SANTIAGO, April 7 (Reuters) – China’s economic problems are minor and are unlikely to trigger a crisis in the world’s biggest metals consumer, the chief executive officer of Chilean miner Antofagasta Minerals Plc told Reuters on Monday.
Copper prices fell to 3-1/2-year lows in March after a bond default by a Chinese company aroused fears about credit problems in the country. Prices have since steadied, though investors remain wary of slowing growth rates in the Asian giant.
Mining industry veteran Diego Hernandez, who used to head Chilean state copper producer Codelco and base metals at BHP Billiton, brushed aside major fears about the health of the buyer of 40 percent of the world’s copper.
“We think the Chinese economy is fairly solid,” he said during an interview in his office in Chile, the world’s top producer of the red metal, as part of the CESCO/CRU copper conference. “It may have some problems, but they’re minor.”
Still, the copper market could tilt into a small surplus if new and expanded deposits come on line as promised, Hernandez said. Contributing to that would be the London-listed company’s own production, as first-quarter output was on target, Hernandez said.
The company, controlled by Chile’s Luksic family, is poised to spend $3 billion over the next five years to boost its output to 900,000 tonnes by 2018 from slightly above 700,000 tonnes currently.
Its flagship $1.9 billion Antucoya copper project is on time and on budget, Hernandez stressed. The company’s financing needs are covered, he added.
Antofagasta has announced it is on the lookout for acquisition opportunities at home and abroad. Hernandez said nothing attractive has come up yet despite gloomier market conditions.
That, coupled with production results that beat forecast last year, led Antofagasta to pay out an unexpectedly large dividend for 2013.
“So long as we don’t see the need to use funds in the short-term, it’s fair that shareholders receive (high dividends) as they probably have a better use for them,” Hernandez explained.
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