Great. Thank you, and welcome to our 2022 full year results. Welcome to those also attending via the webcast and conference call. I am Iván Arriagada, Chief Executive of Antofagasta. With me here today, we have our CFO, Mauricio Ortiz, and René Aguilar, our Vice President of Corporate Affairs and Sustainability. We're gonna do a brief presentation on the release of our results today, and then we'll move to questions and answers. Okay. Let me start by pointing out to our purpose, which is delivering mining for a better future. I think this encapsulates what motivates all of us at Antofagasta and which goes beyond the day-to-day tasks that everyone is expected to do in their specific roles.
As part of our purpose, our vision of a better future comprises four interconnected areas. So the better future we envisage is for the planet, society, our organizational culture, and our people, as shown in this slide. We deliver this through our five strategic pillars, and those have not changed. Safety and sustainability, people, competitiveness, growth, and very importantly, innovation, which we see as a key enabler for our business to respond to both today's challenges and the challenges of the future. With this strategy, we will deliver value on for all our stakeholders, both economic and social. Let me now take you through the highlights of our results. Our people are key to what we do, and our top priority is and remains safety.
2022 was a record year with all our safety indicators improving during the period. This is very important and we're very pleased to report that we had a very successful year with respect to safety. We also, well, successfully achieved our production and cost guidance for the year with copper production of 646,200 tons at a net cash cost of $1.61 per pound despite the temporary reduction in throughput at Los Pelambres due to water restrictions and availability and expected lower grades at Centinela concentrates. Our EBITDA was $2.9 billion, and our EBITDA margin remains solid at 50%. Our total dividend for the year is $0.597 per share, which is equivalent to a 100% payout ratio on our underlying earnings.
As a group, we recognize climate change as one of the greatest challenges facing the world. Centinela stopped extracting any continental water at the end of December, and since April last year, all our mining operations have been using 100% of renewable energy, reducing our emissions by nearly one million tons of CO2 equivalent since 2020. In 2022, all our operations have achieved the Copper Mark accreditation, which is an important independent validation process with respect to our sustainability practices. We continue to work with the communities this year, making a social investment of $57 million. We also achieved our gender diversity target for the year, and now over one in five of our employees is women. Looking to the future, we are creating value through our exploration activities, organic growth projects and innovation.
Following two exploration discoveries in Chile, we have increased our mineral resources by over 900 million tons this year. I think that's an important achievement that we're also reporting. All of this is underpinned by our purpose of developing mining for a better future. Let me be a bit more specific around safety. I think we prioritize safety, health, and well-being of our workforce and communities. We had no fatal accident, you know, last year, and all our safety indicators improved during the year. 2022, as I mentioned, was a record year for our overall safety performance. We continued to reduce our high potential incidents, recording a 35% reduction and the lowest result in recent years.
High potential incidents are leading indicators of the effectiveness of safety controls and are key measures of our success in strengthening them. We aim to keep our Lost Time Injury Frequency Rate below a score of one. In 2022, the overall group score was 0.84, a 37% improvement. This was due to strengthened control strategies, particularly for high-risk tasks. On safety, our current focus is to reinforce the key principles of our strategy, focusing on empowering our people to understand and manage the risk of the critical tasks they carry out, ensuring competent and affecting supervision, and having determined leadership to strengthen our commitment to zero fatalities and occupational diseases. Now, let me say a few words about the copper market.
Copper is not only a commodity essential for our daily lives, but it also plays an integral role in the future, given its use in the energy transition and increasing electrification of the world, especially in emerging economies. The copper price fluctuations during the year reflected the broader volatility in the global economy. Higher inflation, the Ukraine War, as well as the strong dollar, negatively affected most commodity prices early in the year. Signs of economic recovery, fueled by China dropping its zero-COVID policy, led to an upturn in the price. However, economic and geopolitical uncertainty will remain a feature of global markets going forward, as we know.
On the supply side, the expectation of a surplus over the next year or two have diminished, as lower production has been reported widely and with concerns about how the situation will evolve in some jurisdictions which have experienced political or economic deterioration. In the longer term, the fundamentals for demand growth of urbanization, decarbonization, and clean energy targets continue to be supportive for copper demand and our confidence in copper in the long term. The longer-term challenges to supply growth also remain. Lower quality deposits, increasing technical complexity, and higher environmental and social expectations, all of which are limiting the expected rate of supply growth. At Antofagasta, we have a growing mineral resource base, as we've sort of increased this year in 1 billion tons, and the ability to unlock them. We are well-positioned to continue to grow, especially with our organic resource base.
Let me refer briefly to Chile. You know, in Chile, the government presented a revised draft mining royalty bill to Congress in October, which changes the structure and increases the rates compared with the current royalty applicable in Chile. This draft was approved by the Senate Mining and Energy Committee in January, has now passed to the Senate Treasury Committee for discussion and possible revision. It's now sitting in Congress. The bill will be debated in the Senate before being passed to the lower house for its consideration, if approved, it then would become law. As regards to the new constitution, it was rejected in a national referendum in September last year. Since then, a framework has been developed, which provides for certain consensual principles or boundaries within which a new text is to be developed.
