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Pin to quick picksAnglo American Share News (AAL)

Share Price Information for Anglo American (AAL)

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Share Price: 2,693.50
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Miners' profits face an unusual foe: extreme weather

Fri, 29th Jul 2022 17:01

July 29 (Reuters) - Heavy rainfalls, withering droughts and other extreme weather patterns across the globe are denting miners' profits and crimping supply of iron ore, copper and other widely-used minerals as climate change roils yet another industry.

It is an unusual situation for companies that have experience operating anywhere in the world, include miles underground and at the tops of mountains and in places where temperatures often range from 100 degrees Fahrenheit (38°C) to 0F (minus 18°C).

But the first part of 2022 saw the mining industry - parts of which have long faced criticism for how coal production affects climate patterns - contend with a raft of weather-related incidents entirely outside its playbook. Executives detailed their weather-related troubles in earnings reports this week and warned they are likely to continue.

"We are reviewing a few different scenarios to adjust to the likelihood that there are further strange weather patterns," said Lundin Mining Corp Chief Executive Peter Rockandel.

Lundin cut its 2022 copper production forecast after heavy rains dented production at its Chapada mine in Brazil, a facility that as recently as 2019 was contending with drought.

Anglo American Plc slashed its dividend nL1N2Z90D4 after torrid rains hurt its iron ore production in Brazil during the first half of the year, coal mining in Australia and platinum mining in South Africa.

"The extremes that we saw in quarter one of this year outpaced all reasonable forecasting ability that we had," said Anglo CEO Duncan Wanbald.

Rio Tinto Ltd's iron ore shipments from Australia's Pilbara region fell 2% in the first half of the year nL4N2Z819P compared with the same period in 2021, partly due to "significantly higher than average rainfall in May."

Rio also said titanium dioxide production slipped in Madagascar amid one of the worst cyclone seasons in that country since 2008.

With inflation and high energy costs already biting into companies' cash reserves, the disruptions caused by extreme weather are even more evident.

"When markets are tight, these things just become a lot more material ... but there is not a lot you can do," analyst Ben Davis at broker Liberum said.

The cost of weather extremes is also measured in human lives. In Burkina Faso, unexpectedly heavy rains during the dry season caused flash floods at Trevali Mining Corp's zinc mine in April nL1N2Y71IL, killing eight miners who were trapped underground.

Brazil's Vale SA, one of the world's largest iron ore miners, said its output nL1N2Z93CO of the steel-producing mineral dropped in the first three months of the year due to torrential rains. Glencore warned nL1N2ZA0CB that flooding could dent its Australian coal production this year.

Sibanye Stillwater Ltd shuttered its Montana platinum mines last month after mountain snow rapidly melted amid unusually warm weather, causing runoff that took out several key roads and bridges.

ArcelorMittal SA said steel production at its South Africa's unit fell nearly a third during the first half after severe flooding in the KwaZulu-Natal province damaged rail lines.

DROUGHT

In Chile, the world's largest copper producer, miners have faced an ongoing water crisis due to historic drought that has lasted more than a decade and only grown worse this year. Antofagasta Plc, one of the country's largest copper miners, expects its production of the red metal to fall this year due to that drought.

Water is essential in copper production, used abundantly to separate the mineral from its ore and in subsequent steps. To counter water shortages, many mining companies desalinate ocean water and use it in their processes.

Earthworks, an environmental group that tracks the mining industry, said mining companies must do more to fund infrastructure improvements amid the changing climate.

"Mining companies have been prioritizing their bottom line over investing in safety and resiliency for too long," said Jan Morrill of Earthworks.

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UK dividends calendar - next 7 days

Friday 8 March 
Aberforth Smaller Cos Trust PLCdividend payment date
Aberforth Split Level Income Trust PLCdividend payment date
Avon Protection PLCdividend payment date
Baronsmead Second Venture Trust PLCdividend payment date
Baronsmead Venture Trust PLCdividend payment date
Blackstone Loan Financing Ltddividend payment date
GCP Infrastructure Investments Ltddividend payment date
Majedie Investments PLCdividend payment date
Paragon Banking Group PLCdividend payment date
PRS REIT PLCdividend payment date
Renew Holdings PLCdividend payment date
Residential Secure Income PLCdividend payment date
S & U PLCdividend payment date
SSE PLCdividend payment date
Troy Income & Growth Trust PLCdividend payment date
Monday 11 March 
no events scheduled 
Tuesday 12 March 
Invesco Perpetual UK Smaller Cos Investment Trust PLCdividend payment date
Wednesday 13 March 
Tharisa PLCdividend payment date
Thursday 14 March 
abrdn PLCex-dividend payment date
abrdn UK Smaller Cos Growth Trust PLCex-dividend payment date
Alpha Real Trust Ltdex-dividend payment date
Anglo American PLCex-dividend payment date
Apax Global Alpha Ltdex-dividend payment date
Balanced Commercial Property Trust Ltdex-dividend payment date
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LPA Group PLCex-dividend payment date
Merchants Trust PLCdividend payment date
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NatWest Groupex-dividend payment date
Real Estate Credit Investments Ltdex-dividend payment date
Treatt PLCdividend payment date
Tritax EuroBox PLC dividend payment date
  
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A full 14-day events calendar is provided each day with a subscription to Alliance News UK Professional.
  
Copyright 2024 Alliance News Ltd. All Rights Reserved.

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