Antofagasta plc (ANTO) Earnings Call Transcript & Summary

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 are currently on mute. Please unmute yourself, Andrew.

Sorry, typical. Good morning. Thanks, Scott. Welcome to our Q&A. On the call today, we have Ivan Arriagada, our Chief Executive; Mauricio Ortiz, our CFO; and Rene Aguilar, our Vice President of Sustainability and Corporate Affairs. As you will see now, our presentation is available on our website. [Operator Instructions] Okay. I'll now hand over to Ivan 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 tonnes and a unit cash cost of $1.20. So very good performance from an operational point of view. On the back of that and of a strong copper market, our EBITDA increased by 77% to $4.8 billion, and 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. And as you have seen, we have announced a -- or proposed a total dividend for the year of $142.5 per share, which is equivalent to 100% payout reach. 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. And we also have and have been working on a new proprietary primary sulphide-leach technology that could unlock value further from what were before uneconomic mineral sources. And 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 and Antofagasta as a pure play copper producer with high-quality asset is well positioned to deliver the copper the world needs reliably and responsibly and 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. And as part of this, by 2025, we expect that 90% of the water we use in our operations will be either a circulated water or water that comes from the sea. And also that our greenhouse gas emissions by then will have reduced by 30% compared to 2021. And 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. And 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. So on balance, we think a strong year, strong performance, record financial results on the back of strong operating performance despite, as we 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 diesel plant at Pelambres in the second half of this year. So with that, I'd like to pass it on for questions, and we'll be happy with Mauricio and Rene and the team to be able to address your questions.

Our first question is from Luke Nelson. [Operator Instructions]

Can you hear and see me clearly?

Yes, we can hear you.

Two from my side. Firstly, just on the financials. So maybe one 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? And 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 cost 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. Let me -- I'll briefly answer and then pass it on to Mauricio to address specifically for sulfuric acid one. I mean on the financial and cost performance, we typically do not make -- or have or get into hedges for our input commodities. 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 the business cycle and so does copper. And therefore, from that point of view, because we don't hedge copper, which is our revenue line, we don't either hedge our commodities that we buy and that are part of our cost structure. So 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. And as Ivan said, we like the exposure to commodity we're in the commodity business. So at the time that we capture the benefit of a higher copper price, we also have the impact of higher input prices. So 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. And also the freights coming from Asia are increasing the sulfuric acid price. So we are moving within a significant increase in comparison with 2021 to 2022, roughly speaking, $100 per tonne in terms of the acid price. And answer your question of what the impact is in our cost structure. So let me just briefly remind the split on production, Centinela, Antucoya and Zaldivar, they produced copper cathode and the impact on those companies is bigger than -- definitely than Los Pelambres, which just consume acid for their production of the concentrate. But as an overall, as a group, the impact is roughly speaking for each $10 per tonne is roughly 1.5 to below $1 -- $0.01 per pound in terms of cost impact at C1 level.

Okay. That's really helpful. And 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 the -- 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, so maybe some indications on the capital intensity. And then also, you've talked about primary leaching with -- from Cuprochlor. Again, maybe just any indications around how that could be implemented and the capital intensity attached to that. And then bring it all together more broadly, do any of those projects, are they included in the base case to achieve 900,000 tonnes per annum of copper by 2026?

