Inflation and weak copper prices took a toll on Antofagasta PLC (LSE:ANTO)’s full-year profits, though the Chile-based miner reiterated it expects an improvement in the current year.
Underlying profits slumped 39% to US$2.93bn in 2022 on revenues down 22% at US$5.86bn as water shortages hit production while inflationary pressures pushed costs up 34% and slashed margins by almost 15 points.
The full-year dividend was also chopped by 58% to 59.7c, reflecting the FTSE 100 group's policy of 100% underlying earnings payouts.
Copper production fell by 15% to 646,200 tonnes, with gold output 30% lower and molybdenum also down.
This “reflected the expected continuing drought in Chile and the effects of increased input prices, and the pipeline incident at Los Pelambres," said Iván Arriagada, chief executive, who added the year had ended strongly notwithstanding the earlier problems.
A safety programme had also saved US$124mln against a target of US$50mln, while, since April, all new electricity contracts are renewables, he said.
“Looking ahead, the Los Pelambres expansion is expected to be in production during the second quarter including the new desalination plant which will significantly alleviate the water constraints that we have experienced over the past 18 months.
“Also, copper and by-product production is expected to increase over the course of 2023 and we expect cash costs before by-product credits to remain in line with 2022,” Arriagada added.
All this will be supported by strong long-term demand for copper, he said, as China recovers and demand for electric vehicles grows.
Copper production for the current year was again forecast at 670,000-710,000 tonnes.