Anglo American pleases with production report

Anglo American delivered a third quarter production report showing increased diamond, nickel and iron ore output and lower copper in-line with expectations, with full-year guidance mostly reiterated.

Chief executive Mark Cutifani said operational improvements across the portfolio were the main reason for the healthy report, with a 4% production increase on a copper equivalent basis in the third quarter.

Compared to the second quarter of the year 2016 the increase of 12% was largely due to the strong recovery at Kumba's Sishen mine where the completion of its restructuring led to a 46% production increase.

He noted improved market conditions for diamonds, but maintained a relatively cautious outlook.

Total iron ore production from the Kumba project reached 11.8m tonnes in the three months ended 30 September, an increase of 3% on last year and 33% versus the second quarter of 2016, while Minas-Rio increased iron ore production by 53% year on year to 4.5m tonnes as it continues to ramp-up.

Anglo is looking to sell Kumba along with its coal mines and manganese operations in South Africa in order to focus on its more profitable platinum, copper and De Beers diamonds businesses.

Cutifani said the diamond and platinum businesses saw continued discipline on volumes by "mining to demand", with diamond production of 6.3m carats increased by 4% on the same quarter last year and platinum production broadly unchanged compared to last year, increasing by 1% to 619,000 ounces.

Copper production decreased by 9% to 139,800 tonnes as expected, with lower grades at Los Bronces and the impact of strikes at Los Bronces and El Soldado were partly offset by strong plant performance and higher grades at Collahuasi.

Nickel production increased by 66% to 11,300 tonnes following the successful completion of the rebuilding of furnaces at Barro Alto last year.

Broker Investec said the production results were broadly in line with its expectations, with platinum, iron ore and metallurgical coal ahead, and copper behind.

With no changes in full year guidance other than a minor lift in Kumba iron ore, "we do not expect any material changes in our numbers" analysts wrote.