Okay. Luke, I think we're very excited with Cachorro, and 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 this target. We've included in the declaration of resource of 140 million tonnes at 1.21 copper grade. So we think it's a great discovery from the point of view of the quality 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 at least to around 300 million tonnes, and that's the work that we will continue to do as we continue to complete our drilling campaign to understand better this potential future deposits. So very exciting from that point of view. Then what is the sort of path going forward? First, I would say we need to continue to do drilling and just to be able to understand the limits and confines of this ore body. And 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 the copper that's contained in Cachorro. So 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. So in considering the sort of lead times that we have today, we think this is something that we should be able to develop between this -- in this decade. But 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 of we know where the deposit is. But as I said, we're very excited because we think that the quality of what we've encountered here in terms of grade and mineral is quite outstanding. Now we don't -- we 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 this into our existing plants, either removing or replacing mineral with lower grade or in addition to what we're able to feed today. So we would rather prefer that than a stand-alone facility as we like to think of districts. And I think Centinela is a very good example of that. So that's the way we would want to move, and we think that would involve lower capital intensity going forward. So that's the very preliminary thoughts 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 tonnes of copper that we've highlighted as a possibility for 2026 in case that we undertake the projects that we have. So this is outside that envelope. And therefore, it's in addition to what we're already developing. But as I say, very exciting from our point of view, we think this is quite an outstanding discovery. It's 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 production going forward into the future. And it does provide continuity for the end of the decade to what we're mining today. So very exciting from that point of view. Now in terms of the primary leaching and Cuprochlor-T 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 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. So we think certainly, there is a significant advantage in being able to push this technology through. So 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 going forward. So that's basically sort of the timing for that development as well.

We have our next question that's coming through from Jason Fairclough.

I'm going to 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. And 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. And I guess, Ivan, 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 going to be?

Yes. So 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. And it's not a conventional concentrator in the sense that it's based on higher project grinding roles 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 fixed to the sort of type of harder ore that we expect to face at Centinela. So there's been a lot of good work placed in defining the design in a way that it's efficient, that it fits the ore body at Centinela. Now -- we have advanced now that the detailed 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 by the end of this year, as we expect. In terms of capital cost, we give or take, as I've mentioned in the past, we're ballparking the same sort of overall figure that we had provided to the market in the past. So it's sort of a $3 billion project that this project sort of thing -- involve that sort of level of capital investment. And I say there's been changes in the components, but the overall number is similar to what we had indicated in the past. Now obviously, in the current environment, there are some, I would say conditions in Chile, which are happening. I mean 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, who will take over as Finance Minister, which I think, it's good news from the point of view of providing the sort of continuity to some of the policies and perspectives on economic development going forward. I think it's been taken positively. Now on the other hand, and separate to the new government, we've got the constitutional convention, which is developing a proposed -- propose a new constitution. And 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. And also the final text needs to be submitted for a referendum at the end of that process. So I think that is still playing out over the few months coming ahead. And that's something that when we take this decision, we expect will be completed. In respect of the -- specifically the royalty, I mean, that's been part of the program of the incoming government to overhaul the tax system. And from that point of view, there's been several attempts earlier on to address this. And I think this will be taken over by the new government. And I think from our point of view, what it is important is that we -- any changes reach a good balance between ensuring that mining contributes to the social agenda and the demands of the country going forward. But the industry keeps being competitive such that investments go ahead. So we do expect that by the time that we have to make these decisions, we would have clarity with respect to this issue as well. And therefore, it's timed in a way that this decision follows after these events probably have unfolded, and we have more clarity on that.

Just if I could follow up. So 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. So 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. And 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 decision needs to be a decision from an economic point of view, makes sense. And therefore, it would only be undertaken if it's value accretive. Therefore, that's what we are looking for, and we've put in place a structured process 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, Ivan. The desalination plant for Los Pelambres, is it on schedule?

The desalination plant at Pelambres is on schedule. We are advancing to be able to finish commissioning in the second half of 2022, yes.

We have our next question, which is from Abhinandan Agarwal.

So 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 to $1.9 billion guidance which you gave earlier this year? That's my first question.

Okay. Yes. On that, I mean, we did and have highlighted the fact that we've got the final capital estimate under review, essentially because of COVID impacts that we sort of have seen unfolding several waves of COVID. And 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, manageable within the sort of conditions that we have and with minimal impact. But it's also because COVID has impacted, as we commented before on our ability to getting workers to site. And therefore, there's been more absenteeism for a period of time. So all of that have been factored in this new estimate. Now we do expect that this new estimate will allow us to fall within the range of capital expenditure that we have guided for. And the intent of providing a range is, in fact, to address this uncertainty that's still work in progress. So yes, we do expect that once we complete this review, we will be within the range that we provided.

