Future of copper15 Mar 2018 16:22
C/O paleje advfn
Antofagasta today reaffirmed what has been said by others, copper deficit and robust prices for a decade. Big projects in short supply.
https://www.thetimes.co.uk/edition/business/antofagasta-in-driving-seat-as-copper-demand-outstrips-supply-l7sn2jq2r
A global shortage of large-scale new copper mining projects, combined with strong demand linked to the rise of electric vehicles, will ensure prices remain robust, according to the chief executive of Antofagasta.
Iv�n Arriagada said that there was constrained supply and strong demand, especially in China.
Chile is the world�s biggest producer, accounting for about a third of production. Antofagasta, which is majority owned by Chile�s Luksic family, and is the world�s ninth largest producer, said that it would raise its dividend by 177 per cent to 50.9 cents.
�We think the outlook is favourable,� Mr Arriagada said. �We have not seen significant discoveries.�
He added that economic growth was fuelling strong demand for copper, which is used in everything from electronics to electric cars, pipes to roofing materials and cookware.
He said that he expected demand for copper in China to rise by 1 to 2 per cent per year, with much of the growth linked to investment in electric cars.
He said that copper was used �more intensively� in the manufacture of electric vehicles than conventional petrol and diesel models.
Antofagasta unveiled a 59 per cent jump in profits to almost $2.6 billion in 2017 as a rise in prices and cost-cutting offset a modest decline in output.
The group, which operates some of the world�s biggest copper mines in Chile and also produces gold and molybdenum, said that overall revenues hit $4.7 billion last year, up 31 per cent on 2016 chiefly on the back of an �increase in the realised copper price�.
Mr Arriagada said that the result was a �testament to the improved copper market and our continuing cost management programme�.
The average copper price on the London Metal Exchange stood at $2.80 per pound, 27 per cent up on 2016 as the commodities market recovered its poise after a long slump.
Mr Arriagada added: �We have continued to invest through the cycle while maintaining our focus on cost discipline and operating performance.�
The company said that production fell by 0.7 per cent to 704,300 tonnes, compared with 2016 while gold output fell by 21.6 per cent to 212,400 ounces. This was because of lower grades at its Los Pelambres and Centinela mines.
However, molybdenum production rose 47.9 per cent year on year. The profit margin rose to 54 per cent last year, its highest since 2012 when the copper price was 30 per cent higher.
Mr Arriagada said the company�s focus was to look to the next phase of its growth, including expansion projects at Los Pelambres and Centinela.
Analysts at Shore Capit
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