ii view: copper play Antofagasta lowers annual output hopes

First-half results to 30 June

• Revenue up 18% to $4.48 billion (£3.3 billion)
• Adjusted profit (EBITDA) up 27% to $2.84 billion (£2.1 billion)
• Interim dividend up 81% to 30.1 US cents per share
• Net debt of $3.97 billion, up from $2.75 billion in late December

Guidance:

• Now expects full-year 2026 production of between 625,000 to 655,000 tonnes, down from a previous 650,000 to 700,000 tonnes

Chief executive Iván Arriagada said: “Having passed peak levels of capital expenditure for our current phase of growth, we remain well positioned for the future with a resilient balance sheet and low levels of net debt.”

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ii round-up:

Antofagasta (LSE:ANTO) today lowered full-year copper production hopes following the previous temporary closure of operations due to bad weather.

Realised copper prices up 27% during the first half to late June fuelled the same gain for adjusted profits (EBITDA) to $2.84 billion (£2.1 billion). The Chile-based miner now expects full-year 2026 production of between 625,000 to 655,000 tonnes, down from a previous 650,000 to 700,000 tonnes. Analysts expect the downgrade to shave around 4% of annual adjusted profits.  

Shares in the FTSE 100 company fell 4% in UK trading having come into these latest results up by just over a fifth so far in 2026. That’s similar to diversified miner Rio Tinto  Ordinary Shares (LSE:RIO). The price of copper is up around 16% year to date with the FTSE 100 index gaining by 9%.

Antofagasta owns major stakes in and operates four copper mines in Chile. Major construction works at both Centinela and Los Pelambres, and an extended operation come 2027, leave the miner predicting a near one-third increase in copper production over the medium term.

An interim dividend up 81% from a year ago to 30.1 US cents represents a payout ratio of 35% of underlying net earnings, in line with management’s ongoing policy, and is due to be paid to eligible shareholders on 30 September.

Group net debt of $3.97 billion rose from $2.75 billion in late December, owing to new leases and including an expanded water system at its Centinela operations. That leaves the net debt to adjusted profit ratio at 0.68 times, up from 0.53 times in late December.

A third-quarter production update is scheduled for 15 October.

ii view:

Started as a railway operator in 1888, Antofagasta is today one of the world’s largest pure-play copper producers. Employing over 8,000 people, the miner has a mineral resource base of more than 21 billion tonnes, including more than five billion tonnes each at its Los Pelambres and Centinela operations.

For investors, elevated energy prices pressuring consumer disposable incomes globally could yet result in an economic slowdown and impact demand for copper. The miner’s own costs are subject to fuel price moves. A share price to estimated net asset value comfortably above the three-year average may suggest the shares are not obviously cheap, while currency risks remain given that commodities are priced in US dollars, operations are in Chile, and there’s a pound sterling share price.

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More favourably, ongoing construction projects are expected to see output rise by 30% over the medium term. A focus on efficiency persists, with savings and productivity improvements of $115 million made during 2025. A net debt to profits ratio of under one continues to point to a robust balance sheet, while an estimated future dividend yield of around 1.5% is not to be overlooked.

In all, and while risks remain, government drives towards energy transition and renewable energy systems regularly using copper will likely keep existing fans of this South American miner supportive.

Positives:

• Expanding operations
• Focus on costs

Negatives:

• Less diverse commodity portfolio than many rivals
• Currency movements can hinder performance

The average rating of stock market analysts:

Hold