Antofagasta hit by copper slump, will pay big dividend regardless

Antofagasta hit by copper slump, will pay big dividend regardless

Higher energy charges at Los Pelambres mine in Chile, which accounts for two-thirds of the company's output, pushed Antofagasta's costs up 10% per pound of copper output last year.

Chilean copper producer Antofagasta (LON:ANTO) rose 3.7% in early trading Tuesday as it announced it would give its investors a significant dividend despite its earnings dropped over a third last year because of lower copper prices and increased costs.

The company, majority owned by the wealthy Luksic family, said it would pay its shareholders a dividend equivalent to 142% of its full year earnings, up from a 70% payout ratio in 2012.

Net profit attributable to equity shareholders, however, fell 36% to $660 million in 2013, adding that a 10% fall in its realized copper price triggered a revenue fall of 11%, even when total copper output rose 1.6%.

Chief Executive Diego Hernandez said the company’s expected production for this year would again be about 700,000 tonnes.

Antofagasta hit by copper slump, will pay big dividend regardlessThe Chile-focused miner is planning $3bn of capital investments at various operations, which could raise output to 900,000 tonnes annually by 2018. The first new project, Antucoya, to produce 85,000 tonnes annually, is due to begin mining in 2015.

Hernandez warned the operations’ profitability would depend to a large extent on the copper price during the year, which he expected to be “reasonably stable,” with levels similar to 2013, despite short-term fluctuations.

By noon GMT Antofagasta’s shares were down almost 7% for the day, to $826.5p.