Anglo American plc (LON:AAL) today provided an update on how it is responding operationally to the fast-evolving global impact of the COVID-19 pandemic.
Anglo American Chief Executive, Mark Cutifani, said: “Anglo American’s priorities are the safety, health and wellbeing of our people and all those who interact with our business around the world. We also have a clear responsibility to protect the integrity of our business and assets so that we are ready to restart and ramp up any affected operations safely and as quickly as possible once permitted to do so. This approach will enable us to minimise any interruption of supply to our customers and be in a position to support what will be a vital economic recovery phase for the countries in which we operate and the global economy.”
South Africa
Anglo American notes the statement made by the President of the Republic of South Africa on 23 March in relation to a 21-day nationwide lockdown that took effect at midnight on Thursday 26 March, in order to help curb the spread of COVID-19 in South Africa.
Anglo American has consulted with the government authorities and industry bodies in South Africa to determine and agree the appropriate measures to be taken across its operational and other business activities. Such measures are to protect people’s safety and health, the continuing provision of essential services to local communities, the security and integrity of the assets, the supply of essential raw materials to customers, and the ability to return operations to normal levels of activity as swiftly as possible once the lockdown restrictions are eased, in support of the country’s broader economic interests.
In line with South African Government requirements, Anglo American is implementing all appropriate measures across its South African operations, with a focus on de-densification of the workforce, rigorous health screening, and isolation where needed. The status of operations is expected to be as follows during the lockdown period:
· Kumba Iron Ore:
o Sishen and Kolomela mines continue to operate with a c.50% level of workforce.
· Anglo American Platinum:
o Mogalakwena mine and the mechanised Mototolo mine continue to operate with a reduced workforce and production, subject to further planning, as will the associated concentrator and smelter facilities;
o Repair of the ACP plant continues, as planned;
o Amandelbult, Modikwa (JV) and Kroondal (JV) underground mines, as well as the Mortimer and Waterfall smelters, are being placed onto care and maintenance.
· De Beers:
o Venetia mine will operate with a c.75% reduced workforce.
· Thermal Coal:
o Operations continue with a c.50-70% reduced workforce and production;
o Isibonelo, which supplies Sasol’s fuel production facility, operates with a c.20% reduced workforce.
· The rail and port logistics infrastructure to support the export of iron ore and coal is expected to continue to service the operations during this period.
· Supply chain planning is in place and any impact of the 21-day lockdown is being monitored and addressed where feasible.
Anglo American will also continue to provide a number of essential services, including security; mine maintenance; tailings facility safety management; water treatment; community water supply; increased capacity in Anglo American’s hospitals; accommodation provision; health, safety and emergency response; and critical head office services.
Mr Cutifani added: “In South Africa, our operations play a vital role in many of our host communities, including in terms of jobs and the provision of a number of essential community services, including access to water, energy and accommodation. We are wholly committed to supporting the country’s effort to combat COVID-19, including continuity of such services, and will continue to work with government and across the industry to provide all possible support.”
Peru – Quellaveco Project
The Government of Peru has extended its initial 15-day national quarantine period by 13 days to 12 April. As announced on 17 March, Anglo American has temporarily withdrawn the majority of employees and contractors from its Quellaveco copper project in Peru and construction work is significantly reduced, with only critical areas of the project continuing as normal, until such time as workers can return safely.
UK – Woodsmith Project
In line with the British Government’s measures to prevent the spread of COVID-19, Anglo American is in the process of pausing most construction and development activity on its Woodsmith polyhalite project. Appropriate action is being taken to enable safe and swift resumption of work.
Production from Anglo American’s major operations in other countries has not been impacted materially to date and we are taking all appropriate preventative measures to reduce the probability of the virus spreading, including by reducing the density of people on our sites.
Guidance update
Based on the 21-day lockdown period in South Africa and allowing for a safe ramp-up of operations thereafter, Anglo American would expect a 2020 production volume impact of 2-3mt at Kumba Iron Ore (based on the c.50% reduction in the workforce) and 1.5-2mt of export thermal coal. As previously disclosed, the production of refined PGM’s is on hold until 25 May 2020, when we expect the ACP convertor to come back onstream.
Anglo American will provide any additional guidance on its South African and other operations in its scheduled 1Q 2020 Production Report on 23 April 2020.
