Production challenges and higher costs hit major miners’ first quarters21 Apr 2022 21:49
Anglo American (AAL), Antofagasta (ANTO), BHP (BHP) and Rio Tinto (RIO) all reported lower production in the first three months of 2022, while all them bar Antofagasta cut guidance given the lingering nature of the some of the operational issues.
“Weak” was the overriding response to the numbers, which included a 15 per cent drop in iron ore production at Rio Tinto, while labour disruptions and weather issues saw Anglo miss expectations on every product bar diamonds. BHP cut its 2022 financial year (ending 30 June) copper guidance on the back of Covid-19 cases and protests around the Escondida mine in Chile, the world’s biggest producer of the red metal. BHP boss Mike Henry said production gains elsewhere had been “more than offset at Escondida”. The Big Australian held onto iron ore guidance for the year despite a 10 per cent fall in output in the March quarter, because of continued worker shortages in the Pilbara.
RBC Capital Markets analyst Sam Crittenden said overall prospects were still good for the sector but headwinds were clear. “High commodity prices, subdued capital spending, and healthy balance sheets should translate into another quarter of strong free cash flow, but we see operational risk increasing on the back of cost inflation,” he said.
Anglo was down 8 per cent on the update, Rio 3 per cent, BHP 2 per cent and Antofagasta 3 per cent.
AH - Investors Chronicle