We believe in the development of effective, responsible and transparent institutions. We believe in the development of effective, responsible and transparent institutions. We have established guidelines and internal policies that allow us to meet our commitment to conduct our business responsibly and with a long-term vision.
Antofagasta Minerals is part of the mining group, Antofagasta plc, which has been listed on the London Stock Exchange since 1888 and trades on this market.
For this reason, we are subject to the UK Corporate Governance Code1 which sets out the governance principles and provisions that apply to the Group according to its specific circumstances, and are reported annually in its Corporate Governance Report.
The Corporate Governance Report is structured around five principles that guide the development of our policies and practices on the matter: leadership, effectiveness, accountability, remuneration and stakeholder engagement. We have aligned our corporate governance around these principles to make decisions that are more effective and connected to the interests of our stakeholders.
1 Available on the Financial Reporting Council website: www.frc.org.uk
The Board is responsible for the long-term success of Antofagasta Minerals. In particular it is responsible for providing leadership and strategic direction; defining core principles, strategy and priorities; monitoring value creation and the efficient use of resources; supervising performance, risks and internal control systems; and guaranteeing that we are acting in the best interests of all shareholders and taking into account the interests of its stakeholders
SUSTAINABILITY AND STAKEHOLDER MANAGEMENT COMMITTEE
The Sustainability and Stakeholder Management Committee assists the Board in the stewardship of sustainability programmes and engagement with our different stakeholders and makes recommendations to ensure that ethical, safety and health, environmental, social and community considerations are taken into account in the Board’s deliberations. The Committee meets as necessary and at least twice a year to review and update Antofagasta Minerals’ strategy and policy framework, including safety and health, environment, climate change, human rights, community and other stakeholder issues. It also establishes targets and monitors our performance in these areas.
A Performance Agreement is a management tool that establishes annual objectives and goals, allowing performance to be monitored and adjusted as necessary to help achieve targets. By incorporating sustainability targets in annual performance agreements, the Company mobilises and aligns the whole organisation behind strong sustainability practices. Targets associated with safety, people, environment and social performance account for 20% of these agreements. Fulfilment of these targets is supervised in monthly operational performance reviews and included in monthly reports to the Board.
Risks are an inextricable part of our business and cannot be completed eliminated. Effective risk management is an essential part of our culture and strategy. Our risk management system aims to ensure there are established structures and processes to identify and assess risks, and appropriate controls and mitigation measures in place to address such risks. It also requires key risks and mitigation activities and actions to be reported in a timely manner to relevant parties. The Board is responsible for determining the nature and extent of Antofagasta Minerals’ significant risks and for ensuring adequate internal risk management systems and responsibilities exist to prevent and mitigate these risks. The Audit and Risk Committee, which reports regularly to the Board, is responsible for monitoring strategic risks and the status of their respective controls.
REVIEW OF RISK MANAGEMENT MATURITY LEVEL
- In 2018 an independent review of Antofagasta Minerals’ risk management maturity level was completed and the main activities were as follows:
- The Board reviewed, defined and approved the risk appetite for all key risks and updated the risk management policy.
- Risk methodology was reviewed, strengthened and aligned with the risk appetite.
- A risk assessment was carried out at all the operations, projects, exploration activities and support areas. Risks that represented a threat to the business’s strategic goals were identified as “key” and presented to the Audit and Risk Committee and the Board for their review.
- Critical controls and key risk indicator dashboards were defined for each key risk and action plans to keep the exposure within the acceptable limits were prepared.
- Timely and comprehensive risk analysis was embedded into each relevant decision-making process, including for all matters presented to the Board for approval.
- Risks status and the applicability and efficacy of critical on-site controls were included in the performance reviews of the members of the Executive Committee and Risk and Compliance team.
Next steps include monitoring the effectiveness of controls and implementation of action plans, monitoring new internal and external risks that may threaten the achievement of strategic objectives, and defining action plans for risks that require additional analysis or guidance to those defined in the framework methodology. These activities, as well as lessons learned from reviewing the risk management process or materialised risks, are communicated and analysed in relevant internal forums.
We maintain a risk register through a robust assessment of the potential key risks that could affect our performance. We have identified 14 key risks for the business grouped under the categories of People, Sustainability, Competitiveness, Innovation and Growth. Within the Sustainability area we have identified six risks: safety and health, environmental management, community relations, political, legal and regulatory, and corruption. The risk level for these varies between high and very high and the risk appetite is low. For more information on our risk matrix, See Annual Report 2018
We have a corporate internal audit programme based on the risk matrix. This programme covers ethics and compliance, safety, environment, labour and social performance at Antofagasta Minerals and in each of its operating companies. Measures are proposed to correct any control weaknesses identified in audits. The Head of Internal Audit is independent of the executive committee and reports directly to the Board’s Audit and Risk Committee. For more information on risk management, responsibilities, areas of focus in 2018 and details of the key risks and mitigation measures, See Annual Report 2018
We want to be recognised for our responsible, honest and transparent conduct. For this purpose, we have adopted guidelines and standards and have a Code of Ethics that guides our actions and a Compliance Model to prevent, detect and act in timely manner when this aspiration is threatened.
