Antofagasta joins other miners in cutting half-year dividends

Antofagasta is the latest mining giant to cut its interim dividend payments after deteriorating earnings.

Investors in the London-listed Chilean miner are paying out 9.2 cents a share, compared with a record 23.6 cents last year as the commodities sector surged amid rising prices and demand.

This year, however, common metal prices have plummeted from their steep highs as demand began to falter and fears of a recession became acute.

Falling Value: Prices for common metals have plummeted from their steep highs this year as demand began to falter and fears of a recession mounted

Falling Value: Prices for common metals have plummeted from their steep highs this year as demand began to falter and fears of a recession mounted

Falling Value: Prices for common metals have plummeted from their steep highs this year as demand began to falter and fears of a recession mounted

Towards the end of July, Rio Tinto and Anglo American released half-year results and announced that they would cut shareholder bonuses due to a significant drop in earnings.

Rio Tinto reduced its half-year dividend to $2.67 per share from $5.61 per share, though that means it still intends to pay out $4.3 billion to investors, the second-highest interim payout in the US history.

A day later, Anglo American slashed its related dividend by 27 percent to $1.27 per share as it revealed lower earnings on weaker production levels, rising costs and supply chain issues.

The same troubles have hit Antofagasta, where first-half pretax profit fell 61.9 percent to $679.6 million.

The FTSE 100 group was impacted by a decline in production caused by a 13-year drought in Chile, the temporary closure of a concentrate pipeline following a leak and lower ore grades at its Centinela mine.

Problems were compounded by a collapse in copper prices – a key international economic indicator – amid mounting fears of downturns in the US and Europe and uncertainty about China’s economic recovery.

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Pessimism: “While miners have been viewed as a good post-Covid reopening game, they have lost their luster among investors as hopes of a strong recovery have given way to recession fears,” said Mark Crouch, an analyst at trading platform eToro

Antofagasta’s copper concentrate and cathode sales fell by almost a third to $2.13 billion in the first half, with the company attributing most of the decline to deteriorating production volumes.

By-products revenue also fell by a quarter due to lower production of gold and molybdenum — a trace element used to make alloys.

Mark Crouch, an analyst at trading platform eToro, said Antofagasta’s move to cut dividends could encourage some shareholders to withdraw their holdings from the company.

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He added: “While miners have been seen as a good post-Covid reopening game, they have lost their luster among investors as hopes of a strong recovery have given way to recession fears.”

Antofagasta’s earnings soared to an all-time high in 2021 as copper prices hit record levels, allowing the company to provide a record payout to shareholders of $1.4 billion for the year.

It said it remains on track to produce its revised guidance of 640,000-660,000 tonnes of copper for the full year.

“We expect the rest of the year to look very different than the first half – as production improves quarter by quarter,” said Chief Executive Ivan Arriagada.

The FTSE 100 company operates four copper mines in Chile, the world’s largest producer with a 30 percent share of global production and the second largest producer of battery metal lithium.

Antofagasta shares fell 0.4 percent to 1,188.5 pence late Friday afternoon, meaning their value is down around 22 percent over the past year.

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https://www.soundhealthandlastingwealth.com/business/antofagasta-joins-fellow-mining-firms-in-cutting-half-year-dividends/ Antofagasta joins other miners in cutting half-year dividends

Brian Ashcraft

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