Interactive Investor

ii view: copper play Antofagasta misses production target

19th April 2023 16:06

by Keith Bowman from interactive investor

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This FTSE 100 miner has outperformed rivals during 2023 but will it continue? We assess prospects. 


First-quarter production update

  • Copper production of 145,900 tonnes, down 25% on the previous quarter 
  • Gold production of 42,200 tonnes, down 25% on the previous quarter 


  • Full-year 2022 production unchanged at 670-710,000 tonnes
  • Full-year capital expenditure unchanged at $1.9 billion (£1.5 billlion)

ii round-up:

Chilean copper miner Antofagasta (LSE:ANTO) today detailed first-quarter production output below City hopes, but kept its full-year production estimate unchanged.

Copper output during the three months to the end of March came in at 145,900 tonnes, down 25% on the previous quarter and below analyst forecasts for 156,000 tonnes.

Shares in the FTSE 100 miner fell 3% in UK trading having come into this latest news up 6% year-to-date. That’s similar to the price of copper during 2023 as hopes of a soft economic landing have grown and in contrast to a 15% fall for precious metals miner Fresnillo (LSE:FRES). Glencore (LSE:GLEN) and Anglo American (LSE:AAL) are down 10% and 15% respectively. 

The fall in copper output was attributed to temporarily reduced production at its Los Pelambres mine due to lower water availability, and expected lower grades following scheduled maintenance at its Centinela mine.

Gold production also fell by 25% quarter-over-quarter to 42,200 tonnes, also the result of scheduled maintenance at Centinela. 

Management’s full-year copper production estimate however remained unchanged at 670-710,000 tonnes, with output expected to increase through the year as its Los Pelambres desalination plant comes online. That’s potentially up from copper production of 646,200 tonnes in 2022.

A second-quarter production update is likely mid to late July.  

ii view:

Tracing its history back to the Bolivia Railway company in 1888, Antofagasta is now a major Chilean copper miner. It owns major stakes in and operates four copper mines. Los Pelambres and Centinela are its two largest and are being expanded further. Antucoya and Zaldivar the smaller. Both gold and molybdenum are produced as by-products of copper. Anto also operates a transport division providing rail and road cargo services in Northern Chile, mainly to mining customers and including its own operations. 

In 2021, the company detailed several environment goals, including adjusting its operations so that 90% of all water used in production comes from either seawater or recirculated water by 2025. Clean water is a key ingredient in the production of copper. During 2022, it reduced CO2 emissions intensity by 37%.

For investors, the highly uncertain economic outlook including potentially still higher interest rates offers a tough backdrop. China accounts for nearly one-fifth of Anto's sales, and Western relations with the Asian powerhouse are somewhat strained. New mining laws being considered by the Chilean government also create uncertainty.  

On the upside, an expansion of its existing operations is currently being undertaken. Desalination operations will aid operational challenges and its need for clean water, a forecast dividend yield of 2.7% is not to be ignored, while Anto's balance sheet remains strong, with a net debt to adjusted profit (EBITDA) ratio at 0.3 times as at its 2022 results.  

On balance, and while demand for copper and its many continued uses should provide longer-term support, a consensus estimate of fair value at just under £15 per share implies scepticism among some in the City, and that the shares are fairly valued right now.


  • Working on production expansion plans
  • Focus on costs


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

The average rating of stock market analysts:


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