CODE OF CONDUCT AND COMMITMENTS
In December 2006, the Codelco corporate commitments were approved with regard to biodiversity. In these, the company commits to take measures that contribute to the conservation of biodiversity and apply conservation criteria in the areas of influence of its operations and activities. This means the incorporation of this factor into the design and implementation of investment projects; to take especial care of development in protected areas; to identify opportunities to improve the biodiversity in said areas; to contribute to scientific knowledge, and to inform stakeholders of the relevant actions in these matters.

The Codelco Code of Conduct established in 2005, provides guidelines for workers about issues such as corruption, conflict of interest, gifts, political contributions and donations. In 2006, the Code was modified to establish greater restrictions regarding conflict of interest. Between them, they determine that workers with authority to take business decisions about purchases, contracts or associations by the company are obliged to inform their superiors when there is a case of a negotiation, acquisition, contract or association in which, without the participation of companies or related people, there exist circumstances that could reduce the independence of someone that must take the decision, or be affected by the social or political influence of the entities or people involved. In such cases, the superior authority must decide if the stipulations in the internal rules that regulate conflicts of interest will be applied.

In 2006, a corporate directive was also approved to incorporate professional risk indicators into performance measurement systems. The directive provides 29 indicators related to security and occupational health that are used to measure results; inform the authorities and the public among others as well as to adopt management decisions.

This directive is an important step in the search for a system of indicators of this type in the divisions of the company.

In August 2006, Codelco signed a Clean Production Agreement (APL), with the National Counsel of Clean Production, and an agreement was also signed by the Ministry of Mining and Energy, the Superintendence of Sanitary Services, the Energy Efficient Country Programme and the Environment National Commission.

Through this agreement, Codelco commits to undertake a series of actions whose objectives are the following:

• Reduce the concentration of molybdenum in the effluent of the Carén tailings dam (Ril Carén) to obtain, in a gradual form, lower values than those demanded by the applicable norm of the El Teniente Division (Supreme Decree Nº 80 of 2006), with the purpose of complying with the standard of Supreme Decree Nº 90 of 2000.
• To establish a norm that applies criteria of energy efficiency to new Codelco projects.

Finally, also in 2006 a corporate directive was elaborated to identify environmental aspects and evaluate the risk of their impacts, whose objective is to have a corporate methodology with a harmonized nomenclature, concepts and criteria, among others, to determine if an environmental aspect is significant or not.


ENVIRONMENTAL MANAGEMENT SYSTEM
In 2006, the Codelco Norte, Salvador, Andina, El Teniente and Ventanas divisions, as well as the Exploration Management and Head Office maintained their respective certifications based in the environmental norm ISO 14001.

The certification audits are undertaken every three years. In the meantime, annual maintenance audits must be undertaken with the aim of ensuring that the environmental management systems in all the work centres of the company stay effective and are continuously improved.

ENVIRONMENTAL AND OCCUPATIONAL SAFETY INVESTMENT
Compliance with Chilean legislation and the internal norms of Codelco has required significant investment in environmental and occupational safety projects.

In 2006, the total of these investments made by the Corporation was US$96 million of which US$60 million was used on environmental projects and US$36 million on occupational safety initiatives.

The environment investment was undertaken, mainly, in projects associated to the management of liquid waste and the adequate disposal of solid waste and tails. Notable projects include, at Codelco Norte, the investment in the Montecristo solid waste dump for arsenic; in Salvador, the expansion of the capacity of the Pampa Austral tailings dam; in Andina, investment in the treatment of liquid waste in dumps,and in El Teniente, the environmental investments made for the Carén tailings dam and the treatment of the waste water from inside the mine.

Regarding occupational safety, notable projects include: at Codelco Norte, improvements to the electrical systems in industrial areas; in Andina, projects associated to improve the conditions of the changing rooms or rest places for our own workers and contractors; and in El Teniente, the implementation of a fire detection and control system in the road network of the mine, besides safety improvements to the Copper Highway, in terms of protection from loose rock, through the installation of steel meshes.

CARÉN TAILINGS DAM SPILL
In Region VI, some 90km to the west of El Teniente, can be found the Carén tailings dam, a place in which this division has deposited its tails since 1987, which is waste from the concentration process of copper and molybdenum.

Under normal operation, this spills effluent called “clear water” from the tailings dam to the wetland of the same name. These waters contain relatively high levels of two compounds, molybdenum and sulphate, which has, in fact, not impeded agriculturalists in the zone to use it for irrigation and to water their livestock. Studies performed have not detected productivity problems or those of any other type in the irrigated produce or in the animals that consume it.

