Wrap Text
GLN - 2014 Half-Year 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, 20 August 2014
2014 Half-Year Report
Highlights
US$ million H1 2014 H1 2013 Change % H1 2013 2013
Reported Pro forma(1) Reported Pro forma(1)
Key statement of income and cash flows highlights:
Adjusted EBITDA(2) 6,464 6,002 8 3,637 13,071
Adjusted EBIT(2) 3,624 3,182 14 2,066 7,434
Net income attributable to equity holders pre significant 2,010 1,860 8 1,207 4,583
items(3)
Earnings per share (pre significant items) (Basic) (US$) 0.15 0.14 7 0.13 0.35
Net income/(loss) attributable to equity holders(4) 1,720 645 167 (9,386) 2,473
Funds from operations (FFO)(5) 4,909 4,264 15 1,919 10,375
Capital expenditure (including Las Bambas of $798 4,825 6,552 (26) 3,400 13,050
million and $899 million in H1 2014 and pro forma H1
2013 respectively)
US$ million 30.06.2014 30.06.2014 31.12.2013 Change %
Reported Adjusted for Reported
Las Bambas
and Caracal(6)
Key financial position highlights:
Total assets 158,839 154,862 3
Current capital employed (CCE)(2) 23,995 24,351 (1)
Net debt(5) 37,595 32,595 35,798 (9)(7)
Ratios:
FFO to Net debt(5,8) 29.3% 33.8% 29.0% 17(7)
Net debt to Adjusted EBITDA(8) 2.78x 2.41x 2.74x (12)(7)
Adjusted EBITDA to net interest8 9.45x 9.12x 4
Adjusted current ratio(2) 1.16x 1.18x (2)
1 Refer to basis of preparation on page 4.
2 Refer to glossary (page 75) for definitions and reconciliation of Adjusted EBIT/EBITDA to note 3 of the interim financial statements.
3 Refer to significant items table on page 6.
4 H1 2013 reported, adjusted by $(466) million as a result of the finalisation of the fair value adjustments relating to the acquisition of Xstrata and the
resulting increase to the associated impairment (does not impact EBIT and EBITDA) see note 5 of the interim financial statements.
5 Refer to net debt and FFO tables on page 8.
6 Net debt adjusted by $5 billion, including the effects, in July 2014, of the net proceeds received on sale of Las Bambas less the consideration paid for
Caracal (see note 25).
7 Change %, calculated post $5 billion impact of the net consideration received on sale of Las Bambas less consideration paid for Caracal.
8 H1 2014 ratio based on last 12 months' FFO and Adjusted EBITDA and 2013 ratios based on pro forma results.
Highlights
- Strong results, driven by delivery of marketing growth, overall production expansion and synergies from the
acquisitions of Xstrata and Viterra.
- Adjusted EBITDA of $6.5 billion, up 8% compared to pro forma H1 2013 and Adjusted EBIT up 14% to $3.6 billion:
- Marketing Adjusted EBITDA up 23% to $1.6 billion and Adjusted EBIT up 27% to $1.5 billion, as a
result of generally increased volumes and improved market / procurement conditions, notably in grains,
copper, zinc and nickel.
- Industrial Adjusted EBITDA up 3% to $4.8 billion and Adjusted EBIT up 6% to $2.2 billion, a period in
which the positive impact of higher volumes, notable copper, offset the generally weaker net
commodity price / exchange rate environment. Metals and minerals' Adjusted EBITDA mining margin
improved from 29% to 32%, while Energy Adjusted EBITDA margin was stable at 29%, reflecting the
higher overall industrial profitability and improving asset quality.
- Healthy cash flow generation with FFO of $4.9 billion (up 15% compared to pro forma H1 2013) and rolling 12 month
FFO to net debt (adjusted for the disposal of Las Bambas and acquisition of Caracal in July 2014, subsequent to
period end) improving to 33.8% from 29%.
- Net debt at period end was $37.6 billion. After adjusting for the net Las Bambas / Caracal transactions
noted above, adjusted net debt was down 9% to $32.6 billion.
- Strong and flexible balance sheet, with over $9 billion of committed available liquidity.
- The Board has declared an interim distribution of $0.06 per share, an 11% increase over the 2013 interim
distribution, reflecting our confidence in the prospects and strength of our underlying commodities and business and
cashflow profile.
- Board enhancements continued with Tony Hayward being appointed non-executive chairman, Peter Grauer as the
senior independent director and Patrice Merrin as a new independent non-executive director.
- Subsequent to period end, Glencore completed the sale of Las Bambas for approximately $6.5 billion (net of tax)
and the acquisition of Caracal, the majority partner in our oil exploration and development operations in the Republic
of Chad for consideration of approximately $1.6 billion.
- We will also commence a share repurchase or buy-back programme of up to $1 billion (the "Programme") in the
period to 31 March 2015. This Programme will be effected in accordance with the terms of the authority granted by
shareholders at the 2014 AGM. It is currently intended that any shares purchased will be held as treasury shares.
The market will be notified in accordance with applicable listing rules and regulations if and when purchases are
made.
Glencore's Chief Executive Officer, Ivan Glasenberg, commented:
Glencore continued to make decisive progress in delivering on the potential created by the Xstrata acquisition over the
first half of 2014. We remain the most diversified natural resources company by activity, commodity and geography,
providing us with a stable operating platform as well as a high degree of optionality to underlying prices and bolt-on or
brownfield development opportunities. We look to the future with optimism based on our strong starting point and our
culture of entrepreneurialism and hard work to leverage tightening commodity fundamentals.
