Kaz overcomes weak copper market

The red metal spent much of 2019 below the $6,000 (£4,615) per tonne (t) level, or $2.70 per pound (lb). Despite this, Kaz had sales 5 per cent above 2018, at $2.3bn, on production 6 per cent higher than the year before.

A drop in working capital resulted in free cash falling 30 per cent to $411m, but the company still upped the final dividend by a third to 8c, double BMO Capital Markets’ expectations.

This took the total dividend to 12c for the year, the same as 2018. Capital expenditure also climbed in 2019 to cover the Baimskaya acquisition ($436m), which coupled with another $718m in growth spending, pushed net debt up 39 per cent to $2.8bn. 

Development spending at Baimskaya will go from $111m last year to $150m in 2020, Kaz said. This will see the feasibility study completed. Costs will also be higher at the Aktogay mine this year due to a reduction in production. 

This comes as copper has dived in the wake of the coronavirus outbreak. Kaz chief executive Andrew Southam said China’s response to the virus would be a “key driver” of the copper market this year, as will the ongoing trade negotiations between the Middle Kingdom and the US. 

Bloomberg consensus for 2020 cash profits is $1.16bn, rising to $1.18bn in 2021.