Associativity

Infancy

Networks

San Pedro de Atacama

Development

PeopleCompetencies Education

CommunityAntofagasta

Sustainability

Society

WORKING MODEL P.12 2008 MANAGEMENT P.16

WORK AND ASSOCIATIVITY WITH THE COMMUNITY P.20

GENERATING ASSOCIATIVITY FOR SOCIAL INNOVATION

SUSTA INAB IL ITY REPORT

2008

This year 84 projects were developed under the Awardable

Funds program, mainly in the area of Social Development.

We have developed and participated in more than 100 projects

and initiatives that have directly benefited the community.

Operational Efficiency IndexTotal Social Investment (Direct + Indirect) in Social Projects

0

500

1.000

1.500

2.000

2.500

3.000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20083

434266

850 803

2.001

1.338 1.225 1.142

1.857

3.480

80

82

84

86

88

90

92

94

Mill

ion

peso

s

Adm

inistration Costs (%

)

95

1432

1413

86

5

9191

94

Historical Evaluation and Operational Efficiency Index

96

3.500

4.000

9495

933.136

1614

We have good

environmental

practices that are broadly

disseminated and well

known by all our colleagues.

Power Consumption in 2008 (kw/h)

AntofagastaSan Pedro de Atacama

25,869 2,704

Total: 28,573

Have not participatedHave participated

88.3% 11.7%

Participation in FME initiatives

Base: 620 People interviews

This is a translation of the Spanish version of the Escondida Foundation Annual Report, for the period January 01-December 31, 2008. For all legal purposes, the Spanish version is the official and valid document.

Our Communities

Our Foundation

Social NetworksCommunity PerceptionOur Strategic Challenges

Message from the PresidentLearnings and ChallengesCorporate CharterBeyond the Information

Corporate ProfileBetween the Ocean and the DesertHow we Work Who are behind FME?Project Administration2008 Management

People Come FirstEnvironmental Care

Awardable Funds and Networking ProjectsHighlighted Projects2008 ProjectsList of 2008 Projects

Financial StatementsGRI IndexOpinion Survey

060810

02030405

1212

13141616

1819

20

212830

344447

Work Model

Our Relations with People and the Environment

Work and Associativity with the Community

Financial Statements

02

06

12

18

20

34

Projects 2008

Selected Projects *Rejected Projects* 84 projects

33% 67%

Projects Submitted: 252

(86 projects)Promote Entrepreneurship and Solidarity Competencies(22 projects)Integral and Harmonious Development of Ethnias(18 projects)Improve Quality of Education

68%

18%

14%

Projects developed per Strategic Imperative

For each peso allocated

to social investment,

the participants of

our projects receive

93 cents.

Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT02

MESSAGE FROM THE PRESIDENT

hile these are challenging times and moments for reflection, today more than ever the

community needs our commitment, cooperation and support. In this imperative for a better community, we believe that all hands, ideas and experiences are relevant and valuable.

For this reason our foundation has reinforced its efforts in supporting organizations and their projects, as well as the corresponding co-financing of initiatives that are consistent with primary challenges such as improving the quality of education, promoting entrepreneurship and solidarity competencies; plus the comprehensive and harmonious development of the ethnic groups in the Antofagasta Region, with special emphasis on the Atacamanian Communities.

Through this open and across-the-board call to action, we have empowered associativity as a space where we can share knowledge, experience and learnings; primarily through diverse strategic alliances with the social, public and private sectors that during our 2008 administration translated into 126 projects, 84 of which were implemented through our awardable funds program.

I want to stress that through this collaborative method, where the people and their social capital arise as the most valuable asset, we have established relationships that aim at common objectives, as is promoting the sustainability of the initiatives we undertake.

An indication of this mutual cooperation system is the creation of an early childhood network, our educational projects, employment and entrepreneurship projects, awardable funds, the operation of the renewed San Pedro de Atacama Office of Indigenous Affairs or projects such as Zero Harm in the Home.

As to this latter initiative, I want to highlight that imperatives such as safety, respect for life and risk prevention – all emerging from our mother company, Minera Escondida – were shared with more than two thousand neighbors in Antofagasta, in coordination with social organizations and public and private entities that have experience in these issues.

Furthermore, as we have declared, safety and people come first, the next step is to build a network of organizations and a permanent working group to continue instilling the Zero Harm values in the community, with special emphasis on the new generations.

I would also like to take this opportunity to thank all those who have been involved directly or indirectly in our projects, and the community as a whole for taking us in. We know that despite our efforts to build a better region, there is still much work to do.

However, we believe that continuing to work with affection, trust and transparency is vital; without forgetting that the community and its challenges will always be our foundation’s reason for existing.

Cordially,

Carlos MesquitaChairman of the Board Fundación Minera Escondida

I want to stress that through this collaborative method, where the people and their social capital arise as the most valuable asset, we have established relationships that aim at common objectives, as is promoting the sustainability of the initiatives we undertake.

W

03

LEARNINGS AND CHALLENGES

he current challenges for companies, the public sector and civil society at large are marked by open dialogue

and taking responsibility for their actions; by being accountable, by building associatively. In this light we work one-on-one with Minera Escondida because we believe that in relating to the community it is crucial to prioritize human relationships over investment.

Our work approach focuses on being a foundation of continuous social innovation and a generator of networks of trust, providing effective results in community development, with emphasis in the Region of Antofagasta.

This is how we build and congregate in constant harmony with social and community interests, working in the field through open, face to face communication.

We add our values to this imprint: trust, solidarity, responsibility and transparency. Not only are these present in our corporate charter or in the preparation of projects, but also in our daily living with the communities of the Antofagasta Region.

Thus our commitment is to continue replicating high impact projects in the areas of education, social development and indigenous communities with a strategic view of sustainable development. Our commitment is long term, beyond Minera Escondida’s operational life.

Nonetheless, we acknowledge that there are some pending issues that need to be addressed efficiently and in the short term.

Consequently, we are committed to taking a step forward on project impact measurement and to double up our field work so as to consolidate the learnings that enrich this effort, in light of generating the effective sustainability of these initiatives.

We must also continue to open up more areas of participation, especially in matters that are sensitive to the regional realities, such as sports and recreation; thereby sharing new experiences and learnings through the solid social network we have developed with public, private and social organizations.

Cordially,

Petri SaloperaExecutive Director Fundación Minera Escondida

Our

Fou

ndat

ion

Our work is focused on being a foundation that is permanently innovating and generating networks of trust, that contributes effective results in community development with emphasis in the Region of Antofagasta.

T

CORPORATE CHARTER

1

Our foundation’s main contribution is to deliver tools to support the materialization of the community’s social capital.

OUR FOUNDATION

Fundación Minera EscondidaWe are a foundation created and financed by Minera Escondida

We Aspire to:

“Become a comprehensive and renowned foundation for its effective contribution to sustainable development from the Region of Antofagasta”.

Our purpose is to:

“Develop competencies in people and communities, through innovative and replicable models”.

We focus on:

“Contributing, to the improvement of quality in education. Installing entrepreneurship and solidarity skills; developing competencies consistent with the cultural identity of indigenous communities.”

We Value:

Trust: we value diversity and promote human relations as elements that generate social capital;

Solidarity: we understand community sentiments and promote associativity;

Responsibility: we fulfill our commitments both at the personal and institutional level;

Transparency: we practice integrity, honesty and objectivity when allocating resources.

We will be successful when:

The communities in which we operate value us as one of their members given that we bond with their feelings, we understand the local reality and can account for their cultural diversity;

We generate effective models that result in measurable impacts focused on sustained development;

We organize public – private networks and work jointly with Minera Escondida and the community towards a mutual benefit relationship.

05

We believe that it is essential to manage the release of this information, especially in promotional encounters with the different stakeholders and the community. This, in pursuit of listening, generates feedback and enriches our working approach.

BEYOND THE INFORMATION

Our value framework is the lighthouse that guides all our activities, projects and actions with the community. It is epitomized by trust, solidarity, respect and transparency.

In keeping with these values and since the onset of our activities in 1996 we have annually reported the quantitative and qualitative results of our institutional actions; all part of a continuous exercising in freely placing at the disposal of the community, civil society at large and interested entities our projects’ balance sheets and financial statements.

We believe that beyond the Ministry of Justice’s mandate that by law obliges non-profit foundations to submit an annual report, it is essential to prepare these documents focused increasingly in line with the Global Reporting Initiative (GRI).

But the information should not remain only on paper or digital files. We believe it is essential to manage the release of this information, especially in structured meetings with the different stakeholders and the community. This, in pursuit of listening, generates feedback and enriches our working approach.

This annual report covers the period from January 1 to December 31, 2008. The previous edition covered the 2007 accounting period.

It should be pointed out that BHP Billiton, the major shareholder and controlling company of Minera Escondida, our parent company, organized meetings with stakeholder groups to consult on the design and contents of the reports of all its associate companies and foundations in Chile .

Furthermore, we have decided to include the GRI Indicators in this 2008 Report, which differentiates it from the annual reports of previous years. The indicators included are a clear reflection to our actual work, and we in fact omitted those that had no direct reference to our institutional course.

Therefore, we declare that the current report, in accordance with the level of responses and indicators used, represents a Level C in line with the GRI reports’ classification.

At present, our Financial Statements are audited by Ernst & Young. The GRI indicators are not subject to audit given that this is the first report in which they have been included.

Educational Leveling students from the Peine community.

Our

Fou

ndat

ion

2OUR COMMUNITIES

SOCIAL NETWORKS

At Fundación Minera Escondida we maintain ongoing communicational feedback and screening of the problems and opportunities that emerge in our environment. In so doing, we seek to maximize our social work and contribute to the vision of being a responsible neighbor committed to the interests of the community, which has translated into much recognition for community support.

The more significant distinctions to our foundation in the region during its lifetime include the highest citizens’ awards from the communities of Mejillones, Antofagasta, San Pedro de Atacama and Taltal. These are the following:

2002: Municipal Council of the Honorable Municipality of Mejillones. The Almirante Juan José Latorre Citizen Merit Distinction for contribution to the development of the Municipality of Mejillones and its inhabitants.

2003: Municipal Council of the Honorable Municipality of Antofagasta. The City of Antofagasta’s highest official award (Ancla de Oro) for contribution to the municipality in developing and financing more than 300 projects in areas of Health, Education, Social Development, Integration of Indigenous Peoples and the Insertion of Areas for Youth Involvement.

2003: Municipal Council of the Honorable Municipality of San Pedro de Atacama. The Town Council award for Institutional Merit for contribution to Community Development and the preservation of Cultural Heritage.

2004: Municipal Council of the Honorable Municipality of Taltal. The Honorable Municipality of Taltal distinction for Institutional Merit for constant and continuous support by Fundación Minera Escondida to economic, social, educational and cultural development in the community of Taltal.

Throughout 2008 our foundation received a variety of distinctions from social, community and educational entities. Amongst the most significant are the awards by Fonadis – Region of Antofagasta, for continuous contributions to organisms linked to the handicapped; from the Antofagasta Firefighters Corps for being the most distinguished entity in the community; as well as from the Municipality of Mejillones for associative work implemented in the construction and equipping of the new community stadium.

Additionally we had an active participation in the following collaborative organizations:

Civil Society’s Regional Council Region of Antofagasta

Regional Advisory Council for Health Region of Antofagasta

Regional Advisory Council for EducationRegion of Antofagasta

Employment Training DeskMunicipality of Antofagasta

Municipal Committee for Future Childhood Municipality of Antofagasta

School Council for the Fundación Minera Escondida Municipal School Municipality of Antofagasta

Peine Advance Committee Municipality of San Pedro de Atacama

San Pedro de Atacama’s Southern Communities’ Workgroup Municipality of San Pedro de Atacama

We seek to maximize our social work and contribute to the vision of being a responsible neighbor committed to the interests of the community, which has translated into much recognition for community support.