For further information please contact:
Investors Media
Paul Smith Charles Watenphul
t: +41 (0)41 709 24 87 t: +41 (0)41 709 24 62
m: +41 (0)79 947 13 48 m: +41 (0)79 904 33 20
e: paul.smith@glencore.com e: charles.watenphul@glencore.com
Investors Investors Finsbury (Media)
Martin Fewings Elisa Morniroli Guy Lamming
t: +41 (0)41 709 28 80 t: +41 (0)41 709 28 18 Dorothy Burwell
m: +41 (0)79 737 56 42 m: +41 (0)79 833 05 08 t: +44 (0)20 7251 3801
e: martin.fewings@glencore.com e: elisa.morniroli@glencore.com
www.glencore.com
Chief Executive Officer's Review
Glencore continued to make decisive progress in delivering on the potential created by the Xstrata acquisition over the
first half of 2014. In financial terms, our operational performance was resilient across all our businesses and we
demonstrated our characteristic discipline in the use of capital. The successful divestment of Las Bambas has improved
our balance sheet to a position that now allows us to accelerate the return of excess capital to shareholders. We also
took important steps to further enhance our corporate governance, safety and sustainability performance.
Despite a generally muted commodity price environment for much of the half, our industrial assets delivered an improved
performance. Achieving nameplate capacity production at the recently expanded Mutanda copper mine in the DRC and strong
low-cost growth in Australian thermal coal production are particular highlights. Marketing once more delivered and it is
pleasing to see the business' profitability annualising within the range levels indicated post the completion of the
Xstrata acquisition. The performance of agriculture was striking, despite a challenging price environment in our core
commodities of barley, canola and wheat, largely reflecting the successful acquisition and integration of Viterra.
During the period, we successfully executed three key corporate transactions. The most material was the divestment of
our entire interest in Las Bambas, a Peruvian copper greenfield project, to a consortium led by MMG Limited, realising
net proceeds (after-tax) of approximately $6.5 billion in July 2014. In line with our strategy of pursuing opportunistic,
value-creative, bolt-on acquisitions, we also completed the acquisition of the Clermont thermal coal mine in Queensland
in partnership with Sumitomo and purchased Caracal Inc., increasing our ownership percentage in various already held Chad
oil production, development and exploration fields.
In governance terms, we strengthened our Board, with the promotion of Tony Hayward to Chairman and the subsequent selection
of our first female Board member, Patrice Merrin. Glencore has also been invited to join the International Council on Mining
and Metals (ICMM), following an exhaustive application process that began in mid-2013. Our membership reflects the
substantial progress we have made in integrating sustainability across the Group.
As we have said repeatedly, the declines in commodity prices, ubiquitous since 2010, have not reflected weak demand, but
rather excessive supply growth in all commodities. We indicated at our Investor Day in September 2013, that we foresaw
the beginning of the end of this process with the rate of growth in supply peaking in our key commodities. This process
has two implications. Firstly, we should see the start of a period of price appreciation for commodities in general. Secondly,
pricing trends for commodities should start to diverge to reflect increasingly different specific supply conditions. In some
commodities, such as nickel and zinc, not only will supply growth decline but supply is likely to decrease in absolute terms.
Since the start of the year, the price of nickel and zinc has risen by 35% and 10% respectively. We believe that these moves
point the way for other commodities, with the probable exception being iron ore, where supply growth is not expected to peak
until 2017.
In line with our constructive view on our underlying commodities and business profile in particular, we are pleased to
announce an 11% increase in our interim distribution to 6 cents per share. The first half also saw Glencore start delivering
on its promise to return surplus capital to shareholders through the buyback of equity. This took the form of buying back
$577 million (par value) of our 2014 convertible bonds for a total cost of $639 million (excluding accrued interest), via
open market purchases and a highly successful tender process. In addition, we announced today that we will return up to a
further $1 billion of capital to shareholders over the next six months, in the form of an active buy-back of Glencore
ordinary shares. These steps are in line with our prudent capital allocation and balance sheet policies set out in May 2013,
following the Xstrata acquisition. Our goal remains to grow our free cashflow and with it the base dividend, while maintaining
balance sheet efficiency and a strong investment grade rating. We will further revisit the outlook for both the base dividend
and equity buy-backs at our preliminary 2014 results in March 2015.
Glencore remains the most diversified natural resources company by activity, commodity and geography, providing us with a
stable operating platform as well as a high degree of optionality to underlying prices and bolt-on or brownfield development
opportunities. The Las Bambas divestment has enabled us to accelerate our move into a free cashflow positive position and
we look to the future with optimism based on our strong starting point and our culture of entrepreneurialism and hard
work to leverage tightening commodity fundamentals.
Ivan Glasenberg
Chief Executive Officer
Financial Review
Basis of presentation
The reported financial information has been prepared on the basis as outlined in note 2 of the interim financial
statements. The unaudited and unreviewed pro forma financial information for 2013 and where otherwise noted has been
prepared as if the acquisition of Xstrata plc and full consolidation of such had taken place as of 1 January 2013 to
illustrate the effects of the acquisition on the profit from continuing operations and cash flow statement for the six month
period ended June 2013.
