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Chile

Corporación Nacional del Cobre de Chile – CODELCO Renewable Energy PPAs

$2000 million
Renewable Energy
Extractive Industries
Environmental and Social Review Summary
Proposed
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Environmental and Social Review Summary

CODELCO Renewable Energy PPAs

This Environmental and Social Review Summary (ESRS) is prepared by MIGA staff and disclosed prior to the date on which MIGA’s Board of Directors considers the proposed issuance of a Contract of Guarantee. Its purpose is to enhance the transparency of MIGA’s activities. This document should not be construed as presuming the outcome of the decision by MIGA’s Board of Directors. Board dates are estimates only. 

Any documentation that is attached to this ESRS has been prepared by the project sponsor, and authorization has been given for public release. MIGA has reviewed the attached documentation as provided by the applicant, and considers it of adequate quality to be released to the public, but does not endorse the content. 

MIGA has been requested to provide guarantee(s) covering non-shareholder loan(s) of up to US$ 1,200 million from commercial lenders yet-to-be-identified to Corporación Nacional del Cobre de Chile (CODELCO or the Company). The MIGA-guaranteed loans will be used exclusively to support payments under existing and new renewable energy power purchase agreements (PPAs) between CODELCO and third-party energy producers that supply electricity to CODELCO via the national grid (the Project). The PPAs play a crucial role in transitioning CODELCO's electricity supply from coal to renewable power. 

CODELCO is a copper mining company fully owned by the Government of Chile. It was established in 1976 and is the world’s largest copper producer, with an estimated 7.2% share of the total world copper production in 2022. CODELCO engages primarily in the exploration, development, extraction, processing and sale of copper and byproducts, which are high-energy demanding activities, particularly for the minerals processing. 

Since 2018, CODELCO has been implementing a strategy to decarbonize its electricity supply, which involves incentivizing the energy transition of their suppliers by phasing out existing fossil fuel-based PPAs and entering into new renewable energy (RE)-based PPAs.  

The total energy contracted by CODELCO under the Project increases from approximately 240 in 2023 to 4850 GWh/year in 2026, covering up to around 60% of CODELCO’s energy consumption.  All power procured under the PPAs within the scope of the Project will be sourced from the national grid and delivered through existing power distribution infrastructure (including transmission and distribution lines, and substations). The Project will not require the development or upgrade of CODELCO's power distribution infrastructure.  

Several RE power plants will be constructed to supply additional power under the PPAs, however there are no energy projects exclusively dedicated to CODELCO's use. Power for CODELCO's operations will be supplied by a network of power suppliers operating in the national energy market and drawing from a diverse energy mix. CODELCO is not involved in the development or sponsorship of any specific renewable energy projects. 

The power supplied under the PPAs will be used generally across the whole of CODELCO’s operations and will not be dedicated to any specific business activity (such as extraction or refining). The Project will not entail financing of any mining activities and will not result in any changes to or expansion of CODELCO’s existing operations. 

The Project is part of a broader CODELCO’s Decarbonization Program, which is a fundamental component of the overarching CODELCO’s corporate sustainability strategy. In December 2020, CODELCO announced its commitment to become a carbon neutral company by 2050. In support of this goal, the Company also announced six Sustainable Development Commitments that expects to reach by December 2030: (i) 70% reduction of greenhouse gas (GHG) emissions against the 2019 levels, with a further carbon neutrality target by 2050; (ii) 60% reduction of unitary continental water consumption from 2019 levels; (iii) recycling 65% of industrial waste; (iv) implementation of online monitoring and infiltration control systems to all tailing storage facilities; (v) 60% increase of goods and services provided by local suppliers from 2019 levels; and (vi) 25% reduction of particulate matter emissions from 2019 levels. 

In this context, the Project contributes to the CODELCO’s Decarbonization Program and to the GHG-emission reduction targets set for 2030. Furthermore, through this strategy CODELCO is on track to secure 85% of its energy needs from RE sources starting in 2026, and to achieve 100% by 2030.  

 

The Project is considered Category B under MIGA’s Policy on E&S Sustainability (2013), as it considered to entail business activities with potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.  

The risks associated with the Project relate to CODELCO’s institutional capacity to effectively implement its corporate environmental and social management system in accordance with MIGA E&S Performance Standards (PSs), in the context of Project. 

While all PSs are applicable to this investment, based on our current information, the investment will have impacts which must be managed in a manner consistent with the following PSs:  

  • PS1:  Assessment and Management of Environmental and Social Risks and Impacts. 
  • PS2:  Labor and Working Conditions. 