A new constitutional council will be elected in May, which will work with a committee of experts to draft a constitution, and this will be put to a vote in a national referendum in December this year. Having said this, I would like now to pass over to Mauricio, who will give you some more detail on our financial performance for 2022. Mauricio.
Thank you, Iván. Thank you, Iván. Good morning to everyone. Well, in a volatile global environment with higher inflation, logistical constraint, and climate change events, such as the drought at Los Pelambres, our financial remain robust, driven by the operational and cost discipline across all our assets. These factors were reflected in our full year financial performance when compared with the exceptional 2021. Net cash costs in 2022 were in line with our guidance, but higher than last year due to the impact of the lower copper volumes and higher energy and other input prices, along with general inflation. Despite lower production and higher costs, our EBITDA margin remained strong at 50%, 15% lower than in 2021, but mainly reflecting the lower realized copper price, which was down 14%.
In this changing world, our robust balance sheet, which has a net debt-to-EBITDA ratio of only 0.3x , is an important attribute of our company. It's enabled us to make capital decisions from a position of strength and stability. The 14.1% Return on capital employed was mainly explained by our lower earnings on the back of the lower revenue, but also for the $480 million we have invested during the year in our expansion at Los Pelambres that has not yet come into operation. Our underlying earnings were $0.597 per share. This year, we have an exceptional gain of $945 million following the completion of the Reko Diq transaction.
This increases our earning, including exceptional items, to $1.555 per share, 19% higher than in 2021. Finally, having assessed all the decision factors in our capital allocation framework, our total dividend for the year is $0.597 per share, which is equivalent to a payout ratio of 100%, calculated against our underlying net earnings. Now, let me take you through a summary of our production and costs. As guided, copper production was just above 646,000 tons, 10% lower than in 2021, mainly due to the temporary reduction in throughput at Los Pelambres because of the drought and the expected lower grade at Centinela concentrates.
To address the declining grades, we are actively focused at enhancing our operational reliability and the utilization rates of our plant and equipment. We have made further progress in these areas with Centinela concentrates and Antucoya achieving record throughput rates for the year, exceeding their design capacity. This remarkable achievement is a testament to the skills and the disciplines of our people at the mine sites, as well as the effective integration of our new remote operation center. The complex global environment in 2022, with constrained logistic chains and the continuing inflationary pressures, had a significant impact on important inputs such as diesel, sulfuric acid, and explosive. This was mitigated by the weaker Chilean peso. All these factor accounted for $0.25 per pound of our increase in cash costs before byproducts.
Lower production also adversely affected costs. However, this was partially mitigated by the benefit from our cost and competitiveness program, which helped to reduce costs by $0.0 7 per pound. Overall, our net cash costs for the year were $1.61 per pound. Despite the challenging global conditions, the creativity of our people, coupled with the benefit from our investment in advanced technologies, delivered outstanding results in 2022. Through the use of advanced analytics and material learnings, we have been able to improve the efficiency of our consumption rates. For instance, by optimizing the consumption of sulfuric acid and the grinding media, we have been able to improve their cost per unit of production.
Procurement and contract management discipline remain as the main contributor to our cost and competitiveness program, where detailed planning, coordinating purchase across our operations, and careful administration of the contracts has delivered $52 million of structural savings. One initiative we are very proud of is the Centinela concentrator operating at above design capacity. In 2022, daily throughput reached 109,000 tons, which is 4% higher than the design. In 2023, we expect to capture the benefit of this, along with higher concentrate grades driven by better flotation performance. In summary, in 2022, we have a very good year for our cost and competitiveness program. We achieved more than double its target, yielding benefits for $124 million. For 2023, we have set ourselves a target of at least $60 million of CCP benefits.
Our EBITDA was $2.9 billion, our EBITDA margin, as Iván said, was a robust 50%. The bulk of this $1.9 billion decrease in EBITDA, compared with 2021, was from lower sales volume and the lower copper price. These two factors accounted for more than $1.6 billion of the decrease, higher mining costs also contribute to the fall. Exploration and evaluation increased by $10 million- $130 million, mainly explained by our exploration work at Cachorro, where we increased resources and our new Encierro deposit. Our associates and joint ventures have decreased their contribution to EBITDA by $17 million. The transport division increased its contribution by $11 million, mainly due to the better sales as contracts signed in previous periods ramped up. This led to a record year of tonnage transport in 2022.
Overall, our EBITDA margin remained strong, even in a challenging year marked by inflation and lower production. Consistent with our financial discipline, we have maintained our strong balance sheet with a net debt-to-EBITDA ratio at the end of the period of 0.3x . Net debt was $886 million at the end of the period, compared with the net cash of $541 million at the end of 2021. This movement is largely explained by three factors: $2.8 billion of EBITDA subsidiaries, our $1.9 investment in mine development, sustaining CapEx, and the Los Pelambres expansion project, all of which are targeted at securing our production profile for the upcoming years, and more than $1.3 billion paid in dividends, which reflect our commitment to sustainable shareholder returns.
