Copper output falls by five percent from Antofagasta

October 29, 2014

Chilean copper miner Antofagasta posted a 5 percent fall in third-quarter output from the previous three months, mainly due to production stoppages at its Los Pelambres and Centinela operations, Reuters reported.

Chief Executive Diego Hernandez said the company would aim to maintain average production costs flat or lower next year.

Antofagasta produced 169 kt (186,000 st) of copper in the third quarter, down from 179 kt (197,000 st) in the previous three-month period.

The fall was mainly due to a suspension of mining activities following a fatal accident at its Los Pelambres Mine and a maintenance shutdown at its Centinela plant.

It was also down to harder ore recovery at Los Pelambres. Harder ore generally takes longer to process.

The company said, however, that it was on track to hit its target of 700 kt (770,000 st) of copper this year with net cash costs of $1.45 per pound.
Rising costs and low availability of energy are a big concern for Chilean mining companies.

Lower copper prices are also a worry in the short term.

Copper has lost about 8 percent of its value so far this year and is down by a third from a 2011 peak, Reuters reported.

The miner is also facing a tax reform in Chile which will likely increase corporation tax rates from 20 percent in 2013 to 25 percent in 2017, and potentially to 27 percent in 2018.

As a consequence, it decided to make a one-off increase to its deferred tax provision, meaning it will retain $105 million to $150 million of its earnings this year.

Antofagasta is hoping to counter falling copper grades, another issue for the Chilean mining sector, with new projects such as Antucoya and Encuentro Oxide, the expansion of its large Pelambres mine and the construction of a second concentrator at Centinela. This would lift its output to 900,000 tonnes by 2018 and about 1 million tonnes by 2020.

The miner said its $1.9 billion Antucoya project was now 94 complete and remained on budget and on time for first production in the first half of 2015.


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