* Increases volumes in copper, iron ore; platinum flat
* Impact of S.African stoppages to be seen in Q4
* Strikes revive criticism of management
By Clara Ferreira-Marques
LONDON, Oct 25 Miner Anglo American
posted increased production in five of its seven key commodities
including copper, as it braces for the full impact of crippling
South African strikes that have ratcheted up pressure on a
management team already under fire.
Anglo's labour woes - compounded by nagging concerns over
its Minas Rio iron ore project in Brazil and operational trouble
in Chilean copper - have revived long-standing worries among
some investors over the group's exposure to South Africa, and
over a share price that has lagged its peers.
Third-quarter production, outlined on Thursday, was still
cushioned from the effect of platinum and iron ore stoppages.
But Anglo did little to ease worries over its big-ticket
projects, specifically Minas Rio, where a planned spend of at
least $5.8 billion is still under review.
Analysts estimate fresh delays could take the price tag to
some $8 billion.
Another new mine, the $1.9 billion Barro Alto nickel mine in
Brazil which began producing last year, has been hit by
operational setbacks and is still below full capacity. Analysts
at Morgan Stanley said the repairs could take up to a year.
"While (third quarter) output was close to our expectations,
Anglo continues to struggle with strikes in platinum group
metals (PGMs), delays and capex overruns at Minas Rio and
disappointing copper output," analyst Des Kilalea at RBC said in
"Until there is clarity on PGMs and Minas we expect the
share will lag its peers."
Anglo's shares ended the day down 1 percent, underperforming
a 0.4 percent drop in the sector. So far this year, the miner
has lagged the broader sector by almost 20 percent.
Analysts at Macquarie pointed out earlier this week that on
a U.S. dollar market capitalisation basis, Anglo has lost
one-third of its value since Cynthia Carroll became chief
executive in 2007, and is now worth some $25 billion less.
The rest of the peer group are worth at least the same as
they were at the start of 2007.
STRIKE IMPACT AHEAD
Violent strikes and labour troubles across the South African
mining sector spread to Anglo American Platinum, the
world's top producer of the precious metal, last month, just
before the end of the current reporting period.
Weeks later, they hit Anglo's Kumba Iron Ore unit,
which alone accounted for almost half the group's operating
profit in the first half.
Kumba's Sishen mine has since begun to ramp up operations,
but Amplats workers have not yet returned to Amplats'
Rustenburg, Union and Amandelbult mining operations, which
include some of Amplats' most labour intensive shafts, and those
that have suffered deepest compression in margins since 2008.
Anglo's iron ore production for the three months to the end
of September escaped unscathed, as the illegal strike at Sishen
began only at the start of October.
Benefitting from a strong performance from Kolomela mine,
output for the quarter rose 14 percent to 12.5 million tonnes.
Over the month so far, though, the South African iron ore miner
has lost 2.2 million tonnes of finished product.
Platinum production, meanwhile, was flat. Anglo, however,
cut its production target for the year, trimmed planned spending
again and warned costs increased by 8 percent in the quarter.
The strike has so far caused the loss of over 138,000 ounces
of equivalent refined platinum. Every extra day causes the loss
of 4,500 ounces on average.
Copper, however, was a brighter spot for Anglo, despite
ongoing operational trouble at Chile's Collahuasi, where it has
now intervened with partner Xstrata to resolve
operational, management and safety concerns.
The miner produced 157,300 tonnes of copper, up 12 percent.