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Last updated: January 25, 2013 5:42 pm
Wildcat strike action at the Sishen iron ore mine in South Africa’s Northern Cape province compounded problems in the fourth quarter for Anglo American, which was already suffering from a sharp fall in platinum output.
The FTSE 100 miner was hit by a 19 per cent decline in iron ore production in the last quarter of the year as low attendance at the pit, following the end of strike action launched in October, continued to weigh on output. Measured against the third quarter, production fell more drastically by 28 per cent.
Anglo said on Friday that 5m tonnes of production had been lost at Sishen mine, the biggest open pit mining operation in Africa, although production rates have continued to improve.
Mine operator Kumba Iron Ore, which is majority-owned by Anglo, warned last week that the disruption to production in the fourth quarter, combined with a slump in the price commanded by output in the global market, would reduce profits at the operation by 30 per cent.
The mine produced 39m tonnes of iron ore in 2011, the bulk of which was exported to clients including ArcelorMittal.
Overall iron ore production at Anglo grew 4 per cent over the year after the successful ramp-up of output at the nearby Kolomela mine – identified by the group as one of its four big expansion projects alongside the Barro Alto nickel mine in Brazil, Minas Rio iron ore mine in Brazil and Los Bronces copper mine in Chile.
Platinum production decreased 29 per cent compared with the final quarter of 2011 following strike action at the Rustenburg, Amandelbult and Union mines in South Africa that ran from mid-September until November 15, costing 272,590 ounces of lost output.
Mines operated by Anglo American’s Amplats business were hit again by a short wildcat strike this month that was provoked by the announcement of plans to close two mines in the area by the world’s leading producer of the precious metal.
But in spite of the impact of strikes, Anglo achieved increases in production of coking coal, copper, export thermal coal and diamonds from South Africa. The company also highlighted the ending of legal injunctions that delayed progress at its Minas Rio project in Brazil, and which in November forced it to increase its predicted budget for the mine by more than $2bn to $8bn.
Anglo announced earlier this month that it had appointed Mark Cutifani, head of AngloGold Ashanti, to replace Cynthia Carroll as chief executive in April.
Ms Carroll announced her resignation in October against a backdrop of pressure from shareholders over Anglo’s performance.
Tony Robson, analyst at BMO Capital Markets, said: “Overall, Anglo weathered the turbulent quarter better than expected but BMO cautions that industrial unrest and political interference within South Africa does not appear resolved.”
Shares in the company, down by nearly 30 per cent over the past year, fell by 8.5p to £18.86 on Friday.
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