Country: Chile Sector: Materials

Transcription

1 Country: Chile Sector: Materials Year Program Disclosure SCORE Performance Band 2015 Climate Change 96% B Have implemented some climate initiatives with partial success 2013* Climate Change 74% C Some activity with varied levels of integration into business strategy * Not official score Find more information at

2 Climate Change 2015 Information Request Enaex Module: Introduction Page: Introduction CC0.1 Introduction Please give a general description and introduction to your organization. Enaex, a subsidiary of the Sigdo Koppers Group, has 94 s of experience in the explosives industry. Over the s, the Company has established itself as the world's third largest producer of low density ammonium nitrate as well as the leading provider of comprehensive rock fragmentation services for the mining industry in Chile and Latin America. Ammonium Nitrate production and Blasting Services are both Enaex's Core Business and its strategic vision is being a company of excellence with high quality standards on its products and services and growing in a responsible way with their stakeholders and the environment. About ammonium nitrate production Enaex has an annual and complete sold production of 755,000 tons distributed among Chilean mining market and the exportation over 40 countries. Enaex started its internationalization process on 2009 and by today has local presence in Argentina, Colombia, Brazil and Peru. In order of achieving its vision of growth giving a complete blasting service to its mining costumers Enaex recently bought the French company Davey Bickford, specialized on all type of detonators. All of Enaex's offices are ruled by the same principles and values in order of creating and project a solid corporate image. Enaex is currently composed by 1700 workers distributed among three Productive Plants located at the north part of Chile, 22 Services Plants installed inside the costumer site performing the complete blasting process; and in Chilean capital, Santiago, where the headquarter office is located. Enaex Vision is Being the worldwide most prestigious company on high quality ammonium nitrate and related services and the Mission goes according to it: a)growing along with our customers, supplying ammonium nitrate, related chemicals and high quality mining services b)giving a Blasting Service regarding safety, reliability and innovative with highest world class standards c)having global presence with Latin America Explosives Market leadership d)generating value for all its stakeholders e)being recognized as company respectful to the environment and its local communities. Back staging this Mission and Vision Enaex has embedded four Corporate Values: 1) Taking care of Life anyplace, anytime. 2) Serving with Passion to our costumer 3) Accomplishing our Commitments 4) Living through Excellence. As many other companies, Enaex looks everyday for having high sales volumes of its products and services, reducing operational costs by optimizing and innovating its production processes and large logistic service. Enaex, as a world class company, continues becoming a company of excellence, in permanent challenge understanding its customer needs and maintaining its sustainable and socially responsible vision. CC0.2 Reporting Year Please state the start and end date of the for which you are reporting data. The current reporting is the latest/most recent 12 month period for which data is reported. Enter the dates of this first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three s prior to the current reporting if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional s of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting. Please enter dates in following format: day(dd)/month(mm)/(yyyy) (i.e. 31/01/2001). Enter Periods that will be disclosed Wed 01 Jan 2014 Wed 31 Dec 2014 CC0.3 Country list configuration 1/29

3 Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response. Select country Chile CC0.4 Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. USD($) CC0.6 Modules As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sub industries, companies in the oil and gas sub industries, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire. If you are in these sector groupings (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the navigation bar when you save this page. If you want to query your classification, please If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view the questions first, please see US/Programmes/Pages/More questionnaires.aspx. Module: Management Page: CC1. Governance CC1.1 Where is the highest level of direct responsibility for climate within your organization? Board or individual/sub set of the Board or other committee appointed by the Board CC1.1a Please identify the position of the individual or name of the committee with this responsibility The highest level of responsibility for climate is on the Steering Committee of CSR (Corporate Social Responsibility) which is leaded by Enaex CEO, Mr. Juan Andrés Errázuriz who gives the main strategic directions to each area. The CSR committee goes according Enaex s strategic plan, which seeks to grow being efficient without diminishing the excellence of customer services. The other members of the CSR steering committee are: Mr. Pablo Busquet, CFO, who supervises the operational costs of the CDM (Clean Developed Mechanism) projects and how they could impact the overall costs of the company. As CFO he is also aware of understand in a better way any financial impact that climate could have on Enaex core business. Mr. Claudio Yévenes, COO. He is in charge of all production plants, including ammonium nitrate manufacturing and explosives production. In that way, his most important role regarding climate is watching for a low carbon production process through a non failure operation of the CDM projects and drive energy efficiency projects. Ms. Patricia Valenzuela, Human Resources Director. She leads sustainable initiatives related to the relationship with the main stakeholders. This has been focused on developing a communication strategy with them. Mr. Francisco Diaz, Marketing Assistant Director. He represents interests and worries of Enaex s mining costumers incorporating them as new developments. As an example, on 2013 Enaex conducted its explosives products carbon footprint from a mining costumer request. 2/29

