Minera Escondida

Price of Copper

During 2008, the average price per pound of copper on the London Metals Exchange (LME) was US$ 3.15, which is 2.5% lower than the average US$ 3.23 recorded in 2007. The abrupt fall in the price of copper in the last quarter, which reached an average of US$ 1.77 per pound, is to be noted.

Production

Copper production at Minera Escondida was 1,255,019 metric tons, which is 15.43 % lower than the 1,483,935 mt produced in 2007. This is explained by the combined effect of a lower ore head grade and production problems associated to the failure in the Laguna Seca SAG mill concentrator.
In 2008, production was of 997,491 metric tons of copper contained in concentrate and 257,528 tons of cathodes.

Sales

Total sales decreased from US$ 10,289.7 million in 2007 to US$ 7,760.2 million in 2008, which represents a decrease of 24.6 %. This is due to a lower price of copper particularly in the last quarter and to a lower production.
The level of physical sales decreased by 15.4%, which is mainly explained by the lower ore head grade and the production problems with the Laguna Seca concentrator SAG mill.

Operational results and profits

The company’s operational results decreased from US$ 8,070.9 million in 2007 to US$ 4,566.5 million in 2008, representing a decrease of 43.4 %.
Profits also decreased from US$ 6.467,0 million in 2007 to US$ 3,570.3 million in 2008, which represents a decrease of 44.8%.

Taxes

Minera Escondida’s income tax provision through December 2008 amounts to US$ 929.5 million, which represents a decrease of 37% compared to the same period through December 2007. Of this amount US$ 747.5 million are First Category Tax and US$ 182 million are Specific Tax on Mining Activities (Royalty).
Costs

The effective C1 unit cost of exploitation per pound of copper sold (payable) increased from 60.8 c/US$ in the 2007 period, to 77.1 c/US$ in the 2008 period. This reflects the strong price increase compared to 2007 of the main consumables both local and imported such as power, fuel, sulfuric acid and other essential components, attained during large part of 2008. These costs are also a result of the lower production volumes.
For the 2008 period, C1 cost includes credits for by-products gold and silver for an amount of US$ 179.2 million, which represented 6.7 c/US$ credit to unit cost.

Minera Escondida is an operation located 170 km southeast of Antofagasta, at 3,100 meters above sea level. Its owners are BHP Billiton (57.5%), Rio Tinto (30%), JECO Corporation (10%) and International Finance Corporation (2.5%). It is operated by BHP Billiton.

www.escondida.cl
www.bhpbilliton.com
www.fme.cl
www.ceim-fee.cl


 

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