Antofagasta says drought could hit full year production

Chilean miner Antofagasta (LSE: ANTO) saw copper output fall 2.8% to 361,500 tonnes in the first half of 2021 and warned that full-year production guidance, unchanged for now, could be affected by the lack of rainfall in the area where its flagship mine is located.

Los Pelambres, located in Chile’s Coquimbo region, 240 km northeast of Santiago, is beginning to feel the impact of one of the country’s worst drought in the last 12 years. The country’s central region alone, where most people live and which hosts key copper mines, has seen rainfall decrease by almost 30% in the last 20 years.

“Strict water management protocols are in place and various options are being evaluated to mitigate the risk of the impact of the reduced rainfall, in case this situation continues,” the company said in its quarterly production results.

Antofagasta also noted that major maintenance work at Los Pelambres, originally planned for the second quarter, have been postponed to the fourth quarter.

The Santiago-based company produced 178,400 tonnes of copper in the three months to June, down from 183,000 tonnes in the first quarter. It attributed the drop to lower recoveries at the Centinela mine and expected lower grades at Zaldivar.

The miner, however, left its full-year guidance unchanged at 730,000 tonnes to 760,000 tonnes of copper at a net cash cost of US$1.25 per lb. and capital expenditure of US$1.6 billion.