Antofagasta slides as copper outlook disappoints

Shares in Antofagasta (LSE: ANTO) fell more than 6% on Thursday after the Chilean copper miner’s initial production outlook for 2027 fell short of analyst expectations and higher diesel prices pushed up its cost forecast for this year.

The company expects to produce 630,000 to 690,000 tonnes of copper next year. The midpoint of 660,000 tonnes is about 6% below BMO Capital Markets’ forecast of 703,000 tonnes and below the midpoint of Antofagasta’s original 2026 guidance of 650,000 to 700,000 tonnes.

The outlook “implies no growth on the original guidance for 2026,” RBC analysts Ben Davis and David Monus wrote in a note to clients, despite improving grades at Los Pelambres and the anticipated commissioning of an expansion at Centinela.

The disappointment comes as Antofagasta approaches completion of major growth projects at both operations. Higher copper grades at Los Pelambres next year will be partly offset by lower grades at Centinela Concentrates, the company said.

Antofagasta shares fell 6.4% to £33.40 apiece during Thursday trading, giving the company a market capitalization of nearly £33 billion (US$44 billion).

Production pressures

The 2027 guidance still implies roughly 5% growth from BMO’s 2026 production estimate of 631,000 tonnes. The weaker-than-expected outlook could partly reflect lingering effects from this year’s weather disruptions, BMO analyst Alexander Pearce said.

Antofagasta cut its 2026 production guidance in August to between 625,000 and 655,000 tonnes after heavy rainfall and power outages temporarily halted operations at Los Pelambres in July. It maintained that reduced range on Thursday.

Third-quarter copper production rose 7% from the previous quarter to 151,900 tonnes, broadly matching BMO’s expectations. The improvement reflected higher output at Los Pelambres, including the release of concentrate held back during second-quarter pipeline maintenance.

However, production through September totalled 436,900 tonnes, down 8% from a year earlier. Reaching the midpoint of this year’s guidance would require fourth-quarter output of 203,100 tonnes, about 34% above the third-quarter level.

Labour disruption adds another pressure. Two unions representing about 20% of Centinela’s direct workforce declared a strike after quarter-end, and negotiations are continuing, Antofagasta said.

Diesel costs rise

Antofagasta raised its 2026 cash cost guidance before byproduct credits to US$2.60–US$2.70 per lb. from US$2.40–US$2.60, citing persistently elevated diesel prices. The increase amounts to 6% at the midpoint and is the second this year, BMO said.

Guidance for net cash costs, after revenue from gold and molybdenum byproducts, remained unchanged at US$1.15–US$1.35 per lb. Strong prices for those metals are helping cushion the diesel increase, Pearce said.

Third-quarter net cash costs of US$1.38 per lb. were 11% above BMO’s forecast. Gold production was 26% below the bank’s estimate, while molybdenum output fell 10% short.

Copper sales provided a brighter spot, reaching 170,700 tonnes, 9% above BMO’s forecast, as Los Pelambres and Centinela sold material carried over from previous periods.

Expansions advance

Antofagasta maintained its US$3.4-billion capital spending forecast for 2026 and said its major growth projects at Centinela and Los Pelambres remain on schedule to complete commissioning next year.

Testing began on the primary crusher and overland conveyor at Centinela’s second concentrator during the third quarter. At Los Pelambres, work advanced on a new concentrate pipeline and an expansion of the desalination plant.

The company will provide its 2027 cost and capital spending guidance with its fourth-quarter production report in January.