour environment. In 2007, Los Pelambres made new collective labour agreements with its trade unions. In May, a labour agreement which lasts for 45 months until February 2011 was signed with the mine-port trade union, which represents 70% of the companys employees. In December, a new collective bargaining agreement took effect for members of the plant union which runs for 48 months until November 2011. At El Tesoro, 74% of employees are covered by a collective labour agreement which is valid until May 2009.

Trade union activity

The Group respects the freedom of its employees to participate in trade union activity and collective bargaining. There are currently two trade unions at Los Pelambres, two at El Tesoro and one at Michilla. Successful collective bargaining rounds have been held at all operations under a

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In May 2007, Michilla reached a collective labour agreement for a four-year period from June 2007 to May 2011.

Employee education and career development was further supported through the provision of scholarships for undergraduate and postgraduate courses.

Training
All operations develop training programmes for their employees to enhance their employability and further develop their technical skills. The training programmes reflect operational needs and therefore have a direct, positive impact on productivity, operational continuity, safety and environmental matters. The training programmes focus on improving technical skills and behavioural skills such as teamwork and leadership. In 2007, in addition to this technical training, employees were offered secondary school and university level courses in subjects related to mining.

AMSA also encourages its employees to have a say in the way their company is managed. Since 2004 Los Pelambres has had a System for Recognising Creativity and Innovation (SRCI). The SRCI invites employees to submit innovative proposals for improving the companys operations. More than 360 projects have been implemented, a source of pride for the winners and their families who have been awarded prizes.

Performance management involves creating an agreement between the employee and his or her manager, setting goals at the beginning of the year, monitoring performance against them throughout the year, supporting the employee if he or she is not meeting the goals and providing feedback. If an employee meets his or her targets, a predefined performance bonus is awarded. This system enables the company to make plans and evaluate employees performance within a framework that is objective and transparent.

Performance evaluation All AMSAs mining companies carry out employee performance reviews.

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ENVIRONMENTAL MANAGEMENT AT AMSA

Good environmental management is considered to be a key factor in the financial success of AMSA. During 2007, AMSA implemented a process to develop a corporate environmental policy which sets out the commitments of the company with respect to environmental issues. The main issues to be addressed in the environmental management of the Group are related to early detection and timely evaluation of the potential environmental impact and risks of mining. These include social and environmental concerns, responsible use of natural resources, prevention of contamination and maintenance of transparent communication with all stakeholders in terms of environmental performance of the mining companies. The following sections set out the key issues that AMSA faces today regarding enviromental management. To date, Los Pelambres and El Tesoro have implemented Environmental Management Systems and have obtained ISO 14001 certification. Michilla is currently evaluating implementation of an environmental management system. An Integrated Management System is being planned for Esperanza. The greatest consumption of energy related to copper production occurs in the north of Chile, namely the Interconnected System of the North (SING), responsible for supplying the Antofagasta Region where Michilla and El Tesoro are located. The Environmental Department of AMSA and the environmental departments of each operation carry out the management of the environmental matters jointly. The Groups goal is for mining activities to be performed in such a way as to respect the environment and, where necessary, works to mitigate or compensate for their impact on the environment. Ensuring energy supply is one of the main challenges facing the country today as an importer of the raw materials required for energy production. The mining sector is no stranger to this subject since it is one of the principal consumers of energy in the country; copper mining alone consumes more than 30% of all electric power in Chile (source: CNE 2007).

Energy supply and efficiency

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The Central Interconnected System (SIC) supplies the central region of the country where Los Pelambres is located in the Coquimbo area. The shortage of natural gas in Chiles energy system has brought about structural change in the type of primary energy used for generating electricity, with coal, petroleum coke and diesel returning to importance in the national energy system. The mining industry has achieved significant advances in efficient energy usage, but it remains committed to continuing to search for energy-saving measures. Companies in this sector and the National Energy Efficiency Programme (PPEE) have created an Energy Efficiency Working Group in Mining, in which Los Pelambres participates as an active member, with the aim of promoting good practice in the industry. This situation presents considerable challenges to mining companies, with regard to both the innovation required to achieve increased efficiency and developing activities designed to cover their energy requirements without affecting production levels. In order to help secure

energy supplies in the medium and long term and to raise energy efficiency, AMSA has implemented various actions: In 2007 the Working Group for Energy Efficiency, consisting of representatives of the various management units of Los Pelambres, was created. This working group defined four areas of action: compliance with relevant legislative requirements, optimisation of processes, promotion of a culture of energy efficiency and encouragement of innovation in the use of renewable energies. The main activities of the working group include: creation of a Directive on Energy Efficiency for Los Pelambres; participation in the Working Group for Energy Efficiency in

Mining which is part of the PPEE; measuring the baseline for carbon dioxide emissions in machinery at Los Pelambres; development of leaflets and posters to promote this culture among employees and their families; and incorporation of the Directive on Energy Efficiency for Los Pelambres into new contracts. At Michilla, the Energymetrix control system was implemented in 2006, which monitors and controls the energy requirements of the whole plant and which considers the definition of efficiency indicators in the use of electrical energy; furthermore, some old generators were replaced. Control over maximum

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energy demand at peak times: Los Pelambres has implemented a system to control maximum energy demand at peak times which is run by a commission headed by the Superintendency for Electricity Supply and Technical Services.

the mine and the plant. This clean-energy system, which has been used since Los Pelambres inauguration in 2000, supplies 11% of the companys total needs. It is hoped that further advances in knowledge and new opportunities provided by alternative renewable energies will be achieved.

Sources of water: increasing use of sea water

Michilla was the first mining company to use 100% sea water for all its productive processes. Its consumption of sea water is approximately 6,500 cubic metres daily. The water is pumped from the coast to the mining area and installations, situated around 800 metres above sea level. Some of the water is desalinated and is used both for human consumption as well as for production purposes. The company also has a treatment plant for waste water. Treated water, together with the brine produced during the desalination process, is used to irrigate the green areas surrounding offices and recreational buildings. Esperanza will be the second mine in the Antofagasta Region to use 100% sea water for its operations. El Tesoro uses fresh water which is extracted from five wells located in an aquifer to the east of Calama for its productive processes. Although El Tesoro is not the only user of this aquifer the company conducts continuous monitoring and

Non conventional renewable energies

As part of the search for solutions to energy supply and efficiency, AMSA has considered the possible use of alternative renewable energies. In 2007, a concession for geothermal exploration was obtained in the L.B. OHiggins Region. At the beginning of 2008, a memorandum of understanding was signed with Empresa Nacional del Petroleo (ENAP) for the exploration and exploitation of geothermal sources. In 2007, another initiative was developed to monitor winds in order to evaluate the feasibility of wind-energy projects in the Coquimbo Region. As part of its initial design, Los Pelambres incorporated a process to generate energy from the braking system of the ore conveyor belt at

Water usage at AMSA

Two of the Groups operations El Tesoro and Michilla which were responsible for approximately 30% of AMSAs copper production in 2007, are located in the Antofagasta Region. Esperanza, which is currently under development, and various deposits which could be exploited in the future are also located in the same region. Given the scarcity of water resources, it is vital to develop solutions to optimise the use of water in all productive processes and, in the case of new projects, to look for alternative sources of fresh water to ensure the availability of this resource for users in the area, including the various industries and communities.

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programme. Los Pelambres is located in the Choapa river basin. Since this is an agricultural area, emphasis is placed on optimising the use of the water and maximising water re-use. The aim is to reduce the consumption of fresh water as well as to increase the recirculation of water from the production process has detected a lowering of the water table in comparison to earlier levels. Currently El Tesoro and the Chilean Water Authority are working on a plan to allow for the monitoring and sustainable extraction of water from this aquifer. Fresh water is stored in a reservoir with a capacity of 37,000 cubic metres, meeting needs for human consumption and for operations after treatment in an inverse osmosis plant. In 2006, the Antofagasta Association of Industrialists awarded the Annual Environmental Management prize to El Tesoro for its water resources optimisation

and the tailings deposit. As a result, 80% of industrial water is recycled at Los Pelambres. Los Pelambres has rights of use to the surface water in the valleys of the Cuncumn and Choapa rivers which it exercises by water extraction systems.

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the Coquimbo Region, the coastal wetlands offer great biodiversity. Their conservation status has been classified as endangered with the highest conservation priorities. Los Pelambres operations reach from the mountains to the sea with a great diversity of environments within the 3,000 hectares they cover. The areas affected by mining operations include wetlands and High Andean steppes, shrublands and sclerophyllous forests, hydrophilic forests

Biodiversity
With its vision of promoting sustainable mining which respects the surrounding environment, AMSA has been developing a long-term focus in its operations which goes beyond simply complying with environmental legislation to taking on an active role in caring for the flora and fauna affected or potentially affected by mining operations. Among the mining companies, Los Pelambres has taken a leading role with its plans for managing and conserving the biological diversity which is affected by its activities, thus assuming an educational role in

conserving the flora and fauna of the region.

and a brackish coastal lagoon fed by fresh water (Conchal Lagoon). These environments, as well as incorporating a variety of landscapes, are home to a large number of species of flora and fauna, making this an area of special importance from the point of view of biodiversity. In accordance with the findings in the last Environmental Impact Assessment which was approved with Environmental Assessment No. 38/04, the types of environmental impact caused by Los Pelambres which can affect the existing biodiversity are: loss of plant formations, elimination of species of flora and fauna on the conservation list and

Impact on biodiversity
Generally the main impact of mining operations in the north of the country on biodiversity is related to water extraction from wells and other sources from the foothills and the effect which this has on the High Andean ecosystems. Another impact related to biodiversity is the migration of animal species (mammals and birds) as a result of mining operations such as blasting, extraction, loading and disposal of waste. Further to the south in

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destruction of fauna habitat. The company is taking measures to manage these impacts as described below.

in the world. Covering approximately 50 hectares (of which Los Pelambres protects 34 hectares), more than 70 species coexist in this wetland which is also

company has focused its efforts on the conservation and protection of this area. The work is defined in the Plan for Management of Protected Areas presented to the National Environmental Commission (CONAMA) for the Coquimbo Region. In 2000 the site was voluntarily declared a Nature Sanctuary, and in 2004 the international agreement for the protection of wetlands, known as the RAMSAR Convention, accepted the request of the Chilean Ministry for

Conchal Lagoon: protecting a coastal wetland

The Conchal Lagoon is located in the area next to the port of Punta Chungo, the coastal region four kilometres to the north of Los Vilos, and is an ecosystem which is unique

an important stopping point for migratory birds travelling along the Chilean coast, particularly as a nesting and feeding ground or as a place to shelter. Los Pelambres bought much of the land where the Conchal Lagoon is located in 1997, since then the

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Foreign Affairs to designate the Conchal Lagoon as a new RAMSAR site, thus making it the first wetland in Chile with this status under the protection of a private company. The Conchal Lagoon Nature Sanctuary is managed directly by the specialists of the Environmental Department of Los Pelambres, in accordance with the guidelines approved by CONAMA contained in the Plan for Management of Protected Areas, compliance of which is monitored by scientific experts.

