May - 2021, Antofagasta - Chile

Nelson Pizarro, Executive President of Codelco: "Exponor always represents opportunities for improvement, for new products and innovation"

The executive of the state-owned company, which will be present at the international exhibition to take place in Antofagasta, also shared details on the profound transformation of procurement management at Codelco under its 2020 Productivity Agenda. The Chilean state copper producer Codelco has confirmed its participation in Exponor 2019, an international mining industry show organized by the Antofagasta Industrial Association (AIA) which will take place next year. At the same time, the company highlighted the significant contribution of suppliers to this type of spaces, to which it looks for new and better options for its productive processes. The company's Executive President, Nelson Pizarro, highlighted the importance of this type of event, which brings together producers and suppliers of goods and services, particularly considering the operational and logistical challenges that large-scale mining faces at the national level. "Exponor is a chance to exchange information and analyse possibilities for improvement. In this way, it allows us to evaluate the options that the industry can offer, or must create, in order to face falling ore grades, mushrooming regulations, water scarcity and community relations. All of this influences the financial health of the business, and suppliers have a key role in addressing these issues", Pizarro commented. In this sense, the President of the AIA, Marko Razmilic, pointed out that "having Codelco participate once more is of huge importance for us to provide suppliers of goods and services with more and new business opportunities at Exponor. We are sure that the innovative offerings of the suppliers that will participate in this international event are in line with the requirements imposed by the new challenges that Codelco has taken on". Additionally, the state mining executive shared the positive results of the first half of 2018, in which profits reached US$ 1.235 billion, 25% higher than the same period of last year. Copper production hit 813 thousand tonnes, 2% higher than 2017 despite the 3.4% drop in the copper ore grade. "The most important thing, certainly, is cost. The overhead at Codelco has reached 137.6/pound and the final cost per cathode is at 219/pound, reflecting the impact of the investments being made, which represent a sum of US$ 3 billion a year. This cost is competitive if compared to the average of the national industry", Pizarro explained.

Transformation of Procurement Management at Codelco

"Mining today cannot survive with the habits and paradigms of the past. We definitely need to look for different ways of managing mining resources. Different in terms of the management model, the profile of the people involved, the KPIs. With the tools that we have today, with our gigantic open pits, mining is not going to survive. Mining cannot survive if we don't make a profound and daring shift, and the 'Trojan Horse' for this is innovation and technology to generate productivity", the Codelco executive explained. Along these lines, Pizarro revealed that "Codelco is working to capitalize on the potential value of its resources. But it needs to break with the past, make technological leaps forward, seek new business models, new ways of managing contracts: a cultural shift that is far from simple to achieve. Codelco is carrying out a transformation of purchasing under its 2020 Productivity Agenda". This transformation in the management of procurement includes the internationalization of the model through the incorporation of international companies in its supplier database; updating contract and tender documents; changing the language in which it does business (to English); embedding unique purchasing and contracting processes throughout the company and consolidating international links through business hubs in Asia, Europe and the United States. On this last point, Pizarro highlighted the growth of purchasing from China. "In 2015, we made purchases worth US$ 50 million, and by 2017 this figure quadrupled (US$200 million). Our target by 2020 is for this initial figure to increase tenfold (US$ 500 million). We have gone from buying mill balls and bars to electric wheels, mill motors, and we are now taking a chance on electric shovels. (…) Once the potential of the suppliers has been determined, we apply quality control and we are able to acquire a product that is just as competitive as the traditional supplier, which has normally been North American or European. The same quality, but at a two-digit reduction in price", he revealed. Finally, Pizarro called on suppliers of goods and services to "challenge themselves, find their technical limits, not make easy assumptions and raise unit prices without filling the gaps that are out there. Most suppliers have these gaps, even when they have won a tender. Now they tend to see a chance to increase their profits". Codelco is a Strategic Partner of the 2019 edition of Exponor, an event which will take place from May 27th to 30th, with China as Guest Nation. The exhibition is also backed by relevant actors in the sector such as Albemarle, Antofagasta Minerals, Lomas Bayas, Minera Escondida, SQM and the Supplier Qualification System (SICEP). Its sponsors are: the Mining Council, Sonami, Sofofa, Aprimin, the Government of Chile, the Ministry of Mining, the Ministry for the Economy, Development and Tourism, Pro Chile, Direcon and the Regional Government. Its press partner is Mineria Chilena magazine.

Published: 06.09.2018

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