Welcome to the Antofagasta Live Q&A Webinar and Conference Call. I'd like to pass you over to Andrew Lindsay of Antofagasta. Andrew, over to you. Andrew, you're currently on mute. You need to just unmute yourself, Andrew.
Good morning. Thank you, Scott. Welcome to our Q&A. On the call today, we have Iván Arriagada, our Chief Executive, Mauricio Ortiz, our CFO, and René Aguilar, our Vice President of Sustainability and Corporate Affairs. As you will see, our presentation is available on our website. If you've got questions during the webinar, please, if you're on the video link, please raise your hand, and then you'll be invited to ask a question. You'll be promoted to being a panelist and as you know, that takes a few seconds to connect. Remember, unlike me, to unmute yourself, and to please switch on your video as well. At the end, if your question's been answered, please lower your hand, and then you'll return to the attendee area.
Okay, I'll now hand over to Iván for his opening remarks.
Thank you, Andrew, and welcome to everybody to our results release today. I'll start making a few opening remarks and comments on the numbers and then we'll open up for Q&A. I would say that despite the challenges of COVID-19 and the continuing drought in central Chile, we successfully achieved, in the first place, our production and cost guidance for the year, with copper production of 721,500 tons and a unit cash cost of $1.20. Very good performance from an operational point of view. On the back of that, and of a strong copper market, our EBITDA increased by 777% to $4.8 billion. We reached an EBITDA margin of 65%.
Cash flow from operations was strong at $4.5 billion, which essentially, on the back of an already robust balance sheet, has meant that we continue to strengthen our financial condition and have moved to a net cash position in our balance sheet of $540 million at the close of 2021. All this has ensured that we can maintain our financial discipline and deliver shareholder returns. As you have seen, we have proposed a total dividend for the year of $1.425 per share, which is equivalent to a 100% payout ratio. Looking ahead, we have several embedded growth options in our portfolio to be able to continue to unlock growth and value for our stakeholders.
As we disclosed before, we have a large copper resource inventory in highly prospective copper regions mainly in Chile. We also have been working on a new proprietary primary sulfide leach technology that could unlock value further from what were before economic mineral resources. As we continue to advance that technology, we will keep you abreast of development. Copper is critical to support the global transition to a low-carbon economy. Antofagasta, as a pure play copper producer with high-quality asset, is well positioned to deliver the copper the world needs reliably and responsibly. That is our mission and our business. Alongside this, we have continued our commitment to mitigating and adapting to climate change. This year, we announced a carbon neutrality targets.
As part of this, by 2025, we expect that 90% of the water we use in our operations will be either recirculated water or water that comes from the sea. Also that our greenhouse gas emissions by then will have reduced by 30% compared to 2021. We're also, as we've discussed before, been moving to 100% renewable power and we expect to be in all our sites in that space by the end of 2022, by the end of this year. Finally, we have continued to closely work with our communities in which we operate through the relationships that we have developed over the years and which have become particularly important during this time of COVID-19 crisis.
On balance, we think a strong year, strong performance, record financial results on the back of a strong operating performance, despite, as I say, COVID-19 and the drought in Chile, which is a temporary condition that we will continue to face in 2022 until we commission the desalination plant at Los Pelambres in the second half of this year. With that, I'll then like to pass it on for questions. We'll be happy with Mauricio and René and the team to be able to address your questions.
Thank you for that, Iván. Our first question is from Luke Nelson. If you can promote him to panelist now. Luke, if you could unmute yourself and also turn on your video that's there. Luke is just joining us at the moment. Luke, if you could unmute yourself and turn on your video, please.
Hi. Can you hear and see me clearly?
Yeah, we can. We can hear you.
Perfect. Thanks a lot for taking my questions. Two from my side. Firstly, just on the financials, so maybe one more for Mauricio. On the cost side and cost guidance, can you just outline whether, to what extent, there's any hedging involved in the costs, and particularly just on the oil exposure? Then also just on acid. Obviously, sulfuric acid is significantly higher year-on-year. Can you remind us roughly what proportion of the costs, or maybe some sensitivity to the costs around sulfuric acid, and then also the exposure on an annual versus spot basis? That's my first, and then maybe I'll ask my second after that.
