ANGLO American and its subsidiary, Kumba Iron Ore, yesterday lowered their production guidance amid operational challenges which saw their share prices take strain.
In late trade Anglo’s share price was 6.41 percent lower at R741.27 while Kumba’s share tumbled 14.82 percent to R563.87.
Operational challenges, the Covid-19 pandemic and heavy rain in South Africa and Brazil led to a decline in production in Anglo American’s first quarter to end-March, the globally diversified mining company said yesterday.
The mining giant said production fell by 10 percent and adjusted downward its full-year guidance for platinum group metals (PGMs), iron-ore, and metallurgical coal production.
Anglo owns Africa’s largest iron ore miner, Kumba Iron Ore, and is one of the world’s leading PGM producers through Anglo American Platinum.
Outgoing Anglo American chief executive Mark Cutifani said: "This challenging start to the year highlights the importance of adhering to our operating model to stabilise performance after the necessary disruptions of the last two years as we adapted to – and now learn to live with – Covid.
“As a result, we are updating our platinum group metals, iron ore, and metallurgical coal volume guidance for the full year, and our unit cost guidance for most product groups to also reflect up-to-date exchange rates and the inflationary pressure on many input prices, particularly diesel," he said.
Cutifani stepped down on April 19.
PGM production fell 6 percent to 1.02 million ounces in the first quarter, primarily due to high rainfall at its Mogalakwena mine in Limpopo.
Full-year guidance has been revised to between 3.9-4.3 million ounces, from between 4.1-4.5 million ounces previously, the company said.
Iron ore production decreased 19 percent to 16.2 million tons as high rainfall and plant issues affected both Kumba and Minas-Rio in Brazil. Full-year guidance has been revised to between 60 million tons and 64 million tons, from as much as 67 million tons previously.
However, rough diamond production increased by 25 percent, reflecting strong operational performance and lower rainfall impact, primarily in Botswana.
Metallurgical coal production decreased by 32 percent to 2.2 million tons due to the longwall move at Moranbah and the end of production from Grasstree.
The company said: “The suspended Grosvenor operation and Aquila life-extension project both started operations in mid-February. Moranbah was suspended following a fatal underground incident in late March, with full-year guidance revised to 17-19 million tonnes (previously 20-22 million tonnes), subject to regulator approval for restart at the next panel as planned.”
Meanwhile, in a separate statement, Kumba Iron Ore CEO Mpumi Zikalala said: “Seasonal weather-related events and equipment reliability constraints led to challenging operating conditions in the first quarter of the year. Pleasingly, we continued to see strong demand for our high-quality products, resulting in an average realised price 38.5 percent above benchmark prices.”
Kumba released its production and sales report for the first quarter ended March 31, 2022, yesterday.
Zikalala said due to the tough operating conditions, Kumba’s production and sales volumes decreased by 21 percent to to 8.3 million tons and 8 percent to 9.5 million tons respectively.
Kumba trimmed its full-year guidance to a range of between 38 million tons and 40 million tons from the previous estimate of 39 million tons and 41 million tons.
She said: “From a responsible business perspective, we are encouraged that despite the operational challenges we have maintained our safety performance, and our fatality-free track record has increased to five years and 10 months.”
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