In the case of Los Pelambres, various activities have been performed with the aim of mitigating and/ or compensating for the environmental impacts described above, such as: redefinition of survey drawings, location of landfills in areas without vegetation or of little interest, rescue and relocation of fauna, reforestation, definition of protected areas and relocation of High Andean wetlands.

Conservation of species and habitat

Los Pelambres has carried out a survey of species of flora and fauna to be found in the area affected by the companys activities, listing their conservation category as defined in the Red List of the International Union for Conservation of Nature. The company has around 28,000 hectares of protected land which can be excluded from the direct and indirect effects of mining operations, helping conservation and protection.

Mitigation or compensation measures

In the case of El Tesoro, AMSA has placed emphasis on monitoring the water resources which it uses, and so determines the degree to which these sources are being depleted and the potential effect on biodiversity. In addition, periodic tracking of the evolution of the flora and fauna of the area is performed via land surveys and if a significant impact is detected, an action plan is developed in collaboration with the relevant authorities.

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Waste, effluents and emissions

Solid waste
AMSAs operations seek to develop appropriate management of any solid waste generated. The types of waste material generated by the Groups mining companies are organic waste (coming primarily from canteen operations) and industrial waste (generated by mine areas and industrial plants), which may or may not be classified as hazardous. Systems for the disposal of industrial waste have been implemented in all operations recognising the requirements established by current legislation.

In 2007, Michilla conducted a revision of its industrial waste management processes, including those for hazardous wastes. Presentation of a management plan to the authorities for their approval and subsequent implementation is expected in 2008.

Patio located within the companys facilities. Later, waste disposal companies collect and transport waste in compliance with current legislation. (Supreme Decree no. 148, Health Regulation on handling of dangerous residues). In 2006, El Tesoro

El Tesoro already has a Hazardous Waste Management Plan that was approved by the health authorities in 2006. The hazardous waste that is generated, such as organic deposits, used oil, grease, iron deposits, contaminated hoses, contaminated soil, contaminated rags and contaminated personal protection equipment, is temporarily held on the Hazardous Wastes

submitted an Environmental Impact Assessment for the implementation of a compost production plant, seeking to take advantage of waste generated by the company such as wood, boxes, organic canteen waste and sludge from the water treatment plant. The start-up and operation of the composting plant is expected to be carried out in 2008.

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Los Pelambres developed a Waste Management Plan which was approved by the competent authorities in 2006. In 2007, construction of an Industrial Waste Management Centre located within the site was completed. Operations are planned to begin in mid 2008. Hazardous waste from the various generation points across the site is gathered, packaged and temporarily stored at this centre. It is then sent to an authorised waste disposal company located in the Metropolitan Region, which is responsible for stabilising and solidifying hazardous wastes prior to their final disposal in secure facilities especially constructed for this purpose

During 2007, vermiculation (a process using worms) was incorporated into the composting process, which resulted in an increase of 67% of the quantity of compost produced compared to 2006. Waste hydrocarbons from Los Pelambres, such as oils, are recycled at the EcoPlant of the ENAEX company and used as input for the preparation of explosive materials for blasts in the mine.

In 1992, the company began to execute the Aquatic Environmental Vigilance Programme which monitors Michilla Bay. The monitoring, which was conducted continuously up to 2007, covered aspects such as study of the water column, study of sediments on the sea floor, and study of the bentonic ( a type of absorbent clay) subtidal and intertidal communities. El Tesoro operates a water treatment process for water from the site, producing a maximum volume of 250 cubic metres per day. Fifty percent of this water is used for irrigation of green areas and the remainder is filtered to a drainage system. Los Pelambres incorporated the concept of zero discharge through recirculation of fresh water in the basin, both from runoff and from infiltration and refrains from releasing liquid wastes into any ground or body of water, continental or marine. Notwithstanding the above, the company has used water treatment plants in its facilities which filter biologically treated water through drains, and which have their own health authorisations in

Effluents
AMSAs mining operations seek to comply with current regulations in respect to effluents (Supreme Decree 90: Standards of emission for the regulation of contamination associated with the discharge of liquid residues in marine waters and continental areas) which set emissions

Domestic waste generated at Los Pelambres able to be recycled is sent to a recycling plant in Illapel. However, to manage compostable wastes (mostly organic materials from food preparation in the canteen, grass cuttings and wood chips), the company uses a compost plant located within the work site.

standards associated with the discharge of liquid wastes to marine waters and continental ground surfaces. Michilla, since it uses sea water in its operation, discharges brine. The total discharge in 2007 was approximately 620,000 cubic metres.

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accordance with applicable environmental regulations.

Emissions
At both Los Pelambres and

than 10 microns (PM10) and for particulate matter at 12 locations inside and outside its operations, to control the air quality for the workforce and inhabitants of nearby areas. Results obtained from these tests show levels of emissions are maintained below legal limits. Another way to control particulate emissions is regular watering down of the roadways and various sectors of the mines and the installation of permanent dust suppressors. The PM10 tests executed by El Tesoro in the work site encampment area show that the area is maintaining dust levels below the limits established by current standards. At Michilla there is a quarterly monitoring system for PM10, whose measurement is carried out at three stations. There is also a programme for the irrigation of roads, both in the mine and on the ground. The conveyor belts are fitted with a dust collection system and there are sprinklers in the main crusher. As part of its energyefficiency plan, Los Pelambres is considering its baseline carbon dioxide

Los Pelambres generated 45.2 million tonnes of tailings in 2007 which were deposited in the Quillayes dam.

El Tesoro, various measures have been implemented to control particulate emissions. At Los Pelambres, the air is periodically tested for powdered particles less

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emissions from its plant and the evaluation of a method for reducing consumption of energy and carbon dioxide emissions.

incidents in an effective and efficient manner, limiting the consequences, reducing or mitigating illness, injuries, and/or damages which may be associated with them, facilitating recuperation of operations and minimising the impact on the environment. The main incidents which took place in 2007 relate to Los Pelambres and are detailed in the table below.

No significant environmental incidents took place at AMSAs other operations.

Environmental incidents
All operations have procedures to respond to emergency situations that may affect people, equipment, facilities or the environment. These procedures are to control

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March 2007

August 2007

October 2007

December 2007

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Mine Closure
Closure of mine work sites is a fundamental step in the life cycle of a mining operation. Current regulations in Chile require mines to have a closure plan which includes the necessary measures to ensure the safety of the remaining works, as well as the community

and the environment. This plan should be submitted two years before the end useful life of a mine site to the respective Regional Environment Commission and communicated to the local communities. To date, all AMSA operations either have, or are in the process of developing,

mine site closure plans. The closure plans cover operational and financial matters as well as social, environmental and labour issues.

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COMMUNITY RELATIONS AT AMSA

The guiding principle for management of social matters in the AMSA mining companies is the creation of shared value. The presence of mining companies has had a direct impact on the social development of the areas in which they operate. The social management of AMSA is centred on issues such as: the early study of the social context of the areas in which activity develops; the establishment and maintenance of processes of dialogue with the various stakeholders, both internal and external; the maintenance of transparent and timely communication of performance; and promotion of development. AMSAs mining operations In 2007, AMSA designed a corporate policy for community relations which established its commitment to relationships with local communities. All Group mining projects as previously in Los Pelambres and El Tesoro, and currently in the case of Esperanza take into consideration from have identified their stakeholders through a process based on general diagnostics of the business and its surroundings with the help of consultants and key personnel from each operation, and subsequent revision through monitoring. Within the business model, relevant goals have been inception the identification and early evaluation of potential impacts, risks, and opportunities that the projects and operations present to people. This includes the definition of means of mitigation and compensation, relationships with neighbouring communities and local and national stakeholders, alongside the consideration of pre-activity communication methods which are in addition to those required by law. Stakeholders, whether at the level of its operations or directly at the AMSA level, include, employees, unions, contractors, neighbouring communities, clients, providers, national and local authorities, non-governmental organisations, civil society organisations and industrial associations. The three mining operations have carried out perception studies involving various stakeholders. The concerns that arose from those studies were then incorporated into the management of the business, taking into account the expectations and concerns detected and integrating some of these elements into each companys strategic objectives. established in respect of each stakeholder in relation to economic, environmental and social aspects of the business.

Relationships with Stakeholders

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Complaints management procedures

The Groups mining companies have procedures for receiving and handling complaints and queries in order to identify early problems and conflicts. In order to achieve this, the companies have communication systems through their internet sites, public relations offices (in the case of Los Pelambres, with headquarters in

Salamanca and Caimanes) and ongoing participation with the community in public activities, such as El Tesoros the Good Neighbours Teams of Sierra Gorda. Los Pelambres, given the extent of its area of influence and the presence of various populations within it, has staff specially trained for contact with the community on the ground. AMSAs mining operations

have control systems in order to ensure attention is paid to queries or complaints and that an appropriate reply is provided.

Promoting the growth of copper mining

The Andrnico Luksic Abaroa Centre
Located in Punta Chungo, Los Vilos, The Andrnico Luksic Abaroa Centre is the first permanent exhibition on copper mining and sustainable development in Chile. The centre seeks to communicate the importance of copper mining for the socio-economic growth of the country and to contribute to the environmental education associated with it. During 2007, students and other members of the community continued to visit The Andrnico Luksic Abaroa Centre which has had more than 56,000 visitors since opening in October 2006. In addition, as part of an effort to increase the knowledge of mining, AMSA was one of the main sponsors of the first mining course for journalists

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way, even after these mining operations have closed. The development of technical capabilities together with academic scholarships and improvement in infrastructure have helped harmonise mining activities with other productive activities in local areas.

were able to improve their working conditions, positively impacting their quality of life as well as enhancing job security. The mines selected for the study were those that could have the greatest future potential. From there, a report was drafted for each one providing information to the owners regarding the main minerals that could be extracted from each region.

