Anglo posts solid production results, but warns of writedowns

Anglo American has warned the market to expect writedowns when it releases its full-year financial results next month.

The warning comes amid lower coal, iron ore and nickel prices.

Anglo is the fifth-biggest diversified miner in the world, and the first of the majors to warn of non-cash impairments.

While the company did not reveal the amount of the writedown, analysts expect it could run into the billions.

Despite this, the company yesterday posted solid production figures ahead of guidance.

Anglo boosted iron ore output by 37 per cent to 13 million tonnes in the December quarter following the implementation of the production recovery plan at Sishen and record output at Kolomela.

It upgraded full-year production guidance for the commodity to between 45 million – 46 million tonnes.

Export metallurgical coal production increased by 4 per cent to 5.1 million tonnes in the quarter, however Australian export thermal coal production decreased by 6 per cent  to 1.6 million tonnes owing to lower production from Drayton as the mine nears the end of its life.

Full-year production guidance for export metallurgical coking coal has increased to between 20 million – 21 million tonnes.

Nickel production increased by 13 per cent to 10,700 tonnes, driven by continued improved operational stability at Barro Alto prior to the planned rebuild of the two furnaces.

Anglo increased full-year production for nickel to between 35,000 – 37,000 tonnes.

Exploration and evaluation expenditure for Q3 2014 totalled $106 million, a decrease of 19 per cent.

Earlier this week, reports surfaced that Anglo may look to sell two more of its Queensland coal mines.

While the company did not confirm it was looking for potential buyers, a spokesperson told Australian Mining that in terms of its broader coal portfolio everything is currently under review and the outcome of that review is still to be determined.

By 2017 Anglo is targeting productivity to improve by 80 per cent, with 35 per cent fewer people globally through growth and restructuring.

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