Anglo American reports mixed but 'solid' Q4 production

(Sharecast News) - Anglo American reported a mixed but "solid" production performance 2024 on Thursday, with notable declines in copper, diamonds, and steelmaking coal output, while iron ore production saw modest gains. The FTSE 100 mining giant also signalled potential impairments in its De Beers diamond business amid challenging market conditions.

Copper production fell 14% year-on-year to 198,000 tonnes in the fourth quarter of 2024, reflecting the planned shutdown of the Los Bronces plant and lower grades at Collahuasi.

However, output increased 9% from the prior quarter, driven by a strong performance at Quellaveco.

Full-year copper production reached 773,000 tonnes, down 6% but within the company's guidance range.

Iron ore output rose 4% to 14.3 million tonnes, supported by improved operational stability at Minas-Rio despite high rainfall.

For 2024, production increased 1% to 60.8 million tonnes.

Platinum group metals (PGMs) production declined 6% to 876,000 ounces in the quarter and 7% for the full year, reflecting lower concentrate purchases following the transition of Kroondal to a tolling arrangement.

Steelmaking coal production was down sharply, falling 49% year-on-year to 2.4 million tonnes in the quarter, primarily due to the impact of an underground fire at Grosvenor, planned lower output from Moranbah, and the divestment of Anglo American's stake in Jellinbah.

Full-year production declined 9% to 14.5 million tonnes.

Nickel production dropped 10% to 10,000 tonnes in the quarter, in line with expected lower grades.

Diamond production at De Beers decreased 26% to 5.8 million carats in the quarter and 22% for the full year to 24.7 million carats.

The decline was due to a deliberate reduction in output amid lower demand and high inventory levels in the midstream.

Anglo American was currently conducting an impairment review of De Beers' carrying value, with an impairment expected in the full-year results due to ongoing market weakness and softer demand in China.

Looking ahead, the company projected a decline in copper output in 2025 before recovering in 2026 and 2027.

Iron ore production was expected to fluctuate, while diamonds were forecast to see a further reduction in 2025 before rebounding in 2026.

Steelmaking coal output was meanwhile set to decline significantly in 2025 following the sale of the business.

In terms of pricing, Anglo American saw an 8% increase in realised copper prices for 2024, while iron ore prices fell 22%.

The PGM basket price declined 11%, driven by sharp falls in palladium and rhodium prices, while diamonds saw a 3% increase in realised prices despite a weaker price index.

Nickel and steelmaking coal prices also recorded declines.

The firm said it expected full-year 2024 EBITDA for De Beers to be marginally negative, while impairments were also likely on certain steelmaking coal assets following the agreed sale of the business.

Depreciation and amortisation were projected to be at the upper end of the $3bn to $3.2bn guidance range, with its effective tax rate expected to be between 40% and 42%.

"All of our businesses delivered their full year production guidance following another solid operational performance in the fourth quarter," said chief executive officer Duncan Wanblad.

"At our copper operations, Quellaveco delivered its strongest quarter of the year, and the reshaped Los Bronces mine continues to perform well.

"Our Minas-Rio iron ore operation in Brazil produced a record 25 million tonnes for the year."

"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."

Wanblad said the company was continuing to set up the copper business for growth in subsequent years with the resumption of the smaller plant at Los Bronces and through debottlenecking at Collahuasi.

"Iron ore guidance is unchanged except for the impact of the tie-in of the previously announced UHDMS project at Kumba in 2026.

"At De Beers, difficult rough diamond trading conditions mean that we have reduced production guidance in 2025 and 2026 to reflect our focus on value, working capital efficiency and cash generation.

"We are making excellent progress with our portfolio simplification."

Duncan Wanblad noted that in November, Anglo American announced agreements to sell its steelmaking coal business for up to $4.9bn in aggregate gross cash proceeds, with the Peabody transaction expected to complete by the third quarter of 2025.

"We also completed a second bookbuild offering of our Anglo American Platinum (AAP) shares, which in combination with the prior placing generated $0.9bn.

"This has increased the free float of AAP by more than 50%, helping to mitigate flowback when we demerge the business, expected by the middle of 2025.

"The sales process of our nickel business is well progressed and we continue to prepare the De Beers business for separation."

Anglo's focus on operational excellence was bringing "far greater efficiency", Wanblad said, underpinning its "solid production performance" in 2024.

"We are simplifying our portfolio at pace to focus on copper, premium iron ore and crop nutrients, offering a highly attractive and differentiated investment proposition with a structurally lower cost base.

"This higher margin and more cash generative Anglo American will offer greater resilience through the cycle and possess outstanding value-accretive growth optionality in each of our businesses."

At 0822 GMT, shares in Anglo American were up 3.77% at 2,420p.

Reporting by Josh White for Sharecast.com.