CHILEAN copper miner Antofagasta doubled its half-year dividend yesterday after a 54 per cent jump in earnings, confident that strong demand in China and a pickup in Japan and the United States would help underpin volatile copper prices.
Copper is down over 10 per cent this month, as investors grow uneasy about economic recovery prospects and China’s outlook.
London-listed Antofagasta – which has been hit by production setbacks and, along with rivals, is suffering from higher costs and volatility – said yesterday that prices for the red metal were likely to remain “volatile with downside risks”, but it was well-placed to weather the storm.
“While markets are likely to remain volatile, especially in the near-term, we remain confident that copper fundamentals will remain supportive of a strong pricing environment,” chief executive Marcelo Awad said.
Antofagasta said Chinese demand had remained strong over the period and saw it recovering demand in Japan and the US. It also pointed to an underperforming supply side, hit by strikes and declines in ore grades, technical failures, the slow ramp-up of new projects and bad weather.
The group, which also produces gold and molybdenum, used in steel alloys, said fundamentals would continue to support these metals, with good demand, low stock levels and limited new supply fuelling a recovery for molybdenum in the second half.
Net earnings rose to $696.2m (£422m) over the period, within the range of analysts’ forecasts, on revenues of $3.05bn, up over 73 per cent. The group doubled its interim dividend to 8 cents per share, above expectations, but did not repeat its March special dividend sweetener.
City A.M. Reporter