Anglo kicks off quarter on positive note as copper lifts overall output

Anglo American’s overall firstquarter production rose 9% from a year earlier, helped by a 28% jump in copper output from the ramp-up of its Quellaveco mine in Peru and improvement in its steelmaking coal operations, it said on Tuesday.

The London and JSE-listed miner said it produced 178,000 tonnes of copper in the quarter to March, and reported a 59% jump in steelmaking coal output to 3.5-million tonnes.

Copper production, however, came below analysts’ expectations and was down from the previous quarter, due to lower grades at Chilean mines Los Bronces and Collahuasi.

The company left its full-year production and unit cost guidance unchanged.

“With mixed results and no change to production and cost guidance, we do not expect meaningful changes to consensus earnings estimates for 2023,” Citi analysts said in a note.

Anglo’s share price ended 2.29% weaker to R554.74 on the JSE valuing the company at R742bn. The share price peaked at R815 a year ago when its market value was well over R1-trillion. Since then, the shares have retraced in line with commodity prices as the world economic outlook became more uncertain in the wake of the Russia’s invasion of Ukraine and as central banks in the developed markets in particular began hiking interest rates to fight off runaway inflation.

China was also the main drag on the commodity markets for the better part of 2022 with its strict Covid policy before deciding to drop it all early this year.

Rough diamond production via its global giant De Beers remained flat at 8.9-million carats over the reporting period, partly due to the transition of its Venetia mine in SA from open pit to a new underground section.

De Beers jointly owns Africa’s largest diamond producer Debswana with Botswana, though the country is exploring other options outside their 54-year-old partnership.

The two partners are in talks to renew a 2011 sales and marketing agreement which entitles De Beers to 75% of the production from Debswana.

“Overall, Anglo’s production results have been impacted by various external factors. However, the company kept its unit cost and production guidance unchanged, which is impressive given the broader macro environment,” said Willem Oldewage, fund manager at Nitrogen Fund Managers.

The company’s overall performance was affected by lower refined platinum group metals and metallurgical coal production, offset by higher copper production, Oldewage said.