Anglo first quarter copper output surges amid buoyant copper, PGM iron ore prices

Collahuasi mine

ANGLO American reported a surge in first quarter copper production, supported by a 40% increase in the metal’s realised price, whilst production from the firm’s South African investments in iron ore and platinum group metals (PGMs) performed strongly.

There were also significant increases in first quarter prices for PGMs and iron ore compared to the 2020 average price.

All in all, first quarter production was 95% of normal capacity “… meeting strong customer demand despite some limited constraints at certain operations due to Covid-19,” said Mark Cutifani, CEO of Anglo American. Total group production was 3% higher year-on-year.

“Overall, a positive set of results with strong production in metals seeing the best price action (copper and iron ore),” said Goldman Sachs in a report.

The group’s South American mines Los Broncos and Collahuasi provided the bulk of first quarter production of 160,300 tons, an increase of 9% over the first quarter of the group’s 2020 financial year. Full year production guidance of 640,000 to 680,000 tons of copper was unchanged.

The copper price received for Anglo American averaged 421 US cents per pound (c/lb) compared to a 2020 financial year average of 299c/lb. The group said this included 168,979 tons of copper provisionally price on March 31 of 399c/lb.

PGM concentrate production from Anglo American Platinum (Amplats), the Johannesburg-listed business in which Anglo has an 80% stake, increased 7% to 1.02 million oz. But there was a major lift in first quarter refined production – up 59% year-on-year to 973,000 oz. The change was owing to technical problems in February last year in which Amplats shuttered its processing facilities.

Amplats said inventories would take about two years to clear through the market.

From a sales perspective, Amplats’ first quarter production numbers were notable for the continued contribution of rhodium to the basket price, which at $2,219/oz averaged about $200/oz more than the 2020 average. There were price improvements for palladium, and notably for platinum – up 9.5% – but the average price for rhodium doubled.

Amplats received $20,224/oz for its rhodium sales compared to last year’s average price of $10,628/oz. This supports the growing view that the PGM basket will remain competitively priced with other minor metals likely to come to the fore including iridium and ruthenium.

Amplats sounded a note of caution, however, saying that: “The sales mix is expected to revert to normalised levels for the rest of the year”.

Kumba Iron Ore, in which Anglo American has a 70% stake, lifted production 10% to 10.6 million tons (Mt) owing to improved plant availability. The company’s iron ore price came in at $183/t compared to $153/t which it said was down to the high iron content in its ore as well as “… timing on provisionally priced volumes”.

Kumba’s performance offset a 13% production decline at Minas Rio in Brazil owing to planned maintenance at its beneficiation plant. Production was expected to normalise for the remainder of the financial year.

As previously flagged in its regular sales cycle reports, De Beers reported an improvement in diamond prices amid broad economic recovery globally.

From a production perspective, rough diamond production decreased 7% to 7.2 million carats owing to “operational challenges, including excessive rainfall in southern Africa and a Covi-19 related shutdown in Canada and planned maintenance in Namibia”.

Anglo American has adjusted thermal coal production down to 14Mt from 24Mt previously to account for the demerger of its South African thermal coal mines, due for a shareholder vote in May.