Anglo shares gain most in 16 months

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Kumbaironore

Independent Newspapers

Two workers at a Kumba Iron Ore mine. Photo: Simphiwe Mbokazi.

Johannesburg - Anglo American Plc, the company that runs the world’s biggest platinum producer and Africa’s largest iron ore miner, rose the most in 16 months in London trading after both units posted 25 percent gains in output.

Anglo advanced as much as 8.5 percent to 1,457 pence, the biggest intraday increase since September 14, 2012, and was 5.8 percent higher at 10:53 a.m.

South Africa, where strikes have disrupted production at both Anglo’s platinum and iron ore operations, accounts for about 45 percent of the London-based company’s revenue.

The rand has lost almost a quarter of its value against the dollar since the beginning of last year, helping to bolster earnings from South African production sold in the US currency.

While today’s fourth-quarter figures were in line with forecasts, investors “wanted it to be delivered,” Aneek Haq, an analyst at Exane Ltd., said from London.

“The fact they are delivering it plus the benefit that comes through the rand is leading to a much more positive view on the stock.”

Anglo American Platinum Ltd. said today it produced 520,000 equivalent platinum ounces in the three months ended December 31, compared with 416,000 ounces a year earlier when walkouts closed mines for as many as eight weeks.

Kumba Iron Ore’s output climbed to 11.3 million metric tons from 9 million tons.

Amplats, as Anglo’s Johannesburg-based platinum unit is known, closed shafts and cut jobs in South Africa last year as it sought to return to profit.

Pretoria-based Kumba recovered from a two-week walkout in 2012 at its Sishen operation, Africa’s largest mine for the steelmaking ingredient, even as it struggled to overcome depleting resources.

 

Fresh Strike

 

Amplats rose as much as 6.9 percent, the biggest intraday gain since September 19, and was trading 5.1 percent higher at 457.49 rand at 1:07 p.m. in Johannesburg.

The stock advanced even as a strike over wages called by the Association of Mineworkers and Construction Union that started January 23 continued to paralyse production.

Kumba jumped as much as 6.4 percent to 463 rand, the biggest intraday gain in more than a month.

The rand dropped 0.8 percent and was trading at 11.12 against the dollar, extending is slump since January 1 to 5.7 percent.

A weaker rand benefits South African mining companies, which earn their revenue in dollars and incur expenses in the local currency.

Anglo also mines diamonds in southern Africa and Canada.

Production at De Beers, a gem producer owned by Anglo, jumped 13 percent in the fourth quarter to 9.1 million carats.

 

Chilean Mines

 

Production of export metallurgical coal, used in steelmaking, increased 3 percent to 4.7 million tons.

Output for export markets of the variety burned in power plants increased 8 percent to 7.9 million tons.

Copper production climbed 24 percent to a record 214,400 tons as output at the Los Bronces mine in Chile increased 16 percent to 110,000 tons. Production from the Collahuasi mine doubled to 64,800 tons.

Anglo may report underlying earnings of $2.16 billion for 2013 on February 14, according to the average estimate in a Bloomberg survey of analysts.

Profit by that measure fell 54 percent to $2.84 billion in 2012 following a decline in commodity prices and an increase in operating costs.

The fourth-quarter production update “will drive 2013 earnings upgrades,” Nomura Bank International Plc said in an e- mailed note to clients.

“Whether this translates into 2014 earnings upgrades will remain to be seen.” - Bloomberg News


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