Anglo American Q2 Production Report 2017

RNS Number : 5656L

Anglo American PLC

20 July 2017

 

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20 July 2017

Anglo American plc

Production Report for the second quarter ended 30 June 2017

Anglo American reports an 8% increase in copper equivalent production in the second quarter of 2017, compared to the same period of 2016. For the half year as a whole, copper equivalent production increased by 9%.

Mark Cutifani, Anglo American Chief Executive, said: "We have delivered another strong production quarter across most of our businesses. Through the improvements we have made to our portfolio and the efficiencies we are driving, we continue to unlock the potential of our world class assets. The production ramps at Gahcho Kué, Minas-Rio and Grosvenor are also contributing to these ongoing positive performance trends. We have increased the full year production guidance for Kumba Iron Ore and are on track to deliver full year guidance across the rest of our products."

Highlights

·      At De Beers, the ramp-up of Gahcho Kué and stable trading conditions supported a 36% increase in rough diamond production.

·      Copper production, while broadly unchanged, was impacted by the temporary mine stoppage at El Soldado, partially offset by higher production at Los Bronces.

·      Platinum's Mogalakwena mine production increased by 15% due to higher grades and increased throughput.

·      Iron ore volumes from Sishen increased by 38% due to operational improvements.

·      Metallurgical coal production from Australia was impacted by Cyclone Debbie, two longwall moves in Q2 and the ongoing geological issues at Grosvenor; improvements are expected in H2.

Production Summary

	Q2 2017	Q2 2016	% vs. Q2 2016	H1 2017	H1 2016	% vs. H1 2016
Diamonds (Mct)(1)	8.7	6.4	36%	16.1	13.3	21%
Copper (t)(2)(3)	140,800	144,200	(2)%	283,400	290,700	(3)%
Platinum (produced ounces) (koz)(4)	617	586	5%	1,189	1,153	3%
Iron ore - Kumba (Mt)	11.4	8.9	28%	21.9	17.8	23%
Iron ore - Minas-Rio (Mt)(5)	4.3	3.5	24%	8.7	6.8	27%
Export metallurgical coal (Mt)	4.0	4.9	(19)%	9.2	9.0	2%
Export thermal coal (Mt)(6)	6.5	6.8	(4)%	13.4	13.2	1%
Nickel (t)(7)	11,300	11,100	2%	21,200	22,300	(5)%

 (1) De Beers production on 100% basis except the Gahcho Kué joint venture which is on an attributable 51% basis; (2) Copper production from the Copper business unit; (3) Copper production shown on a contained metal basis; (4) Reflects own mine production and purchases of metal in concentrate; (5) Wet basis; (6) Export thermal coal includes export primary production from South Africa and Colombia, and excludes secondary South African production that may be sold into either the export or domestic markets; (7) Nickel production from the Nickel business unit; (8) Copper equivalent production is normalised for, Kimberley, Niobium & Phosphates, Foxleigh and Callide, and to reflect Snap Lake being placed on care and maintenance, and the closure of Drayton.

 DE BEERS

Diamonds(1)		Q2  2017	Q2 2016	Q2 2017 vs. Q2 2016	Q1 2017	Q2 2017 vs. Q1 2017	H1 2017	H1 2016	H1 2017 vs.   H1 2016
Debswana	000 carats	5,933	5,184	14%	5,191	14%	11,124	10,512	6%
Namdeb Holdings	000 carats	391	296	32%	472	(17)%	863	740	17%
DBCM	000 carats	1,405	821	71%	1,106	27%	2,511	1,753	43%
De Beers Canada	000 carats	1,013	147	nm	631	61%	1,644	309	nm
Total carats recovered	000 carats	8,742	6,448	36%	7,400	18%	16,142	13,314	21%

De Beers - Rough diamond production increased by 36% to 8.7 million carats in line with the higher production forecast for 2017, reflecting stable trading conditions as well as the contribution from the ramp-up of Gahcho Kué in Canada.

Debswana (Botswana) production increased by 14% to 5.9 million carats. Orapa's production increased by 44% driven by the ramp-up of Plant 1 which was previously on partial care and maintenance in response to trading conditions in late 2015. This was marginally offset by Jwaneng where production decreased by 3%.

Namdeb Holdings (Namibia) production increased by 32% to 0.4 million carats as a result of Debmarine Namibia's Mafuta vessel being on planned extended in-port maintenance in Q2 2016.

DBCM (South Africa) production increased by 71% to 1.4 million carats largely as a result of higher grades at Venetia.

Production in Canada increased almost six-fold to 1.0 million carats due to the ramp-up of Gahcho Kué to nameplate capacity.

Consolidated rough diamond sales volumes⁽²⁾ in Q2 2017 were 5.4 million carats (5.9 million carats on a total 100% basis) from two Sights, compared with 9.6 million carats (10.2 million carats on a total 100% basis) from three Sights in Q2 2016. Apart from the additional Sight in Q2 2016, the decrease was expected given the strong levels of midstream restocking in H1 2016.

For H1 2017, consolidated sales volumes⁽²⁾ were 19.1 million carats (20.0 million carats on a total 100% basis), compared with 17.2 million carats (18.3 million carats on a total 100% basis) in H1 2016.

The average realised price of $156/ct in H1 2017 was 12% lower than in H1 2016. This reflected strong demand in Sight 1 2017 for lower value goods held in stock at 31 December 2016, following a recovery from the initial impact of India's demonetisation programme in late 2016.  The lower value mix was partially offset by a higher average rough price index, up 4%.

Full Year Guidance

Full year production guidance⁽¹⁾ remains unchanged at 31-33 million carats, subject to trading conditions.

