MARKET REPORT: Mining shares in a hole updates as production slumps

Mining stocks weighed heavily on the FTSE 100 following a series of bleak updates.

Anglo American slumped 8.8 per cent, or 356.5p, to 3679p after trimming its full-year guidance in the wake of a slower first quarter.

Production dropped 10 per cent year-on-year as it was hit by high rates of Covid-related absences as well as heavy rainfall at its mines in South Africa and Brazil and safety and operational issues at its coal and iron ore projects.

The company also predicted that costs would increase during the year as a result of inflation, particularly the rising cost of diesel.

Meanwhile, Antofagasta fell 7.1 per cent, or 116p, to 1520p as it revealed a 24 per cent year-on-year drop in copper production in the first three months of 2022 due to an ongoing drought in Chile.

The firm also reported gold production had fallen by 35 per cent in the quarter amid lower grades from its Centinela mine in the north of the country.

Australian digger BHP completed the trifecta of gloomy updates after slashing its copper and nickel production estimates for 2022. 

The cut to copper forecasts was blamed on lower output from the group’s Escondida mine in Chile, while nickel production had been dented by ‘Covid-19 related labour constraints.’ BHP shares slipped 2.5 per cent, or 71p, to 2818.5p.

The updates followed a similarly downbeat assessment from fellow mining giant Rio Tinto on Wednesday when it reported a drop in iron ore shipments and warned inflation, a resurgence of Covid-19 lockdowns in China and a prolonged war in Ukraine could dampen its fortunes.

Shares in the group fell another 1.8 per cent, or 105p, to 5745p yesterday after JP Morgan and RBC cut their target prices on the stock.

Stock Watch – RWS  

RWS shares soared after a private equity group confirmed it was considering a takeover offer.

Hong Kong-based Baring said it was in the early stages of pondering a bid for the translation group.

However, it stressed that there was no certainty an offer would be tabled and no formal approach had been made. 

Under City rules, Baring will have until 5pm on May 19 to make a firm bid for RWS.

RWS’s shares surged 21.3 per cent, or 75p, to 426.8p.

Rival Glencore was also down 5.6 per cent, or 29.2p, to 489.7p in the wake of the updates.

‘Commodity producers have enjoyed soaring prices in the past year but their moment in the sun might be coming to an end,’ said AJ Bell investment director Russ Mould.

‘The cracks in the latest round of trading updates from the sector are a reminder that mining operations don’t always run smoothly.’

Despite the bad news from the mining industry, the FTSE 100 edged down just 0.02 per cent, or 1.27 points, to 7627.95 points, while the FTSE 250 gained 0.4 per cent, or 75.68 points, to 21159.68. 

The blue-chip index was boosted by British Airways-owner IAG, which ascended 6.2 per cent, or 8.88p, to 152.9p after US rival United Airlines flagged strong demand from customers.

Broadcaster ITV also climbed 6.5 per cent, or 4.72p, to 77.28p and delivery group Royal Mail was lifted 4.7 per cent, or 15.9p, to 354.7p.

Shell shares inched up 0.6 per cent, or 14p, to 2222p following reports it was in talks with several Chinese state-backed energy companies to sell its stake in a major Russian gas project. 

The move came after the oil giant announced it would pull out of Russia following the invasion of Ukraine.

Meanwhile, pest control firm Rentokil rose 1.8 per cent, 9.2p, to 534p after it reported a 12.1 per cent rise in revenues to £713.9million in the first three months of the year.

The group had also managed to offset the impact of inflation by raising its prices.

Estate agent Foxtons shed 3.4 per cent, or 1.55p, to 44.5p after flagging a slowdown in sales activity in the first quarter of 2022.

The firm reported revenues from its sales business had fallen 9 per cent to £9.6million in the period as it no longer benefited from the frenzy of demand sparked by last year’s stamp duty holiday.

FTSE 250 brick maker Ibstock surged 8.8 per cent, or 14.6p, to 181p after upgrading its forecasts. The firm said sales in its first quarter had been better than predicted.