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Antofagasta's H1 earnings soar, drought erodes copper output

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LONDON (Reuters) -Chilean miner Antofagasta saw its half-year earnings soar to a record $2.4 billion, but cut its copper output guidance for the year after drought was expected to affect operations.

It said it would pay an interim dividend of 23.6 cents per share, reflecting higher copper and gold prices and more than triple its payout a year ago.

Antofagasta's financial results are the last of a bumper earnings season that saw rival miners Anglo American, Glencore, Rio Tinto and BHP Group declare bonanza payouts after a rebound in demand for commodities buoyed profits.

It revised its full-year guidance to 710,000 tonnes to 740,000 tonnes of copper at a net cash cost of $1.25 per pound and capital expenditure of $1.6 billion, from 730,000 tonnes to 760,000 tonnes previously, as 2021 proves to be Chile's driest for 12 years.

The redesigning of a desalination plant at its flagship Los Pelambres mine, expected to begin operating in the second half of 2022, could see 50,000 tonnes of production at risk next year because of the shortage of water, the company said.

Peel Hunt analysts said in a note said that would be a 7% reduction from its estimate for 2022 group production of 739,000 tonnes.

The London-listed miner, majority owned by Chile's Luksic family, said its earnings before interest, tax, depreciation, and amortisation (EBITDA) rose to a record $2.4 billion in the first six months of 2021, compared to $2.7 billion for the whole of 2020.

"Our key growth projects are on track and we remain focused on operating discipline and cost control," Antofagasta Chief Executive Iván Arriagada said in a statement.

Copper prices broke records earlier this year and Chile, which produces nearly 30% of the world's output, largely maintained it even during the worst of the pandemic. Copper is essential in construction and electric vehicle manufacturing.

Antofagasta's interim payout in the first half of 2020 totalled 6.2 cents per share in line with its policy of paying a minimum of 35% of underlying net earnings.

Antofagasta's share price was down 4.2% by 0729 GMT, slightly underperforming most of its peers that tracked wider stocks lower.

(Reporting by Clara Denina; Editing by Susan Fenton and Barbara Lewis)

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