As the MIGA-guaranteed funds will be used for payment obligations under the PPAs, and considering that the MIGA scope of E&S Due Diligence (ESDD) focused on CODELCO’s corporate level (see details below), the following PSs do not apply: PS3: Resource Efficiency and Pollution Prevention, PS4: Community Health, Safety and Security, PS5: Land Acquisition and Involuntary Resettlement, PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous Peoples and PS8: Cultural Heritage. 

The following documents were reviewed by MIGA: 

  • Corporate Sustainability Policy, 2021; 
  • Corporate Health and Safety Policy, 2019;  
  • Environmental Management System (EMS), 2021; 
  • EMS Audit Program, Bureau Veritas, 2023; 
  • Sustainability Annual Reports, 2021 and 2022; 
  • Comprehensive Risk Management Manual, 2023; 
  • Copper Mark Seal reports for each of CODELCO's divisions, 2023; 
  • Occupational Health and Safety (OHS) Policy, 2019; 
  • Occupational Health and Safety Management System (OHSMS); 
  • Occupational Health and Safety Strategy (OHSS), 2021-2024; 
  • Corporate Public Affairs Policy, 2021; 
  • Community management system, 2021; 
  • Complaints Report Line (CRL) webpage, accessed March 2024; 
  • Corporate Policy of HR management, 2015; 
  • Corporate Normative on Negotiating Collective Bargaining Agreements (CBAs), 2023; 
  • Corporate Diversity and Inclusion (D&I) Policy, 2021;  
  • Contracting Policy, 2012; 
  • Special Rules for the management of OHS matters associated with contractors and subcontractors (RESSO), 2019; 
  • Special Rules on Environmental and Territorial Management for CODELCO Contractors and Subcontractors (REMA). 2019; 
  • Methodology and Systemic Control of Accreditation, Credentialing and Labor Control of Contractor Companies, 2023.  

The scope of MIGA ESDD considers the use of proceeds of the Project that are limited to payment of contractual agreements and does not involve direct or indirect financing of mining activities or physical assets. CODELCO’s mining operations are considered within the indirect area of influence of the Project, as the power sourced through the PPAs will be used across CODELCO’s sites of activities with no clear linkage of source and type of operation. Accordingly, the mining operations were not within the scope of the MIGA ESDD. MIGA did not review any of CODELCO’s mining operations, as these are considered out of the direct scope of MIGA project. The review focused on appraising the corporate level capacity, policies, and effective implementation of CODELCO’s management systems in the context of the Project. The renewable energy projects associated with the PPAs are not considered "Associated Facilities" to the Project, as defined in PS 1.  

In addition to reviewing the above documents, MIGA’s ESDD included discussions with CODELCO commencing in August 2023 and a site visit in January 2024. During the site visit, MIGA also met with representatives from the Ministry of Mining, the Ministry of Energy, and the Ministry of Finance, as key stakeholders regarding the scope of the Project.  

MIGA’s due diligence review considered the E&S management planning process and documentation for the Project and identified gaps (if any) between these and MIGA’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable time period, are summarized in the paragraphs that follow and in the E&S Action Plan (ESAP) attached to this ESRS. Through the implementation of these measures, the Project is expected to be designed and operated in accordance with the Performance Standards. Key E&S issues associated with the Project business activities are summarized in the paragraphs that follow. 

PS1:  Assessment and Management of Environmental and Social Risks and Impacts 

Environmental and Social Assessment and Management System 

CODELCO operates according to three management levels. These are:    

  • Corporate level;    

  • District level, which typically represents a group of operations in a region; and    

  • Divisional level, which represents the operational sites.   

CODELCO has a Corporate Sustainability Policy (April 2021), which identifies business sustainability as one of the strategic pillars of the corporation. 

The range of CODELCO’s operational risks is managed through a combination of interrelated management systems, which are mostly represented by the overarching Corporate Integrated Risk Management System, and other specific systems, such as the Environmental Management System (EMS), the Community Management System (known as GECO), and the Occupational Health and Safety Management System (OHSMS). 

The EMS is certified under International Organization for Standardization (ISO) 14001:2015, is dated October 2022 and is valid for three years; the latest ISO 14001 audit was performed by an independent certifier, Bureau Veritas, in September 2023 with no major non-compliances to ISO requirements. The EMS facilitates the management of key environmental aspects of the business, and its implementation is managed by the Environmental Management Department (Gerencia de Medio Ambiente).  

CODELCO’s EMS is designed as a single overarching system managed at Corporate level, and each of the CODELCO’s Division and their related operations and projects are required to operate in accordance with this system. The formal objective of the EMS is to establish a standard framework to plan, implement, check and monitor CODELCO’s environmental management, and establish elements, management approaches and other aspects consistent with the Corporate Sustainability Policy, applicable environmental regulations, and international standards (such as, the International Council on Mining and Metals and the Copper Mark standards). 

