It is now 1:00 and time to start the webinar. Welcome to the Antofagasta live Q&A webinar and conference call. I'd now like to pass across to Andrew Lindsay of Antofagasta. Andrew, please go ahead.
Good morning or good afternoon, depending where you are. Welcome to our half year question and answer call. We have with us today, Iván Arriagada, our Chief Executive, Mauricio Ortiz, our CFO, and René Aguilar, our Vice President of Corporate Affairs and Sustainability. We arranged a Q&A facility here. We've got video and some people are telephoned in. If you're joined by video, if you want to ask a question, raise your hand, then you'll be asked to say your question when you get to the top of the queue. If you've joined by telephone, you should dial star one. That will put you in the queue for the telephone. We're encouraging everybody who's joined by video, if you could please use your video. That just helps make this more interactive. Okay.
I'll hand over to Iván, who'll just do a short introduction before the Q&A starts.
Thank you, Andrew. Hello to everyone and a warm welcome. Thank you for joining us as we announce our mid-year results for this year, 2021. Before we speak about our results, I must tell you that sadly, after three years without an accident, we had a fatality in July at Pelambres. Our condolences go to the family and friends of Fernando Silva, who worked for Pelambres contractor company, Besalco. I would like now to talk about our results and the key highlights of the mid-year. I think we are reporting a strong set of financial results with record EBITDA of $2.4 billion and an EBITDA margin, which is close to 66%. This has allowed us to continue to strengthen our balance sheet. We have a strong financial position, and we have a net cash position of just over $700 million at the close of mid-year.
Turning to our production, as we released in our quarter two production report, group copper production for the first six months of the year was 361,500 tonnes. This was in line with our expectations, programs, and guidance. In terms of cost performance, we've had a strong cost performance during the first part of the year and achieved a unit cost in the net cash cost of $1.14 per pound, which was ahead of guidance. We continue to perform very well on the cost side, and this, we think, will carry on for the balance of the year. We remain committed to delivering shareholder returns and therefore have increased our interim dividend to $0.236 per share, equivalent to a pay ratio of 35%, which is fully in line with our dividend policy.
This represents an increase of around 280% compared on last year's interim as a result of increase in the net earnings base. We have continued to progress our projects, and most importantly, the project at Pelambres, which involves the expansion of the plant, but most critical, the construction of a desalination plant and a water system for Pelambres, which is now 52% complete, and we expect to be able to finish in the second half of 2022. We have, in conjunction with the release of our results, introduced a revision to production guidance based on potential water availability restrictions at Pelambres. As you will know, so far this year, precipitation at Los Pelambres has been significantly less than in 2019. We do quote this year because 2019 was, up until now, one of the driest years in the 12-year drought period that we are experiencing.
During the first part of this year, we've seen unprecedentedly high dry conditions with almost no rainfall. As a result of this, if there is only minimal precipitation in the balance of the year, we do expect to have an impact on production at Pelambres, therefore our production guidance has been adjusted to a range between 710,000 tonnes and 740,000 tonnes as the winter rainy season is now coming to an end. This is important. The winter season comes to an end in mid-September, which is when we expect rain to be prevalent, that is now coming to a close. However, we have maintained, despite this change, our cost guidance at $1.25 per pound. Looking into 2022, we've also are running different scenarios ahead of the water system being available and finished as part of the INCO project.
Therefore, we've estimated that if there is no rainfall continuing until that date, that around 50,000 tonnes of production at Pelambres could potentially be at risk in that worst-case scenario. We've also noted that in our guidance commentary. Finally, I would like to mention that we continue to make significant progress on our sustainability strategy. We announced earlier this year a revised emission reduction target by a further 30% to be accomplished by 2025, as we had achieved our earlier target earlier than anticipated. This comes along also a target of carbon neutrality by 2050, which is the same or in line with what the Chilean government has set for the country. Therefore, we are working with the government in the different technology and policy elements of being able to achieve that target, developing a pathway for that purpose.
If technology and regulations allow, we will bring that forward. We've also, and I'm glad to share, recently obtained the international Copper Mark certification or validation for Centinela, and we are progressing the same for all our other sites, which is good news, and we expect to get it very closely for shortly for Zaldívar and then the other companies. In summary, we continue to make progress on our sustainability strategy. By the end of the year, we should be on 100% renewable power, and our desalination plant will be completed. That's in the second half of 2022, and that will be one step closer to having 90% of the group water requirements being sea or recycled water. We ended the half year in a position of financial strength. We had a record EBITDA of $2.4 billion, up by 133%, and a net cash position of $700 million.
