Earnings Transcript for ANTO.L - Q4 Fiscal Year 2020

Andrew Lindsay: Good morning, ladies and gentlemen, welcome to Antofagasta's 2020 Year End Call. I am Andrew Lindsay, as many of you know, I run the London office. And today we will have Mauricio Ortiz, our CFO and Rene Aguilar, our Vice President of Corporate Affairs and Sustainability, answering your questions. If you have any questions, please use the chat facility, which is that sort of in the top right, as a Talk Box circle with a question mark in it. If you click on that, and type your question there, then I'll ask the question for you. I'll now hand over to Mauricio.

Mauricio Ortiz: Can you hear me now?

Andrew Lindsay: Yeah.

Mauricio Ortiz: Well thank you, Andrew. Well good morning, it's great to be speaking with you today, as we announce our strong set of results 2020. As you may know, our CEO Ivan, is recovering from a short illness, so I'm covering the results for Antofagasta today. Before getting into the financial detail, I want to say a few words on the pandemic, and how we responded to it. For Antofagasta, the safety is always the most important priority. The safety of our people, and our communities. So, throughout the pandemic we have taken precautions to ensure our people are still safe on site and also our day-to-day working locations. In addition, we are proud to announce another record safety performance this year. On the financials, we are very proud about our 12% EBITDA increase during the year reaching $2.7 billion as total EBITDA, therein 52% EBITDA margin. Higher copper price and gold prices lead to higher full year revenue that in 2019, and we complete 2020 with a $5.1 billion revenue, that means 2% higher than the year before. We have also taken actions to continue improve our costs, our CCP, our cost and competitiveness program, success and generate benefit for almost $200 million, nearly doubling the original target, which was $100 million. And in line with our capital allocation framework, the Board has announced a total dividend of $54.07 per share, which is equivalent to our payout ratio of 100% of underlying net earnings. Our balance sheet remains strong. We ended the year with a net debt of $82 million and the net debt EBITDA ratio of almost zero, for sure, was the lowest in the industry. Taking all this together and looking ahead, we are optimistic and following the cost that we have in our growth growing on 2020, we have now reassumed and CapEx for the 2020 was $1.3 billion and we are looking forward to 2021 in order to have $1.6 billion as a total CapEx expenditure. In terms of what we are seeing in the copper market, the fundamentals are there. There's a shorter demand increase supported by government stimulus in the U.S., Europe and China. The vaccination rollout is progressing well. In Chile, we have a remarkable result in that aspect. And also, the entire world is reducing the fears of economic downturns within the next couple of years. And in the supply side, we see our response relatively constrained. So longer term demand, of course, is driven by the transition to a low carbon economy. And we have seen all these factors are front end loading in the last couple of months, as the world is accelerating its movement to cleaner technologies in transportation and energy sectors. So, world at the end needs copper to achieve our climate goals. And last, but certainly not least, we continue to make excellent progress to decarbonizing our operations by increasing our use of renewable energy, and improving the energy efficiencies in our processes. Also, already 43% of our water that we consume are currently from the sea. And we are progressing very well in the construction of our desalinization plant at Los Pelambres, which is part of Los Pelambres Expansion project. And the total scope will be done by 2025. So, our recycled water by then will be up to 95% of our total water consumption. To wrap up, we're in a position of strength with high quality asset and very strong growth pipeline, and also our discipline about operational cost and financial aspect. I'm proud of Antofagasta and my colleagues for their resilience and continued strong performance during the year. And now I'm happy to take your questions. So, thank you. Andrew?

A - Andrew Lindsay: Sorry. Okay, thank you for that introduction Mauricio. I think we got a variety of questions here. I'll try and keep them in some logical order, but keep sending them in as you think of them. The first question is just a general question about COVID-19. It's just asking what actions we managed to take in 2019? And why we think they were successful? Because in the end, our production seems to have not been obviously affected by that. And what our expectations are for this year and again, what precautions have we taken?