The EMS is organized in three main elements:  

  • Normative Structure: The first EMS element refers to compliance obligations, including all the environment-related legal requirements internally set by the organization in CODELCO’s standards and procedures.  

  • Context of the Organization: It refers to internal and external environmental contextual factors in which CODELCO operates, that could impact the achievement of the Corporation’s objective and that could affect its capacity to achieve the expected EMS results. Environmental aspects are mostly followed up through the EMS, while social aspects through CODELCO’s Community Management System (see section PS1 - stakeholder engagement).    

  • Management Focus Areas: This element lays out the operational control and management pillars of key EMS processes at each CODELCO’s Operation and Project (as described below, under the section “PS1 - Identification of Risks and Impacts and Management Programs”). 

 

CODELCO’s EMS is revised on an annual basis taking into account progress on sustainability commitments, annual environmental management budget, Top Management Review of EMS results from previous year, and annual review of Environmental Management Plan compliance. 

CODELCO is member of relevant international organizations, including the United Nations Global Compact, The International Council on Mining and Metals (ICMM) and the International Copper Association (ICA); CODELCO is also participant of The Copper Mark assurance framework. In achieving the Copper Mark (CM) seal for each of its mines, smelters and refineries, CODELCO underwent a CM auditing process, that required the implementation of a corrective action plan. Key actions included in the corrective action plan included the following:  

  • Manage the risk to the business in terms of: a) Community perception of contamination from CODELCO's operations, and b) strengthen the procedures on Community Health and Safety Assessment; 

  • Strengthen training and awareness on discrimination among contract workers;  

  • Strengthen training and awareness on forced labor for contract workers; and 

  • Strengthen Human Rights Due Diligence process and associated requirements, and the incorporate the same into CODELCO's risk management framework. 

 

CODELCO provided evidence of the implementation of updated procedures for community health and safety assessment and management in CODELCO’s operations (specifically, the social tool procedure of February 2024, and social management standard of January 2024). 

The implementation of other actions is discussed below, under section “PS2 - Protecting the workforce” and  “PS2 – Non-Discrimination and Equal Opportunity”. 

In adherence to the Energy Efficiency Law, CODELCO implemented a corporate energy management system following the ISO 50001 standard. This system is centralized and multisite, encompassing all 8 of the Company’s divisions, establishing consistent energy efficiency standards. The system aims at optimizing energy usage, identifying areas for improvement, and ultimately reducing operational costs. 

MIGA reviewed CODELCO’s approach to E&S risk management and did not find any substantial gaps against the requirements of PS1. 

Identification of Risks and Impacts  

As mentioned earlier, MIGA scope of ESDD review of this Project was on the corporate level, as corporate financing. Accordingly, the approach for identification of risks and impacts is in the context of corporate policies and systems, and not focused on the operations of CODELCO. 

The annual revision process of the EMS allows the periodical identification of risks and impacts that can potentially affect CODELCO at corporate level, and its appropriate management. The identification and management processes are carried out and revised across the four key EMS Management Focus Areas, as follows:  

  • Regulatory Environmental Compliance Management: Process consistent with the identification and assurance of environmental compliance. To monitor compliance, CODELCO has a Corporate Environmental Compliance Platform, which is controlled by the Environmental Management Department. 

  • Critical Environmental Risk Management: For Critical Risk Management, CODELCO has a Corporate Risk Management and Control Model Platform, which is managed by the Corporate Risk and Control Department. 

  • Sustainable Development Commitments and Goals: Targets that guide the implementation of initiatives to support the environmental performance of operations and projects, beyond compliance obligations. Progress toward these goals is monitored through the 2030 Sustainable Development Goal Tracker. The implementation of the Project is part of CODELCO’s decarbonization program, which in turn is embedded in one of the CODELCO’s Sustainable Development Goals to be achieved by 2030.  

  • Event Impact Management: Prevention process to control, learn and prevent the occurrence of adverse events or emergencies that can cause a negative impact on the environment and CODELCO’s business. To monitor Environmental Incident management, CODELCO has an Environmental Incident Management Platform. 

