Q3 2011 IMS

RNS Number : 5128Q

Anglo American PLC

20 October 2011

 



20 October 2011
Anglo American plc Interim Management Statement Production Report for the third quarter ended 30 September 2011

Overview

·      Iron ore production increased by 3% to 12.2 million tonnes mainly due to increased volumes from Kumba's Sishen Mine

o  The commissioning of Kolomela mine commenced successfully during August 2011.

·      Metallurgical Coal - total production (metallurgical and thermal coal) increased by 5% to 8.0 million tonnes, with a 24% increase and record production from Australian open cut operations

o  Production of metallurgical coal decreased by 4% to 4.0 million tonnes, due to planned longwall moves at the underground operations.

·      Thermal coal production from South Africa and Colombia decreased by 10% to 16.8 million tonnes, mainly due to industrial action at the South African operations, partly offset by an 18% increase in production from Colombia.

·      Copper production decreased by 9% to 139,900 tonnes, due to a number of factors including expected lower grades

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

·      Nickel⁽¹⁾ production increased by 14% to 6,500 tonnes, as Barro Alto production continues to ramp up.

·      Platinum equivalent refined production increased by 3%, while refined production decreased by 7% to 647,000 ounces.

·      Diamond production increased by 3% to 9.3 million carats despite industrial actions at operations in South Africa and Namibia.

·      Phosphates production from Copebrás increased by 10% to 285,000 tonnes.

·      Niobium production from Catalão increased by 22% to 1,100 tonnes.

·      Los Bronces 278,000 tonnes per annum⁽²⁾ expansion project in commissioning phase.

·      Codelco announced on 12 October 2011 that it has put a financing facility in place for its option that it may exercise over a 49% shareholding in Anglo American Sur (Los Bronces, El Soldado and Chagres smelter) in Chile. Anglo American received written notice from Codelco on 13 October 2011 stating that it intends to exercise its option. Anglo American is considering the implications of Codelco's announcement and written notice.

Preliminary Results for the full year to 31 December 2011 will be announced on 17 February 2012.

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

(2)       Additional capacity over first three years

Iron Ore and Manganese		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Iron ore	000 t	12,183	11,819	3%	11,534	6%
Manganese ore	000 t	808	849	(5)%	716	13%
Manganese alloys	000 t	78	80	(3)%	76	3%
Attributable sales volumes
RSA export iron ore	000 t	9,167	8,292	11%	9,806	(7)%
RSA domestic iron ore	000 t	1,538	2,170	(29)%	1,836	(16)%
South American export iron ore	000 t	1,452	927	57%	918	58%

Iron ore - Total production of 12.2 Mt was 3% higher and 6% higher than Q2 2011. 

Production at Sishen Mine has normalised following the weather related interruptions during Q1 2011. While production from the DMS plant increased quarter on quarter, the plant's performance continues to be impacted by mining feedstock constraints caused by the heavy rainfall experienced during Q1 2011.

In Brazil, record monthly production was achieved at Amapá in September (419,000 tonnes), following further improvements in the production processes.

Export sales volumes from Sishen Mine increased 11% to 9.2 Mt, despite the annual maintenance shutdown of the iron ore export channel during August 2011.  South African domestic sales volumes decreased 29% to 1.5 Mt due to reduced offtake from ArcelorMittal South Africa (AMSA).

The commissioning of Kolomela Mine commenced during August 2011, with 0.3 Mt of final product produced as part of the hot commissioning of the plant.  The mine remains on track to ramp up to between 4 Mt and 5 Mt in 2012, whilst ramping up to design capacity of 9 Mtpa in 2013.

The Minas-Rio iron ore project construction is progressing with civil works at the beneficiation plant and pipeline construction both continuing. First ore on ship is forecast in the second half of 2013.

Manganese Ore - Production decreased by 5% due to lower concentrator availability in Australia, offset by production efficiencies mainly from the Mamatwan mine at Hotazel that delivered a record quarterly production.

Manganese Alloys - Production decreased by 3% due to furnace instability at Metalloys, offset by changes to the product mix at TEMCO.

Metallurgical Coal(1)		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Production
Export metallurgical	000 t	4,015	4,197	(4)%	3,949	2%
Thermal	000 t	3,978	3,413	17%	3,088	29%
Weighted average achieved FOB prices
Export metallurgical	US$/t	267	205	30%	276	(3)%
Export thermal	US$/t	98	91	8%	103	(5)%
Domestic thermal	US$/t	35	30	17%	35	-
Attributable sales volumes
Export metallurgical	000 t	3,721	4,240	(12)%	3,929	(5)%
Export thermal	000 t	1,878	1,630	15%	1,600	17%
Domestic thermal	000 t	1,843	1,824	1%	1,867	(1)%

⁽¹⁾ In 2011 the Group decided to retain Peace River Coal and to manage it within the Metallurgical Coal business unit.  Information presented includes Peace River Coal and comparatives have been adjusted accordingly.

