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Anglo’s South African mines up output, platinum sales ‘normal’ despite strike

Anglo CEO Mark Cutifani

Anglo CEO Mark Cutifani

17th July 2014

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – Anglo American’s South African mines came to the party in the three months to June 30, with increased production across-the-board, including platinum supply “at normal levels” to all platinum customers, in spite of the fierce five-month strike in the platinum belt.

The London- and Johannesburg-listed diversified mining company, headed by CEO Mark Cutifani, reported that production from its South African iron-ore, export coal and diamond mines increased owing to better operational performance. Anglo American Platinum (Amplats) reported record production from its lucrative Mogalakwena platinum mine in Limpopo and a sky-high refined nickel production increase.

A “solid performance” was reported from the Northern Cape iron-ore mines, while increased export thermal coal production from the Mpumalanga coal mines and enlarged diamond output from the Limpopo diamond mine, where Anglo is spending R20-billion to go underground, was reported.

Amazingly, the prolonged strike, the longest in South African history, “failed to affect” Amplats’ platinum processing operations and the company’s refined platinum production “remained in line” with last year’s second quarter (Q2) performance, supplemented by pipeline stock.

Platinum sales to customers continued “at normal levels”, supplemented by refined platinum stock record performance.

“A reasonable quarter,” said Investec Securities mining analysts; “exactly in line,” said Liberum analysts, while warning that the May rain’s effect on the Sishen iron-ore pit clay might hurt 2015 production should waste-removal catch-up fail.

Q2 production of export thermal coal from Anglo’s South African mines increased 6% to 4.3-million tons on productivity improvements at the Greenside, Goedehoep and Kleinkopje collieries.

JSE-listed Kumba Iron Ore’s Q2 iron-ore production rose 2% to 11.5 million tons, owing to output increases at the Sishen and Kolomela iron-ore mines.

Diamond production increased 7% to 8.5-million carats, largely as a result of higher output from De Beers’ Venetia mine.

And platinum production rose 23% to 95 600 oz at Mogalakwena on better head grade, improved concentrator throughput and upped mining productivity.

The joint venture (JV) and associate platinum mines increased platinum production 3% to 188 000 oz while output remained constant at Unki, in Zimbabwe, and at Rustenburg’s Western Limb Tailings Retreatment operation.

The platinum-linked output of refined nickel increased 105%.

Where the strike lowered output drastically was in the North West, where Amandelbult’s output fell 84% to 14 000 oz; Rustenburg decreased 91% to 13 000 oz; and Union dropped 91% to 4 000 oz.

Liberum expressed scepticism that the under-performing Amandelbult, Rustenburg and Union underground platinum mines would be disposed of in the short term, as has been speculated.

Anglo produced 7% less coal – 8.1-million tons – for South Africa’s State electricity utility Eskom on lower production from its Kriel coal mine, but more domestically in the non-Eskom space, where demand rose 2% to 1.6-million tons on additional production from the company’s Isibonelo JV with Sasol.

Reporting global production ahead of its presentation of results scheduled for June 25, Anglo said that waste removal at Sishen remained a key Q2 operational focus and that the production recovery plan had resulted in an 8% increase in waste stripping.

Sishen’s Q2 production was 8.3-million tons and Kolomela’s 14% higher at 2.9-million tons.

Export sales of iron-ore increased 1% to 10.3-million tons and domestic sales increased 21% to 1.4-million tons on increased offtake from steelmaker ArcelorMittal South Africa.

Investec analysts commented that they were retaining as “positive” their view on Kumba Iron Ore and described the company’s Q2 performance as “an overall good quarter”.

In Botswana, Debswana’s diamond production benefitted from improved productivity at the processing plants and repair to the Jwaneng slope.

In Australia, Anglo’s metallurgical coal exports rose 10% to 4.8-million tons on better productivity, but thermal coal production for export fell 5% to 8.1-million tons, mainly on lower output from Drayton.

In South America, higher throughput lifted copper production 6% to 194 400 t at Los Bronces and Collahuasi and nickel production rose 25% to 10 600 t on improved operational stability at Barro Alto.

Liberum commented, however, that although copper production was 3% higher than consensus for the six months to June 30, they were down 4% quarter-on-quarter, with continued decline likely on the expectation that grades would fall 9% at Collahuasi and 14% at Los Bronces.

Niobium production was flat at 1 100 t as was phosphates concentrate production at 349 500 t, while fertiliser production decreased 8% on maintenance stoppages.

Manganese ore production was unchanged at 868 000 t and the 72 500 t of manganese alloy production was in line with the prior year.

In Colombia, Cerrejón’s coal production fell 4% on dust emission stemming from the country’s drought conditions.

Platinum ounces lost because of the strike totalled 424 000 oz, with a further 16 000 oz lost during the “safe return to work” period.

In addition, Q2 production was 43 700 oz less owing to the consolidation of mine at Rustenburg and Union as part of the restructuring during 2013.

Refined platinum production decreased by 28% to 421 000 oz with a drawdown of pipeline inventory helping to offset some of the shortfall.

Refined production of palladium decreased 8%, while refined production of rhodium fell 30%, the variance caused by a different source of feed as certain mines’ supply was hit by the strike.

The strike ended on June 24 and employees returned to work on June 25.

"The largest deviation from production capacity is the well-flagged impact of the strike-affected platinum business in South Africa.

"Other than that, operations seem to have met their challenges and delivered volumes in line or modestly above out expectations," Investec commented.

Edited by Creamer Media Reporter

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