As you're aware, our capital allocation framework is fundamental to all our financial decisions, and which also considers our climate resilience. Everything is underpinned by our strong operating cash flow, where our operational discipline allows us to achieve our annual production and cost and competitive program targets, and our gold and molybdenum by-products revenue stream from our two largest mine, Los Pelambres and Centinela, allows us to control our costs and capture price increases in these products. We invest through the cycle in sustaining capital programs and mine development, exposing the ore that will be mined in the following periods. Next, we fulfill our minimum commitment to our shareholders by paying 35% of our underlying net earnings as dividends.
With our excess cash flows, we consider the strength of our balance sheet and then assess our growth projects, which must be in line with our stringent return and risk criteria. If nothing fits our criteria, we return this excess cash to our shareholders as part of our dividend policy. Following this disciplined framework allows us to invest and deliver consistent returns to our shareholders through the cycle. The board has recommended $0.597 per share as total dividend for 2022, which is 100% of underlying net earnings, excluding the Reko Diq transaction. René will give you some more details on our sustainability performance. René?
Thank you, Mauricio, and good morning to everyone. Sustainability at Antofagasta is about deploying a strategy that improves the lives of our employees and embraces and support the development of our surrounding communities, while at the same time managing the environmental impact of our operations. This is why it has been important for us to implement recognized sustainability standards. This year, all four of our mining operations were independently assessed against two benchmark industry responsible production standards, the Copper Mark and ICMM performance expectations. It is also important that we provide reliable information to our stakeholders regarding our performance. Last year, we started publishing online our ESG data book, which we will update quarterly.
Our strategy allow us to put back more into society, the environment, and the global economy than we take out. We do this by setting ourselves goals on climate change, diversity and inclusion by joining global challenges, protecting our employees, developing our suppliers, as well as how we address our environmental impact, so that overall, we have a net positive end result for nature. The group's diversity and inclusion strategy launched in 2018, has transitioned from an awareness-raising phase about unconscious bias and discrimination to introducing inclusive practices as an integral part of how we work. We are deepening our inclusive organizational culture, which supports the retention of all people, whatever their gender, race or sexual orientation. In a key initiative, we ran a campaign on respectful behaviors and held workshops on respectful environments.
In 2022, we increased the proportion of our female employees to 20.6%, compared to 17.4% in 2021, meeting our goal for the year. This is a steady improvement since 2018, and we have more than double our female participation since then. We have now set a new gender diversity goal for women to represent 30% of our employees by 2025. As Iván mentioned, we are committed to the environment and mitigating adapting to climate change. All mining operations have been using 100 renewable energy since April 2022, with an estimated emission reduction of nearly one million tons of CO2 equivalent of our Scope 2 since 2020.
With this reduction, we met our 30% reduction commitment three years early. We will soon set ourselves a new medium-term emission reduction goal for 2030 and a Scope 3 reduction target. We have already begun working on decarbonization plan for all our operations, defining the baselines, the replacement plan for all trucks, the projection of energy inputs, as well as agreeing the assumptions for current and future technologies. The final plan will clearly indicate the steps we must follow to be carbon neutral by 2050 or sooner if the available technology allows it. In 2022, water use rates of our mining operations range from 79% at Los Pelambres to 94% at Zaldívar.
With the completion of the Los Pelambres desalination plant this year, and following its expansion, we are on track for sea and recirculated water to be more than 90% of our total operational use by 2025. We aim to develop social programs and projects in partnership with communities that lead to significant improvements in people's quality of life and increasing their access to goods and services. In 2022, we increased our social value creation investment to $57 million, up from $48 million the previous year. This financial contribution is significant, the real value lies in the social impact created. Over the last five years, we have assessed the impact of 15 social programs in six strategic areas: water management, productivity support and entrepreneurship, community infrastructure, education, employability, and supply development.
This year, two areas of focus stood out in terms of programs that promoted equity and access to basic goods and equal opportunities and had the biggest impact. We continue to enhance access to drinking water for human consumption and irrigation in rural areas near our operations. We also intensify our EnRed program with over 20 initiatives aimed at addressing the infrastructure and digital skill deficit in the communities in our area. I pass you to Ivan.
Thank you, René. I'm gonna close with a reference to guidance for this year and also progress on our growth projects. For this year, copper production will be in the range of 670,000-710,000 tons, which reflects essentially the completion of the Los Pelambres desalination plant and concentrator expansion during the year, partly offset by lower grades at Centinela cathodes. During the year, copper production is expected to increase quarter-on-quarter, mainly due to the production profile at Los Pelambres, it's something that we also witnessed in 2022. Group cash cost in 2023 before and after by-product credits are expected to be $2.20 before by-products and $1.65 after by-products. As always, we remain very focused on productivity.
On the back of what has been achieved recently, we're now targeting savings of at least $60 million under our cost and competitiveness program for 2023. We expect this will offset some of the other inflationary cost pressures we will see during the year. CapEx, expenditure is expected to be $1.9 billion, as sustaining and mine development expenditure increases to approximately $1.5 billion. This increase reflects inflation, higher mine development at Centinela concentrates, detailed engineering on the Los Pelambres desalination expansion and concentrate pipeline sustaining CapEx, and the expansion of the tailings storage facility at Centinela. However, although there is some pre-investment expenditure on the Centinela second concentrator project, this estimate does not include project execution expenditure on that project for 2023.