Support for small mines

organised by SONAMI. This was a two-month course aimed at developing a closer relationship between mining companies, SONAMI and the press attended by more than 50 journalists. AMSAs mining operations have chosen to offer support to small mines in both the Antofagasta and Coquimbo Regions. Los Pelambres, in coordination with the Asociacin Gremial Minera de Salamanca, has supported geological studies for small mines in the Salamanca sector. A total of 21 mines were assisted with prospecting and technical reports over two months, to analyse the feasibility of economic exploitation. Throughout this activity, the same standards for technical equipment and teams that the company uses in its operations were applied. Most of the people who benefited lacked formal education in mining and, as a result of this project,

In the second stage of the project, eight deposits were selected for having the best projections, and new geological studies were conducted in order to determine the productive possibilities of those mines in the short and medium term. In addition, Michilla, Los Pelambres and El Tesoro, through the Consejo Minero (Mining Council) and the support of the NGO Casa de la Paz (House of Peace), are participating in a programme to assist 150 small-scale miners from Tocopilla in the Antofagasta Region whose work sites were seriously damaged by the earthquakes in November 2007. This initiative involved the contribution of economic income over three months

Development without dependence

As part of its operations, AMSA has promoted the goal of contributing to local development while avoiding the creation of relationships of dependence. It is for this reason that many of the programmes and projects executed by its mining operations have focused on supporting and creating opportunities that enable the local communities to continue growing in a sustainable

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to compensate for the loss of their work sites, and the delivery of tools and materials necessary to reconstruct their work sites, as well as training and safety equipment.

in translating their projects or technical activities into simple language that the general public can understand. Companies must respect the publics right to know and must contribute to their understanding. In this context, AMSAs companies are working to build relationships of confidence and mutual collaboration with the neighbouring communities in which they operate, which

can only happen when there is an adequate level of knowledge and familiarity between the parties. This is been achieved by maintaining a direct faceto-face communication policy with communities, as well as by using various communication media. The process of communication with the communities is based on listening to their needs and concerns and incorporating them into the business plans of each mining operation.

Relationships with neighbouring communities

A common challenge for businesses is to succeed

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The companies have also conducted internal labour training, motivating and involving the workforce in support and development activities in the community. Not only have corporate volunteer activities been developed, but the workforce has also been involved in promoting a culture of respect for diversity, cultural traditions and the rights of local communities.

Community support programmes

Michilla Various actions have been undertaken with the communities of Mejillones and Caleta Michilla, a small locality that depends largely on traditional fishing. In 2007, the company lent support through

the provision of potable water and electricity. The company gave guided tours of its operations in which young people and adults from the city of Mejillones participated with the aim of introducing its operations to them. A workshop discussion took place related to the prevention of the use of alcohol and drugs, aimed mainly at mothers and young people older than 18 in Caleta Michilla. Courses in bakery and carpentry were provided for the residents of Caleta Michilla, and bakery courses for the women of the city of Mejillones. Environmental care has been promoted by installing rest stations and rubbish bins on the road and entrances to the city of Mejillones. Construction has taken place of the first phase of the roof to cover the Escuela Lucila Godoy Alcayaga school yard in Caleta Michilla. Backpacks and school supplies have been delivered to students of the Caleta Michilla School. Support has been

Support for victims of the earthquake in the North

In November 2007, the north of Chile was affected by an earthquake which measured 7.7 on the Richter scale, with very serious consequences for various communities in the area. The impact was strongest in Tocopilla and Mara Elena, affecting more than 15,000 people. Through support channelled through the Mining Council and via the government and municipal authorities, Michilla, El Tesoro and Esperanza helped the people and communities that were affected, sending human resources and equipment,

and coordinating actions with other organisations in the area. El Tesoro worked together with the Sierra Gorda Municipality, donating more than 3,000 litres of water in Tocopilla. Workers at El Tesoro voluntarily donated more than 400 food rations. Additionally, the company conducted an evaluation of the status of homes in Baquedano and Sierra Gorda. Esperanza contributed 4,000 kilogrammes of food for the Municipality of Mara Elena and Michilla lent support with heavy equipment (trucks and front loaders) in Tocopilla.

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provided for the Mejillones municipal football team which participates in the Third Division of the Chilean Football League. El Tesoro In regard to support for the community, El Tesoro focuses its efforts on three areas of influence: Antofagasta, Calama, and Sierra Gorda, the latter being the most directly influenced. The main activities taken in 2007 were: Education programmes in corporate social responsibility (training courses and employability for local workers) through the Antofagasta Association of Industrialists. El Tesoro, together with the Spence, Cerro Dominador and Cuadra mines and the Municipality of Sierra Gorda, participate in a project called Equipo Buenos Vecinos (Good Neighbours Team), a programme through which projects are developed for this area. In 2007, events during August (which is the mining month) included visits to mining facilities

by community members, sporting events, and environmental campaigns. Social scholarships for vulnerable groups (including courses in electricity, heavy equipment maintenance, computers, etc). Grant fund projects: projects financed by El Tesoro and executed by their own personnel and business partners and contributing to various social organisations, supporting for children and the poor amongst others. Agreement with the Ministerial Regional Agricultural Secretary for the delivery of support to

the farmers of Calama. Academic scholarship programme at the Technological Mining Centre in Calama for young people from Sierra Gorda, also providing transportation and work internships at the El Tesoro work site. Agreement with the Municipality of Sierra Gorda for moving middle and high school students from Sierra Gorda to Calama. Improvement in school safety zones in the Caracoles school of Sierra Gorda. Publication of the magazine Unidos por un Tesoro (United by a Treasure) providing news

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about the Sierra Gorda area. Support with personnel and equipment for local emergency services for assistance with catastrophes and maintenance of a permanent point of contact. Los Pelambres Los Pelambres has actively developed community support programmes. These include: De Cordillera a Mar (From the mountain range to the sea) programme. The programme sought to support students in the Choapa Valley, introducing scientific and environmental content into the academic curriculum in an educational and practical manner. 15 educational establishments from the province of Choapa participated in this initiative. Volunteering at Los Pelambres. In 2007 the Escuela de Informtica y Ciudadana (School of Technology and Citizenship) was developed together with Comit para la

Democratizacin de la Informtica (Committee for the Democratisation of Technology) of Chile. The programme, implemented in the Cuncumn area, involved training citizens in new technologies with the aim of promoting development and social participation opportunities. The project includes a voluntary corporate programme. The programme Together We Grow More supports projects improving the quality of life in more than 20 rural localities of Choapa. The communities must put forward and demonstrate annually their selection of projects with the participation of neighbours and involve them in efforts to complete the projects. Los Pelambres donated US$4 million to the Engineering Faculty at Pontificia Universidad Catlica de Chile for the construction of a new mining research and postgraduate studies centre, an engineering museum and laboratory facilities. In Salamanca, Los

Pelambres contributed necessary resources to the local municipality to buy the land where the new polytechnic school for the city will be built.

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Opportunities Fair
In 2007, Los Pelambres organised an Opportunities Fair in the city of Salamanca; the objective was to provide the inhabitants of Choapa with information about public and private support

Minera Los Pelambres Foundation

The Minera Los Pelambres Foundation (Fundacin Minera Los Pelambres) was created in July 2003 for the purpose of channelling, in a constructive and formal way, Los Pelambres interaction with, and its long-term contributions to, the sustainable development of the Choapa valley. The Foundations main areas of focus are productivity development, education, training and optimisation of water use. For the period

In 2007, the Foundation continued to finance various projects in those areas, for local farmers, fishing communities, business development and bee-keeping. Projects were carried out with local municipalities through the Communal Productive Development Fund (Fondeproc) of the communities of Salamanca, Illapel and Los Vilos, which last year benefited more than a hundred small business initiatives. In addition, programmes were financed in the area of education designed for rural schools. Training courses included accounting, information technology, management and apiculture.

for productive development projects and projects for improvement in the quality of life of the community. The two day fair was inaugurated by the Minister of Mining together with Antofagastas Chairman, Jean-Paul Luksic. Thirty-six organisations participated in the display and there were around 2,000 visitors. Meanwhile, a leadership training workshop was organised by INACAP at la Casa de la Cultura de Salamanca (the Salamanca House of Culture) which was attended by 137 people.

between 20032007, the Foundations Development Plan included a total investment of US$5 million.

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Work carried out to optimise water resources, to conform with the requirements of Choapa River Supervisory Board, the Committee on Water Resources 2002, has helped reduce the loss of water in the canal from 50% to 20%. This has been achieved through joint technical work to develop projects and subsequently obtaining the necessary financing from the National Irrigation Commission. In 2007 a capabilities transfer programme was created, helping farmers to prepare to manage the water in the Corrales reservoir. The programme involved management and administration courses for 2,663 irrigators in the area grouped in the 92 communities of the Supervisory Board. The objective is to strengthen the skills of the irrigators association for the integrated management of canals and basins in the valley. The Choapa Plan is another programme that the Foundation supported along with the Regional Government and INDAP, through which more than 240 farmers improved their productivity.

The Foundation is also the main force behind the Manque Agricultural Project, where over 100 hectares of table grapes have been planted for export, in order to give continuity to its own work and to create jobs and provide an example for agriculture in the area. Contributions to cultural enabled the Municipal Theatre Ballet of Santiago to visit the regions of Antofagasta and Coquimbo and give performances in Antofagasta, Mejillones and at the former Salitrera Chacabuco, and also in La Serena, Los Vilos, Illapel and Salamanca. More than

12,000 people were able to enjoy, for the first time, a performance by the nations main classical ballet troupe. In addition, Los Pelambres and its Foundation were the main sponsors of the Museum of Contemporary Art in Santiago during the period 20062007 with donations of around US$120,000. The company also implemented a programme of visits to the museum, which involved more than 400 students and teachers from public and private schools in the communities of Los Vilos, Salamanca, Illapel and Canela.