As required by the local legislation, specific CODELCO’s projects and operations are assessed against Environmental Social Impact Assessment (ESIA) processes. ESIA processes are managed by CODELCO’s Environmental Management Department, according to an Environmental Impact Assessment System (SEIA). Based on the outcomes of the ESIA processes, CODELCO’s activities are subject to compliance with obligations, conditions and requirements set forth in environmental authorizations (RCA or “Resoluciones de Calificación Ambiental”). At present, CODELCO manages around 290 RCA’s and 37,000 commitments that are standardized and centrally controlled through the EMS and an Integrated Information System. Non-compliance occurrence or breaches of RCA are classified based on severity and priority, recorded, and followed up. As of 2023 out of around 37,000 commitments, approximately 500 are non-compliant (less than 1.5%). Non-compliances are followed up and addressed by the Environmental Management Department by means of corrective action plans. 

MIGA reviewed the CODELCO’s approach to corporate risk identification, and associated management practices, and considered it in line with the requirements of PS1. 

 

Organizational Capacity and Competency 

The implementation of the Project is primarily managed by CODELCO’s Energy Resources Department, in liaison with the Vice-Presidency of Sustainability and Corporate Affairs (Vicepresidencia de Sustentabilidad y Asuntos Corporativos), which oversees the corporate E&S matters of CODELCO’s operations and ensures that the Project effectively supports the corporate decarbonization program and the broader sustainability goals.  

To provide governance to the EMS, CODELCO relies on a combination of committees that act at Board, Corporate and Divisional level. A bespoke Sustainability Committee advises the Board of Directors with respect to matters of sustainability, overseeing (i) progress regarding CODELCO’s sustainability objectives and commitments, both in the short and long term; (ii) the effectiveness of corporate policies and management systems associated with impacts on the environment, society and responsible production; monitoring compliance with the regulatory framework in these matters; (iii) the publication and dissemination of information of interest in the field of sustainability; and (iv) the definition of guidelines on the socio-community impact of CODELCO.  

From a governance perspective, an EMS Operations Team, consisting of the divisional Environmental Directors and the District Implementation Team, coordinates the implementation and achievement of EMS milestones. A Top Management team, at a Corporate, District, Divisional and VP level, reviews key aspects associated with environmental management and provide essential resources needed to implement, maintain, and continuously improve the EMS and to ensure performance of the Environmental Management Plans.  

From an operational perspective, roles and responsibilities for the implementation of the EMS have been clearly identified, and allocated among the following functions: Corporate Legal Counsel, Vice-President (VP) of Sustainability and Corporate Affairs and its departments, General Manager, Managers of Operations and Administrative Areas, Divisional / VP Sustainability and External Affairs Managers, Divisional / VP Environment Directors, Superintendents and Directors of CODELCO operations areas. 

To foster a culture of sustainability and strengthen E&S management practices across its operations, CODELCO established in 2022 the Sustainability Academy. The scope of the academy is to provide training to workers and supervisors on environmental, social and sustainability commitments. Trainings are provided in all divisional centers, with the participation of operation, supervisors and executive staff; in 2023, more than 700 members of staff and supervisors were trained and certified.  

CODELCO’s organizational capacity is deemed adequate to manage the E&S aspects of the Project and the wide corporate activities.  

 

Emergency Preparedness and Response 

In its Corporate Health and Safety Policy, CODELCO emphasizes the importance of proactive emergency preparedness in workplaces. The policy highlights the need for identifying potential emergency situations, creating comprehensive plans, and ensuring the availability of resources for timely and effective responses. The focus is on minimizing the impact and consequences of emergencies on individuals, processes, and the reputation of the corporation. 

Community information and emergency readiness are managed by each Division health and safety teams. 

 

Key points of CODELCO’s approach to emergency management includes the requirement for each Division to have a Risk Matrix that identifies potential emergencies and their impact on the corporation. This includes developing documented procedures or protocols for addressing emergencies, identifying the type of event, evaluating its criticality and potential extent of impact, outlining action plans, specifying levels of responsibility, and establishing communication flows to all relevant internal and external parties. 

CODELCO’s Corporate Health and Safety Policy stresses the importance of considering several factors when analyzing and defining emergency procedures. These factors include legal requirements, past incidents, industry practices, community involvement in emergency management, and natural events like earthquakes, landslides, floods, and snowfall. The policy also emphasizes that corporate and management levels should maintain documented procedures that define resource requirements, roles, responsibilities, and reliable communication methods. It also requires conducting workshops and annual reviews by executives to assess the status of catastrophic risks. The policy requires establishing maintenance, resources, and review plans for all components and equipment designed to manage emergencies. These components include alarms, evacuation routes, shelter systems, and fire suppression systems. It also emphasizes the need for defined responsibilities, communication channels, specific instructions for each operational area, and actions for external individuals like suppliers and visitors during emergencies. Lastly, the policy highlights the importance of conducting thorough investigations into the causes of emergencies to facilitate learning and immediate adoption of corrective actions. 

