Antofagasta Cuts Its Copper Production Forecast as H1 Profits Surge

Copper  |  2026-09-07 01:55:04   |   By

The Centinela Second Concentrator and the Los Pelambres expansion are on track, with commissioning expected to complete in 2027.

SEATTLE (Scrap Monster): The Antofagasta copper production forecast for 2026 was trimmed on 13 August, dragging the shares down 3%–5% and pulling a clutch of FTSE 100 miners lower with them. By the time trading opened on Friday 14 August 2026, the FTSE 100 had shed almost 150 points for the week, with Glencore and Anglo American also falling in the 3%–5% range. Endeavour Mining dropped 0.7%, Rio Tinto 1.4%, and Fresnillo 1.1%.

The six firms together account for roughly £284.4bn of UK market capitalisation. Thursday’s combined losses erased approximately £6.9bn in value in a single session, though some of that ground was recovered by the close.

Strong Results, but the Forecast Is What Moved the Stock

The surface numbers from Antofagasta’s H1 2026 results were, by any measure, strong. Revenue rose 18% to $4.5 billion, pre-tax profit climbed 72% to $2bn, and earnings per share increased 62% to 85.9c. The board lifted the interim dividend by 81% to 30.1c per share.

Look further into the H1 2026 results presentation and the quality of those numbers holds up. EBITDA reached $2,840.5 million, 27% higher than H1 2025. The EBITDA margin widened by 5 percentage points to 63.4%, placing the group at the top end of the pure-play copper producer peer group. Operating cash flow rose 53% to $2.8 billion. Net cash costs fell 8% year-on-year to $1.22/lb, and the group recorded a record realised copper price of $6.19/lb for the half.

None of that was enough to hold the share price. Investors focused instead on the production downgrade: full-year copper output guidance was cut to 625,000–655,000 tonnes, from the prior 650,000–700,000 tonnes. The midpoint reduction is roughly 5%. The cause was severe rain and snowfall in Chile, which temporarily shut the Los Pelambres mine and damaged pipeline and water-management infrastructure.

H1 copper output came in at 285,000 tonnes, down approximately 9% year-on-year, with Los Pelambres and Centinela both delivering below prior-year levels. The Q2 2026 production report adds a wrinkle: around 7,000 tonnes processed at Los Pelambres during the quarter remained in plant inventory at period end and will be recognised as production in H2 2026, following completion of extended concentrate pipeline maintenance.

What the Antofagasta Copper Production Forecast Means for the Full Year

The production miss raises several linked concerns. Lower volumes mean fewer copper sales. Repair and remediation costs will pressure unit economics in the second half. And Chile’s winter is only halfway through. Citi, which maintained its Buy rating and £44 target price after the results, cut its own 2026 production estimate to 634,000 tonnes, towards the lower end of the company’s revised guidance range, precisely because El Niño effects could generate further disruption before the season ends.

The near-term picture is therefore softer than the headline profit figures suggest. The lower guidance implies higher unit costs on a per-pound basis even if cash costs stabilise, because fixed costs spread over fewer tonnes.

For context on how the quarter unfolded operationally: the Q1 2026 production report via Investegate showed Los Pelambres output already 5% lower year-on-year and 16% below Q4 2025, while Centinela Cathodes fell 34% year-on-year in Q1. The H1 results, despite the record copper price, were therefore fighting an operational headwind from the start of the year.

The 2027 Growth Story Remains the Core Thesis

Antofagasta operates four mines across Chile, making it one of the market’s purest expressions of copper price and Chilean operating conditions. The company produced approximately 653,700 tonnes of copper in 2025. The 2026 downgrade is a setback relative to expectations, but the longer investment case rests on a different set of numbers.

The Centinela Second Concentrator and the Los Pelambres expansion are on track, with commissioning expected to complete in 2027. Together, the two projects are forecast to deliver a 30% increase in copper production from the group’s current run rate. Citi projects Antofagasta’s 2029 copper output will be 27% higher than its 2026 figure, as the Centinela ramp-up gathers pace.

The safety record also held through a difficult half: operations remained fatality-free and the group-level lost time injury frequency rate was 0.68, below the 1.0 threshold the company targets.

For investors with appetite for the cycle, the question is simply whether Chile’s winter inflicts further damage before spring, or whether H2 volume recovery and continued strong copper pricing put the original thesis back on track. Citi’s £44 target and a 30% production uplift on the horizon suggest the market may be overpricing the weather risk. The next quarterly production report will be the first real test of that view.

Courtesy: www.abcmoney.co.uk