Anglo American Interim Management Statement Q1

19 April 2013

Anglo American plc Interim Management Statement for the first quarter ended 31 March 2013

Overview

 

·      Kumba Iron Ore production increased by 2% to 10.3 Mt, reflecting higher production at Kolomela

 

·      Metallurgical Coal achieved record first quarter export metallurgical coal production, which increased by 23% to 4.6 Mt, as productivity improvements more than offset the impact of excessive rainfall

 

·      Export thermal coal production from South Africa increased by 6% to 3.9 Mt. Cerrejón production decreased by 49% to 1.5 Mt owing to the strike during the quarter

 

·      Copper production⁽¹⁾ increased by 1% to 170,400 tonnes, with increased production at Los Bronces offset by lower production at Collahuasi due to a planned shutdown

 

·      Nickel production⁽²⁾ decreased by 48% to 6,200 tonnes owing to the permanent cessation of production and mining activities at Loma de Níquel at the end of 2012 and stoppages at Barro Alto

 

·      Platinum equivalent refined production decreased by 2% to 583,000 ounces following intermittent strike action

 

·      Diamond production increased by 3% to 6.4 million carats due to favourable ore grade, offset by lower production from Orapa due to maintenance

 

·      Phosphates production increased by 15% to 284,400 tonnes driven by a significant increase in productivity

 

 

 

This Interim Management Statement for the first quarter ended 31 March 2013 is unaudited. Interim Results for the six months to 30 June 2013 will be announced on 26 July 2013.

 

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

 

(1)              Copper production from the Copper business unit

(2)              Nickel production from the Nickel business unit

 

IRON ORE AND MANGANESE

 

Iron Ore and Manganese		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
Iron ore	000 t	10,335	10,106	2%	9,013	15%
Manganese ore	000 t	803	816	(2)%	847	(5)%
Manganese alloys	000 t	57	55	4%	61	(6)%

 

Iron Ore - Production from Kumba Iron Ore increased by 2% to 10.3 Mt due to a strong performance at Kolomela. Output increased by 15% compared to the previous quarter as production rates at Sishen continued to recover following the unprotected strike in the fourth quarter of 2012, in addition to higher output from Kolomela.  Kolomela, which is on track to produce at annual design capacity of 9 Mt in 2013, produced 2.7 Mt for the quarter, an increase of 77%.

 

Export sales volumes for the quarter decreased by 2% to 9.9 Mt, as a result of lower stockpiles due to the unprotected strike in the fourth quarter of 2012. Finished product stockpile levels amounted to 3.3 Mt, a decrease of 15% compared to Q1 2012.

 

The Minas-Rio iron ore project in Brazil continued to progress in line with the target of achieving first ore on ship by the end of 2014. During the quarter, two further authorisations were obtained relating to the archaeological survey at the tailings dam and the works necessary for the commencement of pre-stripping at the mine site. Activities at the beneficiation plant, pipeline, filtration plant and port continued as planned.

 

Manganese ore- Production decreased by 2% to 0.8 Mt, whilst marginally lower than the prior year the quarter benefited from an improvement in plant availability at GEMCO in Australia.

 

Manganese alloy - Production increased by 4% to 57,300 tonnes due to higher production from South Africa.

 

METALLURGICAL COAL

 

Metallurgical Coal		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
Metallurgical - Export	000 t	4,615	3,743	23%	4,580	1%
Thermal - Export	000 t	1,494	983	52%	1,690	(12)%
Thermal - Domestic	000 t	1,073	1,588	(32)%	2,025	(47)%

 

Metallurgical Coal - Metallurgical Coal achieved record first quarter production of 7.2 Mt due to record export metallurgical coal production which increased by 23% to 4.6 Mt. Moranbah, Foxleigh and Peace River Coal achieved record production through productivity improvements. This was partially offset by excessive rainfall causing flooding throughout the quarter which had a significant impact on production and waste removal at the Australian open cut operations, Dawson and Callide operations were the worst affected, as rain also caused the 43 day closure of the Moura rail line, affecting shipments from the Port of Gladstone. The floods and rail closure are expected to put pressure on production and unit costs for the remainder of the year.

 

Export thermal coal production increased by 52% driven by a number of productivity improvements at the Drayton operation in New South Wales, Australia.

 

 

The greenfield Grosvenor metallurgical coal project in Queensland, Australia continues to progress, with all permits and licences in place. Construction has commenced on site, with the access road complete and bulk earthworks under way. Longwall production is expected to be achieved in 2016.