Mauricio Ortiz: Okay. Well, we have an early response to COVID back on 2020. We start with all our measures early in February. And I would like to highlight mainly three aspects. The first one was the self-assessment, safety self-assessment before all the people on all our personnel entered to our companies. So that allow us to raise the level of awareness of all the people involved in our operation, not only direct employees, but also contractors. The second one was the dedicated airplanes and buses in order to isolate our people from the rest of the population, as they need to travel from the urban cities like Antofagasta, Santiago, to the mine site. And the third one, of course, we increased all the sanitary measures at our mine sites. For example, promoting the social distancing that at the beginning had an impact on project development and now we replan our project development in order to develop the projects with a reduced number of people on-site. So that helps us to promote social distancing. And also, another sanitary measures such as increase the personal protective equipment. So, going forward on 2021, we are going to maintain this discipline around these three main areas. And we are also expecting to have better results on the back of the 25% of the population in Chile has been vaccinated so far. And the program keeps running very well. And the government is targeting to increase that figure going into 2021.

Andrew Lindsay: Okay, thank you. Sorry, there's a slight lag when we switch between screens here. The next question is another sort of more general question but specifically about Chile relating to the constitutional change and debate which is going on, if you could just describe that in a bit more detail, and also set out what we think the possible implications are for us as a company?

Mauricio Ortiz: Well, as all of us know, that there is a very organized process running currently in Chile, there is - on last October, we had an election in order to a referendum, in order to decide if we are going to set an assembly to propose a new constitution during 2021. And the final choice of Chilean people was go for that assembly. The elections to elect the assembly representative will be disabled, so four weeks' time. Following that election, the assembly representatives, they have nine months plus three months extension, so almost - sorry, sorry, up to one year to write the constitution, to write a propose - to propose a new constitution. And on 2022 we are going to have a new referendum and Chilean people will decide if we go for the proposal that the assembly put in place or we maintain the existing one. So, that is a very clear path that we have going forward in terms of writing the new constitution. In terms of implication for the mining industry, we can see some discussions about water rights and I think as Antofagasta we are very well placed in terms of to tackle that discussion and any implication as I described in the opening remarks and also as you know, we are building our independence from continental sources and basically feeding all our or matching all our water supply requirements from seawater in the Nordic area Centinela, Antucoya raw sea water and in Los Pelambres is going to be our desalinated sea water.

Andrew Lindsay: Okay. Now we have a question from Jack O'Brien with Goldman's. Despite higher CapEx in 2021 and expansion programs thereafter, Antofagasta will be in a net cash position of 2021 onwards. Can we expect any surplus distributions over and above your very high payout ratio? [ph] EG through a special dividend?

Mauricio Ortiz: Yeah. Well, as you know, something that characterize Antofagasta is its disciplined operational costs and financial as I said. So, in terms of taking all our financial decisions, the capital allocation framework, it is the core of that decision. So basically, just let me take you through the capital allocation framework. Our main priority is to always maintain the ability of our assets to keep delivering value through the cycle. So, sustaining the mine development capital go first, then we pay a very straightforward dividend policy which is 35% of the payout ratio. And finally, we assess different development options. We have a very strong development option portfolio in Centinela and Los Pelambres. And any development option must of course, fit our economic parameters and our economic returns parameter. And if there is no project, so, for example, this year Los Pelambres, Centinela and Zaldívar project were fully funded. Of course, we are going to return excess of cash to our shareholders. So, that is basically what really drives our decisions in terms of capital allocation. And going forward, what I will say that we are going to follow this capital allocation framework, our capital allocation framework, and decision factors are very clear. So, we assess the scenario with a very clear framework. But of course, the scenario will be changing different every year, but the decision factors are the same, and the assessment may change according to the macro environment.

Andrew Lindsay: Okay, thank you. So, the next question is about the labor negotiations, which are going on at Los Pelambres. And please, can you give a bit more information about where we are at the moment and what the expected outcome is?

