Anglo American rallies again, output guidance broadly unchanged

LONDON/BENGALURU (Reuters) - Anglo American AAL.L on Tuesday left output guidance broadly unchanged for most of its commodities, adding market conditions had improved for its diamond business, while it trimmed full-year production expectations for coking coal exports.

The Anglo American logo is seen in Rusternburg October 5, 2015. Picture taken October 5, 2015. REUTERS/Siphiwe Sibeko/File Photo

Chief Executive Mark Cutifani said in a statement operational improvements were continuing across the portfolio.

Analysts also said the results were solid and Anglo American’s share price gained another 3.8 percent by 0748 GMT, adding to a leap of well over 250 percent this year.

The gains have been fuelled by a rally in commodities, notably coal.

Coking coal prices have risen by more than 200 percent, meaning even small changes in output can impact profits and prices.

Anglo American has estimated a $10 per tonne price increase in coking coal creates a $142 million (116 million pound) change in pre-tax earnings, while for thermal coal the same increase leads to an extra $54-to-$200 million depending on the region.

Anglo American lowered full-year production guidance for export metallurgical coal to 20.5-21.5 million tonnes from 21-22 million following the completion of the Foxleigh sale in Australia at the end of August.

Full-year production guidance for export thermal coal from South Africa and Colombia was unchanged at 28-30 million tonnes.

Anglo American has said it is focusing on high value core commodities, including platinum group minerals, copper and diamonds.

For its De Beers diamond unit, it said market conditions had improved after a difficult 2015 and output had been increased by 4 percent to 6.3 million carats compared with the third quarter a year ago.

Rough diamond sales increased by 77 percent in the third quarter to 5.3 million carats.

Full-year production guidance remains unchanged at 26-28 million carats, subject to trading conditions.

For copper and platinum, it also said overall guidance was unchanged.

Production from Los Bronces in Chile decreased by 27 percent to 72,100 tonnes due to expected lower grades and in part because of a strike, but it reaffirmed its previous full-year guidance of 570,000 to 600,000 tonnes.

Paul Gait, analyst at Bernstein, which rates Anglo American outperform, said the results were solid and Anglo was “putting to rest” issues, such as high levels of debt that a year ago rocked the sector.

Reporting by Barbara Lewis in London and Mamidipudi Soumithri; editing by Jason Neely