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ANTOFAGA RAILWAY C

CONNECTING T

ASTA COMPANY

TO THE REGION

WITH A BUSINESS ORIGINATING IN 1873, THE ANTOFAGASTA RAILWAY COMPANY IS NOW THE MAIN TRANSPORTATION SYSTEM IN THE ANTOFAGASTA REGION WITH A NETWORK OF OVER 900 KILOMETRES. IT CONNECTS WITH RAILWAYS IN BOLIVIA AND ARGENTINA AND SPECIALISES IN THE TRANSPORTATION OF BULK MINERALS FROM AND SUPPLIES TO MINES IN THE REGION.

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REGIONAL INTEGRATION
As part of the Antofagasta plc Group, we are pleased to contribute to this Sustainability Report. The Antofagasta Railway Company plc (FCAB) is a company in the Antofagasta Region with an extensive reach and a long history. Over the course of time, we have sought to promote regional development, offering not only a highquality service in cargo transportation to various clients, but also taking into consideration the impact of our business on its surroundings. One of the distinctive characteristics of our business is the high level of interaction and integration with other industrial activities in the region, such as the mining industry. More than 90% of our business activity is associated with mining, Miguel Seplveda
GENERAL MANAGER

MESSAGE FROM MIGUEL SEPULVEDA, GENERAL MANAGER OF THE ANTOFAGASTA RAILWAY COMPANY
creating synergies that offer benefits to various sectors. Without a doubt the main focus of our management is on safety. This is why, in 2007, the FCAB implemented a Health and Occupational Safety System which has obtained OHSAS 18001 certification. We hope that in the coming years we can continue to improve our management of this area, effectively integrating the economic, environmental and social aspects of our business.

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THE ANTOFAGASTA RAILWAY COMPANY

ANTOFAGASTA II REGION

The origins of the Antofagasta Railway Company plc (known in Chile as the Ferrocarril de

Railway

Antofagasta or FCAB) began in 1873, the period when the first 33 kilometres of track was built linking Salar del Carmen with the city of Antofagasta. This paved the way for the

Tropic of Capricorn

processing of nitrates at the facilities owned by the Anglo-Chilean Nitrate Company.

Pacific Ocean

FCAB was founded in London in 1888 as the Antofagasta (Chili) and Bolivia Railway Company Limited (subsequently renamed the Antofagasta

FLEET

Locomotives

Trucks

Railway Company plc) and

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was listed on the London Stock Exchange. Today, it has achieved a high level of development and provides a varied range of transport services to its clients. FCAB is 100% owned by Antofagasta plc. Most of the transportation of domestic and international freight is transported via a company-owned railway network of more than 900 kilometres with connections to the railways of Bolivia

and Argentina. The ports of Antofagasta and Mejillones are thus linked with these neighbouring countries, providing a natural gateway to the Pacific Ocean. FCAB handles its clients freight from point of origin to final destination. To this end, in addition to a railway transport service based on sixty mainline and five switch locomotives, it provides transfer and customs services, freight certificates

and highway transportation via its subsidiary, TRAIN Limitada; port loading and unloading services via its subsidiary, FCAB Embarcadores; and freight storage and handling, along with an information network and continuous assistance for its clients. Although a passenger service was previously operated from Chile to Bolivia, today the companys services are only in the freight sector.

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FCAB IN FIGURES

115
trucks in Train
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900km
of track

6.3
million tons transported annually

65
locomotives
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FCAB covers all types of freight and logistic services. These include solid and liquid cargoes, both bulk and crated, drums, maxibags and containers. Its freight services specialises in mineral cargoes, whether finished products or raw materials, and in hazardous cargos such as sulphuric acid, asphalt, cyanide

of its track which will allow it to carry heavier loads. The implementation of this investment programme is expected to help the company provide a better quality of service. TRAIN has a fleet of 115 freight trucks equipped with the latest technology and a similar number of semi-trailers. It was formed in 1987 based on the need to supplement FCABs door-to-door logistics service. It currently serves major companies in a number of industrial and mining sectors throughout the country, operating from bases in the Antofagasta Region. Services provided include receiving and storing products in its facilities and their distribution or loading, including the handling and

well as those previously mentioned include products such as bulk concentrated beer and beverages, cement and lime from INACESA, and concentrated brine from the Salar de Atacama. In 1998, the company created an operating subsidiary, FCAB Ingenieria y Servicios, which is responsible for the maintenance and repair of both own and thirdparty equipment, including locomotives and electric motors. FCAB also owns 50% of the Andino Railway in Bolivia.

and diesel fuel, as well as foodstuffs, all of which comply fully with existing legal and regulatory requirements. In addition, it handles the transport of large and heavy cargo for projects which are key to the development of the Antofagasta Region. FCAB has a long-term investment programme, aimed at improving its rail network through an upgrade

transport of hazardous cargo carried out from two transfer stations for sulphuric acid located in Baquedano and Sierra Gorda. Other special cargoes carried include solvents, residues, special liquids and bottled products, in addition to freight for the mining sector such as cathodes and special heavy cargo (up to 80 tons). Trucks are fitted out according to the type of cargoes carried; these are varied and as Since its beginnings, FCABs main business has been the transport of products related to mining. In recent years, the company has
Train

Regional development

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focused on the transport of copper cathodes, mining equipment and sulphuric acid. The company has long-term contracts with mining companies that are responsible for new developments, projects and exploration in the region and this allow quantities transported to increase steadily over time. Throughout its history, FCAB and its subsidiary, TRAIN, have always given priority to and sought to promote socio-economic development of the Antofagasta Region. This

is reflected in its practices concerning local suppliers, giving priority to the procurement of regional services and products, except in those cases where it cannot obtain the quality required for proper performance of the companys business. FCAB has a procurement inventory control procedure for critical materials and supplies and a continuous quality assessment process for these, as well as for the compliance of the suppliers involved. This process includes identifying a number of critical suppliers based

on their specialisation in terms of certain spare parts used, at both local and international levels. Historically, the company has also made substantial investments in the Antofagasta Region that have contributed to the areas progress and have stimulated and enabled both domestic and foreign companies to begin or continue to invest in the region.

OPERATIONAL SAFETY
Given the nature of its business, safety is of particular importance to FCAB. Management of safety revolves around two key components: managing occupational health and safety, and managing operational safety. The company has a risk prevention policy and, in rail transport, a quality policy which incorporates operational safety as one of its prime objectives. Both policies are reinforced by the companys environmental policy. In order to provide transport services and especially for transport services for hazardous goods, the quality, environment and occupational health and

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safety management systems observe rules, standards, manuals and procedures which manage the risks to individuals, clients, the community and the environment.

environment or affect personal health.

Prevention plans, training and drills.

Emergency plans for incidents

FCAB applies a particular methodology to prepare for emergencies, to ensure an effective response and appropriate control of the risks associated with events such as serious accidents, earthquakes, fire, hazardous materials spills and other incidents that could affect workers, installations, equipment, the environment and the community. This methodology is based on:

A procedure for identifying dangers and assessing risks.

Hazardous cargoes
FCABs trucks and trains carry heavy cargoes and dangerous substances on a daily basis, especially sulphuric acid; special safety measures are accordingly implemented in operational processes to avoid and prevent possible accidents which would impact the

A procedure for identification of, access to, and reporting of legal and other requirements.

A procedure for internal and external communication on health and occupational safety.

Applicable legislation on safety, occupational health and the environment.

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Railway emergency plan

1
REPORT INCIDENT

Follow-up system Informs:

National Commission for the Environment Chilean Quarantine Authority National Service for Geology and Mining Regional Ministerial Secretariat for Health Municipality ACTIVATE COMMAND PROCESS

EMERGENCY

Terminal administrator

2 4
RESPOND TO INCIDENT

Incident command
Emergency manager Emergency superintendent Operational team

ACTIVATE COMMAND PROCESS

ACTIVATE SUPPORT NETWORK

Internal support network

FCAB TRAIN

External support network

Police Fire service Ambulance service Customers Others

Railway Emergency Plan

The Railway Emergency Plan is put into effect in the event of interruption of normal rail service, or of any event, such as a derailment, that interrupts freight movement. This plan seeks to ensure a rapid and effective response in the event of an emergency

that may also involve outside parties such as the ambulance service or the fire brigade as necessary.

assessments, actions, procedures and verifications that, in the event of an emergency, are carried out in the affected zone in order to leave it in a state that does not present risks to safety, public health, the community or the environment. To this end, FCAB has created operational procedures designed to ensure a rapid

Environmental Emergency Plan

This plan focuses directly on soil and water contamination and comprises a set of

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and rigorous process in order to deal with an emergency on the ground. Once the emergency is over, FCABs practice is to institute monitoring measures to confirm restoration of the land involved.

dangerous substances, so as to avoid harming people, the environment and the communities where freight shipment takes place. There are personnel trained to make emergency management decisions with specialisation at both the national and international level. Trained personnel work in various roles including drivers and operators, among other roles. As part of its risk prevention measures, TRAIN currently has a policy of renewal for any trucks between five and seven years old, replacing them with electric powered vehicles with safer and more modern braking systems. TRAIN responds to emergencies that occur on highways, streets and in communities and frequently holds simulation drills on spillages and emergency management. Employees are trained to handle the transfer of dangerous substances, confinement of spillages, buffers and retaining barriers, and neutralisation and clean-up of the affected area.

Incidents
During May 2007, a sulphuric acid spillage of approximately 125 cubic metres occurred as a result of the derailment of 11

Agreement with the Fire Brigade

FCAB has signed an agreement of cooperation with the Fire Brigade in Calama to deal with accidents involving hazardous goods in the urban area of the city. It is hoped that this measure will lead to more companies in the area, both within the municipality of Calama as well as in the rest of the region, following this example. The safety of individuals and the community in general is paramount, so that they can feel safe when these types of products are transported through some parts of the city.

TRAIN Emergency Plan

TRAIN has a Risk Prevention and Emergency Response Protocol which is designed for responding to emergency situations involving both personnel and equipment carrying and transferring

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rail cars loaded with that compound. An immediate consequence was the contamination of soil surrounding the track at the derailment site.

