Many times throughout 2007, Martin Nakouzi has felt the need to check his computer before going to bed. Nakouzi is the executive of the German equipment and technology provider Siemens, in charge of the contract with the Los Pelambres mine, located in Chile and belonging to Antofagasta Minerals. Nakouzi’s nightly anxiety is due to the innovative cost/ton contract that he has with Los Pelambres, and which ties payment of Siemens services to the volume of minerals extracted by the system they have installed at the mine.
The Siemens contract is part of a new modality that is taking the dynamic relationship between supplier and mining sector client a step further, and it is being meticulously analyzed by both parties. It is a unique modality in the mining industry, a type of innovation that has been characteristic of the new era of Antofagasta Minerals, controlled by the Luksic group, and one of the few mining companies with Latin American capital and truly global vision.
nnovation and efficiency have been the brands of Antofagasta Minerals executive president, Marcelo Awad. Like many of those selected for the TEN Hall of Fame 2008, Awad is a veteran in the leagues of his sector. He assumed the post in the mining company in 2004, rising from marketing management. Before that, Awad had spent seven years in Codelco’s London office, which meant priviledged contact with the global heart of metal marketing.
Awad took the reins of a conglomerate that grew in giant steps in the 90s, when Antofagasta went from a small and medium mine operator to become the only private group with Chilean capital in large-scale copper mining. This was thanks to the expansion of Pelambres, which comanded no less than US$1.33 billion.
The unusual way of managing the company has been highlighted in independent reports. In the analyses of the 40 largest mining companies in the world done annually by PricewaterhouseCoopers (PwC) with public information, Antofagasta Minerals stands out for its out of the ordinary results. In the 2005 and 2006 analyses by the consulting firm, the Luksic mine occupied the first place in both years with the greatest EBITDA margin (66% and 74%, respectively) of the 40 companies analyzed, including BHP Billiton, Anglo American and Vale. The Chilean company was also second in return on investment in 2006, after Chinese Zijin, according to PwC. With these results, the Antofagasta management team has been dubbed, affectionately, "Awad’s boys."
Antofagasta is not only one of the mining companies with the best global economic indicators. But, it is also the only Chilean mining company--and one of the few in Latin America--with global pretense. If the company’s center of gravity continues to be in Chile--with Los Pelambres and their new copper-gold project, Esperanza, with US$1.5 billion in investment, the construction of which will begin in 2008--Antofagasta has a risk partnership shared with Barrick Gold in the Reko Diq project in Pakistan, and it’s geologists and engineers are seeking opportunities in Latin America, Africa and Asia.
Awad’s baby will be put to the test in 2008. Los Pelambres is already showing signs of age--with less metal content in the extracted mineral and harder, more expensive material to process--and at the end of 2007 this has already begun to affect their margins. A difficult task for Awad’s boys.