Antofagasta cuts copper output forecast for the year

Antofagasta cuts copper output forecast for the year

Los Pelambres remains Antofagasta’s flagship mine, producing over 55% of the total group output.
(Image courtesy of Antofagasta)

Chilean miner Antofagasta (LON:ANTO) reduced Wednesday its full year production forecast to 664,000 from 695,000 tonnes, citing delays in the start-up of its Antucoya mine as the main cause.

The London-listed company, which has been dealing with a sharp decline in prices, falling ore grades, bad weather and protests, was however able to recover some pace in the second quarter, producing 157,000 tonnes of copper or 7.2% more than in the first three months of the year.

Heavy rains and flash flooding in Chile's northern desert regions, as well as disruptions at two of its mines during the first quarter forced the miner to slash its annual production forecast by about 15,000 tonnes earlier this year.

Gold production in the first half totalled 112,500 ounces, down 9.1% from 123,800 ounces a year earlier after gold production fell at its flagship Los Pelambres mine.

"Following the difficulties with protesters encountered at Los Pelambres and heavy rains at Centinela in the first quarter, we are pleased to report that production has been stronger in the second quarter," said chief executive Diego Hernandez said in a statement.

"Whilst we have seen a positive recovery from these disruptions, overall performance during the first half of the year has not been as good as originally expected," he added.

The firm, controlled by Chile's billionaire Luksic family, also warned of imminent costs increases for the year — to $1.47 per pound from $1.40 — as a result of the reduced output.

Copper prices benefit

Copper prices hit a six-year low on Monday, as the latest slide in China’s stock markets reinforced gloomy prospects for demand in the world’s top consumer of the industrial metal.

It has recovered since then, pushed up by fresh signs of output cuts from several top producers. An ongoing strike at the world’s largest open-pit mine, owned by Chile’s Codelco, forced the miner to halt production yesterday and analysts estimate it may have resulted in 10,000 tonnes of lost output.

Also on Monday, Arizona-based Freeport-McMoRan (NYSE:FCX) said it would consider production cuts as part of a review due to low prices, sending its shares up 8.4% on the news.

Antofagasta shares were down 1.9% to 574.50 pence per share on Wednesday at 2:58 pm GMT.