Anglo American Plc has temporarily halted production at its biggest nickel mine in Venezuela and said on Tuesday all its base metals mines have positive margins despite sliding prices. Mining firms have been slashing production as weak metals prices make some operations uneconomical.
Output at the Loma de Niquel mine has been stopped partly due to high transport
costs at the mine, Anglo said in a presentation on its website.
Anglo owns 91.4 percent of the operation, which produced 15,700 tonnes in 2007, accounting for 60 percent of the firm's total nickel output. It is located 80 km southwest of Caracas. Nickel prices MNI3 lost more than half their value last year and were down over 4 percent at $10,950 per tonne ($4.97/lb) on Tuesday, a fraction of a 2007 peak above $50,000.
Anglo estimated cash costs in 2008 at Loma were just above $5 per lb, but said that was not representative since the mine had been hit by a strike and production difficulties. Anglo shares, which shed 44 percent last year, rose 2.1 percent to 1,362 pence by 1300 GMT, slightly outperforming a 1.7 percent rise in the British mining index .
POSITIVE MARGINS
The group also said its base metals operations all had positive margins at current prices, but did not provide further detail.
Anglo's base metals unit, which has driven group profit for the past three years, accounted for 40 percent of total group operating profit in the first half of 2008. Copper is Anglo's most important base metal, accounting for three quarters of operating profit in the unit. Anglo said last month it was halving capital spending in 2009 by more than half to $4.5 billion to conserve cash amid a collapse in metals prices. Total capex in the base metals unit will be reduced by 45 percent to $1.7 billion, but this will have scant impact on overall production, the presentation said.
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