ANGLO American delivered fourth quarter and full-year production numbers that were largely in line with consensus, but said that copper production from Chile’s Los Bronces was affected by drought whilst power interruptions hurt output at Anglo American Platinum.
All in all production was 4% higher for the fourth quarter owing to the ramp-up of Minas Rio, the firm’s Brazilian iron ore mine. Concentrate production was also higher at Amplats owing to higher grades and improved productivity.
There was a strong performance at Collahuasi but overall, fourth quarter copper production decreased 13% to 158,000 tons owing to lower output at Los Bronces as a result of lower water availability. Total copper sales volumes were 643,900 tons.
Platinum and palladium metal in concentrate production both increased by 10%, to 531,700 ounces and 360,400 oz respectively in Amplats’ fourth quarter. Refined output was lower, however, as a concentrate purchase agreement ended. But there was also a build up of inventory totalling 45,000 platinum oz and 27,000 palladium oz as Eskom-related power interruptions made their presence felt in the quarter.
Platinum sales volumes fell by 14% to 668,300 oz and palladium sales volumes decreased by 4% to 435,800 oz due to lower refined production in the period.
The full year price per platinum ounce for the basket of metals sold increased by 27% to $2,819/oz compared to 2018 due to 48% and 73% price increases in palladium and rhodium, respectively. This reflected the much improved market for platinum group metals which have been further boosted this year with both palladium and rhodium increasing significantly in price, the latter up 40% this year alone.
There as price weakness for De Beers, however. It said that the full-year consolidated average realised price of $137 per carat was lower than the $171/ct achieved in 2018, due primarily to a higher proportion of lower value rough diamonds sold in 2019 and a 6% lower rough diamond price index.
Full year production was also weaker in De Beers’ mines as Venetia moved to underground mining and the closure of Victor in Canada. Diamond production from Botswana was 7% lower in the fourth quarter production, caused by a delay in an infrastructure project and expected lower grades. This was partially offset by a 21% increase at Jwaneng.
Goldman Sachs acknowledged Anglo’s strong iron ore numbers, especially from Kumba Iron Ore, but it was disappointed with the Johannesburg-listed firm’s indicative earnings numbers which were also published today in a trading statement.
Kumba said it expected full-year headline earnings to be in the range of R15,7bn and R16,8bn. This was below Goldman Sachs’ estimates “… which we believe is negative”, it said.
Said RMB Morgan Stanley in a report: “Anglo American’s fourth quarter production was in-line with the latest provided company guidance, coming in broadly in-line with our forecasts with slightly better iron ore and coal production volumes. Realised prices were also in-line leading to a calculated 2019 EBITDA within 1% of our forecast of $10.08bn”.
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