As soon as the incident happened, the mechanism set up by FCAB was immediately activated and the incident reported to the relevant bodies. No injury to employees or to third parties, or damage to public or private property occurred. As a corrective measure, the sector was isolated and the spill confined in order to prevent the liquid from spreading. The acid was subsequently recovered through the construction of a retaining barrier around the site of the derailment. The contaminated soil, which was classified as hazardous waste was removed by an authorised firm. The earth with the lowest level of contamination was neutralised and subsequently filled in the same area. The condition of the site and the recovered fill was inspected by the relevant authority. The neutralised earth was reclassified through analysis by an accredited laboratory. The result was a reclassification by the Antofagasta Health Department from hazardous waste to industrial waste, which allows it to be disposed of in an authorised landfill. In 2007, FCAB received no significant fines or sanctions of any type. Another significant incident happened in 2007, caused by a road accident where there was a spill of 22 cubic metres of SX-80 solvent at the Uribe interchange, Route 5, Antofagasta. The solvent, as would be confirmed by an accredited laboratory, is not classified as hazardous waste and thus could be disposed of in an authorised sanitary landfill. Immediately following the spillage, relevant emergency measures were taken to isolate the area and confine the spillage to avoid the liquid spreading. Public authorities were alerted and recovery procedures were initiated with the construction of a containment barrier. The contaminated soil was removed from the site.

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ENVIRONMENTAL MANAGEMENT AT FCAB

Energy
Reducing energy usage at all FCABs facilities and by its trains and trucks is a constant concern and one that directly affects operations. Equipment to monitor diesel fuel usage has been installed in trains.

ANTOFAGASTA PLC 94

As a way of controlling fuel consumption, preference is given to technologies which use less fuel in new and upgraded equipment. In addition to monitoring diesel fuel use, possible cases of over-consumption are periodically checked in order to identify opportunities for improved efficiency. As a first step, idle time for the locomotives is controlled, and as a second, the means of supplying fuel to the locomotives is optimised. The results of the abovementioned optimisation initiatives should be available in 2008.

TRAIN continuously performs checks and provides training in order to improve the efficiency and output of fuel use in its trucks. In particular, this includes monitoring of consumption by truck and by department on a weekly basis, verification of the computers on the fleet trucks and, in general, confirmation of consumption rates by means of specialised

software. In addition, on-site inventory control as well as discussions with operators on fuel-saving practices are carried out. In order to ensure a continuous supply of electricity, critical production processes are backed up by auxilliary generators for each operation.

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Use of water
Annual consumption of water Annual consumption of water
From its foundation until the 1970s, FCAB distributed drinking water for use by local inhabitants of Calama and Antofagasta. FCAB was for decades a presence of the greatest importance in
3

Today, although the company no longer distributes drinking water, it still provides untreated water for industrial use to various companies in the region. For its own water use in daily activities, FCAB obtains water from Aguas de Antofagasta S.A. totalling 150,449 cubic metres annually. TRAINs consumption is 8,055 cubic metres.

8,055m3

150,449m

the region because of its provision of drinking water and sewage systems for the population, which facilitated the creation of industries.

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Possible environmental effects on waterways

The main environmental impact of operations could occur at the intersection of the railway line with the watershed of the Loa River. Only in the event of a spillage would the soil and water system be affected. In such a case, the emergency plans already described would be put into action, authorities

would be immediately informed of the incident and monitoring plans put into effect based on the scope of the accident. The monitoring plans to control water quality in the areas of the River Loa at the railway crossing consist of frequent water-quality testing, involving measurements taken upstream and downstream

for as long as any emergency and post-emergency periods last. To date, there have been no spillages in any waterways.

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Waste management
Atmospheric pollution
Atmospheric emissions associated with FCABs activities consist of gases resulting from the internal combustion of engines of the locomotives and trucks. These emissions are controlled through regular and rigorous maintenance procedures for the locomotives. The trucks used are new and undergo regular maintenance procedures and a technical inspection every six months, thus ensuring that truck emissions comply with the requirements of Decree 55/94 of the Ministry of Transportation and Telecommunications for gas emissions.

plastic containers are used to capture the acidic water. The solution is then drained into a container where the waste is neutralised using the following processes: Measuring the solutions pH. Adding calcium oxide until a pH greater than 5 is reached. Decanting and evaporating the water. Disposing neutralised muds, which are transferred to a temporary transit collection site until they can be dispatched to an authorised site. TRAIN uses the sewage system to dispose of waste water from its maintenance and washing shops, in compliance with DS 609/98 (standards of emission for the regulation of contaminants associated with the discharge of liquid industrial residues to sewer systems).

generate hazardous and nonhazardous wastes. The main hazardous waste generated is used engine oil, as a result of equipment maintenance operations and oil changes for diesel engines. Used oil is stored in a tank on a daily basis and later removed by truck and sent to an INACESA facility, the final authorised destination where the hydrocarbonbased waste is incinerated, utilising the heat in cement furnaces. TRAIN is currently the company that transports these wastes. Other waste generated by the company, as a result of vehicle maintenance, includes containers used for dilutants and paints and contaminated rags and cloths. Any waste equivalent to domestic waste is sent to the municipal dump. Industrial waste subject to resale, such as scrap iron, copper or bronze, is stored in a scrap heap for later sale or authorised disposal. Hazardous waste is temporarily stored at transit sites and its authorised final disposal is determined by the Management Plan presented to the relevant health authority.

Liquid waste
The liquid waste generated is mainly from activities involved in maintening the tanker fleet. This generally means acidic waters that are produced by washing contaminated parts with acid. To ensure maximum safety in handling this type of waste, preventative measures are taken. Instead of directly discarding the acid solution from a tank truck,

Solid waste
The management of solid waste generated is carried out in accordance with the companys Solid Waste Management Plan. FCABs business activities

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 ANTOFAGASTA PLC 99

EXCELLENCE IN SERVICE
FCAB handles its clients freight from point of origin to final destination with the highest quality service and has made the commitment to offer its clients a safe, reliable and timely solution that inspires confidence at every stage of the process. The company transports a number of products including sulphuric acid to SCM El Abra, Minera Gaby, Minera Escondida, Cerro Dominador, Minera Zaldvar, FCABs main clients are large mining companies. Minera El Tesoro and Minera Spence, as well as cathodes from Chuquicamata, anodes from Altonorte, mineral concentrates from Minera San Cristbal and other Bolivian mines and interchemical solvents.

ANTOFAGASTA PLC 100

HUMAN RESOURCES
The FCAB is committed to attracting and retaining the best possible talent which meets the requirements associated with its culture, philosphy and standards. To this end, it ensures a good working environment for the needs of its employees. The company has 1,029 employees, of which 923 are on permanent contracts and 106 are on temporary contracts. There are also 629 contractors. 93% of employees come from the Antofagasta Region. The minimum starting salary at the company is nearly 55% higher than the national minimum wage. At TRAIN, the starting salary is nearly 40% higher than the national minimum wage.

Worker safety
FCAB makes it a priority to provide maximum safety conditions for its workers. The accident rate with time lost for FCAB for 2007 was 19.2. The rate of total

ANTOFAGASTA PLC 101

frequency of accidents was 44.3 and the severity index was 335, without any fatalities recorded during the year.

and to community members. Health-protection seminars are held on topics such as cardiovascular risks, uterine and cervical cancer, prostate cancer, and promote preventive check-ups in the public and private sector for workers and their families.

where a course is completed with an average higher than 65%, the company rewards the worker by reimbursing the remaining 50%. In 2007, the average number of hours in training per employee for the year reached 74 hours.

Health
FCAB is also constantly concerned with the health and quality of life of its employees. It has accordingly developed an Occupational Safety Programme, the main objective of which is to maintain and promote the health of all the employees of FCAB and its service provider companies. In accordance with this programme, all FCAB employees must undergo a medical examination designed to detect risk factors and/or illnesses that represent a threat to their overall health. In addition, workers who are exposed to excessive noise and metallic dust must undergo periodic qualitative and quantitative evaluations. The company is also responsible for organising and carrying out programmes in education, training, advice, and risk preventation and control that are provided to the workers, their families

Training
FCAB places a premium on the development of skills and knowledge by its workers, both job-specific and transferable, that will be useful to them both within and, as the case may be, outside the company. All workers receive performance evaluations appropriate to the type of work they perform. To this end, internal training policies are in place for workers that are adapted to specific needs as they arise. In accordance with the current collective bargaining agreement, there is a continuing education fund for in-service workers, designed to supplement courses designated as valuable for their professional development. The company pays for 50% of the enrolment fee and respective monthly tuition. In cases

Unions
As part of the companys philosophy of acting ethically and responsibly, FCAB ensures that applicable labour laws are complied with in terms of freedom of association and the right to be part of collective bargaining agreements. Approximately 44% of workers are covered by a collective agreement applicable for four years which expires in December 2009. There are currently four unions at FCAB.

Other activities for workers

Digital literacy
FCAB has made a point of embracing changes in technology occurring globally by helping its workers and their families to face the challenges of the 21st century. FCAB has offered to

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 ANTOFAGASTA PLC 103

 ANTOFAGASTA PLC 104

educate and train members of relevant communities who wish to learn to use the internet and other computer based tools. By participating in the digital literacy campaign initiated by the government, the company has developed an innovative computer skills programme to help to bridge the digital divide for its workers and their families through theoretical

and practical training in the use of information and communication technologies, so that they are prepared to live competently in a globalised world. The project covers work with networks and the use of software that may be obtained free from the internet.

the first company in the Antofagasta Region to eliminate the digital divide by achieving digital literacy for all of its workers, a task achieved thanks to the decisive contributions of senior management, supervisors and workers in the various divisions of the company.

e-Seal accreditation
FCAB received its e-Seal accreditation in 2005 as

COMMUNITY RELATIONS
Ther company is aware of the potential impact of rail and highway transport activities on the communities and population centres near the transport network. Each time a new project is submitted to the Environmental Impact Assessment System (SEIA), corresponding assessments are carried out for the area affected by the project. The most recent Environmental Impact Assessment associated with the project on Transport of containers with mineral concentrates from Minera San Cristobal was in 2005 and covered an assessment of the regional demographic and community aspects of the respective economic activities, an evaluation of indigenous communities and of the organisational structure of the communities. Throughout its hundred year history, FCAB has always sought to maintain good relations with stakeholders affected by its operations, and has been concerned to contribute more than economic value to surrounding communities. In 2007, there were no cases of significant incidents with an adverse impact on local communities.

ANTOFAGASTA PLC 105

FCAB carries out various activities in which the communities have the opportunity to participate for both educational and recreational purposes.