The people, their organizations and their environment will always be our foundation’s reason for being.

07

Our

Com

mun

itie

s

Strategic Objective Program Institution

Promoting entrepreneurship and solidarity competencies

2008 Zero Harm Plan 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 16 - 17 - 18 - 19

Promoting entrepreneurship and solidarity competencies

Educational Leveling 10 - 11 - 21 - 22 - 23 - 24 - 25

Educational Quality Improvement

English Opens Doors 12

Future Childhood Today 13

Lector “Matte” 14 - 20

Tomatis Program for the Study of English 15

Educational Quality Improvement

Bicentennial Project 26 - 27

Multi court complex 28

School Co-operatives 29

1. Police

2. Firefighters’ Corps

3. Corese Hogar

4. ACHS

5. Mutual de Seguridad

6. SODIMAC

7. Lipigas

8. Homecenter

9. Antofagasta Power Company

10. Empretec Chile

11. CIDE

12. Regional Ministerial Secretariat of Education

13. JUNJI

14. Primary Education Association

15. Fundción Tomatis

16. Regional Ministerial Secretariat of Health

17. Oficina de Protección Regional

18. Coaniquem

19. Red Cross

20. Escuela Toconao

21. Chilecalifica

22. Indigenous Organizations, San Pedro de Atacama

23. Boy’s Academy, Santiago Amengual School Annex

24. Socaire School

25. Adult Comprehensive Education Center (CEIA)

26. Regional Ministerial Secretariat of Education

27. Development of Antofagasta

28. Liceo Likan Antai

29. School Cooperatives

Stakeholders Involvement Activities

Professionals working at the foundation

Work environment surveys, annual performance evaluation, monthly team meet-ings, weekly area meetings, two yearly workshops, Individual and Group Develop-ment Plan monthly forum, 90 day PLAMOIS reviews, internal ceremonies and anniversaries, internal projects’ bulletins and monthly newsletter.

Advisory Council

Two Awardable Funds evaluation sessions, Full Workgroup SPA Indigenous Productive Fund, annual meeting, one-on-one meetings, informative talks, monthly newsletter, project newsletters, four annual board meetings, one-on-one meetings, mailing of monthly newsletter.

Media, Minera Escondida workers, contractor companies, Police, Seremi Salud (health care Secretariat), Regional Protection Office

Zero Harm in the Home Campaign, one-on-one meetings, informative talks, social fairs, monthly newsletter (monthly meetings), Awardable Fund.

CEIM TeamMeetings (continuous), newsletter mailing, Projects: Escondida Promotes Employability, Training in Mejillones.

Regional Media Two annual meetings, one-on-one contact, delivery of telephone information, monthly newsletter, press releases.

Media, Coaniquem, Firefighters Corps, Red Cross, CORESE, Chilean Safety As-sociation, Mutual de Seguridad, SODIMAC, Lipigas, Homecenter, ELECDA

Two fairs open to the community, meetings, one-on-one contact, informative talks, mailing of monthly newsletter.

Media, INJUV, SECREDUC, FOSIS, SERNAM, SERCOTEC, SERPLACTechnical coordination meetings, field trips, one-on-one contact, delivery of information, projects, seminars, ceremonies, experiences and formation interchange workshops.

Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT08

COMMUNITY PERCEPCION

Our perception and disposition towards social and community work in the Region of Antofagasta has consolidated as is shown by a study contracted to Gestión Estratégica S.A. (Gestra). One of the study’s objectives, amongst others, was to reveal the communities’ perception, evaluation and attitude towards the institution; and also determine the level of project awareness; likewise, to gather the opinions of the interviewees in terms of initiative implementation.

The research study, entitled Perception of Fundación Minera Escondida and its Projects: Community Segment, was developed during the month of August, 2008 through a survey using a data collection technique structure carried out in homes. The target population was the community of the Region of Antofagasta and the sample consisted of 620 women and men, from ABC1, C2, C3, D and E socioeconomic segments; between 15 and 65 years of age, all of whom were residents of the Region of Antofagasta.

In terms of community involvement through projects implemented by our foundation over its 11 year history, a study reveals an 11.7% share. Projecting this across the regional population suggests that more than 50 thousand people have participated directly in one or more of our initiatives.

Community Number of interviews

Antofagasta 200

San Pedro de Atacama 101

Mejillones 100

Calama 100

Other communities (María Elena, Sierra Gorda, Tocopilla, Taltal and Ollagüe).

119

Total 620

Chart 1: The overall results show that awareness of Fundación Minera Escondida in the city of Antofagasta is 97.5%, whilst at a regional level it is positioned at 92.2% and that pre-disposition towards the foundation is concentrated in 62% Favorable and 19.5% Very Favorable.

Do you know or have heard of Fundación Minera Escondida?

Base: 620 Total interviews

TotalMaleFemaleBetween 18-24 yearsBetween 25-34 yearsBetween 35-44 yearsBetween 45-54 yearsBetween 55 and overHighMediumLowCalamaSan Pedro de AtacamaAntofagastaMejillonesOtherEv. 1 to 4Ev. 5Ev. 6 & 7Yes, has participatedNo, has not participated

92.290.8

93.691.192.690.991.6

94.895.9

90.491.6

83.081.2

97.596.0

85.780.2

93.994.8

100.091.1

100 80 60 40 20 0

Project Participation

Evauation of FME

City

Income Group

Age

Sex

YesNo

92,2% 7,8%

Percent Affirmative Answers

09

Chart 4: Also, on the general institutional evaluation section, on a scale of 1 to 7, an average 5.6 was scored; whilst at a disaggregated percentage level, 22.6% came out as Excellent (7), 32.7% as Very Good (6), and 28.3% as Good. Meanwhile, Predisposition versus Foundation Evaluation averaged a 54.7%.

Chart 2: In terms of community involvement through projects implemented by our foundation over its 11 year history, a study revealed an 11.7% share. Projecting this across the regional population suggests that more than 50 thousand people have participated directly in one or more of our initiatives. The project that assembles the most involvement is the Awardable Fund, followed by the Construction of Kindergartens and the Escondida Promotes Employability program.

Chart 3: The initiatives with the highest evaluation are the Miemprex program with a 7, Construction of Day care Centers with a 6.6, Escondida Fosters Employability with a 6.6 and Awardable Funds with a 6.3.

Have not participatedHave participated

88.3% 11.7%

Participation in FME initiatives

Base: 620 People interviews

Participation in projectsBase: 68 people that participated in projects

Awardable FundsConstruction of Day Care CentersEscondida Fosters EmployabilityFamily supportComputer EducationZero Harm TrainingMiemprexSports EventsTrainign course for children attending schoolAdult educationFundación Minera Escondida SchoolLa Tercera projectCooking CourseMercatorGymnasticsChristmas Party at Caleta ColosoChristmas Activities with Divers AssociationSupport to OncologySwimming techniquesDental careOpen lunch roomMimprex San Pedro de AtacamaSupport to homelessOther

29.221.0

8.2

5.46.0

5.33.43.22.82.72.72.62.62.62.62.62.62.62.62.62.62.5

30

2.50.6

20 10 0

Overall evaluation of the projectsBase: Participants of each project

Miemprex

Construction of Day Care Centers

Escondida Fosters Employability

Awarable Funds

Fundación Minera Escondida School

Family Support

0% 20%

100Average Base

Poor/Regular (3 and 4)

75.6

7.0 3

6.6 8

6.6 12

6.3 20

6.0 3

5.7 3

59.439.6

26.0 18.6 55.4

100

55.744.3

1.1

11.812.6

40% 60% 80% 100%

Excellent (7)Very good (6)Good (5)

Excellent (7)Very good GoodRegular Very bad, poor (1 - 3)

22.6%32.7% 28.3%15.2%1.2%

Overall Evaluation of FME

Base: Total of 620 interviews

Our

Com

mun

itie

s

Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT10

OUR STRATEGIC CHALLENGES Our institution uses three strategic imperatives to guide the planning and development of our projects. These contribute to institutional management precision – consistent with the changes that can occur in the community environment – prioritize social investments and enable quantification of our annual institutional goals.

Improve Quality of Formal Education.

Promote entrepreneurship and solidarity.

Intergal and harmonius development of regional ethnic groups, with emphasis on atacamenian communities.

48%

45%

7%

Participants per Strategic Imperative

Total: 23,897 participants

N

AntofagastaOffice

Antofagasta Region

San Pedro de Atacama Office

Tocopilla

María Elena Sierra Gorda

Mejillones

Antofagasta

Taltal

San Pedro de Atacama

Calama

Ollagüe

Pacific Ocean

Improve quality of formal education

We have applied strategic variables to our pedagogic and institutional management to achieve educational success and results within a context of poverty.

We promote early childhood care, coordinating a comprehensive pre-school educational model, tackling the development of innovative infrastructure and educational quality programs to improve access to the educational system.

We aim for the involvement of the educational community, optimizing direct leadership with clear goals and strong support.

FME

Improve quality in education

Integral development

and harmony of ethnic groups

Promote enterpreurnership

and solidarity

11

Promote entrepreneurship and solidarity.

Improve quality of formal education.

Intergal and harmonius development of regional ethnic groups, with emphasis on atacamenian communities.

68%

18%

14%

Projects per Strategic Imperative

Total: 126 projects

Promote entrepreneurship and solidarity.

Improve quality of formal education.

Integral and harmonius development of regional ethnic groups, with emphasis on atacamenian communities.

48%

39%

13%

Investment per Strategic Imperative

Total: $2,489,882,489

N

AntofagastaOffice

Antofagasta Region

San Pedro de Atacama Office

Tocopilla

María Elena Sierra Gorda

Mejillones

Antofagasta

Taltal

San Pedro de Atacama

Calama

Ollagüe

Pacific Ocean

Promote enterpreurnership and solidarity

Through bidding funds, ventures and employability we empower skills and competencies with emphasis on the generation of social and human capital within these communities.

We offer practical tools to small productive units, opening up new and better opportunities, with a view to ensuring the true sustainability of these initiatives.

We improve employment options and open up new areas for the people, providing support for their personal and family development.

Integral and harmonius development of regional ethnic groups, with emphasis on atacamenian communities.

We foster organized involvement of indigenous communities at an institutional level as well as individually.

We place special emphasis on educational leveling in the more geographically isolated communities.

We stimulate productive enterprise through occupational training as well as entrepreneur techniques.

We support education through improvements in infrastructure, technology insertion and teacher training.

We award scholarships for higher, technical and university education to the Atacama and Quechua students.

Our

Com

mun

itie

s

3

In our community work, we maintain ongoing communicational feedback and screening of the problems and opportunities that emerge in our environment.

Our relations with the communities are characterized by a permanent feedback and monitoring of the problems and opportunities.

WORK MODEL

CORPORATE PROFILE

Foundation Minera Escondida is an autonomous non-profit institution, created by Minera Econdida, whose purpose is to “Develop competencies in people and communities through innovative and replicable models”.

Since our creation, in the year 1996, we have sought innovative Social Responsibility paths that reflect the corporate will of Minera Escondida Limitada, our founder and benefactor, whose owners are BHP BIlliton (57.5%), Rio Tinto (30%), Japan Escondida Corporation (10%) and the World Bank’s International Finance Corporation (2.5%).

