1Q11 Production Report

RNS Number : 3145F

Anglo American PLC

21 April 2011

 



21 April 2011
Anglo American plc Interim Management Statement Production Report for the first quarter ended 31 March 2011

Overview

·      Platinum refined production increased by 19% to 532,900 ounces, while equivalent refined production decreased by 5% 

·      Nickel⁽¹⁾ production increased by 27% to 6,100 tonnes

·      Copper production decreased by 14% to 138,800 tonnes, mainly due to abnormally high rainfall and expected lower grades at Collahuasi, and scheduled maintenance and expected lower grades at Los Bronces

o  Full year production expected to be marginally higher than 2010, based on the commissioning of the Los Bronces expansion project in Q4

·      Thermal coal production from South Africa and Colombia increased by 2% to 16.0 million tonnes

·      Metallurgical coal production from the Australian operations decreased by 37% to 2.1 million tonnes, due to severe flooding in Queensland

·      Iron ore production decreased by 19% to 9.9 million tonnes mainly due to mining constraints caused by wet pit conditions, resulting from excessive rainfall at all of Kumba's operations

·      Diamond production increased by 5% to 7.4 million carats

·      Barro Alto nickel project produced first metal on schedule in March 2011

o  41,000 tpa average over first five years of full production

·      Los Bronces expansion project on track to deliver first production in Q4 2011

o  Increased production to average 400 ktpa over first 10 years (490 ktpa over first three years)

·      Minas-Rio iron ore project commenced civil works for the beneficiation plant

o  26.5 Mtpa production, with first ore on ship expected in second half of 2013

·      Sales of Lisheen and Black Mountain Mining zinc interests completed in February 2011

·      Announcement to combine UK businesses of Tarmac and Lafarge to create a leading UK construction materials company

Interim Results for the half year to 30 June 2011 will be announced on 29 July 2011.

This report forms Anglo American plc's Interim Management Statement for the purpose of the UK Listing Authority's Disclosure and Transparency Rules.

⁽¹⁾ Nickel production from the Nickel business unit

Platinum		Q1	Q1	Q1 2011	Q4	Q1 2011
		2011	2010	vs.	2010	vs.
				Q1 2010		Q4 2010
Refined
Platinum	000 oz	532,900	446,700	19%	872,400	(39)%
Palladium	000 oz	288,200	247,000	17%	502,600	(43)%
Rhodium	000 oz	85,700	61,600	39%	111,400	(23)%
Nickel	t	4,800	4,400	9%	5,000	(4)%
Equivalent refined
Platinum	000 oz	567,600	594,700	(5)%	640,100	(11)%

Platinum - Refined production increased by 19% to 532,900 ounces, despite lower input from mining operations. Equivalent refined platinum production from mining and purchasing activities was 5% lower at 567,600 ounces. The reduction was mainly due to lower production at Platinum's own mines, particularly Bathopele, Tumela and Dishaba, resulting from a number of safety related stoppages, and lower production at JV mines. This was partly offset by production from Unki, which continues to ramp up, and Khuseleka 2 shaft, which was reopened during Q1 2011 following care and maintenance closure in 2009.

Palladium, Rhodium & Nickel - Refined production of palladium, rhodium and nickel increased by 17%, 39% and 9% respectively. The increases vary due to a different source mix from operations and different pipeline processing times for each metal.

Copper		Q1	Q1	Q1 2011	Q4	Q1 2011
		2011	2010	vs.	2010	vs.
				Q1 2010		Q4 2010
Copper	t	138,800	160,800	(14)%	154,400	(10)%

Copper - Production decreased by 14% to 138,800 tonnes mainly due to abnormally high rainfall in the quarter and expected lower grades at Collahuasi. Production at Los Bronces was also impacted by anticipated lower ore grades and scheduled plant maintenance in March, although partly offset by improved mill throughput  resulting from processing softer ore.

The Los Bronces expansion project remains on schedule for first production in Q4 2011.  The expected capital expenditure for the project has been revised to $2.8 billion, mainly due to the impact of the earthquake in 2010 and geotechnical difficulties encountered.