On 16 April 2006, for the first time in the history of the tailings dam, a lamentable accident occurred, when operational failure produced a spill of tails towards the Carén estuary affecting some 17km of the riverbed.

The liberation of the tails together with the effluent caused an impact in the surrounding ecosystem due to the physical effect of the particulate material deposited above soils and sediments. The spill only affected the riverbed in the immediate area and not all the soils of the riverbed. To remedy this situation, the El Teniente Division quickly began a cleaning and mitigation programme that included the removal of sand from the riverbed and its surroundings.

The result of the cleaning work, that implied direct costs of some US$2 million, was certified by an external independent organization, Fundación Chile, a process through which the pertinent authorities and community were kept informed.

The investigations about the cause and effects of the incident, performed by the division and by external parties, led to the introduction of a series of changes in the management and operation of the reservoir, to avoid a repetition of this type of incident.

Actually, the affected zone shows practically the same conditions that it had before the spill, which is testimony to the reversibility of the effects of the incident, as well as the promptness and efficiency of the mitigation tasks.

STAKEHOLDERS
Each year, Codelco undertakes a series of studies to evaluate the perceptions held by various stakeholders about its sustainability performance. The study Codelco Sustentable evaluates the perceptions of communities and authorities included the Gaby Project in 2006.

In addition, it was applied for the first time in a city far from the influence of the operations of Codelco, such as Concepción. The main result of these studies is an index that measures the reputation of Codelco.

Regarding the 2006 survey index, the Andina, El Teniente and Ventanas divisions improved on the results obtained in the previous year; while the other divisions as well as the Head Office and Exploration, saw a fall.

The results of the 2005 and 2006 survey indexes impacted on the performance agreements of the diverse corporate and divisional units. Additionally, the results of this study allows us to orientate the efforts of our community relations.

On the other hand, since 2001, MORI Social Responsibility survey has been performed in Chile under the coordination of Globescan (Canada). This survey is applied in more than twenty countries of the world with the aim of obtaining diverse opinions about issues such as development and corporate social responsibility.

In the last three years, Codelco has been highlighted as the most socially responsible company in the country. The 2006 survey, that considered a sample of 1,000 people living in 30 different cities, shows that in two of the three questions that generate the social responsibility ranking, Codelco maintained its leadership.

CODELCO GOOD NEIGHBOUR
The Corporate Social Investment Fund was created in 2004 and is part of the Codelco Good Neighbour Programme. It has as its aim, from the Headquarters, the development of projects that benefit the communities around the operations of the company. These initiatives are designed for the divisions, Head Office and Exploration which compete for Social Investment Fund resources, in the measure that the divisions commit to financing a minimum 20%.

In 2006, a quarterly evaluation system was applied for the projects of the Codelco Good Neighbour Programme and Social Investment Fund that included an evaluation by the beneficiaries. The evaluations of the said projects also generated a note that coincides with the divisional performance agreements and the corresponding corporate vice-president.

Top date, the Social Investment Fund has developed 26 projects, nine in 2005 and 17 in 2006. For 2007 43 projects will be developed.

Some of the projects developed in 2006 were the following:

• Pat-ta Hoiri folklore group. Support to the group formed by children of atacameña descent, for the purchase of musical instruments and dress for their presentations (Codelco Norte Division).
• Goldwork in Chañaral Province. Courses were provided in gold-working techniques for people made redundant in the Diego de Almagro and Chañaral boroughs that allowed them to train and enter the labour market (Salvador Division).
• Artesanal Products of Aconcagua. Empowered the commercialization of four agricultural items in the Aconcagua zone and that are produced by artisanal means: olive oil, goat’s milk soap, frog’s legs and saffron (Andina Division).
• Environmental education in the Campiche wetland. Implementation of the necessary infrastructure for the wetland to receive visitors for educational purposes (Ventanas Division).
• William Braden Museum: promotion of mining education. Restoration of the Hodkingson House and its conversion into a museum space, in honour of William Braden, founder of El Teniente (El Teniente Division).
• Experimental hothouse and production Inca de Oro. Built and implemented a hothouse for the production of vegetables than can be commercialized in the local market. Also as an educational support for the children from the local school (Exploration Management).
• Digital neighbour. Workshops in computer literacy in the Head Office for contractors' employees, with the support of a group of volunteers from the corporation that acted as instructors (Head Office).

OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT
In 2006, Codelco’s divisions, Head Office and Exploration Management maintained their certification for their occupational health and safety management systems under the specification OHSAS 18001. The Ventanas Division is now in the process of implementing the system.