Metallurgical Coal - The Australian open cut operations delivered a record performance following the recovery actions initiated in the first half of the year, increasing production by 24%. However, planned longwall moves at the underground operations resulted in total metallurgical coal production decreasing by 4% to 4.0 Mt.

Thermal coal production from Australia increased by 17% and by 29% compared to Q2 2011, also as a result of the recovery actions initiated earlier in the year.

Metallurgical Coal business' production increased 5% to 8.0 million tonnes, with record export production achieved.

Thermal Coal		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Production
RSA thermal (non-Eskom)	000 t	5,198	5,813	(11)%	5,264	(1)%
Eskom	000 t	8,751	10,431	(16)%	8,783	-
RSA metallurgical	000 t	76	112	(32)%	84	(10)%
Colombia export thermal	000 t	2,852	2,427	18%	2,538	12%
Weighted average achieved FOB prices
RSA export thermal	US$/t	115	83	39%	122	(6)%
RSA domestic thermal	US$/t	22	17	29%	22	-
Colombia export thermal	US$/t	103	74	39%	104	(1)%
Attributable sales volumes
RSA export thermal	000 t	4,605	4,303	7%	3,213	43%
RSA domestic thermal	000 t	9,901	11,835	(16)%	9,866	-
Colombia export thermal	000 t	2,901	2,763	5%	2,853	2%

Thermal Coal - Thermal coal production in South Africa was impacted by industrial action and geological constraints.  This has been partly offset by Zibulo which continues to ramp up and is expected to reach commercial production in Q1 2012. Cerrejón, in Colombia, delivered a strong performance benefiting from a reduction in weather related stoppages.

Achieved export prices in South Africa were higher than 2010, reflecting favourable market conditions. Thermal Coal sells its export thermal product on index.

Export sales volumes from South Africa increased due to optimised load out efficiencies on the operations and an improvement in rail and port performance.

Copper		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Copper	t	139,900	153,400	(9)%	150,300	(7)%

Copper - Production decreased by 9% to 139,900 tonnes, mainly due to lower grades at Collahuasi, Los Bronces and Mantos Blancos, and weather related interruptions at Collahuasi. This was partially offset by higher production at El Soldado, which benefited from higher ore grades following recent mine development.

The Los Bronces expansion project remains on schedule for first production in Q4 2011.  

At Collahuasi, commissioning of the phase 1 expansion project is under way to increase sulphide processing capacity to 150,000 tonnes of ore per day, an annual average production increment of 19,000 tonnes per year of copper over the estimated life of mine.

Nickel		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Nickel	t	6,500	5,700	14%	6,600	(2)%

Nickel - Production increased by 14% to 6,500 tonnes due to the commissioning of Barro Alto which contributed 1,000 tonnes in Q3 2011. At Loma de Níquel, production was 8% lower than the same period in 2010, due to lower grades and additional maintenance activities in the quarter. 

The Barro Alto plant is continuing to ramp up and will average 40,000 tpa over its first three years of full production. Barro Alto is expected to reach full capacity at the end of 2012.

Platinum		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Refined
Platinum	000 oz	647	697	(7)%	641	1%
Palladium	000 oz	376	405	(7)%	374	1%
Rhodium	000 oz	75	89	(16)%	80	(6)%
Nickel	t	4,900	4,300	14%	5,500	(11)%
Equivalent refined
Platinum	000 oz	667	648	3%	593	12%

Platinum - Equivalent refined platinum production was 3% higher mainly due to the strong ramp up at Mogalakwena and Unki, which more than offset the impact of safety related stoppages. Refined production decreased by 7% despite higher output from mining operations due to an increase in pipeline stocks, compared to a decrease in Q3 2010.

Cash operating costs per equivalent refined platinum ounce increased to R13,093 in the nine months to 30 September 2011, reflecting higher consumables, labour and electricity costs.  The unit cost target for 2011 has therefore been revised to R12,900 per equivalent refined platinum ounce.

Palladium, Rhodium & Nickel - Refined production of palladium and rhodium decreased by 7% and 16% respectively, while nickel increased by 14%. These variances are due to a different source mix from operations and different pipeline processing times for each metal.

Diamonds		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Diamonds	000 carats	9,305	9,033	3%	8,138	14%

Diamonds - Carats recovered increased 3% to 9.3 million carats relative to Q3 2010. Production increased 14% compared to Q2 2011 due to higher productivity and variations in grade, despite industrial actions at operations in South Africa and Namibia.

Other Mining and Industrial - Core (1)		Q3	Q3	Q3 2011	Q2	Q3 2011
		2011	2010	vs.	2011	vs.
				Q3 2010		Q2 2011
Niobium	t	1,100	900	22%	900	22%
Phosphates	t	285,000	260,000	10%	260,700	9%

⁽¹⁾ Assets originally identified for divestment as part of the restructuring programme announced in October 2009, are managed as a separate business unit, Other Mining and Industrial.  In 2011 the Group decided to retain Catalão and Copebrás.

