Anglo American gives mixed picture of Q2 production report

Anglo America CEO, Mark Cutifani

Anglo America CEO, Mark Cutifani

Anglo American Plc has provided production update for the second quarter ended 30 June 2013. The diversified mining giant presented a mixed picture from its divisions, which runs from diamonds, platinum to coal.

The company said production from its Kumba Iron Ore decreased marginally by 1% to 11.3 Mt, with weaker production at Sishen being offset by a strong performance at Kolomela. Production at Sishen mine suffered from low supply of higher grade material as the mine continued to recover from stock drawdowns during the unprotected strike in Q4 2012. Production volumes at Kolomela, which successfully ramped up in 2012, increased by 49% to 2.6 Mt, reflecting 3 months of full production during the quarter.

“Export sales volumes decreased by 4% to 10.2 Mt due to lower stockpiles and production as Sishen continues to recover from the unprotected strike in Q4 2012. Finished product stockpile levels amounted to 3.3 Mt, a decrease of 11% compared to Q2 2012,” Anglo American said.

On the other hand its Manganese Ore production increased by 5% to 0.9 Mt, a quarterly record benefitting from improved plant availability at GEMCO in Australia while Manganese Alloy production increased by 141% to 73,000 tonnes due the temporary cessation of production at TEMCO in Q2 2012.

Anglo revealed that export of metallurgical coal production decreased by 9% to 4.4 Mt due to strategic production cuts executed in 2012 in anticipation of weakening market conditions, a planned longwall move at Moranbah and recovery at Dawson following adverse weather conditions in Q1 2013. This was partially offset by improved longwall cutting hours at Moranbah.

“The strategic production focus and Moranbah’s improvement had a favourable impact on the product mix, with hard coking coal (HCC) to pulverised coal injection (PCI) increasing by 8% in H1 2013 compared to H1 2012,” it said.

“Aquila, a bord and pillar operation producing around 0.5 Mtpa of hard coking coal, will be placed under care and maintenance from 30 July 2013, as a result of weaker prices. Export thermal coal production was in line at 1.5 Mt”.

Equally, export thermal coal production in South Africa decreased by 5% to 4.0 Mt primarily due to mining through poorer than planned geology at Goedehoop with domestic thermal coal production for Eskom increased by 5% to 8.8 Mt, owing to improved machine availability and higher longwall production at New Denmark.  “However, Cerrejón recovered strongly following the strike in Q1 2013, with production only marginally lower than Q2 2012’s record production.

The production of copper increased by 14% to 182,900 tonnes in line with expectations, due to higher production across all businesses except Mantoverde. Production guidance for 2013 is maintained at 680,000 tonnes, against a backdrop of continued caution around the operating performance recovery and stability, particularly at Collahuasi,” Anglo said.

“A negative provisional pricing adjustment of $189 million was recorded in H1 2013 compared to a positive price adjustment of $20 million in H1 2012, resulting in a realised price of 318 c/lb for H1 2013 versus 370 c/lb for H1 2012.”

Anglo’s nickel production decreased by 22% to 8,500 tonnes, driven by the permanent cessation of production at Loma de Níquel in Venezuela in November 2012. Loma de Níquel produced 3,000 tonnes in Q2 2012. This was partially offset by higher production at Barro Alto, which increased by 13% to 6,100 tonnes. Production at Barro Alto continues to ramp-up, but was affected by a number of stoppages during the quarter. It is expected that Barro Alto will produce approximately 20,000 – 25,000 tonnes in 2013.

However, diamond production increased by 10% to 7.9 million carats, largely reflecting improved grades at Orapa and Jwaneng, offset by lower recoveries at Venetia following flooding in January 2013. Production at Venetia decreased by 60%, with shortfalls mitigated through the processing of ore stockpiles. Restoration of full operations is expected during H2 2013.

“Production at Jwaneng in Botswana continues to recover from the impact of the slope failure incident in June 2012, which is expected to be fully resolved during Q3 2013.”

Anglo American said exploration and evaluation expenditure for Q2 2013 totalled $132 million, a decrease of 24% while exploration expenditure in Q2 2013 was $45 million, an increase of $5m, driven by the inclusion of De Beers partially offset by a reduction in central exploration expenses. Evaluation expenditure for the quarter was $87 million, a decrease of 35%. Evaluation expenditure is mainly focused on iron ore, metallurgical coal, copper and diamonds.

error: Content is protected !!