Antofagasta reduced its forecast of copper production by 2026 after the interruptions recorded in Los Pelambres, while higher metal prices boosted its financial results.
Antofagasta reduces its copper production forecast
Chilean mining company Antofagasta lowered its forecast for copper production by 2026 after extreme weather conditions forced the temporary halt of operations at Los Pelambres in Chile.
Now the company expects to produce between 625,000 and 655,000 metric tons of copper during 2026 the previous estimate considered a range of between 650,000 and 700,000 tons. The change represents a reduction of approximately 5% when comparing the midpoints of both projections.
Furthermore, copper production in Antofagasta reached approximately 285,000 tons during the first half of the year, a year-on-year decrease of 9%. This performance was primarily driven by lower production at the Los Pelambres and Centinela mines.
Los Pelambres affects production in Antofagasta
In July, heavy rains and snowfall led to the precautionary suspension of operations at the Los Pelambres mine. The weather conditions prompted the Chilean government to declare a state of emergency in the Coquimbo region.
Subsequently, Antofagasta began to gradually recover its operations, the company indicated that the main infrastructure of the mine did not suffer significant damage, although work will have to be carried out on some pipeline platforms and water management systems.
In this way, the company expects its quarterly production to increase progressively throughout the rest of the year. Los Pelambres is one of the core assets in Antofagasta’s portfolio. Therefore, its performance has a significant impact on the group’s annual production outlook.
Copper prices boost profits
On the other hand, the reduction in production contrasted with a considerable improvement in financial results during the first six months of the year.
Antofagasta’s EBITDA increased by 27% year-on-year increase to US$2.84 billion, compared to US$2.23 billion recorded during the same period of the previous year. Likewise, revenues grew 18% to US$4.48 billion while pre-tax profit advanced 72% to US$1.99 billion.
High copper prices helped offset the effect of lower production, the metal maintains high demand linked to electrification, the expansion of electricity networks, and other copper-intensive industries.
The financial performance also allowed Antofagasta to announce an interim dividend of 30.1 cents per share, compared to the 16.6 cents paid a year earlier.
Antofagasta’s cash flow increases by 53%
Meanwhile, operating cash flow reached US$2.77 billion during the first half of the year, a 53% increase, this growth was supported by higher earnings and a reduction in working capital. Cash costs also decreased by 8% year-on-year to US$1.22 per pound during the first half of the year.
However, the company faces additional pressures because of the fuel prices Antofagasta had anticipated a 20-cent increase in its costs for the year to approximately US$2.60 per pound.
This combination of high copper prices and strong cash flow generation provides some financial support against the anticipated decline in production.
The weather adds pressure on Chile’s copper supply
On the other hand, the adjustment in Antofagasta comes at a time of pressure on Chilean copper production. Extreme weather events pose an additional challenge for large-scale mining operations. In the case of Los Pelambres, the rain and snow forced a review of the planning for the remainder of the winter.
At the same time, supply constraints become more relevant given the prospects for growth in global copper demand. For Antofagasta, the challenge during the coming months will be to recover production at Los Pelambres and maintain the progress of its projects while managing weather risks and the higher costs associated with its operations.
Thus, despite the reduction in its copper production forecast for 2026, the high prices of the metal and cash generation maintain a solid financial base for the Chilean mining company.
Source: Reuters
Photo: Shutterstock