Reliable and responsible copper producer is, you know, what we aim to be and to achieve. I will talk a little bit about our pipeline portfolio. We have a variety of exploration late-stage projects which are in different phases, as you will note in the slide of evaluation, and will generate organic growth for the company, including a new recent discovery, which we call Encierro, which we are including for the first time in our reserves and resource statement, joining the Cachorro project, which we included for the first time in 2021.
We have a huge mineral resource base of over 19 billion tons, of which some seven billion tons are in the Centinela mining district and six billion tons are at Los Pelambres, giving us options to develop our inventory at a time when copper supply is becoming increasingly constrained. We expect our Cuprochlor-T leach process will be adopted at our operations over the next few years, and this will allow us to maximize the utilization of our leach assets and processes, processing ore that might otherwise have been uneconomic. In the meantime, we will continue to remain alert to any attractive external opportunity that may become available.
So to give you a brief update on some of the growth projects, at the end of last year, the Los Pelambres expansion project was 93% complete in terms of construction, with both the desalination plant and concentrator plant expansion due to be in production during the second quarter of this year. Progress continues, on the other hand, with the engineering and pre-investment studies for the Centinela second concentrator. In line with a disciplined approach to capital allocation, the project will be sent to the board for final investment approval, we expect during 2023, following completion of the Los Pelambres expansion project, and once there is sufficient clarity on the outcomes of the ongoing discussions on the mining royalty and tax reforms in Chile.
With respect to our recent exploration success, during 2022, we increased our mineral resources by over 900 million tons, with over half of this coming from two recent exploration discoveries. Cachorro, in the north of Chile, which reported its first inferred resource in 2021, and this were increased by over 70% last year to 242 million tons at 1.21% copper. This makes the project one of the most important manto-type deposits in the northern coastal belt in Chile. Also, it lies between Antucoya and Centinela, so may benefit from the use of their facilities. The Encierro Project, on the other hand, is in the Chilean High Andes, 100 km east of the city of Vallenar and 600 km north of Santiago, and it declared its maiden inferred resource in 2022.
The deposit is a complex copper, gold, moly, neos and porphyry deposit with inferred resources of 522 million tons at 0.65% grade copper. We will continue to drill these deposits and advance them through the development cycle over the coming years. Let me say a few words about innovation and technology. We're proud to report that last year we inaugurated our first 100% autonomous operation at Esperanza Sur Pit with a fleet of 11 trucks and two autonomous drillings. These autonomous projects makes it possible to eliminate the operator's exposure to risk and increase the efficiency and extends the equipment's life cycle. The autonomous drilling equipment has a higher level of utilization, 10% higher than a conventional system. The integrated remote operation centers are already operating at Pelambres and Centinela.
They allow the visualization of real-time data to enable timely decisions to be taken while having a global view of all the processes. This allows a higher level of coordination and improves performance and decreases variability. During 2022, as I've mentioned, we completed the validation of our in-house patented primary sulfide leaching technology, Cuprochlor-T, and made the technology available to our operations to incorporate in the long-term planning. The project continues advancing. An industrial size 38,000 ton leaching heap was completed at Centinela in 2021, and results in 2022 confirm recoveries of 70% or more after approximately 200 days, and pre-feasibility work is now starting at Zaldivar for the primary ore there. The process has the potential to unlock value from previously uneconomic mineral resources and is being considered as an option for the existing operations.
Let me finish now by looking ahead to this year and the opportunities ahead. Safety is always our top priority. We're committed to having zero fatalities, and we will continue with a relentless focus on protecting the health of our workers and communities. We continue to embed our climate change and sustainability strategy in our decision-making. On the critical resource of water, we will continue to take all necessary actions to mitigate the impact of the drought on communities and our operations. Most significantly, we will start production at our desalination plant at Los Pelambres in quarter two 2023. We are accelerating the implementation of innovation as today more than ever, it plays a key role in how our company goes forward. We're committed to maintaining our financial discipline, a key attribute of our group, with a focus on value creation and shareholder returns.
We are in a strong position to take advantage of the growth in copper demand. We have the embedded tons across our business, the ability to unlock them in a sustainable way, and we're a responsible and reliable producer who will deliver value to all our stakeholders. 2022 represented a temporary drop in our production profile, as we had expected. Looking forward, we see growth coming in the short term and the longer term as we advance our project portfolio. Thank you for your attention. Now we will take questions, starting with the floor and then moving to the virtual questions. Yeah. Do you have a micro? It's coming.
Hi, it's Danielle Chigumira from Credit Suisse. A couple of questions from my side. Firstly, on taxes and royalties, what is your current expectations around the timeline for which that you'll get visibility on them? Are you still expecting an effective tax rate in the low 40s? Secondly, for René on sustainability. You've got a track record of surpassing the emissions reductions targets ahead of time. What kind of visibility are you still waiting on in order to set a target specifically for Scope 1 and 2? Is there any reason why, given we've got production increasing, why emissions won't go up every year for the next five years? Finally, just on Zaldivar, what's the timeline for the pre-feasibility study on Cuprochlor?
