Shares of Chilean copper producer Antofagasta PLC retreated in London trading on Tuesday, even as the company unveiled record annual earnings. The stock was down 3.4% by 0820 GMT, a move that underscores the market's current focus on balance sheet pressures and investment outlays over headline profitability.
Record Financials Overshadowed by Debt Climb
The miner reported a substantial 30% increase in revenue for the 2025 financial year, reaching $8.62 billion. This top-line growth was propelled by strong copper prices, which averaged $4.93 per pound—an 18% year-on-year increase. The key earnings metric, EBITDA, surged by 52% to a historic $5.20 billion.
Despite these robust figures, investor sentiment was tempered by a 2% decline in copper output to 653,700 tonnes and, more notably, a significant rise in net debt. The company's net debt position ballooned to approximately $2.75 billion by the end of 2025, up sharply from around $1.63 billion the previous year. The net debt-to-EBITDA ratio stood at 0.53.
Dividend and Capital Expenditure in Focus
In line with its shareholder returns policy, Antofagasta's board recommended a final dividend of 48 U.S. cents per share. This brings the total distribution for the year to 64.6 cents, representing a 50% payout ratio of underlying earnings, which meets the company's stated minimum threshold of 35%.
Capital expenditure, however, reached a peak of $3.7 billion in 2025, tied to major construction projects. Management indicated that this spending is now expected to moderate, forecasting a reduction to $3.4 billion for the current year as the firm moves past the most intensive phase of its build program.
Cost Guidance and Production Outlook
Antofagasta maintained its production guidance for 2026, targeting an output range of 650,000 to 700,000 tonnes of copper. On the cost front, the company reported cash costs before by-product credits at $2.38 per pound for 2025, with net cash costs—after accounting for credits from gold and molybdenum—at $1.19. For the coming year, it forecasts cash costs before by-product credits between $2.30 and $2.50 per pound, and net cash costs in the range of $1.15 to $1.35.
CEO Iván Arriagada emphasized that key growth projects, including the second concentrator at the Centinela operation which is approximately 70% complete, remain on schedule and budget. He attributed strong underlying demand to global structural trends like energy security and electrification.
Market Context: The Copper Conundrum
The stock's reaction highlights a pivotal debate within the mining sector. After a period of record commodity prices, shareholders are increasingly prioritizing cash returns. Simultaneously, companies like Antofagasta are committed to multi-year, capital-intensive growth projects essential for future production. The company's project pipeline is critical to its volume and cost targets for 2026 and 2027.
This creates a delicate balancing act. While the company holds substantial liquidity, with cash and liquid investments totaling about $4.9 billion, the strain on the balance sheet is evident during this peak investment phase. Investors appear to be weighing the record profit against the timeline for converting these expenditures into sustainable free cash flow, especially with copper output having dipped slightly in the reported year.
Risks and Forward Look
The path forward is not without risks. Any escalation in costs, operational setbacks, or delays at major mine sites could pressure a balance sheet already carrying higher debt. Furthermore, copper prices are notoriously volatile and can deviate from consensus forecasts, often at inopportune times for miners ramping up spending.
Attention now turns to management commentary during the upcoming results conference call and the preservation of first-quarter guidance. The next significant data point will be the Q1 2026 production report, scheduled for release on April 15, which will provide an update on output, expenses, and project progress.
The 3.4% share price decline on Tuesday, despite a 10.5% gain year-to-date, signals a market that is cautiously acknowledging record earnings while actively discounting the associated financial and execution risks of Antofagasta's ambitious growth strategy.