Okay, thanks, Luke. I'll briefly answer and then pass it on to Mauricio to address specifically the sulfuric acid one. I mean, on the financial and cost performance, we typically do not make or have, you know, get into hedges for our input commodities. You know, we believe that we're better served from the point of view of margin protection by ensuring that our key commodity purchases are linked to variable commodity prices as they tend to follow as well, you know, the business cycle and so does copper.
Therefore, from that point of view, because we don't hedge copper, which is our revenue line, we don't either hedge our you know, commodities that we buy and that, you know, are part of our cost structure. With that, I think I'll pass it on to Mauricio in case he wants to expand on that and then comment specifically on the sulfuric acid question that you had, Luke.
Well, thank you for the question, Luke. As Iván said, we like the exposure to commodity. We are in the commodity business. At the time that we capture the benefit of a higher copper price, we also have the impact of a higher input price. We don't hedge on a regular basis, and that is our policy. In terms of the sulfuric acid, just let me comment a bit. What we have seen on sulfuric acid is a significant price increase driven by the agricultural business in Asia. Also the freights coming from Asia are increasing the sulfuric acid price.
We are moving within a significant increase in comparison with 2021 to 2022, roughly speaking, $100 per ton in terms of the acid price. Answer your question of what the impact is in our cost structure. Let me just briefly remind the split on production. Centinela, Antucoya and Zaldívar, they produce copper cathode, and the impact on those companies is bigger than, definitely, than in Los Pelambres, which just consume acid for their production of the concentrate. Overall, as a group, the impact is roughly speaking for each $10 per ton is roughly $0.015 to below $0.01 per lb in terms of cost impact at C1 level.
Okay. That's really helpful. Thank you. Then secondly, more broadly on projects. You've announced the Cachorro deposit today, which looks like a really exciting deposit. Can you maybe just articulate where we move from here, the critical path going forward, and also maybe the capital intensity of that project? You mentioned that it's close to existing infrastructure, and it could be used as ore sources to Antucoya and Centinela. Maybe some indications on the capital intensity. Also, you've talked about primary leaching with cupric chloride. Again, maybe just any indications around how that could be implemented and the capital intensity attached to that.
Bringing it all together more broadly, do any of those projects, are they included in the base case to achieve 900,000 tons per annum of copper by 2026?
Okay. Look, I think we're very excited with Cachorro. You know, we've included in our resource and reserves declaration for the first time the work that our exploration team has been carrying out in pursuing, you know, this target. You know, we've included in the declaration a resource of 140 million tons at 1.21 copper grade. We think it's a great discovery from the point of view of the asset and the potential that it has. Now, we believe that from the information that we have, that the potential mineralization there can probably extend, you know, at least to around 300 million tons.
That's the work that we will continue to do as we continue to complete our drilling campaign to understand better, you know, this potential future deposit. Very exciting, you know, from that point of view. What is the sort of path going forward? First, I would say we need to continue to do drilling just to be able to understand the limits, you know, and confines of this ore body. Therefore, we will continue to do that in 2022 and 2023.
We also expect to undertake a scoping study in 2023, where we will essentially be able, with that information, to develop a preliminary concept of how we may be able to mine and essentially convert into metal, you know, the copper that's contained in Cachorro. More drilling in 2022 and 2023. In 2023, a scoping study, and then that should precede a feasibility study, which will then be basically used for the permitting. In considering the sort of lead times that we have today, we think this is something that we should be able to develop, you know, between this, you know, in this decade. Those are the sort of timings that we expect to see involved in the development of this project.
This is likely to be an underground mine, given the depth, as we know, where the deposit is. As I say, we're very excited because we think that, you know, the quality of what we've encountered here in terms of grade and mineral is quite outstanding. Now, we do have the benefit that this is sort of midway between Antucoya and Centinela, and therefore we think that our first preference, and this is what will be studied in the scoping study, is to be able to use existing infrastructure and therefore be able to essentially feed ore into our existing plants, either removing or replacing a mineral with lower grade or in addition to what we're able to feed today.
We would rather prefer that than a standalone, you know, facility, as we like to think of districts, and I think Centinela is a very good example of that. That's the way that we would want to move, and we think that would involve lower capital intensity, going forward. That's the very preliminary thought around what the path might be for developing Cachorro. Now, this is not part of the base case, as it relates to the 900,000 tons of, you know, copper, that we've highlighted as a possibility for 2026, in case that we undertake the projects that we have. This is outside that envelope, and therefore, it's in addition to, you know, what we're already developing. But as I say, very exciting.
