Heavy snowfall in Chile forces Anglo to cut annual copper target
Shares in Anglo American (LON:AAL) collapsed Wednesday after the miner cut its annual target for copper due to heavy snow at its Los Bronces operation in Chile, and also revealed output declines in almost all the commodities it mines.
The stock was under pressure on Wednesday, trading 10.31% down to 729.7p at 1:40 pm GMT, the most it has fallen in more than three weeks, following Anglo's announcement.
Anglo said that annual copper output would be 570,000 to 600,000 tonnes this year, down from a forecast of as much as 630,000 tonnes.
Annual copper output would be 570,000 to 600,000 tonnes this year, down from a forecast of as much as 630,000 tonnes.Production at Los Bronces, perched 3,500 meters high up in the Andes 65km north-east of Chile's capital Santiago, fell 22% to 75,600 tonnes compared with the June quarter in 2015. The mine's output represents roughly 7% of the South American nation's total annual copper production.
Anglo also trimmed its full-year guidance on Brazilian iron ore to 15-17 million tonnes from 15-18 million tonnes. The ramp-up of Minas-Rio failed to offset Kumba Iron Ore's 21% output drop, causing the firm's overall iron ore production to fall 4% to 24.6 million tonnes in the six months to the end June from 25.6 million tonnes in the same period last year.
Diamond giant De Beers - Anglo American's 85%-owned subsidiary - also saw a production drop in the three months in the second quarter, with output falling 19% to 6.4 million carats, from 8 million carats a year earlier.
According to CEO Mark Cutifani, this was the result of a conscious decision to trim diamond production in response to weak market conditions.
Platinum, nickel and coal were the only commodities to brighten up Anglo's results. Platinum production rose 1% to 586,000 ounces in the second quarter, while nickel output surged 76% to 11,100 tons as the company rebuilds its Brazilian furnaces. Output of coal, the third-largest contributor to last year's underlying earnings before interest and taxes, went up 0.1% to 23.8 million tonnes.
The century-old miner, scheduled to report earnings next week, is seeking to raise at least $3 billion in asset sales to help reduce debt. In April, it agreed to sell its Brazilian niobium and phosphate unit to China Molybdenum Co. for $1.5 billion in cash and sold its 70% stake in the Foxleigh coking coal mine for an undisclosed sum to Taurus Funds Management.
Currently, the firm is in talks to offload its other coal mines in Australia.