(1)    De Beers production is on a 100% basis, except for the Gahcho Kué joint venture which is on an attributable 51% basis.

(2)    Consolidated sales volume excludes De Beers' JV partners' 50% proportionate share of sales to entities outside the De Beers Group of Companies from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, and includes pre-commercial production sales volumes from Gahcho Kué.

De Beers	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q2 2017 vs. Q1 2017	Q2 2017 vs. Q2 2016	H1 2017	H1 2016	H1 2017 vs. H1 2016
Carats recovered (000 carats)
100% basis (unless otherwise stated)
Orapa	2,918	2,106	2,366	1,536	2,028	39%	44%	5,024	4,029	25%
Letlhakane	102	130	135	176	159	(22)%	(36)%	232	284	(18)%
Jwaneng	2,913	2,955	2,939	2,837	2,997	(1)%	(3)%	5,868	6,199	(5)%
Debswana	5,933	5,191	5,440	4,549	5,184	14%	14%	11,124	10,512	6%
Namdeb	72	94	118	120	94	(23)%	(23)%	166	166	-
Debmarine Namibia	319	378	310	285	202	(16)%	58%	697	574	21%
Namdeb Holdings	391	472	428	405	296	(17)%	32%	863	740	17%
Kimberley(1)	-	-	-	-	-	-	-	-	68	(100)%
Venetia	1,239	939	1,218	898	695	32%	78%	2,178	1,401	55%
Voorspoed	166	167	169	196	126	(1)%	32%	333	284	17%
DBCM	1,405	1,106	1,387	1,094	821	27%	71%	2,511	1,753	43%
Snap Lake(1)	-	-	-	-	-	-	-	-	3	(100)%
Victor	182	189	148	142	147	(4)%	24%	371	306	21%
Gahcho Kué (51% basis)	831	442	349	83	-	88%	-	1,273	-	-
De Beers Canada	1,013	631	497	225	147	61%	589%	1,644	309	432%
Total carats recovered	8,742	7,400	7,752	6,273	6,448	18%	36%	16,142	13,314	21%
Sales volumes
Total sales volume         (100%) (Mct)(2)	5.9	14.1	8.0	5.7	10.2	(58)%	(42)%	20.0	18.3	9%
Consolidated sales volume (Mct)(2)(3)	5.4	13.7	7.5	5.3	9.6	(61)%	(44)%	19.1	17.2	11%
Number of Sights (sales cycles)	2	3	3	2	3			5	5

(1)     Snap Lake was placed on care and maintenance from December 2015. Kimberley mines was sold in January 2016.

(2)     Consolidated sales volumes exclude De Beers' JV partners' 50% proportionate share of sales to entities outside the De Beers Group of Companies from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, which are included in total sales volume.

(3)     Consolidated sales volume includes pre-commercial production sales volumes from Gahcho Kué. Excluding Gahcho Kué's capitalised pre-commercial production sales volumes results in a consolidated sales volume of 18.4Mct for H1 2017.

 

COPPER

Copper(1)		Q2  2017	Q2 2016	Q2 2017 vs. Q2 2016	Q1 2017	Q2 2017 vs. Q1 2017	H1 2017	H1 2016	H1 2017 vs.   H1 2016
Los Bronces	t	79,000	75,600	4%	75,800	4%	154,800	160,800	(4)%
Collahuasi (44% share)	t	51,000	56,200	(9)%	57,700	(12)%	108,700	107,300	1%
El Soldado	t	10,800	12,400	(13)%	9,100	19%	19,900	22,600	(12)%
Total Copper	t	140,800	144,200	(2)%	142,600	(1)%	283,400	290,700	(3)%

(1)       Copper production shown on a contained metal basis.

Copper production decreased by 2% to 140,800 tonnes.

Production from Los Bronces increased by 4% to 79,000 tonnes. Production benefited from higher ore grades (0.70% vs. 0.62%) and strong plant performance, partly offset by an expected increase in ore hardness.

At Collahuasi, attributable production decreased by 9% to 51,000 tonnes. Higher ore grades were offset by lower throughput driven by the planned electrical overhaul of Line 1 of the processing plant, lasting 65 days and successfully completed in June.

El Soldado production decreased by 13% to 10,800 tonnes, reflecting the temporary suspension of mine operations from 18 February, which restarted on 28 April following approval of the updated mine plan. Production during the mine stoppage was sustained by feeding low-grade stockpile material to the plant, however the delay in receiving the mine plan permit resulted in ~6,000 tonnes of lost production in H1 2017 (of which ~3,000 tonnes were in Q2 2017).

Sales volumes in H1 2017 were impacted by temporary port closures in Chile due to poor weather conditions and heavy tidal swells limiting vessel availability, as well as by higher arsenic content in copper concentrate from Collahuasi which restricted sales into China. At the end of H1 2017, Anglo American had 105,000 tonnes of copper provisionally priced at 269c/lb.

Full Year Guidance

Full year production guidance remains unchanged at 570,000 - 600,000 tonnes. 
 

