Rise in African copper output boosts Glencore Xstrata

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London - Glencore Xstrata met market forecasts with a 24 percent increase in copper production in the first quarter of this year, mainly due to output expansion at its African operations and to higher grades at its South American mines.

Glencore said the performance of its marketing division was overall “strong and in line with expectations”, without elaborating.

Among diversified producers, Glencore Xstrata has the biggest exposure to copper, which accounted for almost half its earnings last year.

The mining company produced 382 000 tons in the three months, up 24 percent from 321 800 tons in the same period a year ago.

The increase was driven by the expansion at the Mutanda mine in the Democratic Republic of Congo and the Ernest Henry mine in Australia and improved production at the Collahuasi and Antamina mines in South America.

African copper output came to 106 400 tons, boosted by growth at the Mutanda, Mopani and Katanga mines. The producer expects growth from Mutanda to accelerate as it completes its next expansion phase.

“Glencore’s African copper assets remain its strongest source of high-quality revenue growth, in our view,” Bernstein Research analysts said in a note.

“[The] results reinforce our thesis for Glencore Xstrata, predicated on its high copper exposure and the increasing benefit of its high-grade African copper assets. We reiterate our outperform rating.”

Output of zinc, another key source of revenue for the group, fell by 18 percent, mainly due to the end-of-life closures of the Perseverance and Brunswick mines in Canada in June.

Nickel production fell 15 percent after maintenance at some mines last year.

The Koniambo nickel mine in New Caledonia, which Glencore inherited from Xstrata, produced below expectation due to various factors, including power availability and extended maintenance stoppages.

Glencore is now reviewing the annual production expectations from Koniambo in light of the quarterly operational performance and the start-up experiences to date. - Reuters

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