At Collahuasi, the phase 2 expansion project to increase concentrator throughput to 160,000 tonnes of ore per day, an annual average production increment of 20,000 tonnes per year of copper over the estimated life of mine, was approved in March 2011. The expansion is expected to be commissioned in the first half of 2013.

Nickel		Q1	Q1	Q1 2011	Q4	Q1 2011
		2011	2010	vs.	2010	vs.
				Q1 2010		Q4 2010
Nickel	t	6,100	4,800	27%	4,400	39%

Nickel - Production increased by 27% to 6,100 tonnes, primarily due to an increase in production at Loma de Níquel which operated with only one furnace for part of Q1 2010 and was also constrained by power rationing imposed by the Venezuelan government in 2010.

First metal from the $1.9 billion Barro Alto nickel project was produced on schedule in March 2011. The new nickel plant will reach full production capacity in the second half of 2012 and will average 41,000 tpa over its first five years of full production.

Iron Ore and Manganese		Q1	Q1	Q1 2011	Q4	Q1 2011
		2011	2010	vs.	2010	vs.
				Q1 2010		Q4 2010
Iron ore	000 t	9,945	12,329	(19)%	11,808	(16)%
Manganese ore	000 t	541	684	(21)%	732	(26)%
Manganese alloys	000 t	69	68	1%	77	(10)%
Attributable sales volumes
RSA export iron ore	000 t	8,557	9,315	(8)%	8,977	(5)%
RSA domestic iron ore	000 t	1,826	1,617	13%	1,722	6%
South American export iron ore	000 t	1,063	1,019	4%	1,254	(15)%

Iron ore - Total production of 9.9 Mt was 19% lower than Q1 2010 and 16% lower than Q4 2010. 

Sishen Mine's production was 8.5 Mt, a decrease of 22%, mainly due to excessive rainfall in the quarter, with twice the annual rainfall recorded during the first two months of 2011.  Production decreased by 25% or 1.9 Mt from the Dense Medium Separation plant and 16% or 0.5 Mt from the Jig plant, as mining equipment was unable to safely access the mining areas and wet feedstock material caused blockages in the plant.

Production from Thabazimbi Mine decreased by 49% to 0.2 Mt, mainly due to the heavy rainfall which hampered access to the main pit and planned reductions as the mine nears the end of its life, while supply to ArcelorMittal SA was supplemented from finished product stockpiles.

Export sales volumes from Sishen Mine reached 8.6 Mt during the quarter, a decrease of 0.8 Mt.  The export sales performance has been maintained by depleting higher brought forward stock levels. Volumes railed on the Sishen-Saldanha Iron Ore Export Channel, which included finished product stock at Sishen Mine, increased by 3% to 9.7 Mt.

Kumba's 2011 production is expected to be flat compared with 2010 levels, as previously indicated.  Despite the decline in operational performance during the first quarter, focused plans are in place to recover the shortfall in production by the end of 2011. 

The 9 Mtpa Kolomela iron ore project remains on budget and on schedule to achieve initial production at the end of the first half of 2012, ramping up to full capacity in 2013.

In Brazil, record daily pellet feed production of 9.1 kt was achieved at Amapá in the quarter, following a review and revision of production processes.

The Minas-Rio iron ore project commenced civil works for the beneficiation plant and mobilised the contractor for tailings dam construction in March 2011.  Completion and commissioning of the mine and plant is expected to take between 27 and 30 months, with first ore on ship forecast in the second half of 2013.

Manganese Ore - Production decreased by 21% due to a voluntary shut down of the Wessels and Mamatwan mines in South Africa for four weeks following a fatality at Wessels mine in February, and concentrator down time at Gemco in Australia that lasted for four days.

Manganese Alloys - Production was in line with Q1 2010 but decreased by 10% compared to Q4 2010 due to lower steel demand and higher alloy stockpiles in China.