The unaudited and unreviewed pro forma financial information has been prepared in a manner consistent with the
accounting policies applicable for periods ending on or after 1 January 2013 as outlined in note 2 of the financial
statements with the exception of the accounting treatment applied to certain associates and joint ventures for which
Glencore's attributable share of revenues and expenses are presented (see note 3) and reflects the final fair value
adjustments arising from the acquisition of Xstrata on 2 May 2013 as if the acquisition of Xstrata plc and full consolidation
of such had taken place as of 1 January 2013. These adjustments primarily relate to depreciation, amortisation and the
unwind of onerous and unfavourable contract provisions. The pro forma financial information has been prepared for
illustrative purposes only and, because of its nature, addresses a hypothetical situation and therefore does not reflect the
Group's actual financial position or results.
A reconciliation of the pro forma results to the reported results for the six months ended 30 June 2013 is included in the
Appendix on page 73.
The reported and pro forma financial information is presented in the Financial Review section before significant items
unless otherwise stated to provide an enhanced understanding and comparative basis of the underlying financial
performance. Significant items (refer to page 6) are items of income and expense which, due to their financial impact and
nature or the expected infrequency of the events giving rise to them, are separated for internal reporting and analysis of
Glencore's results.
Financial Review
Financial results
Compared to the pro forma results for H1 2013, Adjusted EBIT increased by 14% to $3,624 million and Adjusted EBITDA
was up 8% to $6,464 million over the first half of 2014 compared to 2013, driven mainly by improved marketing results
and a modest profitability / net production increase across our industrial portfolio, the latter however, impacted by
generally lower period over period commodity prices.
These results continue to reinforce the strength and resilience of Glencore's business model and the diversification
benefits associated with combining and integrating, across a broad spectrum of commodities, a portfolio of industrial
assets with large scale physical sourcing, marketing and logistics capabilities.
Adjusted EBIT/EBITDA
Adjusted EBIT by business segment is as follows:
US$ million Marketing Industrial H1 2014 Marketing Industrial H1 2013 % H1 2013
activities activities Adjusted activities activities Adjusted Adjusted
Reported Reported EBIT Pro forma Pro forma EBIT EBIT
Reported Pro forma Reported
Metals and minerals 888 1,902 2,790 711 1,508 2,219 26 1,176
Energy products 227 394 621 501 581 1,082 (43) 843
Agricultural products 473 35 508 15 (35) (20) n.m. (20)
Corporate and other(1) (76) (219) (295) (41) (58) (99) n.m. 67
Total 1,512 2,112 3,624 1,186 1,996 3,182 14 2,066
Adjusted EBITDA by business segment is as follows:
US$ million Marketing Industrial H1 2014 Marketing Industrial H1 2013 % H1 2013
activities activities Adjusted activities activities Adjusted Adjusted
Reported Reported EBITDA Pro forma Pro forma EBITDA EBITDA
Reported Pro forma Reported
Metals and minerals 902 3,512 4,414 721 3,153 3,874 14 2,101
Energy products 252 1,468 1,720 519 1,566 2,085 (18) 1,342
Agricultural products 546 73 619 123 3 126 391 126
Corporate and other(1) (76) (213) (289) (41) (42) (83) n.m. 68
Total 1,624 4,840 6,464 1,322 4,680 6,002 8 3,637
1 Reported corporate industrial activities for H1 2013 includes $176 million of Glencore's equity accounted share of Xstrata's income.
Marketing Adjusted EBITDA for the six months ended 30 June 2014 increased by 23% to $1,624 million, while Marketing
Adjusted EBIT was up 27% to $1,512 million, representing 42% of total Adjusted EBIT, up from 37% in the comparable
period. Metals and minerals Adjusted marketing EBIT was up 25% over 2013, with improved contributions from most of
the marketing groups, owing to generally increased volumes from an expanded asset base, together with improving
market conditions, notably in copper, zinc and nickel. Energy products Adjusted marketing EBIT was down 55% over
2013, due to challenging / oversupplied coal markets, while relatively flat oil market conditions persisted throughout the
first half of 2014. The Agricultural products Adjusted marketing EBIT was up $458 million compared to the prior period, to
a large extent, reflecting a poor comparable base, in conjunction with a healthy procurement margin environment in
many markets in 2014, clearly aided by the Viterra acquisition in 2012.
Notwithstanding generally weaker average period over period commodity prices (primarily coal and precious metals),
somewhat mitigated by weaker producer currencies (AUD, Tenge and ZAR), Industrial activities Adjusted EBIT increased
by 6% (EBITDA up 3%) to $2,112 million for the six months ended 30 June 2014, due to various production and
productivity gains, notably Mutanda, as it delivered on its 200,000 tonnes per annum target and Collahuasi, following the
restart of the SAG mill and a return to higher grades.
