Anglo American slumps as it cuts copper output guidance

Anglo American shares were under pressure on Wednesday after the miner cut its full-year copper production guidance.

Due to the severe weather experienced at the Los Bronces mines during the quarter, which limited mine extraction and the ability to mine the higher altitude, higher-grade phases, production guidance was cut to between 570,000 and 600,000 tonnes for 2016 from 600,000 to 630,000 tonnes.

For 2017, it was revised down to between 570,000 and 600,000 tonnes from 590,000 to 620,000 tonnes.

In a production report for the second quarter to 30 June, the company said diamond output fell 19% to 6.4m carats as it reduced production in response to prevailing trading conditions in the second half of 2015.

Platinum production was down 8% to 144,200 tonnes while iron ore production at Kumba fell 15% to 8.9m tonnes as Sishen downside and transitioned the operations to a lower cost pit configuration.

Export thermal coal production slipped 6% to 8.1m tonne due in part to the ramping down of production at Drayton, where mining activities will cease in late 2016.

Platinum production was up 1% to 585,700 ounces and refined platinum output rose 33% to 747,600 ounces.

Nickel production increased by 76% to 11,100 tonnes following the successful completion of the Barro Alto furnace rebuilds in 2015 and iron ore output from Minas-Rio rose 91% to 3.5m tonnes.

Chief executive Mark Cutifani said: “The Q2 2016 operating results are in line with the equivalent period of 2015 on a copper equivalent basis). We are building upon the improving operational trend from the first quarter as we recover refined platinum production and continue to ramp-up Minas-Rio, Grosvenor and Barro Alto.

“We also continue to demonstrate discipline in our key markets, particularly diamonds and platinum, in line with our focus on higher margin and lower cost assets. The decisive actions taken by De Beers last year led to more normal trading conditions in the first half of 2016 with sales volumes increasing as a result, but we maintain a cautious outlook."

At 0950 BST, Anglo shares were down 5.3% to 770.40p.