Commodities trader Glencore International Plc. (GLCNF.PK,GLNCY.PK,GLEN.L), which acquired miner Xstrata last year, reported Thursday lower copper production in its first half due to grade changes and planned maintenance, while production of zinc increased. Looking ahead, the company projects weak copper production and increased zinc production for fiscal 2015.
Further, Glencore said it expects to impair the value of Chad operations by some $790 million in its interim accounts. The company has made significant amendments to Chad's work programme following the sharp decline in oil prices in late 2014 and continuing into 2015, with the objective of preserving value for the long term, while reducing cash outlays in the near term.
For the first half, own sourced copper production was down 3 percent to 730.9 thousand tonnes from last year's757.3 thousand tonnes. The drop in production reflected anticipated grade changes at certain assets and planned maintenance activities at Collahuasi. These were largely offset by a 10 percent growth from African copper, reflecting stronger production at all operations.
Own sourced zinc production grew 12 percent from last year to 730,300 tonnes, mainly due to the ramp-up of the expansion projects in Australia, while own sourced lead production was 2 percent lower.
Own sourced nickel production was 48,900 tonnes, consistent with last year, while attributable ferrochrome production grew 16 percent to 756,000 tonnes, due to the Lion 2 expansion project, now fully ramped-up.
In the fist half, own sourced coal production was 68.7 million tonnes, down 4 percent, primarily due to the market-driven decision to cut back production.
Gold production dropped 10 percent, and silver production declined 3 percent.
Glencore's oil entitlement production was up 68 percent to 5.3 million barrels, reflecting increased production from Badila and Mangara in Chad, and Glencore's higher ownership interest in these fields following the Caracal acquisition.
Industrial capex was about $3 billion in the first half, and the company's target industrial capex ceiling for full year 2015 is now $6 billion, compared to the range of $6.5-$6.8 billion communicated in February 2015.
Looking ahead, the company expects fiscal 2015 copper production between 1.50 and 1.55 million tonnes, compared to last year's production of 1.546 million tonnes. Zinc production is expected to be between 1.52 million tonnes and 1.57 million tonnes, higher than last year's 1.39 million tonnes. The company projects higher production at all other commodities, except Coal.
In London, Glencore shares were gaining 1.6 percent to trade at 183 pence.
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