Our bylaws were approved on August 11, 1994, and our legal status was granted on January 24, 1996 through Decree Nº 95 from the Ministry of Justice, published in the Official Gazette on February 13, 1996.

Therefore, we are an entity with legal status and independent capital structure, legally independent from our founding company.

In our community work, we maintain ongoing communicational feedback and screening of the problems and opportunities that emerge in our environment particularly in the urban and rural municipalities of the Region of Antofagasta, Chile.

BETWEEN THE OCEAN AND THE DESERT

The development and implementation of our projects, primarily through the awardable funds, span over a large part of the Region of Antofagasta according to needs and community involvement. Throughout our 2008 management year we reached more than 90% of the territory spreading initiatives in the municipalities of Antofagasta, Calama, Tocopilla, Mejillones, Taltal, Ollagüe and San Pedro de Atacama.

For reasons of good project operating capacity, we maintain a central office in Antofagasta, at Coquimbo 888, Office 302 whilst in San Pedro de Atacama we have maintained an Indigenous Affairs Office since 2001. In this context, it should be pointed out that during the 2008 management year we inaugurated our own offices in San Pedro de Atacama, enabling us to strengthen our associative work, the development of project networks and face-to-face contact with the Atacama and Quechua communities. Our new offices are at Gustavo Le Paige 527 which replaces our old office at Toconao 535.

We should emphasize that this Sustainability Report encompasses all the activities developed by Fundación Minera Escondida in the regions of Antofagasta and Coquimbo. In the latter case this is implemented particularly through the Awardable Fund, and the Minera Escondida worker’s and contractors.

Furthermore, there were no restrictions on the scope of this Sustainability Report given that we have all the data from our work in the different cities.

13

We aspire to “be recognized and integrated through our effective contribution to sustainable development from the region of Antofagasta”.

HOW WE WORK

Added to the contrast of being one of the largest regions in the country with a low population density ratio is the fact that it covers 500 kilometers of coastline on the Pacific Ocean, as well as the Atacama Desert with cities, villages and valleys going deep into the Andes Mountain Range.

The majority of the population is concentrated in the coastal cities of Antofagasta, Mejillones and Tocopilla, as well as in Calama, inland. Production is strongly linked to mining development and its complementary operations, such as financial, port related, energy and services activities.

According to the Foreign Investments Committee, the Antofagasta Region represents 53% of the national mining product, fundamentally due to copper and – to a lesser degree – potassium nitrate, gold, iodine and lithium. Furthermore, mining exports amount to 93.7% of regional shipments abroad.

Fundación Minera Escondida works with the regional community regardless of gender, political affiliation or religion providing co-financing for either their own projects or those presented by the community through social organizations and institutions.

Quantitatively, the greater number of projects that emerges from the community is channeled through the bidding funds, which during 2008 amounted to 84; that is to say 67% of all initiatives implemented which, as mentioned earlier, amounted to 126 projects.

Both our projects and awardable funds respond to our strategic imperatives:

The Foundation’s team in the field.

Our social and community projects are concentrated mostly in the Region of Antofagasta, which covers an area of 126,440 km2, representing 16.7% of the national territory, and a population – according to the latest census in 2002 – of 493,984 inhabitants; delivering a population density of 3.9 inhabitants per square kilometer.

Improve Quality in Education.

Promote Entrepreneurship and Solidarity Competencies.

Integral and Harmonious Development of Ethnic Groups in the Antofagasta Region with emphasis on the Atacama Community.

Wor

k M

odel

Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT14

WHO ARE BEHIND THE FME?

One of the relevant changes in our leadership and management structure is the formation of three management areas: Communications, Projects and Administration. While decentralizing decision-making and committing to a vertical structure, at the same time this has allowed us, primarily, to empower institutional teamwork, strengthen leaderships and improve our in-house communication.

Furthermore, as of December 1, 2008, Petri Salopera took over as our new Executive Director, replacing Pedro Del Campo who was named Manager of Corporate Affairs at Minera Escondida.

Petri Salopera is a Social Anthropologist graduated from the University of Helsinki, Finland. He brings broad international experience in matters of social and human capital, with special emphasis on sustainable community development in Europe, Asia, North American and South America.

The institution’s Board of Directors is chaired by Carlos Mesquita who is also the President of Minera Escondida.

In addition, the Board members include company and community representatives.

Likewise an Advisory Council is staffed by leading members of the Antofagasta community who participate voluntarily in the institutional scene.

Carlos MesquitaPRESIDENTREPRESENTATIVE OF MINERA ESCONDIDA LIMITADA

Fernando Rivas RocesVICE-PRESIDENTREPRESENTANTIVE OF THE COMMUNITY

Jorge Muñoz Del PinoTREASURERREPRESENTANTIVE OFMINERA ESCONDIDA LIMITADA

Mauro Valdés RaczynskiSECRETARYREPRESENTANTIVE OF MINERA ESCONDIDA LIMITADA

Alejandro Guillier Álvarez Eric Goles Chacc Felipe Berríos Del Solar. S.J.Lucía Santa Cruz SutilDIRECTORSREPRESENTANTIVES OFTHE COMMUNITY

Glynn CochraneJosé Aguilera LópezNicolás Cruz CruzREPRESENTANTIVES OF MINERA ESCONDIDA LIMITADA

Carlos Gajardo RobertsGuillermo Rodríguez RodríguezMáximo Pacheco GómezHONORARY DIRECTORS

Board of Directors

FME Antofagasta Team

15

Agustín Llagostera Martínez Alejandro Bustos Cortés Alfonso Leppes Navarrete Arturo Basadre Reyes Catalina Jones Sepúlveda Eva Cruz Ramos Fernando Cortes Guerra Fidel Arriagada Valenzuela Gabriela Montenegro Rojas Geraldo Juzakos Lazo Hipólito Hurtado Iguail Hugo Donoso Palacios Jacqueline Durán Morgado

Jaime Valenzuela Acuña Juan Music Tomicic María Rojas Elgueta María Inés Verdugo Escobar Miguel Sepúlveda Campos Nibaldo Acuña Camus Patricia Bennett Ramírez Pedro Ziede Díaz Renato Agurto Vargas Solange Veloso Villarzú Sonia Jopia López Tomislav Ostoic Ostoic

Advisors

CONSULTANTS

María José Rivas Yuri RojoPROJECT COMMUNICATION

Anaconda Ltda.CONSTRUCTION

Mario RadrigánEDUCATION

Ricardo LópezLEGAL

Profit Ltda.FINANCE AND ACCOUNTING

WORK AREAS

AREA MANAGERS

Operational Team

Petri SaloperaEXECUTIVE DIRECTOR

Jessica OsoresEXECUTIVE ASSISTANT

Jorssy AlvarezADMINISTRATION

ADMINISTRACIÓN

Leonardo ArayaCOORDINATOR OFPURCHASING AND LOGISTICS

Francisco ContrerasCOORDINATOR OFHUMAN DEVELOPMENT AND SAFETY

Rodrigo CorvalánCOORDINATOR OFINFORMATION TECHNOLOGY

Karen ToledoADMINISTRATIVE ASSISTANT OF PROJECTS

Carola ArmijoADMINISTRATIVE ASSISTANT

Javier MuñozCOMMUNICATIONS

COMMUNICATIONSCarla MartínezCOORDINATOR OF AUDIOVISUALAND INTERNAL COMMUNICA-TIONS

Marcela OyarzúnCOORDINATOR OF PUBLIC RELATIONS

Mario PizarroPROJECTS

PROJECTS

Carolina VilchesCOORDINATORAWARDABLE FUND AND 1+1 PROGRAM

Leslie PlazaASSISTANT OF AWARDABLE FUND

Jorge ButteCOORDINATOR OF EMPLOYABILITY PROJECTS

Juan CarrascoCOORDINATOR OF EDUCATIONAL PROJECTS

Paula VarasCOORDINATOR OF SOCIAL INFRASTRUCTURE

SAN PEDRO DE ATACAMA OFFICE

Manuel EscalanteOFFICE MANAGER

Jenny ZepedaCOORDINATOR OF INDIGENOUS PROJECTS

Ada MamaniASSISTANT OF INDIGENOUS PROJECTS

Esbelcia CruzRECEPTIONIST ANDADMINISTRATIVE ASSISTANT

FME San Pedro de Atacama office Team.

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT16

PROJECT ADMINISTRATION

Progressive implementation of our Projects Management System (SIGPRO) commenced five years ago with a purpose to managing information in real time, not only in terms of project execution but also the administration and use of financial resources.

While there are still challenges pending in terms of improving the use of the system to internalize institutional learnings, its contribution has been significant in matters of control and administration.

The areas of improvement concentrate on the recording and advantageous handling of institutional learnings in order to develop and strengthen institutional awareness and intelligence in matters of project management.

The strengths of the SIGPRO system are focused on the optimization of cost control of all projects and internal initiatives, in keeping with the six monthly updating of the Master Plan for Social Operation and Investment (Plan Maestro de Operación e Inversión Social (PLAMOIS) which permits modification according to specific needs as they emerge.

Furthermore, all purchases and procurements can be made through SIGPRO, as a result of a new On-Line Supplier Registry Platform. Also, consistent with policies for generating local productive concatenation and empower regional development, Fundación Minera Escondida has a data base of 322 suppliers of which 58% represent large, medium and small sized companies in the Antofagasta Region.

2008 MANAGEMENTThe management of internal processes has been under constant development and improvement, mainly with regard to the systems that provide support to the institution. The information is provided by the IT platforms that control the financial and technical aspects of the institutional tasks. This information has made it possible, amongst other things, to establish indicators that will help take corrective measures when the results are not satisfactory.

The historical administrative figures since 1966 up to December 31, 2008 are as follows:

Start

Board of Directors

Execution

Evaluate ProyectImpact

Finance OK Evaluation

BoardRejected

File

Pre-evaluationPrefeasibility

Send

ReturnEvaluate

Re-direct

Send

Reject

Execute

Approve

Reformulate

Re-direct

Correct

Evaluate

Return Return

File

Evaluate

Approve Approve

Request Board of Directors Finance Evaluator FileProject coordinator

Project Management System (SIGPRO)

In line with policies for generating local productive concatenation and empowering regional development, Fundación Minera Escondida has a data base of 322 suppliers of which 58% represent large, medium and small companies in the Antofagasta Region.

17

Chart 1: Total Social Investment, which takes into account Direct and Indirect Social Investment, increased 117% due to construction in Antofagasta of the “Libertad” Kindergarten, as well as facilities for the social organizations Hogar Crea Chile and Maria Ayuda, the remodeling of the stadium and the trades and employability program in the municipality of Mejillones, the construction of the School Library at Toconao and the roofing of the multi-court facilities at the Likan Antai School in San Pedro de Atacama in addition to the mining trades training program for the people of Atacama.

Chart 2: The Operational Efficiency rate that measures the percentage of Social Investment actually received by participants and calculated on a Total Social Investment basis, amounted to 93%. It is worth mentioning that for each peso allocated to social investment, project participants effectively receive 93 cents.

Chart 3: The percentage value of Administration Costs versus Total Investment declined 13% compared to the year 2008, resulting from high Direct Social Investment levels, the construction of the Libertad Kindergarten and the Hogar Crea Chile and Maria Ayuda facilities en Antofagasta. The construction of the Toconao School Library and the roofing of the multi-court facility at the Likan Antai school in San Pedro de Atacama are also included in this result.

