RE: Back to the drawing board24 Jan 2020 00:16
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Severe drought in Chile led to a 28 per cent drop in copper production from one of Anglo American’s biggest mines in the fourth quarter last year.
Lower availability of water at the Los Bronces mine in the Andes, near Santiago, resulted in a 44 per cent drop in throughput at the plant, offset in part by productivity improvements and mining more copper-rich ore.
The group’s total output of copper, used in electric wiring, fell by 13 per cent in the fourth quarter and 5 per cent over the year. The setback was more than covered by increased production of iron ore from Anglo’s Minas-Rio project in Brazil and greater output of coking coal in Australia, leading to a 4 per cent rise in group production.
Anglo American, listed in London and Johannesburg, reported underlying net profit of $9 billion in 2018 from mining commodities including copper, coal, iron ore, diamonds and platinum.
On Monday it announced that it had agreed a £405 million takeover of Sirius Minerals, the struggling North Yorkshire potash mine developer, as it revives a fertiliser business that it sold off in 2016 to survive the commodities rout.
Anglo produces copper from three mines in Chile. It said that Chile’s central zone “continues to face unprecedented climate conditions, with 2019 being one of the driest years on record and the driest since the start of the current decade-long drought”. It produced 638,000 tonnes of copper last year and has said that it expects to produce between 620,000 and 670,000 tonnes next year, “subject to water availability”. Water is critical to its mining operators, both for transporting crushed ore as slurry and for use in processing.
Tyler Broda, analyst at RBC Capital Markets, said: “The conditions are expected to remain tight until the next melt in [the third quarter of] 2020. This poses a risk to guidance, but has also been previously warned and incorporated into the lower production guidance.”
He said production overall showed a “strong finish to a strong year, with production an average of 5 per cent better for both us and consensus”.
Mark Cutifani, chief executive of Anglo, said: “We have delivered our full-year production targets across the business. Production is up 4 per cent for the quarter led by the continued successful ramp-up at Minas-Rio in Brazil.” The Minas-Rio iron ore project had to be shut down for most of 2018 to halt leaks from the pipeline that takes the iron ore slurry to the port.
Production last year was 23.1 million tonnes, up from 3.4 million tonnes in 2018.
As well as the impact of the Chilean drought on copper output, Anglo also reported a 13 per cent drop in diamonds production from De Beers. Mr Cutifani said this was anticipated due to the Victor mine in Canada reaching the end of its mine life and as “Venetia transitions to underground in South Africa”.
Venetia, an open pit mine that began operations in 1992, is South Africa’s biggest diamond producer but by 2021 the ore in th
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