On taxes and royalty, I think the what the government has indicated is their willingness to try to close that discussion ahead of the next budget and as soon as possible. The next budget, which should be discussed at the beginning of the second half of this year. That's the timeline that, you know, they've declared and that we sort of see them working to. In terms of where the reform lands, I mean, our view is that the fiscal terms are very important in terms of, you know, the stability and predictability that they provide for investment decisions and therefore, stability is key. The level needs to be such that Chile remains competitive when compared to other jurisdictions.
I think that's what we've been conveying to the authority, when it comes to, the level at which, taxes, you know, need to be set so that that competitiveness against other key mining jurisdiction, especially those that produce copper, is retained. So that's on royalty. I think on sustainability, yeah, we've been successful in achieving our target that we set ourselves. I think a lot of that has come out of the conversion that we were able to achieve in some of our energy supply contracts. Now, as René was saying, we are in the process of setting our new target for Scope 1 and 2 specifically.
That depends on the improvements that we're able to identify in terms of, you know, project work on energy consumption efficiency. That's basically what we wanna get full visibility to as sort of we move to a new commitment. Our commitment is founded on, you know, the visibility and certainty around being able to achieve, you know, those improvements and changes. We're well advanced in those. I think we're in good shape to be able to refresh our target as it relates to Scope 1 and 2. Scope 1 also involves haulage and, you know, from that point of view, we know that the technology is for replacing diesel in trucks is not yet available.
We're actually, we're very active in terms of testing both battery-assisted haulage trolleys, which we've been looking at as a possibility in Pelambres, and also hydrogen. We know that technology has still to develop. I think advance in terms of being able to understand and test specific solutions in our sites. So a lot of work is being done there. In respect of Scope 3, which you didn't cover, but I think it's important that we also include. I think we're doing two things. I mean, one is that we did commit with our suppliers last year to work together on achieving reductions in emissions in their processes. And help them or assist them in that activity.
We're now in the stage of developing the specific plans. That commitment was made and was put in place last year. I think that was a very significant step forward for us in terms of just agreeing to work in that direction, something that we sort of explicitly explicitly did. Now, that means that we're changing some of our processes internally. For example, when we bid now for goods and services, you know, we look at the. Therefore, we rank them according to, you know, how they come up with emissions, which is something that we weren't doing before.
Also, what we do is that we use, and I think we've shared this with you before, a shadow price for carbon emissions at $100 a ton of CO2. Therefore, we also calculate, you know, how do these alternatives rank when you factor in that cost of emissions. That reference is also available when decisions are made. We've got a very broad set of issues that we're addressing to be able to move forward in Scope 3. Then, as we understand more and more, our expectation is that we will be able to set a target with respect to Scope 3, and we're really diligently trying to work to achieve that by the end of this year, 2023. So that's on the sustainability.
Finally, on Cuprochlor and, you know, we're doing, we're finalizing the sort of pre-feasibility at Zaldívar . Then we expect the feasibility is something that which will be basically undertaking between the end of this year and next year and 2024. That by 2025, we basically have the feasibility ready. I think the key around the pre-feasibility, so the viability of being able to exploit a primary sulfide work, you know, will be completed this year, 2023. You know, the pre-feasibility. Okay?
All right. Thanks. Daniel Major from UBS. Two lines of questions from my side. Firstly, on CapEx, quite a big step up in sustaining in mine development CapEx from $1 billion- $1.5 billion. Can you give us latest estimates of medium-term sustainable sort of rate of mine development CapEx, including the expansion of Centinela? Secondly, on the dividend, will you look at the proceeds from Reko Diq as a opportunity for a special distribution, or is that sort of included in the broader capital allocation discussions? The fact that you've booked the provision, Well, write off of $945 million, does that suggest that the tax payable on that's gonna be fairly limited? Yeah, they're the questions with.
I'll ask Mauricio to comment on the CapEx. I'm, I think on the dividend, maybe just to say that the basis on which we've determined, you know, the payout for this year is the earnings, you know, from last year. Without including the Reko Diq element, because that's sort of an extraordinary element. Now we have yet to receive, you know, I mean, we've got to receive the proceeds. We're expecting that that will happen in 2023. I think the decision around those, you know, those funds, will be made then at that time, you know, by the board, according to, as you say, the sort of the capital allocation framework that we have.
We do consider them to be extraordinary from the point of view that they don't come from the ordinary course of business, as, you know, the earnings on which the dividend was calculated or determined in this year. That's the logic there. Mauricio, you wanna talk about capital expenditure and mine development?
Sure. Thank you. Hi, Dan. How are you? Well, on CapEx, just a brief comment. Well, previously we have a range. We were moving in a range between $600 million and $800 million per year. As we announced a couple of release before, we are moving up for the next three years. This, that mean this year and the next two years to a number around $1 billion as an average. That's mainly explained by two reasons. One is we're opening phases, new phases in Centinela district, basically Esperanza Sur and Esperanza. They're going through opening new phases on these two open pits. Also we are undertaking relevant or important overhauls in two things.
