Anglo American’s Q1 results reveal strong performances across its portfolio, with platinum being the one glaring exception.
The global miner released its interim management statement for the first quarter ended March 31 on Thursday, reporting increases for every major resource except platinum.
Iron ore production was up 10% compared with Q1 2013, export metallurgical coal output was up 31%, and export thermal coal was up 14%. Copper production rose by 18% compared to the same quarter last year, as did diamond output, while nickel saw a hefty 48% increase in production.
Platinum production was unsurprisingly down 39% to 357 000 ounces, due to the almost three-month long strike at Anglo’s Rustenburg, Amandelbult and Union mines in South Africa. As a result of the ongoing industrial action, the company revised its FY 2014 production guidance to approximately 2.1 million ounces, down from its previous 2.3 million to 2.4 million ounces.
Exploration and evaluation expenditure for the quarter came in at $82 million, a decrease of 21% compared to a year ago. Exploration expenditure was $35 million for Q1 2014, down $13 million, spread across all commodities but particularly focused on metallurgical coal and diamonds.
Evaluation expenditure for the quarter totalled $47 million, primarily focused on the copper business, reflecting a decrease of 15% from the corresponding quarter in 2013.
Production in detail
Kumba Iron Ore production increased by 10%, to 11.3 million tonnes, following strong performances from both Sishen and Kolomela. The first quarter of 2013 was, however, impacted by lower than planned production at Sishen following strike action.
Manganese ore production didn’t fare as well, decreasing by 14% to 692 200 tonnes, mainly due to planned maintenance locally and heavy rainfall in Australia, which affected feed rates and yields.
Metallurgical coal from Australia and Canada increased by 31% year-on-year, to 6.1 million tonnes – a record quarter for Anglo. This was primarily due to exceptional production from the underground operation and continuing productivity improvements, the company said.
Australia’s export thermal coal production decreased by 49%, to 800 000 tonnes, due to a product mix change with an increase in metallurgical coal production. Lower production levels were also recorded at Drayton, due to the mine nearing end of life.
Export thermal coal production from South Africa increased by 6% to 4.1 million tonnes – a result of improved operational performance at Greenside and the mine ramp-up at Zibulo.
Anglo reported that production at Eskom was 9% lower, at 7.4 million tonnes, due to excessive rainfall at New Vaal and a delayed start-up after the longwall move at New Denmark. Domestic non-Eskom production also decreased, by 10%, to 1.4 million tonnes, mostly as a result of heavy rainfall at Landau.
Finally, production at Colombia’s Cerrejón’s mine increased by 95%, with this dramatic jump attributed to the effect of a 32-day strike in Q1 2013.
Copper was a star performer in the quarter, with production increasing by 18% to 202,000 tonnes, thanks to improved performances from Los Bronces and Collahuasi. Anglo revised its higher ore grades production guidance for FY 2014 to 710, 000 to 730, 000 tonnes, up from 700 000 to 720 00 tonnes.
Production at El Soldado, meanwhile, decreased by 37% to 9900 tonnes, since its intersection with a geological fault has delayed development of the next major phase of ore supply, resulting in lower ore availability and grades, the company said.
Nickel production also increased, by 48% to 9200 tonnes, driven by improved operational stability at Barro Alto (despite a decrease in ore grades). Brazilian Barro Alto produced 6900 tonnes of nickel in the quarter under review, a 68% increase that reflects both continuing operational stability and the impact of planned stoppages in Q1 2013.
Phosphates concentrate production was flat at 347,900 tonnes, while fertiliser production decreased by 2%, due to an unplanned maintenance stoppage and throughput constraints.
Diamond production was up 18% to 7.5 million carats, largely due to the impact of planned plant maintenance at Orapa in Q1 2013 and recovery from the 2012 sidewall failure at Jwaneng.
Anglo’s only truly bleak result was the 39% drop in equivalent refined platinum production, down to 357,000 ounces. Ongoing industrial action that began on 23 January has been crippling its operations at the Rustenburg, Amandelbult and Union mines.
The total platinum ounces lost due to the strikes in the first quarter of the year came to 185,000 ounces. The company also suffered a decrease of 43 000 ounces as a result of placing Khomanani Mine, Khuseleka 2 shaft and Union North Mine declines on long-term care and maintenance in August last year.
Anglo added that the strike action had not impacted production at the Mogalakwena and Unki mines, or the majority of the joint operations and associates. Production at Mogalakwena increased by 3%, at Unki mine by 4%, and at joint operations and associates by 5%.
There seems to be no end in sight to the three-month long strike, although Anglo Platinum, along with Lonmin and Impala Platinum, are now trying to take their offer directly to workers.