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Anglo reports 'solid' 3d qtr production levels

Keywords: Tags  Anglo American, platinum, copper, nickel, manganese, production, third quarter

LONDON — Anglo American Plc has reported a "solid operational performance" in the third quarter of 2012, with production increases across five of its seven commodities despite continuing disruptions at its platinum operations in South Africa.

Refined platinum production was flat at 649,000 ounces, while equivalent refined platinum production fell 6 percent to 626,300 ounces.

"Production and costs were adversely affected by illegal industrial action (at the South African platinum operations), which caused production loss of 42,000 ounces of equivalent refined platinum in the quarter," the London-based miner said.

Production was down at the Union North and South, Mogalakwena, Tumela and Siphumelele mines, Anglo said. Amandelbult and Union North and South have also been hit by strikes.

Production was down 23 percent at Union North and down 26 percent at Union South as a result of lower grades and other factors.

Mogalakwena production fell as a result of the breakdown of the primary crusher at the North concentrator, as well as lower head grade.

Platinum production at Rustenburg, meanwhile—which was heavily affected by the strikes between July and September—came to 148,100 ounces for the three months ended Sept. 30, down just 0.3 percent, and up 2 percent quarter on quarter despite the loss of 42,000 ounces of output.

"Anglo American Platinum (Ltd.) has been experiencing illegal industrial strike action at its Rustenburg, Union and Amandelbult mining operations since September 18," the company said. "This followed an initial safety suspension on September 12. The strike was initially contained to the Rustenburg mining operations, but has since commenced at Union and Amandelbult operations as of the first week of October."

After the end of the quarter, equivalent refined platinum production losses came to 96,300 ounces during the Oct. 1-24 period.

The production losses have also led to an 8-percent increase in unit costs for the third quarter due to the retained fixed cost base.

The average loss of platinum production stands at 4,500 ounces per day; as a result, the expected refined platinum production for 2012 has been reduced to between 2.2 million and 2.4 million ounces.

"Given the retained fixed cost base, and as result of the reduction in production, the 2012 unit cost is expected to be (15,500 South African rand, or $1,790) to R16,000 ($1,848) per equivalent refined platinum ounces," the company said. "In line with the lower production levels and in light of continued adverse market conditions, planned total capital expenditure for 2012 has been reduced further to R6.5 billion ($750.7 million)."

Anglo’s copper production, meanwhile, was up 12 percent year on year to 157,300 tonnes in the three months ended Sept. 30 as a result of the full ramp-up of the expansion of the Los Bronces project in Chile, the company said.

Production at Los Bronces was 84 percent higher, it added, despite lower ore grades and recoveries; the expansion project contributed 48,900 tonnes.

The new processing plant is still ramping up and affected design throughput capacity in August and September.

Production at Collahuasi, meanwhile, was down by 40 percent as a consequence of planned lower ore grades from current phases in the mine plan. This was exacerbated by lower recoveries, a lengthy ball mill outage and "a number of other plant reliability challenges," Anglo said.

The joint shareholder intervention that began in July to address these issues is expected to start providing improvements in the fourth quarter.

During the quarter, the company also issued corporate bonds with a value of $2.3 billion in the U.S. and European markets.

Nickel production was up 38 percent to 9,000 tonnes, as production from Barro Alto, Brazil, offset the lack of production from Loma de Níquel in Venezuela. Barro Alto produced 4,700 tonnes of nickel in the third quarter and 16,700 tonnes in the year to date.

The three remaining concessions at Loma de Níquel, Venezuela, after the cancellation of 13 other concessions, are due to expire Nov. 10.

"If there is no development in this situation in the coming weeks, then there will be no further production contribution from this operation. Anglo American is continuing to engage with stakeholders in Venezuela," the company said.

Refined production of palladium was up by 4 percent and rhodium was up 20 percent, while refined nickel was down 24 percent following technical issues in the new tank house at the base metal refinery.

Anglo also reported strong operating performance in manganese ore as a result of improved plant availability at its Groote Eylandt Mining Co. (Gemco) mine in Australia, which contributed to record ore production in the third quarter of 858,000 tonnes. The mine is a joint venture between Anglo and London-based BHP Billiton Plc.

The resumption of manganese alloys production at Tasmanian Electro Metallurgical Co. (Temco), also in Australia, in July led to a major rise in alloy production quarter on quarter to 52,000 tonnes.

On Aug. 24, Anglo completed the sale of a 25.4-percent stake in Anglo American Sur, Chile, to a joint venture between Corporación del Cobre de Chile (Codelco) and Mitsui & Co. Ltd., for a cash consideration of $2 billion.

Combined exploration and evaluation operating expenditure for the nine months ended Sept. 30 was $526 million, 47 percent higher than in the same period of 2011.

Spending was focused on opportunities in Africa, Australia, Brazil, Canada, Chile, Finland and Peru.

"Anglo American recognizes the longer-term value of exploration and evaluation activities. However, in light of the current macroeconomic environment and following recent successes, expenditure is being moderated in 2012 and 2013," the company said.

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