Notable activities
Train journeys
During 2007, 12 train journeys were provided for around 3,000 community members and for company employees. The most memorable were: Journey to the Tropic of Capricorn: summer and winter solstice. Mothers Day trip. Trip for senior citizens to Mejillones. Viaje desde Calama a Embalse de Conchi. Cinema Festival trip. Restoration of the steam locomotive: Over time, steam locomotives have become historical assets, mainly for their particular means of operation and because they symbolise an important stage in the global history of railways. Many form part of the heritage of cities and countries that grew up during the industrial revolution of the 19th

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century. Taking all this into account, FCAB took on the challenge of rehabilitating and placing in operation a steam locomotive that was manufactured in 1927 by the North British Locomotive Co. in Scotland. Thanks to the efforts of FCAB and its staff, locomotive enthusiasts and the general public are able to view the restored locomotive, and at the same time experience a part of the history of Antofagasta.

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AGUAS ANTOFA

GENERATING LIFE

DE AGASTA

E IN THE DESERT

IN THE MOST ARID DESERT IN THE WORLD, POTABLE WATER IS VITAL. AGUAS DE ANTOFAGASTA PRODUCES

AND DISTRIBUTES POTABLE WATER TO MORE THAN 133,OOO CUSTOMERS IN ANTOFAGASTA, CALAMA, TOCOPILLA,

MEJILLONES AND TA LTA L , T H R O U G H A D I S T R I B U T I O N NETWORK OF MORE THAN 1,000 KILOMETRES OF PIPELINES.

 ANTOFAGASTA PLC 111

MESSAGE FROM MARCO KUTULAS, GENERAL MANAGER OF AGUAS DE ANTOFAGASTA S.A.

ADASA plays a key role in the life and development of the second biggest region in Chile. We are therefore committed to acting in the best interests of our customers by providing an excellent service and valuing the resource that is so scarce and fundamental to life in the desert - water. Our commitment is to provide high-quality drinking water to over 500,000 people across the region, adhering to national and international standards such as those set out by the World Health Organisation. One of our permanent challenges is the efficient use of water through, for In Antofagasta plcs first Sustainability Report, we are pleased to present the environmental and social performance of Aguas de Antofagasta S.A. (ADASA) and the highlights of 2007. example, promoting the use of alternative sources such as desalination of seawater. This enables us to protect the scarce water resources in the region, thereby guaranteeing a continuous Marco Ktulas
GENERAL MANAGER

A PERMANENT CHALLENGE: THE EFFICIENT USE OF WATER

supply whilst sustaining economic development and the quality of life of its inhabitants. Additionally, we have initiated a dialogue with our stakeholders in order to promote values such as safeguarding people and the environment, and instilling a sense of regional identity and pride. Together with the authorities responsible for education, health and the environment, we face the challenge of overcoming the difficulties resulting from living in the worlds most arid desert and the relationship this has with water scarcity in the north of Chile.

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AGUAS DE ANTOFAGASTA:
LIFE IN THE DESERT
Aguas de Antofagasta S.A. (ADASA) is the water division of Antofagasta plc. The company, formed in November 2003, has operated in the Antofagasta Region since December 2003, when it was awarded the licence to operate water distribution and treatment services which was previously held by Empresa de Servicios Sanitarios de Antofagasta S.A. (ESSAN S.A.). The licence is valid for a period of 30 years. ADASA is a sociedad anonima cerrada (a closed limited company under Chilean legislation), operating as a publicly traded company and registered on a voluntary basis with the Chilean securities regulator, the Superintendencia de Valores y Seguros. ADASA is a 100% indirectly held subsidiary of Antofagasta plc.
Taltal ANTOFAGASTA Tocopilla Calama

ADASA, under the concession from ESSAN S.A., has the right to use the property, plant and

equipment, water rights and easements for the operation of the concession for water distribution and treatment.

Cities supplied by Antofagasta

BOLIVIA

Mejillones

II REGION

ARGENTINA

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Products, services and coverage

The products and services supplied by the company are: Supply of potable water and sale of untreated water. Distribution of potable water. Collection, treatment and disposal of sewage. These services are provided in the driest desert in the world, which calls for continuous efforts to be made in technological innovation and efficient use of resources. ADASAs services of production and distribution of drinkable water cover the cities of Antofagasta, Calama, Tocopilla, Mejillones and Taltal. Through a pipeline extension of approximately 1,104 kilometres, the company transported more than 39.9 million cubic metres of water to more

than 133,000 customers throughout the region in 2007. The collection, treatment and disposal of sewage covers the same cities, with the exception of Antofagasta and Calama, where the treatment and disposal services were not included in the licence transfer for concessions held by ESSAN S.A.

business processes with a focus on value creation and customer service.

Management systems
ADASA began laying the foundations for implementing an environmental management system based on the ISO 14001 standard from December 2007. The implementation will begin with sewage treatment plants and will then be extended to the companys other processes. The company adopts a customer-oriented management style, which, by cultivating the skills in its workforce, seeks to generate

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SUSTAINABILITY IN THE WATER CYCLE

The water cycle
Sea water

Discharge of waste products in line with national regulations

1 2 3
Desalination

Rivers and underground wells

Water collection

Transport of water

Purification of untreated water

Removal of arsenic

4 5
Collection and treatment of used water

Distribution of potable water

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 ANTOFAGASTA PLC 116

WATER COLLECTION
The first stage of the process involves obtaining water directly from overground and underground sources in mountainous regions. Untreated water is extracted from rivers or underground aquifers in order to be carried to treatment plants in Calama, Antofagasta and Taltal, or directly to industrial customers. In addition, since 2003 seawater has been extracted in order to produce potable water using the desalination plant located in Antofagasta. Bolivian Winter. During this period, heavy rainfall in the high mountain regions causes severe landslides, preventing water from being collected. Increase in turbidity of water sources, which hinders the effectiveness of water treatment. Granting of water rights to new or unregulated users, which may have a potential impact on the rights currently held by ADASA. The company constantly monitor the Official Gazette for all applications to formalise water rights and any applications made by third parties that may The risks associated with collecting untreated water are as follows: Disruption to the collection of untreated water, a result of climatic phenomena, such as those occurring in the summer between December and March a period referred to as the affect the rights that are currently being exercised by the company, with a view to taking any necessary measures as indicated in the legal code for the water industry. Furthermore, it is important to note that the water supply from River Loa was declared to be at its maximum In order to prevent further disruption to water intake arising from climatic conditions and the subsequent interruptions to the service, the company has implemented measures including business continuity and contingency plans covering investment, personnel training and regional coordination. An Emergency Committee has also been created in order to ensure a rapid, effective response in the face of any eventuality. Thanks to these efforts, the cities served by the company have not suffered any restrictions to their supply of drinking water in recent years as a result of heavy summer rainfall and the Bolivian Winter. permitted level in 2000 and the Chilean Water Authority is therefore unable to grant additional rights for that particular source.

Potential impacts and risks

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Water catchments
Currently, the sources from which the company has the right to extract water are set out in the adjoining table.
Cubic metres extracted

Key challenges at the collection stage

Among the main challenges which the company currently faces are the following:

Use of sea water

Given the scarcity of water in the area, the use of seawater has emerged as one of the ways of ensuring the sustainability of long-term activity. The company expects to increase the proportion of water from this source in the coming years and has the medium term objective of providing 100% of potable water to coastal cities by desalinating seawater in line with business plans and projections of consumption for different customers.

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Energy
During 2007, ADASAs energy consumption was concentrated in energy used by water transport systems (treated and untreated water), back-up systems, treatment plants and company buildings.

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TRANSPORT OF WATER
For this, a pipeline network of more than 1,000 kilometres of large pipelines is used. The water obtained from the four surface catchments is intended for consumption by the inhabitants of the cities of Calama, Tocopilla, Mejillones and Antofagasta. In the case of Taltal, the city is supplied with water obtained from underground wells located in the Agua Verde area. To reduce the pressure changes, the pipelines are fitted with special mechanisms such as pressure-reducing valves, which allow the problem to be controlled effectively, thus avoiding possible ruptures and water leaks.

Potential impacts and risks

The transport of untreated water does not have a serious environmental impact. The main risk associated with the channelling stage is related to changes in pressure inside the pipeline, resulting from the significant difference in altitude between the area of The second stage of the production process consists of transporting the untreated water from original sources to treatment centres. the mountain range where three of the catchments are located and the coast, where most of the cities to which water is distributed are located.

Key challenges at the transport stage

Given the length of the pipelines, a major challenge is to maintain the infrastructure and to minimise leakage. ADASA has therefore taken a series of measures to ensure a timely and effective response to particular situations which may entail interruptions in the distribution of water to population centres or unregulated customers.

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PURIFICATION OF UNTREATED WATER

The next stage of the production process involves the purification of untreated water. Purification of water sourced from mountain regions is carried out at ADASAs four treatment plants: one in Calama, two in Antofagasta and one in Taltal. Additionally, in Antofagasta seawater is piped to the desalination plant for treatment.
1 2 3
Filtration plant Cerro Topater Desalination plant Filtration plant Salar del Carmen Filtration plant Cerro Taltal Lequena water catchments Quinchamale water catchments Toconce water catchments Agua Verde wells Potable water pipeline

BOLIVIA

1 2 1 3
Mixing tank

Tocopilla Calama Mejillones

Potential impacts and risks

The process of purifying water sourced from mountain regions involves the removal of arsenic that has dissolved naturally in the water, which in turn generates solid waste (arsenic sludge). The disposal of arsenic sludge must be carried out in accordance with legal regulations in order to safeguard against the risk of environmental contamination and for health considerations.

4 1 2 3 4

Pipeline for untreated water

ANTOFAGASTA

II REGION

Taltal

4
ARGENTINA

Type of plant Filtration Filtration Filtration Desalination

Name Cerro Topater Salar del Carmen Taltal La Chimba

Cities or regions served by the plant Calama, Tocopilla and Mara Elena Antofagasta and Mejillones Taltal Antofagasta

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Water purification

1
The untreated water is channelled into the intake tank, where chlorine and ferric chloride are aggregated. Depending on the turbidity of the water, polyelectrolytes are introduced alongside other substances. When these compounds come into contact with the water, a chemical reaction is caused which results in the creation of millions of floccules, tiny particles which attach themselves to the interior of arsenic particles.

2
The water is passed through coagulation filters, where it remains at rest for approximately two hours. While being held there, the floccules increase in size and weight, sinking to the bottom of the coagulation tanks. The water at the higher level in the tank continues through to the third treatment phase.