Metallurgical Coal		Q1	Q1	Q1 2011	Q4	Q1 2011
		2011	2010	vs.	2010	vs.
				Q1 2010		Q4 2010
Production
Export metallurgical	000 t	2,056	3,282	(37)%	3,651	(44)%
Thermal	000 t	3,002	3,350	(10)%	3,728	(19)%
Weighted average achieved FOB prices
Export metallurgical	US$/t	210	131	60%	201	4%
Export thermal	US$/t	102	79	29%	90	13%
Domestic thermal	US$/t	35	31	13%	32	9%
Attributable sales volumes
Export metallurgical	000 t	2,056	3,257	(37)%	3,501	(41)%
Export thermal	000 t	947	1,317	(28)%	1,602	(41)%
Domestic thermal	000 t	1,892	1,949	(3)%	2,250	(16)%

Metallurgical Coal - Production of metallurgical coal decreased by 37% to 2.1 Mt due to the record rainfall and subsequent flooding events experienced at the Queensland operations in late 2010 and during the first quarter.

Production of thermal coal from mines in Australia was also impacted by the adverse weather conditions and decreased by 10%.

All operations are producing again with a ramp-up to full production expected in the second quarter.  A number of initiatives are in progress for the remainder of 2011 to mitigate the production shortfall from Q1.

Thermal Coal		Q1	Q1	Q1 2011	Q4	Q1 2011
		2011	2010	vs.	2010	vs.
				Q1 2010		Q4 2010
Production
Thermal	000 t	7,689	7,418	4%	8,201	(6)%
Eskom	000 t	8,275	8,212	1%	9,485	(13)%
Metallurgical	000 t	80	111	(28)%	103	(22)%
Weighted average achieved FOB prices
RSA export thermal	US$/t	117	78	50%	84	39%
RSA domestic thermal	US$/t	22	18	22%	20	10%
Cerrejón export thermal	US$/t	98	69	42%	79	24%
Attributable sales volumes
RSA export thermal	000 t	3,568	3,932	(9)%	4,358	(18)%
RSA domestic thermal	000 t	1,083	1,190	(9)%	1,316	(18)%
Cerrejón export thermal	000 t	2,147	2,425	(11)%	2,672	(20)%

Thermal Coal - Production of thermal coal, from the Group's South African and Colombian operations, increased mainly due to the continuing ramp up of the Zibulo and Mafube operations. Cerrejón delivered a strong production performance despite disruptions due to labour negotiations and planned maintenance.

Weighted average RSA export thermal prices achieved were markedly stronger reflecting favourable market conditions and Thermal Coal's move towards full price indexation.

Sales volumes were impacted by low stock levels at Richards Bay Coal Terminal as a consequence of Transnet Freight Rail's performance, with multiple derailments affecting stock build up.

Diamonds		Q1	Q1	Q1 2011	Q4	Q1 2011
		2011	2010	vs.	2010	vs.
				Q1 2010		Q4 2010
Diamonds	000 Carats	7,396	7,012	5%	8,532	(13)%

Diamonds - Production increased 5% to 7.4 million carats while, compared to Q4 2010, production was 13% lower due to production constraints, including seasonal rainfall which disrupted operations in southern Africa, and grade variability.

Production summary

The figures below include the entire output of consolidated entities and the Group's attributable share of joint ventures, joint arrangements and associates where applicable, except for De Beers which is quoted on a 100% basis.