10

Total Social Investment

Administration and Fixed CostsInvestments

0 1.000 2.000 3.000 4.000 5.000 6.000

1996

1997

1998

Total Social Investment (Direct & Indirect)Indirect Operational Costs

7.000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

20

6

Total

339

9759

434527

513724

266432

014618

8501014

3014858

8031039

15165134

16141928

25198200

31363559

72225234

20012532

10264258

13381870

26226271

12251748

49260229

11421686

34213

3231857

2427

1169378404

40325983

Million pesos

Evolution of Administration Cost and Fixed Costs

% Administration CostsTotal Investment

0

1.000

2.000

3.000

4.000

5.000

6.000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

40

531 432

1.035 1.101

2.011

3.736

2.607

1.912 1.8421.751

2.549

5.629

0

5

10

15

20

25

30

35

Mill

ion

peso

s

Adm

inistration Costs (%

)

26

14

32

14 13

8

5

14

9

12

15

87

Operational Efficiency IndexTotal Social Investment (Direct & Indirect) in Social Projects

0

500

1.000

1.500

2.000

2.500

3.000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20083

434266

850 803

2.001

1.338 1.225 1.142

1.857

3.480

80

82

84

86

88

90

92

94

Mill

ion

peso

s

Adm

inistration Costs (%

)

95

1432

1413

86

5

9191

94

Historical Evaluation and Operational Efficiency Index

96

3.500

4.000

9495

933.136

1614

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4OUR RELATIONS WITH THE PEOPLE AND THE ENVIRONMENT

During our 2008 management year, rotation in our institutional team accounted for 3 people and seven new members were incorporated in comparison with the year 2007 which represents an increase of 50%, making a total of twenty one staff members at year end 2008. Of this total, five come from other regions. Of the current staff, seventeen individuals are under open-ended contracts and four under fixed contracts. Of these, twelve are women representing 57% of the total. If we take into account only the open-ended contract personnel, staff members are reduced to nine with a 43% female employees.

Fundación Minera Escondida has an Executive Director who comes from outside the region. In addition, we employ three Area Managers, two of them originating from Antofagasta, two Coordinators, two Project Assistants and three Administrative Assistants.

The ratio between the basic salaries for male versus female staff, split up by professional category, indicates certain differences. In Area Management there is an 11% in favor of the men, whilst amongst Coordinators the gap is reduced to 3%. In terms of Assistants there is no difference as this group consists only of women. Amongst the Advisors the gap increases by 21% in favor of the men. Whilst in the Executive Director grouping there are no statistics as the three directors our institution has had since its onset have been men.

The salary variance between men and women is based mainly on experience, in terms of years, of the male personnel. It should be pointed out that recruitment and selection does not distinguish between individuals from inside or outside the region nor between women and men.

It is also worth highlighting that together with the inauguration of our San Pedro de Atacama offices, after seven years of operations in rented premises, our work team in the Indigenous Peoples Area increased by two members, representing a 50% and making a total of four, of which three are under open-ended contracts. It should be pointed out that three staff members, that is, 75% are from the Atacama region including the Office Manager.

The permanent staff benefits from a collective bargaining agreement that takes into account life insurance, dental care programs and family medical services. However, the most relevant benefit is the housing bonus benefit which favors two open-ended contract workers annually; that is to say, a 10%. During 2008, this new, used or extended housing benefit was allocated in full, taking into account, amongst other things, such indicators as family group, seniority and own home.

Another of our strategic concerns, in line with our Zero Harm policies, is personal safety and life protection. During our eleven years of institutional operations we have no record of fatal labor accidents or time loss including amongst our company advisors. In order to strengthen these statistics, during 2008 we held four courses on safety, first aid, fire prevention and control, Zero Harm and defense handling.

Regarding the annual average skills and competencies training hours, during 2008 the Executive Director’s area accessed 50 hours of training, the Area Managers received a total 151.33 hours; the Coordinators 135.13 hours and the Assistants a total of 41.75 hours. Likewise, the Advisors Group accessed an average of 22.63 hours.

In terms of Competencies Management, our organization finances training programs that include seminars, workshops and short courses that contribute to the worker’s performance. In so doing, there is a 50% allocation for Certification and Master’s degrees, with a $300,000 limit for Certification and $1,000,000 per year (up to a total of $2,000,000) for Master’s degrees.

Finally, it should be emphasized that 100% of the Foundation’s employees -just like its consultants- are continuously evaluated in terms of their performance and professional development.

Non discrimination, Zero Harm alignment policies and compliance with standards in keeping with environmental concern all distinguish our work style.

PEOPLE COME FIRST

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Another of our strategic concerns, in line with our Zero Harm policies, is personal safety and life protection.

ENVIRONMENTAL CARE

In line with our values, we have encouraged throughout our team the efficient use of resources and rationalized energy consumption (water and power). Thus, although we do not have a formal environmental policy, we do have best practices that have been widespread and are well known among all those who work in our offices in Antofagasta and San Pedro de Atacama.

For example, all our working documents, bulletins and letters are handled in digital form and are only printed out if strictly necessary. In so doing, not only do we save on paper, but we also optimize the interchange of on line information.

At the same time, printed bond paper is reused in-office, it being kept in a special tray for later consumption.

With regard to electric power consumption, there is an internal rule that calls on workers to be conscientious in turning off monitors, lights and air conditioners when they leave the office. Also, in order to rationalize the use of power, we have a lighting system in meeting rooms and working spaces which enables greater control. This is supported by permanent screening aimed at avoiding unnecessary consumption in empty workstations or traffic- free areas.

In line with Minera Escondida, we have a specially designated container for collecting used batteries so they are not mixed up with the trash. Later these are sent to the company, where they are recycled.

It should be mentioned that in 2008 we moved our San Pedro de Atacama offices, so the average values reported include the consumption of both facilities.

Total consumptions of water, power and reams of paper at our offices during 2008 were:

Paper Consumption, 2008 (500-sheet packs)

AntofagastaSan Pedro de Atacama

21430

Total: 244

Water Consumption in 2008 M3

AntofagastaSan Pedro de Atacama

178 118

Total: 296

Power Consumption in 2008 (kw/h)

AntofagastaSan Pedro de Atacama

25,869 2,704

Total: 28,573

5

We act as a facilitating entity opening up new opportunities of social development in the community.

WORK AND ASSOCIATIVITY WITH THE COMMUNITY

AWARDABLE FUND AND NETWORK PROJECTS

One of our hallmarks is progressive associativity in the implementation of projects, mainly by way of the Bidding Fund, through which non-profit organizations can share learnings and experiences; in this way these learn to work with their peers. The San Pedro de Atacama’s Productive Development Fund, which was implemented in its second version, has been added to this set-up enabling natural persons and organizations to access co-financing resources.

In this context, it should be pointed out that over the past five years networking has gained special worth in the presentation of initiatives for co-financing, with the understanding that whilst more entities get together for the development of a project, this will have a mushrooming effect on the community.

In 2003 two additional co-financing lines were added, the RSC Fund (Minera Escondida workers and colleagues) and the Education Fund. Of the 100 projects implemented, 25 were networked with the involvement of 44 social and educational organizations.

In 2008, the number of projects supported by the Awardable Fund – including the San Pedro of Atacama Productive Development Fund – totaled 84 projects, of which 24 were implemented associatively (29%), enabling thereby the involvement of 52 social and educational organizations working as a network.

Compared to the year 2003 – when this associativity concept was born – during 2008 networking experienced an increase of four percentage points, also true of organization networking; these grew from 44 to 52.

However, at a quantitative level, the total number of projects – both general and bidding fund projects – has been declining with a view to emphasizing management quality, monitoring learnings and optimizing their administration over the number of initiatives.

During 2008 we implemented 126 projects, of which 84 were under a bidding format, representing an 8% decline as compared to our 2007 management year when we implemented 165 projects, 122 of which were executed via Awardable Fund.

Despite the decrease in co-financed projects, what is relevant is that there appears to be a greater interest in participating in the Bidding Funds as can be seen by the following comparative chart on the presentation of projects:

As far as the amounts co-financed by counterparts is concerned, this is still a critical factor for success and the challenge is pending; this is not seen as a problem but rather as an opportunity to explore alternative and complementary financing.

Also during 2008 we adapted the co-financing percentage for institutional first-time applicants which meant that we released a greater amount of resources to a smaller number of projects.

Projects 2007

Selected projects*Rejected Projects*122 projects

66%34%

Projects Submitted: 185

Projects 2008

Selected Projects *Rejected Projects* 84 projects

33% 67%

Projects Submitted: 252

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HIGHLIGHTED PROJECTS

Together with the awardable funds, our work covers the implementation of projects case by case endorsing improved education and social development in the community across all indigenous ethnic groups.

GREATER PRODUCTIVE CONCATENATION

The weak financing lines for indigenous entrepeneurs are an obstacle to generating local productive concatenation in the areas of origin or residence. For this reason, and aimed at reinforcing insertion in the areas of tourism and trade, the Productive Development Fund was implemented with the involvement of natural persons and indigenous social organizations from the municipalities of Pedro de Atacama, Calama, Ollagüe and the locality of Quillagua. In so doing, during 2008, we executed sixteen initiatives aimed at empowering businesses and productive projects through co-financing plans.

— “Gaining trust and taking the final step towards becoming an entrepreneur has been a real challenge, and we have accomplished this through the opportunity offered by the Fundación Minera Escondida”, Juan Bruna.

FACT SHEET: Construction and implementation of new green-houses for the production of carnations INVESTMENT: FME $ 3.938.646. Juan Bruna Co-fnancing$ 1.687.991. Total $ 5.626.637

Flowers that color the desert

Juan Bruna’s crops give life to the Atacama Desert, right in the heart of the Ayllu de Solor in San Pedro de Atacama. However, to cultivate this arid land has not been the most difficult thing for Juan; because the hardest thing for him in this process has been to believe in the potentiality of associativity, to face the crucial decision of becoming an entrepreneur, to break down the barriers of distrust and believe in training for the undertaking of projects rather than dreams.

Juan Bruna, a San Pedro de Atacama farmer.

— “Examples like Juan’s drive us to continue believing that entrepreneurship, together with personal effort and the support provided by public and private organizations is one of the more effective ways of projecting regional development through new productive sources.” Geraldo Juzakos, FME Advisor and Director of the Regional Agency for Productive Development.

The projects that stand out because of their contributions to institutional teachings and learnings are detailed below.

The first step was through Fundación Minera Escondida’s MIEMPREX program, in which he participated with his sister Rossana. Thus was born Sociedad Claveles Bruna, which took momentum through the Second Productivity Development Fund from whom they obtained co-financing for the implementation of a project for new greenhouses for the production of carnations. As a result, Juan is today ready to work in a big way. His goal for the future is to produce twenty five thousand carnations.

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT22

Committed University Students

Since the onset of a solar kitchens project which was implemented in the more vulnerably social communities in Antofagasta and San Pedro de Atacama, the Mechanical Engineering Student Center of the University of Antofagasta have been an example of social commitment and solidarity. In fact, these achievements have been recognized by the university authorities as well as by Fundación Minera Escondida who distinguished them as the Best 2008 Bidding Fund Project.

SPACE FOR ASSOCIATIVITY

The different solidarity and initiatives groups within civil society at large need spaces for channeling projects and thereby support the community. In this context, the Awardable Fund provides opportunities not only for accessing co-financing, but also for integrating associative networks. In so doing, the Bidding Fund endorsed five lines of work focused on such areas as Civil Society, Indigenous Community, Educational Community, Pedagogic Innovation and Employees and Colleagues at Minera Escondida. In this way, fifty eight initiatives were developed in the localities of Antofagasta, Calama, Tocopilla, Quillalgua, Mejillones, San Pedro de Atacama, Taltal and Ollagüe. At the same time, a social fair was organized in Antofagasta that included all these participants, and a gala ceremony was held to distinguish the best projects for the year 2008.

