Rains hit Anglo American Q1 coal, iron ore

Thu Apr 21, 2011 8:13am GMT

* Iron ore output down 19 percent, copper down 14 percent
* Metallurgical coal down 37 percent after floods
* Copper down 14 percent due to rains, lower grades
* Shares dip 0.3 percent in early trade

By Clara Ferreira-Marques

LONDON, April 21 (Reuters) - Miner Anglo American stuck to its production targets on Thursday despite a first quarter that saw floods and heavy rains hampering output, with coal output from its Australian operations down by over a third.

Anglo, the world's fifth-biggest diversified miner, is the latest operator to detail the impact of freak weather across its operations. BHP Billiton warned on Wednesday that persistent rains in Australia were delaying a recovery in its coal operations.

Anglo said iron ore production fell 19 percent while copper dropped 14 percent, the latter hit by both heavy rains and lower grades. Iron ore and copper are the Anglo-South African group's most profitable products.

"It was pretty much as anticipated. We have had an awful lot of rain in Queensland and that has had an impact on everyone operating in the region," analyst Charles Kernot at Evolution said.

"To some extent they are a bit worse than BHP, but each operator is going to be slightly differently impacted."

Shares in the miner dipped 0.3 percent to 3,167 pence at 0750 GMT in London trade, underperforming a 0.7 percent rise in the broader mining sector.

Analysts at Oriel said the production numbers were worse than expected across many divisions: "Nonetheless, the company has said that full year targets should be achievable as production shortfalls are made up during the back end of the year, notably in platinum."

Anglo, Australia's fourth biggest producer of coal and its number two exporter, said output of metallurgical coal, used for steelmaking, dropped over a third to 2.1 million tonnes from its Australian mines.

Australia's Queensland state lost up to 30 million tonnes of coal production when monsoonal rains and a cyclone battered the eastern seaboard between November and February.

"A number of initiatives are in progress for the remainder of 2011 to mitigate the production shortfall from Q1," the miner said in its statement.

Iron ore production dropped to 9.9 million tonnes due to heavy rains that made access to pits virtually impossible -- its flagship Sishen Mine in South Africa saw twice the annual rainfall recorded during the first two months of the year.

Anglo confirmed Kumba production is expected to be flat and said plans were in place to recover the shortfall in production by the end of 2011.

LOS BRONCES ON TARGET, NICKEL UP

Production of copper, which accounts for almost a third of operating profit, dropped to 138,800 tonnes, hit by weather but also lower grades at its Chilean Collahuasi and Los Bronces mines. The expansion of the Los Bronces project is on target for first production in the last quarter of the year.

Nickel production increased 27 percent to 6,100 tonnes while platinum refined production increased by 19 percent, despite lower production at its mines after safety-related stoppages.

Diamond production increased by 5 percent to 7.4 million carats.

The key to Anglo's future performance and production is its hefty project pipeline, including Barro Alto Nickel in Brazil and the Minas Rio project, also in Brazil, which could help the group nearly double iron ore production by 2014.

Analysts say overall production could double from 2009 levels by the end of the decade. (Reporting by Clara Ferreira-Marques; Editing by Sudip Kar-Gupta and Jon Loades-Carter, sourced Thomson Reuters)