 

THERMAL COAL

 

Thermal Coal		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
South Africa
Thermal - Export	000 t	3,909	3,694	6%	4,659	(16)%
Thermal - Domestic (Eskom)	000 t	8,130	7,763	5%	8,561	(5)%
Thermal - Domestic (non-Eskom)	000 t	1,519	1,533	(1)%	1,595	(5)%
Colombia
Thermal - Export	000 t	1,512	2,953	(49)%	2,662	(43)%

 

Thermal Coal - Export thermal coal production in South Africa increased by 6% to 3.9 Mt due to higher production at Zibulo after a reconfiguration of the wash plant to produce additional higher margin export coal, as well as improved machine availability at Mafube.

 

Domestic thermal coal production increased by 4% to 9.6 Mt, owing to improved longwall production at New Denmark.

 

Cerrejón's production decreased by 49%, largely due to a 32 day strike in February and March that preceded a successful resolution of a new three year wage agreement.

 

COPPER

 

Copper		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
Copper	t	170,400	168,400	1%	172,900	(1)%

 

Copper - Copper production increased by 1% to 170,400 tonnes. Production from Los Bronces increased by 5% to 98,300 tonnes, with higher throughput at both plants offset by expected lower ore grades. This higher throughput also resulted in a 3% production increase compared to Q4 2012.

 

Collahuasi's production decreased by 13%, owing to lower grades and the commencement of a 45 day planned shutdown of SAG Mill 3 on 21 March. During the quarter, SAG Mill 3 operated at reduced capacity ahead of the planned shutdown. This mill is responsible for approximately 70% of plant throughput at Collahuasi.

 

Production at El Soldado increased by 16%, as a result of expected higher grades and improved recoveries.

 

 

NICKEL

 

Nickel		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
Nickel	t	6,200	12,000	(48)%	7,400	(16)%

 

Nickel - Production decreased by 48% to 6,200 tonnes, mainly owing to the permanent cessation of production and mining activities at Loma de Níquel in Venezuela in November 2012. Loma de Níquel produced 3,300 tonnes in Q1 2012. Barro Alto produced 4,100 tonnes, a decrease of 38%, driven by the planned stoppage of line 2 for the electric furnace sidewall rebuild and the subsequent heat-up being impacted by a metal run-out. This has now been repaired and heat-up is nearing completion. Line 1 has been operating around nominal capacity since late March 2013. Full run rate is targeted during 2013.

 

Anglo American ceased production at Loma de Níquel in early September 2012, and the three remaining mining concessions expired in November 2012.

 

PLATINUM

 

Platinum		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
Refined
Platinum	000 oz	439	403	9%	704	(38)%
Palladium	000 oz	264	235	12%	413	(36)%
Rhodium	000 oz	57	54	5%	91	(38)%
Copper	t	2,000	2,900	(31)%	2,500	(20)%
Nickel	t	3,300	4,700	(30)%	3,900	(15)%
Gold	000 oz	23	24	(3)%	19	25%
Equivalent
Platinum	000 oz	583	593	(2)%	416	40%

 

Platinum - Equivalent refined platinum production decreased by 2% to 583,000 ounces, largely owing to the intermittent illegal strike action at the underground mines in South Africa, lower production at Unki in Zimbabwe and the suspension of the non-managed pooled and shared Marikana operation in Q2 2012.

 

Equivalent refined platinum production at the Rustenburg mines was flat, while Amandelbult and Union reported decreases in output of 15%. Production at Unki decreased by 19% as a result of lower head grade and a decline in tonnes milled due to a depletion of pre-production stockpiles. This was partly offset by a 31% increase in production at the Western Limb Tailings Retreatment plant largely driven by improved head grades and recoveries. At Mogalakwena, output increased by 1% to 87,000 ounces because of increased throughput at the concentrators.

 

Refined platinum production increased by 9% to 439,000 ounces owing to the impact of the prolonged shutdown at the converting plant in the first quarter of 2012.

 

Palladium, Rhodium and Nickel - Refined production of palladium and rhodium increased by 12% and 6% respectively, while nickel decreased by 30%. Palladium and rhodium variances are a result of a different source mix from operations and different pipeline processing times for each metal. Nickel production was affected by ensuing technical challenges following the failure of titanium cathode strips in the new nickel tank house during the second half of 2012. In addition, delays were experienced in starting nickelic hydroxide production following an extended shutdown in February 2013. The base metals refinery was running steadily by the end of the quarter.

