* Anglo to make recommendation to Amplats on platinum future
* Copper guidance revised up as ore grades improve
* Platinum guidance for 2014 revised down on strike
(Adds chairman, CEO comments at AGM)
By Silvia Antonioli
LONDON, April 24 Miner Anglo American
posted an increase in its copper and iron ore production in the
first quarter of 2014, broadly in line with analysts' forecasts,
but its platinum output slumped, hit by a strike at its South
Output of iron ore, which makes up almost half of group
earnings, totaled 11.3 million tonnes in the first quarter, up
10 percent from the year before, when production at the Sishen
mine in South Africa was curbed following a strike in late 2012.
In copper, the second-largest earner for Anglo, output rose
18 percent year-on-year to 202,000 tonnes, on the back of higher
ore grades from the Los Bronces and Collahuasi mines in Chile.
Anglo raised its 2014 copper production output guidance to
710,000-730,000 tonnes from 700,000-720,000.
In platinum, where Anglo is cutting jobs and mothballing
mines to improve the unit's profitability, equivalent refined
platinum production fell 39 percent to 357,000 ounces, largely
due to a crippling three-month mining strike over wages
affecting some of its South African operations.
Anglo's platinum unit is also struggling with rising
production costs and suppressed prices for the precious metal.
"The reality is that the platinum industry is in a pretty
fragile state," Anglo Chairman John Parker told the annual
general meeting in London.
"Last year for example, we, the largest platinum producers
in the world, lost money. That's bad for shareholders, it's bad
for employees and it's bad for the country."
Anglo is working on a transition strategy to move away from
high-cost mines to concentrate on its newer and more mechanized
ones. It plans to submit recommendations to the board of its
platinum subsidiary Amplats in the next few months over how to
restructure the business, Cutifani told shareholders.
Chief Executive Mark Cutifani, who joined the company just
over a year ago, told the AGM his plan to cut
costs and improve productivity at mines had helped in 2013, but
there was more to be done to reach his target of a return on
capital of at least 15 percent by 2016, up from about 9 percent
"We certainly are encouraged by what we have achieved but we
still have a long way to go," Cutifani said.
Citi analysts said of the productions numbers: "We consider
this a decent start of the year considering (the) seasonally
weaker quarter and strike at platinum operations."
Anglo cut its platinum guidance for the year. It now expects
to produce about 2.1 million ounces of refined platinum
equivalent, down from an estimate of 2.3-2.4 million previously.
The strike which began on Jan. 23 and is still ongoing
severely impacted Anglo's Rustenburg, Amandelbult and Union
production, while its Mogalakwena and Unki mines and joint
venture operations where unaffected.
Processing plants were also not affected so Anglo was able
to tap into its inventories to make up for some of the
production lost in the strike.
Other platinum producers in South Africa such as Impala
Platinum and Lonmin have been affected
by the industrial action.
"With the strike still not resolved platinum is still a bit
of a wild card," Investec analyst Marc Elliott said.
"The new guidance is not down too much as the processing
operations are unaffected by strike. It is likely that Anglo
built up considerable inventories of unprocessed metal as well
as refined metal stocks before the strike started."
Marathon talks aimed at ending the platinum strike will
resume on Thursday after the world's top producers and union
AMCU spent two days haggling over an offer tabled last week by
Anglo American shares closed up 1.26 percent.
(Editing by Erica Billingham and Robin Pomeroy)