My second question is regarding the recent proposals in Chile. So there have been a couple of proposals, namely annulment of water rights for private enterprises and mining ban on indigenous land. So I get 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 ] infrastructure on indigenous land?

Yes. As you say, I mean, the process that the country is going through 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. So some of the proposals that you've seen in the press are coming out of these working groups. Some of them are not, I would say, conducive to what we think would be the best development opportunities for the industry to continue to grow and develop. And 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 collision going forward. So that's very positive. Now -- but 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 the conditions going forward. So a great opportunity, and we expect that it should actually provide a good basis if it's done successfully, but that's still work in progress. So 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 Pelambres will be supplied by sea water or circulated water. And 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 Pelambres and Centinela, we don't have in the sort of review that we've done any material indigenous right claims, which would impact our facilities. And we still are continuing to conduct that work. But as I say, in our main districts of Pelambres and Centinela, we don't think there is any material indigenous claim in both.

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. So not big in the -- not huge in the big scheme of things. But can you just explain what those are? And just elaborate whether you have any further exposure to any derivative instruments in 2022?

Yes. So I'll probably ask Mauricio to address that. But let me say that we as I say, as a general policy, we don't hedge either our revenue line or our input. We do sometimes when we've got unique circumstances hedge in limited circumstances, say, high price or high cost conditions, but that's very small and unique. So our general policy is that we don't hedge our revenue line and our costs. But I'll ask Mauricio to comment on that specific element that you have referred.

Okay. Well, thank you, Ivan. Thank you, Abhi, for your question. So let me expand a bit more what Ivan said. How those limited condition looks like. So for example, when we have high-cost production lines in comparison with a challenging copper price. And that is what exactly happens back in 2020 when we took this derivative that you mentioned. Those derivatives were associated to our Antucoya and our Centinela cathode production we're very limited to something like 10% of each of those companies production. And basically, we took it back in 2021 where remember that when the COVID came on the scene. The copper price move very -- to a very low levels in the second -- Q2 of [ 2020 ]. But as Ivan 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. And as I said at the beginning, to answer in Luke's question, we actually look for that exposure to commodities, either in our revenue line and also in our cost line, and 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.

My apologies that I was on mute previously that's there. Our next question is from Richard Hatch. [Operator Instructions]

Just got 3 questions . The first one is on would you be able to give us any kind of steer either on an absolute basis in peso or U.S. dollars or maybe even on a dollar per tonne produced basis, what we should be thinking about a long term as a good sustaining CapEx number for the business? And that's the first one. And the second one is just a question. I know you talked about the receipt of the permits to extend the life of Zaldivar 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? And then the third one is just on tailings retreatment. Do you see any opportunities within the current portfolio sort of retreat tailings and perhaps create some extra production from that source?

Okay. Thanks. Richard, and I'll ask Mauricio to address the CapEx one. So let me start with the second and third. So on Zaldivar, we've been working on this permit for quite some time. And I think the review that's been undertaken by the technical agents is sort of now coming to some form of closure. And we've had several of them completed. And the rest we expect will happen in the course of first half of 2022. We think from a technical point of view, certainly, 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 liters 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 20 years. So from that point of view, we have no concern on technical grounds that -- this is based on solid grounds. The permit has also an indigenous community consultation, and that's progressing. And I think what we've found is that the indigenous community generally want water from these basins in the Salar de Atacama to be stopped for industrial purposes. So I think that's something that needs to be worked on. So those are the elements, if you want, that we expect that we will have to progress 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 is quite strong. So it's something that from that point of view, we're good with. And the other thing is that the extension that we're asking for is from 2025 to 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 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 Pelambres, and we've seen other companies do the same. So there is a broader, I would say, expectation that in the longer term, mining would use water from the sea. So some of that is also a context that we need to take into account. But I think from a technical point of view, we think we're very solid grounds to be able to get an extension of this permit. On tailings retreating, I think we've got, I mean, tailings at Pelambres and at Centinela. I think our -- the tail -- that is involved in tailings that we deposit are generally a low grade, and therefore, we're not contemplating at this stage, retreating them. It's something that as we think of the extension of the mine life at Pelambres, we're looking at as a possibility, but not -- and we don't have specific plans at this stage because we think we're -- from an economic point of view, it's still certainly mining. It's still much more convenient from the point of view where we can extract value. So 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 longer aging and, therefore, maybe can draw on tailings, which have a higher copper residual grade, not our case. And then Mauricio, maybe you can address the question on CapEx.

