Mining

Anglo forecasts higher output, lower costs for 2021

Anglo forecasts higher output, lower costs for 2021
Mining News Pro - Diversified miner Anglo American expects its production for 2021 to increase by 14% year-on-year and its unit costs to decrease by 3% year-on-year.
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In an investor update published on December 11, the miner said it had maintain a strong performance this year, despite Covid-19-related and other operational impacts.

"This year has brought numerous challenges and I am immensely proud of how the 90 000 people of Anglo American have responded to every aspect of the pandemic. Our agility to protect our people and communities, while sustaining our operations, has enabled us to continue to improve the quality, resilience and performance of our business in 2020.

"At the same time, we have continued to enhance our long-term business prospects," CEO Mark Cutifani commented.

The group expects to achieve further performance improvements in 2021.

Its mining earnings before interest, taxes, depreciation and amortisation (Ebitda) margin is forecast to remain at about 42% in 2021, supported by cost control and price strength across the copper and iron-ore businesses.

"We are delivering strong cash returns, with $5-billion returned to our shareholders since 2017, investing in quick payback growth and maintaining our strong balance sheet.

"Our balanced investment programme is driving considerable business improvement, with associated emissions and water benefits, while also delivering margin-enhancing growth – taking us towards our longer term target of a 45% to 50% mining Ebitda margin," noted FD Stephen Pearce.

Capital expenditure (capex) is expected to increase to between $5.7-billion and $6.2-billions, reflecting the carry-over from 2020 deferrals, additional investment in new business improvement opportunities and the targeting of critical path items for the Woodsmith polyhalite project, in the UK.

The group pointed out that about $600-million of 2020 capex has been deferred to 2021 and 2022.

Anglo plans to spend about $500-million on the further development of the Woodsmith project, which it had acquired the project through the buyout of Sirius Minerals early this year, in 2021.

Another key development project is the Quellaveco mine, in Peru, which is a joint venture with Mitsubishi. The partners expect to invest between $1.3-billion and $1.6-billion on the project this year, with Anglo`s share of the capex amounting to between $800-million and $1-billion.

Looking further ahead, Anglo expects to grow its copper-equivalent production by 20% to 25% over the next three to five years. This will include the output from Quellaveco, which will produce its first copper in 2022.

"Together with our P101 and technology improvement initiatives, we are on track to deliver our targeted $3-billion to $4-billion run-rate of incremental annual improvement by the end of 2022.

"We have a diversified mix of premium products that are increasingly tilted towards a low-carbon economy and broad-based consumer demand.

"Combined with our integrated approach to technology and sustainability, that will also help us achieve carbon neutrality across our operations by 2040," he added.

Cutifani also lauded the quick pace at which Anglo has been able to progress the development of a hydrogen fuel cell electric truck. He described the time from the project`s standing start to the first prototype being in play within three years as "remarkable".

Mining Weekly previously reported that the 300 t truck being developed at subsidiary Anglo American Platinum’s (Amplats`) Mogalakwena mine, in Limpopo, is on track to make its debut next year.

Further, as part of the move to carbon neutrality, Anglo expects to dispose of its thermal coal assets in South Africa and Colombia by 2023.

AMPLATS
Meanwhile, Amplats reported that the successful rebuild and early completion of the Anglo Converter Plant (ACP) Phase A unit has resulted in the platinum-group metals (PGMs) producer being able to increase its refined production guidance for 2020 to between 2.6-million and 2.7-million PGM ounces.

“We are pleased that we have safely and successfully rebuilt the ACP Phase A unit and brought it to full operation ahead of schedule in early December. We have begun to re-establish the processing pipeline to finished metals.

"The installed capacity of the ACP will allow us to refine the metal we produce, as well as release the build-up in work-in-progress inventory, which will likely take up to 24 months,” Amplats CEO Natascha Viljoen noted.

The sales volume guidance has also been increased to about 2.8-million PGM ounces, as minor metal refined inventories are drawn down.

Amplats noted that its metal-in-concentrate (M&C) production had returned to close to normal operating capacity in the second half of this year. As a result, M&C production for the full-year will be between 3.6-million and 3.8-million PGM ounces.

Owing to the temporary closure of the ACP during the year, there will be a build-up of about one-million PGM ounces in work-in-progress inventory by the end of the year, including the impact of processing recovery losses. The release of work-in-progress inventory built up in 2020 is expected to take up to 24 months.

As a result of the planned maintenance on other processing assets in 2021, Amplats expects greater release of work-in-progress inventory in 2022.

Further, Amplats` unit cost guidance for this year is unchanged at between R11 800/oz and R12 200/oz and capex at between R5.7-billion and R6.5-billion.

Unit costs are expected to be between R11 000/oz and R11 500/oz for 2021, while refined PGM production is expected to increase to between 4.6-million and five-million ounces.

Refined PGM production is forecast to rise further to 4.7-million and 5.1-million ounces in 2022.


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