Chilean copper miner Antofagasta Plc is targeting savings of about $160 million this year and said its capital spending will probably be below forecast, as sliding metal prices hit its first-half earnings. Like its peers, London-listed Antofagasta is battling a slide in commodity prices driven by slowing growth in China, the world's top consumer of industrial metals. Copper prices recently hit their lowest since 2009.
The company, also hurt by declining ore grades, unfavourable weather and environmental protests in Chile, said it was reviewing its costs, including in the supply chain and the use of contractors. "Throughout this period of lower copper prices, Antofagasta has had a rigorous approach to cost control at our operations and we are on track to make $160 million (in) savings in 2015," Chief Executive Diego Hernandez said in a statement.
In the first half, however, its net cash costs rose 12 percent to $1.36 per pound. Last month it increased its average cash cost expectations for the year to $1.47 per pound from $1.40 as a result of reduced output. "We remain concerned that costs are moving in the wrong direction and are being adversely affected by falling by-production credits," Investec analysts said in a note.
The company also said capital expenditure for 2015 will probably be slightly below the planned $1.3 billion. Spending is seen falling to between $800 million and $950 million next year, excluding its joint-venture mine Zaldivar. Antofagasta shares, which on Monday slumped to their lowest in more than six years, were up 8.3 percent at 577 pence by 1030 GMT.