For sectors that could potentially be most affected by an emergency or other issues of interest to the communities, CODELCO works with community representatives and emergency working groups, in which police forces, firefighters and the National Office of Emergencies (ONEMI) participate.  

[SASB EM-MM-540a.3] 

An internal review of Emergency Readiness Plans for CODELCO's tailings deposits and Community Emergency Plans was conducted to identify potential gaps in compliance with the ICMM standard for tailings deposits. These plans included the identification of affected groups and geographical record maps.  

MIGA reviewed CODELCO’s approach to Emergency Preparedness and Response, and considered it in line with the requirements of PS1. 

Monitoring and Review  

CODELCO’s EMS includes monitoring and review processes to oversee organization's effectiveness and performance. Annually, CODELCO conducts an External Audit Program as part of the ISO 14001 certification process, coordinated by the Environmental Management Department. 

In the first quarter of each year, each Division conducts a Top Management Review of corporate environmental performance results. Based on the Top Management Review results, priorities of the Environmental Management System may be redefined. The Top Management Review process also addresses unplanned events that may affect EMS operations and performance, such as changes in business status, processes, or organization, new critical environmental risks, oversight, sanctions or requirements, and environmental-social conflicts, to implement appropriate preventive and/or corrective measures. 

The Top Management review is overseen by the Vice-Presidency of Sustainability and Corporate Affairs, with General Managers/Vice Presidents of Projects and other relevant departments required to submit their results to the Environmental Management Department. This department in turn leads the review of Corporate EMS results and consolidates and coordinates these results before submitting them to the Corporate Sustainability Committee.  

Any deviation from EMS objectives and requirements is analyzed to identify causes and determine necessary corrective or preventive actions in compliance with standard requirements. Based on the findings, an Annual EMS Plan and Findings Assessment is documented in the Corporate EMS Control and Findings Platform, under the Environmental Management Department.  

MIGA reviewed CODELCO’s approach to Monitor and Review, and considered it in line with the requirements of PS1. 

Stakeholder Engagement 

Key sustainability corporate information is publicly disclosed in CODELCO’s website (https://www.codelco.com/annual-reports) through annual Comprehensive Reports, covering Governance, Sustainability, Human Resources, and other relevant topics. Information regarding CODELCO’s decarbonization program and the broader sustainability commitments were made available in these reports. These reports have been developed since 2001 and they now follow the international standard of the Global Reporting Initiative (GRI). 

CODELCO faces considerable public scrutiny from national and international media. Stakeholder engagement is managed jointly by corporate and divisional departments. The Vice-Presidency of Sustainability and Corporate Affairs, in particular, oversees liaison with key stakeholders through the Corporate Communications and Public Affairs Department, which defines and implements corporate communication strategies for internal and external audiences regarding environmental issues. 

The Institutional Relations Directorate, and the Divisional and District Communities Directorates also play a relevant role in fostering and leading relations with authorities, the media, and the community. 

Stakeholder engagement at Divisional level is facilitated through a Community Management System (GECO). Procedures for community relations involves identifying areas of influence, mapping groups of interest, analyzing needs and opportunities, developing community plans, and evaluating those plans in a participatory manner. Other mechanisms, such as dialogue tables ("mesas de diálogo"), which originated from the environmental and social impact assessment are also used. Additional mechanisms include community conversations, technical visits, participatory monitoring of outcomes, and an annual survey and evaluation of stakeholder perceptions of CODELCO. Community liaison staff represent the district sites in these efforts. 

GECO aims to promote territorial development by supporting the local economy, education, and human capital. Territorial and community development is further implemented through a corporate program called “Territorial Development with Social Value” which aims to build mutually beneficial relationships with neighboring communities by sourcing from local suppliers and supporting community development programs. 

MIGA considers CODELCO’s approach to Stakeholder Engagement adequate, and in line with the requirements of PS1. 

External Communications and Grievance Mechanisms  

CODELCO has a grievance mechanism called the Complaints Report Line (CRL), which aligns with the criteria of the UN Guiding Principles. The CRL is public, allowing for individual or anonymous reporting of incidents that may constitute violations of the corporate rules, including legal regulations, policies, procedures, the Code of Conduct and Business Ethics, the Corporate Sustainability Policy. The CRL can be accessed by telephone or online and operated by the independent and specialist company EthicsPoint, ensuring the security and confidentiality of information received. The service is available 24 hours a day, seven days a week, and is accessible to all stakeholders and workers regardless of their contract or position within the Company and extended to the entire community.  

Complaints can be submitted for four macro-categories: 

  1. Complaints or allegations of violations of the Code of Business Conduct, including environmental and social complaints. 

