Anglo American Copper, Coal Output Beat Estimates
Anglo American Plc (AAL) reported first-quarter copper, coal and nickel output that beat estimates. The shares rose.
Copper production climbed 18 percent to 202,000 metric tons because of higher ore grades at the Los Bronces and Collahuasi mines in Chile, Anglo said in a statement today. The London-based miner raised the 2014 copper-output forecast to 710,000 tons to 730,000 tons from 700,000 tons to 720,000 tons.
“Results were solid versus our forecasts,” Fraser Jamieson, a JPMorgan Securities Plc analyst, wrote in a note to investors. Output of copper, metallurgical coal and nickel, which together account for 47 percent of operating profit, was “stronger than expected,” he said. Production of export metallurgical coal, used in steelmaking, increased by 31 percent to 6.1 million tons.
Mark Cutifani started a review of Anglo’s worldwide assets after joining the company as chief executive officer a year ago, replacing Cynthia Carroll who quit amid cost overruns and delays at the Minas-Rio iron-ore project in Brazil. He has set a goal of improving Anglo’s return on capital to at least 15 percent by 2016 from 11 percent in 2013.
Anglo shares rose 1.3 percent to 1,566.5 pence in London, the biggest gain in a week.
“I like the numbers, seems to show Mark is getting a handle on things,” Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London, said in an e-mail. “Most important point is that they continue to flag Minas-Rio is still on track and on budget for first ore on ship 2014! Let’s see. A good result for the company.”
The Minas-Rio project, which is scheduled to ship its first ore by the end of the year, was 88 percent completed at the end of the first quarter, the company said. It kept the capital expenditure forecast for the project at $8.8 billion.
Production at the company’s Anglo American Platinum Ltd. (AMS) unit dropped 39 percent to 357,000 ounces in the first quarter as a three-month-old pay strike paralyzes South African mines. Anglo cut its full-year production estimate by as much as 13 percent and said more cuts are possible because of the walkout.
The Association of Mineworkers and Construction Union called more than 70,000 miners out on strike on Jan. 23, including employees at Amplats, as the unit is known. A third day of talks between producers and the union aimed at resolving the standoff were held today.
“Total platinum ounces lost due to the industrial action in the first quarter 2014 was 185,000 ounces,” Anglo said in the statement. The company reduced its platinum-production forecast for 2014 to about 2.1 million ounces from 2.3 million ounces to 2.4 million ounces. “Sales to customers continue at normal levels, supplemented by refined platinum stock.”
Output at Kumba Iron Ore (KIO), Anglo’s unit in South Africa, advanced 10 percent to 11.3 million metric tons. The country accounts for about 45 percent of the company’s revenue across all commodities.
Output of thermal coal for export markets from South Africa rose 6 percent to 4.1 million tons. Total export thermal coal rose 14 percent to 7.9 million tons, Anglo said. Production at the Cerrejon mine in Colombia climbed by 95 percent, reflecting the strike that affected the same period last year.
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