16th Jul 2015 10:42
LONDON (Alliance News) - Anglo American PLC Thursday said it had a "solid" production performance in the second quarter of 2015 that was in line with its expectations but said it will take a substantial impairment charge in the first half totalling between USD3.0 billion to USD4.0 billion.
The FTSE 100-listed multi-commodity miner said iron ore production in the second quarter from its Kumba operations in South Africa fell 9% year-on-year to 10.4 million tonnes from 11.5 million tonnes due to mining feedstock constraints.
However, the miner said it achieved "record" export sales of 11.7 million tonnes in the period, up 14% as it continues to reduce its inventory, which fell to around 4.0 million tonnes from 6.5 million tonnes at the end of 2014.
Production from Kumba for the first six months of the year was down 1% year-on-year to 22.6 million tonnes from 22.8 million tonnes.
But iron ore production from Minas Rio in Brazil totalled 1.8 million wet tonnes in the second quarter, up 55% quarter-on-quarter as it continues to ramp-up. The mine was not in production a year earlier. Minas Rio has produced a total of 3.0 million tonnes in the first half.
Anglo American said first half production from Minas Rio was "marginally behind plan" due to changes to the filtration plant, but said this has been addressed leading to production continuing to increase in May and June.
Export metallurgical coal production was up 9% in the second quarter from the previous quarter to 5.3 million tonnes from 4.8 million tonnes, and export thermal coal production rose 5% in the quarter to 8.6 million tonnes from 8.1 million tonnes.
Operations in Australia and Canada produced 9% more metallurgical coal in the quarter and 38% more thermal coal, whilst production from South Africa remained broadly flat and Colombia reported a small rise.
Export thermal coal sales from South Africa were 16% higher than production in the quarter as it reduces its inventory.
Equivalent refined platinum production rose 60% to 572,000 ounces in the second quarter from 358,000 ounces despite being impacted by industrial strike action in the period. The miner said production would have been around 229,000 ounces higher if the strike action did not take place.
However, some other commodities also experienced a fall in production in the second quarter alongside iron ore.
Copper production was down 5% to 184,500 tonnes in the quarter from 194,500 tonnes a year earlier but was 7% higher year-on-year. Anglo American said this was as expected. Nickel production also fell as expected due to the planned furnace rebuilds to 6,300 tonnes in the quarter from 10,600 tonnes, representing a 41% fall from a year earlier.
Diamond production fell by 6% year-on-year to 8.0 million carats from 8.5 million carats mainly due to lower grades and reduced plant availability. That was up from the production in the previous quarter of 7.7 million carats.
Anglo American said it would provide production guidance for all of its commodities for the full year when it releases its interim results on July 24 "as usual", it said.
"The first six months of 2015 have seen significant further weakness and ongoing volatility in the prices of the bulk commodities, particularly iron ore and metallurgical coal. Anglo American has therefore reviewed its near and longer term commodity price assumptions at the mid-year, while also noting the gradual and ongoing reduction of consensus prices within what remains a wide range of forecasts," said the company.
As a result, Anglo American said it expects to take non-cash impairments totalling USD3.0 billion to USD4.0 billion in the first-half of the year.
Despite the impairment, Anglo American shares were trading flat on Thursday morning at 875.40 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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