Copper (tonnes) on a contained metal basis unless stated otherwise(1)	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q2 2017 vs. Q1 2017	Q2 2017 vs. Q2 2016	H1 2017	H1 2016	H1 2017 vs. H1 2016
Collahuasi 100% basis (Anglo American share 44%)
Ore mined	14,984,100	13,803,300	20,335,200	17,131,800	15,277,400	9%	(2)%	28,787,400	30,135,600	(4)%
Ore processed - Sulphide	10,807,100	12,336,400	12,302,700	12,522,100	12,479,200	(12)%	(13)%	23,143,500	24,582,000	(6)%
Ore grade processed - Sulphide (% TCu)(2)	1.27	1.24	1.29	1.23	1.21	3%	5%	1.25	1.18	6%
Production - Copper cathode	-	100	700	800	1,400	(100)%	(100)%	100	3,300	(97)%
Production - Copper in concentrate	115,900	131,000	132,400	128,900	126,300	(12)%	(8)%	246,900	240,500	3%
Total copper production for Collahuasi	115,900	131,100	133,100	129,700	127,700	(12)%	(9)%	247,000	243,800	1%
Anglo American's share of copper production for Collahuasi(3)	51,000	57,700	58,600	57,000	56,200	(12)%	(9)%	108,700	107,300	1%
Anglo American Sur	89,800	84,900	88,000	82,800	88,000	6%	2%	174,700	183,400	(5)%
Los Bronces mine(4)	79,000	75,800	74,300	72,100	75,600	4%	4%	154,800	160,800	(4)%
Ore mined	11,630,200	13,448,400	13,196,500	13,947,400	13,477,900	(14)%	(14)%	25,078,600	23,965,800	5%
Marginal ore mined	7,764,700	11,461,400	8,445,700	6,192,800	6,148,500	(32)%	26%	19,226,100	19,550,800	(2)%
Ore processed - Sulphide	11,876,300	11,877,400	11,562,500	11,511,700	12,567,500	(0)%	(5)%	23,753,700	24,622,800	(4)%
Ore grade processed - Sulphide (% TCu)	0.70	0.69	0.69	0.65	0.62	2%	13%	0.69	0.68	2%
Production - Copper cathode	9,800	8,900	8,600	8,800	8,900	10%	10%	18,700	18,600	1%
Production - Copper in concentrate	69,200	66,900	65,700	63,300	66,700	3%	4%	136,100	142,200	(4)%
El Soldado mine(4)	10,800	9,100	13,700	10,700	12,400	19%	(13)%	19,900	22,600	(12)%
Ore mined	1,272,200	905,500	2,069,800	1,678,300	2,143,000	40%	(41)%	2,177,700	3,591,000	(39)%
Ore processed - Sulphide	1,899,200	1,797,600	1,833,900	1,553,200	1,741,200	6%	9%	3,696,800	3,577,300	3%
Ore grade processed - Sulphide (% TCu)	0.72	0.65	0.90	0.86	0.89	11%	(19)%	0.69	0.82	(16)%
Production - Copper in concentrate	10,800	9,100	13,700	10,700	12,400	19%	(13)%	19,900	22,600	(12)%
Chagres Smelter(4)
Ore smelted	31,500	31,300	25,900	35,500	36,500	1%	(14)%	62,800	72,400	(13)%
Production	30,600	30,300	25,400	34,700	35,500	1%	(14)%	60,900	70,700	(14)%
Total Copper segment copper production	205,700	216,000	221,100	212,500	215,700	(5)%	(5)%	421,700	427,200	(1)%
Total Attributable copper production(5)	140,800	142,600	146,600	139,800	144,200	(1)%	(2)%	283,400	290,700	(3)%
Total Attributable payable copper production	135,800	137,500	141,300	135,000	139,200	(1)%	(2)%	273,300	280,800	(3)%
Total Attributable sales volumes	144,100	115,300	161,400	135,400	143,500	25%	-	259,400	281,000	(8)%
Total Attributable payable sales volumes	138,900	111,200	155,700	130,700	138,500	25%	-	250,100	271,500	(8)%
Third party sales(6)	27,400	9,800	20,100	26,000	6,700	180%	309%	37,200	15,900	134%

(1)         Excludes Anglo American Platinum's copper production.

(2)         TCu = total copper.

(3)         Anglo American's share of Collahuasi production is 44%.

(4)         Anglo American ownership interest of Anglo American Sur is 50.1%. Production is stated at 100% as Anglo American consolidates Anglo American Sur.

(5)         Difference between total copper production and attributable copper production arises from Anglo American's 44% interest in Collahuasi.

(6)         Relates to sales of copper not produced by Anglo American operations.

 

PLATINUM

Platinum		Q2 2017	Q2 2016	Q2 2017 vs. Q2 2016	Q1 2017	Q2 2017 vs. Q1 2017	H1 2017	H1 2016	H1 2017 vs. H1 2016
Produced ounces	000 oz	617	586	5%	572	8%	1,189	1,153	3%
Own mined production	000 oz	348	444	(22)%	325	7%	673	883	(24)%
Managed	000 oz	284	377	(25)%	266	7%	549	755	(27)%
Joint ventures(1)	000 oz	64	67	(4)%	59	9%	123	128	(3)%
Purchase of concentrate	000 oz	269	142	89%	247	9%	516	270	91%
Joint ventures(1)	000 oz	64	67	(4)%	59	9%	123	128	(3)%
Associates(2)	000 oz	72	70	4%	65	12%	137	133	3%
Third party	000 oz	132	6	nm	124	7%	256	9	nm
Refined
Platinum	000 oz	529	748	(29)%	577	(8)%	1,106	1,008	10%
Palladium	000 oz	373	472	(21)%	353	6%	726	654	11%
Rhodium	000 oz	83	91	(9)%	74	12%	156	138	13%
Gold	000 oz	29	22	31%	25	19%	54	50	8%
Nickel	t	6,000	6,400	(6)%	5,100	17%	11,200	12,100	(8)%
Copper	t	3,500	3,700	(6)%	3,200	7%	6,700	7,000	(4)%

(1)       The joint venture operations are Mototolo, Modikwa and Kroondal. Platinum owns 50% of each of these operations, which is presented under 'Own mined' production, and purchases the remaining 50% of production, which is presented under 'Purchase of concentrate'.

