LONDON--Anglo American (AAL.LN) reported lower production at its
key iron-ore and platinum operations for the last quarter of 2012,
the latest example of how strike action in South Africa is landing
big blows on the global mining industry.
BHP Billiton Ltd. (BLT.LN) and Rio Tinto PLC (RIO.LN), by
contrast, both recently reported higher iron-ore output after
expanding their operations in Western Australia, while Anglo
American suffered from illegal protests at its largest iron ore
mine in South Africa. Its flagship Brazilian iron-ore project,
Minas Rio, is several years behind schedule and more than $5.5
billion over cost.
The FTSE 100 miner said it was still working on a new
capital-expenditure figure for Minas Rio after the lifting of three
injunctions that had contributed to a delay in first iron-ore
shipment to the end of 2014. Anglo American had previously said it
expected the project cost to be no less than $8 billion, more than
three times its original budget. It didn't announce any write-downs
on the project Friday, which some analysts say is likely to
happen.
The miner's Anglo American Platinum Ltd. subsidiary saw
equivalent platinum output fall 29%, to 416,000 troy ounces, as the
strikes in South Africa cut production by 272,590 ounces.
A London-based platinum broker said the lost production from the
world's largest platinum producer, accounting for some 40% of
global supply, had helped support the spot platinum price, which is
up 0.3% at $1,687 a troy ounce. It had already gained some 10% in
January.
Anglo American Platinum didn't give a time frame for its
proposed cull of 14,000 jobs which are linked to its plans to shut
loss-making mines. The proposed layoffs had sparked a backlash from
the government and ruling African National Congress. Analysts said
they worry that the government may pressure the company to scale
back the proposed cuts.
Anglo American said its fourth-quarter iron-ore output fell 19%,
to 9.01 million metric tons, as a result of illegal strikes at its
largest mine, Sishen. Iron ore and manganese accounted for 39% of
the company's earnings before interest, taxes, depreciation and
amortization, or Ebitda, in the first half of 2012.
Copper production rose 2%, to 172,900 tons in the fourth quarter
as higher output from the Chilean Los Bronces mine more than offset
lower grades and the outage of a mill at Chile's Collahuasi mine.
Copper was the company's second-largest contributor to earnings,
accounting for 24% of Ebitda in the first half of 2012.
Diamond output from majority-owned De Beers SA increased 24%, to
8.1 million carats, largely due to the resumption of mining
operations at Jwaneng, South Africa, in September. Nickel output
fell 25%, largely due to the expiration of Loma de Niquel mining
concessions in Venezuela.
"Anglo reported an encouraging set of production results in a
very challenging quarter," said Citigroup analysts in a note. They
said that Anglo American beat the bank's expectations in copper,
coal, and platinum, while iron ore and manganese was in line with
its estimates.
The bank kept its neutral rating on the stock as the new
management grapples with Minas Rio, falling copper volumes at
Collahuasi, ramp up difficulties at Los Bronces and cost pressure
at its metallurgical coal operations.
Cynthia Carroll, Anglo's chief executive, has agreed to step
down in April following shareholder pressure partly related to cost
overruns. Ms. Carroll will be replaced by Mark Cutifani, the CEO of
AngloGold Ashanti Ltd.
--Devon Maylie in Johannesburg and Francesca Freeman in London
contributed to this article.
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