 

DIAMONDS

 

Diamonds		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
Diamonds	000 carats	6,365	6,208	3%	8,051	(21)%

 

Diamonds - Production increased by 3% to 6.4 million carats, largely reflecting improved grades, offset by lower production due to planned plant maintenance at Orapa in Botswana.

 

Production decreased by 21% compared with the prior quarter, with Venetia in South Africa disrupted by excessive rainfall causing flooding in the pit. The impact was partially mitigated through the processing of ore stockpiles, with the shortfall expected to be recovered in H2 2013.

 

Jwaneng in Botswana is continuing to recover from the impact of its slope failure incident in June 2012 and excessive rainfall at the end of 2012.

 

OTHER MINING AND INDUSTRIAL

 

Other Mining and Industrial		Q1 2013	Q1 2012	Q1 2013 vs. Q1 2012	Q4 2012	Q1 2013 vs. Q4 2012
Phosphates	t	284,400	246,900	15%	302,300	(6)%
Niobium	t	1,100	1,100	-	1,000	10%

 

Phosphates - Production increased by 15% due to improved performance following optimised maintenance scheduling, increased plant availability and enhanced performance at the acidulation and granulation plants.

 

Niobium - Production was flat at 1,100 tonnes, with declining ore quality offset by improvements to both throughput and recoveries. Development of the Fresh Rock project to extend the life of Boa Vista, is on-going and on schedule.

 

EXPLORATION AND EVALUATION

 

Exploration and Evaluation expenditure for Q1 2013 totalled $103 million, a decrease of 26%.

 

Exploration expenditure in Q1 2013 was $48 million, an increase of $16, million largely driven by the inclusion of fully consolidated De Beers exploration costs following the acquisition of an additional 40% interest in De Beers in the second half of 2012. Expenditure was primarily focused on opportunities in Argentina, Australia, Brazil, Canada, Chile, Finland (Sakatti deposit), Indonesia and several countries in Africa.

 

Evaluation expenditure for the quarter was $55 million, a decrease of 48%. Evaluation expenditure is mainly focused on iron ore, metallurgical coal, copper and diamonds.

 

SIGNIFICANT TRANSACTIONS

 

On 28 March 2013 Anglo American announced its decision not to proceed with the acquisition of a 58.9% interest in the Revuboè metallurgical coal project in Mozambique. As announced on 24 July 2012, the transaction was subject to a number of conditions. Those conditions were not satisfied and Anglo American decided not to proceed with the transaction. Anglo American expects to continue with its objective of establishing a position in the emerging metallurgical coal basin in Mozambique.

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' joint ventures which are quoted on a 100% basis.

 

						% Change
	Q1 2013	Q4 2012	Q3 2012	Q2 2012	Q1 2012	Q1 2013 vs. Q4 2012	Q1 2013 vs. Q1 2012
Iron Ore & Manganese segment (tonnes)
Kumba Iron Ore
Lump	6,190,300	5,551,000	7,689,900	7,045,500	6,294,100	12%	(2)%
Fines	4,144,700	3,461,500	4,807,000	4,403,700	3,812,400	20%	9%
Total Kumba production	10,335,000	9,012,500	12,496,900	11,449,200	10,106,500	15%	2%
Kumba sales volumes
RSA export iron ore	9,945,100	8,979,600	9,958,600	10,597,600	10,121,200	11%	(2)%
RSA domestic iron ore	882,000	833,100	1,162,400	1,368,000	1,319,500	6%	(33)%
Samancor
Manganese ore (1)	803,400	846,800	858,400	826,400	816,200	(5)%	(2)%
Manganese alloys (1) (2)	57,300	61,200	52,000	30,200	55,000	(6)%	4%
Samancor sales volumes
Manganese ore	864,300	714,800	820,000	883,200	794,400	21%	9%
Manganese alloys	63,100	65,600	48,000	50,800	71,600	(4)%	(12)%
Metallurgical Coal segment (tonnes)
Metallurgical - Export coking coal	3,324,800	3,387,000	3,095,300	3,234,300	2,145,000	(2)%	55%
Metallurgical - Export PCI	1,289,800	1,193,000	1,400,400	1,611,300	1,598,000	8%	(19)%
Total Metallurgical - Export(3)	4,614,600	4,580,000	4,495,700	4,845,600	3,743,000	1%	23%
Thermal	2,566,800	3,714,700	3,398,900	3,286,300	2,570,600	(31)%	-
Weighted average achieved FOB prices (US$/t)
Metallurgical - Export	148	146	188	192	190	1%	(23)%
Thermal - Export	90	83	96	94	113	8%	(20)%
Thermal - Domestic	37	37	36	35	39	-	(5)%
Sales volumes
Metallurgical - Export (4)	4,336,200	4,714,000	4,096,800	4,651,500	3,950,700	(8)%	10%
Thermal - Export	1,506,600	1,518,800	1,776,300	1,525,400	1,222,100	(1)%	23%
Thermal - Domestic	1,109,100	1,920,800	1,817,500	1,698,300	1,484,300	(42)%	(25)%
Production by region: Australia
Metallurgical - Export	4,151,100	4,213,700	4,072,700	4,490,900	3,510,100	(1)%	18%
Thermal	2,566,800	3,714,700	3,398,900	3,286,300	2,570,600	(31)%	-
Total Australia	6,717,900	7,928,400	7,471,600	7,777,200	6,080,700	(15)%	10%
Canada
Metallurgical - Export	463,500	366,300	423,000	354,700	232,900	27%	99%