Mauricio Ortiz: Okay. Well, in terms of labor negotiation you know Antofagasta has a very collaborative approach with the unions. So, we are always looking for the collaboration with the unions in the common benefit, and also looking and taking care of our long-term competitiveness of the business. So, these are the key fundamental principles once we take - once we sit with the unions to talk about the future of our company. So, in terms of their specific labor negotiation at Los Pelambres, there's two unions, the concentrator and the mine union. We are now in the mandatory negotiation period, which is five days extension, following the normal period. This period is going to end today for one union and tomorrow for the other one. Following that, we expect to sit for another five days of our common agreement extension, that is something that will allow us to close any potential difference between the management and the unions. So, I'm positive about that and of course, we cannot guarantee the success of this. But as I said, collaboration, it is fundamental and also looking for the long-term competitiveness of our businesses. It is the drivers that - are the main drivers of our conversation. And as I said, we will have or we're expecting to have another five years extension period following today and tomorrow for the two unions.

Andrew Lindsay: Okay, and as a follow up question to that, are we able in any way to quantify what the financial impact might be of the outcome of these negotiations? Clearly, it is a bit premature as we don't know the details yet. But if you can give any help on that?

Mauricio Ortiz: Yes, well, as I said, the borders of any decision will be of course, the common benefit for both parties, workers union and the company and always maintaining and preserving and of course, targeting the long-term competitiveness of the business. Workers and management knows that this is a cyclical business. So, we target rather than a specific impact in one year, we target a competitive advantage during and through the cycle.

Andrew Lindsay: Okay, and then - okay, well, specifically on Los Pelambres, we've seen that the exchange rate in our guidance is [ph] 780 pesos - dollar for this year. Can you talk through what is driving our cash cost expectations higher at Los Pelambres, so before by credits is going from $1.27 to $1.45?

Mauricio Ortiz: Okay. Yeah, well, Los Pelambres, as you know and we were discussing we have the Los Pelambres Expansion project so basically, this expansion main target are two, one to expand the milling capacity and that allow us to tackle the declining rates in Los Pelambres. And the other one of course is, reach the water independency from [ph] continental source. So, in terms of rate decline we are taking care and we're tackling the long-term challenge build in the Los Pelambres Expansion. Specifically, on 2021, we have a change in comparison with 2020 in the copper grade. On 2020, the copper grade was around 0.7% copper, and on 2021 the grade will be in the space of 0.64% so that basically drives the cost increase as we need to increase the activity to preserve or maintain the final production. So, that is the main driver on Los Pelambres cost increase. But as I said, we are tackling the long-term and the main challenge which is the grade decline as we are moving forward in the life of mine with the Los Pelambres Expansion that will be fully up and running by 2022 on the second half.

Andrew Lindsay: Okay, we're going to see questions now on Centinela, on current operations and on the second concentrated project. First one is, can you talk around the grade profile and how do you see it developing over the next 2022 to 2025?

Mauricio Ortiz: Okay. Yeah, well grade decline is a fact in the copper mining industry and there is something of course that Antofagasta is looking forward to tackle that and to make our projects to minimize that variability. So, for example, in Centinela what we're doing, we're opening the Esperanza Sur, new open pit that will allow us to maintain a steady state the grades in a level that allow us to maintain also of course the production from the concentrator. So, back on 2019, we have the highest grade on Esperanza Sur, the concentrate of the sulfide mine at Centinela. In 2020, we have a little reduction that explain basically our lower production coming from Centinela and now back in 2020, we have an increase and we're expecting that in the long run. The grade at Centinela will be much more similar to what we have on an average between 2020 and 2021. So, wrapping up in Centinela, we're taking positive step in order to maintain a steady state grade going forward in a level as I said between 2020 and 2021. And of course, these are the main grade that we have in Centinela is the one that involved the building of and development of our second concentrator and that will increase copper production to 180,000 tons of copper equivalent. We are doing the engineering of that project on 2021. And the pre-feasibility study gave us a figure of $2.7 billion and the risk in the engineering are moving forward with the detail engineering during 2021 and we are going to present to our board on during the first half of 2022 for final investment decision. So, we have a set of portfolios in - a set of project in our portfolio for Centinela and we're progressing well in term of maintain the production as much as a steady state is possible, based on the resource that we have in Centinela.