The company also continued developing various improvements to its management in these areas, of which the most relevant in 2006 were:

• Development of a corporate intranet information system of risk professionals and the publication of statistics on the website for public access(www.codelco.com).
• Implementation of a corporate information platform of industrial hygiene risk maps in the intranet.
• Held the second corporate hygiene and safety committees in which 120 representatives participated in 40 committees. Launch of the web site of the Codelco committees and definition of a directive about their functioning.
• Incorporation of safety, occupational health and accreditation criteria for certification to OHSAS 18001 for pre–qualification in the bidding of contracting companies.
• Maintenance of the practice of Corporate Safety Hour, in which the whole Codelco organization and its contractors stop and reflect on issues of safety at work.
• Participation in work groups with company organizations to normalize safety and hygiene aspects in contractor’s work.
• Held for the second consecutive year, an audit to verify and confirm the compliance with safety and occupational health aspects among a sample of contracts, in which their have been important improvements.
In 2006, Codelco regretted the death of three of its workers and three contractors, which reaffirms its commitment to all workers of the company to safe working practices.

In the same period, the rate of work accidents among Codelco’s workers was 3.60 that represents a 14% fall compared to the previous year, which was 4.19. Meanwhile, the injury rate increased 59.4%, from 508 in 2005 to 809 in 2006.

The accident rate for workers from contractor companies increased 1.6% from 3.87 in 2005 to 3.93 in 2006. The injury rate fell 2.9% from 364 in 2005 to 353 in 2006.

PROMOTING AND DEFENDING COPPER
Codelco belongs to the International Copper Association, ICA, which represents companies responsible for 80% of world copper production. Its mission is to promote and communicate the unique attributes making copper a sustainable material and an essential element for life, scientific progress and technology, environmental protection and improvements to people’s quality of life.

In 2006, the ICA, together with its members, developed a new strategic plan for the 2007–2011 period. The plan accentuates programmes with high potential impact in the copper market, as well as striking a balance between the development of new markets and the protection of existing ones. By maintaining a long–term perspective and a strategy to face short–term threats, related with substitution and the high relative cost of copper in the face of competing materials.

The new elements of the ICA strategy include:

• More emphasis on sustainable electrical energy programmes including global electrification, energy yield and renewable energy.
• A new initiative in the automobile, white goods, computing, telephony and other sectors (OEM), that will allow ICA to integrate better with the most important final users in the world of copper (60 of these companies collectively account for more than 6 million tons of annual copper demand, that is a third of the refined copper market.
• Expansion of the technological initiative with a focus on those projects that present commercial viability to increase and create new uses for copper.
• Extension of the role of the ICA environmental programme highlighting access to markets and sustainable development.
• More emphasis on the collection and coordination of market data.
• Formation of a new public health initiative centred on the antibacterial properties of copper that represents a great opportunity to develop new uses for red metal.

In 2006, the ICA managed the highest budget in its history, US$66 million, including US$45 million of direct financing from its members as well as US$21 million received as support from copper industry participants, governments, nongovernmental organizations and other organizations that allowed it to finance programmes related to the promotion and defence of copper. This high level of financing demonstrates a solid support by third parties for the work undertaken by ICA in the name of the world copper industry.

The industry has to face the challenges generated by the high relative cost of copper and the danger of substitution it faces from different materials, a process stimulated by actual market conditions.

To help the industry to better understand and quantify the said impact, in 2005 the ICA commissioned a study from specialist consultant CRU. The results showed significant oses being suffered in important copper markets due to substitution.

In 2006, those in charge of the ICA programmes complemented this study with an analysis of 100 copper consuming companies around the world. Working closely with its members, the ICA has been able to use these data to make the necessary changes in its programmes to increase its focus on the advantages of copper over other substitute materials.

Through a strong commitment from companies like Codelco, the ICA will continue exercising its positive impact on world copper demand.

INTERNATIONAL MOLYBDENUM ASSOCIATION
Codelco has been a member of the International Molybdenum Association (IMOA), since 1989, and occupies the vice–presidency of the organization.

In 2006, with a budget of US$2.3 million, IMOA prepared its members for the implementation of a new chemical policy in Europe called REACH.

The IMOA executive committee agreed to the formation of a consortium tasked with obtaining licenses for the main commercial products of molybdenum so as to assure their access to the main consuming market in the world. This process will allow the provision of support to other complementary processes that develop at the international level.

The market, health and environmental committees continue actively working to respond efficiently to the opportunities and threats that the market presents. Among the most relevant achievements in the period were the identification and evaluation of the scientific information that actually exists. This resource will allow the delivery of an outline of the focus of scientific investigation that will have to be undertaken by the industry in the future.