Transport

In Chile, the Antofagasta Railway Company’s (“FCAB”) main business continues to be the transport of copper cathodes from and sulphuric acid to mines in the Antofagasta Region, one of the main copper mining districts in the world. It has benefited in recent years from the new mines and expansions of existing mines. FCAB’s trucking service, Train Ltda., is a key part of FCAB’s bi-modal transport service. Train Ltda.’s main business continues to be the transport of sulphuric acid from transfer terminals operated by FCAB, as well as other supplies such as the transport of quicklime from Inacesa’s cement plant to various mines. In Bolivia, FCAB has a 50% controlling interest in the Ferrocarril Andino, with the remainder held by Bolivian pension funds. The Ferrocarril Andino connects to the Chilean network at Ollague.

The rail businesses in Chile and Bolivia had a solid operational performance during 2009 with rail volumes increasing by 12.2% to 6.3 million tons. This was due to the full-year effect of increased volumes from the San Cristóbal mine in Bolivia, which achieved full tonnage volumes in the second half of 2008, as well as increases from other mining customers. Train Ltda., FCAB’s trucking subsidiary, increased volumes by 11.2% during 2009 to 1.5 million tons.

Combined turnover at the transport division in 2009 was US$139.4 million, compared to US$151.0 million in the prior year. This decrease mainly reflected tariff adjustments, partly due to rates indexed to inflation and fuel costs. As a result, operating profit also decreased to US$41.3 million (2008 – US$50.4 million).

In July 2009 the FCAB exercised an option to acquire a 40% interest in Inversiones Hornitos S.A. (“Inversiones Hornitos”) from GDF SUEZ, which continues to hold the remaining 60% interest. Inversiones Hornitos is the owner of the 150 MW Hornitos thermoelectric power plant which is being constructed in Mejillones, in Chile’s Antofagasta Region. The Hornitos plant, which is expected to begin commercial operation in 2011, will provide energy to Minera Esperanza under a long-term supply agreement. The FCAB is responsible for its 40% share of the estimated total US$0.4 billion development costs of the Hornitos plant, and during 2009 has contributed a total of US$109.5 million.

The Antofagasta port, which is managed by the Group’s 30% associate investment Antofagasta Terminal Internacional S.A. (“ATI”) contributed US$1.5 million to Group results (2008 – US$2.3 million). ATI is a strategic investment for FCAB and complements its principal business as the main transporter of cargo within Chile’s Antofagasta Region.

FCAB also owns Forestal S.A., which manages the Group’s forestry assets. Forestal’s two properties, Releco-Puñir and Huilo-Huilo, comprise 26,295 hectares of native forest near the Panguipulli and Neltume lakes, in Chile’s Region de Los Lagos. During 2009, Forestal continued with its ongoing forestation, fertilisation and thinning programme to maintain these assets.

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