4 Mr. Francisco Baudrand, Planning and Business Development Director. He is in charge of Enaex Strategic Planning which includes raising new and long term initiatives among the company regarding climate assessment and management. Ms. Josefina Diaz, Head of Sustainability. In charge of update and report the status of the carrying out initiatives regarding climate and sustainability. Specifically annual carbon footprint accounting, CDM projects emission reductions reporting to its stakeholders, support any activity of the company related with climate teaching. CC1.2 Do you provide incentives for the management of climate issues, including the attainment of targets? Yes CC1.2a Please provide further details on the incentives provided for the management of climate issues Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Energy reduction project Energy reduction target Efficiency project Efficiency target Energy reduction project Energy reduction target Efficiency project Efficiency target Emissions reduction project Emissions reduction target Comment Chief Operating Officer (COO) Monetary reward Mr. Claudio Yevenes COO of Enaex has an annual monetary reward related to accomplish quoted or reduce unitary operation cost of ammonium nitrate through implementing energy efficiency projects At reporting 2014, the accomplished KPI was to reduce energy consumption per ton of ammonium nitrate from 51 kwh /tan to 49 kwh/tan which represented a decreased from base (2012) of 9439 Mwh/ and 8245 tco2 Business unit managers Monetary reward Prillex Plant Operation Manager Mr. José Contreras leader of the ammonium nitrate production, has an annual monetary reward associated with not exceed 52 kwh per ton ammonium nitrate produced. Environment/Sustainability managers Monetary reward Mr. Carlos Araneda, Enaex CDM projects leader has an annual monetary reward associated to a KPI related to Emission reductions budget achievement. Ms. Josefina Diaz, Head of Sustainability, has an annual monetary reward associated to a KPI related to carbon footprint accounting, verification and reporting Page: CC2. Strategy CC2.1 Please select the option that best describes your risk management procedures with regard to climate risks and opportunities 3/29

5 There are no documented processes for assessing and managing risks and opportunities from climate CC2.1d Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate, and whether you plan to introduce such a process in future Main reason for not having a process No requirement from management Do you plan to introduce a process? Yes Comment During 2013, Enaex s CSR Committee did a first exercise of analysis of risks and oportunities related to climate. However, this analysis was not reported to the Board or deepened during 2014 due it concluded that Enaex core business is not directly threatened in the short term by risks nor opportunities associated with climate and therefore there was not a requirement of the management to repeat it during On March 2015 a flood affected the north part of Chile where Enaex has its two most important productive plants and 1/3 of all its workers. Thankfully no worker or their family resulted hurt nor importantly damaged on personal assets. With that in mind a new assessment of climate risk and opportunities has been planned for August This new assessment is planned considering Materiality criteria and the recently launched Strategic plan in order of having a deepest analysis with financial impacts of climate risks and opportunities. With deeper and more concrete results, Enaex s CEO could be able of presenting them to the Board and promote a reasonably frequency of review, analysis and reporting. CC2.2 Is climate integrated into your business strategy? Yes CC2.2a Please describe the process of how climate is integrated into your business strategy and any outcomes of this process Climate started influencing Enaex business strategy since Kyoto Protocol entered into force on Because from that, Enaex was invited by Mitsubishi Company to develop a CDM project related to the reduction of N2O emissions in the nitric acid plant n 3 (Panna3: UNFCCC Ref.1229 and to sell certified emission reductions at the EU ETS. The first CDM project of Enaex involved USD 12 million investment and was launched on 2007 becoming an important no operational source of revenue for the company until 2012 and reducing almost 800,000 tco2e per. Since this important investment onwards, Enaex Board has been aware about the climate impacts over the business and Enaex stakeholders and has promoted several mitigation/adaptation initiatives in order being aligned with a sustainable development of the business. As an example, on 2010 a USD 20 million investment was approved in order of having an energy cogeneration system based on seizing the steam surplus generated during production process of the new nitric acid plant (Panna4). On 2011 and regarding the whole positive impact that CDM had at Enaex reputation and economic results added up to a complex scenario of Chilean mining costumers due higher production costs because energy scarcity, Enaex Board defined that Climate Change impacts would be part of the long term Strategic Plan through the enhancement of GHG emission reductions and energy efficiency projects at Enaex Productive Plants Enaex Strategic Plan founds itself in four pillars (Growth, Efficiency, Costumers and People) all of which have strategic initiatives to be develop in a 5 horizon. Sustainability (and therefore the need of adapting to climate ) is declared as a fundament key influencing these four pillars with their strategic initiatives whether as specific initiatives or as a criteria for implementing the rest of the initiatives in a sustainable manner. Associated to every strategic initiative there are also short term tactical initiatives declared in an Annual Master Plan, which is presented, reviewed and approved every by Enaex Board at the same time that the last results are reported. One of the most important component of the strategy that has been influenced climate is the Efficiency on Productive Process especially by developing and implementing projects tending to reduce the electric cost by tonne of ammonium nitrate. This projects are mostly based on using the most amount of steam surplus of Prillex plant as energy cogeneration. Since the energy efficiency projects started, Enaex has reduced its purchased energy by 45%. For 2015, the KPI of energy efficiency should not be over 52 kwh per tonne of ammonium nitrate (AN), giving a monetary reward to the management team if this AN energy cost is equal or less than 49,5 kwh per tonne AN. Then,on 2011 was approved to develop and install a N2O emissions catalyst system in Panna 4 Plant under a new CDM methodology (developed by Enaex and an Austrian Company (Carbon Climate Protection)). This allows Enaex reducing near of 80% of Panna 4 N2O total emissions and obtaining 250,000 CERs per. Another important component of Enaex s strategy influenced by climate is the strategic initiative Loyalty of Mining Home Market (Chile) which has the objective of developing innovative onsite solutions as a way of differentiate Enaex over competitors by helping mining costumers on facing current challenges as the higher cost of energy. 4/29