We have also made good progress in advancing our growth projects. I think that's the summary and highlights I wanted to share with you ahead of beginning the Q&A, as we release our results today. Thank you.
Thank you for that summary. We're now going to move on to the Q&A section of the webinar and conference call. If I could just remind people that questions will be from the webinar will be video, and we'd ask people to raise your hand if you'd like to ask a question. Then from invited, you'll be promoted to panelists. It may take a few seconds, then please switch on your video and unmute yourself to ask a question. Now we have our first question from Jason Fairclough from Bank of America. Jason, you're being promoted to panelists. Please unmute yourself and turn on your video.
Okay, I think I'm in. Good morning, guys. [Non-English content]. Okay. Look, just to follow up on the water issue, how acute, how serious is it right now in the central region? Are you really worried, or are you just being conservative? I guess as we look out to next year, is it possible for your desalination plant to fully supply the needs of Los Pelambres once it's up and running? Last question on water, are we going to see any further evolution in the government's approach to water use permits?
Okay. Thank you, Jason. Let me address the how significant is the water issue. I think we have been observing the evolution of certainly rainfall and weather conditions this year, and they are quite significantly dry. I would say we've had quite unseasonably high temperatures as well. The situation, I think is quite significant from the point of view of this being a very dry year compared even to 2019. Now, having said that, we're actually in the course of this week, going through some rain for the first time as we sort of finish the winter. There is a slight improvement in the course of this week. How significant it might be, it still remains somewhat unclear. I think the general trend, undoubtedly, is that we are traveling into much more of a drier year, and therefore, this is an issue.
In our estimates, I think we have been prudent in the sense of looking at scenarios in which we have little, minimal, or very small rainfall. They're predicated on that basis, and therefore are catering for that extreme case, both this year and next. Once we have the plant in place and operating, and we expect that to be in the second half of next year, as I've mentioned. We are making good progress in the construction, which is more than 50% complete. We will expect basically to be able to have addressed the water requirements at Zaldívar, which make the shortfall, considering that the water balance is a blend of other sources as well. By then, we expect to be in safe territory from the point of view of water supply.
In terms of government policy, I think what we've seen is that there's been recently a bill to amend the water rights situation in Chile. I think that's still in process, so it's still being developed. In the case of desal water, there is no impact. The desal water that we are providing or constructing for the purposes of supplying Pelambres is in fact a very good climate change response or adaptation to the condition, but also from a legal point of view, it does remove any risk of these changes in law having an impact. From that point of view, we feel we're well protected from any changes in that aspect.
[Non-English content]
Thanks, Jason. Jason, thank you for your question, sir. We're going to promote our next question from Daniel Major. Daniel, promoting you to panelists. Please turn on your camera. Please turn on your camera and unmute yourself. Daniel, if you could please turn on your camera and unmute yourself. Thank you.
Hi. How are you doing? Thanks for the questions. I guess a question just to follow on from Jason's around the risks to 2022 in terms of water. If I look at the revised guidance for Los Pelambres, about 320-330 for this year, when you talk about the 50,000 tonne risk, is that 50,000 tonne lower than this year? Or would you have been expecting some incremental production uplift in 2022 on the basis of either grade or completion of the expansion? Is that a risk to the downside or risk to what you previously had anticipated? That's the first question.
Yeah. In the case of Pelambres, remember that we were not expecting to get an upside on the INCO project in 2022 because it's expected to be finalized towards the end. Therefore, we were not expecting from that point of view a specific improvement because of extra capacity. Now, what will drive there for production for Pelambres next year is essentially grade with existing capacity. Now with the limitation of water, if that were to eventuate in the worst-case scenario, that would be the outcome of production at Pelambres. We're not expecting, as I said, to have extra capacity available from INCO until very late in 2022, and therefore would not be a factor next year. We were, from that point of view, not expecting extra capacity, just a great performance.
What we're thinking for next year in grade is the grade for Pelambres will be similar to what we've seen this year, slightly lower maybe, but in that sort of range.
Got it. In the worst-case scenario, it's 50,000 less year-on-year. Okay. The second question around projects, I noticed the planned board approval for the Centinela expansion is now 2022, not first half of 2022. Can you give us a bit more detail on that? Is that associated with or dependent on the outcome of the review of taxation? Is any delays to the approval of that project associated with perhaps waiting for some very high input costs we're seeing at the moment to moderate and further the economics of the project? Is there any early steer you can give on where the original $2.7 billion CapEx number might be shaping up at?
