Shares in London-listed mining firms tumble amid production shortfalls

Spiralling costs, supply chain woes, and rampant inflation have piled on the misery for London-listed mining firms, with several producers reporting underwhelming trading updates as the industry bears the brunt of an increasingly volatile marketplace.

Antofagasta has suffered a seven per cent drop on the FTSE 100, after revealing in its first quarter production report that it had swallowed an eye-watering $2.2bn in rising costs from its latest Chilean project.

The review of the Los Pelambres expansion project, which is now more than 70 per cent complete, has soared from $1.7bn (£1.3bn) to $2.2bn (£1.6bn), as the miner shoulders Covid-19 difficulties and battles with inflation.

While copper production is in line with expectations, gold mining has fallen by more than a third, while molybdenum is also trailing behind last year’s figures.

The Chilean miner expects to dish out around $1.9bn (£1.4bn) in expenditure in 2022, at the top end of the previously forecast $1.7bn to $1.9bn range.

BHP’s update was similarly gloomy, revealing it was reducing total copper and nickel production for the full-year, although it is on track with previous iron ore estimates.

In its nine month trading update, the Australian miner revealed full-year total copper production guidance has been slashed to between 1,570 and 1,620kt.

This was due to a lowered production guidance for Escondida, a copper porphyry deposit in the Atacama Desert in Northern Chile. 

Full year nickel production guidance has also been downgraded to between 80 and 85 kt, following a labour crunch arising from the Covid pandemic.

Meanwhile, Tungsten West has been experienced a 22 per cent decline in its trading price on the FTSE AIM All-Share.

The troubled miner has announced it is pausing the development plan for its Hemerdon tungsten and tin project in England due to significant inflation across key consumables.

The London-listed company revealed that prices for steel, cement, explosives, power and diesel have increased significantly since the publication of the project’s feasibility study in March 2021.

It is now evaluating alternative approaches to restart the Hemerdon mine, which will likely entail lower production rates.

AJ Bell’s investment director Russ Mould told City PM that mining companies were struggling amid Covid-19 alongside factors such as weather, geology, drought and geopolitical tensions.

Nevertheless, he described output as “surprising on the downside” and that “volume is disappointing.”