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Anglo American PLC said on Friday it had moderated its production growth plans over the near term as it battled with economic volatility, extreme weather and other localised disruptions at its operations.
The London-based mining company expected its production to drop by 3% this year, with poor ore grades in Chile, and lower production from Kumba Iron Ore Ltd and platinum group metals operations marginally offset by Quellaveco copper ramp-up in Peru and strong diamond production.
Unit costs for 2022 were up around 16% as a result of rising inflation and some production decreases.
For this year, capital expenditure was at $5.7 billion, compared to $5.2 billion last year.
In its performance for 2022, and capital expenditure and production guidance for the next three years, Anglo American said it expected 2023 production to increase by 5% as Quellaveco ramps up, with unit costs likely to increase by 3%.
Capex is forecast to be between $6.0 billion and $6.5 billion, including $800 billion for Woodsmith polyhalite project in North Yorkshire.
For 2024, production is projected to rise by 5%, led by copper, iron ore and steelmaking coal.
Capex for that year is forecast at between $5.5 billion and $6.0 billion.
Production for 2025 is expected to be in line with 2024’s guidance, with capex of between $5.0 billion and $5.5 billion predicted.
Anglo American Chief Executive Duncan Wanblad said the group had moderated its near term production growth plans.
The mining giant, Wanblad said, had built operational momentum in the second half.
This year, the company has focused on restoring operations to normal, while grappling with geopolitically-led economic volatility, extreme weather, and other localised disruptions at its businesses.
It ‘re-phased’ certain of its growth investments to ensure optimal sequencing for long term value creation in the current high inflationary and dynamic external environment, Wanblad said.
Anglo America said it will extend the development schedule and the capital budget at Woodsmith, compared to what was anticipated prior to its ownership of this project. So potentially, this might impact the group’s carrying value of Woodsmith for accounting purposes at the year end, Anglo American Finance Director Stephen Pearce said.
Regarding Quellaveco, Anglo American said it was sequencing options appropriately, based on capital efficiency and returns, cognisant of balancing the current macro uncertainties with the compelling longer term supply and demand dynamics.
Separately, Anglo American Platinum said it production guidance for 2022 was expected to be within target of between 3.8 million ounces and 4.1 million ounces.
The platinum producer said adjusted its 2023-2025 production guidance to reflect new operating conditions.
For next year, output is estimated at between 3.6 million ounces and 4.0 million ounces. For 2024, production is seen at between 3.6 million ounces and 4.0 million ounces in 2024, before dropping to between 3.5 million ounces and 3.9 million ounces in 2025.
Kumba guided for production of 37 million tonnes this year, revised down from 38 million tonnes and 40 million tonnes forecast previously.
Output will likely slow to between 35 million tonnes and 37 million tonnes next year, before recovering to 37 million tonnes and 39 million tonnes in 2024, and between 39 million tonnes and 41 million tonnes in 2025.
Shares in Anglo American lost 1.5% to 3,248.50 pence in London early on Friday. They were down 1.1% at R 686.15 in Johannesburg.
In Johannesburg, Kumba stock dropped 0.8% to R 509.49, while Anglo American Platinum shed 4.2% to R 1,642.15.
By Artwell Dlamini, Alliance News reporter
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