  1. Socio-Environmental Complaints and Suggestions Line (LRSS), which represents a direct contact channel between CODELCO and communities to manage complaints and suggestions regarding the socio-environmental performance of the Corporation, anonymously or not. 

  1. Suppliers Inquiries, which encompasses issues associated with registration, tenders, procurements practices, payments, among others. 

  1. Ethics and Integrity, which encompasses questions, concerns, suggestions, ideas, or help with compliance, business ethics, conflict of interest management, transparency, and integrity. 

 

Complaints are internally registered and classified, according to a set of categories, which includes violations of environmental policies and regulations, workplace harassment, sexual harassment, unsafe working conditions, discrimination, non-payment by CODELCO or their contractors, reprisals, other human rights violations, and illegal control of mining sites or transportation routes. 

CODELCO discloses the number and type of grievances received at each division at the following link: https://www.codelco.com/nosotros/ley-de-transparencia/informe-linea-de-denuncia 

MIGA reviewed CODELCO’s approach to External Communications and Grievance Mechanisms, and considered it in line with the requirements of PS1. 

PS2:  Labor and Working Conditions 

Working Conditions and Management of Worker Relationship 

As of December 2023, CODELCO employed 15,673 in-house staff (contracted both indefinitely and temporarily) and 55,961 contractors (including employees of regular operating contractors and contractors involved in investment projects). 

Human Resources (HR) policies and procedures regarding working conditions and terms of employment, are outlined within the Corporate Policy of HR management, the Corporate Normative on Negotiating Collective Bargaining Agreements, and the Contracting Policy. These policies and procedures are implemented by each Division and by the Corporate Vice Presidency of Projects, through the respective HR Management Departments. 

  Staff contracts, benefits and conditions of work are regularly negotiated between CODELCO and the local sectorial unions, and defined in Collective Bargaining Agreements (CBAs), which typically have terms of two to three years. CBAs are subject to government scrutiny, and government comptrollers oversee CODELCO’s compensation, benefits, and terms of employment on a regular basis. 

CODELCO has implemented policies, procedures, and practices to ensure that no overtime and legal limits in respect to working hours are maintained (no more than sixty hours a week). Working hours are included within the CBAs and includes a minimum of 15 vacation days, as required by the Chilean Labor Code. Working regime is regulated in accordance with the Corporate Sustainability Policy commitments, quality of life policy, and internal regulations on occupational health and safety.  

Pay scales, collective wages and benefits are negotiated and agreed as part of the CBAs. To inform the collective bargaining process, CODELCO carries out an annual analysis of all employee salary and benefits package using the Global Grading system, which considers market comparisons and weighting factors based on work type and experience. CODELCO’s staff remuneration is equal to or above the national minimum wage, and the Company maintains the commitment to meet the average salary of the mining industry at local level. It is noted that as a state-owned enterprise, CODELCO remuneration regime is subject to legal limitations. 

Contractor remuneration packages are not set by CODELCO but are required to be paid according to law and subject to a CODELCO audit.  

MIGA assessed CODELCO’s working conditions and management of worker relationship, and considered these aspects in line with the requirements of PS2. 

Workers’ Organization 

At Corporate level, CODELCO maintains a Corporate Normative on Negotiating CBAs that explicitly endorses the right of freedom of association. As of December 2023, approximately 85% of CODELCO’s staff was covered by CBAs with labor unions. CODELCO negotiated two CBAs in 2022, and 31 CBAs between 2020 and 2021. Since 2015, there is a foundation agreement between CODELCO and the Federation of Copper Workers that promotes the dialogue between Company administration and its labor force. Among other principles, it also remarks the right to collective bargain. This agreement was renewed in 2022. 

CODELCO has systems to respect employees’ rights to freedom of association and collective bargaining in line with International Labor Organization (ILO) conventions.  

Contractors are not represented by the CODELCO unions but are part of individual unions organized within their respective employer organizations.  

As of June 2023, CODELCO negotiated all the CBAs with no conflicts or work stoppages for 2022 and 2023, except for one-day strike on Ventanas Division related to the decommission of the smelter; the strike was resolved through negotiation between CODELCO and the unions. 

MIGA assessed CODELCO’s approach in terms of relationship with workers organizations, and consider this aspect in line with the requirements of PS2. 

Non-Discrimination and Equal Opportunity 

[CMF 5.4.1] 

CODELCO has a Corporate Diversity and Inclusion (D&I) Policy that was approved in 2021 and a D&I Strategy for the period 2020-2024. 

