Sliding copper prices and production bottlenecks took earnings before interest, tax, depreciation and amortisation down from $1,078.9 million in the first half of last year to $904.2 million.
Earnings per share tumbled 33.3% from 29.4 US cents to 19.6, and the interim dividend has been cut by 34% from 10.3 cents a share to 6.8 cents.
US-China trade tensions hit prices
Chief executive Ivan Arriagada saids: “As expected, it has been a challenging first half of the year with the lower grades impacting our performance. It is important to remember that we always said that 2018 would be a year of two very distinct halves. As we have been guiding previously, our production profile for the year is skewed to the second half, as grades are projected to increase throughout the year, allowing us to meet full year guidance. This improvement in grades will also be maintained and carried into 2019.”
Despite his upbeat outlook, the shares fell 50.2p to 836.2p.
Despite this recent decline, the average realised copper price for Antofagasta in the first half of this year was $3 a pound, a 10.3% rise on the $2.72 achieved in the first half of last year.
But copper production was 8.5% lower than in the first half of last year, at 317,000 tonnes. The company said this was primarily caused by lower grades at its 70% owned Centinela mining operation and a pipeline blockage at its 60% owned Los Pelambres site.
Costs were higher than during the same period last year, at $1.52 per pound, 22.6% up on the $1.24 per pound in the first half of 2017. Antofagasta blamed “lower production, higher input prices and a stronger Chilean Peso”.
Key role in infrastructure
Aside from copper, Antofagasta produces also some and molybdenum. Gold sales were 40.6% lower in the first half of this year at 68,100 ounces, from 114,600 ounces in the first half of last year, while molybdenum sales rose by a similar percentage, up 41.9% from 4,300 tonnes to 6,100.
Copper is best-known for its use in wire and cable, which accounts for more than half of demand. The red metal is used also in plumbing, electronic circuitry and industrial machinery.
Gold is best-known for its use in jewellery and as a monetary asset, but is also employed in electronics and dentistry.
Molybdenum is used mainly as an ingredient in alloys, although it is employed also as a fertiliser.
Antofagasta started life in London in 1888, raising money to build and operate a railway line from the port of Antofagasta on the Pacific coast to the Bolivian capital La Paz.