(2)       Associates are Platinum's 49% interest in Bokoni and 33% interest in BPRM.

Platinum - Platinum production (metal in concentrate) increased by 5% to 617,100 ounces.

Own mined production from managed mines

Own mined production from managed mines decreased by 25% to 283,700 ounces primarily due to the sale of Rustenburg in November 2016, which has subsequently been reported as purchase of concentrate from third parties. Excluding Rustenburg, own mined production increased by 7%.

Mogalakwena mine production increased by 15% to 113,900 ounces due to a 7% increase in grade in line with the mine plan, and a 9% increase in concentrator throughput due to North Concentrator Plant optimisations which increased the run-time.

Amandelbult mine production increased by 4% to 110,500 ounces due to improved plant recoveries and increased throughput.

Production from Unki mine in Zimbabwe increased by 10% to 19,500 ounces, as efforts continued to improve mining height control, which has reduced mining waste and increased grade resulting in higher production.

Union mine production decreased by 3% to 39,800 ounces due to lower grade. The sale of Union to Siyanda Resources was announced on 15 February 2017 and is expected to complete in H2 2017, after which production from Union will be treated as purchase of concentrate from third parties.

Joint venture own mined production and purchase of concentrate

Total joint venture production of 128,600 ounces (of which 64,300 ounces is own mined and 64,300 ounces is purchase of concentrate) decreased by 4%. Mototolo decreased by 7% to 29,500 ounces as a result of lower grade. Kroondal decreased by 5% to 67,100 ounces primarily due to lower grade and a plant shutdown which impacted production for seven days. This was partly offset by Modikwa which increased by 2% to 32,000 ounces due to productivity improvements.

Purchase of concentrate from associates

Purchase of concentrate from associates increased by 4% to 72,500 ounces. Production from BRPM increased by 10% to 52,900 ounces from project ramp-ups, but was partly offset by Bokoni which decreased by 10% to 19,500 ounces as a result of the closure of the opencast operations.

Purchase of concentrate from third parties

Purchase of concentrate from third parties increased by 126,400 ounces to 132,300 ounces mainly due to the inclusion of Rustenburg, which has been reported as third party purchase of concentrate since November 2016.

Refined production

Refined platinum production decreased by 29% to 528,700 ounces primarily due to the Waterval smelter run-out and a high pressure water leak at the Converter Plant.

Following the Waterval smelter run-out in Q3 2016, the Number 1 furnace was successfully rebuilt in Q4 2016 and is running at steady-state. The Number 2 furnace underwent planned maintenance and has successfully ramped up to steady-state. The backlog in processing pipeline material of 65,000 platinum ounces following the run-out in 2016 is expected to be made up during H2 2017.

In addition, a high pressure water leak at the Converter Plant ("ACP") on 4 June 2017 impacted a converter plant. The second converter plant was heated up and began steady-state production on 14 June 2017. The total impact on refined platinum production of c.90,000 ounces was deferred from Q2 2017 into H2 2017.

Full Year Guidance

Production guidance (metal in concentrate) remains unchanged at 2.35 - 2.40 million ounces.

Platinum	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q2 2017 vs. Q1 2017	Q2 2017 vs. Q2 2016	H1 2017	H1 2016	H1 2017 vs. H1 2016
Produced platinum (000 troy oz)	617.1	571.9	610.0	619.1	585.7	8%	5%	1,189.1	1,152.7	3%
Owned mined	348.0	324.6	386.8	468.3	443.5	7%	(22)%	672.7	882.6	(24)%
Mogalakwena	113.9	111.9	103.4	100.7	98.8	2%	15%	225.8	207.8	9%
Amandelbult	110.5	97.1	121.1	128.3	106.2	14%	4%	207.7	217.1	(4)%
Unki	19.5	18.9	19.9	18.2	17.8	3%	10%	38.4	36.4	5%
Joint ventures(1)	64.3	59.0	60.1	64.9	66.8	9%	(4)%	123.3	127.7	(3)%
Union	39.8	37.7	38.1	37.7	41.2	6%	(3)%	77.5	75.5	3%
Rustenburg(2)	-	-	44.2	118.1	110.8	nm	nm	-	215.1	nm
Other(3)	-	-	-	0.4	1.9	nm	nm	-	3.0	nm
Purchase of concentrate	269.1	247.3	223.2	150.8	142.3	9%	89%	516.4	270.1	91%
Joint ventures(1)	64.3	59.0	60.1	65.0	66.8	9%	(4)%	123.3	127.7	(3)%
Associates(4)	72.5	64.7	69.2	77.2	69.6	12%	4%	137.2	132.9	3%
Third party purchase of concentrate(2)	132.3	123.6	93.9	8.6	5.8	7%	nm	255.9	9.5	nm
Refined production
Platinum (000 troy oz)	528.7	576.9	631.6	694.6	747.6	(8)%	(29)%	1,105.6	1,008.4	10%
Palladium (000 troy oz)	373.1	353.4	397.4	412.9	472.3	6%	(21)%	726.5	653.9	11%
Rhodium (000 troy oz)	82.8	73.7	92.2	86.8	90.7	12%	(9)%	156.4	138.4	13%
Gold (000 troy oz)	29.3	24.7	33.9	24.1	22.3	19%	31%	54.0	50.2	8%
Nickel (000 tonnes)	6.0	5.1	6.2	7.1	6.4	17%	(6)%	11.2	12.1	(8)%
Copper (000 tonnes)	3.5	3.2	3.3	3.8	3.7	7%	(6)%	6.7	7.0	(4)%
4E Head grade (g/tonne milled)(5)	3.41	3.47	3.41	3.19	3.00	(2)%	14%	3.44	3.05	13%
Platinum sales volumes - own mined and purchase of concentrate	600.5	518.8	606.5	588.0	808.4	16%	(26)%	1,119.3	1,221.2	(8)%

(1)     The joint venture operations are Mototolo, Modikwa and Kroondal. Platinum owns 50% of these operations, which is presented under 'Own mined' production, and purchases the remaining 50% of production, which is presented under 'Purchase of concentrate'.