Financial Review
Earnings
A summary of the differences between reported Adjusted EBIT and income attributable to equity holders, including
significant items, is set out in the following table:
US$ million H1 2014 H1 2013 H1 2013
Reported Pro forma Reported
Adjusted EBIT(1) 3,624 3,182 2,066
Net finance and income tax expense in certain associates and joint ventures(1) (153) (149) (58)
Net finance costs (764) (766) (645)
Income tax expense(2) (636) (279) (68)
Non-controlling interests (61) (128) (88)
Income attributable to equity holders pre significant items 2,010 1,860 1,207
Earnings per share (Basic) pre significant items (US$) 0.15 0.14 0.13
Significant items impacting Adjusted EBITDA and Adjusted EBIT
Share of Associates' exceptional items(3) (74) - (51)
Mark to market loss on certain aluminium positions(4) - (95) (95)
Unrealised intergroup profit elimination(4) - (146) (146)
(74) (241) (292)
Other expenses – net(5) (117) (1,180) (10,487)(6)
Write off of capitalised borrowing costs(7) (18) (23) (23)
Loss on disposal of investments - - (40)
Income tax (expense)/credit(8) (81) 210 230
Non-controlling interests share of other income(9) - 19 19
Total significant items (290) (1,215) (10,593)(6)
Income/(loss) attributable to equity holders 1,720 645 (9,386)(6)
Earnings/(loss) per share (Basic) (US$) 0.13 0.05 (1.04)(6)
1 See note 3 of the interim financial statements and page 74 for pro forma H1 2013.
2 The pro forma H1 2013 pre-significant tax charge has been updated, consistent with the methodology applied to the effective tax rate calculation for the
FY 2013.
3 Recognised within share of income from associates and joint ventures.
4 Recognised within cost of goods sold.
5 Recognised within other expense – net.
6 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata, see note 19 of the interim financial statements.
7 Recognised within interest expense.
8 Recognised within income tax (expense)/credit.
9 Recognised within non-controlling interests.
Significant items
Significant items are items of income and expense which, due to their financial impact and nature or the expected
infrequency of the events giving rise to them, are separated for internal reporting and analysis of Glencore's results to
provide a better understanding and comparative basis of the underlying financial performance.
During the first half of 2014, Glencore recognised a net $290 million of significant items. The largest item is $95 million of
‘premium' cost recognised on the buyback of bonds ($25 million on the successful tender of certain higher yielding
bonds, assumed as part of the Viterra acquisition in 2012, and $70 million related to the purchase and cancellation of
25% of the outstanding December 2014 convertible bonds). In addition, an $81 million non-cash deferred tax charge was
recognised, driven by Kazakhstan's devaluation of its currency relative to the USD in February 2014.
Financial Review
In the first half of 2013, Glencore recognised a net $10,593 million of other significant expenses, mainly comprising a
$1,160 million accounting loss related to the revaluation of Glencore's 34% interest in Xstrata immediately prior to
acquisition, a $8,124 million goodwill impairment recognised upon acquisition of Xstrata and directly attributable
transaction costs of $131 million. On acquisition, the underlying assets and liabilities acquired were fair valued, with an
amount of resulting goodwill allocated to the business. A residual goodwill amount of $8.1 billion could not be supported
and was written off. The size of the impairment was influenced by the deemed acquisition consideration, calculated by
reference to Glencore's share price on the date of acquisition. Furthermore, due to the then persistent challenging nickel
and aluminium margin environment, a $452 million impairment charge was recognised at our Murrin Murrin operations
and a further $324 million impairment charge was recognised against the Group's investment in UC Rusal. During the
period ended 30 June 2014, a positive UC Rusal mark to market movement of $208 million was recognised in other
comprehensive income.
See notes 4 and 5 of the interim financial statements for further explanations.
Net finance costs
Net finance costs were $782 million ($764 million on a pre-exceptional basis, excluding capitalised borrowing costs
written off upon refinance of the revolving credit facility) over the 2014 period, compared to $669 million ($645 million on
a pre-exceptional basis) incurred during the comparable period. Interest income over the first half of 2014 was $147
million, a 23% reduction on the comparable 2013 period, following the repayment (in H2 2013) of a substantial portion of
certain loans extended to the Russneft Group. On a pre-exceptional basis, interest expense for the first half of 2014 was
$911 million, a 9% increase from $836 million in the first half of 2013, due mainly to the higher average debt levels, as
the Group sees through its still elevated capital expenditure, which is now trending lower.
Income taxes
A net income tax expense of $717 million was recognised over the first half of 2014, compared to a net credit of $163
million over the first half of 2013. Excluding $81 million of deferred tax expense that was driven by Kazakh tenge
devaluation, the tax expense in H1 2014 was $636 million or a calculated effective tax rate of 27.2%, reflecting the
expanded industrial asset base and consequential change in profit contribution mix between marketing and industrial
assets, following the acquisition of Xstrata. After accounting for the Kazakh foreign exchange adjustments and a portion
of other permanent differences relating to prior years (note 6), an effective tax rate for the period of around 23% is
believed to be more informative. Glencore expects an effective tax rate in the range of 20% to 25% in 2014. The 2013
amount resulted primarily from an accounting tax credit booked in conjunction with the Murrin Murrin impairment.
Assets, leverage and working capital
Total assets were $158,839 million as at 30 June 2014 compared to $154,862 million as at 31 December 2013, a period
over which, current assets increased from $59,292 million to $60,725 million. The adjusted current ratio at 30 June 2014
was 1.16, down 2% compared to 31 December 2013. Non-current assets increased from $95,570 million to $98,114
million, primarily due to the various on-going capital development programs, including Katanga, Australia zinc,
Koniambo, Australian thermal coal and oil exploration/development.
