Chile-focused copper miner Antofagasta Plc (LON:ANTO) has cut its full-year production target, saying it is now expected to be at the lower end of the 710,000 tonnes to 740,000 tonnes outlook provided in January, with production for the year weighted to the second half.
Like other metals miners, Antofagasta was rocked by the commodities rout to the point it described 2015 as "undeniably difficult", and promised to slash production costs further this year, while increasing production to compensate for lower prices.
While a global market surplus shows little sign of easing, which weighs on prices, the company said its efforts to increase efficiency and drive down costs were on track.The miner has also been affected by declining ore grades, unfavourable weather and operational disruptions caused by protesters concerned about water shortages in the area around its flagship Los Pelambres mine, located 200km north of capital Santiago.
Last year, the company merged two of its most promising copper operations in Chile's north under a new company, Minera Centinela.
While a global market surplus shows little sign of easing, which weighs on prices, the company said its efforts to increase efficiency and drive down costs were on track.
Cash costs before by-product credits and net cash costs were $1.60/pound and $1.26/pound respectively it said. That compared with $1.88/pound and $1.53/pound for the same period in 2015.
In terms of output, Antofagasta said it produced 166,200 metric tons of copper in the three months ended June 30, 2016, up 5.9% from the same quarter a year ago due to higher production from last year's purchase of a 50% stake in the Zaldivar mine and the ramp up of the new Antucoya mine.
Antofagasta, one of the oldest companies listed in London, is expanding output in the next few years.Gold production dropped 4.2% on year to 52,800 ounces in the second quarter while molybdenum production fell 38% on the year to 1,600 tons during the same period due to lower grades at Los Pelambres.
The miner's shares have plunged 35% since the start of 2015, a painful drop, but it is now on the mend. The stock has recovered this year (4.8%) on the back of surging prices for the red metal, which was trading slightly lower on Wednesday morning at $2.15 a pound in New York, still better than the near six-year low it hit mid-January and up 4.6% so far in 2016.
The metal has also benefited in recent weeks from expectations for further stimulus in China, the world's largest copper consumer.
Antofagasta is one of the oldest companies listed in London. It is also one of the many companies expanding output in the next few years. Currently, the firm has majority stakes in four Chilean copper mines - Los Pelambres (60%), El Tesoro (70%), Michilla (74.2%) and Esperanza (74.2%).
The firm is also conducting exploration activities in Peru, while its owner - the Luksic group - holds exploration and mining ventures in Europe, Turkey, Australia, Africa and across the Americas.