Andrew Lindsay: Okay. I now have a question on current operations. This one's from Ian Rossouw at Barclays. He's observing that we did an expansion at Centinela to increase the capacity, the throughput capacity to 105,000 tons a day. But that we haven't achieved that very often in recent years. And he's asking when we expect to achieve that on a more regular basis going forward, or at least a 100,000 tons going forward?

Mauricio Ortiz: Okay. It's a very good question. And I think our engineers invest time on tackle these. Well as you know, Centinela rather than a single piece, is a district. So, the variability of the ore bodies it is something that we need to take care once we operate at Centinela. So, what we have done over the last couple of years, we increased the level of flexibility at the concentrator in order to manage different kinds of ores. I mean from the hardness point of view. So, what do we have now is a flexible layout that will allow us to manage the bottleneck around the concentrator? And that, for example, provides very good result finishing 2020. So, in last quarter we reach our record throughput above the same capacity, the same capacity or the record throughput that we achieved was 108. And I think the flexibility that we built around the concentrator layout will allow us to maintain that level of throughput, independent of the hardness of the ore that we are going to fit. So, answering the question, I expect that with the flexibility that we have built, we are going to manage different kinds of ores and going forward, we are going to maintain our throughput around 100,000 tons per day.

Andrew Lindsay: Okay, question from Dan Major at UBS. And you partially answered this, but I think a bit more detail maybe on Centinela. Can we get an update on the timing key items and the critical path for the approval of Centinela expansion? The CapEx estimate was lost estimated $2.7 billion. We're aware of increased cost pressure. Can you give any indication of potential upside to CapEx? Are you in active discussions on the sale of the water assets at Centinela?

Mauricio Ortiz: Yeah, as I mentioned previously, we are going forward - we are moving forward with the engineering of the Centinela second concentrator. And just let me tackle or just let me expand a bit more on Centinela's engineering. So, what do we have done from the pre-feasibility study to now basically, we are selecting the most efficient technologies of course, proven technologies in order to optimize our OpEx? So, for example, we are now fine tuning the selection of the different equipment and also having an important saving the decision the energy efficiency, as of course, we want to reduce and minimize our Scope 1 emission. As I said, the pre-feasibility CapEx is 2.7. We estimate - our estimate so far is that we are going to be in that range. But of course, following a significant amount of engineering we will have a much more robust product engineering. So, in term of the sales of the water asset. As you know Centinela operates under raw sea water and we own 1300 liters per second pumping system. We need to increase that capacity, if we develop their second concentrators. So, what we are targeting is to divest the existing water asset, plus the right to build the additional expansion to a third party in order to have a dedicated developer for the projects and that will allow us to think to concentrate all our efforts in Centinela and keep second concentrator on time on budget. And also get experience from a third-party as an operator of a water system operator and also from the financial point of view, optimize the capital intensity for the entire project. So, we are looking at that. We launched that process early this year. And we are moving forward with that and that decision will be along with the final investment decision for the second concentrator.

Andrew Lindsay: Okay. I got a couple of questions from Ian Rossouw and Jatinder Goel at Exane, about actually the primary leach. Can you give a bit of an update on what's happening with our primary leach test work? What recovery rates are being achieved? And how does that compare to our expectations required to go ahead with the Zaldivar primary so far at leach? And Jatinder's part of the question is, could that be applied in any way at the Centinela second concentrator zone? Well, obviously not the second concentrator but the development of Centinela in the future or possibly more widely than Centinela within the group's assets?