Yeah. On the DMC, I think we've continued just to be clear to work on the sort of detail engineering. We've even awarded on a limited or conditional basis some of the key contracts. We've got a key contractor working for us on this. We are working on the readiness to be able to undertake the project at the time that we make the decision or choice to do so. That's on the preparatory phase. Work has not stopped and we continue to work on the design, which de-risks the execution. Now, I think the key thing is we want to get from a project point of view to a level in which we have at least 65% of detailed engineering complete, and that will be achieved early in half two.
On the other hand, we've said we want to sequence our construction efforts in a way that we have most of Pelambres built when we undertake DMC, and that will happen now in the course of 2022. The sequencing also has, from that point of view, moved things slightly back. Obviously there is a lot happening in terms of royalty discussion and the constitutional assembly work. I think it's prudent also from a point of view of understanding the landscape for a long tenure project like this one in terms of both aspects, taxation and any potential changes to mining regulation.
Because that work is due to be completed during the first half of 2022, then by the time this is taken for a decision, all of those aspects will essentially be dealt with, and therefore we will have the full set of information to allow us to make a decision on a more informed basis on those aspects. All of that comes into play. In terms of capital estimate, I think we have worked on updating our capital estimate, and the number is still similar to what you quoted. Even though pieces may have changed, we are essentially in a number which is not too different from the number that you mentioned.
On top of that, as we've also mentioned, we have been making progress and work on looking at a way of eventually divesting of the seawater system as a way of reducing the front-end capital. We are now in the process of actually bidding for a potential interested party to take that contract or that possibility. We will assess whether it's attractive once we get the bids, but that will, on the back of a similar figure that you mentioned, reduce also the front-end capital spend if we manage to divest of the water system. That structural approach to the project, its capital estimates have not significantly changed to the numbers that we've talked in the past.
We believe, early probably in the second half of next year, it's a good time to look at the project for a decision because a lot of this information that I've referred to will be clearer for a choice of investment at that time.
Great. Thanks, Iván. Very final one. Based on that information, I guess it's fair to assume you won't spend really any CapEx associated with the Centinela expansion next year if you're only planning to move it to approval back half of the year. Is that fair?
No, I think there will be some, but not significant, but there will be some. We are spending some capital in the way of advancing the detailed engineering already. We're not pausing in the sense that the work in terms of being able to get ready for a good execution of the project is still progressing. We are spending some capital, but obviously, that will increase significantly only after the approval. Therefore, we would expect that a much heavier year spend would be 2023 if the project gets approved. Some capital expenditure next year, but most significantly after that if the project is approved.
Excellent. Very clear. Thank you.
Daniel, thank you for your question. Our next question is going to be coming from Ioannis Masvoulas from Morgan Stanley. Just promoting you to panelist at the moment. If you could please unmute yourself and turn on your camera. Many thanks.
Hello. Thanks for the presentation and for taking my questions. A couple more questions from me on the water situation. The first on the production risks of up to 50,000 tonnes that you flagged for 2022. You don't seem to be factoring in any mitigation strategies such as high-grading the mine for a few quarters or using any third-party water source. Could you verify if that's the case? And is that something that could possibly mitigate the risk if you were to consider that?
Okay. Hi, Ioannis. I think the assumption in quoting that number is that there is no rainfall therefore that it is a sort of worst-case scenario. In terms of mitigation, what we are doing and implementing is improving and stretching as much as is technically possible the efficiency with which we recycle water. I think because we've worked on that over the last couple of years, I think the scope for that is more limited because we are probably recycling as much water as you can and are at the higher topper end of performance in that aspect compared to other mining companies, both in Chile and globally. In terms of adjusting the mine plan, yes, that is not factored in.
There will be probably some, were that scenario to come into play, there would be some changes in the mine plan which could probably provide some change in grade. However, we like to think of the mine development as we develop our mines in the long term, and therefore we would not compromise in any way the way that we develop the mine, which is really planned on a long-term basis. I think that it's extremely important to stress that. We see this as a short-term situation. We've been working on the permanent solution to water since 2016 when we first filed the permit for the seawater system. We want to take a long-term view in how we address this shortage if we have an impact. Some changes in the margin, but I would not expect that we would go and make significant changes.
Certainly, we would not high-grade the mine in a way that it would involve any sort of long-term compromise. That's not the way that we would do it. In terms of third-party water, that's limited. We work within a community, and obviously, this is something which is impacting us and the community, and therefore we are jointly working in addressing this challenge. On the one hand, we're ensuring that there is water available for human consumption by means of ensuring that every small town and village has got the water requirements filled, and that's happening. From an agricultural point of view, we've been working also with the people in ensuring that the water is used efficiently, that the wastewater is minimal, that the way that the water is used for agriculture is optimized.
