Silvia Antonioli London
ANGLO American planned to cut diamond output this year in response to lower prices, the global mining giant said, signalling reduced confidence in a prompt rebound.
Anglo also said its iron ore output rose in the first three months of the year thanks to improved productivity. However, copper production fell because of limited water supplies at its Chilean operations.
The London-listed company, which has lagged rivals for much of the past decade, is trying to improve its mining operations and is selling less profitable assets.
Its turnaround efforts though have so far been overshadowed by a rout in prices of metals such as iron ore and copper, which make up almost half and about a quarter of its earnings respectively.
Some respite came last year from higher margins at its diamond subsidiary De Beers, which became the second-largest earner for the company after iron ore.
Struggle
But diamond demand has slowed since late 2014 as middlemen who buy rough stones struggle with a stronger dollar and liquidity problems. De Beers, the largest producer of rough diamonds by value, has said it will produce sufficient quantities to match demand.
Yesterday, Anglo reduced its 2015 diamond output forecast to 30-32 million carats from 32-34 million carats, “in light of current trading conditions”.
Nomura analysts forecast that each 1 million carat cut in diamond output implied a 1.5 percent drop in Anglo’s 2015 earnings per share.
Iron ore output from Anglo’s Kumba division rose 7 percent in the first quarter from the same period a year ago to 12.2 million tons, thanks to operational improvements.
However, copper output fell 15 percent to 171 800 tons due to water supply problems that prompted the company to temporarily shut a processing plant in Chile.
Platinum, a troublesome division for Anglo, hit by a recurrent labour strike and stubbornly weak prices, saw output rise by 50 percent in the first quarter to 536 000 ounces. – Reuters