REG - Antofagasta PLC - REPORT ON PAYMENTS TO GOVERNMENTS
01/07/2022 07:00
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RNS Number : 9226Q Antofagasta PLC 01 July 2022
NEWS RELEASE, 30 JUNE, 2022
REPORT ON PAYMENTS TO GOVERNMENTS
Antofagasta plc CEO, Iván Arriagada said:
"I am pleased to issue today Antofagasta plc's 2021 Report on Payments to
Governments. The report sets out the taxes and other specified payments to
governments relating to mining activities which were paid during 2021 by the
Company and its subsidiaries.
"All of our operating mines are located in Chile and this is where 99.5% of
these taxes and other payments to governments were paid during the year."
A copy of the report can be found below and on the Company's website at
http://www.antofagasta.co.uk/investors/reports-presentations/
(http://www.antofagasta.co.uk/investors/reports-presentations/) .
Investors - London Media - London
Andrew Lindsay alindsay@antofagasta.co.uk (mailto:alindsay@antofagasta.co.uk) Carole Cable antofagasta@brunswickgroup.com (mailto:antofagasta@brunswickgroup.com)
Rosario Orchard rorchard@antofagasta.co.uk Telephone +44 20 7404 5959
Telephone +44 20 7808 0988
Media - Santiago
Pablo Orozco porozco@aminerals.cl (mailto:porozco@aminerals.cl)
Carolina Pica cpica@aminerals.cl (mailto:cpica@aminerals.cl)
Telephone +56 2 2798 7000
2021 REPORT ON PAYMENTS TO GOVERNMENTS
INTRODUCTION
This report details payments to governments made by Antofagasta plc and its
subsidiary undertakings ("Antofagasta" or "the Group") relating to activities
involving the exploration, discovery, development and extraction of minerals,
for the year ended 31 December 2021. This report has been prepared in
accordance with the requirements of the UK's Report on Payments to Governments
Regulations 2014 (as amended in December 2015) ("the Regulations"), which
enacted EU Accounting Directive 2013/34/EU, as well as the related
requirements set out in the Disclosure and Transparency Rules of the UK's
Financial Conduct Authority.
ANTOFAGASTA PLC
Antofagasta is a Chile-based copper mining group. The Group currently operates
four copper mines in Chile, and has a significant portfolio of growth
opportunities located predominantly in Chile and in the United States. Mining
is the Group's core business and in 2021 represented over 95% of Group revenue
and EBITDA. The balance of the Group's revenue and earnings are generated by
its transport division, which is also in Chile.
Three of Antofagasta plc's subsidiary undertakings operate copper mines in
Chile - Los Pelambres (60% owned by the Group and 40% by Non-Controlling
Interests), Centinela (70% owned by the Group and 30% by Non-Controlling
Interests) and Antucoya (70% owned by the Group and 30% by Non-Controlling
Interests). Antofagasta also holds a 50% stake in the Zaldívar mine in Chile
and is the operator of the mine. Zaldívar is accounted for as a joint venture
by the Group. Each of the Group's individual mining operations are therefore
held within separate Chilean legal entities.
Antofagasta Minerals S.A. is the Group's mining corporate centre, and also
undertakes certain exploration and development activities. Other Group
subsidiary legal entities hold investments in the Group's mining operations,
mining properties, infrastructure required for the mining operations and cash
generated by the mining operations, and therefore incur tax and fee payments
(or refunds) relevant to this report.
The Group's principal activity outside of Chile is the Twin Metals project
(100% owned by the Group) which is a copper, nickel and platinum group metals
(PGM) underground mining project located in north-eastern Minnesota in the
United States.
The parent company Antofagasta plc is registered in the UK and conducts no
direct exploration or mining activities.
All of the revenues and operating costs of the Group's mining operations, and
the large majority of the mining division's corporate costs, are therefore
recorded by Group legal entities within the same tax jurisdiction, namely
Chile.
BASIS OF PREPARATION
Scope of report
Disclosure of payments to governments is required in respect of payments
arising from the exploration, discovery, development and extraction of
minerals; the payments included within this report therefore relate only to
Antofagasta's mining activities, and exclude payments made by its transport
division.
Groups are required to prepare a consolidated report disclosing payments made
by the parent company and its subsidiary undertakings. Accordingly, this
report reflects payments made by the Group companies conducting mining and
exploration activities, or holding investments in the Group's mining
operations, mining properties, infrastructure required for the mining
operations and cash generated by the mining operations (Los Pelambres,
Centinela, Antucoya, Antofagasta Minerals S.A., Inversiones Los Pelambres
Ltda., Michilla Costa and Minera Pampa Fénix SCM), and excludes payments made
by the Zaldívar joint venture. The amounts reflect 100% of the payments made
by the subsidiary companies - i.e. not just the Group's proportionate share
where the Group does not own 100% of the subsidiary undertaking.
Payments
The payments disclosed in this report are on a cash basis. Chilean corporate
tax payments on account made during a year are typically based on the prior
year's taxable profit, and therefore the tax cash payments are likely to
differ from the current tax charge reflected in the Group's income statement.
Any cash refunds for excess payments made in the previous year are offset
against current year payments, and if the refunds exceed the payments the net
refund is shown as a negative amount in this report.
The payments made to governments are required to be analysed into the
following categories:
· Production entitlements
· Taxes - taxes levied on the production or profits of companies,
excluding taxes levied on consumption, value added taxes, personal income
taxes, sales taxes, property taxes or municipal charges.