6 One example is the currently launched Energex project which has developed an explosive product of high energy release resulting in a better prepared blasting material for the milling process reducing total energy consumption downstream. Enaex mining costumers have had a positive influence on Enaex business strategy in terms of Climate Change management because they have been constantly demanding knowing the Carbon Emission Factor of Enaex explosives. As a recent result has been a collaborative work with one of the most important Chilean mines, Minera doña Ines de Collahuasi, by using Enaex s emissions factors in their carbon foot print calculation. This kind of long term relationship also impacts on a strategic advantage over competition. Another examples of important long term business decisions taken by Enaex regarding Enaex sustainable development and climate management commitment have been: 1) Supporting the ECOPLANTA Project (2005). The Ecoplanta, installed inside Enaex customer mining site, allows collecting and recycling wasted fuel oil from mining operation and use it for explosive production. 2) Incorporating LED Technology when new Corporate Building was designed on 2012 CC2.2c Does your company use an internal price of carbon? Yes CC2.2d Please provide details and examples of how your company uses an internal price of carbon Enaex has defined as internal price of carbon the one resulted from the operational cost from its two CDM projects divided by total issued CER (certified emissions reductions) In example, during reporting 2014, the operational cost of both CDM projects was USD1.5 million and a total issued CERs Therefore we arrived to an internal price of carbon 2014 of 2.4 USD/CER On January 2014 Enaex applied for a Norwegian fund raised to support vulnerable CDM projects. On this application Enaex suggested a sale/purchase price according to this internal price of carbon (2.9 USD/CER). This price was acceptable for being eligible to the fund. CC2.3 Do you engage in activities that could either directly or indirectly influence public policy on climate through any of the following? (tick all that apply) Trade associations Funding research organizations CC2.3b Are you on the Board of any trade associations or provide funding beyond membership? Yes CC2.3c Please enter the details of those trade associations that are likely to take a position on climate legislation Trade association SCX Is your position on climate consistent with theirs? Consistent Please explain the trade association's position Enaex is founder and shareholder of "Santiago Climate Stock Ex" which is a non mutual stock market ex, that is, brokers that trade on it are not required to be shareholders. Transactions are allowed for a wide scope of participants, including corporations and individuals. In the long term, instruments such as derivatives are expected to be available, just as in developed markets How have you, or are you attempting to, influence the position? Enaex looks forward to actively participate in the association board meetings, and at the same time, being updated about international carbon market and taking actions for influence it. 5/29

