BENGALURU/JOHANNESBURG (Reuters) - Anglo American said on Tuesday its overall production will rise by more than previously expected between 2018 and 2021, while this year’s costs are forecast to be lower.
Anglo said in an update to investors and analysts that 2018 production will be 2 percent higher than its previous forecast, driven by increases in copper, diamonds and platinum group metals, while costs will be 5 percent below earlier guidance.
The company, whose products also include coal, nickel and iron ore said it expected a 3 percent rise in production in 2019 and a further 5 percent boost in both 2020 and 2021, lifting its share price, which was one of the biggest gainers on London’s blue chip index.
“In the next 3-5 years, we’re basically growing the business around 20 percent,” Chief Executive Officer Mark Cutifani said.
Anglo also raised its long-term sustaining capital expenditure to $2.8-$3.1 billion, mainly due to increased spending on its Quellaveco copper project in Peru.
Along with other mining groups, Anglo is investing in improving its businesses while returning cash to shareholders who were badly burned by a commodity price rout two years ago.
“We are also confident about the outlook, with production expected to increase by 3 percent in 2019, with cost inflation fully absorbed by our productivity and cost improvements,” Cutifani said in a statement.
The Minas-Rio iron ore mine, Anglo’s largest growth project, is expected to re-start production this month after it was halted by the Brazilian government in March.
Anglo’s London-listed shares were up 5 percent to 1,654 pence by 1420 GMT.
After cutting debt and raising dividends over the last few years, Anglo would now enhance shareholder returns through its capital allocation, Cutifani said, adding that it would maintain a strong balance sheet.
Anglo’s outlook contrasts with rivals BHP, and Rio Tinto, which in October signalled lower output for copper, a mineral expected to be in high demand from increased electrification.
Anglo, which has mining operations in Southern Africa, North and South America and Australia, had raised its platinum and palladium targets for 2019 in October.
Reporting by Noor Zainab Hussain in Bengaluru and Zandi Shabalala in Johannesburg, Editing by Shounak Dasgupta, Jane Merriman and Alexander Smith
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