Anglo American is battling South African logistics constraints that are affecting Kumba Iron Ore’s operations, while it expects more impairments at its diamond-producing unit, De Beers.
The diversified miner achieved its full-year production guidance across all its businesses, it said on Thursday.
Anglo American is in the process of hiving off its diamond, platinum group and coal assets, leaving it focused on iron ore, copper and crop nutrients.
It made the move to slimline its holdings after BHP Group attempted to acquire the mining group last year in a million pound bid, but was rebuffed.
Shares in the company rose by 6.11% in afternoon trade on the JSE to R574.18, erasing the stock’s 2.48% and 2.58% weakening in the past seven and 30 days respectively.
Anglo American’s South African iron ore producing unit, Kumba Iron Ore, which is listed in both Johannesburg and London, said its performance was impacted by Transnet logistics constraints, including train derailments in 2024.
This led to its rail performance deteriorating by 2%, said Kumba Iron Ore CEO, Mpumi Zikalala. This was despite the company’s efforts to work together “with government and Transnet to improve logistics” performance.
“Due to the challenging rail performance during the year, sales ended the year at 36.3 million tons,” she said.
In the quarter to December 2024, Kumba’s iron ore railed to Saldanha Bay Port decreased by 8% compared to the previous quarter. This has been attributed to train derailments during the period following the re-opening of the ore export channel as well as the planned 15-day annual maintenance shutdown.
“To maintain a balanced and efficient value chain, finished stock at the mines was drawn down and production reduced by 17% compared to quarter three 2024,” added Zikalala.
For the full year, Kumba’s production of 35.7 million tons was in line with its prior year performance, closely matching the ore railed by Transnet of 35.6 million tons.
Moreover, low iron ore prices during the period reflected subdued steel demand, coupled with an increase in iron ore supply although strong steel exports and an economic stimulus support in China provided a partial offset.
Meanwhile, Anglo American’s De Beers unit said with the rough diamond market facing weak pricing and its 2024 full year consolidated sales volumes falling by 28% year-on-year, the company is bracing for a financial knock.
“The Group is undertaking an impairment review of De Beers’ carrying value, assessing the impact of diamond market conditions and general fall in demand in China which is likely to lead to an impairment at the full year results,” said Anglo American.
Although De Beers’ average realised price increased by 3% to $152 (R2 821) per carat, this was reflective of a “larger proportion of higher value rough diamonds being sold, partially offset by a 20% decrease in the average rough price” index.
As a result of this, Anglo American expects De Beers’ full year earnings before interest, tax, depreciation and amortisation (Ebitda) to be marginally negative. In the first half of 2024, De Beers recorded an Ebitda of $300m.
Anglo American expects to accrue profits from its copper operations. In 2024, the company produced 772 700 tons of copper, attaining the top-end of its guidance range.
In the fourth quarter to December, total copper production of 197 500 tons reflected “the reconfiguration of the Los Bronces mine and anticipated lower grades at the Collahuasi” mine.
Anglo American’s production guidance for copper for 2025 remains unchanged at between 690 000 to 750 000 tons.
"Our forward production guidance is unchanged in copper with growth in 2026 driven by higher grades in Chile, with this production level then maintained in 2027. We continue to set up the copper business for growth in subsequent years,” said Duncan Wanblad, the CEO of Anglo American.
BUSINESS REPORT