Copper will lead commodity recovery: Antofagasta

A slide in copper prices has hit miners hard, with Chilean copper miner Antofagasta no exception; on Tuesday, the company reported a 83 percent slide in pre-tax profits for 2015, sending the company's shares 10 percent lower in opening trade in London.

Along with other commodities, Copper has seen a 15 percent slide over the last 12 months on the back of decreased demand and oversupply.

Asked whether a recovery in copper prices was on the cards this year, Antofagasta's Chief Executive Diego Hernandez told CNBC that a rebound was not imminent.

"I think probably not this year. I think that this year we will see prices similar to the areas that we have seen since January and why – because supply and demand is tight but we will see a small surplus and with these market conditions any surplus affects the price," Hernandez said.


Copper manufacturing
Baranozdemir | Getty Images

"The expectation is that copper demand will not increase (but) it's still much better than any other commodity. Copper demand will grow this year at around 2 percent globally versus around 3-3.5 percent (growth) per year that we have seen over the last 20 years."

"But it will come and it will come sooner than in other commodities. Why? Because there is less in-store capacity than in other commodities," he added.

Reporting earnings on Thursday, Antofagasta's full-year pre-tax profit in 2015 fell 82.9 percent to $259.4 million. The company said in a statement that it had made operating cost savings and was positioning itself so it could "benefit from the recovery (in the cyclical copper industry) when it comes."

It also said it was not recommending a final dividend. London-listed shares of the company were the worst performers on Tuesday, down 8 percent.

Hernandez said the current commodity rout - widely attributed to a slowdown in China – was more vicious than previous periods of commodity turmoil.

"In 2008, 2009 we saw prices going down but really it was a financial crisis and not a commodity crisis and China was growing well and it really didn't affect the industry but this time it looks like it will take a little longer especially because it's about China."

Still, Hernandez thought there were reasons to be optimistic, with China's urbanization set to continue and boost demand for copper, although he believed growth would not be at the same pace "as it used to be."