Mauricio Ortiz: Okay. Well in terms of results, we are we are extremely, extremely excited about what we are getting in terms of results. Recoveries are above previous research. So, we are extremely encouraged for the results that we have so far. What we are doing on 2020 we completed all the laboratory essay on different kinds of sulfide ores and in different scales. And in 2021, we are moving for a pilot industrial leach part of nearly 40,000 tonnes of ore. We already built that ore. We are building all the instrumentation around this leach part and we are going to start to leaching later this year. So, we are excited about the result that that will provide. And looking forward, of course, we are targeting to capture the benefit of this positive result. Antofagasta invest significant amount of time and resources on this research. And we have encouraging results with the secondary leaching or secondary chloride leaching and now moving forward, we expect the same positive results with the primary Sulfide Leach recovery. In term of where we can apply this, of course, Zaldivar is part of the potential user of this technology once we prove it and we confirm the laboratory results. We need to - we have a massive primary ore body on Zaldivar and also, the resources are at Centinela. But our priority in terms of Centinela going forward on answering the previous question is to develop and moving forward with the concentrator. So, we see the potential of this technology for the following waves of development in our portfolio.

Andrew Lindsay: Okay. We have different topic on emissions. This is from Danielle Chigumira at Bernstein. I recognize that Antu has a 2022 emissions reduction target, which we've actually just said we've achieved. How's the company thinking about longer term emissions reductions and will Antofagasta follow its peers and commit to a significant further reduction over the next decade or two to a net zero?

Mauricio Ortiz: Okay. Yeah. Well, let me share some general ideas and then I'm going to pass over to Rene to add some concepts. So, first of all, we reach our target two years in advance of what we've done originally. On 2018, we plan to reach a target of 300,000 tonnes of copper saving or copper - sorry, emission reduction by 2022, but we reach by 2020. So, that is of course, something that is very important as we reach that. Going forward, the challenges are in Scope 1. How we reduce the emissions? Because having all this Scope 2 on renewable energy, the challenges will be basically and how we can manage and reduce or minimize our emissions at the mine site and there we are working in order to promote mode new technologies for transport ore and also our personnel at the mine site. And also, on Scope 3 which is definitely something that we need to assess carefully before we commit the target. So, having said that, Rene happy to add something?

Rene Aguilar: Sure. Thank you, Mauricio. I think you were spot on. As you already said, we in 2017 agreed on a target for 300,000 tons of reduction. By 2022, we challenge ourselves and we are very happy to tell that we have achieved the target and exceeded that target this year in 2020. So, we ended up with a number of roughly 580,000 tons of reductions in our emissions, which is a very good figure that shows the commitment that Antofagasta has when it comes to climate change. So, what are we going to do now is that we're going to set a new target, you should be listening very, very soon from us. A new challenge, a target for emission for both emission reductions and carbon neutrality. So those news are going to be shared very soon with the market. So, we are working with the teams on the details now. And of course, we know that the new challenge will require more effort on both Scope 1 and Scope 3 since, of course, Scope 2 it's already addressed by the new countries that we had on renewables from for our mining division. So, we've started this year with Zaldivar, starting in July this year. So just because of this year, we have reduced further almost 70,000 tonnes of reduction in emissions just because of that contract. But we need to follow the GHG guidance to provide us credit on those reductions. So, we are not pursuing those reductions until we've got and we complete the whole process on the certification of those reduction and emissions as well. So, now we're going to be as I said before, working towards stressing ourselves in the Scope 1 and also Scope 3 and Scope 3, we've been reporting to CDP on the 15 categories. 8 of those 15 categories, we are doing a maturity assessment on which other areas we should consider. And also, as you know, we have started the work and we have started reporting on TCFD from this year with a special information on that. And also, we have started this year - last year, actually, 2020, the work with [ph] seismic. So, you should be reading from us on that subject as well.

Andrew Lindsay: Okay, and then we've got another on environmental orientated question about one of the most important impacts on Chile of climate change is on water availability and water scarcity. And we've talked a bit, obviously, about the expansion of the desalination plant at Los Pelambres. But can we talk a bit more broadly about the impact of climate change on the group, particularly as regards water availability?

