[miningmx.com] – IT’S worth taking a look at Anglo American’s third quarter production figures. Although they only reflect three months of activity, the figures are the first installment of performance that can be truly credited to the stewardship of newly appointed boss Mark Cutifani.
Let’s remember what Cutifani said in July when he put in his first presentation as CEO of Anglo. Assets that recorded more than two disappointing quarters would have to answer important questions about viability, especially as only 11% of the group’s assets had met budgets previously.
Cutifani arrives at Anglo as an experienced operator; his broad-based technical nous is the characteristic that best differentiates his skill-set from Cynthia Carroll his predecessor whose petroleum and aluminium background comprised the majority of her operational experience.
As it turns out, Anglo’s diamond and copper operations performed well in the third quarter, and there were signs of reovery from Anglo American Platinum (Amplats) following a one fifth increase in refined production from Amplats’ Mogalakwena shaft descibed by Standard Bank Group analyst, Justin Froneman, was “commendable’.
In fact, analysts think Amplats’s 2.3 million ounce target remains on track. Production from the Rustenburg assets will suffer, largely owing to the controversial restructuring programme undertaken at the shafts which has seen political, labour and economic fallout of various hues and cries all year.
Commenting on Anglo’s overall performance in the September quarter, Investec Securities commented: “Overall, a reasonable result with some difficulities in coal and iron ore against significant improvements in copper and diamonds in particular’.
Ironically, however, its Kumba Iron Ore that looks like giving Cutifani the biggest headache – ironic, because the company was consistently Anglo’s best performer under the hand of Carroll. Those days seem to be over, at least temporarily.
The key problems at Kumba Iron Ore are pit constraints at its Sishen mine where full-year production will almost certainly fall below initial forecasts of 40 million tonnes, although the company hinted this might happen at its interim results in July.
Interestingly, Cutifani already seems to want answers from Kumba management, led by Norman Mbazima, a relatively new recruit having taken over the company’s reins in July last year. “A plan to address the current pit constraints and a longer term operational strategy is expected to be presented by the end of the year,’ the company said on October 18.
There’s also another reason for unease at Kumba.
According to the company it doesn’t have the mining rights to a sliver of land on which the Transnet rail operated on the Sishen mine. The rail route has been “lifted’ and pushed westwards to make way for the Sishen West Expansion Project (SWEP) on which R1bn has been spent to date.
Kumba does have mining rights for the iron ore located in the western half of the mine, but according to Macquarie Research there is cause for some concern.
“One can’t help but be concerned that given the the DMR [Department of Mineral Resources] slow turnaround time on some applications and the potentially fractious relationship between Kumba and the DMR due to the previous Sishen 21.4%/ICT [Imperial Crown Trading] issue – there could be a delay,’ said Kieran Daly, Macquarie analyst.
