Antofagasta: drought in Chile may affect Copper production

Antofagasta, a London-listed copper producer, warned on Wednesday that a prolonged drought in Chile could affect production at its Los Pelambres mine. Los Pelambres copper mine is one of the largest copper mines in the world.

The company said it was still expected to produce 73-760000 tons of copper this year, compared with 733900 tons in 2020.

The company explained: "the yield guidance assumes that the minimum requirement for precipitation is to recover during the year-round balance, so it depends on the availability of water."

"however, the precipitation in, Los Pelambres so far this year is significantly lower than in 2019, which itself is the driest of the current 12 years of drought."

The company said it had implemented strict water management agreements and was evaluating options "to mitigate the risk of falling rainfall and prevent this from continuing."

Antofagasta, which has a 60 per cent stake in Los Pelambres, produced 84400 tonnes of copper in the quarter, down 0.6 per cent from the previous quarter, mainly due to low ore grade.

The company is currently building a desalination plant to provide water to mines and local communities.

The company's copper production in the second quarter of this year totaled 178400 tons, down 2.5% from the previous quarter, due to a decline in its Zaldivar ore grade and a decline in Centinela cathode ore recovery.

Production in the first six months of this year fell 2.8 per cent to 361500 tons.

Another risk is the persistence of the outbreak, but the company said it expected its impact to subside in the coming months.

CEO Ivan Arriagada said: "We expect that as Chile continues to successfully carry out vaccination, the restrictions already in place will continue to be lifted, leading to the relaxation of movement restrictions in specific areas."