3
Filtration removes all those particles and floccules which, due to their smaller size, have managed to avoid being collected in the coagulation tanks. The filter beds of the filtration pools are made up of active carbon, sand and quartz elements which trap impurities and let only clean and purified water pass through.

4
Finally, according to Ministry of Health regulations, fluoride and chlorine are added before the water is sent for consumption by users, ensuring that it is not contaminated on the long journey to different destinations within the distribution network.

Key challenges of the purification process

The health and quality of life of the companys customers is enhanced by the excellent quality of drinking water distributed. The procedures carried out by ADASA have enabled the presence of arsenic in the water to be reduced to levels in line with recommendations laid down by World

Health Organisation (see chart). Adequate removal of waste that is generated as a result of the purification process in particular the removal of waste generated through arsenic removal is fundamental to protecting the environment and human health and safety. As explained in the following pages, this has been successfully achieved by ADASA. The accumulation of arsenic sludge deposits at unauthorised sites

prior to ADASA assuming responsibility for the operation resulted in the formation of a habitat in which vegetable species and some small animals (the four-eyed frog, Pleurodema thaul) were able to thrive. The company has undertaken to protect this habitat, located around the Salar del Carmen Filter Plant.

Monitoring water quality

The quality of drinking water that is distributed to households in Chile is regulated by requirements of Official Chilean Standard

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409 (2005). ADASA has implemented effective measures which enable it to exceed the requirements established under Chilean law and reach the standards recommended on an international level by WHO. Water is monitored daily upon leaving each of the plants and in the distribution network of all regions served by ADASA. These monitoring programmes are used for analysis carried out by the relevant authorities (the Regional Ministerial Health Secretary and the Superintendency of Sanitation Services) and ensure that the quality of water distributed by ADASA meets production and distribution standards. The samples are analysed in the companys Water

Quality Control Laboratory, accredited by the National Standards Institute.

presence of this element to 0.01 mg/l. In 2006, a 10-year timeframe in which to reduce the concentration of arsenic in drinking water to 0.01 mg/l was implemented under Chilean law, a level which ADASA had already met by the end of 2003. The work carried out by ADASA in the field of arsenic removal is not, however, limited to research and development; the company plays a wide educational role through various informative campaigns with a view to dispelling myths about arsenic established when the inhabitants of the region were exposed to high levels of arsenic between 1958 and 1970. Measures implemented include the publication of an external corporate magazine Agua Viva;

Arsenic: a problem of the past

In view of the major social and environmental impact of the quality of water supplied to cities, ADASA has taken on a long-standing commitment to enhance the quality of life of the regions inhabitants through technological improvements carried out in its three filter plants. This, in turn, guarantees the quality of the drinking water collected. ADASAs efforts and commitment have helped to dispel the previous fear and mistrust of the public resulting from the presence of arsenic in rivers and water courses across the region, following a reduction in the

ANTOFAGASTA PLC 123

disseminating informative brochures to the health and education authorities, hotel and tourism sectors, and regional and national communication media; field trips to water purification installations and participation in special programmes broadcast via regional and national media; visits to water purification plants by teachers and students from high schools and universities, adults from neighbouring communities, workers, their children and service providers; and periodic talks in all of the regions schools responsible for 128,000 students. The Drinking Water Quality in the Antofagasta Region seminar was also held, with sponsorship from the Superintendency of Health Services and the Ministry of Health. This was open to the public with talks presented by national and international specialists. The water purification process, entailing the removal of arsenic and subsequent water filtration, generates solid waste in the form of arsenic sludge. This must be disposed of in accordance with current legislation (DS number 148). In order to comply with this standard, the company has built a hazardous waste landfill site at the Salar del Carmen filtration plant. Sludge is transferred to landfill once it has been through the dehydration process. Other harmful waste generated through water purification includes reagent containers, mainly those containing sodium silicate fluoride, which must also be disposed of in compliance with current regulations.

Waste management

ANTOFAGASTA PLC 124

DISTRIBUTION: UNINTERRUPTED SUPPLY

Once the purification process is complete, water is carried through extensive networks of supply lines and interconnectors to households in the towns. The distribution network involves storage and regulation tanks that are designed to maintain water reserves and to regulate distribution throughout the various neighbourhoods and towns within those cities that are being serviced.

Distribution of potable water

1 Water storage tank

2 Pressure

regulator

3 Water
pipe

Potential impacts and risks

Distribution does not create any significant environmental repercussions. The main risk is associated with the potential loss of water or leakages resulting either from pipe fractures or problems with the distribution network.

Domestic connection

5 Water meter

Key distribution challenges

Key challenges associated with distribution have been identified as follows: To ensure an effective, timely response in emergency situations that may arise through water supply cutoffs. Certain climatic

phenomena occur within the region, such as the Invierno Altiplnico also known as the Bolivian Winter which may cause problems with the water supply and which calls for prompt action to be taken by ADASA. To maintain potable water distribution networks in a good state of repair.

ANTOFAGASTA PLC 125

Measures implemented by the company with a view to guaranteeing a constant supply of water include the following: Implementation of a system for monitoring fractures to main water tanks and conservation of drinking water networks, seeking to prevent interruptions to service by means of improved practices in preventive maintenance and the analysis of vulnerable areas in order to focus investment. Installation of an efficient telemetry and remote control system in pressurereducing stations. Telemetry allows remote

measurement of the water that circulates through the network, transmitting information in real time on the volume and pressure of water at various points. Scheduling water cutoffs in order to carry out night-time maintenance, thereby limiting the impact on clients.

Installation of new pressure-reducing stations and installation of new monitoring devices to minimise leakages of water within the network.

Continuous renovation of the water infrastructure, particularly in areas with the greatest loss.

ADASA has implemented a series of practices through which to minimise water leakages, including: More accurate measurements of the amount of water leaving tanks in order to detect those areas with a higher incidence of leakages.

Detection and intensive monitoring of fraudulent activity and standardisation of potable water services.

ANTOFAGASTA PLC 126

TREATMENT AND DISPOSAL OF SEWAGE

This service is carried out in the same cities that are supplied with water, with the exception of Antofagasta and Calama, which are not managed by ADASA. Once the water has been used by households, it is returned via the sewage network to the treatment plant where coarse and fine solids, oils and fats are removed. Once this process is complete, the treated water may be disposed of into the sea via underwater pipes in accordance with current legislation (DS No. 90 Emission standards for the regulation of contaminants associated with the discharge of liquid waste to sea waters and continental surface waters).

Potential impacts and risks

This stage does not generate any significant environmental impacts. The main risks are associated with inappropriate management of the sludge that is generated, which is disposed of in accordance with the relevant environmental and health regulations.

solids (rags, wood and other materials), fine solids (sand), fats and oils represent the majority of the waste generated in the sewage treatment plants. In 2007, a total of 200 tonnes of solid waste was produced in the sewage treatment plants, which were subsequently disposed of in accordance with current regulations.

Key treatment challenges

The company currently owns three sewage treatment plants, which are located in the cities of Mejillones, Tocopilla and Taltal. Large

Discharge
Volumes discharged in 2007 Underwater disposal

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RELATIONS WITH STAKEHOLDERS

ADASA respects and recognises customers needs for accurate, credible information on the product it provides to them. The provision of transparent, timely and accurate information to customers is crucial to meeting their expectations and to engaging in mutual collaborative relationships with them. ADASA seeks to build transparent, trustbased relationships with all stakeholders within a wider framework of stakeholder engagement.

Customers
One of the areas of attention and concern for ADASA is its base of over 133,000 customers, which are divided into two categories: Regulated customers, comprising domestic consumers located in the concession areas of Antofagasta, Calama, Tocopilla, Mejillones and Taltal. Unregulated, mainly industrial, clients such as Mantos Blancos, Minera Spence S.A., Rayrock, SQM Nitratos and Sierra Miranda.

Client relationship management

Highlighting the importance of improving the quality of life of residential customers and the efficiency of supply systems for industrial customers, ADASA launched its Customer Relations project in November 2007 with a view to improving the relationship between customers and the company, consolidating its image and taking one step further towards becoming an industry benchmark.

Open communication
ADASA has open communication channels in place with its customers, such as the website www. aguasantofagasta.cl, where up-to-date information can be found on the company, business offices, tariffs and online queries. The same web site provides users with the means to express any concerns or submit a complaint to the company.

ADASA has carried out a process to identify its stakeholders, analysing each one in terms of level of involvement, risk analysis and flow of information. The main stakeholders identified by the company are customers, communities, employees and contractors, and the national and regional authorities.

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Payment transparency

each customers home once water consumption has been verified.

latest modifications to the service, planned cut-offs, supply replacement and other issues. The company has also implemented an Integrated Customer Care System which automatically registers each enquiry, the reason for that enquiry and the adopted solution. This allows ADASA to improve customer service and provide efficient solutions more quickly. In 2007, there was a 9.6 % fall in the number of complaints compared to the previous year.

Customer care and satisfaction

In order to promote a prompt and efficient response, ADASA has implemented its Fono Clientes telephonebased customer service system, which has reduced waiting times and improved In striving towards improved customer service and promoting greater transparency in payment procedures, ADASA is the only water company to invoice the client at the same time as reading the meter, printing out the receipt in The company website now features an online customer care platform where clients are able to pay the balance due on their water account, and can also be kept informed about the customer service.

ANTOFAGASTA PLC 129

Occupational health and safety

The company currently has occupational health and safety programmes in place which enable it to maintain high levels of performance in these areas. Through its Risk

Numerous evaluations were carried out in regard to safety in 2007, including:

Internal risk management audits that allow management and evaluation of the elements integral to managing operational risk and safety activities under the responsibility of area supervisors.

Employee relations
ADASA has a total of 263 employees, of which 257 are on permanent contracts and six on fixed-term contracts. As part of its management model to achieve excellence in its services, ADASA seeks to promote the well-being and commitment of its workers through sporting and cultural activities, as well as lifelong training in certain areas. While the company does not have a specific policy in place with respect to the hiring of local workers or suppliers, all employees are resident in the Antofagasta Region. Suppliers of goods and services are both local and national.

Management Department, the company has an occupational health and safety plan in place to detect and manage work-related illnesses, as well as risks and exposure to them through operational processes and duties. In striving for continuous improvements in occupational health and safety, the company has also drawn up plans for quantitative and qualitative evaluation of risks and prevention of work-related illness and accidents at work. 2007 saw the implementation of various training programmes aimed at raising awareness of the risk of illness and effects on the health of employees as a result of contact with physical, chemical and biological agents.