The D&I policy’s scope covers all workplaces, with eight central areas: (i) Strengthening a diverse and inclusive culture, (ii) Develop different areas of D&I, (iii) Lead from the level of senior management to obtain sustainable change, (iv) Promote awareness and training on these issues, (v) Promote actions that generate results and enhance continuous improvement, (vi) Promote positive actions for closing gaps, (vii) Include D&I in all processes involving people, (viii) Encourage a good work environment. 

CODELCO’s corporate policies contain explicit definitions aimed at preventing and detecting situations of workplace and sexual harassment, described in the following documents: 

  • Code of Business Conduct. 

  • D&I policy. 

  • Corporate guidelines for the prevention of behaviors of sexual harassment, workplace, and domestic violence. 

  • Internal work center regulations. 

 

The procedures to be followed for reporting situations of discrimination or harassment are described in these documents. CODELCO is currently working on a new corporate guideline for the investigation of these types of complaints. There are training and awareness programs covering discrimination and harassment, and these are mandatory for CODELCO’s employees and for contractors.  

Throughout the CODELCO operations, management is implementing a “Cultural Transformation Index” on an annual basis, designed to identify issues and areas of improvement.  

As mentioned, Copper Marks reports suggested insufficient evidence of related training in the workforce, as the awareness of the specific CODELCO’s requirements is variable amongst the workforce. A corrective action plan is being established to address the gaps identified. 

As part of the ESAP, CODELCO will provide evidence of the implementation of a training program on discrimination and inclusion for staff and contractors (ESAP 1). 

Grievance mechanism 

Employee grievances are collected and processed by CODELCO through the Complaints Report Line (CRL) described in section PS 1 “External Communication and Grievance Mechanisms”. 

Protecting the Work Force 

CODELCO has policies and practices in place to prohibit forced labor and human trafficking. The minimum age for employment at CODELCO operations is 18 years. CODELCO has a management system that prevents the employment of personnel under the age of 18 and prevents the exposure of employees under the age of 18 to hazardous work in line with ILO conventions. Proof of age is required during the recruitment process.  

Forced labor issues are covered under Chilean law, and through references in the Code of Conduct to United Nations Guiding Principles, and Universal Declaration of Human Rights. Contractors are subject to audits including checks on remuneration.  

CODELCO is updating its policies to specify its position on forced labor. Furthermore, new training is being made available to workers, to raise awareness on forced labor and human trafficking. As part of the ESAP, CODELCO will provide evidence of the implementation of a training program on forced labor for staff and contractors (ESAP 2).  

CODELCO will also provide evidence of the implementation of a Human Rights Due Diligence process, demonstrating that the same is incorporated into CODELCO's risk management framework (ESAP 3). 

Occupational Health and Safety 

CODELCO maintains an Occupational Health and Safety (OHS) Policy, which is executed through the Occupational Health and Safety Management System (OHSMS) and the Occupational Health and Safety Strategy (OHSS) 2021-2024. The OHSMS is based on ISO 45001:2018 Occupational Health and Safety Management, applies to both CODELCO’s in-house staff and contractors, is defined at the corporate level, and implemented at each site. The most recent ISO 45001:2018 certification was received in December 2023. These systems and policies are managed by the corporate Department of Operational Health and Safety (OHS). 

The OHSMS and its implementing manuals, clearly spelled out purpose, objectives, organizational structure and responsibilities, and operational model of the system. Furthermore, the OHSMS specifies the requirements and guidelines that must be defined at each working site and captured in the relevant project specific OHS Management Plans (OHSMP), which are managed by the relevant divisional OHS departments. OHSMPs are updated annually and include an analysis to confirm/identify critical control requirements and provisions for main safety and health risks.  

The OHSMS is aligned with the requirements of general Chilean standards for labor accidents and occupational illness (Law No. 16,744, DS 40, DS 54, among others), and with the regulations for mining (DS 132). RI 403-6] [ICMM 5] 

The current OHSS, in force until 2024, was developed based on a survey of gaps and analysis of corporate performance, and mostly focused on eradicating fatality occurrences and minimizing OHS risks by means of four work pillars: Critical risk control, Leadership on site, Learning, Culture of Excellence. For the implementation of the OHSS, CODELCO focuses on trainings supervisors for the critical risk control approaches (fatality and major operational impacts) and leadership on site. To this end, CODELCO continuously conduct formal field sessions and meetings with the executive committees and safety managers of all divisions. 

In addition, CODELCO maintains a constant communication campaign aimed at disseminating information and best practices to manage the most relevant critical risks. 

The primary professional illnesses that affect CODELCO workers are silicosis, hearing loss, and osteomuscular issues. While incident rates have reduced in recent years, new cases are sporadically identified with several cases currently active. CODELCO has in place specific procedures and controls aimed at reducing these risks. These include Controls at source, risk mapping, provision of PPE, personal monitors, and medical screening.  

