Chilean miner Antofagasta (LSE: ANTO) has shown resilience amid the country’s Covid-19 crisis, delivering copper volumes in the second quarter that were 5% ahead of expectations, but 8.4% lower than the previous period.
In the three months to June 30, the company churned out 177,700 tonnes copper, compared to 194,000 in the first quarter, mainly due to expected lower grades from the Centinela mine.
Antofagasta operated with just two-thirds of its workforce during the period, which weighed on production.
First half copper output totalled 371,700 tonnes, in line with expectations and 4% lower than the same period last year.
Gold production fell by 29% to 46,000 oz. compared with the first quarter. For the first six months of the year, gold output decreased 26% to 111,100 ounces.
Antofagasta CEO Iván Arriagada said the company had managed to expand activities in areas initially restricted, such as mine development and maintenance.
“We believe we can continue to operate at current levels until the end of the year, assuming no further Covid-19-related restrictions are imposed,” he said.
Work on the Los Pelambres expansion, one of the many global copper projects delayed due to the coronavirus, is expected to resume this quarter, the company said.
Production targets for 2020 remained at 725,000-755,000 tonnes copper, at a net cash cost of US$1.20 per lb. copper.
The miner, majority-owned by the Luksic family, one of Chile’s wealthiest, is facing labour challenges at some of its operations.
Unions at its Zaldívar mine recently claimed that workers risked their lives to maintain production at pre-pandemic levels. They cited a mounting number of confirmed coronavirus cases among the mine’s workforce as the main reason for their discontent.
They also recently voted in favour of a walk-off, rejecting a new contract offer, which they said had stripped them of current benefits.
Antofagasta and unions at Zaldivar and Centinela have entered into mediation with the government to avoid a strike. Major copper miners operating in Chile, the world’s top producer of the metal, have largely maintained output, even as measures to fight the spread of Covid-19 have devastated other parts of its economy.
In recent weeks, however, a spike in coronavirus cases in the South American nation has prompted top miners to review their plans.
State-owned Codelco, the world’s top copper miner, has halted some expansion projects and pulled back on production.
BHP (NYSE: BHP; LSE: BHP) announced it would scale down activity at its small Cerro Colorado mine.
Wood Mackenzie estimates that about 700,000 tonnes of new copper supply has been pushed out of 2022 expectations by delays, compared to previous forecasts.
The International Copper Study Group (ICSG) said in its latest report, published on July 21, that global mine production declined by 3.5% in April. That was the first full month of pandemic-related disruptions in the copper industry.
Fears of further disruption have pushed copper from doom to boom in the space of a couple of months, with prices hitting past a two-year high.
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