Anglo copper, iron output rise, while strike hits platinum

* Anglo to make recommendation to Amplats on platinum future

* Copper guidance revised up as ore grades improve

* Platinum guidance for 2014 revised down on strike (Adds chairman, CEO comments at AGM)

By Silvia Antonioli

LONDON, April 24 (Reuters) - Miner Anglo American posted an increase in its copper and iron ore production in the first quarter of 2014, broadly in line with analysts' forecasts, but its platinum output slumped, hit by a strike at its South African operations.

Output of iron ore, which makes up almost half of group earnings, totaled 11.3 million tonnes in the first quarter, up 10 percent from the year before, when production at the Sishen mine in South Africa was curbed following a strike in late 2012.

In copper, the second-largest earner for Anglo, output rose 18 percent year-on-year to 202,000 tonnes, on the back of higher ore grades from the Los Bronces and Collahuasi mines in Chile. Anglo raised its 2014 copper production output guidance to 710,000-730,000 tonnes from 700,000-720,000.

In platinum, where Anglo is cutting jobs and mothballing mines to improve the unit's profitability, equivalent refined platinum production fell 39 percent to 357,000 ounces, largely due to a crippling three-month mining strike over wages affecting some of its South African operations.

Anglo's platinum unit is also struggling with rising production costs and suppressed prices for the precious metal.

"The reality is that the platinum industry is in a pretty fragile state," Anglo Chairman John Parker told the annual general meeting in London.

"Last year for example, we, the largest platinum producers in the world, lost money. That's bad for shareholders, it's bad for employees and it's bad for the country."

Anglo is working on a transition strategy to move away from high-cost mines to concentrate on its newer and more mechanized ones. It plans to submit recommendations to the board of its platinum subsidiary Amplats in the next few months over how to restructure the business, Cutifani told shareholders.

"DECENT START"

Chief Executive Mark Cutifani, who joined the company just over a year ago, told the AGM his plan to cut costs and improve productivity at mines had helped in 2013, but there was more to be done to reach his target of a return on capital of at least 15 percent by 2016, up from about 9 percent in 2012.

"We certainly are encouraged by what we have achieved but we still have a long way to go," Cutifani said.

Citi analysts said of the productions numbers: "We consider this a decent start of the year considering (the) seasonally weaker quarter and strike at platinum operations."

Anglo cut its platinum guidance for the year. It now expects to produce about 2.1 million ounces of refined platinum equivalent, down from an estimate of 2.3-2.4 million previously.

The strike which began on Jan. 23 and is still ongoing severely impacted Anglo's Rustenburg, Amandelbult and Union production, while its Mogalakwena and Unki mines and joint venture operations where unaffected.

Processing plants were also not affected so Anglo was able to tap into its inventories to make up for some of the production lost in the strike.

Other platinum producers in South Africa such as Impala Platinum and Lonmin (LSE: LMI.L - news) have been affected by the industrial action.

"With the strike still not resolved platinum is still a bit of a wild card," Investec (LSE: INVP.L - news) analyst Marc Elliott said.

"The new guidance is not down too much as the processing operations are unaffected by strike. It is likely that Anglo built up considerable inventories of unprocessed metal as well as refined metal stocks before the strike started."

Marathon talks aimed at ending the platinum strike will resume on Thursday after the world's top producers and union AMCU spent two days haggling over an offer tabled last week by the companies.

Anglo American (LSE: AAL.L - news) shares closed up 1.26 percent. (Editing by Erica Billingham and Robin Pomeroy)