Antofagasta profits, dividend surge to record on high metals prices

A view of a miners’ camp inside Antofagasta’s Los Pelambres mine near Los Caimanes town, Chile, January 27, 2007. REUTERS/Victor Ruiz Caballero

LONDON, Feb 22 (Reuters) – Chile’s Antofagasta (ANTO.L) saw profit surge to its highest ever in 2021 on strong copper and molybdenum prices, allowing it to dish out a record shareholder payout of $1.4 billion for the year.

The London-listed miner, majority owned by Chile’s wealthy Luksic family, said its earnings before interest, tax, depreciation and amortisation (EBITDA) rose to a record $4.8 billion in 2021 from $2.74 billion a year earlier.

It also declared a consensus-beating final dividend of 118.9 cents per share, bringing the total for the year to 142.5 cents.

Rivals Glencore (GLEN.L) and BHP Group (BHP.AX) have also announced hefty payouts to investors this earnings season, buoyed by strong commodities demand.

“It’s a good set of results for 2021,” Chief Executive Ivan Arriagada told Reuters, citing a favourable market environment and high copper prices, which broke records in 2021, while molybdenum, used in stainless steel, rose 98%.

Chile, the world’s top producer, largely maintained output even during the worst of the pandemic. Copper is essential in construction and electric vehicle manufacturing.

Antofagasta said its capital expenditure rose 36% to $1.77 billion in 2021 due to the expansion of its flagship mines Los Pelambres and Centinela. It expects capex to increase by $1.7 billion-$1.9 billion in 2022 on expansion costs and water shortages.

Shares initially fell but bounced back to 2% higher by 1300 GMT.

Antofagasta set 2022 copper production guidance at 660,000-690,000 tonnes at a net cash cost of $2 per pound.

It also booked a $178 million impairment after its proposed copper and nickel mine Twin Metals in Minnesota was blocked by the U.S. Department of the Interior’s decision to cancel two mineral leases on domestic conservation concerns. read more

“We need to see what the (legal) options are, and on that basis we’ll take a decision to proceed or not,” Arriagada said.

“We should be able to make a determination in the first part of this year,” he said, adding that it would take many years before the project could be developed.

Mining companies are also facing higher inflation costs.

Investor sentiment on Antofagasta was “generally negative” because of cost inflation in Chile, the risk of higher Chilean mining taxes, operational challenges, and the potential for capex to rise further, analysts at Jefferies said.

Chile, which is rewriting its Constitution, is considering including a proposal that could lead to the nationalization of the country’s copper industry, sparking an angry response from mining firms.

Reporting by Zandi Shabalala and Clara Denina; Editing by Kirsten Donovan and Jan Harvey

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