- Group copper production in Q2 2020 was 177,700 tonnes, a decrease of 8.4% compared to the previous quarter, mainly because of expected lower ore grades at Centinela Concentrates
- Group copper production in the first six months of the year was 371,700 tonnes, in line with expectations and 4.0% lower than in the same period last year
- Gold production for the quarter decreased by 29.3% to 46,000 ounces compared with Q1 mainly due to lower grades at Centinela, and for the first six months decreased by 25.5% to 111,100 ounces
- Molybdenum production was 3,100 tonnes, some 700 tonnes higher than previous quarter. For the year to date, production was 5,500 tonnes, 14.1% lower than in the same period last year
- Cash costs before by-product credits in the quarter were $1.50/lb, 1c/lb lower than previous quarter and for the first half of the year were $1.51/lb, 9.0% lower than in the same period last year primarily because of the weaker Chilean peso, lower input prices and tighter cost control
- Net cash costs were $1.13/lb in Q2 2020 and for the first half of the year were $1.12/lb, an 2.7% increase compared with the previous quarter but 5.9% lower than in the first half of 2019. This was primarily due to lower cash costs before by-product credits, partially offset by lower by-product credits
- In mid-May the rate of COVID-19 infections in Chile accelerated leading to a lockdown being declared in Santiago that was later extended to other parts of the country. Having continued at this higher rate for over a month, it now appears to be decreasing and it is hoped that there will be some relaxation of the restrictions over the coming weeks
- Since the beginning of the outbreak, the Company has coordinated its actions with local and regional government to introduce many new measures to prevent the infection of its workforce and local communities and the transmission of the disease. These measures have included health self-assessments prior to site access, strict social distancing, health monitoring, the provision of hygiene kits, strict facilities cleaning protocols and company-arranged chartered transport to and from the mine sites. The Company has also established a $6 million fund to support local communities
- The Company is operating with approximately two-thirds of its workforce at its operations with most of the balance working from home. Mine development and maintenance were initially restricted, but as the operations have adjusted to the new working conditions, work in these areas has resumed
- The Company’s growth projects at Los Pelambres, Centinela and Zaldívar have largely been suspended since March with some limited work continuing, mostly on the desalination plant at Los Pelambres. Antofagasta plans to restart the Los Pelambres Expansion and Zaldívar Chloride Leach projects gradually during Q3 fully integrating new health protocols for COVID-19 into the revised project execution plans
- Costs related to actions taken because of COVID-19 are $38 million of which some $21 million have been capitalised since they mostly are associated to the growth projects
- Group copper production guidance is unchanged at the lower end of the original 725-755,000 tonnes guidance range, on the basis that no COVID-19 related shutdowns are required during the rest of the year
- Net cash costs guidance for the full year is also unchanged at $1.20/lb, 10c/lb lower than originally guided, assuming revised production guidance is achieved and the Chilean peso averages 800 pesos to the US dollar for the year
- Capital expenditure for the year is expected to be less than $1.3 billion, assuming the work on the Los Pelambres Expansion and Zaldívar Chloride Leach projects ramps-up as expected
- The water situation in Central Chile has improved due to substantial rain and snow fall during the last two months. Although this has improved the 2020-21 water balance at Los Pelambres, water usage optimisation and recycling improvements will continue
- Negotiations with the workers’ union at Zaldívar and the supervisors’ union at Centinela are in the first week of the government mediation phase which will complete this week. If both the union and the Company agree, mediation can be extended a further five working days
- The labour agreement with the largest workers’ union at Centinela was successfully agreed in June. Negotiations with the two other unions at Centinela will be completed during the rest of the year
Antofagasta plc CEO, Iván Arriagada said: “Our focus during the second quarter has been on the health and safety of our employees and contractors, and the communities near our operations as the full impact of COVID-19 has been felt across Chile. Nevertheless, the hard work and professionalism of our workers and resilience of our operations have allowed us to continue to operate close to forecast production levels while ensuring a safe health environment for our workers.
“During the quarter, we have been running our operations with approximately two-thirds of our workforce on-site, with the remainder either quarantining or working at home. As we have gained experience of working safely in this new environment we have managed to expand our activity in areas that we initially restricted such as mine development and maintenance. As a result, we believe we can continue to operate at current levels until the end of the year, assuming no further COVID-19 related restrictions are imposed.
“Antofagasta’s operating resilience has meant that despite the challenges we have faced, our copper production for the half year is close to our original guidance at 371,700 tonnes. Furthermore, net cash costs at $1.12/lb are some 6% lower than last year as a result of the weaker Chilean peso, lower input costs and continued tight cost control.
“As the outlook remains uncertain, despite the performance of our operations in the first half of 2020 we are maintaining our guidance for the full year at the lower end of the original 725-755,000 tonnes range, at a net cash cost of $1.20/lb.”