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30 August 2012 | Anna Reynolds
Chilean mining group Antofagasta has reported a 7.2 per cent fall in half-year profits, as the price of copper fell by 13.8 per cent in 2012 compared to the same period in 2011.
The company is producing more copper, molybdenum and gold than in 2011. Copper production rose by 16.5 per cent to 336,000 tonnes and the cost of producing copper has fallen by 6.3 per cent. However, these benefits have been offset by price of copper declining by more than 10 per cent since the end of April.
Antofagasta said the metal’s price was stable at around 330 to 340 cents per pound level, indicating relatively robust demand.
It attributed the drop to weaker demand from the major copper markets of China and Japan, which already have plenty of stock. It also blamed the economies in Europe and the US for the fall in trading prices.
Increases in production are due to a new flagship mine, Esperanza, which has not yet reached full capacity. The mining business also remains optimistic that profit reductions are short-term, but said it was impossible to forecast whether copper prices will stabilise over the remaining year.
From an industry perspective, Antofagasta expressed concerns there are not enough mines coming into production to make up for those closing, which could have long-term effects on the production of copper.