CODELCO has established occupational, health and safety performance indicators aimed at tracking OHS performance.  

In 2021 there was one fatality involving a contractor, in 2022 two fatalities involving CODELCO personnel and a contractor, and in 2023 two fatalities involving CODELCO contractors. 

In 2020, the current total number of “lost time” accidents was 95 and the accident frequency was 0.83 accidents per million hours worked. The total number of “lost time” accidents in 2021 was 94 and the accident frequency rate was 0.75 accidents per million hours worked, and in 2022 “lost time” accidents was 86 and the accident frequency was 0.61 accidents per million hours worked. As of June 2023, the current total number of “lost time” accidents was 46 and the accident frequency is 0.59 accidents per million hours worked. This performance is comparable to other companies operating in the mining sector. 

MIGA assessed CODELCO’s approach to Occupational Health and Safety, and considered this aspect in line with the requirements of PS2. 

Workers Engaged by Third Parties:  

CODELCO applies a regulated procurement regime, which sets comprehensive contractual E&S requirements and standards of work for contractors and subcontractors. 

CODELCO has established a set of Special Rules for the management of OHS matters associated with contractors and subcontractors (known as RESSO). The RESSO are mandatory for Contractors and Subcontractors who perform tasks or services under a contract, at any of CODELCO’s business units, offices, sites, or projects. Under the RESSO, contractors are required to operate in accordance with the CODELCO’s OHSMS-45001:2018 certifications. 

The RESSO refer to the minimum requirements for risk prevention activities, defining responsibilities, obligations and prohibitions, verification mechanisms and sanctions.  

Their objective is to facilitate the implementation, operation, maintenance, and continuous improvement of the CODELCO’s OHSMS across CODELCO divisions, sites and projects, covering all employees who work at these sites, regardless of their dependence.  

To require contractors to comply with applicable environmental regulations and internal standards, CODELCO has defined the "Special Rules on Environmental and Territorial Management for CODELCO Contractors and Subcontractors" (REMA). The REMA set the minimum requirements to ensure environmental performance consistent with corporate standards at all CODELCO divisions, sites, and projects. In particular, REMA are applicable to work, services, projects, tasks or activities performed by a Contractor or Subcontractor, in a specific area or location owned by CODELCO. 

CODELCO uses REMA to manage and ensure Contractors and Subcontractors meet their obligations while providing services associated with: 

  • Environmental management systems at business units. 

  • Environmental standards. 

  • Minimum coordination of preventive activities. 

  • Definition of responsibilities, obligations, and prohibitions. 

  • Sanctions and verification mechanisms implemented. 

CODELCO evaluates Contractors' performance continuously, using various principles and criteria.  

These include measuring the achievement of expected service results to meet critical requirements. The assessment is based on performance indicators compared to goals reviewed and agreed upon with the Contractors. CODELCO emphasizes that a Contractor’s historical lost-time injury and accident rates are relevant factors measured in the Corporation's bidding processes. Consequently, CODELCO positively assesses Contractors who fully comply with their health and safety obligations and have certified management systems under the above specification.  

 

A Broad Community Support determination is not required for the Project.  

For additional information on the Project, please contact: 

 

Name & Title: Lucila Siskind (Treasury Director) 

Address:  Calle Huérfanos 12708340424 Santiago, Región Metropolitana, Chile 

E-mail:  lsiskind@codelco.cl 

Phone: + 56 9 91398787 

 

Name & Title: Pamela Carvajal (Finance Specialist) 

Address:  Calle Huérfanos 12708340424 Santiago, Región Metropolitana, Chile  

E-mail:  pcarv024@codelco.cl 

Phone: + 56 9 89057854 

 

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MIGA supports its clients (as defined in MIGA Policy on Environmental and Social Sustainability) in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities. 

In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for MIGA. The CAO is mandated to address complaints from people affected by MIGA-guaranteed business activities in a manner that is fair, objective, and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of MIGA. 

Independent of MIGA management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of MIGA’s environmental and social performance through its compliance arm. 

Complaints may relate to any aspect of MIGA-guaranteed business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of a MIGA-guaranteed business activity. Complaints can be submitted to the CAO in writing to the address below: 

 

Compliance Advisor/Ombudsman 
International Finance Corporation 
2121 Pennsylvania Avenue NW 
Room F11K-232 
Washington, DC 20433 USA 
Tel: 1 202 458 1973 
Fax: 1 202 522 7400 
E-mail: cao-compliance@ifc.org 

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