Copper Miner Antofagasta’s Investments Push it Into the Red

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For years Antofagasta found favor as a conservative copper miner that paid out big dividends to shareholders. Then, in late 2011 the London-listed miner, controlled by Chile’s Luksic family, approved a now-$1.9 billion growth project called Antucoya. The copper price has been drifting lower ever since.

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In a market largely focused on cutting spending and increasing free cash flow, but which can always have its head turned by low-cost growth, Antofagasta seems to offer neither one thing nor the other right now. Antucoya is close to three-quarters complete and 2014 is the peak in terms of capital spending, even with $200 million having slipped from this year to next. The Wall Street Journal reports that Antofagasta expects to end the year with perhaps $100 million in net debt, whereas it has long kept net cash on its balance sheet.

At $7,077 per metric ton, the 3-month price of copper moved up 1.3 percent on Monday, August 25, making it the day’s biggest mover on the LME. Also on the LME, the cash price of primary copper increased 1.2 percent to $7,088 per metric ton.

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After a 0.5 percent increase, the price of US copper producer grade 122 finished the day at $3.90 per pound. The price of US copper producer grade 110 inched up 0.5 percent to $3.90 per pound. After a 0.5 percent increase, the price of US copper producer grade 102 finished the day at $4.09 per pound. The Japanese copper cash price saw little movement yesterday at JPY 762,000 ($7,312) per metric ton.

Chinese copper prices closed flat for the day. The price of Chinese copper bar steadied at CNY 52,230 ($8,460) per metric ton following two-days of increases. The Chinese copper cash price ended a two-day climb, settling at CNY 52,430 ($8,493) per metric ton. The price of Chinese copper wire saw essentially no change for the fifth day in a row, remaining around CNY 50,395 ($8,163) per metric ton. The price of Chinese bright copper scrap was unchanged at CNY 44,300 ($7,176) per metric ton.

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