7 CC2.3d Do you publicly disclose a list of all the research organizations that you fund? No CC2.3e Do you fund any research organizations to produce or disseminate public work on climate? Yes CC2.3f Please describe the work and how it aligns with your own strategy on climate Since 2009, Enaex has contributed, economically (with about 9,000 USD/y) and with its active participation in CLG Chile, a group which is part of a Climate Change Global Program hosted by the University of Cambridge and which comprises "business leaders from major UK, EU and international companies who believe in an urgent need to develop new and longer term policies for tackling climate. In Chile, CLG is leading by the business school of Universidad de Chile and the Chilean British Chamber, focusing the work on promoting the research about climate effects and impacts, developing appropriate solutions and technologies to deal with it and supporting the design and implementation of national public policies for climate adaptation of private companies. Being part of CLG Chile this last has allowed Enaex to keep up to date and have a word regarding new public policies and definitions that Chilean government is aiming to implement with respect to 2020 binding commitment (Chilean Intended Nationally Determined Contributions (INDCs)). This work is fully aligned with Enaex long term strategy since we have the largest amount of CERs (27% of total Certified Emission Reductions) issued to Chile, being able of contributing with an important part of the total national emission reductions CC2.3h What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate strategy? In the middle of 2014, Enaex's CEO approved the creation of "Head of Sustainability" position in the company. One of the main duties of this position is being aware of the activities of the company related to sustainability and climate strategy. In that way Enaex's Head of Sustainability, Ms. Josefina Diaz, participates actively at CLG meetings where chilean energy and environmental authorities treat and discusses climate policies. Nevertheless, it is necessary propose a way to commitment and improve this contribution in the future. CC2.4 Would your organization's board of directors support an international agreement between governments on climate, which seeks to limit global temperature rise to under two degree Celsius from pre industrial levels in line with IPCC scenarios such as RCP2.6? Yes CC2.4a Please describe your board's position on what an effective agreement would mean for your organization and activities that you are undertaking to help deliver this agreement at the 2015 United Nations Climate Change Conference in Paris (COP 21) Enaex s Board supports and expects from the COP21 an effective agreement with respect to the responsibilities of Chilean Government and individual organizations or industries in relation to climate. To support the generation of this agreement Enaex has actively participated during the last 4 s in discussions and activities organized by the Ministry of Environment through CLG Chile. 6/29

8 Attachments Change 2015/Shared Documents/Attachments/ClimateChange2015/CC2.Strategy/CC 2.2a Strategic Plan.pdf Page: CC3. Targets and Initiatives CC3.1 Did you have an emissions reduction target that was active (ongoing or reached completion) in the reporting? Absolute and intensity targets CC3.1a Please provide details of your absolute target ID Scope % of emissions in scope % reduction from base Base Base emissions (metric tonnes CO2e) Target Comment Abs1 Scope 2 93% 21% Five projects related to energy efficiency have been implemented at Prillex Plant complex since This means MWh of additional saving over the 29,000 MWh already reduced by energy cogeneration by steam surplus use since By 2014 Prillex AN Complex is 45% energy self sufficient CC3.1b Please provide details of your intensity target ID Scope % of emissions in scope % reduction from base Metric Base Normalized base emissions Target Comment Int1 Scope 1 100% 18% metric tonnes CO2e per metric tonne of product On 2014 both parameters, emissions from scope 1 and ammonium nitrate production, were lower than 2012 (12% and 4% respectively). Nevertheless, the intensity target (Scope1 tco2/tan) also decreased by 18% from Int1 Scope 2 93% 18% metric tonnes CO2e per metric tonne of product This intensity target is a KPI for the Corporative Production Officer and it is focused on reducing the energy consumption by tone of ammonium nitrate. Since 2012 this target decreased from 61 kwh to 51kwh during Regarding the emissions related to this target, they were reduced from 49 kgco2/kgan to 40 kgco2/kg AN ( 18%) considering that only 2% of this is explained by a lower emission factor reported by the energy authority on Int3 Scope 2 93% 3% metric tonnes CO2e per metric tonne of For 2015 (target ) the goal is to achieve an energy consumption lower than 50 kwh per ton of ammonium nitrate which represent a 3% reduction target from In terms of absolute emissions reductions this means 230 tco2 ( 1%) less than absolute 2014 scope2 (31462 tco2) or as an intensity figure <39 kgco2/kgan assuming no in grid emission factor (0,79 tco2/mwh) 7/29

9 product CC3.1c Please also indicate what in absolute emissions this intensity target reflects ID Direction of anticipated in absolute Scope 1+2 emissions at target completion? % anticipated in absolute Scope 1+2 emissions Direction of anticipated in absolute Scope 3 emissions at target completion? Int1 Decrease 21 No 0 Int2 Decrease 21 No 0 Int1 Decrease 1 No 0 % anticipated in absolute Scope 3 emissions Comment 27% of absolute emissions from scope1 are process emissions (250,018 tco2). From this, 17% (41,317 tco2) comes from Panna1 plant which does not have an N2O abatement system. In order of reducing process emissions since 2014, Panna1 remained out of service 9 of 12 months of 2014 and was replaced by overloading Panna 3 and Panna4 plant which have lower emissions per tone of nitric acid produced due their CDM projects implemented. Scope 3 is not related to this target Absolute energy consumption of Prillex Plant (93% total Scope2) was expected to decrease 19% (9.439 MWh/49264 MWh) since 2012 due five energy efficiency projects implemented last two s. In the same way absolute scope 2 emissions were reduced 21% (8245 tco2 reduced during reporting / tco2 2012) where just 2% of this reduction is explained by a less grid emission factor (2012 grid EF tco2/mwh vs grid EF 0,79 tco2/mwh) Scope 3 is not related to this target As 2015 target of 49 Kwh / ton AN assumes an increase of AN production, the expected absolute reduction of scope2 in order of achieving this target is 230 tco2 ( 1%) Scope 3 is not related to this target CC3.1d For all of your targets, please provide details on the progress made in the reporting ID % complete (time) % complete (emissions) Comment Abs1 100% 100% Target completed on 2014 Int1 100% 100% Target completed on 2014 Int2 100% 100% Target completed on 2014 Int3 42% 0% By May 2015 target of 49 Kwh/t AN has not be achieved because a mechanical failure at the steam turbo compressor responsible of energy cogeneration of Prillex Plant. This mechanical failure forces the use of purchased energy from SING grid system CC3.2 Does the use of your goods and/or services directly enable GHG emissions to be avoided by a third party? Yes CC3.2a Please provide details of how the use of your goods and/or services directly enable GHG emissions to be avoided by a third party The use of Enaex s ammonium nitrate (AN) as raw material at onsite explosives production allows Enaex mining costumers directly reduce their scope3 GHG emissions. This GHG emissions are avoided at explosives manufacture because Enaex AN has a lower CO2e emission factor (2.1 tco2/tan) than the one reported by Brent G.F., Greenhouse gas implications of explosives and blasting (2.9 tco2/tan) considering that no other emission factor has been reported for explosive grade ammonium nitrate 8/29