						% Change
						Q1 2011	Q1 2011
	Q1	Q4	Q3	Q2	Q1	vs.	vs.
	2011	2010	2010	2010	2010	Q4 2010	Q1 2010
Platinum segment
Platinum (troy ounces)	532,900	872,400	697,000	553,800	446,700	(39)%	19%
Palladium (troy ounces)	288,200	502,600	404,500	294,400	247,000	(43)%	17%
Rhodium (troy ounces)	85,700	111,400	88,600	67,300	61,600	(23)%	39%
Nickel (tonnes)	4,800	5,000	4,300	4,800	4,400	(4)%	9%
Equivalent refined
Platinum (troy ounces)	567,600	640,100	648,300	600,900	594,700	(11)%	(5)%
Diamonds segment (De Beers) (diamonds recovered - 000 carats)
Total diamonds production for De Beers	7,396	8,532	9,033	8,420	7,012	(13)%	5%
Anglo American's share of diamonds production for De Beers	3,328	3,839	4,065	3,789	3,155	(13)%	5%
Copper segment (tonnes)(1)	138,800	154,400	153,400	154,700	160,800	(10)%	(14)%
Nickel segment (tonnes)(2)	6,100	4,400	5,700	5,300	4,800	39%	27%
Iron Ore and Manganese segment (tonnes)
Iron ore	9,944,800	11,807,700	11,819,200	11,458,700	12,328,700	(16)%	(19)%
Manganese ore (3)	540,600	731,600	848,800	688,400	684,000	(26)%	(21)%
Manganese alloys (3)(4)	68,800	76,800	79,600	87,200	68,400	(10)%	1%
Metallurgical Coal segment (tonnes)
Metallurgical	2,056,300	3,651,300	3,971,000	3,797,900	3,281,600	(44)%	(37)%
Thermal	3,002,300	3,727,500	3,413,000	3,970,200	3,349,800	(19)%	(10)%
Thermal Coal segment (tonnes)(5)
Thermal	7,688,800	8,200,700	8,240,300	7,813,000	7,418,100	(6)%	4%
Eskom	8,275,000	9,484,800	10,431,300	8,275,300	8,212,000	(13)%	1%
Metallurgical	79,500	103,000	111,700	110,400	111,400	(22)%	(28)%
Other Mining and Industrial segment (tonnes)(6)
Metallurgical coal	108,400	240,200	226,400	206,700	194,700	(55)%	(44)%
Zinc (7)	22,500	77,300	93,700	91,000	87,700	(71)%	(74)%
Lead (7)	8,300	18,200	22,200	15,400	15,400	(54)%	(46)%
South Africa Steel Products	173,200	151,000	180,000	197,000	182,000	15%	(5)%
Coal production by commodity (tonnes)(5)
Metallurgical	2,244,200	3,994,500	4,309,100	4,115,000	3,587,700	(44)%	(37)%
Thermal	10,691,100	11,928,200	11,653,300	11,783,200	10,767,900	(10)%	(1)%
Eskom	8,275,000	9,484,800	10,431,300	8,275,300	8,212,000	(13)%	1%

⁽¹⁾ Excludes Platinum copper production.

⁽²⁾ Excludes Platinum nickel production.

⁽³⁾ Saleable production.

⁽⁴⁾ Production includes Medium Carbon Ferro Manganese.

⁽⁵⁾ Includes 598 kt (Q4 2010: 726 kt) of capitalised production from Zibulo (previously Zondagsfontein). The 598 kt includes export thermal coal production of 427 kt (Q4 2010: 465 kt) and Eskom coal production of 171 kt (Q4 2010: 261 kt). Excludes thermal coal production within the Other Mining and Industrial segment.

⁽⁶⁾ Excludes Tarmac, Copebrás and Catalão.

⁽⁷⁾ Zinc and lead production related to the Group's portfolio of zinc assets, the sales of which completed in December 2010, in respect of Skorpion mine, and February 2011, in respect of Lisheen mine and Black Mountain Mining (Proprietary) Limited.

As production figures are sometimes more precise than the rounded numbers shown in this report, small differences may arise throughout the report between the summation of quarters and the year to date totals. The percentage change will reflect the percentage change in the rounded production figures shown in this report.

Forward looking statements:

This Interim Management Statement contains certain forward looking statements which involve risk and uncertainty because they relate to events and depend on circumstances that occur in the future.  There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements. 

For further information, please contact:

United Kingdom

James Wyatt-Tilby, Media Relations

Tel: [phone]

Caroline Metcalfe, Investor Relations

Tel: [phone]

Leisha Wemyss, Investor Relations

Tel: [phone]                        

South Africa

Pranill Ramchander, Media Relations

Tel: [phone]

Notes to editors:

Anglo American plc is one of the world's largest mining companies, is headquartered in the UK and listed on the London and Johannesburg stock exchanges. Anglo American's portfolio of mining businesses spans precious metals and minerals - in which it is a global leader in both platinum and diamonds; base metals - copper and nickel; and bulk commodities - iron ore, metallurgical coal and thermal coal. Anglo American is committed to the highest standards of safety and responsibility across all its businesses and geographies and to making a sustainable difference in the development of the communities around its operations. The company's mining operations and extensive pipeline of growth projects are located in southern Africa, South America, Australia, North America and Asia.

www.angloamerican.com

 

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