Anglo American production report for Q4

And then possibly the most important company news of yesterday, on the local front that is, the Anglo American fourth quarter production report. This is for the quarter that ended December 31, and that wraps up their full year. Iron ore sparkled (it can't really sparkle, but the business division can), with Q4 2011 better by 5 percent when measured against Q4 2010. And two percent better than the prior quarter. Total output of 12,427 million tons for the quarter, mostly driven by the South African export market, which was up 7 percent. What is also pleasing is that the South American iron ore export market also increased significantly, up ten percent. The South African domestic market used to be bigger than South America, but there was a dramatic fall off in iron ore domestic market, that was down 28 percent. Byron is taking a detailed look at the big daddy of their Iron Ore assets, Kumba Iron ore, who released a trading update yesterday morning.

Copper production was shunted much higher both on the corresponding quarter, up ten percent and versus last quarter, up 22 percent to 170,000 tons. Thanks to the Los Bronces expansion (an extra 19,000 tons) and higher grades at some of their key mines.

Platinum was one of the sore spots, quarterly production falling 19 percent to 710 thousand ounces, "mainly due to a greater number of safety stoppages resulting in lower mine production and increased processing of lower grade surface stockpiles. Equivalent refined platinum production declined by 9% to 583,200 ounces, due to a higher number of safety stoppages." Not good. And in our opinion these issues are not going away and are going to get worse and not better.

Diamond production was even worse, would you believe. Perhaps that is the reason why the purchase of De Beers seemed like a pretty good deal at the time, see early November piece -> Anglo American acquiring De Beers stake from Oppenheimer family. I would have thought that both the sellers and the buyers would have been well aware of the fact that "Diamond production decreased by 24% to 6.5 million carats. This reduction mainly reflects De Beers' deliberate focus on increasing waste stripping, as well as scheduled maintenance at the Debswana and DBCM operations in recognition of short-term global macro-economic volatility" Not our favourite business over here, diamond mining, but we like the luxury goods story and the two are linked.

Thermal coal production fell 10 percent on the year and 16 percent on the quarter. Export metallurgical coal sales increased by 4 percent. Average prices increased for all their coal products. On balance an expected report, perhaps the diamond and platinum production numbers did disappoint, but base metals and ferrous metals did well. That is I guess what attracts investors in the first place, the diversity of the business and the smoother earnings over time. We will review the results again when they hit the screens, results as per the calendar on their website is expected to be 17 February. How exciting!