Diversified mining company Anglo American showed why it is among the leading mining houses in the world, when it revealed its interim management statement for Q1 ended 31 March 2013. Miningne.ws takes an overview look at the performance of the companys bulk commodities.

Iron Ore

Amid tough trading and economic conditions more especially in South Africas mining industry Anglo American announced that production at JSE-listed Kumba Iron Ore, a member of the Anglo American group of companies, increased by 2% to 10.3 Mt due to a strong performance at the Northern Cape-based Kolomela mine.

Anglo American expanded, pointing out that output increased by 15% compared to the previous quarter as production rates at Sishen mine, also in the Northern Cape, continued to recover following the unprotected strike in the fourth quarter of 2012, in addition to higher output from Kolomela.

Kolomela, which is on track to produce at annual design capacity of 9 Mt in 2013, produced 2.7 Mt for the quarter, an increase of 77%.

The company noted that export sales volumes for the quarter decreased by 2% to 9.9 Mt, as a result of lower stockpiles due to the unprotected strike in the fourth quarter of 2012. Further, finished product stockpile levels amounted to 3.3 Mt, a decrease of 15% compared to Q1 2012.

The Minas-Rio iron ore project in Brazil continued to progress in line with the target of achieving first ore on ship by the end of 2014. During the quarter, two further authorisations were obtained relating to the archaeological survey at the tailings dam and the works necessary for the commencement of pre-stripping at the mine site. Activities at the beneficiation plant, pipeline, filtration plant and port continued as planned.

Meanwhile, Anglo American said that manganese ore production decreased by 2% to 0.8 Mt, and that while marginally lower than the prior year, the quarter benefited from an improvement in plant availability at GEMCO in Australia.

Manganese alloy production increased by 4% to 57 300 ton due to higher production from South Africa.

COAL

Metallurgical Coal achieved record Q1 production of 7.2 Mt due to record export metallurgical coal production which increased by 23% to 4.6 Mt. Australia-based Moranbah, Foxleigh and Peace River Coal mines achieved record production through productivity improvements.

Anglo American explained that this was partially offset by excessive rainfall causing flooding throughout the quarter which had a significant impact on production and waste removal at the Australian open cut operations, adding that Dawson and Callide operations were the worst affected, as rain also caused the 43 day closure of the Moura rail line, which affected shipments from the Port of Gladstone.
The company advised that the floods and rail closure are expected to put pressure on production and unit costs for the remainder of the year.

Meanwhile, export thermal coal production increased by 52% driven by a number of productivity improvements at the Drayton operation in New South Wales, Australia.

Anglo American revealed that the greenfield Grosvenor metallurgical coal project in Queensland, Australia continues to progress, with all permits and licences in place. The company also reported that construction has commenced on site, with the access road complete and bulk earthworks under way, while Longwall production is expected to be achieved in 2016.

Export thermal coal production in South Africa increased by 6% to 3.9 Mt due to higher production at Zibulo after a reconfiguration of the wash plant to produce additional higher margin export coal, as well as improved machine availability at Mafube.

Domestic thermal coal production increased by 4% to 9.6 Mt, owing to improved longwall production at New Denmark.
Cerrejn, which is located in Colombia, saw its production decrease by 49%, largely due to a 32-day strike in February and March 2013 that preceded a successful resolution of a new three year wage agreement.

Copper

Copper production increased by 1% to 170 400 ton. Production from Los Bronces mine in Chile, increased by 5% to 98 300 tonnes, with higher throughput at both plants offset by expected lower ore grades. This higher throughput also resulted in a 3% production increase compared to Q4 2012.

Collahuasis production decreased by 13%, owing to lower grades and the commencement of a 45-day planned shutdown of SAG Mill 3 on 21 March. During the quarter, SAG Mill 3 operated at reduced capacity ahead of the planned shutdown. This mill is responsible for approximately 70% of plant throughput at Collahuasi.

Production at the El Soldado mine, also in Chile, increased by 16%, as a result of expected higher grades and improved recoveries.

Platinum

Equivalent refined platinum production decreased by 2% to 583 000 oz, largely owing to the intermittent illegal strike action at the underground mines in South Africa, lower production at Unki in Zimbabwe and the suspension of the non-managed pooled and shared Marikana operation in Q2 2012.

Equivalent refined platinum production at the Rustenburg mines was flat, while Amandelbult and Union reported decreases in output of 15%, while production at Unki mine decreased by 19% as a result of lower head grade and a decline in tonnes milled due to a depletion of pre-production stockpiles.

This was partly offset by a 31% increase in production at the Western Limb Tailings Retreatment plant largely driven by improved head grades and recoveries. At Mogalakwena, output increased by 1% to 87,000 ounces because of increased throughput at the concentrators.
Refined platinum production increased by 9% to 439,000 ounces owing to the impact of the prolonged shutdown at the converting plant in the Q1 of 2012.

Diamonds

Anglo American said that production increased by 3% to 6.4 million carats, largely reflecting improved grades, offset by lower production due to planned plant maintenance at Orapa mine in Botswana.

Production decreased by 21% compared with the prior quarter, with Venetia in South Africa disrupted by excessive rainfall causing flooding in the pit. The impact was partially mitigated through the processing of ore stockpiles, with the shortfall expected to be recovered in H2 2013.

Jwaneng in Botswana is continuing to recover from the impact of its slope failure incident in June 2012 and excessive rainfall at the end of 2012.

Company Developments

Exploration and evaluation expenditure for Q1 2013 totalled US$103 million, a decrease of 26%, while exploration expenditure in Q1 2013 was $48 million, an increase of $16 million largely driven by the inclusion of fully consolidated De Beers exploration costs following the acquisition of an additional 40% interest in De Beers in the second half of 2012.

Anglo American explained that expenditure was primarily focused on opportunities in Argentina, Australia, Brazil, Canada, Chile, Finland (Sakatti deposit), Indonesia and several countries in Africa.

Evaluation expenditure for the quarter was $55 million, a decrease of 48%. Evaluation expenditure is mainly focused on iron ore, metallurgical coal, copper and diamonds.

Meanwhile, on 28 March 2013 Anglo American announced its decision not to proceed with the acquisition of a 58.9% interest in the Revubo metallurgical coal project in Mozambique. As announced on 24 July 2012, the transaction was subject to a number of conditions.

The company said that those conditions were not satisfied and Anglo American decided not to proceed with the transaction.

Anglo American did however note that it expects to continue with its objective of establishing a position in the emerging metallurgical coal basin in Mozambique.

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