Marcelo Awad, chief executive of Antofagasta, has stepped down with immediate effect only a week before he was due to present the financial results of the FTSE 100 Chilean mining company to investors in London.
Mr Awad has been chief executive of one of the world’s leading copper producers since 2004 overseeing an ambitious expansion of its operations aimed at keeping pace with the rise in global demand for the industrial metal.
He has been replaced on a temporary basis by Jean-Paul Luksic, Antofagasta’s chairman, whose family controls 65 per cent of one of the word’s leading copper producers.
His unexpected departure from the miner, which was listed in London in 1888, comes a week ahead of the release of annual results, which Antofagasta said were expected to be in line with market forecasts.
Though Antofagasta’s shares have fallen 13 per cent over the past year, they have still managed to keep ahead of a 26 per cent fall in the FTSE’s index of metals and mining stocks prompted by growing fears of slackening in the growth of global demand for industrial metals.
Mr Awad’s departure follows some concern over delays last year in ramping up production at its Esparenza project. The mine produced more than 90,000 tonnes of copper in its first full year of operation and is expected to deliver between 160,000 and 175,000 tonnes this year. But the company had predicted production of nearly 160,000 tonnes at Esperanza during 2011 after completion of a $2.6bn investment in the mine.
Production at the mine – a key component in Antofagasta’s ambitions to raise annual production in Chile from 520,000 tonnes in 2010 by more than half over five years – is complicated by the need to pipe and desalinate seawater from the Pacific to the site.
Its main Los Pelambres mining complex is also expected to see production slip from 412,000 tonnes to 390,000 this year.
In December Mr Awad, who spent several years in the London offices of rival Codelco, the state-controlled Chilean mine, before joining Antofagasta in 1996, committed his company to a $1.3bn investment in the Antucoya mine project in partnership with Marubeni of Japan. He then predicted the deal would lift total group production to 800,000 by 2015.
In spite of teething problems at Esperanza, and some operational concerns at other mines, Antofagasta’s quarterly production report issued last month was generally well received by analysts. Several expressed surprise at his sudden departure on Tuesday, saying they were unaware of any senior management tensions.
Analysts have pencilled in pre-tax profits for 2011 of more than $3bn on revenues exceeding $6bn, compared with $4.6bn achieved the previous year.
In spite of a drop in the copper price from 407 cents per pound in the third quarter to 340 cents by the fourth quarter, the company still expected to boost production and profits again this year. Copper traded at 376.35 cents on Tuesday.
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