BHP bets billions on Chile mines to face global copper crunch
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Los Pelambres remains Antofagasta’s flagship mine, producing over 55% of the total group output. (Image courtesy of Antofagasta)
Chile’s Antofagasta (LON:ANTO) said Wednesday it plans to boost copper production in 2016 by as much as 17% after it missed its output target for last year.
The mining group, property of the Luksic family —one of Chile’s richest— said it produced 630,300 metric tons of the red metal in 2015, down 11% from 2014.
The London-listed miner now expects an output of 710,000-740,000 tonnes for 2016 as it ramps up production at its Antucoya and Centinela Concentrates mines, as well as from its Zaldivar mine, which jointly owns with Barrick Gold (TSE, NYSE:ABX) since late 2015.
The new output target is less than some analysts had expected. As a result, the company’s shares fell more than 3% to 365.70p in London.
Source: Google Finance.
Like its peers, Antofagasta is dealing with very low prices and weak demand from top copper consumer China. Declining ore grades, unfavourable weather and environmental protests have also hurt the miner.
“The continued deterioration of the macro-environment and associated falling commodity prices combined with several operational setbacks resulted in copper production declining,” said Chief Executive Officer Diego Hernandez. “Whilst we have finished the year on a good note, 2015 has been undeniably difficult.”
Antofagasta has been hit by very low prices, weak demand from top copper consumer China, declining ore grades,unfavourable weather and environmental protests.
Last year, the company merged two of its most promising copper operations in Chile’s north under a new company, Minera Centinela.
Antofagasta is one of the oldest companies listed in London. It is also one of the many companies expanding output in the next few years. Currently, the firm has majority stakes in four Chilean copper mines — Los Pelambres (60%), El Tesoro (70%), Michilla (74.2%) and Esperanza (74.2%).
Chile generates about a third of the world’s copper, with companies including BHP Billiton, Anglo American and Japan’s Sumitomo Corp all operating in the country, which is the world’s top producer of the industrial metal.
