Antofagasta Plc warned it will produce less copper than expected this year as Chile’s ongoing drought hampers its operations.
Chile, which includes some of the world’s driest deserts, has been struggling with a decade-long drought exacerbated by climate change. That’s impacting miners, farmers and wine makers and has led the government to reform its water code.
Antofagasta now expects to produce 710,000 tons to 740,000 tons of copper this year, down from its previous forecast of 730,000 tons to 760,000 tons. The company’s shares fell 5.9% as of 8:03 a.m. in London trading.
“This year has been the driest of a 12-year drought in Chile,” Antofagasta said in a statement Thursday. “Given the traditional rainy season runs from June to September, it is looking increasingly likely that the low levels of precipitation will continue until at least the Southern Hemisphere winter next year.”
Antofagasta is building a desalination plant that the company says will materially lower water scarcity risks. Still, that’s not scheduled to come into operation until the second half of 2022, and Antofagasta said it could lose another 50,000 tons of copper production next year.
Despite the drought, Antofagasta joined many of its peers in posting a record first-half profit after copper hit an all time high. Profit more than doubled to $2.36 billion from a year earlier, and the company said it will pay a dividend of 23.6 cents a share.