Keeping the trust of stakeholders is critical for any business but especially for the natural resources sector due to the long-term nature of mining operations and investment. It presents a significant challenge as society is increasingly distrustful of institutions and companies, demands high ethical standards and has greater expectations of the role companies play in promoting a diverse and inclusive culture and protecting human rights, among other matters. It is a priority for the long-term viability of Antofagasta Minerals to ensure our Purpose, Values and Ethical Principles remain relevant and are reflected in the daily actions of our employees.
Antofagasta Minerals’ compliance management aims to ensure that all employees follow internal policies, procedures and controls, as well as relevant laws and regulations. In 2018 we implemented a new Compliance Model structured around three pillars (Prevention, Detection and Action) that were based on compliance risk management and the Code of Ethics.
PREVENT situations and behaviours that are at odds with ethical behaviour and compliance. For this purpose, the Company has various guidelines and tools, including:
- Crime Prevention Manual which describes our Anti-Corruption Model to ensure compliance with regulations under the UK Bribery Act1 and Law 20,3932 in Chile. There is a person in charge of Crime Prevention at each of our operations. All of them are certified by the risk classification system Feller Rate until March 2019 in line with Law 20,393.
- Policies and procedures which determine how we engage with stakeholders and provides guidelines that all workers must follow. These include the Antitrust Protocol, and guidelines on business relations with companies linked to a Politically Exposed Person and on modern slavery.
- Conflict of interest declarations which must be completed by all employees and updated regularly. - Due diligence is conducted on suppliers and contractors to review company ownership, involvement in corruption cases, commercial behaviour, legal and labour cases, conflicts of interest and contract risks.
- Training to provide employees with the knowledge and skills to deal with any problem that might arise.
1 UK’s anti-corruption law.
2 It establishes criminal liability for money laundering, reception, financing of terrorism and bribery offences.
DETECT promptly infringements of ethics guidelines. For this purpose, there is a consultation and complaint reporting mechanism. Complaints that affect the Group are resolved by the Corporate Ethics Committee, which reports to the Board’s Audit and Risk Committee at least every three months. Committees have also been established at each operation to deal with local issues. In addition, assessments and analysis are conducted on the most sensitive concerns and complaints.
ACT when identifying possible infringements. Investigations are conducted to take the necessary measures to protect the Company, as well as to strengthen internal controls, effective functioning of the Compliance Model and communication with key stakeholders.
CODE OF ETHICS
The Code stresses the commitment of the Board, employees and contractors to conduct business in a responsible and transparent manner. It includes the values that guide the Company’s actions, guidelines to identify and manage potential conflicts of interest and for the handling of privileged, confidential and financial information, and it also sets out the role of the Ethics Committee. It also provides guidelines on a number of issues including respect for human rights, local culture and values and the rights of neighbouring communities.
MANAGEMENT OF COMPLIANCE RISKS
The Compliance Risks Department keeps a record and monitors the evolution of the main compliance risks, but daily risk management is everyone’s responsibility. Compliance risks and existing controls are regularly highlighted and assessed and action plans are defined to reduce risk exposure. As part of this process, changes in the operating environment that require controls to be strengthened or additional measures are also highlighted, and this helps to continuously improve the Compliance Model.
PAYMENTS TO GOVERNMENT
Antofagasta makes payments to governments relating to activities involving the exploration, discovery, development and extraction of minerals. In June 2018, the Group published its third report detailing its mining division’s payments to governments for the year ended 31 December 2017. These payments were primarily taxes paid to the Chilean government, and mineral licence fees. In 2017 these payments totalled $317 million, of which 99.9% were paid in Chile. The full report is available on the Company’s website at www.antofagasta.co.uk.
Chilean law allows political donations subject to certain requirements but Antofagasta Minerals does not make political donations. However, it often contributes to financing projects that benefit local communities in alliance with local municipalities and the government. These contributions are regulated by specific laws and are reviewed by the Chilean Internal Revenue Service.
Our Code of Ethics provides guidelines on protecting respect for the Human Rights of our different stakeholders. These have been incorporated into Antofagasta Minerals’ risk management, e-learnings to all employees and in inductions for new workers. Our operating companies are also audited on their adherence to Human Rights and the Board’s Sustainability and Stakeholder Manager Committee monitors performance.
In addition, in compliance with the UK’s Modern Slavery Act 20151 , Antofagasta plc has published a statement setting out the steps taken to ensure that slavery and human trafficking are not occurring in its supply chain or in any part of its business (including Antofagasta Minerals). Other reviewed issues are undocumented workers, discrimination by gender or ethnic origin, and labour conditions and abuse. This statement is available at www.antofagasta.co.uk.
At the end of 2018, we began a due diligence process to identify our impacts on people (employees, communities, contractors) which will allow us to prepare a Human Rights Policy and action plan for the coming years.
Since 2018 we have participated in the extractive sector’s “Laboratorio de Derechos Humanos y Empresas” (Laboratory of Human Rights and Companies), organised by Acción Empresas2 , a learning space to strengthen organisational practices on human rights.
Our relations with indigenous peoples are conducted with respect and in accordance with the provisions of ILO Convention 169 and ICMM guidelines. Of our operations, only Zaldívar needs to engage with an indigenous community as its water source is near Peine, a village included in the Atacama La Grande Indigenous Development Area.