Mauricio Ortiz: Yes, well, the same as the previous one. I want to share some ideas and we have the benefit to having here our Vice President of Sustainability to add more flavor to the answer. So, in terms of climate change, what we are doing, as Rene mentioned, we are adopting the TCFD framework that will allow us to assess all the risks around climate change, not only the transition one, but also the physical one. So, in terms of the physical one, we see, we already shared some ideas of what we are doing in order to mitigate our impact. And in terms of adapting our operations, we are now doing the assessment based on physical risk. Of course, water efficacy is one - is the top of the list. And as I commented before, we are moving forward in order to get full independence from continental sources. By 2025, we expect to operate more than 95% of our copper with sea water. And there is also a risk that need to be assessed. So, for example, the tides at the different Chilean ports are also part of the assessment. And we are, of course, continuously developing alternatives in that space and also rainfalls not only the drought, but also the excess of water in some areas are part of the assessment. So, looking forward, we are assessing all this risk in a very comprehensive way and following the TCFD recommendations and framework. Rene?

Rene Aguilar: Yeah. Thank you, Mauricio. Yes, you're right. When it comes to water in particular, I think the question was asking on water as well, I would say that we are as a group in a very good position, if you consider where we are as a mining company to other places in the country. In our case, two out of three of our operations that are based in the north, are running already on raw seawater. We've got Zaldívar that is running on continental water, and we are applying for a renewal in that permit from 2025 to 2029. And then a little bit of ramp down by 2030, 2031, when it comes to water, in particular. We are not asking for a huge amount of water, we are in a special basin, which has our recharge capacity of roughly 640 liters per second. We are just asking him for 212 liters per second for that particular one. We are in conversation, of course, with the authorities, we have presented the second addendum to our environmental report. We presented that in March this year at the beginning of this month. So, we are expecting from the authorities to get an indication of the new observation that they might have during April. So, we are, following all the due process to have that permit approval by the end of this year, that will be a good target for us. And at the same time, the environmental services running on indigenous consultation process, they are responsible for that. So, they're doing that with one community, which is called the Paynee [ph] community at the same time. So, both processes are running at this time. So, we are following due process on that particular word. And when it comes to Pelambres, as you know we are working in our desalination plant. The final aim of the desalination plant will be to have 100 liters per second for processing coming directly to the sea. When doing that we had conversations with a community with roundtables with our communities and people that were in the agricultural sector mainly. In that particular promise, they were very happy about the decision that was made by Pelambres. Pelambres is going to be the very first mining company in the central part of Chile going desalt, which is very good news. And then of course, we're going to be talking with the local authorities and the communities about the very use of the water rights that we already have in that particular basin. But looking to the future, we are switching into seawater as well for Pelambres and recirculation. And that will by 2025, will be approximately 95% of the water that we're using there. So, good news in that front anything as Mauricio was pointing out, we are well prepared on that because we've got a very strong climate change analysis before making these calls.

Andrew Lindsay: Okay, thank you Rene. Now, another question. And this is we're off the environmental questions. Now, question about how much of the plant production increase from a Brownfield expansion is simply to offset grade decline?

Mauricio Ortiz: Well, yeah. So, in terms of our Brownfield expansion that we are currently developing, we have Los Pelambres which is the largest one, and we are adding from there something in the space of 60,000 tonnes of copper per year. Following that, we have the Esperanza Sur open pit at Centinela that will be in a range of 10,000 to 15,000 tonnes of copper per year. And also, the Zaldívar project which is related with increase recoveries driven by our corporate cloud technology, the one that I comment before, and also that increase in something like 10 percentage points in the recovery of the processing plan, and that will increase roughly speaking 10,000 to 15,000 tonnes of copper. So, summing up all together. We're in the space of 80,000 to 90,000 tonnes of copper coming from the existing project and we will see that production up and running by 2022. Especially, Los Pelambres one is going to be in the second half. So, and going beyond that we have a significant portfolio options or significant growth options at our portfolio. And in Centinela, we already discussed and we already went through a detail on the largest project that we have which is the second concentrator and in Los Pelambres, we have also the mine life extension project that is going to be assessed or is currently assessed, and is going to be presented for investment decision on 2023. So, there's plenty of projects in our two-mining district. We are very confident of the rationale behind these Brownfield projects, and how this project provides returns to our shareholders.

