A lower dividend was no surprise after output drop and higher production costs at Antofagasta in 2022.
Copper producer expects increased output in 2023 and only modest input cost inflation.
‘Doctor Copper’ historically a good guide to the health of both Antofagasta’s share price and the global economy.
“Usually, a firm copper price would be a good sign for both the global economy and the share price of FTSE 100 member Antofagasta, but the Chilean producer’s shares are looking a little dull after its full-year results for 2022,” says AJ Bell investment director Russ Mould.
“This may be down to ongoing fears that a recession is coming, although Antofagasta has its own specific issues with which to deal, notably cost inflation, a drought in Chile and a delayed desalination plant. Even so, a strong copper price could cure all of these ills and then some in the coming year, especially if China’s economy starts to motor and consume raw materials in large volumes once more.
“Copper’s malleability, conductivity and ductility mean it has many industrial uses across infrastructure, construction and cars to name but three – it is not for nothing that it has the nickname ‘Doctor Copper.’
“The industrial metal’s price sank from $10,000 aton to below $8,000 in mid-2022 as markets fretted over the risk of a global slowdown, but China’s reopening and more soothing words from the International Monetary Fund and the Davos crowd mean the metal is rallying and dragging Antofagasta’s share price along with it.”