 

 

						% Change
	Q1 2013	Q4 2012	Q3 2012	Q2 2012	Q1 2012	Q1 2013 vs. Q4 2012	Q1 2013 vs. Q1 2012
Thermal Coal segment (tonnes)
South Africa
Thermal - Export	3,909,200	4,659,100	4,555,300	4,223,500	3,694,200	(16)%	6%
Thermal - Domestic (Eskom)	8,129,800	8,560,600	9,056,900	8,326,200	7,762,700	(5)%	5%
Thermal - Domestic (Non-Eskom)	1,518,800	1,594,500	1,530,500	1,560,900	1,533,200	(5)%	(1)%
Metallurgical - Domestic	-	-	-	15,700	58,400	-	(100)%
Colombia
Thermal - Export	1,512,000	2,661,700	2,829,400	3,104,700	2,953,000	(43)%	(49)%
Weighted average achieved FOB prices (US$/t)
South Africa
Thermal - Export	83	84	87	93	104	(1)%	(20)%
Thermal - Domestic	20	21	20	21	22	(5)%	(9)%
Colombia
Thermal - Export	77	84	86	90	95	(8)%	(19)%
Sales volumes
South Africa
Thermal - Export	3,914,900	4,511,000	4,400,800	3,720,100	4,518,700	(13)%	(13)%
Thermal - Domestic	9,565,800	10,192,500	10,468,500	9,909,500	9,447,500	(6)%	1%
Colombia
Thermal - Export	1,773,500	2,701,700	2,630,300	2,959,600	2,634,000	(34)%	(33)%
Production by region: South Africa
Thermal - Export	3,909,200	4,659,100	4,555,300	4,223,500	3,694,200	(16)%	6%
Thermal - Domestic (Eskom)	8,129,800	8,560,600	9,056,900	8,326,200	7,762,700	(5)%	5%
Thermal - Domestic (non-Eskom)	1,518,800	1,594,500	1,530,500	1,560,900	1,533,200	(5)%	(1)%
Metallurgical - Domestic	-	-	-	15,700	58,400	-	(100)%
Total South Africa	13,557,800	14,814,200	15,142,700	14,126,300	13,048,500	(8)%	4%
Colombia
Thermal - Export	1,512,000	2,661,700	2,829,400	3,104,700	2,953,000	(43)%	(49)%

 

 

 