You know, from our point of view, we think this is a quite an outstanding discovery, something that we've been working on for several years and want to continue to work, as we think it will be part of our you know production you know going forward you know into the future. It does provide continuity, you know, for the end of the decade to what we're mining today. Very exciting from that point of view.
Now, in terms of the primary leaching and Cuprochlor technology, I mean, we are in the final stages of doing a very large industrial scale testing at one of our sites, and therefore expect to be able to package that technology for the operations to use as of, you know, the end of this year, when we finish packaging this technology. It obviously does involve a lower capital intensity than what would be a conventional concentrator. And more importantly, it does allow us to take advantage of solvent extraction and electrowinning facilities that we already have. We think, you know, certainly there is a significant advantage in being able to push this technology through.
We expect to see that once we're able to package this by the end of this year, finishing this large industrial-scale testing that we're completing, and which is showing very good results, that we would be able to start including this in our mine plans, you know, going forward. That's basically, you know, sort of the timing for that development, as well.
Thanks a lot.
Excellent. Thank you very much for your questions there, Luke. That's it. We have our next question that's coming through from Jason Fairclough. Jason, I'm promoting you to panelist. If you could please now unmute yourself and then turn on your video. Jason, you've now joined. If you could just unmute yourself and turn on your video, please. Please go ahead.
Yep. Good morning, guys. Thanks a lot for the Q&A session. I'm gonna come back to, I guess, a question I seem to always ask, which is, could you give us a little more color on where we are with the Centinela second concentrator project? How is the concept evolving from the last study that gave us the $2.7 billion CapEx figure? I guess, look, today you're saying first production in 2025, so you do need to approve this and start spending soon to be able to achieve this production target. I guess, Iván, I'm trying to square this with the uncertain fiscal situation in Chile. How do you think about committing to, say, $3 billion of CapEx when you don't know what the tax situation is gonna be?
Yeah. The second concentrator project, as you know, Jason, we've been working on this for quite some time, and I think we've got a concept which is quite advanced in terms of its engineering. We're actually working on the detail and vendor engineering now for the main pieces of equipment involved in the Centinela second concentrator. It's not a conventional concentrator in the sense that it's based on High-Pressure Grinding Rolls rather than on SAG mills and sort of conventional mills, which make it more efficient from an energy consumption point of view, and also more fit to the sort of type of harder ore that we expect to face at Centinela.
There's been a lot of good work placed in defining the design in a way that it's efficient, that it fits, you know, the ore body at Centinela. Now, we have now advanced the detail engineering and continue to do so. We have assigned on a limited basis certain packages, and therefore, all of that work is in good shape to be able to undertake this project if we take it to the board, you know, by the end of this year, as we expect. In terms of capital cost, you know, we give or take, as I've mentioned in the past, you know, we're ballpark in the same sort of overall figure that we had provided to the market in the past.
It's sort of a $3 billion project, you know, that this project sort of involves that sort of level of capital investment. I say there's been changes in the components, but the overall number is similar to, you know, to what we had indicated in the past.
Now, obviously, you know, in the current environment, there are some, I would say, conditions, you know, in Chile which are happening and one is we've got a new government and which is taking place on March 11, which I think is from that point of view, we've had recently the announcement of the cabinet and Mario Marcel, which used to be a former central bank president, will take over as Finance Minister, which I think it's good news from the point of view of, you know, providing the sort of continuity to some of the, you know, policies and perspectives, you know, on economic development, you know, going forward. I think it's been taken positively.
Now, on the other hand, separate to the new government, we've got the constitutional convention, which is, you know, developing a proposal new constitution. I think that will essentially play out in the course of this year. It's still early days. The different working commissions are providing proposals which still have to be voted by the plenary, which requires a 2/3 majority. Also, you know, the final text needs to be submitted for a referendum at the end of that process. I think that is still, you know, playing out, you know, over the few months coming ahead. That's something that when we take this decision, we expect will be completed.
In respect of, specifically, the royalty, I mean, that's been part of the program of, you know, the incoming government to overhaul the tax system. You know, from that point of view, there's been several attempts, you know, earlier on to address this. I think, you know, this will be taken over, you know, by the new government. I think from our point of view, what is important is that any changes reach a good balance between ensuring that mining contributes to the social agenda and the demands, you know, of the country going forward, but that the industry keeps being competitive such that investments go ahead.
