Anglo American's Forecast for 2021 Sees Diamond Production Rising to 35-37 M Ct

Anglo American plc hosted a briefing for investors and analysts to provide an update on the Group’s current and projected operational and financial performance. The briefing covered guidance for the next three financial years, including capital expenditure, and an update on Anglo American’s broad range of organic growth options, which are subject to ongoing strict capital allocation discipline.

Mark Cutifani, Chief Executive of Anglo American, said: “We have completely transformed the quality of our asset portfolio and our performance as a whole over the last five years. We have created a highly competitive business, with Anglo American amongst the very best in the industry in terms of margin. We see considerable further opportunity ahead and continue to target $3-4 billion of incremental annual EBITDA by 2022. This will come from a combination of meeting or surpassing industry best-practice equipment performance across our operations; volume growth from existing and new operations, such as Quellaveco; and the deployment of our FutureSmart Mining™ technologies and digitalisation. It is these technologies that will transform how we mine, process and market our products, providing the next step change in our performance.

“We have continued to improve our performance during 2018. We now expect production to be 2 per cent above previous guidance and costs 5 per cent below. We are also confident about the outlook, with production expected to increase by 3 per cent in 2019, with cost inflation fully absorbed by our productivity and cost improvements. We expect a further 5 per cent production increase in both 2020 and 2021. In the last three years, we have reduced net debt by more than $9 billion and paid almost $2 billion in dividends to our shareholders in the last 18 months. We are now well positioned to drive enhanced returns through our capital allocation options, maintaining a strong balance sheet while delivering attractive shareholder returns and value-adding disciplined growth.

“Anglo American’s portfolio spans the products and product qualities that will supply the needs of a cleaner, more electrified and richer world. We have a well sequenced range of high returning, quick payback growth options, from life extensions in diamonds and metallurgical coal, to growth across our copper, diamonds and met coal businesses in particular. Combined with our multi-stakeholder focus to create a truly sustainable business, we believe we are set to keep delivering on all fronts.”

With regard to diamond mining under Anglo-owned De Beers, the company said that it had raised its guidance for 2018 to between 35-36 mn cts against the earlier expected 34-36 mn cts.

Similarly, guidance for 2019 was raised to between 31-33 m ct (previously ~32 m ct) and for 2020 to 33-35 m ct (previously ~32 m ct). Anglo stated that the dip in total production during these two years was on account of declining open pit production at Venetia and Victor end-of-mine-life.

However, guidance for 2021, released for the first time, sees production rising to 35-37 m ct.

Anglo also noted that diamond mining costs were expected to rise from US$ 63 per carat in 2017 to ~ US$ 65 per ct in 2018 and 2019, but clarified that this was primarily due to FX rates and higher ratio of waste costs expensed rather than capitalised.