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GLN - 2019 Half-Year Production Report
GLENCORE PLC
(Incorporated in Jersey under the Companies (Jersey) Law 1991)
(Registration number 107710)
JSE Share Code: GLN
LSE Share Code: GLEN
HKSE Share Code: 805HK
ISIN: JE00B4T3BW64
NEWS RELEASE
Baar, 31 July 2019
2019 Half-Year Production Report
Highlights
• Own sourced copper production of 663,000 tonnes was 33,200 tonnes (5%) lower than H1
2018, mainly reflecting: (i) Alumbrera open-cut depletion and sale of Punitaqui in
H2 2018 (together, 15,900 tonnes); (ii) re-bricking Kazzinc’s furnace (6,200 tonnes);
and (iii) smelter outages at Mopani culminating in the shutdown of the plant in June,
with a major refurbishment programme now underway (5,000 tonnes). Katanga’s ramp-up
and Mutanda’s updated mine plan largely offset each other.
• Own sourced cobalt production of 21,300 tonnes was 4,600 tonnes (28%) higher than H1
2018, reflecting a full six-month period of operation of Katanga’s cobalt circuit
(started in Q2 2018) and improved cobalt recoveries at Mutanda. Katanga continues to
apply technical solutions, which seek to maximise cobalt hydroxide production within
acceptable uranium limits resulting in approximately 3,600 tonnes (59%) of the 6,100
tonnes produced in H1 2019 being below such limits.
• Own sourced zinc production of 535,900 tonnes was 37,700 tonnes (8%) higher than H1
2018, reflecting the contribution of Lady Loretta mine (Mount Isa) and a stronger
performance at McArthur River, partly offset by expected reductions at Antamina,
reduced activity in Argentina and the impact of a safety-related stoppage at Kazzinc.
Own sourced sales during H1 2019 were 59kt lower than production, due to timing of
shipments following flooding in North Queensland that damaged rail infrastructure.
• Own sourced nickel production of 55,400 tonnes was 6,800 tonnes (11%) lower than H1
2018, reflecting maintenance at Murrin and Koniambo, and the feed mix delivered to
the INO refinery in Norway favouring third-party material (expected to reverse in H2
2019).
• Attributable ferrochrome production of 799,000 tonnes was broadly in line with H1
2018.
• Coal production of 68.2 million tonnes was 6.2 million tonnes (10%) higher than in
H1 2018, reflecting the contribution of interests in HVO and Hail Creek acquired
during 2018, higher production at Prodeco, following a period of increased mine
development, a strong operational performance in South Africa, partly offset by lower
Cerrejón production to meet air quality requirements (control of dust emissions).
Own sourced sales during H1 2019 were 3 million tonnes lower than production, due to
timing of shipments.
• Oil entitlement interest production of 2.2 million barrels was broadly in line with
H1 2018, reflecting expected natural declines in Equatorial Guinea, offset by
increases in Chad as the current drilling campaign delivers incremental production.
• Average key base metals’ realised prices for H1 2019 were as follows:
LME (average 6
Realised months) Difference
¢/lb $/t $/t %
Copper 261 5,754 6,167 (7)
Zinc 121 2,668 2,732 (2)
Nickel 567 12,500 12,318 1
• The average spot Newcastle coal price for the period was $88/t. After applying a
portfolio mix adjustment (component of our regular coal cash flow modelling guidance)
of $10/t to reflect, amongst other factors, movements in pricing of non-NEWC quality
coals, an average price of $78/t was realised across all coal sales volumes.
• Updated production guidance (except for Africa copper and cobalt) is shown on page
17. As previously advised, Katanga is conducting a comprehensive business review
which is expected to indicate lower production levels for 2019. The review is nearing
completion and updated guidance, with accompanying presentation material, is expected
to be provided next month, upon release of our interim financial statements. In H1
2019, Katanga produced 109,700 tonnes of copper and 6,100 tonnes of cobalt in
hydroxide.
• As flagged at our Investor Update in December 2018 and discussed again alongside our
2018 full year results in February, our Marketing segment has cobalt purchase
commitments from the Group’s own mines (primarily in the DRC), against which price
risk cannot be perfectly matched, due to the illiquid / immature hedging tools
available and/or inadequate depth of the physical forward market. Reflecting our
overall Group risk tolerance and appetite, our target cobalt price exposure (within
Marketing) is minimal, however during any period of market oversupply, we could build
some “involuntary” cobalt price exposure, which is what occurred through 2018. In
this regard, from a Group perspective, there remains an unrealised profit lag
(effectively between our Industrial and Marketing segments) until the final sale of
product to an external counterparty. Our net cobalt price exposure was broadly
unchanged from 31 December 2018 to 30 June 2019, reflecting a period of solid sales
volumes. Based on our carried internally sourced priced cobalt exposure of 10.3kt,
with the Metal Bulletin cobalt price falling some 50% during H1 2019 (from $58.4k/t
to $29.4k/t) and a significant decline in hydroxide payabilities, we expect to report
related EBIT losses within Marketing of approx. $350 million during this period. It
is important to note that this reportable loss in H1 2019 will be principally non-
cash, as funding in respect of building the position occurred predominantly in 2018.
Excluding this cobalt loss, we expect to report overall H1 2019 Marketing EBIT of
approx. $1.3 billion, which on an annualised basis is within the $2.2-3.2 billion
p.a. guidance range.
Glencore Chief Executive Officer, Ivan Glasenberg:
“I am pleased to report a solid performance from our underlying base business,
where our key assets in copper, coal, zinc and nickel performed largely in line
with our expectations. However, our African copper business did not meet expected
operational performance. We have moved to address the challenges at Katanga with
several management changes as well as overseeing a detailed operational review,
targeting multiple improvements to achieve consistent, cost-efficient production at
design capacity. In Zambia, we are nearing the end of our multi-year site
transformation projects, including plans to commission a new copper concentrator
towards the middle of 2020 and the development of 3 new mining shafts. Completion
of repairs to Mopani’s smelter is expected by the end of 2019. Our African copper
assets retain significant potential and will play a key role in the transition to a
low carbon economy. We have developed detailed turnaround plans and I look forward
to taking you through these plans along with our financial performance on 7
August.”
To view the full report please click
https://www.glencore.com/dam/jcr:9a598e35-657b-4489-a445-dc221706c20d/GLEN_2019-
HY_ProductionReport.pdf
and
The full announcement can be accessed using the following JSE link:
https://senspdf.jse.co.za/documents/2019/jse/isse/GLN/HY PR_3107.pdf
For further information please contact:
Investors
Martin Fewings t: +41 41 709 2880 m: +41 79 737 5642 martin.fewings@glencore.com
Media
Charles Watenphul t: +41 41 709 2462 m: +41 79 904 3320 charles.watenphul@glencore.com
www.glencore.com
Glencore LEI: 2138002658CPO9NBH955
Notes for Editors
Glencore is one of the world’s largest global diversified natural resource companies and a major
producer and marketer of more than 90 commodities. The Group's operations comprise around 150
mining and metallurgical sites, oil production assets and agricultural facilities.
With a strong footprint in both established and emerging regions for natural resources,
Glencore's industrial and marketing activities are supported by a global network of more than 90
offices located in over 50 countries.
Glencore's customers are industrial consumers, such as those in the automotive, steel, power
generation, oil and food processing sectors. We also provide financing, logistics and other
services to producers and consumers of commodities. Glencore's companies employ around 158,000
people, including contractors.
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International Council on Mining and Metals. We are an active participant in the Extractive
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Date: 31/07/2019 08:00:00
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