10 (IPCC only reports EF for fertilizer grade ammonium nitrate) There are two main reasons for having an ammonium nitrate with such low carbon footprint: 1)Two CDM projects implemented at Enaex Prillex AN Complex reducing almost 90% of total GHG emissions from nitric acid production 2)Five energy efficiency projects implemented between 2010 and 2014 at Enaex Prillex Complex reducing almost 45% of GHG emissions derived from purchased energy. As an example of how many GHG emissions could be avoided by an average Enaex s mining costumer, we have that they can consume 4,500 tons of ammonium nitrate per month. Just considering scope3 GHG emissions from 1 purchase goods and services, using Enaex ammonium nitrate can make a total avoidance of tco2 per at one mining costumer. Enaex AN emission factor was accounted during on 2014 using cradle to gate approach and the methodology defined by the guideline PAS 2050:2011 Specification for the assessment of the life cycle greenhouse gas emissions of goods and services. CC3.3 Did you have emissions reduction initiatives that were active within the reporting (this can include those in the planning and/or implementation phases) Yes CC3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation 0 0 To be implemented* 0 0 Implementation commenced* 0 0 Implemented* Not to be implemented 0 0 CC3.3b For those initiatives implemented in the reporting, please provide details in the table below Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency as specified in CC0.4) Investment required (unit currency as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment 86% of energy saving at Prillex Complex occurred by using process's steam surplus of ammonium nitrate The initiatives and their estimated emission reduction involved in this energy saving are: 1)Panna3 steam connection to Panna4 steam compressor 9/29

11 Energy efficiency: Processes production at the steam compressor unit installed at Panna4 Plant: On 2010, Panna4 plant was raised considering using its own steam surplus. This allowed 35% of energy self sufficiency. Then, on 2013, Panna3 steam surplus was connected and driven to Panna4 steam compressor in order of increase +10% energy cogeneration (9439 tco2 avoided) reaching almost 45% of energy self sufficiency. This can be totalize 29,000 tco2 avoided emissions by less energy purchased 9439 Scope 2 Voluntary <1 Ongoing (8082 Mwh/y; 6385 tco2/y) 2) Return of Panna 3 condensate (675 Mwh/y; 533 tco2/y) 3) Inverters installation at Area92 (557 Mwh/y; 440 tco2/y) 4)Updated reverse osmosis plant (125 Mwh/y; 99 tco2/y) CC3.3c What methods do you use to drive investment in emissions reduction activities? Method Dedicated budget for energy efficiency Comment Every an Investment Budget Plan with the most important (strategic and tactic) initiatives is raised. Regarding Efficiency Strategic pillar, including energy efficiency projects, a USD 4 millon budget is planned for 2015 Attachments Change 2015/Shared Documents/Attachments/ClimateChange2015/CC3.TargetsandInitiatives/FragBlast 2009 Greenhouse Gas Implications of Explosives and Blasting (1).pdf Change 2015/Shared Documents/Attachments/ClimateChange2015/CC3.TargetsandInitiatives/2014 Targets and Initiatives.pdf Page: CC4. Communication CC4.1 Have you published information about your organization s response to climate and GHG emissions performance for this reporting in places other than in your CDP response? If so, please attach the publication(s) Publication Status Page/Section reference Attach the document In mainstream financial reports but have Complete page 43/Section "Desarrollo Change 2015/Shared 10/29

