AAL Anglo American Plc

By Joe Wallace

Anglo American PLC (AAL.LN) produced less copper in the fourth quarter as the drought in Chile knocked production at one of its biggest mines, the company said Thursday.

Palladium and platinum output rose, however, in a trend that will help shares in Anglo outperform those in other diversified miners, according to analysts at BMO Capital Markets.

Here are some highlights from Anglo's production report:

Copper:

Anglo mined 158,800 metric tons of copper in the final three months of 2019, 13% less than in the same period of 2018. For the year as a whole, production fell by 5% to 638,000 tons. The main reason for the fourth-quarter decline was a 28% fall in output at Los Bronces, Anglo said, "driven by the continued drought conditions in central Chile." The company expects to produce 620,000-670,000 tons of copper in 2020, but said the outlook depends on how much water is available.

Platinum-Group Metals:

Improving ore quality at the Mogalakwena mine in northern South Africa helped lift Anglo's overall production of both platinum and palladium by 10% in the fourth quarter from a year before, to 531,700 and 360,400 ounces respectively. Output also rose at the company's Dishaba mine, part of its operations in Amandelbult.

Anglo said output would have been higher without power outages from utility Eskom. Depending on the availability of power, Anglo expects to produce between 2 million and 2.2 million ounces of platinum and 1.4 million ounces of palladium-roughly the same as in 2019.

Diamonds:

Production by De Beers--Anglo's diamond-mining subsidiary--fell 15% in the fourth quarter from a year before to 7.8 million carats, as output tumbled 65% in South Africa, 10% in Namibia and 7% in Botswana. De Beers deliberately cut output "in response to softer rough diamond demand," Anglo said, a trend driven by the struggle by diamond polishers in India to access credit from the banking system. However, Anglo said diamond demand had improved toward the end of 2019, and that it expects to produce more diamonds in 2020 if this continues to be the case.

Write to Joe Wallace at joe.wallace@wsj.com

(END) Dow Jones Newswires

January 23, 2020 06:28 ET (11:28 GMT)

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