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Buoyant energy markets boost Glencore as it keeps its guidance mainly unchanged

Glencore chief executive Gary Nagle said its financial performance, both industrial and marketing, was strong during the period. Photo: Reuters

Glencore chief executive Gary Nagle said its financial performance, both industrial and marketing, was strong during the period. Photo: Reuters

Published Aug 1, 2022

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Commodity giant Glencore – which is expected to post its interims next week with bumper earnings anticipated – on Friday said in its half-year production report that its performance was strong, boosted by buoyant energy markets.

Glencore chief executive Gary Nagle said: “Our financial performance, both industrial and marketing, was very strong during the period, particularly on account of buoyant energy markets which will be a feature in the release of next week’s half-year report.

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“Allied with the strong results, particularly in marketing and mostly energy-related, our net working capital has significantly increased during the period, in line with materially higher oil, gas, and coal prices, and their elevated market volatilities,” he said.

Glencore kept most of its full-year guidance the same, but cut its full-year copper guidance by 5 percent, due to geotechnical issues in the Democratic Republic of Congo (DRC).

Glencore said its own-sourced copper production of 510 200 tonnes was 87 700 tonnes, 15 percent lower than the first half of 2021, due to ongoing geotechnical constraints at the Katanga mine in the DRC.

Its coal production was also lower.

In the six months to June, 30 its South African thermal coal production was at 8.3 million tonnes, 23 percent lower than the first half of 2021.

The decrease in thermal coal mainly reflected the ongoing impact of curtailing production to match lower capacity available via export logistics channels and reduced domestic demand, as well as challenges from significant wet weather and flooding in April.

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Coal production of 55.4 million tonnes was 6.7 million tonnes, 14 percent higher than the first half of 2021, mainly reflecting higher attributable production from Cerrejón, a large open-pit coal mine in Northern Colombia, following the acquisition in January of the remaining two-thirds’ interest that Glencore did not already own.

“On a like-for-like basis, overall group production declined by 0.5 million tonnes, 1 percent,” it said.

Meanwhile, ferrochrome production increased by 2 percent in the period under review, reflecting consistent smelter performance.

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Attributable ferrochrome production of 78 6000 tonnes was 2 percent higher, reflecting consistent smelter performance.

Own-sourced zinc production of 480 700 tonnes was 101 000 tonnes, 17 percent lower than the first half of 2021, reflecting a progressive reduction in the South American portfolio through disposals and closures, Covid-19-related absenteeism leading to lower development rates, and sequence changes at Mount Isa and lower production at Antamina mine.

Own-sourced nickel production of 57 800 tonnes was 10 100 tonnes, 21 percent higher than the first half of 2021.

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Entitlement interest oil production of 3.1 million barrels of oil equivalent was 0.6 million barrels, 22 percent higher than the first half of 2021, due to the commencement of the gas phase of the Alen project in Equatorial Guinea from March, 2021.

Glencore’s shares increased by nearly 4 percent on Friday on the JSE, and closed at R93.29.

BUSINESS REPORT

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