— “As university students we should leave our classrooms and share with the more vulnerable communities. The country needs supportive and committed professionals.” Manuel Sanquea, Medical student.

— “This is an example of how we should build a better region. Not only by taking advantage of free energy resources, but also encouraging the involvement of young people and future professionals in community matters and in working with under-resourced peoples”, Wilfredo Castro, Regional Ministerial Secretariat of Economics), Region of Antofagasta.

University students delivering solar kitchens to Antofagasta families.

In their free time and as part of their community integration activities, these youths designed and constructed these solar kitchens. Then, following a socializing and training process implemented together with neighborhood residents committees, Fundación Minera Escondida and university students from other careers handed over these kitchens to under-resourced residents. Benefiting from solar energy, these residents can save up to 30% in liquid gas costs.

FACT SHEET: Clean Energy for EveryoneINVESTMENT: FME $2.744.000, student co-financing $484.235. Total $3.228.235

Memoria Anual FUNDACIÓN MINERA ESCONDIDA 200822

23

Special needs children and young people from the E-77 School in Antofagasta know that they must make a special effort to overcome the barriers of discrimination, achieve their social Independence and, through better opportunities, join the competitive labor market. In keeping with the care and attention rendered by the educational community, the school venture has been one of the primary tools for building autonomous lives. From the very beginning Fundación Minera Escondida has worked on generating new spaces to empower student skills. For example, through the Bidding Fund as well as other initiatives, it has backed the implementation of a cafeteria and a pastries center, a printers shop and photocopying center in addition to an artisans workshops in its rendering of services to the community.

In 2008 the school participated in the School Cooperatives program and developed the Taller Golosi Project that produced customized candies and chocolates for their clients who were mostly families, neighbors, other educational establishments and companies. The members of this cooperative group state that the secret to Taller Golosi is based on personalized attention, product quality and passion for work.

SCHOOL VENTURE AS A BASIS

The school and university cooperatives program was developed during 2008 in Antofagasta (Padre Alverto Hurtado School, Japón D-58 School, Fundación Minera Escondida School and E-77 Special School), Mejillones ( Juan José Latorre Educational Complex) and San Pedro de Atacama (Likan Antai School). One of these units operated out of the Católica del Norte University through a solidarity group called Kactus consisting of commercial engineering students. Together with the process of cooperative formation and constitution, the foundation presented the participants with seed capital for the financing of their business plans. In addition, an agreement was signed with COPEUCH for the integration of these regional cooperatives in their national network so as to compare experiences and learnings.

— “The educational community and especially our students have grown a lot as a result of reinforcing undertakings. Knowing that they can do things independently and create their own businesses is priceless, since it is a key learning for their life stories.” Rosa Loyola, Headmistress Escuela E-77.

Special needs’ youths at E-77 School.

From Antofagasta, Candy with Love

FACT SHEET: Taller Golosí, Juan Sandoval Carrasco E-77 Special School.INVESTMENT: FME $ 5.142.857 for facilities, including Seed Capital. Total program $36.000.000.

— “Entrepreneurship is primary for children and young people, regardless of their status, in achieving better personal and professional perspectives” Ximena Arancibia, FONADIS Regional Director.

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT24 Memoria Anual FUNDACIÓN MINERA ESCONDIDA 200824

English Speaking Volunteers

When the young Australian Mary Johns crossed the threshold of the Escuela Municipal España (España Municipal School) in Antofagasta, she never imagined the mark she would leave on her students because for most of the students there it was the first time they would have an English speaking volunteer to reinforce their teaching and learning of the English language. Mary was a member of a group of thirty four volunteers from the United States of America, England and Australia, who were spread around the more vulnerable elementary and secondary schools and institutes in Antofagasta,

LEARNING FOR A GLOBAL WORLD

Command of the English language is essential in a globalized world, so it should be encouraged at the early stages of education especially in public establishments. To emphasize this country imperative, four years ago the Ministry of Education launched a program called ‘English Opens Doors’ which, with endorsement from FME, was expanded across various regional municipalities through the presence of young English speaking foreign volunteers, supporting the teaching of the English language. This associative work, which is complemented by other programs such as teacher internships, scholarships and implementation of language labs, has helped combine public and private efforts in improving English speaking skills in the more vulnerable educational sectors and thereby not fall behind within the educational system.

English speaking Volunteers.

One of the happiest with this experience was the head of English at the España School, Patricia Lau, who said that to have the support of an English speaking volunteer had given her students far more opportunities to listen to and practice English right in the classroom, making it a valuable contribution to a teacher’s task. Also, as the volunteers are foreigners, there is a degree of curiosity amongst her students that compels them to use English to communicate with them. Likewise, as they are actually in the classroom, these novel teachers can run conversation workshops and develop other ways of using English, focused on the school and the local community, such as a school radio or drama workshops.

— “We have made great progress, especially in terms of phonetics and the stimulation of English conversation, which has reinforced the learning process”, Patricia Lau, Escuela España teacher.

— “Our goal is that the greater number of children and young people in the region learn to handle the English language and in this context the associative work between the English Opens Doors program and Fundación Minera Escondida has been of great support”, Jacqueline Durán, Regional Ministerial Secretariat on Education

FACT SHEET: English Opens Doors ProgramsINVESTMENT: FME $74.000.000, for the complete regional program

25

Leading Schools in Educational Quality

SHARE EXPERIENCES AND LEARNINGS

Associativity in high risk municipal elementary and high school schools is strategic in terms of encouraging improved learnings. For this reason, the Minera Escondida Schools Network (REME), through its strategic association with two organizations in Antofagasta, Mejillones and San Pedro de Atacama have been working since 2005 on different projects that have included implementation of first level educational programs – in areas of infrastructure, equipment and teacher training – that have benefitted more than 480 teachers and 12,500 students.

INVESTMENT: $277.280.494

— “The effort and personal sacrifice by the educational community and its teachers is crucial in advancing better quality education. The programs and projects are very important, but if they are not lead appropriately, improvements in the system will not come about”, Silvia Vega, Escuela Japón Headmistress.

School children in Antofagasta

The Network of Minera Econdida Schools (REME) has one of the best examples of educational quality development and drive in their Escuela Japon. This establishment from Antofagasta, who since 2006 has been supported across the board through social, community and educational projects by Fundación Minera Escondida has attained sustained improvement in their SIMCE (National Performance Evaluation Scheme) assessment results. In this context, at the last evaluation it averaged 255 points in language, exceeding both its own socioeconomic group’s average (239) as well as the regional index (249). This has permitted them to become one of the three autonomous schools in Antofagasta, that is to say those that have demonstrated consistently good student learning results enabling them to receive maximum preemptive funding. In addition, the establishment received the Gabriela Mistral Scholarship from Fundación Chile for the financing of

their School Management quality certification process, thereby becoming one of a select group of eight schools to hold this distinction.

Also, according to the Ministry of Education’s National Performance Evaluation Scheme measures, the establishment achieved Academic Excellence, obtaining 100% of the Performance Excellence Grant. Likewise, as part of the REME network, Fundación Minera Escondida has developed, in this school, trades and employability programs for parents and guardians whilst the school’s management has been supported through projects such as Lector Matte, Mentes Activas (Active Minds), Discovery English Lab, Pocket Pc, English speaking Volunteers – English Opens Doors Program – and Teaching and Learning Evaluations. At the same time, the establishment was integrated to the Leading Schools Network promoted by Fundación Minera Escondida, Fundación Chile and the El Mercurio national newspaper.

— “We must continue working on this line of associativity, not only within the actual educational establishments, but also with support from the private sector”, Nibaldo Acuña, FME Advisor and Provincial Director of Education – Antofagasta.FACT SHEET: Fundación Minera Escondida Schools Network (REME)

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT26 Memoria Anual FUNDACIÓN MINERA ESCONDIDA 200826

Emerging through Valuable Tools

Mrs. Ana Cortés, a neighbor from the Bonilla settlement in Antofagasta, did not have major educational opportunities since she had only studied up to first year high school. However, she always wanted more. So, a few years ago she took part in the trades program under the Escondida Promotes Employability (EFE) program, graduating as one of the most outstanding students in the Administrative Assistant course. But she didn’t rest on her laurels and went on for more, finally graduating from High School through the Educational Leveling program sponsored by Fundación Minera Escondida.

ENTREPRENEURSHIP AND NEW

OCCUPATIONAL OPPORTUNITIES

One of the strategic challenges in the Region of Antofagasta is to increase the level of entrepreneurship and specialization of local manpower thereby improving labor insertion, decreasing unemployment and empowering productive concatenation. However, many of the inhabitants in the region are hindered in accessing quality jobs due to incomplete education or poor specialization in the labor market’s areas of interest. In response to these challenges the foundation simultaneously promotes the Escondida Promotes Employability (EFE), Educational Leveling and the Miemprex projects. In this way social intervention aimed at encouraging sustainability is put into action.

— “The opportunity to access the Foundation’s projects was very important to me. I not only learned a trade and got a permanent job once I had completed my practical placement but I was also able to fulfill my dream of graduating from High School”, Ana Cortés, EFE and Educational Leveling Program

— “If we want a fairer and more equal society, we must encourage productive and social enterprise. Therefore it is crucial that we work integrally with support from the Government, the private sector and civil society at large to improve the level of education of the more vulnerable individuals, specializing and supporting them to become small business owners”, Solange Veloso, FME Advisor and Social Director of Hogar de Cristo Antofagasta.

FACT SHEET: EFF, Educational Leveling and Miemprex Programs INVESTMENT: $126.650.951

Adult Education Students.

This story of effort and personal sacrifice is repeated in many unemployed youths and mothers’ heads of families in the region, who are looking for new opportunities everyday to change and improve their quality of life. For this reason, Fundación Minera Escondida has empowered entrepreneurship through networking with the Miemprex projects for those who wish to start up their own business, accessing educational leveling to obtain Elementary and High School degrees and additionally through the already mentioned EFE that enables access to various trades in the areas of mining, industry, tourism and services. Therefore through this program interaction, the communities can comprehensively access better occupational and entrepreneur opportunities.

27

Guaranteed Education from the Crib

The day of the inauguration everything was spotless and the community was expectant. The doors would finally open on this new establishment at the 18 de Septiembre settlement in Antofagasta, which would receive seventy two children from newborns to four year olds; mostly coming from the Juanita Cruchaga shantytown. The President of the Republic, Michelle Bachelet attended the ceremony - together with a retinue of regional authorities and Fundación Minera Escondida officials – who toured the modern facilities. In fact, the President praised the quality of construction, its safety, equipment and the stimulating setting of the venue, attributes that also contribute in delivering quality education to highly vulnerable sectors.

EARLY CHILDHOOD IS CRUCIAL TO CHILE

The associative work of a network comprising the Regional Government, Junta Nacional de Jardines Infantiles ( JUNJI) (the National Kindergartens Board), municipalities and FME helped strengthen the regional benefits of the Sistema de Protección Integral a la Infancia (Comprehensive Childhood Protection System), Chile Crece Contigo (Chile Grows with You) which aims to eliminate inequities that very often determine the fate of a boy or a girl in our country. In addition to infrastructure and equipment, FME has added training programs for teachers and allotments enabling kindergartens representatives to join the Escondida Promotes Employability, Educational Leveling and Miemprex projects.

