Chilean miner Antofagasta (LON: ANTO) is to be below last year鈥檚 levels, as operations continue to be impacted by the home country鈥檚 longest drought in decades.
The company, which already saw 2021 copper production drop by 1.7% to 721,500 tonnes, anticipates churning out between 660,000 to 690,000 tonnes of copper this year due to mix of lower grades at some operations, and water shortages.听
Antofagasta鈥檚 flagship mine Los Pelambres has been one of the company鈥檚 operations hardest hit by the lack of rainfall.
Chile鈥檚 central region alone, where the mine is located and home to the majority of both the country鈥檚 population and key copper mines, has seen rainfall decrease by more than 30% over the last 20 years.
The drought听not only is impacting miners, but also farmers and wine makers, which has led the authorities to reform the nation鈥檚 water code.听
Chief executive Iv谩n Arriagada noted the company is ready to commission a desalination plant in the second half of the year, which will provide a long-term solution to ongoing water shortages at Los Pelambres.
Arriagada also drew attention to the multiple favourable long-term trends that were in place in the copper market.
鈥淭he demand picture for copper continues to be strong as copper is essential to economic activity and green investment initiatives such as electric vehicles, infrastructure and renewable energy,鈥� he said.
Antofagasta is in the midst of expanding Los Pelambres鈥� concentrator plant, with work slated to be completed in early 2023.
The company, majority-owned by Chile鈥檚 Luksic family, one of the country鈥檚 wealthiest, noted that it is reviewing the project鈥檚 costs due primarily to impacts of covid-19. It already anticipates that capital expenditure this year will increase to between $1.7 billion and $1.9 billion.
Net cash costs this year were estimated at $1.55 per pound of copper, up from $1.20 a pound in 2021, reflecting lower production and increased input costs, especially sulphuric acid.