We do expect that by the time that we have to make these decisions, you know, we would have clarity with respect to, you know, this issue as well. Therefore, you know, it's timed in a way that, you know, this decision follows after, you know, these events probably have unfolded and we have more clarity on that.
Just if I could follow up. The $3 billion-ish number that you've talked about, is that based on a water system that's being built by Antofagasta, or is that a third-party water solution?
That is premised on basically Antofagasta or us being able to or investing in the water system. The basis is that we undertake that investment directly. As you know, and we've commented on this in the past, we are in parallel running a process whereby we want to consider the option of that being taken up by a third party. That therefore would reduce the sort of front-end capital requirements if we go for that alternative. I think for us, the important thing, and we've stressed this in the past, is that that decision needs to be a decision which from an economic point of view makes sense, and therefore it would only be undertaken if it's value creative.
Therefore, that's what we are looking for. We've put in place a structured process, you know, to be able to arrive at a response to that question, through a formal bidding, which is actually running as we speak.
Okay, perfect. Just one super quick last one, if I could, Iván. The desalination plant for Los Pelambres, is it on schedule?
The desalination plant at Los Pelambres is on schedule. We are advancing to be able to finish commissioning in the second half of 2022. Yes.
Okay. Thank you very much. [Non-English content] .
Yeah. Thanks, Jason.
Jason, thank you for your questions that are there. We have our next question, which is from Abhinandan Agarwal. I'm promoting you to panelist. You're now a panelist. If you'd please unmute yourself and turn on your video. Thank you very much.
Good afternoon, good morning, all. Thanks a lot for the presentation and the Q&A. A couple of questions from my side, please. My first question is, can you discuss your preliminary findings on the ongoing Los Pelambres CapEx review? What's your confidence level in terms of the final CapEx being encapsulated within the $1.7 billion-$1.9 billion guidance, which you gave earlier this year? That's my first question.
Okay. Yeah. On that, I mean, we did and have highlighted the fact that we've got the final capital estimate under review essentially because of, you know, COVID impacts that we've sort of have seen unfolding, several waves of COVID. The good thing is that we have very high rates of vaccination, and therefore, we're seeing this last wave as being quite, from that point of view, you know, manageable within the sort of, conditions that we have and with minimal impact. But it's also because COVID has impacted us, we commented before, on our ability to get, you know, workers to site and therefore, you know, there's been more absenteeism for a period of time. All of that has been factored in this new estimate.
Now, we do expect that, this new estimate will allow us to, you know, fall within the range of capital expenditure that we have guided for. The intent of, you know, providing a range is in fact to address, you know, this uncertainty that's still work in progress. Yes, we do expect that once we complete this review, you know, we will be within the range that we provided.
Thank you very much. My second question is regarding the recent proposals in Chile. There have been a couple of proposals, namely the annulment of water rights for private enterprises and mining ban on indigenous land. I get, you know, that they're quite far away from being included in the draft constitution, but can you please remind us what's your exposure, especially regarding any key infrastructure on indigenous lands? Thank you.
Yeah. As you say, I mean, the process that the country is going through, it involves working commissions providing proposals which have to be discussed in the plenary for a 2/3 majority approval, and then the final draft of the Constitution going for a referendum in July. Some of the proposals that you've seen in the press are coming out of these working groups. Some of them are not conducive to, you know, what we think would be the best, you know, development opportunities for the industry to continue to grow and develop. Therefore, they have to still go through the process and be subject to that level of approval. Now, I think that.
Just before I go into your specific question, just to say that I think Chile does face a very unique point in time, in the sense that this can become a very unique opportunity to be able to, through the new constitution, establish a new social pact, which will allow for greater levels of cohesion, you know, going forward. That's, you know, very positive. The outcome is not guaranteed and obviously we've seen some of these proposals coming from the working groups, which in fact introduce more uncertainty as to, you know, the conditions going forward. A great opportunity, and we expect, you know, that it should actually provide, you know, a good basis if it's done successfully. That's still work in progress.
