By Jaime Llinares Taboada

 

Antofagasta PLC on Wednesday downgraded 2022 production and cost guidance after a pipeline problem at its Los Pelambres project caused copper output to fall 6.5% in the second quarter.

The Chilean copper miner cut full-year production to 640,000-660,000 metric tons from its original guidance of 660,000-690,000 tons.

On May 31, Antofagasta detected a leak in the underground pipeline that transports concentrate from its Los Pelambres concentrator plant to the port. Two weeks later, the company warned that full-year production would be at the lower end of the 660,000-690,000 tons range because the processing plant was operating at lower rates due to the shutdown of the pipeline.

The pipeline restarted on June 26, but Antofagasta estimates around 15,000 tons of lost production for the year due to the issue.

In addition, Los Pelambres is also being affected by regional drought. Antofagasta said the new production guidance incorporates a low-probability negative outlook for water availability for the rest of the year.

On Wednesday, Antofagasta also raised 2022 net cash cost guidance to $1.65 a pound from $1.55, reflecting inflation in diesel and other input prices and despite the weakening of the Chilean peso.

For the second quarter, the group reported copper production of 129,800 tons, down from 138,800 tons in the first quarter. Net cash costs per pound jumped to $1.90 from $1.75 in the period.

"Reduced production levels and higher costs compared to last year reflect the expected impact of the drought and the temporary closure of the concentrate pipeline at Los Pelambres in June, as well as lower grades at Centinela Concentrates," Chief Executive Ivan Arriagada said.

The Chilean businessman added that the significant decline in copper prices since the start of June has reinforced Antofagasta's commitment to control costs, particularly amid the current inflationary environment.

 

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

 

(END) Dow Jones Newswires

July 20, 2022 03:07 ET (07:07 GMT)

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