Senior Management Messages

Today Codelco faces a complex and critical scenario. It is probably one of the most challenging moments in its 45-year history. In this environment, we must strive to fully understand the challenges we face and, at the same time, we must have a leading role in restructuring, revitalising and strengthening our Company that has history.

Our operations have brought benefits and development to Chile, but they are becoming increasingly challenging and difficult to operate. For example, the sharp decline in copper ore grades over the last few years. Additionally, many of our industrial facilities and infrastructure have depreciated, they have been in operation for a long time, are becoming obsolete and, in many cases, do not meet the high mining standards of the 21st century.

Nelson Pizarro C.

Chief Executive Officer

2015 was an enormously challenging period for Codelco; management underwent significant adjustments and declining commodity prices had an impact on the global market. However, I can confirm we had an exceptional year in management terms. We moved forward with our strategic plan, mainly related to our investment portfolio, but this did not affect key projects under construction; complete cost control – the Company moved from the third to the second quartile, and we achieved record copper production. We also reinforced workplace safety, strengthened teams and incorporated best practices. And significant progress was made together with employees towards a Strategic Agreement, based on mutual trust and a frank exchange of opinions.

Copper Market

This year that ends, similar to the previous year, global copper prices continued their downward trend, together with declining by-product prices. In this difficult world outlook, 2015 was also a challenging year for our Company.

The average LME copper price was 249.2 US$/lb in 2015, down 20% from 2014 when the average price was US$311.3 US$/lb. Similarly, molybdenum prices, our main by-product, fell 41%; while gold dropped 8% and silver 18%.

There were several reasons for this trend, especially slower growth forecasts for China, the world’s largest copper consumer, in addition to new projects around the world that oversupplied the copper market and other financial factors.

The Company’s sales revenue was US$11.694 billion - this includes toll milling services, own copper and by-product sales, down US$2.133 billion from 2014.

These results were offset by the organisation’s efforts to increase output, reduce costs and the strong US dollar.