On the specific issues that you've mentioned in terms of water rights, I mean, most of our facilities are, after we complete the construction at Los Pelambres, will be supplied by seawater or circulated water. Specifically, by 2025, based on the construction work that we've got in hand, we expect that close to 90% will be supplied by seawater. On indigenous rights, in our main facilities of Los Pelambres and Centinela, we don't have, in the sort of, you know, review that we've done, any material indigenous rights claims which would impact our facilities. And we still are, you know, continue to conduct, you know, that work.
As I say, in our main districts of Los Pelambres and Centinela, we don't think there is any material indigenous claim involved.
Thank you very much.
Is Scott still around or-
No, sorry. Please go, please go ahead, Grant. Sorry, I was on mute. My apologies.
Oh, okay.
All right. Good afternoon, everyone. I hope you can hear me.
Yes.
Sorry, I just have a quick follow-up question, similar to what Luke had in terms of hedging. I do note in your accounts that you had some hedging losses at, I think it was Centinela and Antucoya for derivatives of around $120 million. You know, not big in the you know, not huge in the big scheme of things, but can you just explain what those are and just, you know, elaborate whether you have any further exposure to any derivative instruments in 2022?
Yeah. I'll probably ask Mauricio to address that. Let me say that we, as I say, as a general policy, we don't hedge either our revenue line or our inputs. We do sometimes when we've got unique circumstances, you know, hedge in limited circumstances, you know, say high price or high cost conditions. That's very small and unique. Our general policy is that we don't hedge our revenue line and our costs. I'll ask Mauricio to comment on that specific element that you've referred to.
Okay. Well, thank you, Iván. Thank you, Grant, for your question. Let me expand a bit more what Iván said. How those limited condition looks like. For example, when we have high cost production lines in comparison with a challenging copper price. That is what exactly happens back in 2020 when we took this derivative that you mentioned. Those derivative were associated to our Antucoya and our Centinela cathode production, were very limited to something like 10% of each of those companies' production. Basically, we took it back in 2020. Remember that, when the COVID came on the scene, the copper price moved very to a very low levels in the second, on Q2 of 2020.
As Iván said, in general terms, we don't do that, and we only do to protect margins in certain conditions. Going forward, we don't see any scenario where we are going to do that in 2022. As I said at the beginning to answering Luke's question, we actually look for that exposure to commodities, either in our revenue line and also in our cost line. We try to maintain that exposure in a healthy condition that allow us to capture all the benefit of the copper price going up and control the cost, or the cost pressure in the input prices such as energy and other commodities.
Great. Thank you very much.
Thank you, Grant. My apologies that I was on mute previously that's there. Our next question is from Richard Hatch. I'm promoting you to panelist. If I could just remind everybody, if you'd like to ask a question, please raise their hand on the webinar. Richard, if you just unmute yourself and also turn on your video. Thank you. Please go ahead.
Morning, guys. Thanks a lot for the conference call. Just got three questions. The first one is, would you be able to give us any kind of steer, either on an absolute basis in CLP or U.S. dollars, or maybe even on a dollar per ton produced basis, what we should be thinking about long-term as a good sustaining CapEx number for the business? That's the first one. The second one is, just a question. I know you talk about the receipts of the permits to extend the life of Zaldívar in the first half of this year. Just wondering if you've got any concerns around receipt of those, if you see any risk around that.
The third one is, it's just on tailings retreatment. Do you see any opportunities within the current portfolio to retreat tailings and perhaps create some extra production from that source? Thanks.
Okay, thanks, Richard. I'll ask Mauricio to address the CapEx one. Let me start with the second and third. On Zaldívar, you know, we've been working on this permit for quite some time, and I think the review that's been undertaken by the technical agencies is sort of now coming to some form of closure. We've had several of them completed. The rest, we expect, will happen in the course of first half of 2022.
We think from a technical point of view, certainly, you know, this is, it's strong, the case for the permit is strong in the sense that our hydrological models show that what we are expecting to get an extension for, which is 200 L per second, is well below the recharge of the system that we're extracting water from and from where we have been using water for, you know, 20 years. From that point of view, we have no concern on technical grounds, you know, that this is based on solid grounds.
The permit has also an indigenous community consultation, and that's you know progressing and I think what we've found is that the indigenous community generally want you know water from these basins in the Salar de Atacama to be stopped for industrial purposes. I think that's something that needs to be worked on. Those are the elements, if you want, that we expect that we will have to progress you know in the course of this first half of 2022 to be able to come to a resolution on the permit. I think what gives us confidence is that the technical basis on which this permit is predicated you know is quite strong.