Richard, good to see you. Well, so let me start reminding that we have 2 different level of CapEx. One -- the first one associated to mine development -- sorry, 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 mine development and sustaining CapEx, we usually use a range or in the past, we have a range, let's say, around $600 million to $800 million for all -- for these 2 categories. For the next 2 to 3 years, we will see an increase driven by some enablers to capture the full value of our life of mines -- for our current life of mines. And that increase will be in the space of up to $1 billion. And for example, in 2022, we already increased that mine development plus sustaining CapEx to that level. What kind of projects are we having on that categories? For example, the digital -- the second phase of the digital plan at Los Pelambres will be part of that portfolio within the next 2, 3 years. and also the new concentrate pipeline, which is not only a refurbishment of the existing infrastructure, but also relocating away from the local communities. So basically, within the next 2, 3 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. And in terms of development CapEx, that is fully contingent to our expansion project and being the more important one on that category, the second concentrator at Centinela, which Ivan described in detail a couple of questions ago.

Very helpful. Can I just ask one last follow-up. Just in terms of the M&A opportunities. There's a couple of interesting projects that have come to fruition in Chile last sort of 2 to 3 years and for a smaller scale on the production standpoint, 40,000, 50,000, 60,000 tonnes, but pretty low cost dollar, pounds and all that, $20. Is that too low in terms of a volume standpoint for you need to consider? Or I mean, given the fact that it will be a pretty high margin and high-return asset, could that be something you could potentially look at just to [indiscernible] out your portfolio?

Yes. 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 opportunities in their own merit, and we compare them to the large mineral inventory that we already have. I mean we hold 19 billion tonnes of mineral inventory at our copper grade of around 0.4 on average throughout the life. So we obviously are looking for opportunities to continue to expand the mineral inventory and specifically interested in those where we can upgrade 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. So those would be the sort of criteria that we would look at. We would look at finding opportunities that probably exceed 100 million tonnes of grades, which would upgrade our existing inventory, and those would be especially attractive.

We've got our next question, which is from Tyler Broda. [Operator Instructions] Tyler, I can see you've joined us, if you could please just -- you can talk if you 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. And Elaine, if we could pass across to you for any questions from the conference call, please.

[Operator Instructions] We will take our first question from Jatinder Goel from BNP Paribas Exane.

I've got 2 questions. First one, Ivan, 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?

Yes. On Reko Diq, I think we've been consistent in our approach in the sense that we exited the project at the time in which we had this litigation initiated. And we're now seeking compensation for what we've lost there, and that has not changed. So we remain at the same view and position and are pursuing sort of the legal avenues that are open to us. And we will continue in that path. So our position has not changed with that respect. And therefore, 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 to, does that mean your stake needs to be sold if you don't want to get involved in that project development?

As I said, we are not involved in discussions around project development. And what we hold today is 50% of a claim against the government of Pakistan for having basically removed our license to be able to mine. So we hold that right. And we have not been involved in any conversations regarding a potential development of the project. And from our point of view, from our interest as Antofagasta, again, we -- our interest is focused on being able to getting compensation for the actions that we're taking with respect to removal of the licenses. So we remain in that position and have not been involved in discussions around the development of the project.

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 35% payout at interim and then full year is a big decision making. Is there any thought process of revisiting it? Or would you still keep 35% interim and then year-end remains the big one?

