Antofagasta (LON:ANTO) reported a strong first half of 2026, supported by favorable copper and by-product pricing, cost discipline and productivity gains, while reducing its full-year copper production outlook following severe winter weather at its Los Pelambres operation.
Chief Executive Iván Arriagada said first-half EBITDA rose 27% year over year to $2.84 billion, producing a 63% EBITDA margin that he described as among the highest in the company’s history. Cash flow from operations increased 53%.
Costs and Full-Year Guidance
Despite inflationary pressures in inputs including diesel and sulfuric acid, Antofagasta reduced net cash costs by 8% during the first half. Arriagada attributed the result to cost discipline, productivity improvements and by-product contributions from the Centinela and Los Pelambres districts.
The company maintained its full-year net cash cost guidance of $1.15 to $1.35 per pound. CFO Mauricio Ortiz said improved production in the second half, in addition to by-product revenue and the company’s competitiveness program, should support delivery of that target.
However, Antofagasta lowered its full-year copper production outlook to 625,000 to 655,000 metric tons because of a severe weather event in July at Los Pelambres. The company said the new range includes contingency for the remainder of the winter season.
Arriagada said the storm was the most severe weather event in Los Pelambres’ history, producing about 5 million cubic meters of snow at the mine. The company temporarily suspended activities and has been restoring operations in what it described as a safe and orderly manner.
While operations have largely resumed, some areas still require snow removal. Antofagasta expects this to defer access to higher-grade mining areas, resulting in lower feed grades at Los Pelambres during the remainder of the year than previously anticipated. The weather did not have a meaningful impact on Antucoya, Zaldívar or Centinela, according to Arriagada.
Centinela Expansion Remains on Track
Management said construction and pre-commissioning work at Centinela’s second concentrator remain on schedule and on budget. Arriagada said commissioning is expected to be completed in 2027, with the ramp-up beginning that year and reaching full effect in 2028.
The company identified soil conditions in the flotation area that require additional sealing work, but Arriagada said the issue was identified early enough to be addressed within the existing project schedule and budget.
Ortiz said Antofagasta has moved beyond peak capital spending on its growth program. The company expects capital expenditure of $3.4 billion in 2026, compared with $3.7 billion in the prior year, followed by remaining project-related spending in 2027. Sustaining capital expenditure is expected to remain in a range of $1 billion to $1.5 billion over the next couple of years, though the company plans to provide more detailed 2027 guidance later in the year.
- Centinela’s current permit covers the second concentrator and a potential throughput increase to 150,000 tons per day.
- Management said the district’s water infrastructure has additional capacity to support higher throughput at both concentrators.
- Ortiz confirmed that Antofagasta still intends to fully draw down the $2.5 billion project-finance facility for the Centinela second concentrator.
During the first half, Antofagasta recognized an additional $630 million in lease liabilities related to the water system for the Centinela expansion. Ortiz said the amount reflects the full investment made by a third party that built the relevant water subsystem, which has already delivered its first water and will supply the second concentrator.
Water, Inputs and Longer-Term Portfolio
Antofagasta also approved a $900 million investment at Sal de Vida for a water pipeline intended to eliminate the use of continental water by mid-2028. Arriagada said the project would secure a stable water supply and support a potential extension of the mine’s life through 2051.
On sulfuric acid, management said the company has not faced supply disruptions despite higher spot prices, as it does not source directly from the Middle East and holds term contracts with suppliers. Antofagasta has secured the volumes required for 2027, although pricing for next year will partly reflect higher market conditions.
Arriagada said Antofagasta generally does not hedge commodity input costs such as fuel, arguing that remaining exposed to both the commodities it sells and the inputs it purchases helps protect margins over time. The company uses long-term commercial contracts to support supply security and pricing arrangements.
Looking beyond Chile, Arriagada said Antofagasta continues to view its Twin Metals project in the U.S. as an attractive long-dated option. The company is seeking to recover leases in the Maturi area after a mining withdrawal was reversed, while preparing to update the project’s pre-feasibility work and conducting drilling on other properties within the Twin Metals complex where it holds valid exploration licenses.
Management also reiterated its strategic interest in Peru through its 19% holding in Buenaventura. Arriagada said Antofagasta entered the investment at an attractive point and continues to work with Buenaventura’s board and management, particularly around potential copper opportunities.
About Antofagasta (LON:ANTO)
Antofagasta plc is a copper mining group with significant by-product production and interests in transportation. The Group creates value for its stakeholders through the discovery, development and operation of copper mines. The Group is committed to generating value in a safe and sustainable way throughout the commodity cycle.
