Glencore maintains production guidance after mixed first half

(Sharecast News) - Mining giant Glencore reported a mixed performance across metals and commodities in a first-half production update on Friday, with both positive and negative trends impacting production figures. The FTSE 100 company said own-sourced copper production amounted to 488,000 tonnes, showing a 4% decline compared to the first half of 2022.

It put the decrease down to anticipated mining sequences at Collahuasi and Antamina, along with lower copper by-products outside the copper department.

Additionally, copper sales volumes were impacted, being around 11,000 tonnes lower due to shipment timing.

On a brighter note, Glencore reported an increase in own-sourced cobalt production, reaching 21,700 tonnes, a 5% rise year-on-year.

The improvement there was driven by better recoveries at Katanga.

In contrast, the company's own-sourced zinc production faced a decline, totalling 434,700 tonnes, which was 10% lower than the first half of 2022.

The decrease primarily resulted from the disposals of South American zinc operations of 18,700 tonnes in 2022, and the closure of Matagami of 17,300 tonnes.

Nickel production figures also showed a decline, with 46,400 tonnes produced, marking a 20% drop from the same period a year prior.

The reduction was primarily attributed to higher third-party production at INO, necessitated by the strike at the Raglan mine in 2022.

Glencore's attributable ferrochrome production reached 717,000 tonnes in the first half of 2023, which was 9% lower than the same period in the prior year.

That decrease was due to planned additional smelter offline days.

Coal production remained stable, with 54.2 million tonnes produced in the period, showing little variation compared to the first half of 2022.

Despite the fluctuations in production across various commodities, Glencore maintained its full-year production guidance.

For copper, the second-half guidance midpoint stood at 552,000 tonnes, indicating a 13% increase from actual production in the first half.

Conversely, cobalt was projected to see a decline in the second half of the year, with a 27% drop compared to the first six months, reflecting the current weak market conditions for the metal.

Zinc production was expected to rise in the second half, reaching 515,000 tonnes, or an 18% increase.

Glencore said that growth would be aided by the continued ramp-up of Zhairem and reduced weather challenges in Australia, benefiting copper production as well.

Nickel production was set to increase by 41% in the second half, with a total of 65,000 tonnes, due to around 10,000 tonnes coming from INO as the impact of last year's Raglan strike was fully recovered.

The remaining 9,000 tonnes was expected to come from stronger Murrin and Koniambo contributions, based on first-half maintenance and recent production performances.

For ferrochrome, second-half production was projected to be 17% lower than the first, with a total of 593,000 tonnes, mainly due to winter season offline days and maintenance in South Africa.

"We are pleased to report a solid first-half production performance from our underlying base business, where our key copper, coal and zinc assets performed in line with expectations and previously communicated guidance," said chief executive officer Gary Nagle.

"Our full year production guidance remains unchanged from earlier guidance.

"Second half volume weightings in copper, zinc and nickel reflect higher expected production volumes from Collahuasi, Kazzinc, Mount Isa and INO."

Nagle said that in Glencore's marketing segment, progressively through 2023 the "particularly elevated" commodity market imbalances and volatility levels that prevailed through much of 2022 had largely normalised, which, while clearly impacting profitability, had allowed for the release of some of the investment made in non-RMI marketing working capital in 2022.

"We continue to expect a full-year 2023 adjusted EBIT outcome above the top end of our $2.2bn to $3.2bn per annum long-term guidance range, likely in the $3.5bn to $4bn range."

Reporting by Josh White for Sharecast.com.