Anglo ups copper, iron ore production
But the group's platinum output slumped, hit by a strike at its South African operations.
JOHANNESBURG - Mining giants Anglo American posted an increase in its copper and iron ore production in the first quarter of 2014, broadly in line with analysts' forecasts, but its platinum output slumped, hit by a strike at its South African operations.
Output of iron ore, which makes up almost half of group earnings, totaled 11.3 million tonnes in the first quarter, up 10 percent from the year before, when production at the Sishen mine in South Africa was curbed following a strike in late 2012.
In copper, the second-largest earner for Anglo, output rose 18 percent year-on-year to 202,000 tonnes, on the back of higher ore grades from the Los Bronces and Collahuasi mines in Chile. Anglo raised its 2014 copper production output guidance to 710,000-730,000 tonnes from 700,000-720,000.
In platinum, where Anglo is cutting jobs and mothballing mines to improve the unit's profitability, equivalent refined platinum production fell 39 percent to 357,000 ounces, largely due to a crippling three-month mining strike over wages affecting some of its South African operations.
Anglo's platinum unit is also struggling with rising production costs and suppressed prices for the precious metal.
"We consider this a decent start of the year considering (the) seasonally weaker quarter and strike at platinum operations," Citi analysts said about the productions numbers.
Anglo cut its platinum guidance for the year. It now expects to produce about 2.1 million ounces of refined platinum equivalent, down from an estimate of 2.3-2.4 million previously.
The strike which began on 23 January and is still ongoing severely impacted Anglo's Rustenburg, Amandelbult and Union production, while its Mogalakwena and Unki mines and joint venture operations were unaffected.
Processing plants were also not affected so Anglo was able to tap into its inventories to make up for some of the production lost in the strike.
Other platinum producers in South Africa such as Impala Platinum and Lonmin have been affected by the industrial action.
"With the strike still not resolved platinum is still a bit of a wild card," Investec analyst Marc Elliott said.
"The new guidance is not down too much as the processing operations are unaffected by strike. It is likely that Anglo built up considerable inventories of unprocessed metal as well as refined metal stocks before the strike started."
Marathon talks aimed at ending the platinum strike will resume on Thursday after the world's top producers and union AMCU spent two days haggling over an offer tabled last week by the companies.
Anglo American shares were up 2.4 percent, outperforming a 1 percent rise in the mining sector.