A lot of this is about engaging with the community in that constructive way and facing this jointly. We're not planning on buying water from other sources. One, because there's limited availability, and certainly, we would not want to do that in a way that it would compromise the ability of others to perform their business like their crops and agriculture. That's not something that we're contemplating at a scale which is material or would make a difference. Yeah.
That's very clear. Maybe a question related to the desalination plant. Is there any visibility on the exact timing? You mentioned second half of next year, but I guess if it's middle of next year, that gives you far greater visibility on the production risks. If it's towards the end of the year, that 50,000 tonnes could be even worse. Maybe how do you think about the scenarios that you've run around the exact timing of commissioning and I guess the ramp-up of the desalination plant?
Yeah. So far, when we say half two, say the midpoint of that is this quarter three, that we would expect that in quarter three we would be doing the commissioning of the plant. We expect that the ramp-up would be fairly quickly. This is now known technology and we are expecting that and planning so that we can ramp up the plan pretty quickly. Now, that will be the base situation in which we are performing our programs and plans. If there is opportunity to bring some of that forward, we will look at that and are looking at those possibilities. So far at this stage, I would say it's safe to say that it's quarter three for commissioning.
That's great. Maybe a very last question from me on Zaldívar. You're guiding to a 10 percentage point improvement in grade in SX-EW in recoveries that would lead to a 10,000 tonne-15,000 tonne output increase. At the same time, you're running at a process grade significantly above reserve grade. If we take everything into account, how should we expect the finished cathode output to develop for the mine over the next two to three years? Will it be up or will it be down relative to the past two or three years?
You mean the production?
Relative production, yes.
Yeah. No, we will provide more detailed guidance on each of our mines in October. I think that in Zaldívar, what we've experienced is an ore body which has got into phases where we have low solubility, and as you know, leaching is the process that we use there. A key is being able to transform the process such that we're able to leach essentially secondary sulfides. The way of achieving that is through the project which we've chloride leach. That will therefore improve recoveries in the way that we've described before. I think in terms of going forward, therefore, we should expect to see that build into the production and therefore some, a net increase. This will, however, change year on year because, as we know, rates may change and therefore, it may change year on year.
We will provide detailed guidance in October, but those are the factors at play. I think we're positive about Zaldívar from the point of view of being able to achieve a step change in recoveries once we have the project implemented. The project has progressed well. I mean, we are close to 80% advanced in construction, and therefore we will be able to have it ready early next year. Then, we'll see the benefits of the change to chloride, which I think will be important.
Great. Thank you very much.
As a reminder, if you'd like to ask a question, please raise your hand. Our next question is from Jatinder Goel from BNP Paribas. We just promoted you to panelist. If you'd please unmute yourself and also turn on your camera. Many thanks.
Yes. Hi. Thanks, operator, and good morning, Iván and Mauricio. A couple of questions. First one on Pelambres concentrate pipeline. It's indicated that it's reaching end of its life. Are you able to indicate total CapEx required to replace that pipeline? What's the timeline to replace it? Because it looks like it's all bundled into the EIA of second desalination plant of Los Pelambres. Does everything, including those Mauro enclosures that you need to build, need to happen by 2025? What's the total CapEx we need for this pipeline replacement and those Mauro enclosures? That's the first question, and I'll ask the second one afterwards.
Yeah. Okay. You're right in the sense that it's a key piece of infrastructure, and we expect to be able essentially to build it after we get the permit, which is in process as you referred to. That it'll be ready by 2025. Between 2023 and 2025, we'll be able to build a replacement pipeline. It's not dependent on the other components. Each of them, the expansion of the desal plant and the other works require at the Mauro are somewhat independent. The permit is sort of, it's one. That's why we've called this the project to adapt operationally the operation to basically be able to be ready for the next phase of production.
The capital cost, I'm going to give you a sort of a range because I think we're working still on the final estimates, but it's probably around $350 million for the full pipeline. That's as I say, a preliminary number. I think we're still working on that final figure. Mauricio may be able to comment on that. It's an important project, and we think certainly for the life of Pelambres, it's a key piece of infrastructure, which we're going to build. We're going to also doing it in a layout which is friendlier because it's removed from sectors which are now close to communities, and therefore it will provide more operational independence as well.
