Global miner Anglo American (LON:AAL) posted Thursday a 2% increase in overall production during the three months to June 30, helped mainly by its giant Minas-Rio iron ore mine in Brazil, but cut diamond guidance for the year as sales remain weak.
Iron ore production rose by 7.1% from a year earlier to 16.4
million in the quarter, with the Kumba division in South Africa contributing
10.5 million tonnes and the Brazilian mine adding another 5.9 million tonnes.
Production at Minas-Rio, one of the world’s largest sources of high-grade iron ore concentrate, was suspended for most of last year because of a slurry pipeline leak, but Anglo was able to undertake optimization work in the meantime.
Anglo needs to secure a final licence to increase the height
of the water storage dam in order to keep producing iron ore beyond the end of
the year. “The conversion of the installation licence to an operating licence
for this lift is expected by year-end, subject to approval by the Minas Gerais
state government in Brazil,” it said.
Diamond production at the company’s De Beers unit, the
world’s biggest miner of precious stones, dropped 14% amid weaker demand and
lower prices. Ongoing work to switch Anglo’s Venetia operation in South Africa to
underground mining from open pit, also weighed on the division’s second quarter
results.
Forecast diamond production for the year was pegged at 31 million carats, at the bottom end of a previous estimate range.
“While overall retail sentiment for diamond jewelry in the US remains solid, a more challenging environment in China and higher-than-normal polished diamond inventories in the midstream resulted in a cautious approach from rough-diamond buyers during the fifth cycle of 2019,” De Beers chief executive officer, Bruce Cleaver, said in a separate statement.
The world’s number four diversified miner also reported that
metallurgical coal’s (also called coking coal) output rose by 11%, while
thermal coal, used for power, fell 8%.
Copper continues to support Anglo’s performance. Production of
the industrial metal in the second quarter of the year, however, climbed by
only 1% to 159,100 tonnes, thanks mainly to the company’s Los Bronces and
Collahuasi mines in Chile. Platinum production rose 3% to 520,300 ounces and
palladium decreased by 1% to 347,200 ounces, due to a change in mix of
production, Anglo said.
In addition to Los Bronces, Anglo American runs El Soldado
copper mine and it has 44% participation in Collahuasi mine, in northern Chile.
Copper deposits are among the hottest assets in mining right now, with the world’s top producers becoming increasingly bullish on the metal. There are expectations that bigger power grids around the world and an electric-vehicle boom will boost demand, while supplies are constrained.
However, industry analysts at CRU say the coming online of major projects — Anglo’s Quellaveco (2022), Teck’s Quebrada Blanca expansion (2021) and First Quantum’s Cobre Panama (already in production) will momentarily eliminate the gap between supply and demand.
The research group, in fact, has cut its forecast deficit and now expects the market will be in a small surplus this year and next, but short again by 250,000 tonnes by 2023.