Globally diversified miner Anglo American, lowered its full-year production forecasts for a number of its minerals, with the exception of platinum, which it nudged up thanks to an improved operational performance.
Looking at the London-based group’s second-quarter production specifically, CEO Mark Cutifani noted there’d been a strong performance in its copper and metallurgical coal units.
"This reflects our consistent and relentless focus on driving efficiency and productivity from our existing world-class asset base," he said.
Looking ahead for the full year, however, the outlook was mixed, with production targets lowered for iron ore from Kumba Iron Ore because of rail constraints, and for export thermal coal from SA and Colombia.
Offsetting the downward revisions was the expectation of higher output from Anglo American Platinum, the world’s biggest producer of platinum.
Amplats said it would increase its platinum production to between 2.4-million and 2.45-million ounces for the year to end-December, up from its earlier forecast of between 2.3-million and 2.4-million ounces, because of a "strong operational performance".
It kept its palladium target unchanged at up to 1.6-million ounces.
The core divisions in Anglo are platinum, copper and diamonds, with bulk commodities like metallurgical and thermal coal, along with nickel and manganese, making up the balance of the portfolio.
In the first six months of the year, platinum production from its own mines and from purchased concentrate — an important element of the Amplats business after it sold two big mines — increased by 4% to 1.233-million ounces.
Copper output increased by 10% in the interim period to 312,900 tonnes, while sales volumes shot up 18% to 306,000 tonnes. Anglo said it had priced 120,300 tonnes of copper at $3.01 a pound at the end of June. Copper is trading at about $2.79 a pound.
Copper production for the year was kept at between 630,000 tonnes and 660,000 tonnes.
Diamond production from Anglo’s 85%-held De Beers increased by 8% in the interim period to 17.5-million carats, driven by large increases in output from Canada, Namibia and Botswana, which offset a 16% fall in SA where there was a fatal accident at the Venetia mine.
De Beers maintained its full-year production target at up to 36-million carats.
De Beers sold 10-million carats in the interim period in three sales, compared with 5.9-million carats in two sales in the same period a year earlier.
"In addition to the different number of sales cycles over the period, sales volumes benefited from positive sentiment in the midstream following growth in consumer demand for diamond jewellery in late 2017, and a continuing positive outlook," Anglo said, noting that average rough diamond prices had risen by 4% to $162 a carat.
The price improvement this year had to be considered against the sale of a "substantial volume of lower value" diamonds sold in the first half of 2017, Anglo said.
Anglo noted there was increased production of lower-value diamonds coming into De Beers from the Gahcho Kue mine in Canada and the Orapa mine in Botswana.
On the coal front, Anglo has sold its Eskom-tied mines in SA and was now focused on its export thermal coal mines.
Export thermal coal from SA fell by 9% in the interim period to 8.8-million tonnes as two of its mines were closing mined-out areas. Coal for domestic use in SA fell by half to 7.8-million tonnes.
Anglo dropped its thermal coal production forecast by 1-million tonnes to between 29-million and 30-million tonnes because of the impending closure of some South African mining areas and "dust-related stoppages" at its Colombian operations.
Metallurgical coal output in Australia was a standout performance for Anglo, with a 17% increase in the interim period to 10.8-million tonnes. Anglo kept its full-year target intact at a maximum of 22-million tonnes.
The production forecast at Kumba, SA’s largest iron ore miner, was lowered by 1-million tonnes to between 43-million and 44-million tonnes. Kumba has said there have been derailments on the line linking its mines to the Saldanha harbour. Anglo said the lowered forecast was to "align production rates to rail availability".
Output from the Minas Rio iron ore mine in Brazil was pegged at the 3-million tonnes it has already sold so far this year, after the mine was stopped in March following the discovery of leaks in the pipeline connecting the mine to the harbour more than 500km away.
Anglo is replacing a 4km section of the pipeline where the leaks were found and work will be completed in the fourth quarter of 2018. Anglo has forecast it will lose up to $400m in operating profit from the stoppage.
seccombea@bdfm.co.za
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