Consistent with 31 December 2013, 99% ($16,758 million) of total marketing inventories were contractually sold or
hedged (readily marketable inventories) as at 30 June 2014. These inventories are considered to be readily convertible
into cash due to their liquid nature, widely available markets, and the fact that the associated price risk is covered either
by a physical sale transaction or a hedge transaction. Given the highly liquid nature of these inventories, which represent
a significant share of current assets, the Group believes it is appropriate to consider them together with cash equivalents
in analysing Group net debt levels and computing certain debt coverage ratios and credit trends.
Financial Review
Cash flow and net debt
Net debt
US$ million 30.06.2014 31.12.2013
Restated(1)
Gross debt 57,691 55,173
Associates and joint ventures net funding (60) (72)
Cash and cash equivalents and marketable securities (3,278) (2,885)
Net funding 54,353 52,216
Readily marketable inventories (16,758) (16,418)
Net debt 37,595 35,798
Net debt, adjusted by $5 billion, including the effects, in July 2014, of the net proceeds 32,595 n.m.
received on sale of Las Bambas less the consideration paid for Caracal
Cash and non-cash movements in net debt
US$ million H1 2014 H1 2013 H1 2013
Reported(2) Pro forma Reported
Cash generated by operating activities before working capital changes 5,576 5,553 2,912
Associates and joint ventures Adjusted EBITDA(3) 849 401 224
Net interest paid (802) (1,016) (858)
Tax paid(4) (772) (707) (392)
Dividends received from associates(4) 58 33 33
Funds from operations ("FFO") 4,909 4,264 1,919
Working capital changes, excluding readily marketable inventory movements 616 (920) (65)
Payments of non-current advances and loans (538) (971) (971)
Acquisition and disposal of subsidiaries, net of cash acquired - (175) 1,477
Purchase and sale of investments (397) (110) (110)
Purchase and sale of property, plant and equipment (excl. Las Bambas) (3,949) (5,559) (2,917)
Capital expenditure related to assets held for sale – Las Bambas (798) (899) (334)
Margin receipts/(payments) in respect of financing related hedging activities 202 (168) (168)
Acquisition and disposal of additional interests in subsidiaries (61) (7) (7)
Dividends paid and purchase of own shares (1,631) (1,388) (1,388)
Cash movement in net debt (1,647) (5,933) (2,564)
Net debt assumed in business combination - - (17,183)
Foreign currency revaluation of non-current borrowings and other non-cash (150) 318 318
items
Non-cash movement in net debt (150) 318 (16,865)
Total movement in net debt (1,797) (5,615) (19,429)
Net debt, beginning of period (35,798) (29,230) (15,416)
Net debt, end of period (37,595) (34,845) (34,845)
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata, see note 19 of the interim financial statements.
2 See reconciliation on page 76.
3 See note 3 of the interim financial statements.
4 Adjusted to include the impacts of proportionate consolidation of certain associates and joint ventures as outlined in note 3 of the interim financial
statements.
The reconciliation in the table above is the method by which management reviews the movements in net debt and
comprises key movements in cash and any significant non-cash movements on net debt items.
Net debt as at 30 June 2014 increased to $37,595 million from $35,798 million as at 31 December 2013, due to the
$1,647 million of net additional funding required, in excess of FFO, to fund primarily capital expenditure of $4,747 million,
of which the Las Bambas amount was since reimbursed in July 2014, through the sales mechanism. Adjusting net debt
by $5 billion for the July 2014 net consideration received on sale of Las Bambas and the consideration paid for Caracal
(see note 25), results in a decrease of net debt of $3.2 billion compared to 31 December 2013.
Financial Review
Business acquisitions and disposals
Net expenditure on business acquisitions was $110 million over the first half of 2013 compared to a net outflow of $397
million in 2014, due primarily to the acquisition of an effective 25.05% interest in the Clermont coal mine.
Liquidity and funding activities
During the first half of 2014, the following significant financing activities took place:
- In April, Glencore issued the equivalent of $3.5 billion of interest bearing notes as follows:
- 5 year $1,000 million, 3.125% fixed coupon bonds;
- 7 year EUR 600 million, 2.750% fixed coupon bonds;
- 10 year $1,000 million, 4.625% fixed coupon bonds; and
- 12 year EUR 500 million, 3.750% fixed coupon bonds.
- In May, Glencore issued $200 million Libor plus 1.20% coupon notes due 2018.
- In June, Glencore signed new committed revolving credit facilities totalling $15.3 billion, which extended and
refinanced previous revolving credit facilities. The facilities comprise:
- an $8.7 billion 12 month revolving credit facility with a borrower's 12 month term-out option and a 12 month
extension option; and
- a $6.6 billion 5 year facility with two 12 month extension options.
- In June, Glencore repurchased and cancelled 25% of its outstanding convertible bonds due December 2014, for a
consideration of $647 million.
Going concern
As at 30 June 2014, the Group had available committed undrawn credit facilities and cash amounting to $9.2 billion (as
per the Group's financial liquidity policy, it has a $3 billion minimum threshold requirement). Based on these available
capital resources and the Group's financial forecasts and projections, which take into account expected purchases and
sales of assets, reasonable possible changes in performance and consideration of the principal risks and uncertainties
noted on page 11, the directors believe the Group can continue as a going concern for the foreseeable future, a period
not less than 12 months from the date of this report.
Credit ratings
In light of the Group's extensive funding activities, maintaining strong Baa/BBB investment grade ratings is a financial
priority/target. The Group's credit ratings are Baa2 (stable) from Moody's and BBB (stable) from S&P.
