Antofagasta PLC on Tuesday cut its dividend as profits suffered as costs rose and production fell.
The London-based mining firm focused on Chile said pretax profit in the six months to June 30 fell 6.8% to $712.6 million from $764.5 million a year prior. In contrast, revenue edged up by 2.3% to $2.96 billion from $2.89 billion.
Total operating costs increased to $2.28 billion from $2.12 billion.
Copper production volumes declined 3.7% to 284,700 tonnes from 295,500 tonnes. This reflected lower production at Centinela concentrates, and higher production at both Centinela Cathodes and Los Pelambres.
Gold production decreased by 22% to 66,900 from 86,200 ounces, reflecting lower gold grades at Centinela.
Molybdenum production was 5,200 tonnes, 6% higher than 4,900 tonnes in the same period last year due to higher ore processing rates at Los Pelambres.
Antofagasta confirmed that total production for 2024 is expected to be at the low end of the company’s 670,000 to 710,000 tonne guidance range.
Given this, cash costs before by-product credits are expected to be $2.40 per pound. In the first half of 2024, cash costs before by-product credits were $2.65/lb up 7% from a year before.
Capital expenditure guidance is unchanged at $2.7 billion.
Antofagasta said actions taken generated savings and productivity improvements of $130.0 million in the first half, in line with its plan.
‘The company’s growth programme remains on track, with construction of the Centinela second concentrator currently ahead of schedule and initial groundworks commencing at Los Pelambres’ desalination plant expansion, concentrate pipeline and El Mauro enclosures,’ the company said in a statement.
Antofagasta cut its interim dividend by 33% to 7.9 US cents from 11.7 cents. This is equivalent to a pay-out ratio of 35% of underlying net earnings and is in line with the company’s capital allocation framework.
Looking ahead, Antofagasta expects demand for copper to grow by between 2% and 3% per year through to 2030. ‘Rising demand for copper is primarily driven by the energy transition, with electric vehicles, renewable power and related infrastructure providing support to global copper prices,’ it said.
The company said a range of growth projects will provide incremental growth in the medium-term, which is expected to grow output to around 900,000 tonnes of copper production.
Shares in Antofagasta rose 0.4% to 1,886.50 pence in London on Tuesday. The wider FTSE 100 was down 0.4%.
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