Antofagasta has maintained its copper production guidance for 2020 amidst the COVID-19 pandemic. The company had forecast copper production at 725,000 to 755,000mt in 2020 at a net cost of $1.30/lb. In 2019, Antofagasta produced a record 770,000mt copper, up 6.2pc from the prior year at a cash cost of $1.22/lb, with a strong performance at Centinela mines.
Although, the company has ruled out any impact on its operations as yet, the group is evaluating potential impact due to supply chain disruption and order cancellations, said a company release. Antofagasta is planning to secure critical supplies for its operation and additional storage capacity in case of cancellation of sales. Antofagasta has enforced strict safety and hygiene procedures and banned all international travel for its employees to mitigate the spread of the virus.
Depressed copper demand and fall in copper prices are expected to hurt global GDP growth in 2020, according to Antofagasta. Copper prices have dropped to below $2.50/lb levels due to the COVID-19 outbreak. The company expects supply side growth to be limited in 2020 in the absence of major greenfield projects coming online in 2020. A general industry-wide decline in the copper grade is likely to reduce copper production by 200,000 to 300,000mt in 2020 from existing operations.
Antofagasta posted revenue of $4,965 million for 2019, up by 4.9pc from $4,733.1mn in 2018. The company copper and gold sales increased in the year but gains were partially offset by the fall in copper prices. EBITDA rose to $2,438.9mn, up by 9.5pc from a year ago, while EBITDA margin increased, to 49.1pc from 47.1pc in 2018.
In the wake of uncertainties arising due to COVID-19, the company plans to review its 2020 capital expenditure, which is expected at $1.3-1.5bn.