Glencore Copper, Zinc Output Falls
11 February 2016 - 9:00PM
Dow Jones News
LONDON—Commodities titan Glencore PLC reported Thursday lower
fourth-quarter copper and zinc output, in line with its promise to
cut back production as it seeks to slash costs and pare back debt
amid a protracted commodities price slump.
Copper output, the company's biggest earnings contributor in the
first half of last year, fell 6% to 374,700 metric tons in the
three months ended Dec 31, 2015 compared with the same quarter a
year before. Meanwhile zinc production, another important earnings
contributor, fell 18% year-over-year to 317,700 tons during the
same period.
The Switzerland commodities trader and producer announced in
September plans to shutdown two African copper mines over a period
of 18 months, thereby reducing copper output by 400,000 tons. A
month later it said it would idle two zinc mines, one in Australia
and another in Peru that together produce 500,000 tons of zinc
annually, until the zinc price recovers.
Glencore's shares have fallen 68% over the past year, making it
the second worst performer out of the U.K.'s blue chip FTSE 100
index after mining peer Anglo American PLC.
Glencore is seeking to cut its debt by more than a third to
around $18 billion to $19 billion by year-end to strengthen its
balance sheet as it seeks to protect its investment grade credit
rating amid investor concerns that commodity prices could remain
low for longer or fall further.
Standard & Poor's Ratings Services last week cut Glencore's
credit rating to a notch above junk status, citing new concerns
about low commodity prices but it maintained a stable outlook on
Glencore's new rating, saying its active balance sheet reduction
plan should mitigate the risk of another downgrade.
Glencore late Wednesday said it would receive $500 million from
the sale of future rights to the gold and silver output from its
Antapaccay mine in Peru, brining the total raised from such deals
to $1.4 billion.
The miner reported a 17% year-over-year drop in coal output to
29 million tons in the fourth quarter after putting its South
African Optimum Coal operations into business rescue proceedings
over the summer.
Looking ahead, the company expects copper production to fall as
much as 9% to 1.4 million tons this year after falling 3% to 1.5
million tons last year. Zinc output should fall 26% to 1.1 million
tons this year after rising 4% to 1.4 million tons last year.
Oil output is also forecast to fall 22% to 8.2 million barrels
despite rising 44% to 10.6 million barrels last year. The expected
decline in oil output reflects lower drilling activity in response
to a tumbling oil price, said a person familiar with the
matter.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
February 11, 2016 04:45 ET (09:45 GMT)
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