Antofagasta PLC on Wednesday lowered its annual production guidance after posting lower output in the first half of 2022, as a drought and a pipeline leak in Chile hurt operations.
The London-based miner said copper output in the second quarter of the year fell 6.5% quarter-on-quarter to 129,800 tonnes. For the half-year, it was 26% lower year-on-year at 268,000 tonnes.
A leak at the Los Pelambres asset in Chile hurt output. It occurred on May 31 and took until June 26 to be repaired.
Copper output guidance for 2022 has been lowered to between 640,000 and 660,000 tonnes, from the previous range of 660,000 tonnes to 690,000 tonnes.
Gold and molybdenum production also fell. Gold output was down 7.8% to 35,400 ounces in the second quarter from 38,400 ounces in the first. In the half-year that ended June 30, it plummeted by 39% to 73,800 ounces from 120,500 ounces.
Molybdenum production shrank 31% in the half-year, to 4,000 tonnes from 5,800 tonnes. Quarter-on-quarter production remained flat at 2,000 tonnes.
‘This revision mainly reflects the impact of the pipeline incident and the continued uncertainty arising from the water shortage at Los Pelambres. The drought has continued at Los Pelambres during the period, although there has been heavier precipitation in July. The revised guidance range incorporates a low probability negative outlook for water availability for the rest of the year. Strict water management protocols remain in place to optimise water usage and mitigate the impact of low water availability,’ Antofagasta explained.
It also noted weaker copper prices, which have been on a downward trend since June. As response, the firm pledged to keep a lid on costs. The cost of the company’s copper production rose 60% in the first half year, to $1.82 per pound from $1.14 a year ago. Antofagasta estimates this cost to narrow to $1.65 per pound as the Chilean peso weakens.
Antofagasta said it received $3.42 per pound of copper in the second quarter, down from $5.05 in the first.
Chief Executive Ivan Arriagada said: ‘The significant decline in the copper price since the beginning of June has reinforced our commitment to control costs, particularly during this period of higher input prices and general inflation.’
The firm added that its expansion project at Los Pelambres was 82% complete and expects its desalination plant to finish in the fourth quarter of 2022.
Antofagasta shares were 1.1% higher at 1,058.00 pence each in London on Wednesday morning.
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