Mining group Anglo American has joined rivals in reporting a weak start to the year as it grappled with the effects of the pandemic and weather-related disruptions to its operations.
Production in the three months to March was 10 per cent lower than the same period a year ago because of Covid-related absences and high rainfall in South Africa and Brazil, the London-listed group said in a trading update on Thursday.
Its shares, which recently hit a record high, fell 8 per cent to £37.13.
Mark Cutifani, outgoing chief executive, said the group would update full year volume guidance for platinum metals, iron ore and metallurgical coal in response.
It also increased its guidance on costs by 9 per cent, citing currency fluctuations and inflationary pressures, particularly the price of diesel, which it uses to power trucks at its sites.
Anglo said operations at its Moranbah coking coal mine in Australia had been suspended following an accident in March and that it had lowered production guidance to 17mn-19mn tonnes, from 20mn-22mn previously, as a result.
The statement was more positive about prospects for the De Beers diamond division, saying rough diamond production had jumped 25 per cent and demand was strong. Analysts believe De Beers could benefit from the western sanctions imposed on Russian producer Alrosa.
“Today’s result, although in line with the apparent operating challenges facing the miners as an industry, were much weaker than we had anticipated and we expect meaningful consensus [earnings] downgrades,” said Tyler Broda, analyst at RBC Capital Markets.
“Also, the change in cost guidance for the full year, although in part due to volumes being lower, is a surprise considering previous guidance was given in December.”
The disappointing trading update comes as Duncan Wanblad, Anglo’s head of business development and strategy, takes charge of the company from Cutifani, who is stepping down after nearly a decade at the helm.
In a recent interview with the Financial Times, Wanblad said his immediate priorities would be safety, keeping costs under control and honing the operational model introduced by Cutifani.
Anglo’s update came just hours after BHP, the world’s biggest miner, warned of a hit to copper and nickel production from pandemic-related absences and social unrest in Chile. Rio Tinto and Vale have also published weak first-quarter trading updates this week.
Chile focused copper producer Antofagasta also reported disappointing production figures on Thursday, with first-quarter production of 138,000 tonnes, down 24 per cent on the same period a year ago.
The company blamed a temporary slowdown at the Los Pelambres mine because of a drought and lower ore grades at another one of its assets.