Understood. That's very clear. Thanks, Iván. Second question on water infrastructure tender. You're aiming to conclude it by 2021, while the new concentrator approval doesn't come until second half of next year. Will the tender be contingent on the company actually going ahead with the project, or are you happy to outsource the current infrastructure and monetize even if next concentrator were not to be built? Or does it imply that the decision is implicitly made that the company will go ahead with this one? Related to that, if the water infrastructure, both current and future, stays within company's balance sheet, has Centinela got enough debt capacity to fund the project?
Yeah. The bidding, as you say, will probably come to a close this year, and then the award will probably happen in the course of the first part of next year. It's conditional on the project. We've got to see the offers that we have requested, both with and without the project, and therefore, we will look at them in that way. However, I am of the view that we would have a preference to look at this decision as a joint decision associated to the project. What's more attractive, probably for an incumbent, from an incoming party, is to be able to not only take the water system, but actually do an expansion in the water system, which would be associated to the project, because there is probably the prospect of some extra return there.
On the other hand, for us, the construction as such, we can reassign that risk in a different way where we do build it ourselves. I think it's progressing, but I like to think that in the end, these are decisions that go jointly, and therefore, that we will make that timing match as we move forward. In terms of debt capacity, I think one of the interesting features is that over the last three years, we've seen a significant improvement in the performance of Centinela. If you look at every indicator across Centinela, the numbers are performing well. We used to have this issue of the thickening of tailings, which is now very stable. The plant is actually achieving throughput rates which we have not seen before, over 105,000 tonne a day, as we've reported. The financial numbers come along the same line.
You look at net earnings and profit, after tax for Centinela, very significant for the first part of this year. We have an asset which is now performing very well. We think it does provide therefore a good platform to be able to eventually undertake an expansion if the conditions are right. From a debt capacity point of view, therefore, we think that Centinela is able to basically undertake the requirements for the project to move ahead, especially if we're thinking of carving out the capital required for the water, because we will deal with it in a different fashion.
I could just follow briefly on that water infrastructure outsourcing then. Do you think you can achieve a NPV positive outcome or will it more be NPV neutral because you'll add up unit cost, but you'll get some upfront cash?
We think that we would certainly not do this if it's not NPV positive, albeit it may be marginally positive. We are looking at the project on a basis of we construct everything. If we have a better case from an economic return point of view, a value point of view, which we can achieve by means of having someone else take over the water system, we would do it. If not, we will build it ourselves. It's really a condition that we get value out of this transaction and not only risk shedding or risk mitigation.
Understood. Very clear, Iván. Thank you so much, and all the best.
Thank you.
Thank you for your question. We have our next question from Abhi Agarwal. [Non-English content], Abhi, if you could just unmute yourself and turn on your camera. Mate, thanks.
Good afternoon, Iván and Mauricio. Thanks a lot for taking my questions. I have a couple of questions related to the Chilean situation. The first one is, what's the latest on the royalty discussion? Are you aware of what the recent proposal in the Senate is, and what the timeline around is? Is there a chance that the new bill could be passed ahead of the presidential elections in November? That's my first question.
Okay. Thanks, Abhi. As you know, there was the original bill which was passed in the lower chamber of Congress, went to the Senate, which is where it now sits, it's being worked basically through the Senate. There's a special committee there, a mining committee, which is therefore looking at this proposal. I think that's been positive in the sense that there's been much more of a balanced discussion around the royalty and the ability to have a balance between having the industry contribute somewhat more at the same time being able to continue to promote the industry and its investment as a way of contributing to the country development and progress. A much more considered discussion is taking place now in the Senate, I think that's where it sits today. They've been basically engaging with different parties.
We as companies have been able also to be able to go to the Senate and express our views with respect to taxation and the industry. I think one of the key points is stressing that the value that mining has for the country is much wider than just the payment of taxes. We have a multiplier effect in what we do in terms of employment, technology, vendor development, community engagement, that from a value point of view and a social development point of view, is much broader. All of that is now being considered. What do I expect on timing? I think there will be an attempt to try to close this before the next president takes office in March next year.
I think there will be an attempt to try to close this before year-end, amongst other things, because there's also legislative changes, and therefore it's likely that parliament will change in the course of the balance of the year. The work is being done, I think, as has been stated by some of the members of Congress, with the aim of trying to reach some form of change before the end of the year. I think what's good is that there's much more of a balanced view that the issue of Chile not losing competitiveness in terms of its taxation charge against other jurisdictions is on the table, and therefore, the scope for tax increases is being looked at to be able to contribute more to public finances, but at the same time, in a way that the industry continues to develop, and it does not become uncompetitive.