It's, you know, it's something that, from that point of view, we're good with. The other thing is that the extension that we're asking for is from 2025- 2031, so it's also a sort of limited window of time. I think the broader context generally is that the drive in Chile has been to move, you know, mining to be supplied by water from the sea, and that's something that we've seen. I mean, we ourselves are building a desalination plant at Los Pelambres, and we've seen other companies do the same. There is a broader, I would say, expectation that in the longer term, mining would use water from the sea.
Some of that is also a context, you know, that we need to take into account. I think from a technical point of view, we think we're at very solid grounds to be able to get an extension of this permit. On tailings, you know, retreating, I think we've got, I mean, tailings at Los Pelambres and at Centinela. I think our tailings that we deposit are generally a low grade, and therefore, we're not contemplating at this stage retreating them. It's something, you know, that as we think of the extension of the mine life at Los Pelambres, we're looking at as a possibility, but not.
We don't have specific plans at this stage because we think we're, you know, from an economic point of view, it's still certainly, you know, mining, it's still much more convenient, you know, from the point of view where we can extract value. It is there. As I say, our tailings tend to be of much lower grades than the tailings that you've seen retreated in other facilities which have, you know, longer aging and therefore maybe can draw on tailings which have a higher copper residual grade. Not our case. Mauricio, maybe you can address the question on the CapEx.
Well, thank you. Hi, Richard, good to see you. Well, let me start reminding that we have two different level of CapEx. One is the first one associated to mine development and sustaining CapEx, that is, in order to secure our ability to keep producing copper, and the other one is the development CapEx. In the mines, mine development and sustaining CapEx, we usually use a range, or in the past we have a range, let's say around $600 million-$800 million for all, for these two categories. For the next two to three years, we will see an increase driven by some enablers to capture the full value of our life of mines, of our current life of mines. That increase will be in the space of up to $1 billion.
For example, in 2022, we already increased that mine development plus sustaining CapEx to that level. What kind of project are we having on that category? For example, the desalination, the second phase of the desalination plant at Los Pelambres will be part of that portfolio within the next two to three years. Also the new concentrate pipeline, which is not only refurbishment of the existing infrastructure, but also relocating away from the local communities. Basically, within the next two to three years, we will have a number close to $1 billion in terms of mine development and sustaining CapEx, mainly driven by these enablers to capture the full value for the life of mine.
In terms of development CapEx, that is fully contingent on our expansion project and being the more important one in that category, the second concentrator at Centinela, which Iván described in detail a couple of questions ago.
Helpful. Thanks very much. Can I just ask one last follow-up? Just in terms of M&A opportunities, there's a couple of interesting projects that have come to fruition in Chile last two to three years, but kind of smaller scale on the production standpoint, 50,000, 40,000, 50,000, 60,000 tons, but pretty low cost, you know, $1 a lb, something like that, $1.20. Is that too low in terms of a volume standpoint for you to consider or, you know, I mean, given the fact that it would be a pretty high margin, high return asset, could that be something you could potentially look at just to boost out your portfolio? Thanks.
Yeah. I'm not sure what specific opportunities, I mean, you have in mind, so I can't comment specifically, but I think the general rule is that obviously we would look at you know opportunities in their own merit, and we compare them to the large mineral inventory that we already have. I mean, we hold 19 billion tons of mineral inventory you know at a copper grade of around 0.4 on average you know throughout the life. So you know we obviously are looking for opportunities to continue to expand our mineral inventory and specifically interested in those where we can upgrade you know our mineral inventory through grade or location. I think Cachorro is a good example.
I mean, we're looking there at a discovery which has got over 1% copper grade, and therefore we think it's a great and very attractive opportunity. Those would be the sort of criteria that we would look at. We would look at finding opportunities that probably exceed, you know, 100 million tons of grades, which would upgrade our, you know, existing inventory. Those would be especially attractive.
That's very helpful. Thanks a lot.