(2)     Sale of Rustenburg to Sibanye completed on 1 November 2016, after which production from Rustenburg is included within third party purchase of concentrate.

(3)     Other includes Twickenham.

(4)     Associates are Platinum's 49% interest in Bokoni and 33% interest in BRPM.

(5)     4E: the grade measured as the combined content of: platinum, palladium, rhodium and gold.

IRON ORE AND MANGANESE

Iron Ore and Manganese		Q2  2017	Q2 2016	Q2 2017 vs. Q2 2016	Q1 2017	Q2 2017 vs. Q1 2017	H1 2017	H1 2016	H1 2017 vs.   H1 2016
Iron ore - Kumba	000 t	11,382	8,864	28%	10,473	9%	21,854	17,788	23%
Iron ore - Minas-Rio(1)	000 t	4,324	3,484	24%	4,342	0%	8,666	6,833	27%
Iron ore - Total	000 t	15,706	12,348	27%	14,815	6%	30,520	24,621	24%
Manganese ore(2)	000 t	843	791	7%	823	2%	1,666	1,567	6%
Manganese alloys(3)	000 t	39	30	32%	31	25%	71	62	15%

(1)  Wet basis

(2)  Saleable production

(3)  Production includes medium carbon ferro-manganese

Kumba Iron Ore - Iron ore production increased by 28% to 11.4 million tonnes.

Sishen production increased by 38% to 7.9 million tonnes as a result of improved mining productivity, driven by fleet efficiencies and higher plant yields. Waste removal increased to 43 million tonnes compared to 31 million tonnes in Q2 2016 (H1 2017: 77 million tonnes).

Kolomela production increased by 11% to 3.5 million tonnes, underpinned by productivity improvements. Waste removal increased by 22% to 15 million tonnes (H1 2017: 25 million tonnes).

Export sales increased by 8% to 9.4 million tonnes. Total finished product stocks were 4.4 million tonnes (3.5 million tonnes at 31 December 2016) as a result of higher production at Sishen and sales volumes delayed to H2 2017 due to unfavourable weather conditions at Saldanha port.

Full Year Guidance

Full year production guidance has been increased to 41 - 43 million tonnes (previously 40 - 42 million tonnes) as a result of the improved performance at Sishen.

Iron Ore Brazil - Iron ore production from Minas-Rio increased by 24% to 4.3 million tonnes as the operation continued to ramp-up to its current operating capacity.

The focus remains obtaining the Step 3 licences required for the operation to access the full range of run-of-mine grades and target the operation's nameplate capacity of 26.5 Mt (wet basis).

Full Year Guidance

Full year production guidance remains unchanged at 16-18 million tonnes (wet basis).

Manganese ore - Manganese ore production increased by 7% to 843,300 tonnes. Production from the Australian operations increased by 5% and by 9% from the South African operations.

Manganese alloy - Manganese alloy production increased by 32% to 39,300 tonnes. The South African Manganese operations continue to operate only one of four furnaces.

 

Iron Ore and Manganese (tonnes)	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q2 2017 vs. Q1 2017	Q2 2017 vs. Q2 2016	H1 2017	H1 2016	H1 2017 vs. H1 2016
Kumba Iron Ore	11,381,600	10,472,600	11,927,900	11,759,900	8,863,600	9%	28%	21,584,200	17,788,100	23%
By product:
Lump	7,504,200	6,978,800	7,812,000	7,598,500	5,721,300	8%	31%	14,483,000	11,391,000	27%
Fines	3,877,400	3,493,800	4,115,900	4,161,400	3,142,300	11%	23%	7,371,200	6,397,100	15%
By mine:
Sishen	7,871,900	7,678,900	8,489,900	8,348,700	5,699,600	3%	38%	15,550,800	11,541,400	35%
Kolomela	3,509,700	2,793,700	3,438,000	3,411,200	3,164,000	26%	11%	6,303,400	5,877,100	7%
Thabazimbi	-	-	-	-	-	-	-	-	369,600	(100)%
Kumba sales volumes
Export iron ore	9,423,600	10,053,000	10,611,400	10,343,200	8,729,700	(6)%	8%	19,476,600	18,105,800	8%
Domestic iron ore	924,600	832,700	612,700	706,900	936,000	11%	(1)%	1,757,300	2,103,700	(16)%
Minas-Rio production
Pellet feed (wet basis)	4,324,100	4,341,700	4,855,300	4,452,400	3,483,800	0%	24%	8,665,900	6,833,200	27%
Minas-Rio sales volumes
Export - pellet feed (wet basis)	4,371,000	4,256,500	4,761,800	4,510,400	3,223,900	3%	36%	8,627,500	6,938,300	24%
Samancor
Manganese ore(1)	843,300	823,100	804,200	761,700	791,300	2%	7%	1,666,400	1,567,200	6%
Manganese alloys(1)(2)	39,300	31,500	37,100	38,900	29,700	25%	32%	70,800	61,800	15%
Samancor sales volumes
Manganese ore(3)	887,600	836,000	805,000	757,400	813,300	6%	9%	1,723,600	1,664,000	4%
Manganese alloys	37,200	34,400	31,600	49,200	46,400	8%	(20)%	71,600	89,200	(20)%

 

