(Adds cost forecast, analyst quote, background)
By Silvia Antonioli
LONDON, Jan 28 (Reuters) - Chilean mining firm Antofagasta said on Wednesday it expects a smaller-than-expected increase in production this year after posting annual output for 2014 in line with its guidance.
Like its peers, the London-listed copper miner faces falling ore grades and rising costs and has been hit by a recent plunge in the price of copper, down 13 percent this year.
The Chilean miner said it expects production of about 710,000 tonnes of copper in 2015, slightly below analysts forecasts, at net cash costs of $1.50 per pound.
“This is unlikely to give any confidence to the investors, (who) in our view, were expecting annual improvement in unit costs due to a weak Chilean peso and lower oil prices,” Citi analysts said in a note. “(The) market could react negatively on today’s results.”
Majority-owned by Chile’s Luksic family, Antofagasta produced 704,800 tonnes of copper in 2014, down 2.3 percent from the previous year, also due to lower grades at its Los Pelambres mine but in line with its 700,000 tonnes target. Net cash costs for the year at $1.43 per pound were 5.1 percent higher than in 2013 but slightly better than the company $1.45 target.
“We continue to focus on controlling our cost base in 2015 whilst growing our production,” Group Chief Executive Diego Hernández said. “We remain optimistic about the copper market in the medium to long term.”
To battle a fall in production due to aging mines and declining grades, Antofagasta is focusing on its $1.9 billion Antucoya greenfield project, which is expected to come on stream this year, and other brownfield expansions. It hopes a $3 billion investment over five years will allow it to grow its output to 900,000 tonnes by 2018. (Editing by David Holmes and Jason Neely)