Value at risk
One of the tools used by Glencore to monitor and limit its primary market risk exposure, namely commodity price risk
related to its physical marketing activities, is the use of a value at risk (VaR) computation. VaR is a risk measurement
technique which estimates the potential loss that could occur on risk positions as a result of movements in risk factors
over a specified time horizon, given a specific level of confidence. The VaR methodology is a statistically defined,
probability based approach that takes into account market volatilities, as well as risk diversification by recognising
offsetting positions and correlations between commodities and markets. In this way, risks can be measured consistently
across all markets and commodities and risk measures can be aggregated to derive a single risk value. Glencore has set
a consolidated VaR limit (1 day 95%) of $100 million representing less than 0.2% of equity.
Glencore uses a VaR approach based on Monte Carlo simulations and is either a one day or one week time horizon
computed at a 95% confidence level with a weighted data history.
Average market risk VaR (1 day 95%) during the first half of 2014 was $30 million, representing less than 0.1% of equity.
Average equivalent VaR during the first half of 2013 was $30 million.
Financial Review
Distributions
The directors have declared a 2014 interim distribution of $0.06 per share amounting to $787 million excluding
distribution on own shares. The dividend will be paid on 19 September 2014.
Interim distribution 2014
Applicable exchange rate date (JSE) 22 August
Ex-dividend date (JSE) 1 September
Ex-dividend date (Jersey and Hong Kong) 3 September
Last time for lodging transfers in Hong Kong 4:30 pm (HK) 4 September
Interim distribution record date in Hong Kong Opening of business (HK) 5 September
Interim distribution record date for JSE Opening of business (SA) 5 September
Interim distribution record date in Jersey Close of business (UK) 5 September
Deadline for return of currency election form (Jersey shareholders) 8 September
Applicable exchange rate date (Jersey and Hong Kong) 10 September
Payment date 19 September
As the half-year distribution will be paid out of capital contribution reserves, they are exempt from Swiss withholding tax.
As at 30 June 2014, Glencore plc had CHF39 billion of such capital contribution reserves in its statutory accounts.
The half-year distribution is declared and ordinarily paid in US dollars. Shareholders on the Jersey register may elect to
receive the distribution in sterling, euros or Swiss francs, the exchange rates of which will be determined by reference to
the rates applicable to the US dollar. Shareholders on the Hong Kong branch register will receive their distribution in
Hong Kong dollars, while shareholders on the Johannesburg register will receive their distribution in South African rand.
Further details on distribution payments, together with currency election and dividend mandate forms, are available from
the Group's website (www.glencore.com) or from the Company's Registrars.
Board changes
On 8 May 2014, Tony Hayward was appointed as permanent non-executive chairman. Following this appointment, Peter
Grauer was appointed as the senior independent director and on 26 June 2014, Patrice Merrin was appointed as an
independent non-executive director.
Financial Review
Risks and uncertainties
The Group is exposed to a number of risks and uncertainties which exist in its business and which may have an impact
on the ability to execute its strategy effectively in the remaining six months of the financial year and could cause the
actual results to differ materially from expected and historical results. The directors consider that the principal risks and
uncertainties as summarised below and detailed in the Glencore plc (formerly Glencore Xstrata plc) 2013 Annual Report
on pages 18 to 31, copies of which are available at www.glencore.com, remain appropriate in 2014.
Risks relating to the Group:
- Fluctuations in the current and expected volumes of supply or demand for commodities, commodity prices and
currency exchange rates;
- Geopolitical risk;
- Compliance with laws and regulations;
- Liquidity risk;
- The Group's ability to attract, retain and compensate key employees; and
- Delays in or failures to effectively integrate businesses acquired.
Risks relating to the Group's marketing activities:
- Its ability to identify and take advantage of arbitrage opportunities;
- The effectiveness of its hedging strategy;
- Counterparty credit and performance risk;
- Risk management policies and procedures that may leave it exposed to unidentified or unanticipated risks;
- Reliance on third parties to source a significant amount of its commodities; and
- Cost increases and infrastructure constraints related to significant amounts of freight, storage, infrastructure and
logistics support required by its marketing activities.
Risks relating to the Group's industrial activities:
- Delays in or failure to develop planned expansions or new projects;
- Operating risks and hazards;
- Title to the land, resource tenure and extraction rights of industrial activities;
- Availability of infrastructure at its industrial assets being adequate and remaining available;
- Increases in production costs;
- Estimates of stated mineral and hydrocarbon reserves, resources and mineralised potential;
- Environmental hazards associated with the processes and chemicals used in the Group's extraction and production
methods and its shipping and storage activities; and
- Accidents at the Group's industrial activities, logistics and storage facilities which could result in injuries and
fatalities.
Subsequent events affecting our financial position
- On 8 July 2014, Glencore completed the acquisition of Caracal for consideration of $1.6 billion. See note 19 of the
interim financial statements.
- On 31 July 2014, the sale of the Las Bambas project completed and Glencore received a consideration, net of tax,
of approximately $6.5 billion. See note 13 of the interim financial statements.
