Return to news listing NEWS RELEASE - 18.01.23

Quarterly Production Report – Q4 2022

STRONG FINAL QUARTER. FULL YEAR GUIDANCE ACHIEVED

Antofagasta plc CEO, Iván Arriagada said: “Antofagasta has ended the year on a strong note, achieving full year production and cost guidance despite the ongoing drought in Chile and higher input costs.

“In 2022, we produced 646,200 tonnes of copper at a cash cost of $1.61/lb. With the Los Pelambres desalination and concentrator plants expected to be in production during the second quarter of the year after finishing commissioning, we forecast annual copper production in 2023 will increase to between 670,000 and 710,000 tonnes with net cash costs of $1.65/lb.

“The recent strength in the copper market is a positive start to the year, reflecting not just the relaxation of Covid restrictions in China and its expected stronger growth, but also the fundamental long-term importance of copper and the need for increased supply.

“In today’s challenging operating environment, our Purpose of developing mining for a better future is truer than ever. We continue to deliver an essential commodity that plays a crucial role in the energy transition and the development of a sustainable world, while also bringing real social benefits to our country and local communities.”

HIGHLIGHTS

PRODUCTION

Group copper production for the full year was 646,200 tonnes, within guidance and 10.4% lower than last year mainly due to the temporary reduction in throughput (-12.0%) at Los Pelambres as a result of the drought and the reduced concentrate pipeline availability in June, and expected lower grades (-18.3%) at Centinela Concentrates
Group copper production in Q4 2022 was 195,700 tonnes, 7.6% higher than in the previous quarter due to higher throughput at Los Pelambres and Centinela Concentrates
Gold production for the full year was 176,800 ounces, within guidance and 29.9% lower than in the previous year as a result of the expected lower grades at Centinela. Production in Q4 increased by 19.6% compared to the previous quarter to 56,100 ounces, mainly due to higher throughput and higher grades at Centinela
Molybdenum production in the quarter was 3,100 tonnes, 500 tonnes higher than in the previous quarter on higher grades at Los Pelambres and Centinela. For the full year, production was 9,700 tonnes, within guidance and 7.6% lower than in 2021 due to lower throughput and grades at Los Pelambres

CASH COSTS

Cash costs before by-product credits in Q4 2022 were $2.00/lb, 12c/lb lower than in Q3 2022 due to higher production at Centinela, partially offset by higher input prices
Cash costs before by-product credits in 2022 were $2.19/lb, 22.3% higher than last year mainly due to the impact of the drought and higher input prices during the period, particularly for diesel and sulphuric acid. Other inflationary pressures also contributed to higher costs although this was partly offset by the weaker Chilean peso and the savings coming from our Cost and Competitiveness Programme (CCP)
Net cash costs in Q4 2022 were $1.27/lb, 39c/lb lower than in the previous quarter, reflecting the lower cash costs before by-products credits and the increase in by-products credits on increased production and higher realised prices
Net cash costs for the full year were $1.61/lb, slightly below guidance and 34.2% higher than in 2021 due to higher cash costs before by-product credits

GROWTH PROJECTS UPDATE

As at the end of 2022 the Los Pelambres Desalination Plant and Concentrator Expansion projects, including design, procurement and construction, were 93% complete, and both are due to be in production during the second quarter of this year
The first phase of the desalination plant will allow Los Pelambres to reduce the risk of restrictions due to future water shortages. The concentrator expansion will increase production by some 40,000 tonnes of copper per full year for 4-5 years and then by 70,000 tonnes per year, compared to how much would have been produced without the expansion
The second phase of the desalination plant, the relocation of the concentrate pipeline and other ancillary works are currently being permitted. These projects will further secure Los Pelambres’ water supply and operational integrity
Progress continues on the engineering and pre-investment studies for the Centinela Second Concentrator project. In line with our disciplined approach to capital allocation, the project will be sent to the Board for final investment approval during 2023 following completion of the Los Pelambres Expansion project and once there is sufficient clarity on the outcomes of the ongoing discussions on the mining royalty and tax reform bills, and the rewriting of the Chilean constitution

