De Beers stands out as the exception to a rough start for the year at Anglo American

Anglo American experienced tougher-than-expected operating conditions in the quarter to end-March which have resulted in reductions in production guidance for the group’s output of iron ore, metallurgical coal and platinum group metals (pgm) for the full year to end-December.

Main reasons included high rainfall which hit operations in South Africa and Brazil in particular along with the impact of peak-Covid related absenteeism and “safety and other operational challenges” at the metallurgical coal  and iron ore operations.

According to former CEO Mark Cutifani – who stepped down on April 19 to be replaced by Duncan Wanblad – “this challenging start to the year highlights the importance of adhering to our operating model to stabilise performance after the necessary disruptions of the last two years as we adapted to – and now learn to live with – Covid.”

De Beers was the standout exception to the overall group performance with rough diamond production up 25% because of a strong operational performance and lower rainfall impact, particularly on the major Botswana mines.  Production guidance for 2022 is unchanged at 30m – 33m carats with unit cost guidance also unchanged at around $65/carat.

PGM output dropped 6% during the March quarter mainly due to high rainfall affecting the opencast Mogalakwena mine and full year production guidance for metal in concentrate has been dropped to between 3.9m oz  and 4.3m oz from the previous estimate of 4.1m oz to 4.5m oz.

Iron ore production fell  19% for the March quarter as high rainfall and plant issues hit both Kumba in South Africa and Minas-Rio in Brazil.  Full year production guidance has been dropped to between 60mt and 64mt from the previous estimate of between 63mt and 67mt.

Copper production dropped by 13% mainly because of a planned shift to lower grade ores but the group has maintained production guidance for 2022 at between 660,000t and 750,000t although it notes that production is subject to the extent of further Covid-19 related disruptions as well as water availability in Chile.

Metallurgical coal production slumped by 32% because of the delayed longwall move at Moranbah and the end of production from Grasstree. Production guidance for 2022 has been revised to between 17mt and 19mt from the previous estimate of 20mt to 22mt subject to further Covid-19 related disruptions and the timing of the restart of the Moranbah longwall mining operation.

Nickel production dipped 8% to 9,300t because of lower ore grades along with the impact of heavy rainfall and unplanned maintenance at Codemin.  Production guidance for 2022 is unchanged at between 40,000t and 42,000t.

Cutifani also stressed Anglo American’s moves towards achieving greater energy security and reducing costs and emissions. He pointed in particular to the MOU (memorandum of understanding) reached during the quarter with EDF Renewables to secure 100% renewable energy for the group ‘s South African operations.