Richard, thank you for your question. That's there. We've got our next question, which is from Tyler Broda. Tyler, we're going to promote you to panelist. If you could please unmute yourself and turn on your video, please. Tyler, if you could please unmute yourself and turn on your video. Many thanks. Tyler, you can go ahead? I can see that you've joined us. Okay, Tyler, I can see you've joined us. You can talk if you can hear us. Okay, unfortunately, Tyler, we can't hear you at the moment, so we're going to move to questions from the conference call. Elaine, if we could pass across to you for any questions from the conference call, please.
Thank you, Scott. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signals to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Jatinder Goel from BNP Paribas Exane.
Thanks, Alberto. Good morning and good afternoon. I've got two questions. First one, Iván, for you on Reko Diq. You don't seem keen to develop the project as you have stated very clearly in the past. Would you consider holding it as an investor if someone else was to develop the project? Or for you, the only path is to just completely exit it?
Yeah. On Reko Diq, I think we've been consistent in our approach in the sense that we exited the project, you know, at the time in which we had this, you know, litigation initiated. We're now seeking compensation for what we've lost there, and that has not changed. We remain of the same view and position and are pursuing sort of the legal avenues that are, you know, open to us. We will continue in that path. Our position has not changed in that respect, and therefore, you know, we remain consistent with what we've said in the past with respect to this agenda.
I mean, if you could elaborate a little bit on that. Technically, you still own half of that project, and if Barrick were to go on a different route, does that mean your stake needs to be sold if you don't want to get involved in that project development?
As I say, we are not involved in discussions around project development. What we hold today is 50% of a claim against, you know, the government of Pakistan for having, you know, basically removed, you know, our license to be able to mine. We hold that right, and we have not been involved in any conversations regarding a potential development of, you know, the project. From our point of view, from our, you know, interest as Antofagasta, again, our interest is focused on being able to, you know, getting compensation for, you know, the actions that were taken with respect to removal of the licenses.
We remain in that position and have not been involved in discussions around the development of the project.
Thanks, Iván. One question on dividend policy. A number of mining companies have moved away from making full-year as their big dividend decision and also doing or taking more flexibility at interim results. For you, it's been more like $0.35 payout at interim, and then full year is the big decision-making. Is there any thought process of revisiting it, or would you still keep $0.35 interim and then year-end remains the big one?
We think that our dividend policy has served us well, you know, over the years. I think we've been probably one of the few mining companies which have remained with a dividend policy unchanged, and it works well when prices increase and when prices, you know, go down as well. It behaves well through the cycle. And I think the logic and we've explained, you know, in our capital allocation, which has been expanded recently, the sort of decision factors that go into deciding, you know, the dividend. And from that point of view, we think having a minimum which is linked to earnings like the 30%-35% minimum is appropriate.
You know, in excess of that, we basically iterate through a process which considers, you know, the outlook, the cash requirements, you know, going forward, the financial position the company is at, and also, you know, some of the investments which are required, for the purposes of, you know, sustainability or climate change, which is now factored into our capital allocation. I think the key is, we've had a good 2020, you know, with good cash generation on the back of a solid market and good operating performance. We have moved to a financial position of cash, of net cash at $540 million.
Therefore, you know, the cash that's available, you know, we think, you know, according to that and in line with our capital allocation, is there to go back to our shareholders and return them, you know, for their investment. We think our dividend is consistent with our dividend policy, which has served us well and is derived from a capital allocation, which is, you know, the framework that I've just described. We see those serving well, you know, the company, in the past and no reason to sort of change them going forward.
Sure. The decision to return that excess cash above 5% will always be at the year-end for now?
Yeah, I think that's not part of the policy per se. That's been a practice. I don't see, you know, that we would change that. As I said, that's not part of the policy. How we comply with the minimum is in between the interim and the final. It's not part of the policy, but that's been the practice and I think therefore expected, you know, that would not change, you know, because it's been a good practice.
Understood. Thank you very much, Iván.
Once again, if you would like to ask a question, please press star one. We'll take our next question from Jack O'Brien from Goldman Sachs.
Hi. Thank you. Most of mine have been taken, but just one question on some of your ownership stakes. I think I've asked it before, but clearly quite a value accretive exercise could be increasing the ownership at your various mines. I think you own typically around 50%-70%. Just wondering if there's any scope to potentially increase your equity ownership at any of those mines, which could prove to be, depending on your copper outlook, quite attractive at these levels.
