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Luksic group’s mining profits fall more than 60% in the first half due to low production and a drop in the price of copper

The IS drop in copper productionthe product of the severe drought affecting the country, and the lower price of the metal, impact on the results of Antofagasta plc in the first half.

The mining company of the Luksic group reported this Thursday that its profits before taxes amounted to US$679 million in the first six months of the year, a figure 61.9% lower than the US$1,783 million for the same period in 2021.

Even though, the company’s net income after taxes was US$260 million, representing a 60.87% decrease compared to US$665 million in the first half of the previous year.

“We had to face several challenges in these first six months of the year: volatility in the price of copper as a result of macroeconomic events, the long drought in the central zone of Chile and an incident in the Minera Los Pelambres concentrate pipeline. Likewise, sales declined during the period, which was reflected in our financial results for the semester,” said Iván Arriagada, Executive President of Antofagasta plc.

At the end of July, the company reported that it produced 268,600 tonnes of copper in the first half of the year, 25% less than in the same period of the previous year, and reduced its estimate of its production target this year to a range. between 640,000 and 660,000 tonnes of copper, compared to range between 660,000-690,000 tonnes previously projected.

However, Iván Arriagada confirmed that a better performance is expected in the second quarter of the year. “Production will increase from quarter to quarter and the Los Pelambres concentrates that were delayed due to the concentrate pipeline incident will be launched. In addition, the desalination plant will start operating in the last quarter of the year, which will increase water availability. We are confident of achieving the group’s target of producing between 640,000 and 660,000 tonnes of copper this year”, he demanded.

In 2021, the mining company’s copper production was 721,500 tonnes, down 1.7% from the 733,900 tonnes in 2020, which was, in turn, 4.7% lower than the record set in 2019.

As a result of the lower production recorded in the first half and the increase in the prices of key inputs, such as oil and sulfuric acid, production costs increased compared to the previous year.

The net cost of cash rose 59.6% to US$1.82 per pound, although savings of US$35 million were achieved as a result of initiatives that advanced the company’s cost and competitiveness program.

“In the short term, there are still global uncertainties like inflation and geopolitical conflicts, so we remain committed to our operational discipline and cost control,” Arriagada said.

Likewise, the executive pointed out that the Minera Los Pelambres desalination plant registers an 82% advance at the end of the first semester, which confirms that its start will happen before the end of this year.

The Complementary Infrastructure Project (INCO) of Minera Los Pelambres considers the construction of a desalination plant in Los Vilos.

Arriagada specified that progress is being made at the same time in the processing of environmental permits to double its capacity and, in this way, be able to work mainly with sea water and recycled water from 2025.

The executive reiterated that the company is maintaining its estimate to invest US$1.9 billion this year, a figure similar to the previous year.

The company recalled in the presentation of its results that the government presented a tax reform on July 7 and on July 11 it proposed a new mining royalty, a proposal that is being considered by the mining industry.

“The initial view is that it is more onerous than the proposal made by the Senate Mining and Energy Commission in January, but not as heavy as the original proposal made by the Lower House in May 2021. The Senate will review the new project now. before being taken to the Lower House for consideration”, Antofagasta Plc showed in its findings.

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