Antofagasta lowers spending, raises H1 earnings

* Lowers FY capex forecast

* Resumes dividend payments

* Shares (Berlin: DI6.BE - news) highest since April (Adds shares, metal prices, detail, CEO)

LONDON, Aug 16 (Reuters) - Chilean miner Antofagasta (LSE: ANTO.L - news) cheered investors with a slim rise in mid-year profit on Tuesday achieved mostly through cost cuts aimed at weathering a weak copper market it does not expect to rebound before 2018.

Majority-owned by Chile (Stuttgart: 704599.SG - news) 's wealthy Luksic family, Antofagasta cut capital expenditure by 42 percent to $385 million in the first half from $662 million a year earlier.

"We continue to rebase our cost structure as a response to the low price environment," Chief Executive Iván Arriagada told Reuters.

He said the miner had also lowered its annual spending target to "slightly below" $1 billion from $1.1 billion.

It is saving money through lower engineering and construction costs and by shelving projects that fail to meet capital targets.

Antofagasta (Other OTC: ANFGF - news) 's London-listed shares rose to their highest in nearly five months, up 4.7 percent to 538 pence by 0820 GMT.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 2.3 percent to $571.6 million for the six months to June 30.

The company also resumed dividend payments for the first time in a year, declaring an interim dividend of 3.1 cents in line with its earlier policy of paying 35 percent of full-year earnings.

Arriagada, who has been at the helm since April, said the company had no plans to change its shareholder payouts, unlike rivals such as BHP Billiton (NYSE: BBL - news) and Rio Tinto (LSE: RIO.L - news) whose dividend policies have buckled under metal price pressure.

Copper prices hit a 6-1/2-year low in January but have risen since, bringing some relief to miners.

But Antofagasta, like other miners and analysts, maintains a cautious outlook due to modest demand growth from top consumer China.

Arriagada said the company did not expect to see significant change in metal prices this year or next as the market was largely balanced with little prospect of a deficit before 2018.

Its copper production was 323,300 tonnes in the first half, up 6.6 percent, while the company maintained its annual output target at the lower end of a 710,000-740,000 tonne range.

Revenue fell 18.5 percent to $1.4 billion on lower copper prices, sales volumes and the closure of its Michilla mine at the end of last year.

"EBITDA surprised to the upside, though much of this came through lower exploration and corporate expenditure, as well as slightly higher than expected EBITDA from the railway segment," Bernstein analysts said in a note.

Larger rival BHP on Tuesday posted a record $6.4 billion annual loss on a bad bet on shale, a dam disaster and the slump in commodity prices.

Benchmark copper on Tuesday was trading up 0.5 percent at $4,792 a tonne. (Reporting by Zandi Shabalala; editing by Jason Neely)