I also want to add that most mining companies have invariability agreements which span for a few years, and therefore, at least most of them have until 2023. Therefore, these changes will not come into effect until those invariability agreements expire. Unless the bill is built in such a way that it includes some incentive for that invariability to be waived. That's an added element of protection in the short term. I expect that this will probably try to run to completion before the year ends. That's what I expect.
Very clear. Thank you. My second question is, the recent Glacier Protection Bill being considered by the government. Are any of your operations at risk? If yes, how do you plan to mitigate that risk if that bill is passed? Thank you.
Yeah. On the glaciers, there's been a wide range of discussion around the legislation itself. I think now, the bill that has been moving forward is again, a more balanced view on the glacier situation. We don't have operations which impact or surround white glaciers, and therefore, from that point of view, there's no specific limitation that this bill would impose. In terms of what's called rocky glaciers, those which might be submerged, there may be a few, and those run across the Andes, and that would simply, I think, impose some limitations in terms of how we sort of develop the infrastructure around the mine. We don't expect any significant impact in the way that the bill is currently crafted. Therefore, not something which is center stage for us. Maybe René, you want to complement there in case.
Sure.
There's something to add.
Sure. Thank you, Iván. Yes. As Iván was saying, the bill was already discussed at the mining committee at the Senate. They were doing that for a period of time, for some months. They have agreed in that particular committee, that there is, of course, an agreement on not affecting directly the white glaciers as Iván discussed. They have considered what is called the permafrost, which is the area that surrounds the glacier. If any project, not only mining, but any project, would need to do something in the surrounding area of a glacier, they will need to go through an environmental impact assessment. That is the way the senators have decided on this particular bill. Now, it's on the environmental committee, where they are again discussing the same topics they already agreed on the mining committee.
I would say that in Chile, we are expecting for that bill to pass, as discussed in the mining committee and now discussing in the environmental committee. It shouldn't have an effect on our company as Iván described just now.
Thank you, René.
Thank you.
Thank you. We've got no further questions from the webinar at the moment. We're going to move on to questions from the conference call. As a reminder, if you'd like to ask a question on the conference call, please press star one. Aisling, if I could pass across to you for the questions from the conference call.
Thank you. We'll now take a question from Luke Nelson of JPMorgan. Please go ahead.
Hi. Thanks for taking my questions. A couple from me. Firstly, just on projects and CapEx, you mentioned opportunities to accelerate projects. Can you maybe just talk through specifically where those opportunities are you see? What the sort of best case upside scenarios for some of Esperanza and Pelambres expansion could be with the best case? Also just what the potential delta in CapEx could be for this year relative to the $1.6 billion that's been guided. That's my first question.
Thank you, Luke. I think I'll move to and pass to Mauricio to address this point. Mauricio?
Thank you, Iván. Hi, Luke. Thank you for the question. As you know, our half year expenditure was in the space of $780 million, mostly explained by our development projects, at Centinela, the Esperanza Sur open pit, and Los Pelambres, of course, the expansion project that we were talking. Within this 50%, we have some opportunities to accelerate the project. Basically, Esperanza Sur development open pit that basically increase our copper production at Centinela in the space of 50 tonnes-10,000 tonnes per year. We have an option to accelerate that and bring forward some mine movement in order to increase throughput from that open pit to the concentrator. In Los Pelambres, we are also evaluating how to bring forward the mainly the desal plant, as Iván described previously.
Overall, these alternatives that we are evaluating represent something like one month's expenditure on an annual basis using the guidance of a base. That is there for 2021 base.
Thank you. Thank you, Mauricio. Yeah. I would just add, look, as Mauricio mentioned, we think of opportunities on our high-return projects, from the point of view of both what we can achieve in terms of, in the case of Esperanza, Sur, ore, and in the case of desal plant, water. Also I would say that our ability to do this depends obviously partly on the sanitary conditions. What we've seen is that we have high vaccination rates, and therefore we have been able to progressively move to the full manpower establishment for our projects. There is more absenteeism than we would normally see out of the sanitary condition, and also the fact that there is government support for those that don't go to work. Therefore, our ability to do this depends on basically being able to address these issues.
As I say, as the vaccination rate has increased, we see more opportunities therefore to accomplish this. If there are, we will pursue them and go after them because we think these are high-return opportunities. Within limitations, obviously, as Mauricio said and sort of estimated.
That's very clear. Thanks. Maybe if we think about into next year, the sort of building blocks. Obviously, growth will be what it will be, but more just in terms of mine sustaining and mine development. I don't want to front-run to specific guidance, which you clearly will give, but can you maybe give some direction of travel in terms of those building blocks heading into next year? Obviously, mine sustaining specifically this year is quite below typical levels in prior years, so I'd be interested to get your views on CapEx as we move into next year.