Andrew Lindsay: Okay, I'll just try and pull together two questions on CapEx here. One is the observation that our sustaining CapEx ratio, this is dollar of sustaining CapEx per tonne of copper produced in 2021 is $380 versus $497 in 2020. And can you explain why that differences arisen? And then based on the fixed Forex rates that we're using for our guidance, what's upside risks do we see for the group's $1.6 billion estimate for this year? And if I can add to that there's a question about what is - how do we see CapEx in 2022 or not as growth, but total CapEx?

Mauricio Ortiz: Well, I'm going to split the answer in in several parts. So, let me let me tackle the first one, the one on sustaining CapEx. We see sustaining CapEx as our sustaining CapEx plus mine development CapEx in the range of $600 million to the $800 million per year. And that is as I said, according to our discipline that is our priority on how we preserve the ability to keep delivering value through the cycle. And yeah, actually, if you realize that the actual figure on 2021 is slightly lower. But we need view or we need to analyze the figure rather than a specific picture. This is a movie. So, we analyze this over a five-year period rolling time. So, if you put all the things together, you will realize that roughly speaking, the ratio is within the range of $450 per tonne plus minus $50. So, we believe that there is nothing to worry about. So, if that was your worry about, I don't know who could table the question. But there's nothing to worry about. This is part of how the number progressed during the cycle. And as I said, keep the figure within the range that we are targeting and maintaining the discipline or sustaining CapEx. In terms of - well, I'm going to tackle the 2021-2022 forecast, before we jump to the last part. In terms of 2022 forecasts. Of course, we provide only the one-year guidance. So, we are not providing detailed guidance for 2022. But I will say directionally, that sustaining CapEx, mine development plus sustaining CapEx will be in the range of $600 million to $800 million. And the development CapEx will be the balance - will be explained mainly to complete into the expansion project, the Los Pelambres Expansion project, and will be explained by the balance of the remaining CapEx to complete the project. So, that will explain directionally our 2022 figure. And in terms of upside risk for this year, yeah, you realize that the exchange rate that we announced along with our guidance was 780 and the current price is that we have a stronger peso than that. And there is variability there. But it's also important to highlight that most of the project expenditure is already committed. So, most of the contract were signed and are committed from commercial agreement previously signed. So, going forward, there is some risk but we see it's a confined risk around the $1.6 billion guidance that we provide early in the year.

Andrew Lindsay: Okay, we have really just building, you've sort of explained that the inflation impact may be on the growth CapEx is limited because a lot of the equipment and other materials already preordered. But with a more general question about inflation from Abhi Agarwal at Deutsche. Have we seen any signs of inflation creeping up at our operations? And how do we expect this to develop over the coming year?

Mauricio Ortiz: Yeah, well, in terms of inflation, what we have seen, of course, the scenario that we are living now is different to what we have seen on 2020. Copper price and commodity prices are up, for example, commodities that are relevant in our cost structure. Diesel went up and as we captured the savings when the diesel went down last year, we also are translating that in terms of diesel expenditure. In terms of our exchange rate, there is some pressures on the exchange rate. But if we put all the things together, I would like to put on the table our most powerful tool to counteract the cost pressures, which is the CCP. So, in 2021, we were very successful in capturing structural savings on the CCP and now on 2021, we are going to deploy full potential of those savings. So, savings not only driven by supply excellence and operational excellence, as we have seen, increasing the throughput at Antucoya and Centinela oxide plant, but also drives by optimization and the use of technology. So, for example, minimizing the amount of people on site that will allow us also to reduce the cost. So, on 2020, we have the challenge of tackle the, let's say, the COVID inflation. On 2021, we have the normal kind of inflation. But I'm very confident that we are going to tackle also that challenge and we are going to deliver within our guidance.

Andrew Lindsay: Okay, and a question from Luke Nelson, JP Morgan. Within the cash costs, is it possible to break out the year-on-year effect, in sense, of the time of moving to 100% renewable power supply?