One, expanding or increasing our tailing deposit capacity, either in both Los Pelambres and in Centinela as part of the sustaining CapEx, of course. Also, overhauls some major mine at the water at Centinela, and also including this guidance of $1 billion average for the next two years. We're including also the necessary works to relocate the concentrate pipeline on the additional model in the diesel plant in Los Pelambres. Basically, we are investing in sustaining CapEx, as we said, in order to enable production going forward and the risk production going forward, maintaining our capabilities to produce copper through the cycle.
Just to follow up on the tax on the Reko Diq, should we assume that you receive largely the $945 you've provisioned in cash?
Yeah, we don't expect tax on that proceeds. Of course, we need to complete the evaluation through the whole jurisdiction that we're involved, but we don't expect tax.
Yeah.
A couple questions just around production. You did mention the expectation for quarter-on-quarter growth throughout the year, but could you perhaps put it in bands H1 versus H2, and what's the type of split you're thinking about? Is it 45, 55, or something more pronounced? The second one is around absenteeism at the mines. How has that been progressing, and what assumption have you put underlying the 2023 production target?
Yeah. The production is quarter and quarter is largely driven by the fact that the water availability for Pelambres, you know, will be in place in quarter two. Therefore, because, you know, the first three months of the year are the dry season, you know, then we run Pelambres, you know, when there is water limitation, at a lower throughput. We're not actually using all the capability that we have in terms of plant capacity. Therefore, you know, it's when water becomes available, then, you know, basically Pelambres is able to run at a higher throughput, which is sort of double the rate at which it would be running at in the first quarter. That's the sort of difference that you have.
It's essentially driven by Pelambres. In terms of absenteeism, I think what we saw traditionally, absenteeism was around 3% when we had COVID. After COVID, that, you know, went up. In some occasions, you know, we witnessed in some projects, and this was also reported across the industry in Chile and elsewhere, that absenteeism went as high as, you know, 25% or 30%. Now we're back down to numbers which I would place, you know, between 6% and 8%. We're still above what was the situation pre-COVID.
I think, you know, with the economy now going into a slower growth, you know, phase, out of the other control and inflation, we expect that that will probably converge towards sort of historical levels. Yeah, we are running with absenteeism levels which are higher after COVID than what we had before. I think this also has to do with the change in the way of working and expectation generally on people and how those have evolved. Which makes it, you know, certainly more challenging. At levels between six and eight, it's something that, you know, we can manage.
We've also changed our way of working, and I think that's also having an impact in terms of being able to attract new people and helping to reduce that further to the levels of 3% that we would expect to see sort of a normal case.
[Jens] from Barclays.
He was the first to...
Three, three questions. Just pushing you a bit on the sustaining CapEx. You said earlier, Mauricio, that it's $1 billion over the next few years, but this year is $1.5 billion.
Should we expect next year and the year after to come back to one or somewhere in between? Second question, just on the minority dividends. There you only paid $80 million in the first half and the second half, zero. You can see quite a bit of cash building up at some of the assets, particularly at Los Pelambres. Should we expect some catch-up payments on that in this year? If you could just help us think how should we think about your expansion plans, I guess the remaining CapEx at Pelambres. Will you fund that from debt within the asset? You will channel up most of the cash flow at the asset to the parent company. Likewise, just how we should think about that for Centinela.
Sorry, last question, just on Zaldívar recoveries there. Just obviously that's still been quite disappointing with this, I guess leaching project that's completed. Where should we get to there and what other, I guess, what's the sort of end goal there on recoveries longer term?
Let me start with that one, and then Mauricio will address the financial questions. On Zaldívar, we've implemented the chloride leach as the processing route, to be able to leach low solubility, secondary sulfides. That's a proven, if you want, processing, route. What we saw during the years that rumping up to the levels of recoveries that we are targeting, you know, is a bit more extended than, you know, we had anticipated. I think, the good news, I would say, is that the project is operating as expected from the point of view of, you know, the levels and concentrations of chloride.
The second one is that, in the fourth quarter, we saw an uptick in recoveries, which is sort of nearing now the sort of levels that we expected at this stage. The sort of recoveries that we're getting in secondary sulfides are north of 60% now, and therefore that's good, and that's continuing in the course of 2023. We think that now the process has become, this is a chemical process, has become active, and therefore that we are now heading into the type of recoveries that, you know, we expect. It has been a bit more, and than we had anticipated, but we're getting there.
We're positive about where this is heading, from that point of view. Mauricio, you wanna address.
Thank you.
More financial question?
Well, in terms of sustaining CapEx, this year, we are guiding $1.5 billion, based on the factors that I explained just a couple of minutes ago. We expect to return to something lower than that next two years, basically because this year we are front-end loading some works in this specific project I mentioned. In terms of minority dividends, you're right. This year was a year where we'll build up cash in our companies, basically because we assess that the companies went through, of course, low grades and lower throughput at Pelambres. We were cautious about our cash distribution from the companies. I think in times of volatile environment, it was a wise decision.
