Antofagasta PLC (LON:ANTO) posted a better-than-expected increase in underlying profits in 2020 as lower costs and higher copper and gold prices outweighed a decline in production.
EBITDA rose 12.3% to US$2.7bn, beating analysts’ expectations of US$2.6bn, on higher revenue and lower unit costs due to the weaker Chilean peso, lower input costs and continued tight cost control.
Revenue for the full year climbed 3.3% to US$5.1bn as higher copper and gold prices, partially offset a decline in sales volumes. The miner announced in January that its 2020 production had fallen 4.7% to 733,900 tonnes.
The Chilean-based miner was upbeat about copper prices for the current year.
“In early 2021, sentiment in the copper market is positive despite a second wave of the pandemic in many countries, as markets took encouragement from the successful development of several vaccines and their accelerating rollout.
Demand is expected to recover the volumes lost in 2020, and to grow further. There is, however, some uncertainty about stimulus packages in China continuing as strongly as in 2020, but the economic recovery expected in the US, Europe and elsewhere in the world, supported by fiscal stimulus packages, will positively impact sectors that use copper. In particular, growth is expected from infrastructure investment and the growth of the electric vehicles and renewable energies sectors. Additionally, constraints on the scrap trade due to restrictions in the Chinese market and supply chain disruptions are also expected to contribute to increased demand for refined copper.
On the supply side, while production is expected to grow as several projects are completed, the risk of impact from coronavirus (COVID-19) remains, including the consequences of past and ongoing reductions in maintenance activity, sustaining capital expenditure and waste rock stripping.
Overall, the copper market in 2021 is expected to be in deficit before remaining tightly balanced for the following years as several large projects are completed, it said.
Antofagasta declared a final dividend of 48.5 US cents per share, bringing the total dividend for the year to 54.7 cents (17.8 cents in 2019).