12 not used the CDSB Framework Sustentable" Documents/Attachments/CC4.1/Memoria Enaex 2014 Firmada.pdf In voluntary communications Complete at Enaex website: Report of 2012 Carbonfootprint Calculation Change 2015/Shared Documents/Attachments/CC4.1/Enaex_informe final.docx.pdf Module: Risks and Opportunities Page: CC5. Climate Change Risks CC5.1 Have you identified any inherent climate risks that have the potential to generate a substantive in your business operations, revenue or expenditure? Tick all that apply Risks driven by s in regulation Risks driven by s in physical climate parameters Risks driven by s in other climate related developments CC5.1a Please describe your inherent risks that are driven by s in regulation Risk driver Air pollution limits Description Locations where Enaex facilities are placed do not have GHG emission regulations yet. However, and looking into 2020 and Chilean global commitments it is likely that Enaex Productive Plants such Prillex at Mejillones or Rio Loa, near Calama, should be affected by regulations to decontaminate saturated areas or in Potential impact Inability to do business Timeframe 1 to 3 s Direct/ Indirect Likelihood Direct Likely High Magnitude of impact Estimated financial implications Failure on complying with any local environmental regulations could imply partial or total operation ceasing. In that way, the financial impact could be as high as USD 1,5 million per day depending on which facility Management method Enaex has developed an online monitoring system installed at two key points of Mejillones and publicly reported at Mejillones city webpage ( nuestro servicio de monitoreo en lineacalidad del aire ambiental/) Considering the emissions reductions from its CDM projects (>95% abatement), Enaex is well prepared to face new air pollution limits because has already set highly strict voluntary limits like the Swiss Normative of NOx and N2O Cost of management Following the Swiss Normative standards about NOx and N2O (< 100 ppm) emission implies the maintenance cost of current Enaex abatement systems which represent USD 1,3 million per. In the same way, any new nitric acid plant planned to be built must 11/29

13 Emission reporting obligations order to promote best practices and general lower local emissions Chilean Office on Climate Change has already published a draft for comments of a national mitigation/adaptation framework in order of having an emission reduction commitment to present during COP21. This draft includes the Industrial Process subsector (where Enaex belongs) and commits at least 25% of emission reduction by Regarding this upcoming national commitment and being Enaex a large scale chemical industry and the only one that produces nitric acid, there is a potential risk of being obligated to measure, report and verify our corporative emissions in a near future (at least 2020 onwards) in order of having a better estimation of national emissions reductions and subsector contributions. On 2014 Chilean Increased operational cost 1 to 3 s Direct More likely than not Lowmedium is affected and how long the closure can last. Failure on complying with any environmental obligation could imply monetary penalties or even the partial close of the operations. In that way, the financial impact could be as high as USD 1,5 million per day depending on which facility is affected and how long the closure can last. Through the CDM projects and carbon footprint Enaex performs its corporative GHG inventory since 2012 and this is verifying it for the first time anticipating a possible obligation. Furthermore, by its CDM projects, Enaex has developed good experience regarding monitoring and verification procedures. Regarding reporting experience, Enaex has planned develop its first formal emissions report during 2015 supported by a specialized company as a way of being well prepared and gaining knowledge in case of any future reporting obligation. consider Selective N2O Catalyst System which could mean an average additional investment cost of 1 million USD per new plant Enaex has estimated a total annual cost monitoring, verifying and reporting GHG emissions inventory near of USD 50, /29

14 Carbon taxes government enacted a new environmental tax legislation which includes a charge of usd5 per ton of CO2 released as Carbon Tax for the power sector. With this action Chile becomes the first country in South America to tax carbon dioxide (CO2) emissions showing its leadership regarding climate fighting commitment. In the same way, a draft of a National Adaptation/Mitigation Program is now under public revision in order of present a bonding commitment at COP21 This active position of Chilean government regarding climate raise the possibility of a Carbon Tax over N2O emissions could affect Enaex in the short term. Increased operational cost 1 to 3 s Direct More likely than not Lowmedium calculation Enaex knows the magnitude of its emissions which are low and could be under a possible N2O normative therefore exempt from carbon tax Nevertheless, the only financial estimation that Enaex can make at this point is considering a carbon tax similar to current electric carbon tax of 5 USD/tCO2 released. If we have an annual average of 250,000 tco2eq, the cost of a carbon tax could be near of USD 1,25 millon. In order of managing the carbon tax risk, Enaex has developed two strategies: Maintain and promote low GHG emission production. As Enaex is the only nitric acid plant in Chile, having low GHG emission production could discourage any possible carbon tax participate actively through CLG Chile with national environment authorities in order collaborate with the national GHG baseline inventory and then collaborate with any possible public policies regarding carbon taxes Maintain low GHG emission production trough Enaex CDM projects costs USD 1.5 million per and the membership of CLG Chile about USD 5000/ CC5.1b Please describe your inherent risks that are driven by in physical climate parameters Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications After the event of march 2015 Enaex could estimate how much a in precipitation pattern can Management method Cost of management Enaex production plants and their workers are located in northern Chile, which is not used to receiving more than 3 mm of rainfall / A in the Before the event of march 2015 there was no risk assessment of 13/29

