Chilean miner Antofagasta (LSE: ANTO) said on Thursday that water shortages in The country have forced it to cut its copper production target for this year as a decade-long drought exacerbated by climate change.
The miner now expects to produce 710,000 to 740,000 tonnes of copper this year, down from its previous forecast of 730,000 to 760,000 tonnes.
Antofagasta is building a desalination plant that will begin operations in the second half of 2022 and is expected to reduce the risk of water shortages.
The company said a redesign of the desalination plant at its flagship Los Pelambres mine, which is scheduled to start operations in the second half of 2022, could also be affected, with delays putting 50,000 tonnes of copper production at risk.
Los Pelambres, located 240km northeast of Santiago in Chile's Coquimbo region, is one of the company's operations affected by the drought. Over the past 20 years, rainfall in the centre of the country alone, where most people live and where the main copper mine is located, has fallen by nearly 30 per cent.
Despite weather-related challenges, Antofagasta's half-year earnings jumped to a record $2.4bn as strong copper prices boosted its bottom line. Soaring metals prices also led the company to declare an interim dividend of 23.6 cents a share, more than triple the payout a year ago.
While average copper prices rose in the first half of the year, the metal hit a more than four-month low on the London Metal Exchange on Thursday as a stronger dollar weighed on investor sentiment.
LME copper for three-month delivery fell 0.4 percent to $9,009 a tonne, its lowest level since April 14, before rebounding almost flat at $9,045 a tonne.
Chief Executive Ivan Aliagada said in a statement that the first half of the year had been an unprecedented dry period in central Chile, with little rain. We have now experienced 12 years of drought, with 2021 so far less precipitation than 2019, which was itself one of the driest years on record.
However, Antofagasta's key growth projects were on track and Mr Ariaga said the company remained focused on operational discipline and cost control.
