Wrapup 1: Miners' profits face an unusual foe: extreme weather

Alumina

29/07/2022 17:01

July 29 (Reuters) - Heavy rainfalls, withering droughts and
other extreme weather patterns across the globe are denting
miners' profits and crimping supply of iron ore, copper and
other widely-used minerals as climate change roils yet another
industry.
    It is an unusual situation for companies that have
experience operating anywhere in the world, include miles
underground and at the tops of mountains and in places where
temperatures often range from 100 degrees Fahrenheit (38°C) to
0F (minus 18°C). 
    But the first part of 2022 saw the mining industry - parts
of which have long faced criticism for how coal production
affects climate patterns - contend with a raft of
weather-related incidents entirely outside its playbook.
Executives detailed their weather-related troubles in earnings
reports this week and warned they are likely to continue.
    "We are reviewing a few different scenarios to adjust to the
likelihood that there are further strange weather patterns,"
said Lundin Mining Corp  LUN.TO  Chief Executive Peter
Rockandel.
    Lundin cut its 2022 copper production forecast after heavy
rains dented production at its Chapada mine in Brazil, a
facility that as recently as 2019 was contending with drought. 
    Anglo American Plc  AAL.L  slashed its dividend nL1N2Z90D4
after torrid rains hurt its iron ore production in Brazil during
the first half of the year, coal mining in Australia and
platinum mining in South Africa.  
    "The extremes that we saw in quarter one of this year
outpaced all reasonable forecasting ability that we had," said
Anglo CEO Duncan Wanbald.
    Rio Tinto Ltd's  RIO.L  RIO.AX  iron ore shipments from
Australia's Pilbara region fell 2% in the first half of the year
nL4N2Z819P compared with the same period in 2021, partly due to
"significantly higher than average rainfall in May." 
    Rio also said titanium dioxide production slipped in
Madagascar amid one of the worst cyclone seasons in that country
since 2008.
    With inflation and high energy costs already biting into
companies' cash reserves, the disruptions caused by extreme
weather are even more evident. 
    "When markets are tight, these things just become a lot more
material ... but there is not a lot you can do," analyst Ben
Davis at broker Liberum said.
    The cost of weather extremes is also measured in human
lives. In Burkina Faso, unexpectedly heavy rains during the dry
season caused flash floods at Trevali Mining Corp's  TV.TO  zinc
mine in April nL1N2Y71IL, killing eight miners who were trapped
underground. 
    Brazil's Vale SA  VALE3.SA , one of the world's largest iron
ore miners, said its output nL1N2Z93CO of the steel-producing
mineral dropped in the first three months of the year due to
torrential rains. Glencore  GLEN.L  warned nL1N2ZA0CB that
flooding could dent its Australian coal production this year. 
    Sibanye Stillwater Ltd  SSWJ.J  shuttered its Montana
platinum mines last month after mountain snow rapidly melted
amid unusually warm weather, causing runoff that took out
several key roads and bridges. 
    ArcelorMittal SA  MT.LU  said steel production at its South
Africa's unit  ACLJ.J  fell nearly a third during the first half
after severe flooding in the KwaZulu-Natal province damaged rail
lines.    
    
    DROUGHT
    In Chile, the world's largest copper producer, miners have
faced an ongoing water crisis due to historic drought that has
lasted more than a decade and only grown worse this year.
Antofagasta Plc  ANTO.L , one of the country's largest copper
miners, expects its production of the red metal to fall this
year due to that drought.
    Water is essential in copper production, used abundantly to
separate the mineral from its ore and in subsequent steps. To
counter water shortages, many mining companies desalinate ocean
water and use it in their processes.
    Earthworks, an environmental group that tracks the mining
industry, said mining companies must do more to fund
infrastructure improvements amid the changing climate.
    "Mining companies have been prioritizing their bottom line
over investing in safety and resiliency for too long," said Jan
Morrill of Earthworks.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Anglo American cuts dividend as inflation, extreme weather erode
earnings     urn:newsml:reuters.com:*:nL1N2Z90D4
ArcelorMittal South Africa shares drop after power cuts, rail
issues dent production     urn:newsml:reuters.com:*:nL1N2Z911W
Sibanye-Stillwater says Montana mines to remain suspended for
4-6 weeks      urn:newsml:reuters.com:*:nL4N2YB2BW
Antofagasta sees lower 2022 copper production on water shortage 
   urn:newsml:reuters.com:*:nL4N2TZ1QU
Brazil's Vale posts 50% decline in quarterly profit   
 urn:newsml:reuters.com:*:nS0N2YB00M
EXPLAINER-Why Australia is battling floods again     urn:newsml:reuters.com:*:nL4N2YL0I6
Glencore lowers full-year copper output guidance     urn:newsml:reuters.com:*:nL1N2ZA0CB
Eighth and last missing miner found dead in flooded Burkina Faso
mine     urn:newsml:reuters.com:*:nL1N2Y71IL
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Clara Denina, Helen Reid, Nelson Banya, Gabriel
Araujo, Ernest Scheyder and Praveen Menon; writing by Ernest
Scheyder
Editing by Marguerita Choy)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))