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SA power crisis weighs on Anglo
Julie Bain
Posted: Tue, 29 Apr 2008
[miningmx.com] -- ANGLO American's coal production fell 2.8% to 22.3 million tonnes (mt) in the three months to the end of March compared to 22.9mt in the same quarter last year largely because of lower production in South Africa as a result of power shortages, it said in its quarterly review.
Supplies of coal to South African power utility Eskom fell to 8.4mt from 8.7mt last year, while production of thermal coal, which is predominantly exported through Richards Bay Coal Terminal to power utilities mainly in Europe, fell 4% to 11.2mt. Production of metallurgical coal rose 4.9% in the first quarter to 2.8mt.
Anglo said coal production was knocked in the first quarter as a result of the power shortages in South Africa and of bad weather in both Australia and South Africa.
With the ramp up of output at the Dawson operation in Australia and extra production from the
recently acquired Foxleigh operation in Australia, thermal coal production in that country rose 8.2% to 3.4mt compared to the previous year.
At Anglo's metallurgical coal units in Queensland, production increased by 6.9% to 2.5mt in spite of severe flooding in the quarter. It was Anglo's South American thermal coal output, however, which showed the largest gain in the quarter, adding 10.3% to 2.8mt.
Refined platinum production in South Africa tumbled 18.9% because of the power shortages in the country; more details were released in the quarterly update from its subsidiary Anglo Platinum. Anglo said it remains on target to produce its previously stated target of 2.4m ounces of platinum in the 12 months of 2008.
South Africa's power problems also reduced diamond production at the 45% held De Beers. Anglo said total diamond output in the first quarter fell 6.8% to 11.7 million carats.
Iron ore production from Anglo's subsidiary Kumba Iron Ore rose 7.2% in the quarter, providing a bright spot for the South African operations. In the period Kumba produced 8.2mt which Anglo said: "was mainly due to the additional production delivered by the Sishen Expansion Project which was commissioned towards the end of 2007".
In South Africa too, despite the power cut backs, Anglo's output of manganese ore from its Samancor joint
venture with BHP Billiton rose "due to record or near record performance from all operations", said the company.
Manganese alloys production in South Africa was 1.3% lower year-on-year because of the mandatory 10% reduction in power consumption in South Africa which would have affected the company's smelting capacity in the first quarter.
Operations in Anglo's base metal unit, with the exception of its nickel division, showed an improvement in the quarter. Copper output rose 9.1% to nearly 160,000 tonnes as grades improved at Anglo's Los Bronces mine in Chile. Zinc production added 1% to 82,877 tonnes because the Lisheen operation in Ireland also provided higher grades and Anglo said it resolved operational issues at its South African zinc mine Black Mountain.
Nickel production fell by 28.5% to 4,622 tonnes in the period dragged down by the strike at Anglo's Loma Niquel mine in Venezuela which stopped production throughout March.
The
company is still waiting on its mining rights in South Africa but said that in February the "Department of Minerals and Energy and Anglo American confirmed agreement on all remaining matters regarding mining rights conversions, subject to completion of outstanding documentation".
In a separate statement issued today, Anglo said that it had raised $708m through the sale of its 0.78% equity interest in China Shenhua Energy. The company bought the interest in the power company when Shenhua listed on the Hong Kong stock exchange three years ago.
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