Anglo American maintained its full-year production guidance despite a rocky start to 2019, with the bulk of a decline in first-quarter output stemming from its metallurgical coal mine in Australia.
Anglo, one of the world’s largest diversified mining companies, reported a 6% fall in group output measured as a copper equivalent for the three months to end-March. Anglo released production numbers only and no financial data.
About 80% of this decline was due to two planned longwall moves at its metallurgical coal mines. A longwall move is a shift to mine a fresh block of coal. Net coal production was 25% lower at 4.2-million tonnes compared to the first quarter of 2018.
The balance of the output decline came from lower diamond production, particularly from the $2bn Venetia mining project in SA where operations are moving underground, Anglo American Platinum and Kumba Iron Ore, two SA subsidiaries.
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“By the end of the quarter we had increased our production run-rate and are on track to deliver this year’s production targets and our guidance is unchanged,” CEO Mark Cutifani said in a statement.
De Beers, which is 85% owned by Anglo, reported an 8% decline in output to 7.9-million carats, with SA production falling 65% to 400,000 carats as mining switches to underground at Venetia and the Voorspoed mine was closed at the end of 2018.
Rough diamond sales dropped to 7.5-million carats in the first quarter compared to 8.8-million carats the previous year as persistent sogginess in the small-diamond market remained a factor.
De Beers maintained its outlook at between 31-million and 33-million carats for the year.
Copper, which is an important division for Anglo and one that is attracting fresh investment in a new mine, reported a 4% increase in production to 161,100 tonnes, “the best first-quarter performance since 2014”, the company said.
Anglo American Platinum, which is 80% held by Anglo, reported a steep drop of 14% in platinum sales and 11% in palladium sales to 414,200oz and 292,100oz respectively.
The decline was in line with lower refined output due to maintenance work at the base metals refinery and converter plant as well as power outages and a physical stock-take at the precious metals refinery.
Unplanned processing issues at Kumba Iron Ore’s Sishen and Kolomela mines in SA meant output fell 12% to 9.5-million tonnes.
Kumba’s iron ore sales remained steady at 10.9-million tonnes.
At the closely watched Minas Rio iron ore mine in Brazil, output ramped up by 61% to 4.9-million tonnes after an extended shutdown during 2018 because of leaks in the 530km pipeline linking the mine to the coast.
Analysts are concerned that delays in securing a permit to extend a tailings dump will negatively affect the operation, leading to a full mine shutdown in 2020. Anglo did not give any details or guidance to the market on developments around this matter.
However, it reassured investors and analysts during its full-year results presentation in February that it had experts working on its tailings dam designs and it was closely co-operating with Brazilian authorities to secure its permit.