						% Change
	Q1 2013	Q4 2012	Q3 2012	Q2 2012	Q1 2012	Q1 2013 vs. Q4 2012	Q1 2013 vs. Q1 2012
Copper segment (tonnes) (5)
Collahuasi total production	66,900	73,800	62,900	68,700	76,700	(9)%	(13)%
Collahuasi attributable production (6)	29,400	32,500	27,700	30,200	33,700	(10)%	(13)%
Avg sulphide grade (%TCu) (7)	0.75	0.74	0.70	0.79	0.80	1%	(6)%
Los Bronces mine (8)	98,300	95,100	87,200	89,800	93,200	3%	5%
Avg sulphide grade LB (%TCu)	0.80	0.85	0.79	0.86	0.89	(6)%	(10)%
Avg sulphide grade LBDP (%TCu)	0.79	0.83	0.79	0.83	0.90	(5)%	(12)%
El Soldado mine (8)	15,600	15,200	12,500	12,700	13,400	3%	16%
Avg sulphide grade (% TCu)	1.03	0.94	0.72	0.78	0.89	10%	16%
Mantos Blancos mine	12,400	13,900	14,100	13,300	12,900	(11)%	(4)%
Avg sulphide grade (% ICu) (9)	0.54	0.59	0.71	0.69	0.58	(8)%	(7)%
Mantoverde mine	14,700	16,200	15,800	15,100	15,200	(9)%	(3)%
Avg oxide grade (% ASCu) (10)	0.61	0.63	0.65	0.68	0.58	(3)%	5%
Total copper production	207,900	214,200	192,500	199,600	211,400	(3)%	(2)%
Attributable copper production (11)	170,400	172,900	157,300	161,100	168,400	(1)%	1%
Attributable sales volumes	160,300	177,900	150,200	160,200	155,200	(10)%	3%
Nickel segment (tonnes) (12)
Codemin	2,100	2,500	2,500	2,500	2,100	(16)%	-
Loma de Niquel	-	-	1,800	3,000	3,300	-	(100)%
Barro Alto	4,100	4,900	4,700	5,400	6,600	(16)%	(38)%
Total nickel production	6,200	7,400	9,000	10,900	12,000	(16)%	(48)%
Sales volumes	7,100	9,000	7,600	12,600	10,800	(21)%	(34)%
Platinum segment
Refined production
Platinum (troy oz)	439,200	703,800	649,000	623,000	402,800	(38)%	9%
Palladium (troy oz)	263,600	413,300	392,100	355,500	235,000	(36)%	12%
Rhodium (troy oz)	56,500	91,200	90,500	75,100	53,900	(38)%	5%
Copper (tonnes)	2,000	2,500	2,700	3,300	2,900	(20)%	(31)%
Nickel (tonnes)	3,300	3,900	3,700	5,400	4,700	(15)%	(30)%
Gold (troy oz)	23,300	18,600	38,500	24,100	24,000	25%	(3)%
Equivalent refined
Platinum (troy oz)	583,000	416,000	626,300	583,600	593,200	40%	(2)%
4E built-up head grade (g/tonne milled	3.22	3.22	3.32	3.09	3.20	-	1%
Diamonds segment (diamonds recovered - carats) (13)
Debswana	4,535,000	5,537,000	4,385,000	5,345,000	4,949,000	(18)%	(8)%
Namdeb	429,000	470,000	419,000	460,000	318,000	(9)%	35%
De Beers Consolidated Mines	1,002,000	1,547,000	1,247,000	964,000	674,000	(35)%	49%
De Beers Canada	398,000	497,000	324,000	472,000	267,000	(20)%	49%
Total diamonds production	6,364,000	8,051,000	6,375,000	7,241,000	6,208,000	(21)%	3%

 

 

 

						% Change
	Q1 2013	Q4 2012	Q3 2012	Q2 2012	Q1 2012	Q1 2013 vs. Q4 2012	Q1 2013 vs. Q1 2012
Other Mining and Industrial segment (tonnes) (14)
Phosphates	284,400	302,300	292,300	271,500	246,900	(6)%	15%
Niobium	1,100	1,000	1,100	1,200	1,100	10%	-

 

 

(1)              Saleable production

(2)              Production includes medium carbon ferro-manganese

(3)              Within export coking and export PCI coals there are different grades of coal with different weighted average prices compared to benchmark

(4)              Includes both hard coking coal and PCI product sales volumes

(5)              Excludes Anglo American Platinum's copper production

(6)              Anglo American share of attributable Collahuasi production is 44% of total production

(7)              TCu = total copper

(8)              Anglo American previously held 74.5% of AA Sur, as of 24 August 2012, holds 50.1%. Production is stated at 100% as Anglo American continues to consolidate AA Sur

(9)              ICu = insoluble copper (total copper less acid soluble copper)

(10)            ASCu = acid soluble copper

(11)            Difference between total copper production and attributable copper production is Anglo American's 44% interest in Collahuasi

(12)            Excludes Anglo American Platinum's nickel production

(13)            Production data for De Beers is disclosed on a 100% basis

(14)            Excludes Amapá, Tarmac and Scaw Metals

 

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 Tel: +44 (0)20 7968 8759		UK Leng Lau Tel: +44 (0)20 7968 8540
Emily Blyth Tel: +44 (0)20 7968 8481		Caroline Crampton Tel: +44 (0)20 7968 2192
South Africa Pranill Ramchander Tel: +27 (0)11 638 2592		Sarah McNally Tel: +44 (0)20 7968 8747

 

Notes to editors:

Anglo American 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, extensive pipeline of growth projects and exploration activities span southern Africa, South America, Australia, North America, Asia and Europe. www.angloamerican.com