Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Anglo American    AAL   GB00B1XZS820

My previous session
Most popular
News SummaryMost relevantAll newsofficial PublicationsSector newsTweets

Anglo American : Risk of disappointment for copper bulls as wage deals sealed

share with twitter share with LinkedIn share with facebook
share via e-mail
02/08/2018 | 05:57pm CEST
FILE PHOTO - Sheets of copper cathode are seen at the copper cathode plant inside the La Escondida copper mine near Antofagasta

LONDON (Reuters) - Copper bulls who are betting on labour strife this year due to a full calendar of contract talks may be disappointed if early wage deals at two copper mines are a signpost for further agreements with mine workers.

Benchmark copper prices rallied 12 percent in December, partly due to fear of shortages if workers go on strike since many major operations in top producers Chile and Peru have contacts expiring this year, including at top mine Escondida.

Chile's state-owned Codelco said late last month it had struck a contract deal with workers at its Andina copper mine, while workers at the Lomas Bayas mine accepted a contract offer from operator Glencore Plc (>> Glencore) early in January.

"The risk of disappointment is probably as big as the risk of it (strikes) coming to fruition because just take a look at what happened last year," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"We had some quite significant disruptions and the price did not actually move that much at the time."

LME Benchmark Copper Price: http://reut.rs/2EuGiso


The world's biggest copper mine, Chile's Escondida, was hit by a six-week strike last year, pushing down output at the operation by 7.8 percent to 903,000 tonnes in 2017.

The strike ended when the union representing the striking workers opted to return to work under the old contract, effectively pushing talks on a new deal into 2018 for the mine operated by BHP (>> BHP Billiton Plc) (>> BHP Billiton Limited).

Last week, the powerful union at the mine cast doubt on chances of starting talks on a new labour agreement with the company before formal negotiations scheduled for June.

Despite the tough talking by the union, several analysts believe there will not be a repeat of last year's extended walk-out.

"Looking at the major Escondida contract due for renewal in June, we would question the appetite for either workers or mining companies to withstand another lengthy strike," ING analysts led by Hamza Khan said in a note.

Several contracts due to be negotiated at other mines are with supervisors or professionals, who are regarded as less likely to strike, UBS analyst Daniel Major said in a note.

Chile Copper Output vs BHP Shares: http://reut.rs/2EGl6xe


Even last year, when the copper market was hit by a series of disruptions, the actual amount of copper lost was less than expected, according to some analysts.

"Last year we were using 5.5 percent but as far as I've got to, it's only realising 5.2 percent so far," said analyst Vivienne Lloyd at Macquarie, adding that the last year's number could not be finalised until all the fourth quarter production reports were released.

Karen Norton at Thomson Reuters GFMS said provisional data showed a disruption rate last year of 5.1 percent, close to the long term average and lower than in 2015, when it hit 6 percent.

Lloyd estimates that the multiple mine contracts up for negotiation this year equals 31 percent of global copper production, but she does not expect extensive strike action.

Last year the world's second biggest copper mine - Grasberg in Indonesia - had stoppages linked to disputes with the government, but operator Freeport-McMoRan Inc (>> Freeport-McMoran) said on Jan. 25 it was edging closer to a permit deal after it agreed to divest a 51-percent stake in the huge mine.

"Now the government actually has the incentive to allow the mine to produce," Lloyd said. "So we actually have a lower (forecast global) disruption rate for this year, 4.8 percent."

Any loss of production through disruptions would be cushioned by an increase in inventories, Hansen said.

Total stocks in exchange-approved warehouses have gained more than a fifth since early December to over 700,000 tonnes.

Copper Mine Disruptions: http://reut.rs/2si4NEj

Exchange Copper Inventories Rise: http://reut.rs/2BGABXn

(Reporting by Eric Onstad; Editing by Adrian Croft)

By Eric Onstad

Stocks mentioned in the article
ChangeLast1st jan.
ANGLO AMERICAN -2.15% 1644.2 Delayed Quote.8.45%
LME COPPER CASH -0.64% 6081 End-of-day quote.-15.32%
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news on ANGLO AMERICAN
08/07ANGLO AMERICAN : completes sale of New Largo thermal coal project in South Afric..
08/06ANGLO AMERICAN : rough diamond sales value for De Beers' sixth sales cycle of 20..
08/06China's Cleanup Transforms Iron -- WSJ
08/01ANGLO AMERICAN : Tax and Economic Contribution Report 2017
08/01ANGLO AMERICAN : Sale completed of New Largo coal project
08/01ANGLO AMERICAN : completes sale of New Largo thermal coal project in South Afric..
07/31De Beers Group to Close Voorspoed Mine
07/31ANGLO AMERICAN : De Beers Sales Cycle 6
07/31ANGLO AMERICAN : rough diamond sales value for De Beers’ sixth sales cycle..
07/30MITSUBISHI CORPORATION : Reaches Final Investment Decision on Quellaveco Copper ..
More news
News from SeekingAlpha
08/07Iron ore moves close to $70/ton as China cracks down on pollution 
07/27Anglo American's (AAUKY) CEO Mark Cutifani on Q2 2018 Results - Earnings Call.. 
07/26Anglo American Plc ADR 2018 Q2 - Results - Earnings Call Slides 
07/26Anglo American gives green light to $5B Peru copper project 
07/26Anglo American reports 1H results 
Financials ($)
Sales 2018 27 468 M
EBIT 2018 6 025 M
Net income 2018 3 095 M
Debt 2018 2 746 M
Yield 2018 4,93%
P/E ratio 2018 8,89
P/E ratio 2019 9,51
EV / Sales 2018 1,19x
EV / Sales 2019 1,18x
Capitalization 29 908 M
Duration : Period :
Anglo American Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends ANGLO AMERICAN
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 25,1 $
Spread / Average Target 17%
EPS Revisions
Mark Cutifani Chief Executive Officer & Executive Director
Stuart John Chambers Chairman
Stephen Thomas Pearce Finance Director & Non-Executive Director
Anthony Martin O'Neill Technical Director & Director
Philip Roy Hampton Senior Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
BHP BILLITON PLC11.21%123 838
RIO TINTO-3.01%85 864
GRUPO MEXICO S.A. DE C.V.-14.51%22 857