Mark Cutifani, Anglo American CEO, says the strong performance in copper offset declines in diamonds and iron ore in the third quarter of 2018. Picture: RUSSELL ROBERTS
Mark Cutifani, Anglo American CEO, says the strong performance in copper offset declines in diamonds and iron ore in the third quarter of 2018. Picture: RUSSELL ROBERTS

After a standout performance in its copper division in the September quarter and positive performances across the bulk of its other businesses so far in 2018, Anglo American lined itself up for a strong 2018 by meeting its production targets.

Anglo, which is listed in London and Johannesburg, reported quarterly falls in diamond, iron ore and metallurgical coal production for the three months to end-September compared to a year ago, but these were offset by an outstanding performance from its copper mines. 

“Strong operational performance at our copper assets delivered a 17% increase in production, more than offsetting planned lower volumes at De Beers and the impact of rail infrastructure constraints at Kumba in the first half of the year,” Anglo CEO Mark Cutifani said, referring to JSE-listed Kumba Iron Ore, Africa's largest iron ore miner.

On a year-to-date basis, Anglo's production numbers are all positive apart from a small dip in iron ore — excluding the well-flagged stoppage at the Minas-Rio iron ore mine in Brazil — and nickel, but Anglo has retained its full-year forecasts for all its commodities.

Copper production for the year to date was 485,000 tonnes, 13% higher compared to a year earlier. Output was 17% higher in the quarter at 17,200 tonnes.

Kumba, which is 69.7% owned by Anglo, had a difficult start to the year, with derailments on the railway line linking its two mines in the Northern Cape to the Saldanha port 860km away, and refurbishment of the ship loader at the harbour.

Kumba slowed production in its third quarter, lowering output by 9% to 10.5-million tonnes to “offset elevated stock levels at Sishen and Kolomela arising from Transnet rail constraints in the first half of 2018”

“Production volumes were also impacted by the slight decrease in processing plant yields as Kumba focused on producing high-quality products to maximise the value of tonnes railed to port and benefit from the strong demand for high-grade ore,” Kumba said on Tuesday.

Export sales fell by 10% to 9.7-million tonnes during the quarter as a scheduled refurbishment programme at Saldanha left just one ship loader in operation.

Kumba's stockpile of iron ore increased to 6.6-million tonnes from 6.2-million tonnes at the end of June.

“Kumba continued to work closely with Transnet to improve logistical performance and good progress has been made during the quarter,” it said, adding that it maintained its targeted full-year sales at between 42-million and 44-million tonnes.

The restart of Minas Rio, where repair work on a damaged section of pipeline linking the mine to the port more than 500km away is due to be completed by year-end will be “the next positive catalyst for Anglo”, said SBG Securities analyst Tim Clark.

seccombea@bdfm.co.za