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Highlights
Production Declines: Anglo American reported a 13% decrease in copper output and a 25% drop in rough diamond production for the third quarter, attributed to reduced demand.
2024 Guidance Maintained: Despite the production declines, the company upheld its production forecasts for copper and diamonds for the remainder of the year.
Business Restructuring: Anglo American is focusing on copper as a key driver of its business strategy, following a failed takeover bid from BHP Group.
Anglo American, (LSE:AAL) a leading global miner, announced significant declines in its third-quarter production for both copper and diamonds. Specifically, copper output fell by 13%, while rough diamond production decreased by 25%. These reductions were primarily linked to ongoing lower demand in the market, prompting the company’s De Beers diamonds unit to explore further production cuts in the future.
For the first nine months of 2024, the company reported copper production of 575,000 tons, representing a 4% decrease year-on-year. Similarly, diamond production stood at 18.9 million carats, reflecting a 21% drop. Despite these challenges, Anglo American has maintained its production guidance for 2024, anticipating copper output between 730,000 and 790,000 tons, and rough diamond production of 23 to 26 million carats. The company is currently assessing the necessity of additional production cuts.
Anglo American's shares have seen an increase of approximately 18% this year, and they opened 2.2% higher following the production report. The mining giant is in the midst of a significant restructuring, shifting its focus toward energy transition metals, particularly copper. This strategy follows a recent $49 billion takeover offer from rival BHP Group, which Anglo American successfully fended off.
The company plans for copper to represent 60% of its operations as it divests various assets, including its Australian steelmaking coal operations and nickel mines in Brazil, along with the De Beers diamond unit and its platinum business, Amplats. Additionally, while retaining iron ore mines in South Africa and Brazil, the company has slowed down progress on its Woodsmith fertilizer project in the UK.
Furthermore, Anglo American reported a 6% decline in steelmaking coal production in the third quarter, attributed to the shutdown of its Grosvenor mine in Queensland due to an underground fire. The miner has adjusted its annual production guidance for steelmaking coal to a range of 14 to 15.5 million tons, down from the previous forecast of 15 to 17 million tons. The final round of bidders for its coal assets is currently in place, with an announcement regarding the sale agreement anticipated in the coming months.
