South African miner, Anglo American has reported a drop of 32% y-o-y in its coal production for Q2 CY20 at 8.4 mn t against 12.4 mn t in Q2 CY19.
Metallurgical coal
–Production fell to 4 mn t in Q2 CY20 against 5.8 mn t in same quarter last year.
–The drop has been attributed to two underground incidents and longwall moves at Grosvenor and Grasstree mines.
–In January, a fall of ground at Moranbah delayed the completion of a longwall move with the operation restarting ahead of schedule in mid-May.
–At Grosvenor, operations have been suspended since May following a gas ignition incident underground and are expected to restart only after some time.
–The company stated that the disruption to operations from Covid-19 has been limited. Open cut operations have been scaled back at Dawson and Capcoal mines in response to reduced demand for lower quality metallurgical coal.
–In Q2 CY20, the ratio of hard coking coal production to PCI/semi-soft coking coal was 81:19, lower against Q2 2019 (85:15), due to a lower proportion of product coming from the underground operations.
Thermal coal
Total thermal coal output dropped to 4.4. mn t in Q2 CY20 against 6.6 mn t in Q2 CY19.
South Africa
–South African thermal coal production fell by 22% y-o-y to 3.6 mn t due to Covid-19 lockdown restrictions and sections at Goedehoop mines reaching end of their life.
–All mines operated at 50% at the start of lockdown in late March, with open pit operations ramping up to 70% as lockdown measures were eased in May.
–Since June, all mines have been operating at 80% with safety measures being undertaken by the company.
–Similar measures in the logistics chain have affected the loading of volumes onto trains resulting in higher stockpiles at operations.
Colombia
Production decreased by 62% y-o-y to 0.8 mn t due to Covid-19-led lockdown and tepid demand. Mining operations recommenced in early May and would ramp-up over the course of Q3.
Price:
The H1 2020 weighted average realised price for export thermal coal from South Africa and Colombia was $56/tonne. This was 7% lower than the weighted average quoted FOB price from South Africa and Colombia principally due to discounts for energy content of coal.
Revision in full-year guidance
–Following the temporary suspension of operations at Grosvenor since the start of May, production guidance for metallurgical coal in 2020 has been revised to 16-18 mn t (previously 19-21 mn t), subject to the extent of further Covid-19 related disruption.
–Production guidance for export thermal coal is revised to 21 mn t (previously 22 mn t) due to the impact of Covid-19 related restrictions and lower production at Cerrejón mine, in response to sluggish demand.
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