THIRD-PARTY RELATIONS
Goods and Services
The Company is a permanent consumer of inputs and services used for its production sites, projects and investments. Therefore it develops procurement and contract procedures and establishes collaboration relationships with suppliers - both national and international - who offer world quality and competitive conditions and products.
In 2011, Codelco’s transactions totalled US$ 9.307 billion, this includes long-term power contracts to supply electric power (US$ 2.487 million) and fuel supply contracts (US$ 176 million). In 2011 Codelco signed transactions with 3,941 suppliers, 3,575 Chilean suppliers and 366 foreign suppliers.
Total consumption of goods and services was down 49% in 2011 compared to 2010, mainly because power and fuel contracts in 2010 were significantly higher (US$ 12.303 billion and US$ 1.807 billion, respectively). Excluding the effect of energy and fuel, Codelco increased its signed transactions by 64% in 2011 compared to the previous period.
Supplier Development
Building trust in relationships and competitiveness with suppliers is a key initiative for Codelco in order to ensure a competitive supply of goods and services for the growing requirements of the Company’s existing and future activities. In 2011, key activities in supplier development were as follows:
Supplier Development
In 2011 the first portfolio of Cluster Projects was implemented; the programme aims to develop local suppliers through collaborative work with Codelco user areas and identify creative proposals to solve various operational challenges.
The second portfolio of projects was also prepared and 29 projects reached the Cluster Project stage.
New Market Management
In 2011 a new management was established to identify and develop business opportunities by introducing new products and foreign suppliers, mainly from Asia.
New Market Place
Codelco buys and contracts through electronic platforms to ensure transparent processes. During this period, a new pilot e-commerce system based on SAP technology was installed at Andina Division.
Trade Unions
In 2011, Codelco had regular meetings with the different trade unions, such as Sutmin, Aprimin and Agema, to address issues of common interest.
Mining Industry Meetings
Codelco participated in several seminars, such as those organised by Aquiles, Corfo and Abastemín (organisation dependent on the Mining Council). At these meeting, Supplier Management presented the requirements associated with the Company’s operations and investment activities in goods and services.
Contractor Management and Supervisions
Codelco’s main business activities are generally carried out by the company’s permanent employees; while other activities, such as work implementation or service provision, are carried out by specialised contractor companies bound to Codelco through civil or commercial contracts.
Contractors recruit, select, contract, pay and lay off their employees, whenever they act at their own accord and risk. Likewise each contractor company is responsible for labour relations with its employees and/or unions.
Codelco commissions specialised companies to oversee that contractor companies comply with labour and insurance obligations. Codelco exercises its right to information, retention and payment regarding labour and social benefit insurance obligations as provided by current labour law. Codelco also undertakes all the necessary measures to effectively protect the life and health of all personnel who work at its operations, whether employees or contractors.
In 2011, contractor companies showed a high level of compliance with all obligations. However, between May and July, over a period of 55 days, a sector of contractor company employees who provide services to El Teniente Division went on an illegal strike that involved violent actions that partially affected the operational continuity of this division. The conflict - that reduced the division’s output by 17,000 tonnes and cost the company US$ 130 million - came to an end after signing a direct agreement between the contractor company employers and their employees.