Metals and Minerals
The H1 2013 information in this section has been presented on the pro forma basis
described in the Financial Review section
US$ million Marketing Industrial H1 2014 Marketing Industrial H1 2013
activities activities activities activities
Revenue 16,967 14,618 31,585 21,134 15,256 36,390
Adjusted EBITDA 902 3,512 4,414 721 3,153 3,874
Adjusted EBIT 888 1,902 2,790 711 1,508 2,219
Adjusted EBITDA margin 5.3% 24.0% 14.0% 3.4% 20.7% 10.6%
MARKET CONDITIONS
Selected average commodity prices
H1 H1 Change
2014 2013 %
S&P GSCI Industrial Metals Index 343 365 (6)
LME (cash) copper price ($/t) 6,916 7,543 (8)
LME (cash) zinc price ($/t) 2,049 1,936 6
LME (cash) lead price ($/t) 2,100 2,172 (3)
LME (cash) nickel price ($/t) 16,534 16,137 2
Gold price ($/oz) 1,291 1,524 (15)
Silver price ($/oz) 20 27 (26)
Metal Bulletin cobalt price 99.3% ($/lb) 14 12 17
LME (cash) aluminium price ($/t) 1,755 1,919 (9)
Metal Bulletin alumina price ($/t) 323 334 (3)
Metal Bulletin ferrochrome 6-8% C basis 60% Cr, max 1.5% Si (¢/lb) 106 102 4
Platinum price ($/oz) 1,438 1,549 (7)
Iron ore (Platts 62% CFR North China) price ($/DMT) 111 137 (19)
Currency table
Average Spot Average Spot Change in
H1 2014 30 June H1 2013 30 June average %
2014 2013
AUD : USD 0.92 0.94 1.01 0.92 (9)
USD : CAD 1.10 1.07 1.02 1.05 8
USD : COP 1,959 1,877 1,827 1,923 7
EUR : USD 1.37 1.37 1.32 1.30 4
GBP : USD 1.67 1.71 1.54 1.52 8
USD : CHF 0.89 0.89 0.94 0.95 (5)
USD : KZT 177 184 151 152 17
USD : ZAR 10.70 10.64 9.21 9.88 16
Marketing
Highlights
Adjusted EBIT for H1 2014 was $888 million, an increase of 25% compared to H1 2013. The increase was driven by
generally higher volumes, including copper, zinc and lead, supportive market conditions, notably in copper, zinc and
nickel and synergy benefits following the acquisition of Xstrata.
Metals and Minerals
Financial information
US$ million H1 2014 H1 2013 Change %
Revenue 16,967 21,134 (20)
Adjusted EBITDA 902 721 25
Adjusted EBIT 888 711 25
Selected marketing volumes sold
Units H1 2014 H1 2013 Change %
Copper metal and concentrates(1) mt 1.5 1.3 15
Zinc metal and concentrates(1) mt 1.6 1.5 7
Lead metal and concentrates(1) mt 0.4 0.3 33
Gold koz 682 471 45
Silver moz 25.5 11.1 130
Nickel kt 84 125 (33)
Ferroalloys (incl. agency) mt 2.2 1.7 29
Cobalt kt 10.7 10.0 7
Alumina/aluminium mt 6.0 5.9 2
Iron ore mt 29.6 12.8 131
1 Estimated metal unit contained.
Copper
Tight cathode market conditions were a key feature of the first half with supply disruptions and continued demand
strength generating a deficit that was supported by a reduction in exchange stocks to levels last seen in late 2008.
Despite this, copper prices fell 8% to average $6,916 per tonne, partly under the unfounded influence of a flood of metal
from the unwinding of Chinese collateralised financing deals. The actual outcome was quite the opposite, with cumulative
Chinese net imports of refined cathode surging almost 50% higher period on period. Despite some of the more bearish
expectations around the impact of slowing Chinese economic growth on base metals demand, the base effect on the
scale of copper consumption growth, should see Chinese copper demand exceed 10 million tonnes in 2014, on the back
of targeted GDP growth of c.7.5%. Offtake in the major western markets has also proved positive after a sluggish winter
affected first quarter.
On the supply side, compared to mine supply disruptions of more than 650,000 tonnes in 2013, unexpected H1 2014
disruptions have already trimmed more than 500,000 tonnes from 2014 mine supply forecasts. While stronger refined
copper production is forecast over the balance of 2014, the absolute level of growth remains at risk from continuing scrap
shortages as well as the supply risks surrounding aging assets and the successful on-time delivery of new greenfield
mine projects. This growth in supply should be more than matched by continued strength in demand, underpinned by the
second half weighting of China State Grid's large infrastructure budget, as well as accelerating Chinese investment in
road and rail. Elsewhere, PMI data remains positive, pointing to continued manufacturing strength in Europe and the US.
Mirroring the shortages of scrap and associated constraints on supply growth, exchange inventories have more than
halved over the six months of the year to total 251,000 tonnes at the end of June.
Zinc / Lead
Average zinc prices rose by 6% period on period for H1, outperforming the LME complex. The medium-term positive
outlook for zinc is driven by a looming mine supply shortage, expected to affect the market in 2015, and an improved
Western demand outlook. There has also been a consistent drawdown in visible zinc inventories, with LME/SHFE
inventories dropping by approximately 290,000 tonnes (or 25% of the LME/SHFE inventories) during the period. H1 2014
refined zinc metal imports into China increased 34% versus H1 2013, building on the already high level of metal imported
in 2013 (650,000 tonnes).
