Miner cuts dividend to focus on projects

The Chilean miner, which paid out a 100 cents special dividend on 2010 earnings, disappointed market hopes for another bumper payout, announcing a full year dividend of less than half 2010 levels, though profits rose 32 per cent on strong metal prices.

The London-listed group’s dividend cut followed the unexpected exit of chief executive Marcelo Awad on March 7.

“It was necessary to bring a new leadership to the company in order to conduct this second phase for Antofagasta, with special emphasis on operations and projects,” Antofagasta CFO Alejandro Rivera said.

“Antofagasta from now on will have a new phase of growth,” he said, referring to new projects including Antucoya in Chile, where construction will begin this year and production from 2014.

The miner’s full-year earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $3.66bn, broadly in line with expectations, thanks in part to a record average copper price for the year. Analysts had forecast EBITDA of $3.6bn.

But its total dividend was down sharply on the year before at 44 cents per share as it slashed a proposed special dividend for 2011 to 24 cents, less than a quarter of 2010 levels. Its payout ratio matched the historic level of 35 per cent of profit.

“Last year’s special dividend, we said clearly, was a one-off, exceeding even our profit for the year – that is not sustainable,” Rivera said. Antofagasta said the decision to restrain its special dividend was driven by capital expenditure plans to drive future growth.