Antofagasta’s Strong Performance in 2023


Antofagasta, the Chilean copper miner, showcased its resilience in 2023 as its profit saw a slight decline, surpassing analyst expectations. Despite facing challenges, such as increased cash costs, the company maintained a positive outlook due to a rise in copper sales and favorable pricing trends for the red metal.

Profit Performance

The company reported a pretax profit of $1.97 billion in 2023, down from $2.56 billion the previous year. This decrease was primarily attributed to a one-off gain of $944.7 million from the disposal of the Reko Diq project in Pakistan in 2022. Adjusted for exceptional items, the pretax profit actually rose by 11% to $1.80 billion, reflecting the positive impact of increased copper sales and pricing.

Financial Highlights

Driven by these factors, Antofagasta’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 5% to $3.09 billion. Revenue also saw growth, rising by 8% to reach $6.325 billion in 2023. These results outperformed analyst expectations, with the company surpassing forecasts for both EBITDA and revenue.

Market forecasts for copper took an unexpected turn in 2024, shifting from surplus to deficit due to supply disruptions in South America and a downward revision in outlook from Anglo American. This deficit caused copper prices to reach a five-month high in December. While prices have since dipped, analysts remain optimistic about future price trends, citing ongoing supply challenges as a key factor that could continue to support higher prices in the market.

In conclusion, Antofagasta’s resilient performance in 2023, amidst evolving market conditions and supply disruptions, positions the company well for the future as it navigates the dynamic landscape of the copper industry.

Copper Market Insight from Antofagasta

Copper Prices Stability

In 2023, copper prices saw reduced volatility and displayed a high level of stability during the second half of the year. According to Ivan Arriagada, Chief Executive of Antofagasta, this trend indicates a positive outlook for the industry.

Company Developments

Investment Concerns

The expansion project, requiring a $4.4 billion investment, has sparked concerns among investors. Citi analysts highlighted the financial implications of this venture in a recent research note. Antofagasta mentioned a potential $400 million cost reduction if they opt to outsource Centinela’s water assets.

Financial Performance

Despite the investment, the FTSE-100 listed miner announced a final dividend of 24.3 cents, bringing the total yearly payout to 36.0 cents. This marks a decrease from the 2022 dividend of 59.7 cents.

Future Projections

Antofagasta confirmed its 2024 guidance, anticipating a growth in copper output. The company aims to produce between 670,000-710,000 metric tons with a net cash cost of $1.60 per pound.

Market Response

As of 0824 GMT, Antofagasta’s shares have decreased by 2.2%, trading at 1,727.00 pence.

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