[miningmx.com] – ANGLO American said it expected to impair some assets, especially its bulk commodity operations, owing to the decline in prices in its 2014 financial year scheduled for publication on February 13.
Anglo has been linked with the sale of several of its assets. It has already agreed to sell its 50% stake in Lafarge Tarmac to partner Lafarge SA for at least $1.5bn, and said in December it would sell its Callide and Dartbrook Australian coal projects on the block to which it may add two more, according to speculation by Bloomberg News.
In October it was reported Anglo would sell the Mantos Blancos and Mantoverde mines, along with Anglo’s 50.1% stakes in the El Soldado mine and Chagres smelter in Chile. Shares in Anglo were 1.3% higher in early morning Johannesburg trade.
Commenting in its fourth quarter production report, the group said: “Given the sharply lower commodity price environment, particularly for the bulk commodities, Anglo American expects to record certain non-cash impairment charges as special items for the 2014 financial year”.
Macquarie Research said in a report today that it expected that Anglo’s coal businesses and Minas Rio, its Brazil iron ore project, would “… bear the brunt of any impairment charges”. First iron ore shipment from Minas Rio took place in October, Anglo said.
Said Investec Securities: “We are not surprised by the warning of impairments, at the investor day management alluded to this potential particularly at Minas Rio. Continued weak commodity price performance may lead to other impairment charges”.
The prospect of impairments comes amid the heavy liquidation of oil and copper, albeit the latter was in the current financial year, while fourth quarter production figures showed hefty falls in the output of nickel, copper and diamonds.
On the upside, Anglo American’s 80%-owned listed platinum subsidiary, Anglo American Platinum, gave further evidence of its turnaround potential.
It increased refined platinum production 14% in the fourth quarter to 593,000 ounces owing to higher output at Amandelbult, Rustenburg and Union mines which suffered the effects of a strike last year. Mogalakwena increased production due to “… increased throughput at the concentrator and mining productivity improvements,” Anglo said.
Copper production decreased by 18% to 174,800 tonnes as a result of grade declines at Los Bronces and Collahuasi while nickel output fell 34% to 6,700 tonnes due to the Barro Alto Line 2 furnace rebuild, which commenced in October. Anglo said both output declines were ‘expected’ and scheduled.
Diamond production, which was Anglo’s star turn in its 2013 financial year, decreased 8% to 8.4 million carats compared with the fourth quarter last year due to lower grades at Orapa and Venetia, combined with lower production at Snap Lake as a result of a mandatory safety stoppage, the group said.
However, production for the year to December 2014 was 32.6 million carats, a 5% increase on the previous year, due to increased production from Debswana – output that represented De Beers highest production since the 2010 financial year.
Metallurgical and thermal coal output were relatively steady in the quarter while Kumba Iron Ore lifted production 10%.
“Overall, this is was a strong end to the year for Anglo with all businesses coming in at or very close to guidance,” said Macquarie Research.
