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Glencore trims guidance as copper output falls

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Glencore trims guidance as copper output falls
FILE PHOTO: The logo of commodities trader Glencore is pictured in front of the company's headquarters in Baar, Switzerland, September 30, 2015. REUTERS/Arnd Wiegmann/File Photo   -   Copyright  Arnd Wiegmann(Reuters)
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By Yadarisa Shabong and Barbara Lewis

(Reuters) – Glencore <GLEN.L> on Friday reported a 4% drop in copper output so far this year and trimmed full-year guidance as it prepared to suspend some operations in the Democratic Republic of Congo.

Production of battery mineral cobalt rose 21%, a third-quarter production report said, as the company increased output at its Katanga copper and cobalt mine, also in Congo.

As part of the company’s efforts to overcome problems in the politically volatile African state, Glencore in August laid out plans to separate its African copper business from its wider copper operations and halt production at its Mutanda copper and cobalt mine at the end of this year.

Full-year 2019 copper output, excluding African copper, is expected to be around 1.010 million tonnes, while guidance for African copper was around 375,000 tonnes, making a total of just under 1.4 million tonnes versus previous guidance of around 1.45 million.

The mining sector overall is under pressure from investors demanding action to prevent the most severe climate change and seeking assurances that production is ethical.

Glencore’s share price has been hard-hit with investors wary of its exposure to difficult regimes, while the price of the battery minerals found in them has been volatile.

Its shares were trading 0.86% lower by 1005 GMT on Friday.

“We expect that the jury will still be out for many investors as to whether Glencore have indeed begun to ‘turn the corner’ operationally,” analysts at Credit Suisse, which rates Glencore “outperform” said in a note.

Graphic: Glencore vs peers –

Copper, one of the best conductors, is relevant in any kind of economy, including those shifting to greener energy, but miners have struggled to bring on new supplies and face difficulties in extracting from old ore bodies.

Popular protests and drought have raised concerns about output from Antofagasta <ANTO.L> and Anglo American <AAL.L> in Chile, the world’s biggest copper producer.

While there are ample cobalt supplies for the near term, analysts predict a future surge in electrical vehicle use will spur demand. Prices rose in August after Glencore said it would mothball Mutanda.

On Friday, Glencore also said Katanga’s two cobalt driers are undergoing repairs and an upgrade, with a ramp up to full drying capacity targeted for the middle of 2020.

Glencore’s coal production rose 8% year-to-date compared with the same period a year ago.

The world’s biggest shipper of seaborne coal has said it can continue to generate strong margins from high quality coal assets as demand will continue, especially in Asia, despite a clamour in developed countries for minerals associated with the transition to a greener economy.

(Reporting by Yadarisa Shabong in Bengaluru and Barbara Lewis in London; Editing by Kirsten Donovan)

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