MARKET REPORT: Covid variant fears put miners in a hole

 Antofagasta was swept up in a mining sector sell off as it warned a drought in Chile would hit production this year.

The FTSE 100 group said ‘unprecedented’ low rainfall in the country, which has seen what the company described as the ‘driest of a 12-year drought’ means it will mine between 710,000 and 740,000 tonnes of copper this year.

This is down from previous forecasts of between 730,000 and 760,000. What’s more, the company said that if there was no rain until the next rain season it could produce 50,000 tonnes less copper next year.

Dumped: Investors rushed out of big mining companies yesterday as metals prices slumped as fears that the rapid spread of the Delta variant will hit global growth gripped markets

The predictions cast a gloom over its otherwise positive news about the previous six months, when profits more than doubled to around £1.8billion.

This led it to become the latest Footsie miner to hand out a sky-high dividend.

It will deliver a half-year payout of 17.3p per share – up around fourfold on last year.

Antofagasta was driven to bumper profits by a metals rally that was sparked by countries coming out of lockdowns last year and the world economy beginning to bounce back.

Stock Watch – Helios Towers 

An expansion into Senegal and writedowns in the value of its equipment helped keep Helios Towers in the red during the first half of the year.

The firm operates masts that provide mobile signal in six African countries including Tanzania, Ghana and South Africa. 

The FTSE 250 group posted a £32million loss in the six months to June, though this was narrower than a £61million loss in the same period of last year.

The results came a day after boss Kash Pandya announced he would step down at the group’s annual meeting next year. 

One of the biggest fallers on the mid-cap index, it fell 5.8 per cent, or 9.8p, to 160.4p.  

Copper is a bellwether for global growth as it is a raw material used in manufacturing, construction and infrastructure projects – which usually boom when economies expand.

However, over the last few months it has also been given an extra boost by a string of Western nations pledging to spend billions on a green industrial revolution, as it is used in green technologies such as electric cars.

But despite this long-term rally, investors rushed out of big mining companies yesterday as metals prices slumped as fears that the rapid spread of the Delta variant will hit global growth gripped markets. 

Antofagasta fell 4.5 per cent, or 65.5p, to 1405p as shareholders digested its lower production forecasts and a 2 per cent drop in copper prices to around $9,000 a tonne.

Fellow miners Rio Tinto (down 2.7 per cent, or 146p, to 5192p) and Glencore (down 3.5 per cent, or 11.15p, to 307.1p) dropped.

Anglo American sank to the bottom of the Footsie leaderboard, though its staggering 10 per cent, or 323.5p drop, to 2912p was driven by its stock going ex-dividend.

Major oil firms were also hit – with BP dropping 4.9 per cent, or 14.9p, to 287.75p and Shell by 3.9 per cent, or 55.8p, to 1375.6p as crude prices tumbled 3 per cent to $66 a barrel.

Precious metals groups, however, proved to be an exception.

Gold and silver are safe havens that traders typically turn to in times of crisis. Investors flocked into Fresnillo (up 0.6 per cent, or 4.8p, to 835.8p) and Polymetal (up 1.6 per cent, or 24.5p, to 1515.5p).

The fall among many of the heavyweight resources groups dragged the FTSE 100 fell 1.5 per cent, or 110.46 points, to 7058.86, while the more domestically focused FTSE 250 fell 1 per cent, or 229.5 points, to 23606.87. 

The oil price plunge also knocked the wind out of energy services provider Wood Group just as it secured a £440million Government-backed loan to plough into low-carbon investments. 

It is the first group granted this type of loan. But shares fell 1.7 per cent, or 4.1p, to 234.3p.

Love Island-broadcaster ITV was out of favour with investors – dropping 4.2 per cent, or 5p, to 115.55p – after it invested £3million in nutritional supplements company Feel.

The start-up – which sends personalised supplements to customers via subscription – is working closely with former Girls Aloud singer and TV personality Cheryl (formerly Tweedy, Cole and Fernandez-Versini) as it ramps up. It will start a tailored media campaign with ITV later this year.

Lockdowns and social distancing restrictions pushed Grosvenor Casinos and Mecca Bingo-owner Rank Group to a £104million loss for the year to June, compared with a profit of £13million the year before.

Rank fell 4.5 per cent, or 8.2p, at 175p.

This post first appeared on Dailymail.co.uk