Anglo American surges after fourth quarter production report

Anglo American surged to the top of the FTSE 100 as investors welcomed its fourth quarter production report.

Production for the fourth quarter rose 3% from the end of 2014 and the third quarter, while output for the year as a whole was up 5%.

Copper output from the group’s retained operations in the three months ended 31 December rose 23% to 181,400 tonnes thanks to higher grades, throughput and metal recoveries.

Nickel production increased 57% to 10,500 tonnes following the successful completion of the planned Barro Alto furnace rebuilds.

Meanwhile, Minas-Rio saw a more than fourfold increase in iron ore production to 3.3m tonnes, which reflected the ongoing ramp-up of the operation.

On the downside, however, iron ore production at Anglo’s Kumba project slumped 12% to 10.9m, reflecting operational changes at Sishen to move to a lower cost mine configuration.

Although this was weaker compared to the same quarter in 2014, it was above RBC Capital Markets’ estimate of 10.4m tonnes.

Export thermal coal production fell 21% to 7.7m tonnes, which the company attributed to the impact of strikes in South Africa and weather-related issues at Cerrejón mine.

Platinum production was largely flat at 598,000 ounces, while diamond output slid 16% to 7.1m carats as Anglo chose to reduce production in response to trading conditions.

SP Angel analyst John Meyer said the production report looks reasonable with a good performance from copper and an improvement in nickel.

“These results may remind the market of some of the better quality assets within the company’s portfolio which may be better recognised outside the Anglo portfolio as the market frets about the ability of the Anglo balance sheet to withstand a commodity price environment,” he said.

Back in December, Anglo said it would be suspending its dividend payment for 18 months as it announced a radical portfolio restructuring and further material costs savings and capex reductions to combat declining commodity prices.

At 1224 GMT, Anglo shares were up 9.6% to 278.15p.