— “This venue, plus the teaching staff’s work has impacted favorably on the improvement of social development of children in the sector. Furthermore, the educational community finds effective support in the education of their children, regardless of their vulnerable condition”, Rossana Salazar, Riqueza Escondida Kindergarten Headmistress.

— “This associative work is a model, since it helps combine the efforts of the public and private sectors to help overcome the social vulnerability of our poorer children. We have to believe that if we improve our early childhood segment we will harvest a much better future for our country”, María Estela Ortiz, JUNJI National Director

President Michelle Bachelet at the inauguration of the Riqueza Escondida Kindergarten.

During the ceremony the President expressed her satisfaction at having seen an on-site associative model implemented by the Regional Government, the Junta Nacional de Jardines Infantiles (JUNJI) (National Kindergarten Board), municipalities and Fundación Minera Escondida. This networking activity opened up 500 new vacancies for vulnerable children and infants through the construction of three modern kindergartens, two in Antofagasta and one in Calama, plus twelve day care centers.

FACT SHEET: Construction and equipment for Riqueza Escondida Kindergarten, AntofagastaINVESTMENT: $ 234.385.770

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT28

2008 PROJECTSOrganized under our three strategic imperatives – Improve quality in education, Promote entrepreneurship and solidarity competencies and Integral and harmonious development of ethnic groups in the Region of Antofagasta with emphasis on the Atacama community – we have developed and participated in more than one hundred projects and initiatives directly benefitting the community.

Awardable Funds (84).

Other (42).

68%

14%

Projects per Type

Antofagasta Taltal

Mejillones

Ollagüe

María Elena

11 27 72 2 1

San Pedro de Atacama

* La Serena

2

441

* Ovalle

Pacific OceanN

2

Calama

Tocopilla

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(86 projects)Promote Entrepreneurship and Solidarity Competencies.(22 projects)Integral and harmonious development of regional ethnic groups, with emphasis on atacamenian communities.(18 projects)Improve Quality of Formal Education.

68%

18%

14%

Projects developed per Strategic Imperative

AntogafastaSan Pedro de AtacamaCalamaTocopillaMejillonesTaltalOllagüeMaría ElenaOther regions

57%21%9%3%3%2%2%1%2%

Percentage of Projects per Commune

* These initiatives correspond to the Awardable Fund, Minera Escondida line of Workers and Contractor Companies.

Antofagasta Taltal

Mejillones

Ollagüe

María Elena

11 27 72 2 1

San Pedro de Atacama

* La Serena

2

441

* Ovalle

Pacific OceanN

2

Calama

Tocopilla

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT30

2008 PROJECTSImprove Quality in Education Direct Social Investment Municipality

1 FME Scholarship Pedagogy English 18,643,250 Antofagasta Region

2 FME Scholarship Elementary Pedagogy 5,040,000 Antofagasta Region

3 Lighthouse 80,000,000 Antofagasta

4 Laboratorio Tomatis 64,265,811 Antofagasta

5 Teaching and Learning Evaluation 62,000,000 Antofagasta

6 Best REME School Program 77,000,000 Antofagasta

7 Best REME School Program 27,772,768 Antofagasta

8 Passion for Teaching 2,299,073 Antofagasta

9 Lector Matte Project 110,509,726 Antofagasta

10 Future Childhood Today 141,637,069 Antofagasta

11 Talent Students Scholarship 1,539,940 Antofagasta

12 Kindergarten Construction 260,608,467 Antofagasta

13 FME School Support Plan 3,890,169 Antofagasta

14 English speaking Volunteers 63,931,272 Antofagasta Region

15 FME School CGPA and CEAL Strengthening 3,812,788 Antofagasta

16 Donation of Shading Los Llamitos Kindergarten 10,303,547 Antofagasta

17 Lector Matte Project (2007) 23,962,774 Antofagasta - Mejillones

18 English Development Program 0 Antofagasta

Subtotal 957,216,654

Promote Enterprising and Supportive Competencies Direct Social Investment Municipality

19 E-Learning Training Program 19,850,000 Antofagasta Region

20 2008 Miemprex Competencies Development 43,195,922 Antofagasta - Tocopilla - San Pedro de Atacama

21 Action in Face of Emergency Program 2,333,331 Antofagasta

22 Hogar Crea Antofagasta 142,221,509 Antofagasta

23 María Ayuda Home for Children 145,185,649 Antofagasta

24 Community Projects 298,370,148 Mejillones

25 2008 Zero Harm Plan 45,000,000 Antofagasta

26 Promote FME Bidding Fund Models 21,266,878 Antofagasta Region

27 Social Organizations Meeting 0 Antofagasta Region

28 Student Cooperatives 36,361,982 Antofagasta - Mejillones - San Pedro de Atacama

29 Escondida Promotes Employability 62,420,957 Antofagasta - San Pedro de Atacama

30 2008 Educational Leveling 10,000,000 Antofagasta

31 Manufacture of solar troughs 40,945,794 Antofagasta

32 Sermas 7,200,000 Antofagasta

33 Development of Competencies in Organizational Management 12,953,020 Antofagasta Region

34 Fundación Trascender Installation and Support 3,500,000 Antofagasta

35 Competencies Development and Training Program Competencias 100,000,000 Mejillones

Awardable Fund

36 Music Workshop for Children with Down Syndrome 1,360,000 Antofagasta

37 Earthquake, preparing for emergencies-Firefighters’ Corps 4,212,000 Antofagasta

38 La Cocina de la Abuela (Grandma’s kitchen) 2,144,088 Antofagasta

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Promote Enterprising and Supportive Competencies Direct Social Investment Municipality

39 Look what I see: understanding the view of children and adolescents 1,134,940 Antofagasta

40 My hope, a job 4,611,151 Calama

41 Helps us with the labor re-insertion of CET interns 5,000,000 Antofagasta

42 Community Gym for infantile obesity and overweight adults 3,376,146 Antofagasta

43 Renewal of some workshop equipment items 1,461,898 Antofagasta

44 Implementation for group incline rescue 4,850,000 Tocopilla

45 Firemen Called, constant alert 5,000,000 Antofagasta

46 Fight for a better life through sports 1,955,000 Antofagasta

47 Preparing future jukokas for the region 382,500 Antofagasta

48 Cheerleaders, a healthy mind through sports 727,500 Antofagasta

49 Educating to save lives 4,443,456 Antofagasta

50 Training of Social organizations in accident prevention 4,250,000 Antofagasta

51 Computer literacy for housewives 602,000 Antofagasta

52 Sports is our future 2,907,000 Antofagasta

53 Clean energy for everyone 2,744,000 Antofagasta

54 We seek insertion through work 4,250,000 Calama

55 Construction of water tanks and training for farmers 3,029,980 Taltal

56 Training workshop in gold and silver jewelry with semiprecious stones 5,000,000 Antofagasta

57 Improving associativity of artisan fishermen of Tocopilla 8,546,860 Tocopilla

58 Through football we encourage a healthy lifestyle 4,471,000 Antofagasta

59 Building for the future 2,949,166 Antofagasta

60 The theatre is here, community itinerary Mejillones 2008 599,400 Mejillones

61 Our dreams into music 1,519,426 Taltal

62 The playground, a new school learning scenario 1,360,000 Antofagasta

63 Improving learnings through technology and family support 2,730,000 Antofagasta

64 Forging scientific minds 4,196,965 Antofagasta

65 Tugar tugar the Ckapin Panni children have a place to play 1,434,146 Calama

66 Strengthening learnings through multimedia 505,082 Mejillones

67 Astronomy in the upstanding curricula of education 3,500,000 Calama

68 Teacher training in preparation of learning aids 4,250,000 Antofagasta

69 Obesity in the handicapped child, a scourge we can fight 3,333,109 Calama

70 Communicating in English, a real opportunity to come up in life 5,000,000 Calama

71 Purchase of Musical instruments for D-85 School Band 1,468,588 Antofagasta

72 I grow with my school 2,199,675 Antofagasta

73 Jointly strengthening language and logical thought 2,100,000 Antofagasta

74 Physical Education “a path to a healthy lifestyle” 3,378,700 Antofagasta

75 Bilingualism: double track learning for deaf boys and girls 4,991,435 Antofagasta

76 Implementation of language workshop 1,084,846 Antofagasta

77 Seeding knowledge with my parents and technology 3,812,250 Calama

78 Developing my technical English skills 3,382,911 Calama

79 Support and integration of the older adult in society 3,100,000 Antofagasta

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Promote Enterprising and Supportive Competencies Direct Social Investment Municipality

80 Implementation of materials for psychomotor and cognitive stimulation 1,407,748 Antofagasta

81 Transforming the traditional classroom into a virtual science lab 1,403,962 Antofagasta

82 The marvelous adventure of Reading, let’s communicate what we learn 1,227,050 Tocopilla

83 I know myself, I protect myself, I am happy 695,786 Antofagasta

84 Continuance of Escuela Ollagüe’s audiovisual room implementation 734,804 Ollague

85 Improved screening of Valle de la Luna through motorbike screening 3,535,000 San Pedro de Atacama

86 Seeking a better future 1,750,000 San Pedro de Atacama

87 Building hope 5,000,000 San Pedro de Atacama

88 Rescue of the Peine peoples’ own arts and crafts 1,997,500 San Pedro de Atacama

89 Social Insertion 2,500,000 Calama

90 Implementation of sports 586,300 Ollague

91 Execution of Ayluu San Pedro de Atacama Football School 1,275,000 San Pedro de Atacama

92 Faith, traditions and customs in the Coska Sanctuary 4,080,000 Calama

93 The Road to hope 3,500,000 Calama

94 Quillaglua community computer center 4,850,550 María Elena

95 Fighting alcohol and drugs through sports 2,284,099 Antofagasta

96 Equipping Vehicle rescue group 2,987,600 Tocopilla

97 Improving parents’ and children’s quality of life 4,250,000 Antofagasta

98 Improvement and extension of night watchmen 4,250,000 Antofagasta

99 Symphonic Orchestra Implementation 4,222,260 Antofagasta

100 Improve lifestyle for handicapped people 3,697,500 La Serena

101 Giving dignity and respect to God’s children 2,240,744 La Serena

102 A gallery for my town 4,240,000 Ovalle

103 Halcón del Oriente junior football school 1,275,000 Antofagasta

104 Online administration course Social Companies 8,600,000 Antofagasta Region

Subtotal 1,196,751,311

Integral and harmonious development of ethnic groups Direct Social Investment Municipality

105 Lector Matte SPA 2008 E-26 Program 12,044,146 San Pedro de Atacama

106 2008 Scholarships for Indigenous People 21,430,000 San Pedro de Atacama - Calama

107 Lector Matte SPA 2008 E-21 Program 16,426,995 San Pedro de Atacama

108 E-25 School Classroom Portable Technology 3,042,106 San Pedro de Atacama

109 Toconao School Library 138,139,904 San Pedro de Atacama

110 Roofing of Lican Antai School Court Complex 112,043,196 San Pedro de Atacama

111 Educational leveling for Atacamans and Quechuas 9,379,388 San Pedro de Atacama

Productive Development Fund

112 Restaurant of Typical Atacaman food 2,000,000 San Pedro de Atacama

113 Artisan Center 2,000,000 San Pedro de Atacama

114 Implementation of artisan cooking 1,000,000 San Pedro de Atacama

115 Production of honey, sub-products and alternative medicine services 1,782,400 San Pedro de Atacama

116 Sanitary permit acquisition for workers’ food cafeteria 1,382,400 San Pedro de Atacama

117 Production of carnations as cut flowers 3,938,646 San Pedro de Atacama

118 Furniture Workshop 2,000,000 San Pedro de Atacama

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Integral and harmonious development of ethnic groups Direct Social Investment Municipality

119 Purchase of driers and emergency generator 581,000 San Pedro de Atacama

120 Sun kitchen 2,000,000 San Pedro de Atacama

121 Reduce manufacturing costs, wool cushions 100% alpaca, llama and sheep 70,000 San Pedro de Atacama

122 Sale of quick foods and snacks 1,200,000 San Pedro de Atacama

123 Improvement of kitchen extension 1,600,000 San Pedro de Atacama

124 Honey quality recovery 913,163 San Pedro de Atacama

125 Permit for Sandstone for inside housing patio 941,180 San Pedro de Atacama

126 Local extension of pastries production 2,000,000 San Pedro de Atacama

Subtotal 335,914,524

Other Initiatives Direct Social Investment Municipality

Other Initiatives Managed (1) 609,175,594

Shared Contributions Programs 1+1 (2) 121,131,582

Subtotal 730,307,176

Total Direct Social Investment 3,220,189,665

(1) Institutional planning takes into account the projects of the Operations and Social Investment Master Plan (PLAMOIS) in line with the strategic imperatives. However, during the year other community initiatives were managed through additional funds transferred from Minera Escondida to the foundation.