In terms of how we want to work the financing of our projects going forward, of course, we have the discipline to optimize the leverage ratios in of our operating companies, use their balance sheet in order to contribute to the group robustness. Just to give you an example, what we have in our portfolio in terms of Centinela second concentrator, we are actively evaluating a project finance in order to optimize the financing of that expansion. In terms of Los Pelambres has been a very robust asset. We have plenty of options. Of course, we're exploring for the second desal model and the relocation of the concentrate.
Debt could be corporate or other kind of debt, and of course, some combination, some healthy combination between debt and equity. As a main principle, Iván, summarizing, to optimize the leverage ratios in a healthy way of our operating company is part of our discipline.
This is Jason Peck with Bank of America. Two questions. One on the second concentrator project, and then the other one again on the Cuprochlor. On the second concentrator, could you just talk to us a little bit about the CapEx number? You know, again, how live is that, given the huge fluctuations we're seeing in some of the input costs for mining CapEx? With that, I guess, how complete is the scope, right? So for example, is there anything outside the scope that we need to think beyond the number you published? Secondly, just on Cuprochlor, that's an in-house technology. You guys have developed it's IP. Does Barrick get it for free at Zaldívar?
On, on the, on the second concentrator, I mean, as you know, we've updated the CapEx estimate recently. In doing so, we've included, at this stage, and because we've sort of advanced in the engineering, all of the scope of the project. It's also got some escalation components to it. Expecting that some of the price do fluctuate and have or are subject to some level of inflation. We think from that point of view, that estimate is a, you know, robust expected value of what, you know, the capital expenditure for that project will be. Now we are in an environment which is volatile and, you know, with changes and therefore, you know, obviously we, you know, we look at what's happening.
In essence, what we see is that the inflation is actually coming down and input prices are actually coming down. We see limited risk therefore of having to restate that number on the basis of the sort of macro trends that we are witnessing, you know, for the next, you know, couple of years when we expect to be able to do the construction. From our point of view, we think it's a fair estimate of, you know, where the construction cost will fall. When we did the review, we were quite keen on including some escalation component to it as well, and the full scope. Remember that this is a project in which we've been working for a long period of time and therefore, you know, the scope is quite well-defined in terms of the construction.
It's included in there, right. Cuprochlor-T . Yeah, this technology, you know, we're very excited about it, and obviously it's part of the extension, we think, may happen at Zaldívar . You know, the exact commercial terms under which, you know, this would be applied and deployed is something that we still need to sort of, work out. We're very keen at this stage on actually proving that this provides the right solution, you know, for the type of ore that we have at Zaldívar . From that point of view, as we mentioned before, this is being incorporated into our mine plans and, you know, it's the route to grow at Zaldívar .
You do ultimately see it as an asset that should generate a return for you, the technology?
Well, I mean, we do. I think our focus is primarily on being able to deploy it and use it for our own resources. That's what drives us at this stage. Obviously, you know, we see economic value and commercial value, you know, in the long term. Our... The main application we see in our own ore bodies, it's been now included as part of our mine plans for Antucoya and Centinela. We're starting to see, you know, in a five-year timeframe, some copper coming out of this into our, you know, Centinela and Antucoya. That's what drives us and has us excited with respect to Cuprochlor-T and obviously the extension for Zaldívar . Okay.
If there are no more questions from the floor, then we will move to the virtual questions.
Thank you. As a reminder to everyone, if you'd like to ask a question, please use the Raise Hand feature on your screen. Or if you've dialed in, please press star nine to raise your hand. Our first question today comes from Bob Brackett at Bernstein. Bob, please unmute yourself and go ahead with your question.
Good morning. Looking at the net cash cost, you provided a bridge from 2022 to 2023 explicitly around FX and byproducts. You mentioned that inflation would be offset by things you can control. Can you give us a sense of what you see as that level of inflation and therefore what's the scale of the things you control offsetting that?
Yeah. Mauricio, you wanna take that?
Thank you for the question. In terms of, let me split the answer in two pieces. First, in terms of inflation, we have the Chilean inflation and the global inflation. In terms of Chilean inflation, that is mostly offset by the exchange rate, that is what we have seen last year. We have the global inflation that impacts our unit cost. Along that part, we also have the input prices. Input prices has increased significantly since 2021, in comparison with 2021, driven basically by energy, explosive and diesel and sulfuric acids. Wrapping up, how we control inflation is, we don't control inflation. If we could, would be great.
How we manage inflation is, for one side, our peso, denominated cost base, which is providing some offset to the local inflation. In terms of global inflation, one of the characteristic or one of the main features from Antofagasta is having a significant stream of gold and molybdenum, which is mostly help us to tackle that global inflation, and that is what we have seen in 2022. That is pretty much how we work out the inflation, Bob.
Okay. No problem.
Great. Thank you for that.
Okay. Our next question is from Ioannis at Morgan Stanley. Yannis, please go ahead and unmute and go with your question.
Great. Thank you very much for the presentation. Just three questions left from my side. The first, going back to the Centinela expansion project. You've already given some colors about your thoughts on the timing of sanctioning. I'd like to figure out, based on the most recent royalty proposal, do you think the fiscal framework is conducive to you going ahead with it? i.e., is there enough economic value based on the current terms we've seen, or do you expect further improvement before you go ahead? The second question, going back to Reko Diq and the cash proceeds. In case there is a special dividend as part of your distribution decision at the time, will this have to wait until the full year results in 2023 or would you consider distribution as soon as you get the cash?
