Letter Chairwoman of the Board

Codelco is and will continue to be a company for all Chileans, which demands a special level of commitment and responsibility from all those that in one way or another participate in the management of the Corporation. For this reason, we are proud to be able to give the country a report of a management period characterized by unprecedented results with regard to the income from copper sales and the transfer of surpluses to the Treasury.

But 2006 will not only be memorable for Codelco for the high average price of a pound of copper in the international markets. For some time the Corporation has assumed that its essential task is to maintain its leadership position within large-scale copper mining, and this required renewed alliances and new agreements with stakeholders, which are all the people and institutions directly or indirectly related to the company. The 2006 management period was also productive in this respect.

In the framework of this challenge, an agreement was signed between Codelco and the owner of the company, represented by the State and, specifically, by the Ministry of Finance, that allows Codelco to use US$ 713.5 million of its net profits to finance part of the company’s ambitious portfolio of projects through capitalization and the creation of a reserve fund. This is a landmark in the history of the company that, without a doubt, strengthens its capital and financial position, and contributes to the maintenance of a favorable credit risk classification.

In the same vein, the climate of dialogue that has characterized the relationship between the administration and the workers also produced important benefits in 2006. A total of ten collective negotiation processes were resolved in a satisfactory way for all parties that produced new collective work contracts for a high percentage of our workers and supervisors. This is a clear example of the maturity in the relationship among all actors as well as the effectiveness of the policy to build agreements.

This policy is also expressed in the relationship between Codelco and the community, before which the company looks to become a good neighbor, open to dialogue and sensitive to the interests of others. In this sense, the Corporation has internalized the people’s concern for the environment. During 2006, the company invested US$60 million in various projects in this field. This investment, added to that undertaken in previous years, has allowed Codelco to enter the market for selling carbon bonds. In the 2003 – 2006 period alone, the company stopped emitting 220,000 tonnes of carbon dioxide, a reduction that has already been approved for commercialization in the Chicago Climate Exchange.

But perhaps the most important example of building agreements refers to the proposal for a new corporative government for Codelco that will strengthen the quality of its policies and fortify its competitiveness. We are truly proud to have produced a legislative proposal that was sent by President Bachelet to Congress March 8, 2007 to modify the composition and attributes of the Board, and apply to Codelco the norms that prevail for limited liability companies. This reform deepens the work the Government has undertaken with respect to public companies, especially Codelco, the most strategically important of them: to be transparent and to professionalize management with every passing day.

We have a set of challenges for the coming years for which we have to continue working to conclude agreements in aspects such as cost containment, the execution of investment projects within the framework of stipulated terms and budgets, the incorporation of more women at all levels of the company, as to date they only account for 6% of the workforce, the adoption of decisive measures for energy efficiency to not only reduce energy demand, but also greenhouse gas emissions, and the continuous improvement of security standards for our workers and contractors. These and other tasks will allow Codelco to continue to obtain better levels of competitiveness and productivity. We think that this conjunction of achievements and challenges will without a doubt strengthen Codelco, but it will also strengthen a country that is maturing, modernizing and looking to the future of all the Chileans.









KAREN PONIACHIK POLLAK
MINISTER OF MINING & ENERGY