(2) This summary also includes the funds assigned to organizations as a result of the BHP Billiton 1+1 Program adminis-tered by the foundation.

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT34

6FINANCIAL STATEMENTS

TABLE OF CONTENTS

1. Report from the Independent Auditors

2. Financial Statements

3. Financial Statement

4. Activities Statement

5. Cash Flow Statement

6. Notes on Financial Statements

Currency Conversion Acronyms

M$ - Thousand Chilean pesos

US$ - US Dollars

UF - Chilean inflation-index unit

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1. REPORT FROM THE INDEPENDENT AUDITORS

Referring to the Financial Statements as of December 31, 2008 and 2007

Messrs.

Directors of Minera Escondida Foundation:

We have audited Fundación Minera Escondida’s Financial Statements as of December 31, 2008 and the corresponding activities and cash flow statements of the years ending on that date. The preparation of said financial statements (which include their corresponding notes) is Fundación Minera Escondida’s management responsibility. Our responsibility lies in expressing an opinion on said financial statements, based on our own audits. The financial statements of Fundación Minera Escondida of the year ending on December 31, 2007, were audited by other auditors, who expressed their opinion that said statements were free from any significant errors in their report dated February 1, 2008.

We conducted our audits according to generally accepted accounting principles in Chile. Said principles require us to plan and carry out our work in order to obtain a reasonable degree of certainty that the financial statements are free from any significant errors. An audit requires an examination, on a test basis, of the evidence supporting the contents and information disclosed by said financial statements. An audit likewise includes an assessment of the accounting principles used and of the significant calculations carried out by the Foundation’s management, as well as an assessment of the general presentation of the financial statements. We consider that our audits constitute a reasonable basis on which to ground our opinion.

In our opinion, the financial statements as of December 31, 2008, make a fair presentation of all the significant aspects of Fundación Minera Escondida’s financial situation as of December 31, 2008 and of the results of its operations and the cash flow of the year ending on said date, according to accounting principles generally accepted in Chile.

Antofagasta, January 30th, 2009

Charles Guaita RERNST & YOUNG LTDA.

Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT36

2008 2007

M$ M$

Available 151,636 60,053

Marketable Securities 12,184 438,449

Sundry Current Assets (net) 42,251 805,513

Total Current Assets 206,071 1,304,015

2008 2007

M$ M$

Real estate 1,424,068 322,086

Office Equipment 117,293 92,586

Furniture 51,526 44,365

Facilities 123,783 54,246

Vehicles 15,791 15,791

Sundry fixed assets 21,353 -

Goods on gratuitous loan 535,737 535,737

Subtotal 2,289,551 1,064,811

Less: Accumulated Depreciation -246,241 -215,869

Total net fixed assets 2,043,310 848,942

Fixed Assets

2008 2007

M$ M$

Temporary restriction financial invest-ments

3,802,070 2,207,859

Standing restriction financial invest-ments

3,042,369 3,030,528

Guarantees 3,635 3,635

Other long term assets 18,655 22,929

Total Other Assets 6,866,729 5,264,951

Total Assets 9,116,110 7,417,908

Sundry Assets

2008 2007

M$ M$

Suppliers 830,744 536,625

Provisions 63,465 53,372

Withholdings 12,127 9,661

Funds received in administration 7,258 2,054

Total current liabilities 913,594 601,712

2. FINANCIAL STATEMENTS

Assets

Current Assets

Liabilities and Equity

2008 2007

M$ M$

Non restricted 1,358,077 1,577,809

With temporary restrictions 3,802,070 2,207,859

With standing restrictions 3,042,369 3,030,528

Total equity 8,202,516 6,816,196

Total Liabilities and Equity 9,116,110 7,417,908

Equity

Current Liabilities

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2008 2007

M$ M$

Donations 5,783,644 2,522,321

Total operating revenue 5,783,644 2,522,321

Operating Revenue

2008 2007

M$ M$

Direct Social Investment -3,220,190 -1,934,187

Indirect Social Investment -602,633 -97,046

Operational Costs -259,957 -504,773

Administration Expenditure -340,730 -208,170

Administration Expenditure San Pedro de Atacama Office

-36,815 -24,149

Depreciation and amortization -45,675 -31,222

Total Project Expenditure -4,506,000 -2,799,547

Operational Result 1,277,644 -277,226

Project Expenditure

2008 2007

M$ M$

Financial Income 508,092 370,155

Sundry Revenue 30,637 23,592

Total non operational income 538,729 393,747

Non-Operational Income

2008 2007

M$ M$

Sundry expenses -15,360 -14,647

Currency adjustment -414,693 -429,690

Total non operational expenditure -430,053 -444,337

Non operational result 108,676 -50,590

Surplus (deficit) for the Period 1,386,320 327,816

Non Operational Expenditure

3. ACTIVITIES STATEMENT

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT38

4. CASH FLOW STATEMENT

Cash Flow originated by operating activities

2008 2007

M$ M$

Surplus (deficit) for the Period 1,386,320 -327,816

Debits (Credits) to Results not repre-senting cash flow

Depreciation and amortization 45,675 40,539

Currency adjustment 414,693 429,690

Others -30,107 -22,105

Asset Variation influencing (Increase) Reduction of Cash Flow

Other assets 763,262 -804,265

Liabilities Variation influencing (Increase) Reduction

296.585 52.382

Suppliers and withholdings 296,585 52,382

Provisions 10,093 20,618

Other Accounts Payable 5,204 -2,272

Net profit (loss) Flow Originated by Operating Activities

2,891,725 -613,229

Flow Originated by Investment Activities

2008 2007

M$ M$

Acquisition of fixed assets -1,232,729 -15,569

Long term financial investments -1,983,369 824,619

Others 4,274 -6,223

Net profit (loss) Flow Originated by Investment Activities

-3,211,824 802,827

Net Flow for the period -320,099 189,598

Effect of inflation on cash and cash equivalent

-14,580 -32,764

Net Variation of Cash and Cash Equivalent

-334,679 156,834

Cash and Cash Equivalent Initial Balance 498,502 341,668

Cash and Cash Equivalent Final Balance 163,823 498,502

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5. NOTES TO THE FINANCIAL STATEMENTS

(1) The Foundation’s Legal Incorporation

Fundación Minera Escondida was constituted as a non-profit institution on January 17, 1995, before the Notary Public, Andrés Rubio Flores. Its legal residence was set in the city of Antofagasta, the duration of the Foundation is for 50 years and its corporate purpose will be the performance of educational programs and projects, technological research and performance of all kinds of activities aimed at continuously improving the community’s life conditions.

(2) Accounting Criteria Applied

A) Period Covered

The present financial statements correspond to the twelve month period between January 1 and December 31, 2008 and 2007.

B) Preparation Bases

The present financial statements have been prepared according to accounting principles generally accepted in Chile

As of January 1, 1999, Accountants Association of Chile A.G. Technical Bulletin Nº 63 that rules the submission of financial statements for non-profit organizations has been in force. The current financial statements have been prepared according to the above mentioned bulletin.

C) Presentation Bases

The financial statements as of December 31, 2007 and their respective notes have been updated off the books in 8.9%, so as to permit an adequate comparison with the financial statements of the present year.

D) FOREX Adjustment

The financial statements have been adjusted to recognize the effects of the variation in currency purchasing power that occurred during the respective year. The updating has been determined by applying the current regulations that establish that non monetary assets and liabilities at the closing of each year and the initial equity and its variations, must be updated with effect on income. The applied index was the Consumer Prices Index published by the Instituto Nacional de Estadísticas (National Institute of Statistics), experiencing a variation for the period January 1 to December 31, 2008 of 8.9%% (7.4% in 2007).

E) Conversion Bases

Assets and liabilities expressed in Inflation Index Units (UF) have been translated into pesos at the value at the prevailing exchange rate at year end of the current financial statements at the following parities: $ 21.452,57 en 2008 ($ 19.622,66 en 2007).

F) Financial Investments

Financial investments are registered including accrued interests and readjustments upon the closing of each year. The financial investments with standing and temporary restricted availability are presented under Other Assets.

G) Bad Debt Provision for Funds Given into Administration

The Foundation has set up a bad debt provision for all the funds given into administration to Fundación Sointral, which amount as of December 31, 2008 and 200 to M$ 375.710.

H) Funds Received in Administration

They register the contributions made by institutions and organizations of the public and private sector and civil society, which may or may not be direct beneficiaries of the project

I) Fixed Assets

Fixed asset goods are valued at their cost of acquisition monetarily adjusted as of December 31 of each year.

Depreciations have been calculated following the straight line depreciation method applied to the adjusted values of the respective assets, taking into account the estimated useful life of such goods.

J) Personnel Vacations Provision

The Foundation has established a provision for personnel vacations on an accrued basis as of December 31 of each year, in accordance with Accountants Association of Chile A.G. Technical Bulletin Nº 47.

K) Personnel Management Bonus and Incentives provision

As of December 31, 2008 and 2007, the Foundation has a provision for the vacation bonus, in accordance with that established in the Benefits Manual as well as a management incentive provision for both periods.

L) Income Tax

As of December 31, 2008 and 2007, the Foundation has no records for income tax provision as, pursuant to the tax laws in force, it does not have positive net taxable income.

M) Donations

Fundación Minera Escondida is a donor suitable for purposes of what is set out in Article 47 of Decree Law Nº 3.063, of 1979, related to what is established in Article 2 of the DFL Nº 1, of 1986 of the Finance Ministry. By virtue of the aforesaid, all donations from Minera Escondida Limitada, founder of Fundación Minera Escondida, in favor of the latter one, and all those other donations by other enterprises or institutions, are protected by the aforesaid tax benefit, through which all donations are accepted by the Chilean Internal Revenue Service as tax expense determined as a First Category Tax, up to an amount equivalent to 4,5% of the First Category net taxable income, pursuant to the limit established in Article 10 of Law Nº 19.885.

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT40

N) Cash Flow Statements

For the purposes of the cash flow statement, pursuant to what is set out in the Association of Chilean Accounts A.G. Technical Bulletins No. 50 and 63, all those short-term investments done ordinarily for the management of cash flow surplus and which can be rapidly converted into known cash amounts are considered as cash equivalent, and when there exists the intention of making said conversion within a term not in excess of 90 days and with a minimum risk of significant value loss.

