Anglo raises its PGM production

• Lower iron-ore sales blamed on operational challenges and train delays thanks to locusts, rain

Anglo American has reported an overall increase in group production, as the output of copper and platinum group metals (PGMs) improved. But the group’s iron ore division in SA blamed locusts and rain for lower sales and there was a disappointingly familiar complaint about Transnet Freight Rail.

Anglo American has reported an overall increase in production, as copper and platinum group metals (PGMs) output improved, but the company’s iron-ore division in SA blamed locusts and rain for lower sales.

Anglo, listed in London and Johannesburg, operated at 95% of normal capacity in the March quarter. Its overall production as measured in a copper equivalent metric grew 3% year on year.

For SA, there was a disappointingly familiar complaint about Transnet Freight Rail from Anglo subsidiary Kumba Iron Ore, the largest iron-ore miner in Africa, echoing concern of other miners and traders of bulk commodities in SA.

“Rail performance deteriorated significantly during the period due to a series of operational challenges and train delays, caused by severe weather conditions and a locust outbreak,” Kumba said on Thursday.

The Northern Cape, home to the Karoo, has been grappling with a locust outbreak and large swarms since November 2020.

Export sales fell 2% to 10.2million tonnes during the quarter, meaning Kumba could not take full advantage of its average realised price of $180/tonne compared with the benchmark price of $150/tonne for ore with 62% iron content.

Kumba realises a higher price than the benchmark because of its production of lumpy iron ore, a sought-after product that makes up 69% of sales and has an iron content of 64%.

Chrome ore miners and coal miners have complained this year of train delays, some of which were related to weather, while Transnet Freight Rail has said that there were high levels of theft and vandalism on its network.

The rail network has long been a source of frustration for SA’s bulk mineral exporters because of a lack of capacity and efficiency.

Private participation on the state-owned rail network and harbours is a key point in President Cyril Ramaphosa’s economic recovery and renewal plans to revive SA’s moribund economy and to create jobs and attract investment.

Public enterprises minister Pravin Gordhan said recently that private train operators should be able to access the Transnet Freight Rail network within three years, while Durban harbour, for example, is opening its tightly held container operations to private companies.

For Kumba, train delays from its two mines in the Northern Cape to Saldanha port meant that its stocks at the harbour fell to a “suboptimal level” during the quarter as inventory increased at its mines. Kumba’s stocks were 5.3-million tonnes, of which 4.9-million were Sishen and Kolomela.

Transnet did not respond immediately to a request for comment.

Output at Anglo’s second iron-ore asset, the Minas Rio mine in Brazil, fell 13% to 5.6million tonnes because of “unplanned maintenance at the beneficiation plant”.

The lost volumes are expected to be recovered during the year.

COPPER OUTPUT SURGES

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Elsewhere in the Anglo group, the copper operations in Chile had a strong three months, contributing to a 9% increase in output to 160,000 tonnes. During

the quarter, Anglo said that it would separately list its export thermal coal mines in SA as the company moves away from fossil-fuel mines.

Anglo forecast full-year thermal coal production of 14-million tonnes, reflecting the output from SA before the exit expected in May and its one third stake in the Cerrejón coal mine in Colombia, which CEO Mark Cutifani said should be removed within two years.

SA’s coal output for the year was pegged at 6-million tonnes, down from a forecast of 16-million had the assets been retained.

The other standout performance was at Anglo American Platinum, the 80%-held subsidiary.

Refined production jumped nearly 60% to 973,000oz of five PGMs and gold as the company recovered from plant failures at its converter plant that feeds the refinery.

Sales were two-thirds higher at 1.3-million ounces as refined output increased from higher concentrate supplies from its own mines and more thirdparty material.

Amplats also tapped into its inventories to supply more of the minor PGMs, such as ruthenium and iridium, which are used to make hydrogen, a source of energy.

Amplats kept its production guidance unchanged at up to 4.6-million ounces and refined output of up to 5-million.