15 Change in precipitation pattern pattern of precipitations have recently affected the northern Chile last March 2015, with a "extremely rare" 11,9 mm rain in just one day causing a flash floods of mudslide. As this incident could happen again, the risk of suspending operations of Enaex productive plants associated to unexpected precipitations was detected where roads could be closed, energy supply suspended and Enaex workers released of their labors in order to attender the possible damage to their homes or families. Reduction/disruption in production capacity 1 to 3 s Direct About as likely as not Medium affect the business perform. Almost 50% of Enaex workers and also Eanex costumer's workers were affected by the rain and the flooding. At Rio Loa, the most affected plant, suspend the operations cost USD 1 million per day If the sea temperature increases 2 C in a permanent way (not only in summer time) Enaex has estimated an annual additional consumption of energy near of 1100 MWh which means USD110,000 more on energy cost. the implications of flood event on Enaex business. Now Enaex has considered perform climate physical impacts risk assessment in order of knowing how to proceed in future cases and how much it could cost. There is currently no quantification of how much could cost managing this risk Change in mean (average) temperature Changes in sea temperature affects Prillex Plant operation due its uses sea water as cooling system at nitric acid and ammonium nitrate production process In summer time the sea water temperature increases 2 C, then the power needed for cooling system would increase 100 KW Reduction in capital availability 3 to 6 s Direct Unlikely High No managing method has been done besides increasing the power needed in summer time The cost of management could imply consider new investment regarding cooling water system and the cost of them has not been quantified yet. Sea level rise Enaex's Prillex Complex involve assets for about USD 800 millions. A recent risk study made by a insurance company Reduction/disruption in production Unknown Direct Unlikely Mediumhigh Enaex's Prillex Complex involve assets for about USD 800 millions. A recent risk study made by a Enaex has an emergency plan implemented at all its facilities. I case of Prillex Complex, this plan includes specific instructions about how to The annual cost of the complete insurance 14/29

16 showed that no more than 20% could be affected by an eventual tsunami. capacity insurance company showed that no more than 20% could be affected by an eventual tsunami. proceed preventive and reactively in case of tsunami In order of protect Enaex assets there is a USD 160 million insurance USD 3.3 million Tropical cyclones (hurricanes and typhoons) Enaex consumes 1,000 ton of ammonia per day, I order of fulfill this consumption receives a new ammonia shipment every 21 days from Trinidad y Tobago Therefore any important climate problem, such excess of precipitation or hurricanes at Central America, can cause disorders on Enaex supply chain and ammonium nitrate production affecting the complete value chain by leading in a noncompliance with the delivery time schedule with Enaex mining costumers Reduction/disruption in production capacity 3 to 6 s Indirect (Supply chain) Very unlikely Mediumhigh Prillex Plant produces 1,100 ton per day of nitric acid and another 1,100 ton per day. One day of no production could cost USD 1.5 million So far, this risk have been managed by maintaining a good coordination / communication with Enaex ammonia supplier (Transamonia) In example, if the ammonia loading at Caribbean port delays 1 or 2 days due climate problems ammonia supplier can adjust the time in sea transit (12 days as normal) in order of not having ETA delay As this risk has been managed by a good relationship with Enaex ammonia provider no extra cost has been quantified yet CC5.1c Please describe your inherent risks that are driven by s in other climate related developments Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Since it was founded Enaex has managed the risk of loosing reputation by doing all of its activities in a sustainable way, As an example, in Cost of management 15/29

17 Reputation Changing consumer behaviour The recent studies of the anthropogenic impact on climate and the more frequent natural disasters over the world have made Enaex's stakeholders (nearby community, costumers, being more informed and concerned about what is the company doing regarding managing its impacts of the operation On 2012 Chilean investment regarding 2020 on new mining projects were almost USD 100 billion. By 2014 this value has been reduced to USD6 60 billion due a lot of mining projects have been delayed or even closed because the higher operational costs of energy, water and decreased of productivity. If Chilean mining costumers are losing competiveness at their markets due higher energy costs, Enaex will be affected by a more competitive and price based scenario. Reduced stock price (market valuation) Reduced demand for goods/services 1 to 3 s Up to 1 Direct Indirect (Client) Unlikely Likely Mediumhigh Mediumhigh Enaex has not quantified how much climate could affect its reputation Enaex is national leader at Blasting Services for the mining industry having 65% of market share producing 750,000 ton ammonium nitrate. In a more competitive scenario, it becomes easy to lose market share or margin. 1% of market share loss represent almost USD 1 million lost revenue invested in a new nitric acid/ammonium nitrate plant (Panna4) considering a system which uses the steam surplus of the plant for energy generation. This USD 20 million investment has allowed 35% of energy selfsufficiency Today Eanex has calculated its carbon foot and has some sustainability perform indicators in order of showing to its stakeholders how is the company managing climate impacts on business and value chain For managing this risk Enaex is working on developing new and more sustainable products and services in order of gain differentiation over its competitors. It is include in 2020 strategic plan developing energy saving solutions for mining costumers like ENERGEX product which leads a better rock material for downstream crushing. By 2015 Enaex is investing almost USD 100,000 on initiatives like carbon footprint accounting and verification and its first Sustainability report annual budget of R+D is USD 0.5 million 16/29

