Antofagasta Share Price
Over the past 12 months the Antofagasta (LON:ANTO) share price has risen by 175%, and since the turn of the year, the mining giant is up by 18.6%. The company’s strong performance coincided with the surge in the price of copper during 2020.
Results
Antofagasta confirmed a 6% rise in its net profit during 2020 as well as raising its dividend, while mining giant’s net profit reached $893.9m, up from $843.1m in 2019. Lower costs and stronger prices more than offset a fall in copper production levels.
Antofagasta’s EBITDA increased by 12% to $2.74bn ahead of analysts’ expectations of $2.7bn. The copper miner also announced a final dividend of 48.5 cents per share, bringing the full-year number to 54.7 cents, and up from 50.9 cents in 2019.
Production
The London-based Chilean miner said its copper production had fallen 5% last year to 733,900 tonnes because of lower grades of copper, but would pick up in 2020 to between 730,000 and 760,000 tonnes.
“The year has been challenging, but we have successfully kept our people safe and healthy, achieved our production and exceeded our cost targets,” chief executive Iván Arriagada commented.
“Full year copper production was 733,900 tonnes and net cash costs were $1.14/lb, reflecting the company’s agility in changing operating conditions,” Arrigada added.
Copper
The red metal makes up a significant portion of Antofagasta’s revenue and has made a robust start to 2021, now valued at just below $9,000 per tonne. This bodes well for Antofagasta’s prospects. The question will be if copper can keep the momentum that was established in 2020 amid talk of a supercycle.
CRU director of base metals research and strategy, Vanessa Davidson, believes the copper price will peak in H1 of 2021, with the prices beginning to tail off towards the end of the year.
“Our expectation is that prices will drop next year. We see a peak in copper prices in the second quarter of this year, and then we expect to see prices coming off a little bit,” she said. “The supply from the new products will start hitting the market from the second half of the year.”
CRU is forecasting a 5.2% rebound in global copper consumption in 2021, with China increasing by 3.5% and the rest of the world increasing by 7.1%. “In order to get that recovery of 5.2% in global refined copper demand, we need the rest of the world to recover by 7.1%,” Davidson explained.
While the price of copper may not soar, providing the world economy recovers, demand will remain firm, and Antofagasta will be well positioned to capitalise.
