1st Jul 2024 12:01
(Alliance News) - The suspension of production at Anglo American PLC's Grosvenor steelmaking coal mine in Queensland could hinder the group's disposal plans, analysts said.
On Monday, Anglo American said production at the Australian mine had been halted following an underground gas incident on Saturday.
The London-based diversified miner said it will provide steelmaking coal production guidance "once more information is available", and indicated that assessment of the incident may take several months as a result of the likely damage underground.
Before this incident, Grosvenor was expected to account for around 29% of the total steelmaking coal output for the first half of 2024.
The steelmaking coal business expects to produce 8 million tonnes of product in the first half of 2024, of which Grosvenor will contribute 2.3 million tonnes.
For 2024 as a whole, production guidance for the steelmaking coal business is 15 million tonnes to 17 million tonnes, of which Grosvenor was expected to contribute 3.5 million tonnes, representing lower production in the second half of the year due to a planned longwall move.
Anglo American said all emergency protocols were followed and the workforce was safely evacuated from the mine without injury.
"The mine team is working with specialist teams from the Queensland Mines Rescue Service and the regulatory authorities to extinguish the underground fire, prior to being able to assess the steps towards a safe re-entry into the mine," the company added.
These procedures, it said, are expected to take several months as a result of the likely damage underground.
Analysts at Citi said the procedures towards reopening of the mine will likely "takes months" and it is likely the 1.2 million tonnes of production planned in [the second half of 2024] will be lost.
Citi estimates an earnings before interest, tax depreciation and amortisation impact for 2024 at around USD250 to USD300 million, around 3% of the group total.
"More importantly, [Anglo American] is currently running the process for divestment of the steel making coal business and a major incident at an asset that accounts for close to a quarter of the production could impact the timing/value outcome of the process," it added.
Shares in Anglo American fell 2.2% to 2,441.50 pence in London on Monday afternoon.
By Jeremy Cutler, Alliance News reporter
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