Antofagasta copper drops 9.5% on grades, costs surge 17%
Antofagasta’s first-half copper production fell to 285,000 tonnes as lower ore grades and a stronger peso drove a 17% cost increase, prompting investor skepticism over the miner's ambitious full-year recovery targets.
Antofagasta produced 285,000 tonnes of copper in the first half of 2026, a 9.5% decline from 314,900 tonnes a year earlier. The shortfall was driven by thinner ore grades and reduced processing rates at its Los Pelambres and Centinela concentrators. Second-quarter output of 142,000 tonnes was marginally below the first quarter's 143,000 tonnes, dragged down by weaker performance at the Antucoya mine.
While volumes contracted, unit costs expanded significantly. Cash costs before by-product credits reached $2.61 per pound, a 17% increase from the prior year. CEO Iván Arriagada attributed the inflation to elevated prices for diesel and explosives, alongside a stronger Chilean peso. The company also flagged rising sulfuric acid prices, a vital processing chemical, tied directly to shipping tensions in the Strait of Hormuz disrupting Middle Eastern sulfur supply.
Antofagasta lifted its full-year cost guidance to $2.40–$2.60 per pound to reflect this persistent consumable inflation. The dynamic creates a mixed operating environment: a tighter global copper market has pushed Comex futures near $6.69 per pound, but the resulting appreciation of the peso simultaneously erodes the margins of local operators.
These operational hurdles are not isolated to Antofagasta. Chilean national output fell 5.8% in the first quarter to 1.21 million tonnes, hitting a nine-year low in February. Codelco’s El Teniente mine produced 59,100 tonnes in the first quarter, down from 80,100 tonnes a year prior following a fatal mid-2025 collapse. BHP has also forecast grade-driven output declines at its massive Escondida mine for 2027.
Despite the shaky first half, Antofagasta reiterated its full-year production guidance of 650,000 to 700,000 tonnes. Achieving the mid-point of this target would demand approximately 380,000 tonnes in the second half, a sharp step-up from the first six months. The miner is banking on improving ore grades at Los Pelambres and the release of 7,000 tonnes of copper currently trapped in plant inventory due to pipeline maintenance.
The market, however, remains dubious. Antofagasta’s London-listed shares dropped 5.2% immediately after the production report was released. For investors, the central question is whether a structural trend of degrading ore quality across Chile’s aging mines will allow Antofagasta to execute the aggressive catch-up required in the second half.