COAL

Coal		Q2	Q2	Q2 2017	Q1	Q2 2017	H1	H1	H1 2017
		2017	2016	vs.	2017	vs.	2017	2016	vs
				Q2 2016		Q1 2017			H1 2016
Met Coal (Australia) - excl. 2016 divestments(1)
Metallurgical - Export	000 t	3,964	4,921	(19)%	5,242	(24)%	9,206	9,019	2%
Thermal - Export	000 t	305	1,015	(70)%	479	(36)%	784	1,820	(57)%
South Africa
Thermal export - Primary(2)	000 t	4,064	4,426	(8)%	4,059	-	8,123	8,268	(2)%
Thermal export and domestic - Secondary(3)	000 t	1,023	973	5%	978	5%	2,001	1,752	14%
Thermal domestic - Eskom	000 t	6,889	6,709	3%	6,374	8%	13,263	13,101	1%
Thermal domestic - Isibonelo(4)	000 t	1,052	1,082	(3)%	896	17%	1,948	2,242	(13)%
Cerrejón
Thermal - Export	000 t	2,450	2,330	5%	2,782	(12)%	5,231	4,940	6%
Thermal Export South Africa and Cerrejón		6,514	6,756	(4)%	6,841	(5)%	13,354	13,208	1%

(1)       Excludes production from Foxleigh, which was sold on 30 August 2016, and Callide, which was sold on 31 October 2016.

(2)       Thermal export - Primary is export quality product. Comparatives have been restated to align with current presentation.

(3)       Thermal export and domestic - Secondary is lower quality product that can be sold into either the export or domestic markets. Comparatives have been restated to align with current presentation. In 2016, ~60% of secondary production was sold into the export market.

(4)       Restated to exclude domestic secondary coal production from mines other than Isibonelo.

Metallurgical Coal (Australia) - Export metallurgical coal production decreased by 19% to 4.0 million tonnes. Longwall moves took place at both Moranbah and Grasstree during the quarter. The impact of Cyclone Debbie on the Queensland rail network resulted in operational delays with a net impact on saleable production of ~0.6 million tonnes in the quarter. Run-of-mine production was not materially impacted and the stock build continues to be unwound in H2 2017.

Grosvenor production continues to be affected by geological issues, which are typically more challenging for the first longwall panel. In addition, a major belt tear occurred in the main conveyor drift. The focus remains on managing geological issues to deliver improved operational performance and stability.

Export thermal coal production decreased by 70% to 0.3 million tonnes following the cessation of mining activities at Drayton.  Furthermore, in reaction to the rail outage in Q2 2017, thermal coal volumes were substituted for higher margin metallurgical coal production at Capcoal (Grasstree).

South Africa - Primary export thermal coal production decreased by 8% to 4.1 million tonnes, due to operational challenges at Khwezela associated with the integration of the Kleinkopje and Landau mines. In addition, there was an expected and temporary reduction at Mafube as the mine transitions to a new pit.

Eskom related production increased by 3% to 6.9 million tonnes, with higher production at New Denmark due to a longwall move in Q2 2016. The sale of the Eskom-tied operating mines (New Vaal, New Denmark and Kriel) to Seriti Resources was announced on 10 April 2017, and is expected to complete by the end of 2017.

Cerrejón - Cerrejón's attributable production increased by 5% to 2.4 million tonnes, reflecting productivity gains.

Full Year Guidance

Full year production guidance for export metallurgical coal remains unchanged at 19 - 21 million tonnes, but is expected to be at the lower end of this range due to the geological issues at Grosvenor.

Full year production guidance for export thermal coal from South Africa and Cerrejón remains unchanged at 29 - 31 million tonnes, but is expected to be at the lower end of this range primarily due to the operational challenges at Khwezela.

Coal (tonnes)	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q2 2017	Q2 2017	H1	H1	H1 2017
						vs.	vs.	2017	2016	vs.
						Q1 2017	Q2 2016			H1 2016
Met Coal (Australia)(1)	4,268,200	5,721,400	5,955,100	5,923,500	5,935,700	(25)%	(28)%	9,989,600	10,837,900	(8)%
Metallurgical export - Coking	3,237,000	4,747,300	4,496,900	4,326,600	3,997,500	(32)%	(19)%	7,984,300	7,376,400	8%
Metallurgical export - PCI	726,500	495,100	862,900	741,300	923,300	47%	(21)%	1,221,600	1,642,100	(26)%
Thermal export	304,700	479,000	595,300	855,600	1,014,900	(36)%	(70)%	783,700	1,819,400	(57)%
South Africa	13,028,200	12,307,300	13,708,600	14,690,700	13,188,800	6%	(1)%	25,335,500	25,360,600	-
Thermal export - Primary(2)	4,064,100	4,058,500	4,229,400	4,480,800	4,425,600	0%	(8)%	8,122,600	8,267,200	(2)%
Thermal export and domestic - Secondary(3)	1,022,600	978,200	926,900	1,009,900	972,700	5%	5%	2,000,800	1,751,300	14%
Thermal domestic - Eskom	6,889,100	6,374,300	7,514,700	8,083,900	6,708,700	8%	3%	13,263,400	13,100,700	1%
Thermal domestic - Isibonelo(4)	1,052,400	896,300	1,037,600	1,116,100	1,081,800	17%	(3)%	1,948,700	2,241,400	(13)%
Colombia
Thermal - Export	2,449,600	2,781,700	2,800,600	2,927,800	2,329,500	(12)%	5%	5,231,300	4,939,500	6%
Total coal production	19,746,000	20,810,400	22,464,300	23,542,000	21,454,000	(5)%	(8)%	40,556,400	41,138,000	(1)%
Sales volumes
Met Coal (Australia)
Metallurgical - Export(5)	4,155,000	4,947,400	4,926,900	5,223,100	4,836,700	(16)%	(14)%	9,102,400	9,065,600	-
Thermal - Export	422,800	473,200	699,000	862,000	1,118,800	(11)%	(62)%	896,000	1,816,700	(51)%
South Africa
Thermal - Export	4,153,900	4,693,300	5,825,200	4,159,300	4,744,000	(11)%	(12)%	8,847,200	9,087,200	(3)%
Thermal - Other domestic	513,700	394,300	485,100	389,700	341,600	30%	50%	908,000	710,100	28%
Thermal domestic - Eskom	6,841,100	6,359,200	7,288,500	7,871,900	6,577,500	8%	4%	13,200,300	12,823,900	3%
Thermal domestic - Isibonelo	1,030,600	964,600	1,168,900	1,260,800	1,268,100	7%	(19)%	1,995,200	2,481,700	(20)%
Third party sales	1,835,400	1,567,800	694,600	2,181,800	1,608,600	17%	14%	3,403,200	3,175,400	7%
Cerrejón
Thermal - Export	2,770,500	2,646,300	2,722,300	2,905,100	2,843,800	5%	(3)%	5,416,800	5,182,800	5%

