Shares in Anglo American inched up 3% on the JSE yesterday after it reported an 11% increase in overall production volumes while subsidiary Anglo American Platinum’s output plunged for the June quarter due to operational challenges at Amandelbult and Eskom load shedding.
Anglo American’s shares traded around 3% firmer at around R547.5 after Duncan Wanblad, the CEO, said its overall 11% rise in production, when compared to the second quarter period of 2022, was reflective of ramp-ups at the new Quellaveco copper mine in Peru. The mine has now “reached commercial production” levels.
“We also delivered a strong performance at our Minas-Rio iron ore operation in Brazil, as well as higher production from our open cut operations in Steelmaking Coal in Australia. These were offset by temporary lower production from De Beers’ Venetia mine, as it transitions from open pit to underground,” Wanblad said.
De Beers signed a new agreement with the government of Botswana for a 10-year sales agreement encompassing Debswana’s rough diamond production and mining licenses extending to 2054.
In the period under review, De Beers’ diamond production decreased by 5% to 7.6 million carats, due to the planned reduction from South Africa.
However, there was an increase of 6% and 8% from the Botswana and Namibia operations, boosted by the “planned treatment of higher grade ore at Orapa” as well as “ongoing ramp-up and expansion of the mining area at the land operations” respectively.
Rough diamond production from South Africa was lower by a massive 62% at 0.5 million carats as a result of a program to end open pit mining operations at Venetia, which however is continuing to process lower grade surface stockpiles.
“Demand for rough diamonds was impacted by the ongoing macro-economic headwinds, with high levels of polished diamond inventory in the midstream. Rough diamond sales totalled 7.6 million carats compared with 9.4 million carats in Q2 2022, and 9.7 million carats in Q1 2023,” Anglo American said in its trading update.
Copper production for Anglo American was 56% higher despite a 2% lowering in output from the Chile operations. However, steelmaking coal production quickened by 28%, reflecting higher production at the open cut operations, which offset unseasonal wet weather in the contrasting second quarter period in 2022.
The resource multinational’s exposure to South Africa’s difficult platinum mining sector impacted on platinum group metals production under Anglo American Platinum, which was hammered by operational challenges and electricity load shedding.
Anglo Platinum’s total PGMs production for the June quarter cooled by 9% to 943 100 ounces. The mines it controls and manages saw a 10% decline in output to 526 700 ounces, mainly due to short term constrains at the Amandelbult mine.
Scheduled power outages impacted its concentrators and smelters, resulting in increased work-in-progress inventory of 38 900 PGM ounces for the period. PGMs sales volumes resultantly retreated by 8% to 1 108 700 ounces as a result of the lower production of refined concentrates.
“Production was impacted mainly by short-term operational challenges and infrastructure closures at Amandelbult as well as expected lower grades at Mogalakwena,” said Natascha Viljoen, CEO of Anglo American Platinum.
Although Anglo Platinum said the Unki mine in Zimbabwe continues to deliver a stable tonnes output, its PGM production decreased by 11% to 59 000 ounces compared to the prior year’s comparative period.
Total Modikwa PGM production was 5% weaker at 70 200 ounces due to increased mining of lower grade ore while the output from Kroondal decreased by 19% to 101 800 ounces “largely due to the ramp-down at the Simunye shaft and geologically challenging ground conditions” across the complex.
“While we continued to manage heightened Eskom load-curtailment, it impacted 29 production days for the quarter contributing to a build-up in work-in-progress inventory of 38 900 PGM ounces. Eskom load-curtailment deferred own-managed mines metal in concentrate production by 21 500 ounces,” the company said.
Earlier this week, Anglo Platinum warned that profits for the interim period to the end of June may have fallen by up to 75% owing to softer metal prices and the effects of lower sales volumes owing to power outages in South Africa.
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