Yeah. Mauricio, you want to take this again?
Thank you. As you mentioned, we traditionally guide in October each year. Directionally what I can share with you that actually the sustaining and mine development, we used to use a range between $300 and $400 each, mine development and sustaining CapEx. Next year, the range, total range, which is $600-$800, will be in the high end of that range, closer to the high end of that. That in terms of the sustaining and mine development. As you highlight, this year, we are running slightly lower than, or in the lower end of that range. Some catch-up we can expect for next year. In the development where we are finishing the expansion of Los Pelambres and the overall number for the full year transfer to do will be below this year figure.
Okay, great. One final question, if I may. Maybe for René, just on the sustainability targets of 30% reduction by 2025. Can you maybe just give a sense of how that's broken out between sort of, I suppose, easy wins, inverted commas, by switching over to renewable PPAs versus sort of actively changing the way you operate, which are likely to be harder to extract? Also just to what extent there's any explicit cost in terms of CapEx or OpEx that we should be factoring in to get to that 2025 target?
Sure.
René, you want to take this one?
Yeah. Sure, Iván. Yes, look, you're right. As you rightly pointed out, we have made a lot of improvements since we've, for the first time, announced our reduction target of 300,000 tonnes between 2018- 2022, which actually we've achieved early in 2020 by 580,000 tonnes. We have committed ourselves to improve that by 30% by 2025 and looking for carbon neutrality by 2050 or early if technology is available. The first bit of our effort was put on Scope 2 emissions, basically. That is why we have agreed on changing the grid, basically. We are moving into renewable sources of energy. Therefore you got after 2022 a reduction as well on Scope 2 emissions. The next step that we are working on right now is basically in Scope 1.
We are working on ways to reduce our emissions, particularly at the mine site, particularly at the haul trucks. For that, we are working on efficiency, but also we are developing a very robust, I would say, electro-mobility strategy that looks into getting more electrical power, if you want, into our fleet. In the future, we are also considering the green hydrogen as a source of energy for those haul trucks. That is part of the roadmap that we've got, which again is focusing on Scope 2, Scope 1. Also we are going to start working more hardly on Scope 3 emissions as well. We are going to be working in the whole grid.
Maybe if I can complement Luke. I think initially we've set this target to 2025, and I think initially it's probably around two-thirds from the change in renewable and a third on efficiency. That sort of moves from that point to probably, for the whole period, being half and half. The change in the energy supply is actually a cost benefit for most part. On the other components, because we are looking at changing and developing new technology solutions, there's more of a front-end investment in some cases involved. Generally, we look at returns and a business case over the long term, as we make our choices and decisions in achieving our reduction targets. As I think we've mentioned, hydrogen as a means of supplying fuel to hauling trucks is something that we and others, obviously, in the industry are looking.
We are part of several pilot testings that we are doing here, and we are also participating in some abroad, like the Torc Team initiative, which involves a broader scope of alternatives to supply hauling trucks with clean energy. I think we want to be very active in this space, but very deliberate as well with respect to the long-term economic impact of the costs that are involved in this effort. We think there is scope for us to continue to improve, and I think we've achieved great results. We set our targets initially in 2018 to be completed in 2022, and we got there in 2020. That was ahead of time, and that's why we've sort of refreshed this at this juncture. We're very committed to convert our process fully to green energy.
Thanks a lot.
Okay, we've got one further question from the conference call from Jack O'Brien. Aisling, maybe you could put him through.
Yes, please go ahead.
Perfect. Thanks very much. Good morning. Quick question on, obviously, you've got a very strong balance sheet. Just wanted to understand if the board had ever considered increasing the stakes in the mines that you operate. Would that be a good use of capital given where your balance sheet sits today and the prospects ahead?
I think certainly we're keen on expanding our exposure to copper. From that point of view, it certainly would be attractive, but we've got long-established relationship with our partners and especially, in the case of Pelambres and Centinela and Antucoya, where traditionally, we've built these mines from the very beginning, all of them, and with our Japanese partners. Therefore, we think very highly of that relationship, which is for mutual benefit. We see ourselves as continuing to develop these assets alongside our partners and value greatly the relationship that we have with them. While, as I say, we would like to certainly get more exposure to copper, we understand that this is something that we're a journey, that we started with our partners, with a long-term view, and we've both benefited from that and therefore, see no significant scope for changing that.
Okay. That is very clear. Just one follow-up, if I may. Obviously, the sort of precedent suggests that you always pay out the 35% at the interims, and no surprise there. Was there any sort of discussion at board level whether to maybe increase the payouts at the interim this time round, just given, again, where your balance sheet lies and the strong first half?
