Anglo American production declines and impairments planned

Production in the fourth quarter generally declined at Anglo American as the mining giant warned that crumbling commodity prices would lead to impairment charges in its full year results.

Compared to the previous quarter, the London-based group's fourth quarter saw falls in the production of iron ore, metallurgical coal, copper and nickel, with thermal coal and platinum group metals higher and diamonds slightly so.

For the whole of 2014, the FTSE 100 miner said it produced 48.9m metric tonnes of iron-ore, surpassing its guidance of 45m to 46m tonnes.

The total includes 688,000 tonnes from its Brazilian Minas-Rio project, which delivered its first consignment in October, and a 14% increase in output from its Kumba unit, Anglo American said.

However, iron ore prices have fallen by over two-thirds after hitting their heights four years ago.

“Given the sharply lower commodity-price environment, particularly for the bulk commodities, Anglo American expects to record certain non-cash impairment charges in 2014,” the company said in a statement on Wednesday.

Broker Shore Capital noted that fourth-quarter production being generally down on the previous period "will exacerbate [the] effect of falling commodity prices".

"Not really what we wanted to see, particularly given the general weakening in commodity prices."

However, analysts at SP Angel noted that copper surplus arguments might be "overdone" and that "copper prices could be better supported from here" after copper weakness at Anglo followed weaker production for a number of the companies reporting.

Anglo American shares were up 1.64% to 1,107.88 at 09:48 on Wednesday, having fallen from above 1,600p in the last six months.