For general purposes, the total tax rate in Chile is 35%, which comprises a
standard corporate ("first category") tax which is payable as profits are
earned (current tax rate of 27%) and a withholding tax payable when those
profits are distributed out of Chile (total tax rate of 35% less the first
category tax already paid). So typically withholding tax of 8% will be paid
when profits are distributed out of Chile, reflecting the 35% total tax rate
less the 27% first category tax rate already paid. During 2021 there was a
temporary reduction in the typical withholding tax rate (which was applicable
between 2020 and April 2022), whereby the withholding tax payment was
effectively based on a total tax rate of 30%, rather than the normal 35% rate.
The withholding tax therefore effectively represents a deferred tax on the
profits generated by the operating companies, payable when those profits are
distributed out of Chile, and forms part of the total 35% tax rate. The
withholding tax paid in respect of amounts distributed by the operating
companies to the Group companies which hold the Group's interests in the
operating companies is therefore included within this report as part of the
taxes levied on the income or profits generated by the Group's mining
activities. Withholding tax paid in respect of amounts distributed by the
operating companies to the external companies which hold the Non-Controlling
Interests in the operating companies is excluded from this analysis, as it
does not reflect part of the tax charge borne by the Group's subsidiaries, but
rather is a tax charge borne by those external companies.
In addition to first category and withholding tax, there is also a Chilean
mining "royalty" tax, which is calculated as a percentage of taxable operating
profit for mining operations, and accordingly is a profits-based tax which is
therefore included within this report as part of the total "taxes" paid.
The "taxes" reflected in this report in respect of the amounts levied on the
profits generated by the Group's mining activities in Chile therefore comprise
corporate ("first category") tax, withholding tax paid in respect of amounts
distributed by the operating companies to the Group companies which hold the
Group's interests in the operating companies, and the mining "royalty" tax.
· Royalties - typically amounts levied based on production levels or
revenues. As noted above, the Chilean mining "royalty" tax is a profits-based
tax rather than a production or revenue-based royalty.
· Dividends
· Bonuses - signature, discovery and production bonuses
· Fees - licence fees, rental fees, entry fees and other considerations
for mining licences or concessions.
· Infrastructure improvements - payments to governments for the
construction of major public infrastructure such as highways, railways,
bridges and port facilities. Payments which form part of the Group's social
investment activities, for example contributions in respect of local schools,
health care or community facilities, or improvements to the general
environment of local communities, such as improvements to local roads and
public spaces, are excluded.
Government
"Government" means any national, regional or local authority of a country, and
includes a department, agency or undertaking that is a subsidiary undertaking
where the authority is the parent undertaking.
Materiality
Under the Regulations a payment need not be disclosed if it is a single
payment of less than the equivalent of £86,000 (€100,000) or a series of
related payments in a single year whose total is less than the equivalent of
£86,000. In general this de minimis materiality level has been applied when
preparing this report, although in some circumstances payments below this
threshold have been voluntarily included.
Analysis by project / entity
An analysis of payments by project is required where payments are attributable
to specific projects. Projects are defined as operational activities which are
governed by a single contract, licence, lease, concession or similar legal
agreement, and form the basis for payment liabilities with a government. Where
agreements are substantially interconnected in operating and geographical
terms, with substantially similar terms, those agreements should be treated as
a single project. Payments may be disclosed at an entity level where payments
are made in respect of obligations imposed at that entity level rather than at
a project level.
Rounding
The amounts shown in this report have been rounded to the nearest US$1,000.
PAYMENTS TO GOVERNMENT - 2021
COUNTRY SUMMARY
Production entitlement Taxes Royalties Dividends Bonuses Fees Infrastructure improvements Total
US$ US$
US$ US$ US$ US$ US$ US$
Chile - 767,658,000 - - - 6,498,000 - 774,149,000
United States - - - - - 4,163,000 - 4,163,000
Total - 767,658,000 - - - 10,661,000 - 778,319,000
CHILE
GOVERNMENT REPORT Production entitlement Taxes Royalties Dividends Bonuses Fees Infrastructure improvements Total
US$ US$
US$ US$ US$ US$ US$ US$
Tesorería General de la República de Chile 767,658,000 6,498,000 774,156,000
- - - - -
Total - 767,658,000 - - - 6,498,000 - 774,156,000
PROJECT REPORT Production entitlement Taxes Royalties Dividends Bonuses Fees Infrastructure improvements Total
US$ US$
US$ US$ US$ US$ US$ US$
Los Pelambres - 544,735,000 - - - 912,000 - 545,647,000
Centinela - 11,917,000 - - - 1,612,000 - 13,523,000
Antucoya - 733,000 - - - 257,000 - 990,000
Exploration activities (within Antofagasta Minerals S.A.) 3,606,000 3,606,000
- - - - - -
Antofagasta Minerals S.A. - 17,288,000 - - - - - 17,288,000
Inversiones Los Pelambres Ltda. 192,985,000 192,985,000
- - - - - -
Michilla Costa - - - - - 18,000 - 18,000
Minera Pampa Fénix SCM - - - - - 93,000 - 93,000
Total - 767,658,000 - - - 6,498,000 - 774,156,000
UNITED STATES
GOVERNMENT REPORT Production entitlement Taxes Royalties Dividends Bonuses Fees Infrastructure improvements Total
US$ US$
US$ US$ US$ US$ US$ US$
Department of Interior - - - - - 2,225,000 - 2,225,000
Minnesota Department of Natural Resources 1,938,000 1,938,000
- - - - - -
Total - - - - - 4,163,000 - 4,163,000
PROJECT REPORT Production entitlement Taxes Royalties Dividends Bonuses Fees Infrastructure improvements Total
US$ US$
US$ US$ US$ US$ US$ US$
Twin Metals - - - - - 4,163,000 - 4,163,000
Total - - - - - 4,163,000 - 4,163,000
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