REPORT: Glencore Increases Copper, Coal Production in First Half
The world’s largest commodity trader Glencore (LSE:GLEN) recorded a 13 percent increase in copper output to 741,000 tons, in line with market forecasts.
Coal for the London-listed company also rose in output, increasing five percent to 71.2 million tons thanks in part to the expansion at its Australian mines.
The two metals and minerals have been Glencore’s most profitable assets so far in 2014.
"Second-quarter production was broadly in line with our forecasts. The production profile for the group is weighted towards the second half and we therefore expect volume improvements going forward," Citi analysts said.
Copper output improved primarily by growth at it African and South American mines, including its Mutanda and Katanga mines in the Democratic Republic of Congo and at its Antapaccay mine in Peru. Almost half of the company’s profits come from the red metal.
While copper and coal have performed well for Glencore, output for zinc and nickel has not.
Zinc dropped 11 percent to 650,400 tons in the first-half and nickel production fell eight percent to 49,100 tons.
The dip in nickel production can be contributed to the closure of mines in Australia and the Dominican Republic.
The company’s Koniambo mine in New Caledonia, a multi-billion Greenfield project, produced 4,100 tons of nickel in ferronickel in the first half reporting.
The previous goal for Koniambo was 55,000 tons by 2016. Glencore plans to announce a revised target number for the mine next week.
"The ramp up of Koniambo is still likely to take longer than expected, and could be an incremental downside risk," Nomura analysts said in a note.
Shares for Glencore were down 1.2 percent yesterday, in line with a one percent fall in the UK-listed mining sector.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”