Mauricio Ortiz: Okay, yeah, well, I'm going to use the example of Centinela. On Centinela last year, we had a saving associated to the energy tariff reduction, mainly driven by our transit from coal fire power station to renewable power of, roughly speaking, $45 million. If we expand that example to the rest of the group, we are going to have an impact of roughly speaking, $0.03 to $0.04 per pound in our C1 costs, once we are fully on renewables.

Andrew Lindsay: Sorry - we would now go to a different type of question from Jatinder of Exane. What are you hearing on taxes and royalties as part of the discussions which started on the constitutional change in Chile?

Mauricio Ortiz: Okay, yeah. Well, in terms of taxation, of course, you may be aware that there's some ideas presented by mainly from coming from the Congress. And this is important because in Chile, the taxation and all the taxation discussion must be led by the executive branch. That means the President. So, so far, the executive power, the President, they are not keen to introduce new changes. Remember that only in just February last year, we have the latest update to our taxation regime that introduced interesting benefits for our activity and the current government is not interested in making new changes in the near term. So, having said that, if any discussion is going to happen, the discussion in Chile is not only around taxation is also about how the mining industry being so important in the country contribute to the Chile economic development. Also, and going out to the COVID impact - negative impacts in our economy the discussion must be around not only how we increase taxation, but also how we promote and maintain the competitiveness of the country as a mining country. So, I think it could be a discussion around the taxation is not going to be in the short term. The most probable thing that this conversation will follow, once we decide is we are going to change the constitution, the existing constitution on 2022, according to the referendum that I mentioned previously, and in any case, being a mining country, the lawmakers must keep in mind that not only the taxation but also how we contribute or stress that Chile competitiveness in the mining space. And maybe I lost - I'm losing the second part of the question, Andrew, can you please remind me? Because it was about taxation on the second part?

Andrew Lindsay: Okay. Is just taxation royalties, I was on mute. Okay, I think we're actually down to our last few minutes. So, we just finished with one last question, actually, about twin metals. Again, from Jatinder. Have you seen much change in the way the authorities are looking at twin metals under the new government? And that probably can be expanded what is going on in twin metals at the moment?

Mauricio Ortiz: Yeah, I will start with that. Well, what do we have in twin metals, we present the MPO, the mine plan and operation permit, which is the backbone of all the permit, permitting in the U.S. is complex, because we need to tackle not only at the state level, but also at the federal level? Going forward, we are positive about the permitting. And also, we are positive about the projects, about the specific project. The world needs copper, and the thing that we need to put on the table that operators like Antofagasta with our ESG credentials are only a handful. So, we are the most modern suitable operator for that ore body. And we are very keen to pursue the necessary permitting on Minnesota and also at the federal level. That is, I will comment from the general point of view. I will now open the mic to Rene, if he wants to add something on the permitting.

Rene Aguilar: Yeah certainly. You're right. We're going through the permits in both federal and state levels in relation to twin metals. And I think that the question was also asking whether we have seen any different flavor coming from President Biden administration to mine or to the freight. I would say yes, we've seen good signs coming from the government of President Biden. He issued two executive orders some weeks ago. One of those orders was in relation to what is called the America supply chain. And the government is of course, working towards having the right trend when it comes to supplying America with any kind of supplies and particularly with the ones in relation to metals and critical mineral resources. So mining was again, put on at the forefront of the discussion. We have been listening conversation on how to enhance the mining and processing capacity in the U.S. as part of this executive order that they're going to be running this analysis for 100 days. And then they're going to come with some recommendations. So, we as a mining company are of course, very aware about that process happening, and we're looking forward to the conclusions of that analysis.

Andrew Lindsay: Okay. So, I think we've just completed in just over an hour. So, if I can just thank you very much everybody for your attendance. And I apologize to people who haven't had their questions answered or not answered as fully as they would like. And if you do have any more questions, please email myself or Andres Vergara and we can answer you by email. With that, we'll say Goodbye.

Mauricio Ortiz: Bye-bye. Thank you.