We certainly find that those investments, as you say, we hold are attractive and have, you know, potential for development. I think our partnerships, especially if we think, you know, from the early days in which Los Pelambres was developed and subsequently Centinela and more recently Antucoya, are integral to the way that we see our business in terms of, you know, risk shedding and sharing and also our ability to bring together economic resources to be able to develop our facilities.
I think those have served us well, again, and we are quite, from that point of view, comfortable with, you know, the shareholdings that we have with our partners and the way that we work together in developing especially, I would say, Los Pelambres and Centinela, which are sort of our main districts. No change expected there.
Very clear. Thank you.
As a reminder, to ask a question at this time, please press star one. We will take our next question from Tyler Broda from RBC Capital Markets.
Hi, can you hear me this time? You can.
Yes.
Perfect. Sorry about that before. Bit of an issue with the firewall and Zoom. I just have two questions. One of them is a follow on to Jason's question, just about Centinela and with the timing, you know, for the decision coming at the end of this year. How would you characterize the path of Centinela, if you were to go forward with this new concentrator? How should we look at sort of the operations in that scenario? And then I guess secondly, you're in a strong net cash position, still trading with a reasonable rating, you know, Twin Metals has stalled.
I guess, how are you looking sort of from at your sort of international ambitions at this stage in terms of exploring other opportunities? Thanks.
Yeah. In the case of Centinela, I mean, clearly we've sort of mapped, you know, the development of the asset to its full potential through an expansion. If that were, for some reason, you know, not to go ahead, I mean, we would continue basically to use, you know, the infrastructure that we have today through the plant, which was built back in 2011, and which we now are operating at slightly above its design capacity. It's actually performing extremely well, including, you know, the thickened tailings, which, you know, took some time to get to the level of operational excellence as I would say, we've got it running today.
We would expect, therefore, that we would continue to develop the Esperanza Sur Pit, which we're opening this year, combine that with the Esperanza Central Pit and be able to feed, you know, with a sequence of grade which would optimize that operation with the existing plant. We think there is a tremendous opportunity to unlock value by means of being able to add additional processing capacity and essentially also bring on board the Encuentro Sulfide pit. As you know, we've been exploiting the oxides and we have an opportunity with the sulfides that lie below. We would, you know, potentially use, as I say, the existing plant to its full capacity. We could think of Cuprochlor as an alternative, as well, you know, for secondary leaching.
I think given the grade and that this is secondary sulfides, you know, we would expect that the concentrator would be a better option and also given the sort of size of the reserves that we have at Centinela. We think that is the preferred and optimal development path. That is something that we want to try to see unfold as we continue to work in the project. Now in terms of international ambition, I think, you know, our strategy is clear. You know, we are a pure copper player. We mine copper and gold, silver, moly as byproducts.
The geographical area that we like to see ourselves focused is the Americas, which spans, you know, from Canada to Chile, you know, including Peru and other locations. We have active, I would say, exploration activities in Peru, in BC, in Canada, which we continue to pursue. If we find opportunities which are attractive, I mean, obviously, you know, we would want to look at them. I think certainly, you know, we want to think of ourselves as a company that can undertake, you know, an international expansion.
We need to find, you know, obviously the right target and the right time, but that's something we see very much as part of our strategy and we're open to do it in a disciplined way from a capital allocation point of view. That appetite certainly remains intact.
Iván, thanks very much. Appreciate it.
Well, thank you for all your questions today. We've no further questions, so I'd like to pass back to Iván for closing remarks.
Thank you, Scott. In closing, I mean, I would like to say that, you know, we're certainly as a team very pleased to have been able to share the results and release the results for 2021 today. As I mentioned, you know, we've had, I think, an excellent year meeting our production and cost guidance and also being able to achieve a very solid set of financial results, which has provided the basis for, you know, a very good dividend in the way that we've declared. I would also like to point out that in addition to that, you know, we have also a record in terms of taxes paid, you know, in Chile.
I think that's an important contribution that we also make to our host country and the community with which we work. As much as this is a record result in terms of earnings, it is a record result as well in terms of taxes paid, which actually tend to be in numbers quite similar to the net earnings that we accomplished at the end of the year. A good balance for all stakeholders. With that, I'd like to thank you for the call and we remain available for any further questions that you might have subsequently. Thank you very much.
Thank you. That now concludes the webinar today. Thank you and goodbye.
Bye.