Wildcat strikes hurt production at Anglo

Dineo Faku

PRODUCTION figures posted by Anglo American on Friday confirmed market fears of the severe damage done by the two months of wildcat strikes in the local mining industry last year, which spread to the transport and agricultural sectors.

An employee uses a front loader to shift iron ore into piles at Sishen open cast mine, operated by Kumba Iron Ore Ltd., an iron ore-producing unit of Anglo American Plc, in Shishen, South Africa, on Wednesday, Aug. 24, 2011. Kumba Iron Ore Ltd. may decide on the next stage of its Sishen-Saldanha expansion in 2014, the company said in a presentation on its website today. Photographer: Nadine Hutton/Bloomberg. Credit: Bloomberg

The drop in production at Anglo’s platinum and iron ore businesses in the fourth quarter came as no surprise as wildcat strikes in August were followed by South African sovereign downgrades by three credit ratings agencies.

The firm, which is listed in Johannesburg and London, reported a 29 percent decline in platinum production year on year to 416 000 ounces in the fourth quarter, from 583 000 ounces in the corresponding period of 2011.

Production at Kumba Iron Ore dropped 19 percent to 9 million tons in the fourth quarter following a strike at its Sishen mine. The company said 5 million tons of output was lost as a result. Kumba’s export sales volumes for the quarter decreased 6 percent to 9 million tons after the production losses at the Sishen mine.

The drop at Anglo American Platinum (Amplats) follows a halt in operations between September 18 and November 15 at its Rustenburg, Amandelbult and Union mines because of the industrial action.

Amplats lost 272 590 ounces of production during the fourth quarter, it said on Friday.

Last week the government criticised Amplats’ plan to idle four shafts, and ultimately sell its Union mine, which will lead to 14 000 job losses.

Mineral Resources Minister Susan Shabangu blamed Amplats boss Chris Griffith for not consulting with authorities and threatened to withdraw the company’s mining licence.

Amplats has since met the government at the negotiation table to discuss its proposed restructuring plan.

The industry had to ensure that labour relations issues were prioritised by all mine management, RBC Capital Markets analyst Des Kilalea said. “If no material labour stoppages and no safety stoppages are experienced, the next year will be better at Anglo.”

Amplats has previously warned of financial losses as a result of poor market and operating conditions.

Headline earnings a share for 2012 is expected to decrease to a loss of between R4.91 and R6.28 from a profit of R13.65 for the year to December 2011.

Anglo American reported increases in copper, thermal coal and diamond production in the fourth quarter.

The thermal coal business strengthened, with the company reporting that export thermal coal production increased 5 percent to 4.7 million tons, reflecting the ramp-up of its Zibulo mine in Mpumalanga and increased production of lower calorific coal.

Diamond production increased 24 percent to 8.1 million carats, reflecting the resumption of mining operations at Jwaneng in Botswana last September.

The firm was continuing its cost review of the Minas-Rio iron ore project in Brazil, which had been delayed amid escalating costs. Anglo’s stock slid 1.02 percent to R266.40 on the JSE on Friday.