I think it was all around the consistency of the 35% payout. Essentially, this is a policy, as you've mentioned, that has been applied very consistently in the past and we believe in that consistency being a strength. It was confirmation of that.
Cool. Very clear. Thank you.
Thank you very much. We've got one further question from the webinar from Danielle Chigumira. Would you, panelist, please turn on your camera and also unmute yourself. Many thanks.
Great. Thank you for taking my question. I have two questions, one on safety and the other on emissions. On safety, it's good to see the high potential incidents going down. Year-to-date, the injuries and fatalities are going in the wrong direction. How should we think about that discrepancy? Could it be specific, or is it to do with something else? Just on Scope 3, René mentioned targeting reducing your Scope 3 emissions, but do you have a timeline to disclose them to the market?
Yeah. Let me introduce this, and I'll probably ask René to complement. Safety is certainly our top priority, and as you've said, we focus a lot on high potential incidents, which are tracking well. However, the total injury rate has increased, and the way that we've looked at this and our reading is that because we're doing a lot of construction work, so there's a lot of project work that has been added to what we normally do in terms of operations, is that a lot of this increment has to do with small incidents, hands, fingers, and the like, in construction work. Therefore, that's the area of focus where we're working to be able to bring those numbers down. It's not a big concern from the point of view of the type of injury that happens, which is small.
We want to address that head-on, and that's why we've identified that it's associated to the construction work in projects where we've moved north of 3,000 people to site to be able to do, as I say, civil construction work. That's the reading that we have, and we monitor all these indices quite closely, and therefore, it's very key for us that we bring this down by addressing that specific aspect or space in which we've had some increase. In terms of emissions, I think certainly we've been looking at emissions to me and reporting, in fact, Scope 3 emissions in our sustainability report for several years. This is not something that we're looking at from completely new.
I think where we found a challenge, that's been common across the industry, is to be able to set a target in terms of reducing Scope 3. Scope 3 is something that we measure and report for almost all of the 15 dimensions in Scope 3 that GRI has, and consistently. We want to now think that certainly by 2025, we would be able to set an emission reduction target, or before, on Scope 3. We're just working the way to accomplish that in the most effective way. What kind of cooperation or ecosystem do we need to build with our partners upstream and downstream to be able to achieve these reductions in a coordinated way?
We measure, we have been reporting this in almost all of the 15 dimensions, and certainly not later than 2025, I would expect that we would be able to release targets for Scope 3 emission reductions. If earlier, that would be even better. We're working on that. One of the things, by the way, that we're also going to release shortly, as we mentioned, is that we've got the progress report on TCFD. I think that also addresses our approach to climate change in a much broader sense, including how we look at Scope 3 emissions and the scope there to be able to progress work. We are expecting to be able to release this in the next 30 days. It talks much more broadly about how we see our risks and our opportunities in this Scope 3 aspect that you've asked, Daniel. Thanks.
I don't know, René, if you want to say. I'm conscious that we probably got two minutes. Do you want to say something brief or?
No, I think I'm fine.
Yeah.
Thank you.
Thank you, Danielle.
Thank you. We have no further questions at the moment, so what I'd like to do is turn the call back to Iván for any closing remarks.
Thank you, Scott. In closing, I would like to say that I think we've had a good first half of the year. Starting with sustainability, as we were just discussing, I think that the fact that we've been able to refresh our emission reduction target, that we are very well into working for carbon neutrality, with the government and other parties at different levels, means that we're making good progress on sustainability. That includes adapting to climate change in the way of continuing to build the desalination plant at Pelambres, which is now over 50% complete, something which we started several years ago in anticipation of the sort of risks that we're seeing today. Good from that point of view, that we are in that path. The results were solid, were robust financially.
We've achieved a record EBITDA number with the EBITDA margins close to 66%, that has allowed us to strengthen our financial position even beyond what we had before, by means of having a net cash position of $700 million, which positions us well for the balance of the year and the close of 2021 as we look at closing that year. In our growth projects, I think we're making good progress. Certainly, COVID has been something that we've been challenged with in our operations and our projects. I think now with the level of vaccination that we're seeing in Chile at over 80%, and in our sites and operations, that we're achieving that sort of rates and higher, we believe that we are in good shape to continue to build our projects and deliver on our growth promises.
With that, I would like to end our remarks, and thank you very much for attending the call.
Thank you. That concludes our Antofagasta results Q&A. Iván, René, and Mauricio, thank you very much for your time, and goodbye.