Catalão - Niobium production increased 22% to 1,100 tonnes due to inclusion of ore from Mine II and Copebrás waste resulting in higher production at the tailings plant. Production from the Boa Vista plant increased as a result of higher quality ore processed and improved recoveries at the concentration and metallurgy processes.

Copebrás - Phosphates production increased 10% to 285,000 tonnes due to changes in the production mix reflecting market demand and increased availability at the plant, as a consequence of the reduced number of shutdowns.

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
						Q3 2011	Q3 2011
	Q3	Q2	Q1	Q4	Q3	vs.	vs.
	2011	2011	2011	2010	2010	Q2 2011	Q3 2010
Iron Ore and Manganese segment ('000 tonnes)
Iron ore(1)	12,183	11,534	9,945	11,808	11,819	6%	3%
Manganese ore (2)	808	716	541	732	849	13%	(5)%
Manganese alloys (2)(3)	78	76	69	77	80	3%	(3)%
Metallurgical Coal segment ('000 tonnes)
Metallurgical	4,015	3,949	2,165	3,892	4,197	2%	(4)%
Thermal	3,978	3,088	3,002	3,728	3,413	29%	17%
Thermal Coal segment ('000 tonnes)(4)
RSA Thermal (non-Eskom)	5,198	5,264	5,080	5,885	5,813	(1)%	(11)%
RSA Metallurgical	76	84	80	103	112	(10)%	(32)%
Eskom	8,751	8,783	8,275	9,485	10,431	-	(16)%
Colombia Thermal	2,852	2,538	2,609	2,316	2,427	12%	18%
Copper segment (tonnes)(5)	139,900	150,300	138,800	154,400	153,400	(7)%	(9)%
Nickel segment (tonnes)(6) (7)	6,500	6,600	6,100	4,400	5,700	(2)%	14%
Platinum segment
Platinum ('000 ounces)	647	641	533	872	697	1%	(7)%
Palladium ('000 ounces)	376	374	288	503	405	1%	(7)%
Rhodium ('000 ounces)	75	80	86	111	89	(6)%	(16)%
Nickel (tonnes)	4,900	5,500	4,800	5,000	4,300	(11)%	14%
Equivalent refined
Platinum ('000 ounces)	667	593	568	640	648	12%	3%
Diamonds segment (De Beers) (diamonds recovered - 000 carats)
Total diamonds production for De Beers	9,305	8,138	7,396	8,532	9,033	14%	3%
Anglo American's share of diamonds production for De Beers	4,187	3,662	3,328	3,839	4,065	14%	3%
Other Mining and Industrial segment (tonnes) (8)
Niobium	1,100	900	900	1,200	900	22%	22%
Phosphates	285,000	260,700	240,800	270,900	260,000	9%	10%
South Africa Steel Products	158,000	183,100	173,200	151,000	180,000	(14)%	(12)%
Coal production by commodity ('000 tonnes)(4)
Metallurgical	4,091	4,033	2,244	3,995	4,309	1%	(5)%
Thermal	12,028	10,890	10,691	11,928	11,653	10%	3%
Eskom	8,751	8,783	8,275	9,485	10,431	-	(16)%

⁽¹⁾ Includes 300,000 tonnes of capitalised production from Kolomela (Q2 2011: nil).

⁽²⁾ Saleable production.

⁽³⁾ Production includes Medium Carbon Ferro Manganese.

⁽⁴⁾ Includes 822,000 tonnes (Q2 2011: 735,000 tonnes) of capitalised production from Zibulo (previously Zondagsfontein). The 822,000 tonnes includes export thermal coal production of 585,000 tonnes (Q2 2011: 509,000 tonnes) and Eskom coal production of 237,000 tonnes (Q2 2011: 226,000 tonnes).

⁽⁵⁾ Excludes Platinum and Black Mountain mine copper production.

⁽⁶⁾ Excludes Platinum nickel production.

⁽⁷⁾ Includes Barro Alto which is currently not in commercial production and therefore all revenue and related costs associated with 1,000 tonnes (Q2 2011: 1,100 tonnes) of production have been capitalised.

⁽⁸⁾ Excludes Tarmac.

Production figures are sometimes more precise than the rounded numbers shown in this report. 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:

Media		Investors
UK James Wyatt-Tilby Tel: [phone]		UK Leng Lau Tel: [phone]
Emily Blyth Tel: [phone]		Caroline Crampton Tel: [phone]
South Africa Pranill Ramchander Tel: [phone]		Leisha Wemyss 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 bulk commodities - iron ore and manganese, metallurgical coal and thermal coal; base metals - copper and nickel; and precious metals and minerals - in which it is a global leader in both platinum and diamonds. 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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