Glencore posts growth in copper

Comment on this story
Glencore12345 REUTERS The logo of commodities trader and mining group Glencore.

London - Mining company Glencore posted a 13 percent increase in first-half copper output, in line with market forecasts and boosted by growth at its African and South American mines but its zinc and nickel production dipped.

The London-listed company, which is due to report half-year results next week, makes almost half of its profit from the red metal and said its total copper output using feed from its own sources rose to 741,000 tonnes in the first half of this year.

That compares with analysts' forecasts of 739,000-754,000 tonnes.

The increase in copper was mostly on the back of higher production at its Mutanda and Katanga mines in the Democratic Republic of Congo and at its Antapaccay mine in Peru.

Operational improvements at Collahuasi in Chile, a joint venture with Anglo American, also helped.

“Second-quarter production was broadly in line with our forecasts. The production profile for the group is weighted towards the second half and we therefore expect volume improvements going forward,” Citi analysts said in a note.

However, output of zinc, another large contributor to Glencore's bottom line, dropped 11 percent in the first half to 650,400 tonnes and nickel production fell 8 percent to 49,100 tonnes, as some mines were placed on care and maintenance.

The Koniambo mine in New Caledonia, a multi-billion greenfield project that has seen cost overruns and delays, produced 4,100 tonnes of nickel in ferronickel in the first half.

In May, Glencore said it would review its annual production target from Koniambo after flagging some start-up difficulties due to issues such as power instability and maintenance stoppages.

Its previous goal for Koniambo was 55,000 tonnes by 2016 but a revised target should be announced next week.

“The ramp up of Koniambo is still likely to take longer than expected, and could be an incremental downside risk,” Nomura analysts said in a note.

In coal, Glencore posted a 5 percent increase to 71.2 million tonnes, due to some improvements at existing mines and expansion projects in Australian thermal coal.

Prices for thermal and metallurgical coal, however, are depressed due to poor demand and excess supply. Analysts expect them to remain weak in the medium term.

“Glencore still gets good exposure to commodities such as copper, nickel, zinc, all of which could perform well over the next couple of years or so but coal remains a difficult space. The company produces a lot of it and prices are weak,” Investec analyst Marc Elliott said.

Glencore shares were down 1.2 percent at 09:11 SA time, in line with a 1 percent fall in the UK-listed mining sector .

The miner said it received $6.5 billion (R69 billion) after tax from the sale of its Peruvian copper project Las Bambas to a Chinese consortium earlier this year. - Reuters

sign up

Comment Guidelines

  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

  5. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines