Rocky first half for Antofagasta as copper production plunges
COPPER miner Antofagasta has promised it will make up for lost ground after a poor set of first-half numbers disappointed the City.
Iván Arriagada, chief executive, insisted “we always said 2018 would be a year of two halves”.
He added: “We’ve left behind the harder half and we’re going into the better half.”
Production at the Chilean miner fell 8.5pc in the first six months of the year after it ran into lower-quality ore at its mines and suffered a pipeline blockage at its biggest site.
This, coupled with a rise in the value of the peso against the dollar, drove up the cost of each ton of copper it mines.
As a result pre-tax profits fell 32pc to $466m (£365m). Revenue rose by 3.6pc to $2.1bn as higher prices offset the lower output.
None the less shareholders sent the Antofagasta’s stock down 7.0pc yesterday to 886.4p as traders noted its earnings before interest, tax, depreciation and amortisation were well short of expectations.
Mr Arriagada said the company had previously flagged production issues and would stick to its output guidance for the full year.
The price of copper, used in electric wiring, has fallen 15pc this year. Mr Arriagada said its outlook was bright: “Demand is growing 2-3pc a year – the issue is with supply; it’s constrained. Grades are coming down and tonnage is coming down. There are few new discoveries.”
Antofagasta has increased its spending on exploration – the process of seeking out new deposits – with a view to finding a virgin site in Chile for mining.
It comes as rival FTSE 100 miner BHP Billiton faces a race against time to conclude wage negotiations with workers at its giant Escondida copper mine in Chile, which is responsible for 5pc of global supply.
Both sides have asked for an extra day of government-backed mediation to resolve their differences, amid signs they are moving closer to an agreement. Without a deal, a strike could be called as early as this weekend.
Mr Arriagada said that Antofagasta, which is 65pc controlled by the Luksic family, had reached its own labour deal at the start of the year and had no need for fresh talks until 2019.