Anglo American cuts diamond output forecast on weaker market

2015-04-23 11:51

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Despite a shining performance from its Venetia mine in South Africa last year, Anglo American has trimmed its forecast for diamond production this year due to weaker market conditions.

The global mining company, which has lagged its peers for much of the past decade, is restructuring to improve its mining operations and is selling less profitable assets.

Its turnaround efforts, however, have so far clashed with a rout in prices of metals such as copper and iron ore, which make up almost half and about a quarter of its earnings respectively.

In the first quarter, iron ore output from its Kumba division rose by 7% from the same period a year ago to 12.2 million, thanks to some operational improvements.

However, copper output fell by 15% to 171 800 tonnes due to water supply constraints which pushed the company to temporarily shut a processing plant in Chile.

Some help came last year from higher margins at its diamond subsidiary De Beers, which became the second-largest earner for the company after iron ore.

In diamonds, a bright spot for Anglo last year, production increased by 2% to 7.7 million carats, thanks primarily to higher grades at the Venetia mine.

A 100-carat emerald-cut D colour diamond, which was mined by De Beers in southern Africa, sold at a New York auction for about $22 million (about R267 million) on Tuesday.

However, the company reduced this year’s diamond production forecast to between 30 million and 32 million carats, from 32 million to 34 million carats, in light of weaker trading conditions.

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