2023 GUIDANCE

Group production in 2023 is expected to be 670-710,000 tonnes of copper (as previously announced), 220-240,000 ounces of gold and 10-11,500 tonnes of molybdenum. Copper guidance reflects that the Los Pelambres desalination and concentrator plants will be in production during the second quarter of the year partly offset by lower grades at Centinela Cathodes. Gold and molybdenum guidance reflects the higher grades and recoveries expected at Centinela Concentrates
Copper and by-product production is expected to increase quarter on quarter through the year
Group cash costs in 2023 before by-product credits are expected to be $2.20/lb, in line with 2022 reflecting higher production and decreased input costs, offset by inflation and a stronger Chilean peso
Group net cash costs in 2023 are expected to be $1.65/lb as by-product credits are forecast to decrease reflecting the expected fall in gold and molybdenum prices
Capital expenditure in 2023 is expected to be $1.9 billion, as sustaining and mine development expenditure increase for the year to approximately $1.5 billion due to inflation, higher-than-average mine development at Centinela Concentrates, detail engineering works on the Los Pelambres desalination expansion and concentrate pipeline projects and the expansion of the tailing dump facility at Centinela. Development expenditure reduces to $400 million and includes residual expenditure on the Los Pelambres Expansion project and on engineering and pre-investment commitment phase work on the Centinela Second Concentrator project

SUSTAINABILITY

With no serious safety incidents in 2022, the Group achieved improvements in all safety indicators during the year, including the Mining division’s Lost Time Injury Frequency Rate down by 32% and High Potential Incidents down by 39%
All the Group’s mining operations have now obtained the Copper Mark for compliance with this independently verified responsible production standard, with Los Pelambres receiving the Mark during Q4
Centinela started to operate 100% with seawater, ending the extraction of continental water at the end of December. On completion of the planned expansion of the desalination plant at Los Pelambres, which is expected in 2025, seawater and reused and recycled water will account for over 90% of the Mining division’s operational water use

OTHER

As previously announced, on 15 December the Company exited its interest in the Reko Diq project in Pakistan. The exit proceeds, which totalled $946 million, are expected to be recognised as an exceptional item in the Company’s 2022 financial results, and to be received by the Company by the end of 2023
The Government presented a revised draft mining royalty bill to Congress in October which was approved by the Senate Mining and Energy Committee in January and passed to the Senate Treasury Committee for discussion. The bill will then be debated in the Senate before being passed to the lower house for its consideration
After the proposed new Chilean constitution was rejected in a national referendum in September 2022, Congress has adopted a new plan for drafting the constitution. The plan includes specific boundaries for the scope of the drafting process. It is expected that the new constitution will be put to a vote in a national referendum by the end of the year
As announced on 29 December, access to Los Pelambres was temporarily blocked by a small group of people without connection to any specific incident and who were requesting compensation. The blockade was lifted the following day and engagement with communities will continue in accordance with existing programmes and channels of communication
During 2023 negotiations are scheduled with the workers’ unions at Zaldívar (July) and Centinela (November, two unions), with the supervisors’ union at Centinela (May) and with five unions at the Transport division

GROUP PRODUCTION AND CASH COSTS	Year to Date			Q4	Q3
	2022	2021	%	2022	2022	%
Copper production kt	646.2	721.5	(10.4)	195.7	181.9	7.6
Copper sales kt	642.5	725.6	(11.5)	201.5	178.0	13.2
Gold production koz	176.8	252.2	(29.9)	56.1	46.9	19.6
Molybdenum production kt	9.7	10.5	(7.6)	3.1	2.6	19.2
Cash costs before by-product credits ⁽¹⁾$/lb	2.19	1.79	22.3	2.00	2.12	(5.7)
Net cash costs ⁽¹⁾$/lb	1.61	1.20	34.2	1.27	1.66	(23.5)