CODELCO: CORPORACIÓN NACIONAL DEL COBRE DE

CHILE

By: Maddy Betlach, Grace Owens, Alex Cantarera, Lisa Volpatti, Abby Stein

Chilean Culture

Music Folklore to modern to classical

Cuisine Assortment of seafood, beef, fruits, and

vegetables Sports

Soccer Tennis

Industry Analysis: Overview

Governmentally-owned copper company Formalized in 1976 President – Minister of Mining

Board of Directors (7 members) – elected by President

Headquartered in Santiago Five primary divisions: Codelco Norte,

Salvador, Andina, Ventanas, and El Teniente

Largest copper producing company in the world

Ventanas Division - smelter

Transferred from ENAMI in May 2005 Products: cathode copper; gold, silver,

and selenium from anode slime left over Industry: Copper, lead, and zinc refining Major competitors: Freeport-McMoRan

Copper & Gold Inc., Rio Tinto Plc, Grupo Mexico S.A., BHP Billiton, Xstrata Plc

Ventanas, Cont.

Challenges: Revenue growth volatile from year to year (due to supply and demand uncertainty), dependence on natural resource

Opportunities: High barriers to entry – start-up costs, many established companies dominate market, dependence on natural resource

Interest to Engineering – actual copper smelting process, copper use in other industries (construction, electrical, etc.)

Interest to Business – Effects of nationalization of copper/being governmentally owned; truly global competition

Social and Political Impact

Hires over 18,000 people Government owned

Nationalized under Salvador Allende Interference during a crisis 10% tax on foreign currency sales Receives all excess spending

People’s Reform Benefits for minimum wage Strong government control

remained

Environmental Impact

Pollution Chuquicamata

arsenic River Loa Initiatives to reduce

arsenic emissions by 97%

Ventanas Division in 2007 375,000 metric tons of

copper 141,000 kilograms of

silver 3500 kilograms of gold 329,000 tons of

sulfuric acid Depletion

Copper Smelting

Extract copper ore from Earth El Teniente Chuquicamata

• Transportation Leach heaps Crushing mills

Copper Smelting

• Oxide minerals Leaching Electrowinning

• Sulfide minerals Crushing Froth flotation Smelting Electrorefining

Products Shipped to Customers

Shipped 1.94 million tons of copper in 2007Products:• refined copper cathodes (99.99% pure)• copper concentrates• blister or anode copper• molybdenum• anodic slime• sulphuric acid

How are products shipped?• from major ports:

- Chilean port of San Antonio

Environmental Factors

Sustainable Development Policy of Codelco, 2003 Spent $733 million on environmental projects:

Reduction of smelter emissions Improve efficiency of water and energy use Management of solid and liquid wastes

Certified under the International Standard ISO-14001 in all its Divisions in 2003

Codelco Good neighbor program A green cover for Chañaral Teniente Voluntary Environmental Agreement

“The mission of Codelco is to develop in a responsible and agile way, all of its capacity for the mining and related businesses, in order to maximize its economic value and its contribution to the

Chilean State in the long-term.”

Safety Concerns

Smelting Poisonous fumes and dust Excessive heat and noise Electrical hazards during electrolytic processes

Open Pit Mining Blasting Fear of slopes caving in

Skills and Engineering Jobs

Skills vary from hard manual labor to using engineering techniques to improve output.

Most employees have no secondary education and control certain aspects of the smelter

Engineers are predominantly used checking the reliability of the equipment and also the copper product itself.

Questions

How long does the actual process of turning the copper ore into copper sheets take?

Why is Codelco involved in the production of sulfuric acid as well as copper?

Codelco is striving produce 50% of the Chilean copper exports, how will this be reached?

What is the rate of injury in the plant?

Questions

What effects do you think being governmentally owned has had on the company overall?

How do you handle competing in a truly global market?

Has the volcano in Iceland affected shipping?

How much does public opinion affect your operations?