We think that our dividend policy has served us well 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 go down as well, so it behaves well through the cycle. And I think the logic, and we've explained in our capital allocation, which has been expanded recently, the sort of decision factors go into deciding the dividend. And from that point of view, we think having a minimum, which is linked to earnings like the 35% minimum is appropriate. And then in excess of that, we basically iterate through a process, which considers the outlook, the cash requirements going forward, financial position the company is at and also some of the investments which are required for the purposes of sustainability or climate change, which is now factored into our capital allocation. But I think the key is we've had a good 2020 with good cash generation on the back of a solid market and good operating performance. We have moved to our financial position of cash -- of net cash at $540 million. And therefore, the cash that's available, we think we -- according to that and in line with our capital allocation is there to go back to our shareholders and return them for their investments. So we think our dividend is consistent with our dividend policy, which has served us well and is derived from a capital allocation, which is the framework that I've just described. And we see those serving well the company in the past and no reason to sort of change them going forward.

Sure. So the decision to return that excess cash above 35% will always be at the year-end for now?

Yes. I think that has been -- that's not a -- that's not part of the -- sorry, part of the policy per se. That's been a practice. And I don't see that we would change that. But as I said, that's not part of the policy. How much we -- how do 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 that would not change because it's been a good practice.

[Operator Instructions] We'll take our next question from Jack O'Brien from Goldman Sachs.

Most of mine have been taken. But just one question on some of your ownership stake. I think I haven't 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% to 70%. I'm 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're not -- I mean, we're not -- I mean, we -- certainly, we find that those investments, as you say, we hold are effective and have potential for development. I think our partnerships especially if we think from the early days in which Pelambres was developed and subsequently Centinela and more recently, Antucoya have -- are integral to the way that we see our business in terms of risk shedding and sharing and also our ability to bring together economic resources to be able to develop our facility. So I think those have served us well again, and we are quite, from that point of view, comfortable with the shareholdings that we have with our partners and the way that we work together in developing, especially, I would say, Pelambres and Centinela, which are sort of our main districts. So no change expected there.

[Operator Instructions] We will take our next question from Tyler Broda from RBC.

Can you hear me this time? .

Yes.

Perfect. Sorry about that before. We have an issue with the firewall in Zoom. I just have 2 questions. One of them is a follow-on to Jason's question, just about Centinela and with the timing for the decision coming at the end of this year. How would you characterize the path of Centinela if you weren't 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. Twin Metals is 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?

Yes. So in the case of Centinela, I mean, clearly, we've sort of mapped the development of the asset to its full potential through an expansion. And if that were, for some reason, not to go ahead, I mean, we would continue basically to use the infrastructure that we have today through the -- at the plant, which was built back in 2011 and which we've now are operating at slightly above its design capacity. So it's actually performing extremely well, including the thick entailing, which took some time to get to the level of operational excellence, I would say that we've got it running today. So 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 with a sequence of grade which would optimize that operation with the existing plant. But 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 sulfates that lie below. So we would potentially use, as I say, the existing plant to its full capacity. And we could think of Cuprochlor-T as an alternative as well for secondary leaching. But I think given the grade, and this is secondary sulfide we would expect that the concentrator would be a better option and also giving the sort of size of the reserves that we have at Centinela. So we think that, that is the preferred and optimal development path. And 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 our strategy is clear. We are a pure copper player. We mine copper and gold, silver, moly as byproducts. And the geographical area that we like to see ourselves focused is the Americas, which spans from Canada to Chile, including Peru and other locations. And 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, we would want to look at them. And I think certainly, we want to think of ourselves as a company that can undertake an international expansion. We need to find, obviously, the right target at the right time. But that's something that we are -- we see very much as part of our strategy, and we're open to do in a disciplined way from our capital allocation point of view. So that appetite, certainly remains intact.

Well, thank you all for your questions today. We have no further questions. I'd like to pass back to Ivan for closing remarks.

Thank you, Scott. So in closing, I mean, I would like to say that 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, 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 a very good dividend in the way that we've declared. And I would also like to point out that in addition to that, we have also a record in terms of taxes paid in Chile. And I think that's an important contribution that we also make to our host country and the community with which we work. So 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. So a good balance for all stakeholders. And 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.