WHILE the Covid-19 pandemic remained challenging in Glencore’s ferrochrome, nickel, and oil operating environment in 2021, its operations largely performed in line with guidance expectations, chief executive Gary Nagle said yesterday.
By 2pm on the JSE the share leapt 3.73 percent higher at R83.77.
Of note, the diversified mining firm yesterday reported 43 percent higher ferrochrome production in its full-year 2021 production report.
However, the outputs of all other commodities were down, including overall coal being 3 percent lower, copper declined by 5 percent, zinc dropped 4 percent, lead decreased by 14 percent, nickel down 7 percent, gold showed a 12 percent decline, while silver was 4 percent down.
Oil output increased by 34 percent as the company produced 20 percent more coking coal, which totalled 9 1 million tons, and cobalt was 14 percent higher at 31 300 tons.
“The operating environment remained challenging in 2021, with the Covid-19 pandemic again dominating the daily lives of many of our colleagues, families, local communities, and society at large. As a responsible operator, our top priority is to protect the safety and health of our people and the communities that host our businesses. Maintaining production in 2021 became increasingly important as many of our products, so crucial for decarbonisation, energy supply, and industrial output saw higher levels of demand,” Nagle said.
Glencore's sourced copper production of 1 195 700 tons slid 5 percent, or 62 400 tons, lower than 2020, mainly due to the Mopani disposal of 23 800 tons, expected lower copper grades at Antapaccay in Peru of 14 800 tons, and lower copper by-products from its mature zinc and nickel mines of 26 600 tons.
Its cobalt production of 31 300 tons was 14 percent higher than in 2020 due to the limited restart of production at Mutanda in 2021.
“Own sourced zinc production of 1 117 800 tons was 52 600 tons, 4 percent lower than 2020, mainly reflecting the expected decline of Maleevsky mine in Kazakhstan, being lagged by the slower than expected ramp-up of replacement Zhairem mine tonnage, 19 600 tons,” the company said.
“These factors were partly offset by stronger zinc production at Antamina, which was suspended for part of 2020 due to Covid-19 restrictions,” Glencore said.
Coal production of 103.3 million tons was 3 percent lower, reflecting the care and maintenance status at Glencore’s Colombian subsidiary, Prodeco, as well as lower domestic power demand and export rail capacity constraints in South Africa, offset by higher production at Cerrejón coal mine in Colombia following a Covid-19 suspension and strike in 2020.
The group said in January that it had completed the Cerrejon purchase from Anglo American and BHP for $101m (R1548).
“We completed the Cerrejon acquisition and Ernest Henry disposal, such transactions being consistent with our continued strategy to simplify and align our portfolio with the materials needed for the energy transition and the responsible decline of our coal business,” said Nagle.
The Cerrejon acquisition was the last major deal of former chief executive officer Ivan Glasenberg, before he left Glencore at the end of June after 20 years he was with the company.
Looking ahead, Nagle said Glencore’s 2022 production guidance was unchanged from the investor update in December.
Citigroup said in a note that Glencore's fourth-quarter production was broadly in line with expectations, and forecast that the company's marketing arm would deliver strong earnings before interest and tax for 2021, according to Dow Jones News.
“Our estimate at $3.3 billion appears conservative,” the bank said.
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