Anglo American Quarterly Iron-Ore Output Falls, Copper Rises

Anglo American Plc (AAL), a mining company with operations from Australia to Brazil, said second-quarter iron-ore output fell 1 percent from a year as its biggest production site recovers from strikes.

Iron-ore volumes were 11.3 million metric tons, the London-based miner said today in a statement. Copper rose 14 percent to 182,900 tons and platinum-equivalent refined production advanced 2 percent to 594,000 ounces.

“Weakish iron ore sales are the main concern, and an area to be monitored,” Investec Plc (INVP) said in an e-mailed note to clients. Iron-ore production was 2 percent below its estimate, the bank said.

Chief Executive Officer Mark Cutifani, who is scrutinizing every aspect of the company’s business after taking over from Cynthia Carroll in April, will announce the outcome of his review next week. The evaluation focuses on the performance of Anglo’s divisions, allocation of capital and the importance of South Africa to its portfolio, he said last month.

Production of export metallurgical coal, used in steelmaking, fell 9 percent to 4.4 million tons. Output of export thermal coal from South Africa declined 5 percent to 4 million tons and from Colombia fell 3 percent to 3 million tons.

Anglo may report a 31 percent plunge in underlying profit to $1.17 billion when it releases interim results on July 26, according to the average estimate of four analysts surveyed by Bloomberg News. The stock was little changed at 1,356 pence at 10:33 a.m. in London trading.

Diamond Mines

Anglo also mines diamonds in southern Africa and Canada. Production at De Beers, a gem producer owned by Anglo, jumped 10 percent in the second quarter to 7.9 million carats because of “favorable ore grades” at the Orapa and Jwaneng mines in Botswana, Anglo said. While output at the Venetia mine in South Africa declined 60 percent, full operations will be restored in the second half, it said.

The company’s copper output at Los Bronces in Chile increased 13 percent to 101,700 tons. Production from the country’s Collahuasi mine jumped 25 percent to 37,700 tons.

Anglo booked a negative provisional pricing adjustment of $189 million in the first half after selling copper at 318 cents a pound, compared with 370 cents the previous year, it said.

The Kumba Iron Ore (KIO) unit said second-quarter production at Sishen in South Africa decreased by 9 percent to 8.6 million tons from a year earlier as its biggest mine continued to recover from strikes late last year. The Kolomela mine increased output 49 percent to 2.6 million tons, countering the output loss from Sishen, Kumba said.

Platinum Unit

Anglo American Platinum Ltd. (AMS), the biggest producer of the metal, said July 15 that first-half profit almost doubled after the rand weakened, curbing the impact of cost increases in South Africa. Earnings excluding one-time items may have risen as high as 5.35 rand (54 U.S. cents) a share from 2.73 rand a year earlier. Amplats, as the company is known, will release full results next week.

Platinum producers in South Africa, which has the largest known reserves of the metal, have seen costs rise after strikes led to above-inflation wage gains, while demand wanes. Amplats intends to cut 6,000 jobs as part of a plan to return to profit by idling shafts and reducing annual output by 350,000 ounces. Talks with unions on the proposal are due to end on Aug. 10.

“Overall, not a great set of results, especially when compared to the better results from the other majors,” Numis Securities Ltd. said in a note. Anglo stock is expected to remain less attractive “with exposure to the weaker commodities and ongoing issues in South Africa, especially upcoming labor negotiations” and power-price increases, it said.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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