The item “Flow originated by operating activities” includes all such cash flows related to the line of business, also including interests paid, financial income and, in general, all such flows that are not defined as investments or financing. It should be noted, however, that the “operating” concept used in this statement, is broader than that considered in the income statement

(3) FOREX Adjustment

The effects of the FOREX adjustment of nonmonetary and equity assets and liabilities are summarized as follows:

FOREX Adjustement

(Debit) Credit to Results

2008 2007

M$ M$

Updating of:

Equity -557,063 -492,231

Fixed Assets 138,236 60,231

Other Assets 4,134 2,310

Net Charge to Income -414,693 -429,690

(4) Financial Investments

The financial investments with standing and temporary restricted availability are the following:

Institution Type of Investment Non restrictedRestrictions

TotalTemporary Standing

M$ M$ M$ M$

Banco Bice Mutual Fund 12,184 1,477,430 - 1,489,614

Santander Investment Investment Fund - 2,324,640 3,042,369 5,367,009

Total 12,184 3,802,070 3,042,369 6,856,623

As of December 31, 2008

As of December 31, 2007

Institution Type of Investment Non restrictedRestrictions

TotalTemporary Standing

M$ M$ M$ M$

Banco Bice Mutual Fund 438,449 12,625 - 451,074

Santander Investment Investment Fund - 2,195,235 3,030,528 5,225,763

Total 438,449 2,207,859 3,030,528 5,676,836

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(5) Assets Given in Gratuitous Loans

A) Corporación Nacional del Cáncer (“CONAC”)

In August, 1999 the Foundation gave, on gratuitous loan, real estate and equipment situated in the city of Antofagasta to the Corporación Nacional del Cáncer (National Cancer Corporation) (“CONAC”), destined as a shelter for patients with cancer. The agreement is of five-year duration, renewable in favor of CONAC which has been consecutively renewed to the present date.

B) Universidad del Mar

In May 2003, the Foundation gave, on gratuitous loan, a Mitsubishi model L-300 van to the University José Santos Ossa, at present Universidad del Mar, to be used as a mobile library.

The detail of the assets given on gratuitous loan is the following:.

2008 2007

M$ M$

Corporación Nacional del Cancer(National Cancer Corporation)

Real-estate 102,373 102,373

Construction and Infrastructure works 386,293 386,293

Furniture and equipment 36,292 36,292

Subtotal 524,958 524,958

Universidad del Mar

Vehicle 10,779 10,779

Subtotal 10,779 10,779

Gross Value of assets given on gratuitous loan

535,737 535,737

Less: Accumulated Depreciation -99,580 -89,609

Net Total of assets given on gratuitous loan

436,157 446,128

(6) Funds Received in Administration

The amounts received during 2008 for co-financing projects amount to M$ 82.470 (M$ 154.812 in the year 2007) according to the following detail:

2008 2007

M$ M$

Awardable Funds 73,641 132,922

REME: Lector Matte SPA 2008 Project 3,723 9,586

Portable classroom Technology E.26 SPA School

606 8,745

REME: Active Minds Elementary Teaching

0 2,470

Male and Female Dental Project 4,500 1,089

Total 82,470 154,812

REME: Minera Escondida Schools Network

The balance as of December 31, 2007 of funds received in Administration amounted to M$ 7.258 (M$ 2.054 en 2007).

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT42

(7) Equity

A) Equity Changes

Non RestrictedRestrictions

TotalTemporary Standing

MUS$ MUS$ MUS$ MUS$

Balances as of January 1, 2007 607,779 2,899,939 2,600,436 6,108,154

Revaluation of Equity 44,976 214,595 192,432 452,003

Surplus (deficit) for the period 796,105 -1,087,115 -10,014 -301,024

Balances as of Diciembre 31, 2007 1,448,860 2,027,419 2,782,854 6,259,133

Balances as of December 31, 2007, restated at 8.9%

1,577,809 2,207,859 3,030,528 6,816,196

Balances as of January 1, 2008 1,448,860 2,027,419 2,782,854 6,259,133

Revaluation of Equity 128,950 180,439 247,674 557,063

Surplus for the period -219,733 1,594,212 11,841 1,386,320

Balances as of December 31, 2008 1,358,077 3,802,070 3,042,369 8,202,516

B) Incorporation of the Foundation

According to the statutes of Fundación Minera Escondida, Minera Escondida Ltda. made contributions for US$ 9,000,000, which was given in the following way:

US$

Contribution upon obtaining legal status 3,000,000

Contribution within first year of obtaining legal status 3,000,000

Contribution within the second year of obtaining legal status 3,000,000

Total 9,000,000

During 2008 the Foundation received a donation from Minera Escondida Ltda. of M$ 5.634.478 (M$ 2.522.321 in 2007) for financing new projects. It also received M$ 149.166 from BHP Billiton Australia for the Shared Contributions program (During 2007, no other donations were received).

C) Restrictions

The Foundation is subject to a standing statutory restriction over the equity contribution of Minera Escondida Limitada established in the above Note 7 (b), which requires that 50% of the total amount of this contribution must be kept in investments of fixed income instruments from solvent issuers, the remaining 50% destined, together with the income proceeding from the aforementioned investments, to the Foundation’s ends.

During June 1999, the Foundation’s Board of Directors agreed to set temporary restrictions on the contribution made by the Founder during said year and those that may be contributed in the future, in order that 50% of the total contribution is kept in investments of fixed income instruments from solvent issuers, together with the income proceeding from the aforementioned investments. The restriction will be in effect until the Foundation’s Board of Directors decides to lift it. The Board’s decision made this restriction also applicable to the accrued interests of the 50% investment of the initial equity contribution, stated in the statutes. Its purpose is to generate long-term financial resources to sustain the future operating costs of the Institution.

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On April 5, 2001, the Foundation’s Board of Directors authorized the Chief Executive Director to lift the temporary restriction to investments, according to the Foundation’s needs for social investment, based on projects submitted to the Board’s consideration. During 2001 it was not necessary to lift this restriction; however during 2002 the restriction was lifted for the necessary investments to cover the social investment requirements, a policy which has remained in force during 2008 and 2007.

D) Classification according to the activity statement as of December 31, 2008

Non RestrictedRestrictions

TotalTemporary Standing

M$ M$ M$ M$

Income

Donations year 2008 3,628,551 2,155,093 - 5,783,644

Financial Income 508,092 - - 508,092

Other income 30,637 - - 30,637

Total Income 4,167,280 2,155,093 - 6,322,373

Costs of Projects -3,907,372 -560,881 - -4,468,253

Sundry Costs and Income -479,641 - 11.841 -467,800

Surplus (deficit) for the period -219.733 1.594.212 11.841 1.386.320

(8) Subsequent Facts

Within the period comprised between December 31, 2008 and the date of presentation of this report, there have been no subsequent facts that might significantly affect the present financial statements.

Petri SaloperaExecutive Director

Carlos MesquitaChairman of the Board

Jorge Muñoz del PinoTreasurer of the Board

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Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT44

GRI INDEX GRI Code Indicator Description Page Number

Strategy and Analysis

1.1 Statement of the most senior member responsible for decisions 2

1.2 Main management impacts, risks and opportunities 2

Organizational Profile

2.1 Name of the Organization 12

2.2 Main brands, products and/or services 20

2.3 Operational structure of the organization 12

2.4 Headquarters’ location 12

2.5 Countries where they operate 12

2.6 Nature of the property and legal form 5, 12

2.7 Markets served 13

2.8 Organizational Dimensions 18

2.9 Significant changes in the organization 12, 14

2.1 0 Prizes and awards received 6

Report Parameters

Report Profile

3.1 Period covered by the Report 5

3.2 Date of most recent Report 5

3.3 Report presentation cycle 5

3.4 Report contact point 38

Report Scope

3.5 Report content definition 5

3.6 Report outreach 12

3.7 Annual Report scope limits 12

3.8 Joint venture and Subsidiary operation information treatment 12

3.11 Significant changes in scope of the Report 6

GRI Table of Contents

3.12 Report Basic Content Table 36

Audit

3.13 External audit policies and practices 5

Governance, commitments and stakeholders participation Governance

4.1 Organizational governance structure. 14

4.2 State if the president of the maximum governing body holds an executive position 14

4.3 Number of members of the maximum governing body who are independent or non execu-tive

14

4.8 Mission, values and conduct codes and relevant principles for economic, environmental and social performance

4

Commitments with external initiatives

4.13 Main associations to which the organization belongs 6

Stakeholder participation

4.14 Stakeholder relations included by the organization 7

4.15 Stakeholder Identification and selection process 7

4.16 Stakeholder inclusion focus and frequency 7

4.17 Main stakeholder concerns and the organization’s response 7

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GRI Code Indicator Description Page number

Economical Dimension

EC6 Policy, practices and proportional cost corresponding to local suppliers 16

Environmental Dimension

DMA Management focus 19

EN3 Direct Energy consumption, broken down by primary sources 19

Social Dimension

DMA Management focus 18

LA1 Breakdown of workers 18

LA2 Total number of employees and mean employee attrition 18

LA3 Social Benefits for full-time workers 18

LA4 Percentage of workers covered by collective bargaining agreements 18

LA11 Competencies management and continuous training programs 18

LA12 Percentage of employees under regular performance evaluations 18

LA14 Ratio between male and female basic wage 18

Society

SO5 Position and involvement in the development of public policies and lobbying activities 28

Product Responsibility

PR5 Client satisfaction practices 8

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OPINION SURVEYAs a way of obtaining quality information relevant to our stakeholder groups, below there are a number of questions for you to answer so as to participate in the continued improvement of our report. Please answer them and send us your comments. We will appreciate it.

1. How old are you?

2. Gender: a. ( ) Male b. ( ) Female

3. Before reading this report, did you about this institution?

a. ( ) Yes Through whom or what?

b. ( ) No

4. A We will next describe a series of opinions about this Sustainability Report. Please indicate your rate of agreement.

5. What are, in your opinion, the principal strong points of the Report? Check a maximum of three (3)

a. ( ) Content

b. ( ) Drafting

c. ( ) Design

d. ( ) Photos and images

e. ( ) Length

f. ( ) Other:

6. What are, in your opinion, the principal weak points of the Sustainability Report? Check a maximum of three (3)

a. ( ) Content

b. ( ) Drafting

c. ( ) Design

d. ( ) Photos and images

e. ( ) Length

f. ( ) Other:

7. How can this Sustainability Report be improved in order to meet your interests & demands?

8. A What score would you give this Sustainability Report, for the information it contains?

9. What score would you give the Institution for the information described in the Sustainability Report?

10. Finally, what is your overall opinion of the Report?

Thank You

VERY MUCH AGREE AGREE DISAGREE VERY MUCH DISAGREE NOT KNOW

MDA DA ED MED NS

4.1 The annual report satisfies my interests

4.2 The annual report is the appropriate length

4.3 The literary styles makes for easy reading

4.4 The design helps understand the data

4.5 The charts, tables and infographs help reading

4.6 I would prefer that the information be presented through a different communications medium

4.7 The information presented is honest and transparent

Fundación Minera Escondida`s 2008 SUSTAINABILITY REPORT48

Fundación Minera Escondida

Content development: Fundación Minera EscondidaInformation & communication design:

Photographs: Oliver Llaneza / Fundación MineraEscondida Photographic File

No part of this financial report may be reproduced in any format, paper or electronic, without prior consent from Fundación Minera Escondida.2009

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