18 Attachments Change 2015/Shared Documents/Attachments/ClimateChange2015/CC5.ClimateChangeRisks/ANTEPROYECTO CONTRIBUCION NACIONAL TENTATIVA pdf Page: CC6. Climate Change Opportunities CC6.1 Have you identified any inherent climate opportunities that have the potential to generate a substantive in your business operations, revenue or expenditure? Tick all that apply Opportunities driven by s in regulation Opportunities driven by s in physical climate parameters Opportunities driven by s in other climate related developments CC6.1a Please describe your inherent opportunities that are driven by s in regulation Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Enaex's breakeven abatement cost is around 2,5 USD/CER. Enaex could offer almost 800,000 CERs/ in a local cap and trade market. If the price for CERs of this market would be 3 USD, Enaex will received an additional no operational income of 400,000 USD In other words, any price over 2,5 USD/CER offered by a local cap and trade market could impact positively Enaex results. Management method Cost of management Cap and trade schemes EU Carbon market has been depressed for almost 3 s with prices lower than 1 EUR/ CER. A future Chilean Cap and Trade Scheme could offer a better price and a more steady demand for Enaex CERs than current EU carbon market Increase in capital availability 1 to 3 s Direct Likely High As a way of managing this opportunity Enaex has continued the verification of its emission reductions and CERs issuance in order of having CERs to offer in potential Chilean Cap and Trade Market Also, has worked collaborating with environment national authorities, through CLG Chile, by giving information of its process and emissions in order of build national baseline inventory which is needed for a potential cap and trade system. Annual verification cost is USD75,000 and CLG membership is USD 5000 per CC6.1b Please describe the inherent opportunities that are driven by s in physical climate parameters 17/29

19 Opportunity driver Induced s in natural resources Description Increasingly higher costs of energy are affecting Enaex mining costumers, This has been an opportunity for developing new products and services specially designed for downstream energy saving gaining a differentiation competitive advantage over Enaex's competitors Potential impact New products/business services Timeframe Up to 1 Direct/ Indirect Indirect (Client) Likelihood Likely Magnitude of impact Mediumhigh Estimated financial implications As part of its long term strategic plan, Enaex has estimated that 12% of annual revenue can be achieved by 2020 from new products or services specially developed for mining costumers in order of saving energy or having a more sustainable mining process. Management method Regarding managing this opportunity Enaex has incorporated into Strategic Plan several initiatives focused on Enaex's mining costumer needs by developing new and more sustainable products and services. One of the recently launched products is ENERGEX which has a higher fragmentation power reducing the rock work index and therefore saving energy at the mining process downstream Cost of management Enaex annual R+D budget designated for new products like Energex is around USD 0.5 million CC6.1c Please describe the inherent opportunities that are driven by s in other climate related developments Opportunity driver Reputation Description Climate and its implications have offered to Enaex the opportunity of being more efficient regarding its process, products and services resulting in capital saving and good reputation. As an example, on 2014, Chilean Energy Ministry recognized Enaex with the "Energy Efficiency" stamp for all the initiatives implemented since 2010 In the same way, Enaex also has been named by Chile Foundation and Capital Magazine as one of the top 10 Chilean Leaders on Climate Change fighting for three consecutive s (2011; 2012; 2013). Potential impact Increased stock price (market valuation) Timeframe Up to 1 Direct/ Indirect Likelihood Magnitude of impact Direct Likely Medium Estimated financial implications Enaex has not yet quantified how much its reputation could be improved in stock price terms in the short term Nevertheless, Enaex deeply belives that working sustainably will mean a stock price recognition in the long term Management method Enaex has managed this opportunity by being proactive making a sustainable developing of its business and by participating and supporting in most national activities around climate fighting Cost of management By 2015 the cost of maintain the reputation gained is reflected in a USD80000 budget for accounting, verifying and reporting 2014 GHG inventory. Enaex has As the carbon 18/29