London-listed miners shares dive on weak production numbers

Shares in London-listed miners Anglo American, Antofagasta and BHP slide as Covid-related absences and Ukraine war hamper production

  • Miners revealed first quarter production fell below expectations 
  • Covid-related absences, soaring costs and supply chain issues held back trade 

Shares in London-listed mining giants tumbled on Thursday after a series of disappointing production updates.

The FTSE 350 Mining index dipped 0.5 per cent at the opening bell as Anglo American, Antofagasta and BHP revealed a shortfall in first quarter production, which was blamed on Covid-related disruption and the impact of the Ukraine war.

Rio Tinto shares fell by 3 per cent on Wednesday and continued their decline the next day after the Anglo-Australian firm warned that soaring inflation, a resurgence of Covid-19 lockdowns in China and a prolonged Ukraine war could dampen its fortunes.

Covid-related absences have played their part in the first quarter mining production slowdown 

The group reported lower-than-expected iron ore shipments in the first quarter, while supply chain woes and labour shortages hit the mining giant’s efforts to ramp up its Pilbara operations in Western Australia during the first three months of the year.

Similarly, Anglo American shares fell by 8.8 per cent by late morning trading on Thursday after it lowered its production outlook on inflationary concerns.

Outgoing Anglo American chief executive Mark Cutifani revealed production was 10 per cent lower during the first quarter than the same time last year, with the firm ‘impacted by peak Covid-related absenteeism, high rainfall affecting operations in South Africa and Brazil, and safety and other operational challenges at metallurgical coal and iron ore operations’.

To reflect inflationary pressures, particularly on the cost of diesel, and exchange rate fluctuations, the group revised expectations for a less productive year.

Anglo American’s platinum group metals operations, for example, are now forecast to produce 3.9-4.3million ounces this year, down from previous guidance of 4.1-4.5million ounces.

Cutifani said: ‘This challenging start to the year highlights the importance of adhering to our operating model to stabilise performance after the necessary disruptions of the last two years as we adapted to – and now learn to live with – Covid.’

Antofagasta shares were down 8.3 per cent approaching midday as the Chilean miner revealed its first-quarter copper production fell by 24 per cent annnually, having been hit by continued drought and lower grades.

Its boss Iván Arriagada said: ‘The copper, gold and molybdenum markets have been strong throughout the quarter, and we expect this to continue as structural supply and demand dynamics support a tight physical market.

‘In the meantime, we maintain our focus on the safety and health of our employees and contractors, and on cost control and disciplined capital allocation.’

Meanwhile, BHP Group shares fell 2.5 per cent after the world’s largest listed miner reported weaker-than-expected iron ore production for the March quarter due to a pandemic-related labour crunch.

BHP boss Mike Henry assured investors that the firm’s Western Australia iron ore business ‘continues to perform strongly as we navigate the state’s first major Covid-19 wave’.

He added: ‘Market volatility and inflationary pressures have increased further as a result of the Russian invasion of Ukraine.

‘We continue our work to mitigate cost pressures through a sharp focus on operational reliability and cost discipline.

‘While we expect conditions to improve during the course of the 2023 calendar year, we anticipate the skills shortages and overall labour market tightness in Australia and Chile to continue in the period ahead.’