Glencore copper output falls

Glencore CEO Ivan Glasenberg. File picture: Arnd Wiegmann

Glencore CEO Ivan Glasenberg. File picture: Arnd Wiegmann

Published Feb 11, 2016

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London - Glencore’s copper production fell last year after it suspended output from mines in Africa following a plunge in prices. The trader and miner also agreed a $500 million deal with Franco-Nevada Corp. to sell precious-metals output from a mine in Peru.

Glencore mined 374 700 metric tons of copper in the final quarter of 2015, 6 percent less than year earlier, the company said in a statement Thursday. Output for the whole year fell 3 percent to 1.5 million tons, reflecting the suspension of operations at Katanga in the Democratic Republic of Congo and a curtailment at Mopani in Zambia. The company said it plans to cut copper output about 7.5 percent this year and reduce zinc supply by a quarter.

The rout in commodities from copper to coal has left mining companies battling for survival. Billionaire CEO Ivan Glasenberghas scrapped Glencore’s dividend payments and sold new shares to rein in debt accumulated during a commodities boom. The company said in December that it planned to reduce debt to as low as $18 billion by the end of this year. It’s cutting output and has started asset sales.

Read also: Expect weak mining earnings

The deal with Franco-Nevada will deliver gold and silver, calculated by reference to copper produced at the Antapaccay mine in Peru, and forms part of Glencore’s debt-reduction plans, the company said in a separate statement. Franco-Nevada will make an advance payment of $500 million to Glencore’s Narila subsidiary when the transaction, which is subject to conditions that will probably be met at the end of February, closes.

Streaming deals

That’s Glencore’s second precious-metals streaming transaction, after agreeing to sell a share of silver output to Silver Wheaton Corp. last year. That will bring the company’s upfront proceeds from streaming to a total $1.4 billion to date, the Baar, Switzerland-based company said.

Read also: ‘We grilled Guptas on Glencore deal’

The shares fell 6 percent to 87.94 pence by 9:59 a.m. in London. They’re down 2.6 percent this year after slumping 70 percent in 2015, which was the second-worst performance in the UK’s benchmark stock index.

Zinc production fell 18 percent to 317 700 tons in the fourth quarter from a year earlier, while coal output declined 17 percent to 28.8 million tons, it said.

Glencore plans to produce about 8.5 million barrels of oil this year, down 20 percent from 10.6 million barrels last year. It said it has “significantly” reduced drilling in Chad because of oil’s slump and will preserve the reserves until prices improve.

Peter Grauer, the chairman of Bloomberg, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.

-With assistance from Jesse Riseborough.

BLOOMBERG

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