Diversified mining giant Anglo American says production fell almost a tenth in its second quarter ending June, hit by lower grades of copper and water availability issues in Chile, with only its diamond interests giving investors reason for cheer as Russian sanctions bite.
Anglo, whose interests include diamond arm De Beers and Kumba Iron Ore, said production fell 9% for the quarter to end-June, amid flooding, droughts and planned maintenance, and it has cut its full-year guidance for lucrative steel-making coal by more than a tenth.
The London- and Johannesburg-listed miner said it was under pressure as it continued to ramp-up coal production at its Aquila mine in Australia, replacing its expired Grasstree mine, as well as planned maintenance at the Minas-Rio iron ore mine in Brazil.
Steelmaking coal fell 12% to 2.6-million tonnes, with the group cutting its annual guidance by about 11% to as much as 17-million tonnes. It is this commodity that has fared best price-wise recently, more than tripling in the first half of the year, with energy prices surging generally in the wake of Russia’s invasion of Ukraine.
Anglo’s shares were down 2.95% to R524.88 in afternoon trade on Thursday, bringing their year-to-date loss to almost a fifth, while Kumba gave back 4.08% to R447.97 and Anglo American Platinum 3.53% to R1,148.01.
Its diamond expectations were given a bump of at least 3%, with Anglo saying demand remained strong and it is eyeing increased demand as jewellers avoid stones from sanctions-hit Russia.
Diamond output for the quarter fell 4%, but rose 10% to 16.9-million carats for the first half, and Anglo upped its full-year production guidance to between 32-million and 34-million carats, from between 30-million and 33-million previously. First-half prices rose 58%.
Full-year production guidance is unchanged for Platinum Group Metals (PGMs), iron ore as well as copper, and Anglo’s Quellaveco project in Peru had delivered its first copper concentrate in July, and will contribute to second-half output.
“Quellaveco is expected to add around 10% to our global output once fully operational, central to the margin-enhancing organic growth we are delivering in future-enabling metals and minerals over the next decade,” CEO Duncan Wanblad said in a statement.
“Our production performance started to pick up in the second quarter of 2022, with operational momentum and our focus on asset resilience positioning us well for a stronger second half of the year,” he said.
Copper fared worst in the miner’s quarter to end-June, falling 21%, with Chile, the world’s biggest copper producer, battling with drought conditions with the two years to June the driest since records began.
This has affected mining output, and Anglo’s production of a metal that is widely viewed as a bellwether for the global economy fell 17% in its first half, and prices 13%.
Update: July 21
This story has been updated with additional information.
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