(1)       Comparatives have been restated to exclude production from Foxleigh, which was sold on 30 August 2016, and Callide, which was sold on 31 October 2016.

(2)       Thermal export - Primary is export quality product. Comparatives have been restated to align with current presentation.

(3)       Thermal export and domestic - Secondary is lower quality product that can be sold into either the export or domestic markets. Comparatives have been restated to align with current presentation. In 2016, ~60% of secondary production was sold into the export market.

(4)       Restated to exclude domestic secondary coal production from mines other than Isibonelo.

(5)       Includes both hard coking coal and PCI sales volumes.

Coal by mine (tonnes)	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q2 2017	Q2 2017	H1	H1	H1 2017
						vs.	vs.	2017	2016	vs.
						Q1 2017	Q2 2016			H1 2016
Met Coal (Australia)
Capcoal	1,508,900	1,785,400	1,230,200	1,637,300	2,205,400	(15)%	(32)%	3,294,300	3,965,400	(17)%
(incl. Grasstree)
Dawson	1,046,800	1,092,100	1,273,000	1,185,900	1,143,800	(4)%	(8)%	2,138,900	2,149,800	(1)%
Drayton	-	-	82,300	317,100	418,200	n/a	n/a	-	768,100	n/a
Grosvenor	183,600	709,800	539,100	685,700	331,200	(74)%	(45)%	893,400	534,200	67%
Jellinbah	840,300	718,000	882,100	820,200	821,600	17%	2%	1,558,300	1,580,000	(1)%
Moranbah North	688,600	1,416,100	1,948,400	1,277,300	1,015,500	(51)%	(32)%	2,104,700	1,840,400	14%
	4,268,200	5,721,400	5,955,100	5,923,500	5,935,700	(25)%	(28)%	9,989,600	10,837,900	(8%)
South Africa
Goedehoop	1,230,800	1,222,100	1,134,200	1,286,500	1,266,600	1%	(3)%	2,452,900	2,267,900	8%
Greenside	877,700	1,004,800	1,036,900	1,111,400	990,700	(13)%	(11)%	1,882,500	1,797,000	5%
Zibulo	1,672,900	1,439,400	1,407,200	1,571,800	1,638,600	16%	2%	3,112,300	3,028,600	3%
Khwezela(1)	1,475,000	1,596,100	2,230,000	2,137,100	1,849,000	(8)%	(20)%	3,071,100	3,818,600	(20)%
Mafube	407,600	441,400	435,400	506,000	438,500	(8)%	(7)%	849,000	817,600	4%
New Vaal	4,121,900	3,414,300	3,994,800	4,350,500	4,027,700	21%	2%	7,536,200	7,549,500	0%
New Denmark	769,600	954,400	773,200	777,300	392,600	(19)%	96%	1,724,000	996,900	73%
Kriel	1,420,300	1,338,500	1,659,400	1,834,000	1,503,300	6%	(6)%	2,758,800	2,843,100	(3)%
Isibonelo	1,052,400	896,300	1,037,500	1,116,100	1,081,800	17%	(3)%	1,948,700	2,241,400	(13)%
	13,028,200	12,307,300	13,708,600	14,690,700	13,188,800	6%	(1)%	25,335,500	25,360,600	-
Cerrejón
Carbones del Cerrejón	2,449,600	2,781,700	2,800,600	2,927,800	2,329,500	(12)%	5%	5,231,300	4,939,500	6%
Total Coal production	19,746,000	20,810,400	22,464,300	23,542,000	21,454,000	(5)%	(8)%	40,556,400	41,138,000	(1)%

(1)       The merger of Kleinkopje and Landau.

NICKEL

Nickel		Q2  2017	Q2 2016	Q2 2017 vs. Q2 2016	Q1 2017	Q2 2017 vs. Q1 2017	H1 2017	H1 2016	H1 2017 vs.   H1 2016
Nickel	t	11,300	11,100	2%	9,900	14%	21,200	22,300	(5)%

Nickel production increased by 2% as result of a stable performance in both smelting operations at Barro Alto, running slightly above nominal capacity during the second quarter. Production from Codemin decreased by 4% to 2,200 tonnes due to maintenance in May 2017.

Full Year Guidance

Full year production guidance remains unchanged at 43,000 - 45,000 tonnes.