Lastly, on molybdenum, we've seen the price surge over the past couple of months. Would you consider focusing on a high-grade areas at Los Pelambres and Centinela to potentially lift moly output and improve your EBITDA cash position? Or are you sticking with your mine plan as is across operations? Thank you.
Yeah. On the Centinela expansion and what we've said is that it's very important that we have clarity on the fiscal terms applicable to the project. I think that's one element. The other one is that in discussing, you know, the tax reform, that we've sort of made this argument that taxes are set at a level in which, you know, the industry remains competitive. I think that's just a broader statement with respect to where we expect taxes to end and to land. I think we continue to pursue basically that principle. We think there is still discussion that needs to take place in Congress to be able to get to that level.
With respect to Reko Diq, I just wanna be completely clear that, you know, no decision has been made with respect to the, you know, to where the proceeds would go. That will be part of our capital allocation review. We normally do that at least twice a year, when we pay the interim dividend and when we pay the final dividend. In respect of, you know, half-year close and in respect of any year close. You know, this will go into that conversation and into that review. That's sort of the cycles in which we would look at that decision. So twice a year.
With respect to moly, I think we've been very, you know, pleased with how certainly moly has performed in terms of, you know, the market fundamentals and price. It's provided us, you know, an interesting revenue stream. That used to be the case only of Pelambres, but now we actually have operating a moly recovery plant at Centinela. We actually upgraded last year and therefore expect to see more revenue. In terms of how we mine our deposits, essentially those decisions are governed by copper, which is the mainstream product, you know, that we get. There could be in the margins some optimization, but that remains the rule.
We work our deposits in a sequence that is driven basically by copper, and moly is a by-product. That's essentially the rule that we have because that provides the optimum economic value, you know, for these deposits.
Very clear. Thank you very much.
Thank you. Our next question is from Grant Sporre at Bloomberg. Grant, please press star six to unmute and ask your question.
Hi. Good morning. Thanks for the presentation. Just a couple of follow-up questions, if I may. Just on the molybdenum market, if you know, just a broader question, how sustainable do you see the current price levels? If you have a view on the market, if you could share it, that would be great. Two just smaller questions. Just in terms of working capital, there was a quite a big jump in receivables. Is this just temporary and it'll revert to normal, or have you perhaps changed your terms in which you know, you collect your receivables?
Lastly, a small thing, but I guess it sort of points to the, to the Reko Diq proceeds potentially is on the cash flow, there's a small equity acquisition of about $67 million. I don't know if you're able to share what that what that pertains to. Those are my three questions. Thanks very much.
Yeah. I'll address a couple of them, and if you could talk about the working capital. On the molybdenum, I think that this is a market which, you know, produces around 300,000 or, you know, about 300,000, 350,000 tons a year. We, you know, we produce 10,000. You know, it is a percentage of that that is small, but not completely irrelevant. Moly is used as an alloy for, you know, for very special hard metal applications. It tends to be from that point of view, cyclical in terms of how its price performs.
Therefore, there have been some bottlenecks, the way that we look at it recently in terms of production, essentially associated to, lower production as a by-product in some of the, you know, base, copper mine where this is produced. We tend to think that that will sort of ease, and therefore that, you know, some of the increase in price is temporary. Fundamentally, we think moly remains strong in the sense that, you know, it is required and progressively more, you know, needed for the purposes of, you know, alloys with, with, for noble uses like, you know, aircraft engines and the like. Maybe there is an element of...
There is an element of cyclicality certainly in the price associated to, you know, the business cycle and maybe some element of tight supply explaining some of the increase in price that we recently saw and we expect to slightly moderate. The other question was on the equity that doesn't... No, we do participate in small joint ventures, you know, from time to time associated to some of exploration activities. We've sort of seen an increase of activity there as we get back from COVID, but there's nothing relevant at this stage for us to share or disclose more broadly. It's just that. You wanna address the working capital?
Well, hi, Grant. Well, basically, let me explain the working capital movements in the following way. Basically on 2022, we run flat. We have higher inventories, mainly explained for two reasons, higher ore inventories in Centinela and Antucoya, but also higher warehouse inventories and supplies inventories. That was driven by the supply constraint that we were mentioning and tackling during the year. Basically, in order to maintain operational continuity and preserve our reliability in our plants, we increased warehouses and operational stocks. That movement was mainly offset by an increase in creditors, mainly due to the higher input prices, and in minor degree, debtor decrease due to the lower copper prices.
Basically, that are the main movements that accounts for where we're running flat in terms of working capital in 2022.
Just to complement the record date is also recorded as a trade-
Yeah
receivable. That's a big, improve... sorry, increase as well, but it's temporary and associated to that.
Okay, great. Thank you for that clarity.
Yeah.
There are no more questions on the line. I will now hand over to Iván Arriagada for closing remarks.
Thank you. Okay. Well, with that, we'll close the submission of the results. Thank you very much for those attending. We look forward to a very exciting 2023. Thank you.