Amplats, Kumba keep 2019 output numbers unchanged despite Q1 whiffles

PRODUCTION decreases at Anglo American Platinum (Amplats) and Kumba Iron Ore in South Africa were among the main features of Anglo American’s first quarter production report, published today with declines in metallurgical coal the most influential metric for the period under review.

On a copper equivalent basis, group production was 6% lower. Four-fifths of this decline was down to longwall moves at its Australian metallurgical coal mines, Anglo said. Despite the lower numbers, production guidance for coal, platinum and iron ore were unchanged. Goldman Sachs described the report as neutral for the stock.

JP Morgan Cazenove said in a report yesterday that shares in Anglo American were fully priced as they did not factor in the risk posed by South African elections in May, or the prospect of a delay in granting a licence for its Minas Rio iron ore operations in Brazil – a potential event that could crimp earnings.

However, the performance from Minas Rio – which is recovering from a near year-long repair to pipeline ruptures – was ahead of expectations. The mine produced 4.9 million tons (Mt), an increase of 61%. Minas Rio is targeting full year production of 18 to 20 Mt whilst Kumba is keeping guidance unchanged at 43 to 44Mt.

This was despite a 12% first quarter decline to 9.5Mt which was “… driven by reductions at Sishen and Kolomela due to plant maintenance”, said Anglo. Total sales, however, were flat at 10.9Mt, helped by ongoing demand for premium quality lump product.

Amplats said refined platinum production decreased by 18% to 411,700 ounces and refined palladium production decreased by 8% to 293,600 oz. “The decrease was driven by maintenance required at both the Base Metals Refinery and the converter plant, the annual planned stocktake (including the physical stock take at the Precious Metals Refinery which occurs every three years) and power disruptions,” the company said.