Antofagasta Forecasts Copper Market Tightness in 2nd Half 2018 -- Commodity Comment
March 13 2018 - 7:44AM
Dow Jones News
By David Hodari
Global copper mining behemoth Antofagasta released its
fourth-quarter and full-year results for 2017 on Tuesday. The
mining company announced it was raising its dividend to 40.6 cents
from 15.3 cents and reported a pre-tax profit of $1.83 billion.
Here are some remarks from the company's earnings report.
On revenue:
"Revenue for the group in 2017 was $4,749.4 million, 31.1%
higher than in 2016...mainly [reflecting] an increase in the
realized copper price and copper sales volumes, as well as higher
molybdenum revenue offset by lower gold revenue. Ebitda reflected
this increase in revenue, partly offset by the higher unit cash
costs, and increased exploration and evaluation expenditure and
mine closure provision costs. Ebitda increased by 59.1% to $2,586.6
million..."
On copper prices:
"The LME copper price at the beginning of 2017 was $2.51/lb and
rose to end the year at $3.27/lb, averaging $2.80/lb over the whole
year, an increase of 27% compared with 2016. Copper supply came
under pressure during the first half of the year as strikes and
other issues at some of the world's largest mines led to
significant disruptions. However, in the second half of the year
demand was supported by unexpected strength in key markets,
particularly in China. This resulted in the average realized price
of copper being 29.0% higher in 2017 at $3.00/lb."
On the copper market outlook:
"The copper market is expected to tighten in the second half of
the year and to be in balance or in a slight deficit for the full
year. From 2019 the likelihood of the market being in deficit is
expected to increase as mine supply continues to be affected by the
long-term trend of grade decline and lack of new investment... the
few projects that have been approved or are awaiting the final
stages of permitting are only expected to come on-stream in the
next decade..."
On prospective labor negotiations:
"There are an unusually large number of labour negotiations
taking place in Chile and Peru during 2018. With the backdrop of
stronger copper prices, employee expectations may be raised which
could result in some supply disruptions in the region."
On production at Los Pelambres:
"Copper production was 343,800 tonnes in 2017, which was 3.3%
lower than in 2016. This decrease was primarily due to lower
grades, which dropped from 0.73% to 0.68%."
On outlook at Centinela:
"Production for 2018 is forecast at 230-245,000 tonnes of
payable copper, 130-140,000 ounces of gold and 1,500 tonnes of
molybdenum following the commissioning of the molybdenum plant
early in 2018. While the grade at Centinela Concentrates will be
lower than in 2017, Encuentro Oxides will reach full capacity
during the year contributing approximately 50,000 tonnes of payable
copper."
On outlook at Zaldivar:
"Attributable copper production in 2018 is forecast to be
approximately 55-60,000 tonnes at a cash cost of $1.70/lb.
Attributable capital expenditure in 2018 is expected to be
approximately $60 million, of which $10 million will be spent on
mine development."
Write to David Hodari at david.hodari@wsj.com
(END) Dow Jones Newswires
March 13, 2018 08:29 ET (12:29 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Antofagasta (LSE:ANTO)
Historical Stock Chart
From Apr 2024 to May 2024
Antofagasta (LSE:ANTO)
Historical Stock Chart
From May 2023 to May 2024