Nickel (tonnes) unless stated otherwise(1)	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q2 2017 vs. Q1 2017	Q2 2017 vs. Q2 2016	H1 2017	H1 2016	H1 2017 vs. H1 2016
Barro Alto
Ore mined	2,375,700	1,023,500	364,300	974,100	835,300	132%	184%	3,399,200	1,292,300	163%
Ore processed	615,700	523,900	579,800	610,000	569,200	18%	8%	1,139,600	1,167,300	(2)%
Ore grade processed - %Ni	1.71	1.70	1.77	1.76	1.76	1%	(3)%	1.71	1.76	(3)%
Production	9,100	7,800	8,800	9,000	8,800	17%	3%	16,900	17,700	(5)%
Codemin
Ore mined	7,500	-	-	-	6,800	-	10%	7,500	6,800	10%
Ore processed	144,000	143,600	142,900	144,000	151,300	-	(5)%	287,600	302,700	(5)%
Ore grade processed - %Ni	1.69	1.65	1.73	1.72	1.72	2%	(2)%	1.67	1.70	(2)%
Production	2,200	2,100	2,100	2,300	2,300	5%	(4)%	4,300	4,600	(7)%
Total Nickel segment nickel production	11,300	9,900	10,900	11,300	11,100	14%	2%	21,200	22,300	(5)%
Sales volumes	10,400	10,400	11,400	11,600	11,100	-	(6)%	20,800	21,900	(5)%

(1)       Excludes Anglo American Platinum's nickel production.

 

EXPLORATION AND EVALUATION

Exploration and Evaluation expenditure for the quarter totalled $52 million, an increase of 17%. Exploration expenditure for the quarter totalled $23 million, an increase of 2%. Evaluation expenditure for the quarter totalled $29 million, an increase of 31%.

NOTE

This Production Report for the second quarter ended 30 June 2017 is unaudited.

AVERAGE REALISED PRICES SUMMARY

Average realised prices	H1 2017	H2 2016	H1  2016	FY 2016	H1 2017 vs. H2 2016	H1 2017 vs. H1 2016
De Beers
Total sales volume (100%) (Mct)	20.0	13.7	18.3	32.0	46%	9%
Consolidated sales volume (Mct)(1)	19.1	12.8	17.2	30.0	49%	11%
Consolidated average realised price ($/ct)(2)	156	201	177	187	(22)%	(12)%
Average price index(3)	121	119	117	118	2%	4%
Copper (USc/lb)	264	235	215	225	12%	23%
PGMs
Platinum (US$/oz)	957	1,015	971	993	(6)%	(1)%
Palladium (US$/oz)	780	670	551	610	16%	42%
Rhodium (US$/oz)	911	682	679	680	34%	34%
Basket price (US$/oz)	1,843	1,877	1,632	1,753	(2)%	13%
Basket price (ZAR/oz)	24,400	26,209	25,100	25,649	(7)%	(3)%
Iron Ore - FOB prices
Kumba Export (US$/dmt)(4)	71	67	55	64	6%	29%
Minas-Rio (US$/wmt)(5)	66	61	44	54	8%	50%
Coal
Metallurgical Coal
Metallurgical - Export (U$/t)(6)	195	153	79	119	27%	147%
Metallurgical - PCI (US/t) (6)	124	102	70	77	22%	82%
Thermal - Export (U$/t)	87	65	47	55	34%	85%
South Africa
Thermal - Export (U$/t)(8)	72	69	50	60
Thermal - Domestic (U$/t, FOR)	20	17	16	17
Cerrejón
Thermal - Export (U$/t)(7)	71	65	47	56	9%	51%
Nickel (USc/lb)	442	474	387	431	(7)%	14%

(1)       Consolidated sales volume excludes De Beers' JV partners' 50% proportionate share of sales to entities outside the De Beers Group of Companies from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, and includes pre-commercial production sales volumes from Gahcho Kué. Excluding Gahcho Kué's capitalised pre-commercial production sales volumes results in a consolidated sales volume of 18.4Mct for H1 2017.

(2)       Consolidated average realised price based on 100% selling value post-aggregation and excludes pre-commercial production sales from Gahcho Kué.

(3)       Average of the De Beers price index for the Sights within the six month period. The De Beers price index is relative to 100 as at December 2006.

(4)       Average realised export basket price (FOB Saldanha).

(5)       Average realised export basket price (FOB Açu) (wet basis).

(6)       Weighted average metallurgical coal sales price achieved.

(7)       Weighted average export thermal coal price achieved.

Note:

Production figures are sometimes more precise than the rounded numbers shown in the commentary of this report. The percentage change will reflect the percentage change using the production figures shown in the Production Summary of this report.

Forward-looking statements:

This 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:

Media		Investors
UK James Wyatt-Tilby [e-mail] Tel: [phone] Marcelo Esquivel [e-mail] Tel: [phone] South Africa Pranill Ramchander [e-mail] Tel: [phone] Ann Farndell [e-mail] Tel: [phone]		UK Paul Galloway [e-mail] Tel: [phone] Trevor Dyer [e-mail] Tel: [phone] Sheena Jethwa [e-mail] Tel: [phone]

Notes to editors:

Anglo American is a globally diversified mining business. Our portfolio of world-class competitive mining operations and undeveloped resources provides the raw materials to meet the growing consumer-driven demands of the world's developed and maturing economies. Our people are at the heart of our business. It is our people who use the latest technologies to find new resources, plan and build our mines and who mine, process and move and market our products to our customers around the world.

As a responsible miner - of diamonds (through De Beers), copper, platinum and other precious metals, iron ore, coal and nickel - we are the custodians of what are precious natural resources. We work together with our key partners and stakeholders to unlock the long-term value that those resources represent for our shareholders and for the communities and countries in which we operate - creating sustainable value and making a real difference.

www.angloamerican.com

 

END

 

 

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