Toronto, Canada — 11 July 2012 – The weaker earnings guidance from Anglo American’s listed subsidiaries – Anglo American Platinum (Amplats) and Kumba Iron Ore – is a pointer to a likely trend in results from other listed mining companies, as metal and mineral prices have trended lower for a large part of the first six months of 2012.
Miningmx reports that, revealing this in a statement issued here, RBC Capital Markets – a premier investment bank which is part of the Royal Bank of Canada – said the mining giant did, however, forecast some improvement in second-half prices which, if achieved, should result in better top-line revenue – although costs will remain a key impediment.
Amplats said last week that it expected its interim earnings to be lower by more than 20%. Similarly, Kumba reported that its earnings would be down from R28.20 per share to R23.40.
“Not surprisingly, Anglo American subsidiaries Anglo Platinum and Kumba have guided to lower earnings for the six months to end-June 2012 as a result of lower commodity prices and, in the case of Anglo Platinum, lower sales,” said RBC Capital analyst Des Kilalea. “This guidance is close to our numbers, and we are in the process of refining our forecasts ahead of Anglo’s Q2 of 2012 production update, which is due on 20 July.
“Our forecasts see some improvement in some H2 prices which, if achieved, should result in better top-line revenue, but costs will remain a key impediment, particularly for Amplats, despite some assistance from a weaker South African rand.”