Anglo American Notes Poor Rail Performance In Q4 Production Report
In the latest production report from Anglo American – Duncan Wanblad, Chief Executive of Anglo American, said: “Our fourth quarter production was in line with our expectations and in line with the third quarter, despite the deliberate slowdown at Kumba to help draw down stock levels caused by poor third-party rail performance.”
Kumba – Total production decreased by 27% to 7.2 million tonnes, due to a 57% decrease at Kolomela to 1.3 million tonnes and a 15% decrease in Sishen’s production to 6.0 million tonnes, reflecting the decision to reduce production to align to lower third-party rail capacity and alleviate mine stockpile constraints.
Total sales increased by 32% to 9.3 million tonnes(1), primarily due to industrial action by trade unions at Transnet in Q4 2022, as well as improved performance at Saldanha Bay port in Q4 2023 following the completion of the annual maintenance shut-down during October. As a result of actively managing inventory, total finished stock decreased to 7.1 million tonnes(1), with stock at the mines decreasing to 6.5 million tonnes(1), which remains considerably above desired levels.
However, due to third-party rail under-performance, stock at the port is very low having decreased to 0.6 million tonnes(1) (Q3 2023: 1.8 million tonnes(1)). For the full year, Kumba’s iron (Fe) content averaged 63.7% (2022: 63.8%), while the average lump:fines ratio was 66:34 (2022: 67:33). The full year average realised price of $117/tonne(1) (FOB South Africa, wet basis) was 15% higher than the 62% Fe benchmark price of $102/tonne(1) (FOB South Africa, adjusted for freight and moisture), driven by the lump and Fe content quality premiums that the Kumba products attract, as well as the benefit of provisionally priced sales volumes.
2024 Guidance
Production guidance for 2024 is unchanged at 58-62 million tonnes (Kumba 35–37 million tonnes; Minas-Rio 23-25 million tonnes). Kumba is subject to third-party rail and port availability and performance. Unit cost guidance for 2024 is c.$37/tonne(2) (Kumba c.$38/tonne(2); Minas-Rio c.$35/tonne(2)).
(1) Production and sales volumes, stock and realised price are reported on a wet basis and could differ to Kumba’s stand-alone results due to sales to other Group companies. Total finished stock in Q3 2023 was 9.0 million tonnes.
(2) FX rate assumption for 2024 unit costs of ~19 ZAR:USD for Kumba and ~5.0 BRL:USD for Minas-Rio.
View the full media release here: https://southafrica.angloamerican.com/~/media/Files/A/Anglo-American-Group-v5/PLC/media/press-release/releases/2024pr/q4-2023-production-report.pdf