De Beers subdued, a Kumba blip, but Anglo steady on strongly priced metal sales

Iron ore pellets

UNSCHEDULED maintenance hit output at Kumba Iron Ore in South Africa and subdued trading conditions for De Beers partly informed a significant reduction in diamond sales, but Anglo American kept sales steady, especially in the higher priced commodities.

“We remain broadly on track overall to deliver this full year’s production targets, with an increase to Minas-Rio guidance offsetting two reductions at De Beers and Kumba Iron Ore,” said Mark Cutifani, CEO of Anglo, in comments to the firm’s interim production report.

There were full-year production adjustments at both De Beers and Kumba.

Driven largely by subdued trading conditions in the diamond market, owing to the poor environment for the mid-stream (the diamond ‘manufacturers’, or polishers and cutters), De Beers took its production target to 31 million carats, the lower end of its 33 to 31 million carat guidance for the year.

The average realised rough diamond price was 7% weaker at $151/carat for the half-year which was “… driven by a 4% reduction in the average rough price index and a change in the sales mix in response to weaker conditions,” said Anglo in its report.

De Beers brought forward maintenance at Orapa in Botswana and encountered lower production at Venetia in South Africa where the mine is switching to underground mining from its current open-cast operations. Production was stopped at the closed Voorspoed.

Diamond sales by De Beers over the first three sights or cycles of they year was about one million carats lower at nine million carats.

Kumba reported “unscheduled maintenance” at Sishen and Kolomela, but drew from stockpiles in order to keep sales level.

Production guidance for Kumba is now 42 to 43 million tonnes (Mt) compared to guidance of 43Mt to 44Mt. However, the Brazilian mine Minas-Rio – fresh from nine month downtime following a pipeline leak – is expected to produce as much as 21Mt against previously estimated production of 18Mt to 20Mt, the group said.

Production elsewhere across the product range was stable. Anglo American Platinum’s (Amplats’) production increased by 3% to 520,300 ounces while palladium production decreased by 1% to 347,200 oz. Both numbers exclude the impact of the transition of Sibanye-Stillwater Rustenburg material to a tolling arrangement in 2019.

However, the robust nature of the platinum group metal rand-basket pricing is expected to results in a highly significant contribution from the unit in the six month period. Amplats is to post its numbers on July 22 following by Kumba on July 23. Anglo is publishing its half-year numbers on July 25.