CAP SA, Chile’s largest steel producer, fell after announcing a 39 percent increase in the cost to develop an iron ore project in northern Chile.
Cap declined 0.9 percent to 18,945 pesos at 4:47 p.m. in Santiago. It earlier dropped 1.8 percent, the most in a week.
The company will invest $800 million to develop its Cerro Negro Norte iron ore mine, which will begin production activities in the fourth quarter of 2013, according to a statement posted Dec. 19 on its website and on Dec. 20 on the website of the local securities regulator. The company had initially announced the project would cost $574 million to develop and would begin operations in the first quarter of 2013.
“The delay and the increase in costs will have an effect on the production estimates of approximately 1 million tons of iron ore in 2013,” Mauricio Seguel, an analyst at Banco Santander SA, said in a telephone interview today from Santiago. “If we punch the numbers into the model, it shows a 3 percent fall in the target price. That is affecting the stock today.”
CAP SA said yesterday its Totoralillo port will be shut for about three months after a fire damaged the facility, according to a statement on its website.
CAP will use the Huasco and Coquimbo ports to maintain iron-ore exports to customers, the company said.