Our tax expense changes as our earnings change.
The consolidated effective tax rate was higher this quarter compared to the same quarter of 2011 mainly because of the improvement in earnings at Las Cruces, combined with its lower intergroup interest expense as it repaid a portion of its intergroup debt earlier this year. Additionally, we realized higher foreign exchange losses and other corporate costs this quarter for which there is no tax recovery.
2013 outlook for income tax expense
We expect the statutory tax rates at our operations in 2013 to remain the same as they were in 2012, unless a statutory tax rate change is enacted. We expect income tax expense to increase in 2013 due to higher income from operations mainly from higher sales volumes as Las Cruces, offset partly by lower expected copper sales volumes at Cayeli.
Discontinued operation - 2011
We sold our 18 percent equity interest in Ok Tedi in January 2011, and have reported our results relating to Ok Tedi in that year as discontinued operations. After-tax income of $81 million in 2011 includes net earnings of $17 million in January 2011, before the sale, and a gain on sale of $64 million net of withholding taxes. We paid Papua New Guinea withholding taxes of $27 million on the sale.
Results of our operations
2013 estimates
Our financial review by operation includes estimates for our 2013 operating earnings and operating cash flows. We have based these estimates on our 2013 objectives for production (using the midpoints in our production volume ranges) and cost per tonne of ore milled (cost per pound of copper produced at Las Cruces), as well as the following assumptions for the year:
------------------------------------------------------------Copper price US $3.60 per poundZinc price US $1.00 per poundeuro to C$ exchange rate $1.25Working capital Assume no changes------------------------------------------------------------
Cayeli
---------------------------------------------------------------------------- three months ended December 31 2012 2011 change----------------------------------------------------------------------------Tonnes of ore milled (000's) 319 316 +1%Tonnes of ore milled per day 3,500 3,400 +1%----------------------------------------------------------------------------Grades (percent) copper 3.0 3.5 -14% zinc 5.0 5.3 -6%----------------------------------------------------------------------------Mill recoveries (percent) copper 74 79 -6% zinc 69 67 +3%----------------------------------------------------------------------------Production (tonnes) copper 7,000 8,600 -19% zinc 11,100 11,300 -2%----------------------------------------------------------------------------Cost per tonne of ore milled $81 $76 +7%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31 2012 2011 change----------------------------------------------------------------------------Tonnes of ore milled (000's) 1,218 1,195 +2%Tonnes of ore milled per day 3,300 3,300 +2%----------------------------------------------------------------------------Grades (percent) copper 3.3 3.2 +3% zinc 5.0 6.0 -17%----------------------------------------------------------------------------Mill recoveries (percent) copper 78 75 +4% zinc 66 68 -3%----------------------------------------------------------------------------Production (tonnes) copper 31,400 28,700 +9% zinc 40,700 48,100 -15%----------------------------------------------------------------------------Cost per tonne of ore milled $77 $78 -1%----------------------------------------------------------------------------
