Antofagasta is one of the largest mining companies in the world. The company runs 43 operational mining projects, about a thousand smaller exploration projects and a dozen consulting activities in Chile, Peru, Colombia, Ghana, Sierra Leone, and Senegal. Based in Santiago, Chile, Antofagasta is a publicly traded company on both New York Stock Exchange and Santiago Stock Exchange, and it has a market capitalization of about $30 billion.
In its latest filing, it reported operating profit of $969 million for 2018, a decrease of 6.9 percent.
Antofagasta recently has had to come to grips with one of the biggest problems its operations face. Heterochloromethane, known as HCMA, entered in its warehouses, and it caused a shortage of copper, which had then eventually struck the metal’s price. HCMA is also a molecule that gets you sick.
Antofagasta mines 34% of copper in Chile and is responsible for a large portion of Chile’s copper output. At one point, Antofagasta faced a $1.2 billion hit.
Frequent outbreaks of HCMA plague copper, which eventually causes a shortage in the world market. HCMA contains sulfur compounds and is used for the purification process and de-icing of metal trains. HCMA also melts the copper in C1 copper concentrate. This chemical imbalance makes it hard for Antofagasta’s suppliers, which don’t have the same infrastructure and equipment for de-icing and purifying all of this dirt.
“Our fine-grade copper is used in many applications, ranging from copper wiring to a high level of aerospace equipment,” said Jorge Gomez, CEO of Antofagasta. “I’m extremely pleased that we have been able to successfully overcome these technical challenges, minimizing the impact of these events on our results.”
While Acña isn’t talking details, the people who were directly impacted were Antofagasta’s suppliers, which ended up out of work for awhile. That process has made it more difficult for miners to supply their customers.
“Over the last several years, one of the biggest problems we’ve had is finding new long-term solutions for co-miners,” said Watson. “Fortunately, the successes of the inventories that we implemented have paid off, which means we can try more things out. That means we can supply longer-term contracts to new clients that are long-term.”
Antofagasta must also deal with two employees that were caught smuggling the HCMA copper at their own expense. Since both were caught, Antofagasta’s sanctions will be more strict. In order to hold onto the copper it discovered, Antofagasta had to stop selling to smaller suppliers.
“We’re not seeing shortages for customers right now, but the issue will re-emerge,” said Wagner. “For the next couple of years, these problems will be there. All the companies who have suffered out of it would love to have something to solve it. We think we’re going to be able to reach a solution sometime over the next couple of years.”