21st Apr 2016 08:55
LONDON (Alliance News) - Anglo American PLC on Thursday said production was in line with its expectations in the first quarter of 2016 as the multi-commodity miner reiterated its guidance for the full year.
The FTSE 100-listed miner, which is in the process of narrowing its focus to diamonds, platinum and copper, said the first-quarter production results reflect the major restructuring programme under way and the company's ongoing efficiency and cost-reduction strategy.
Diamond production in the first quarter, which comes from Anglo's 85% stake in De Beers, fell 10% year-on-year to 6.9 million carats from 7.7 million carats following the company's decision to reduce production to align itself with the trading conditions experienced in 2015.
Full year production, on a 100% basis, is still expected to be between 26.0 to 28.0 million carats.
Platinum concentrate production in the quarter was 4% higher at 567,000 ounces from the 544,000 ounces a year ago thanks to lifts at the Amandelbult and Mogalakwena operations in South Africa. Refined platinum production, however, was 52% lower because of a planned stock-take and a safety stoppage that lasted 12 days at the Precious Metals Refinery, the company said.
Production of platinum concentrate and refined platinum is still on track to hit 2.3 to 2.4 million ounces for the full year.
Anglo's other core unit, copper, saw production fall a smidgen year-on-year to 146,500 tonnes from 146,800 tonnes. Importantly, that is from continuing operations but overall production was down 15% year-on-year due to the sale of the AA Norte assets in Chile back in September.
The miner is on course to produce 600,000 to 630,000 tonnes over the whole of 2016.
Anglo American's other commodity segments, which will potentially be offloaded over the next few years, also reported overall falls in production in the quarter.
Iron ore production from its main Kumba operation in South Africa was down 27% in the first quarter at 8.9 million tonnes from 12.2 million tonnes as the Shishen mine at the project moved to a lower-cost pit configuration.
At the other end, production from the Minas-Rio operation in Brazil soared compared to a year ago, totalling 3.3 million tonnes from 1.2 million tonnes as the project continues to ramp up. Notably, production was 3% higher from the last quarter of 2015.
Fusing the operations together, combined iron ore production amounted to 12.2 million tonnes from 13.4 million tonnes, as total iron ore production edges closer to Anglo American's 15.0 to 18.0 million tonne target for the full year.
Metallurgical coal production was down 9% to 4.5 million tonnes from 5.0 million a year before thanks to the planned longwall moves at the Moranbah and Grasstree mines, but that was partly offset by a better performance from the Dawson mine and from the development coal production from Grosvenor. All of those mines lie within Australia.
Thermal coal production also fell 13% to 7.7 million tonnes from 8.7 million as Anglo American cut production at the Cerrejon mine in Colombia to reflect market conditions and because it made more lower-margin sales into the domestic market from the Landau mine in South Africa.
The miner is still expecting full year production of metallurgical coal to be in the region of 21.0 to 22.0 million tonnes and for thermal coal production of 28.0 to 30.0 million tonnes.
Exploration and evaluation expenditure in the quarter amounted to USD46.0 million, down 38% from last year's budget. In detail, exploration expenditure was down 20% to USD29.0 million whilst evaluation expenditure was 55% lower at USD17.0 million.
Anglo shares were down 1.1% to 783.7 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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