Audits carried out by Mutual de Seguridad (a private sector organisation for promoting health and safety) as part of the Competitive Enterprise Programme. Annual management audit, to review and update company risk maps.

Accident rate indicators

Lost time injury frequency rate All Injury Frequency Rate Number of Fatalities

Charge p

Volumes disch

Number of days lost worked over a one-ye case one fatality is eq lost days).

ANTOFAGASTA PLC 130

Training
As part of the effort to ensuring that ADASAs workforce remains motivated and committed, various training activities were carried out in 2007. The most notable was the First Innovation Game, where various teams were formed to resolve different problems faced by the company. Along with this programme, a series of workshops were held which were geared specifically towards the development of managerial skills for departmental managers and professionals. The aim was to create collaborative communities within the company and strengthen leadership, negotiation, teamwork, creativity and communication. In 2006, ADASA was e-Seal accredited by the National Training and Employment Service (SENCE) in recognition of the companys success in bridging the digital gap. In 2007, approximately US$72,000 was invested in staff training, of which US$44,000 was contributed directly by ADASA and

US$28,000 by SENCE. 217 employees took part in the activities and an average of 23 hours of annual training was received by each employee. Other collaborative events that took place outside the workplace were held in the ADASA Social Club and Sports Facility, which fosters

comradeship between workers and promotes a healthy worklife balance. There is also a folk music association formed by company workers. ADASA has entered into two collective bargaining agreements with its two trade unions, which comprise 139 employees and 37

ANTOFAGASTA PLC 131

employees respectively covering 67% of all workers. The good relationship with employees is reflected in the low staff turnover, which was just over 1% in 2007.

served by ADASA. This involved a movable display stand and audiovisual and graphic material handed out to 128,000 children aged between 4 and 17 years.

up measures that will improve the quality of service for future clients.

Authorities
As a utility company, ADASA works directly with all relevant political, health, tax and environmental authorities in the field, achieving transparency, ensuring prompt issuance of analysed information and responding to each enquiry submitted by the authorities.

Community
ADASA realises it is an integral part of the community and hence it has implemented a permanent programme to promote its values: the Culture of Life in the Desert. The programmes objective is to focus on the talents of employees and of contractors, paying particular attention to the role carried out by each, and promoting the philosophy that the resource that is obtained and used is not just water, but life. What began as a single company initiative turned into a campaign which today has been adopted by 16 bodies representing the education and health sector, municipalities and the National Environmental Council (CONAMA). Community-based activities carried out in 2007 included: Visits to all educational institutions in the cities

The creation of an online community www. nuestronorte.cl through which to develop regional business projects in the social, cultural or economic domain.

Visits carried out by corporate volunteers from each city, comprising workers and service providers, to sponsored social organisations.

An agreement with the Catholic University of the North and the University of Antofagasta to strengthen innovation and to develop students technical skills.

Donations granted to the Regional Fire Brigades of the five cities supplied to fund equipment and operations.

Annual meetings with property developers and estate agents within the region to draw

ANTOFAGASTA PLC 132

 ANTOFAGASTA PLC 133

Acronyms
ADASA AIA AMSA COCHILCO CONAMA COREMA DGA EDELNOR EIA ERNC ESSAN FCAB GRI ICA IUCN IMOA MET MIC MLP OMS PPEE SENAME SENCE SEREMI SERNAGEOMIN SERNAM SIC SING SISS SONAMI Agua de Antofagasta S.A. Asociacin de Industriales de Antofagasta Antofagasta Minerals S.A. Comisin Chilena del Cobre Comisin Nacional de Medio Ambiente Comisin Regional de Medio Ambiente Direccin General de Aguas Empresa Elctrica del Norte Grande Estudio de Impacto Ambiental Energas Renovables No Convencionales Empresa de Servicios Sanitarios de Antofagasta Ferrocarril de Antofagasta Global Reporting Initiative International Copper Association International Union for Conservation of Nature International Molybdenum Association Minera El Tesoro Minera Michilla Minera Los Pelambres Organizacin Mundial de la Salud Programa Pas de Eficiencia Energtica Servicio Nacional de Menores Servicio Nacional de Capacitacin y Empleo Secretara Regional Ministerial Servicio Nacional de Geologa y Minera Servicio Nacional de la Mujer Sistema Interconectado Central Sistema Interconectado del Norte Grande Superintendencia de Servicios Sanitarios Sociedad Nacional de Minera

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GRI Content Index

GRI Code Indicator Description of Indicator Page

1 1.1

Strategy and analysis Statement from the most senior decision maker about 9 the relevance of sustainability to the organisation and its strategy Description of key impacts, risks, and opportunities Organisational profile Name of the organisation Primary brands, products, and/or services Operational structure of the organisation Location of organisations headquarters

1.2 2 2.1 2.2 2.3 2.4 2.5

9, 10, 11

2 14, 15 16 16

Number of countries where the organisation operates, 15 and names of countries Nature of ownership and legal form Markets served including geographic breakdown, sectors served, and types of customers/beneficiaries Scale of the reporting organisation Significant changes during the reporting periods Awards received in the reporting period Report parameters

2.6 2.7

Annual Report, page 62 15 14, 15 11, 33, 35 21

2.8 2.9 2.10 3

Report profile
3.1 3.2 3.3 3.4

Reporting period for information provided Date of most recent previous report Reporting cycle Contact point for questions regarding the report or its contents

2 2 2 138

Report scope and boundary

3.5 3.6 3.7

Process for defining report content Boundary of the report State any specific limitations on the scope or boundary of the report

3 2 2

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3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities

No joint venture were registered during this reports time span. Only those existing operations in which AMSA is the controlling part are reported. The FCAB section includes no information on the Puerto de Antofagasta (Antofagasta Port) business, of which AMSA owns a 30%

3.10 3.11

Explanation of the effect of any re-statements of information provided in earlier reports, and reasons Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied

This is the Groups first report This is the Groups first report

GRI content index 3.12 4 Table identifying the location of the Standard Disclosures in the report. Governance, commitments, and engagement 135

Governance 4.1 4.2 4.3 Governance structure of the organisation Indicate whether the Chair of the highest governance body is also an executive officer State the number of members of the highest governance body that are independent, and/or non-executive Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body Processes in place for the highest governance body to ensure conflicts of interest are avoided Statements of mission or values, codes of conduct, and principles Annual report pages 64 to 71 Annual Report, page 61 Annual report pages 61 and 153 17

4.4

4.6 4.8 Stakeholder engagement 4.14 4.15 5

17 17, 19

List of stakeholder groups engaged by the organisation Basis for identification and selection of stakeholders Management approach and performance indicators

20, 69, 101, 105, 128 20, 69, 128

Economic EC1 EC5 Direct economic value generated and distributed Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation. 23 23, 101

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EC6 GRI content index EN3 EN8 EN9 EN12

Policies, practices and proportion of spending on locally-based suppliers at significant locations

23

Direct energy consumption by primary energy source Total water withdrawal by source Water sources significantly affected by withdrawal of water Description of significant impacts of activities on biodiversity in protected areas and areas of high biodiversity value Habitats protected or restored Strategies, current actions, and future plans for managing impacts on biodiversity Total water discharge by quality and destination Value and number of significant fines and non-monetary sanctions for non-compliance with environmental laws and regulations

56, 94, 95, 119 59, 96, 118 58 59

EN13 EN14 EN21 EN28

60, 61, 62, 122 60, 61 63, 64, 98, 127 28

Governance LA1 LA4 LA7 Total workforce by employment type, employment contract, and region Percentage of employees covered by collective bargaining agreements 15 51, 102, 131

Rates of injury, occupational diseases, lost days, and 50, 101, 130 absenteeism, and number of work-related fatalities by region Education, training, counseling, prevention, and risk-control programmes in place regarding serious diseases Average hours of training per year per employee by employee category Programmes for skills management and lifelong learning Total number of incidents of discrimination and actions taken Monetary value of and total number of fines or non-monetary sanctions for non-compliance with laws/regulations 49, 102, 130

LA8

LA10 LA11 HR4 SO8

52, 102, 131 52, 102, 131 45 No major sanctions or fines due to law infringement were registered, beyond what is stated on the EN28 standard

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CONTACT INFORMATION
If you would like further information, or have any comments or questions relating to the Sustainability Report, please contact: Fernando Crisosto G., External Affairs Manager inforeporte@aminerals.cl Or visit the company web site: www.antofagasta.co.uk Head Office: 5 Princes Gate, Knightsbridge, London SW7 1QJ, United Kingdom Tel: +44 (0)207 808 0988 Fax: +44 (0)207 808 0986 Registration Number 1627889 Chile Office: 4001 Apoquindo Ave, 18th floor, Santiago de Chile Tel: +56 (2) 798 7000 Fax: +56 (2) 798 7445 Related links: Michilla www.michilla.cl Los Pelambres www.pelambres.cl El Tesoro www.tesoro.cl Esperanza www.mineraesperanza.cl FCAB www.fcab.cl ADASA www.aguasantofagasta.cl AIA www.aia.cl COCHILCO www.cochilco.cl SERNAGEOMIN www.sernageomin.cl GRI www.globalreporting.org ICA www.copperinfo.com IMOA www.imoa.com This paper has Green Seal and Green-e certifications Design and production: Plural Communications English version with the assistance of Flag Communications Photography: Group photo library Printing: Salviat Impresores This report was produced and edited in June 2008

Printed in Mohawk Options 100% PCW paper and manufactured with eolic power

ANTOFAGASTA PLC 138

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Resident in area of activity Other (please specify)

If you could change anything about this report, what would it be?
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Information

What information did you expect to read on receiving the Sustainability Report?

Mining Transport Water

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Environment Human resources Corporate management

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Community Photos

Please indicate below which of the sections of the report you considered to be most useful:
Interview with the Chairman Company overview Sustainability commitment Relationships with stakeholders Economic performance Antofagasta Minerals Antofagasta Railway Company Aguas de Antofagasta

Case studies Charts

How do you think Antofagasta plc could improve the quality of its Sustainability Report?

Additional comments

Please send to Mr Fernando Crisosto, 4001 Apoquindo Ave, 18th floor, Santiago de Chile.

ANTOFAGASTA PLC 139