Lead medium to long term fundamentals face similar headwinds to zinc on the supply side, but the mild winter conditions
in Europe and soft demand for e-bikes out of Asia, produced a balanced supply/demand over the period. Hence, the
effect on the LME price and physical premiums has been limited relative to zinc during the first half.
Metals and Minerals
Nickel
Global stainless steel production continued to increase in the first half of 2014, driven by growth in China and North
America, along with improved conditions in Europe and Japan. Improved activity in stainless, coupled with robust
demand from non-stainless applications such as nickel-based alloys, resulted in higher global nickel consumption levels
in the first half of 2014 compared to the prior year.
On the supply side, the nickel market was significantly impacted by Indonesia's ban on unprocessed mineral exports,
implemented in January 2014 and enforced to date with no exception. While the ban has put more than 300,000 tonnes
of primary nickel production at risk (mainly in the form of Chinese nickel pig iron), record levels of raw and finished nickel
inventories, limited the ban's impact on supply during the first half of the year. LME inventory increased from 262,000
tonnes at the start of the year to 305,000 tonnes at the end of June. However, if sustained, the export ban will have a
material impact on global nickel supply in the medium term, with sizeable primary deficits forecast to arise. Reflecting the
improved market sentiment, LME cash price at the end of June was $18,715 per tonne, up 35% from $13,905 at the start
of 2014.
Ferroalloys
There was a divergence in regional ferrochrome pricing during H1 2014, as a strong uptick in consumption in the West
contrasted with relatively weaker demand conditions in China. With global production largely unchanged on H2 2013
levels, prices increased steadily in all major stainless producing regions, except China.
Manganese Alloy prices continued to move in a narrow range as supply kept pace with demand. Vanadium prices
remained similarly range bound during the period, as much anticipated production out of Australia hit further delays,
while new Brazilian production was pushed into H2 2014.
Alumina/Aluminium
Average prices for alumina and aluminium fell by 3% and 9% respectively compared to H1 2013. However, aluminium
premiums for duty unpaid, in-warehouse material rose from a range of $210 to $230 per tonne at the end of 2013 to a
range of $340 to $360 per tonne at the end of H1 2014.
Iron Ore
As new production came on line, primarily in Australia, the iron ore market moved into surplus and inventories started to
increase in China. This resulted in FOB iron ore prices decreasing from the mid $130s to below $100 per tonne. As
prices decreased, premiums also eroded which resulted in challenging marketing conditions. A significant increase in
futures market volumes / liquidity now provides enhanced risk management capabilities.
Metals and Minerals
Industrial activities
Highlights
Total industrial revenue in H1 2014 for metals and minerals was $14,618 million, down 4% mainly reflecting lower
commodity prices. Adjusted EBITDA was $3,512 million, up 11% from $3,153 million, while EBIT was $1,902 million, up
26% from $1,508 million. The growth in EBITDA and EBIT was driven by strong copper production growth (up 13%)
mainly due to the expansion at Mutanda to 200,000 tonnes per annum at the end of 2013 and operational improvements
at Collahuasi, reflecting higher processing rates following the restart of the SAG mill and a return to higher grades. The
performance was also impacted by changes in commodity prices, specifically nickel prices up and copper and precious
metal prices down, which, together with the strengthening of the US dollar versus the Australian dollar and the South
African rand, were key drivers of the improved performance at nickel and ferroalloys and a reduction within the zinc
business, the latter also impacted by the closure of two Canadian mines towards the end of H1 2013. The higher overall
profitability and improving asset quality is reflected in the increase in the adjusted metals and minerals' mining margin
from 29% to 32%.
Financial information
US$ million H1 2014 H1 2013 Change %
Revenue
Copper assets
African copper (Katanga, Mutanda, Mopani, Sable) 1,896 1,502 26
Collahuasi(1) 677 402 68
Antamina(1) 437 448 (2)
Other South America (Alumbrera, Lomas Bayas, Antapaccay, Punitaqui) 1,346 1,243 8
Australia (Ernest Henry, Mount Isa, Cobar) 766 1,151 (33)
Custom metallurgical (Altonorte, Townsville Refinery, CCR, Horne, Pasar) 4,169 4,280 (3)
Intergroup revenue elimination (770) (446) n.m.
Copper 8,521 8,580 (1)
Zinc assets
Kazzinc 1,174 1,307 (10)
Australia (Mount Isa, McArthur River) 569 474 20
European custom metallurgical (Portovesme, San Juan de Nieva, Nordenham, 1,028 1,195 (14)
Northfleet)
North America (Matagami, Kidd, Brunswick, CEZ Refinery) 571 838 (32)
Other Zinc (AR Zinc, Los Quenuales, Sinchi Wayra, Illapa, Rosh Pinah, 354 250 42
Perkoa)
Intergroup revenue elimination (205) (337) n.m.
Zinc 3,491 3,727 (6)
Nickel assets
Integrated Nickel Operations (Sudbury, Raglan, Nikkelverk) 1,066 1,304 (18)
Australia (Murrin Murrin) 386 325 19
Falcondo - 113 (100)
Nickel 1,452 1,742 (17)
Ferroalloys 898 982 (9)
Aluminium/Alumina 256 225 14
Metals and minerals revenue – segmental measure 14,618 15,256 (4)
Impact of presenting joint ventures on an equity accounting basis (1,114) (850) n.m.
Metals and minerals revenue – reported measure 13,504 14,406 (6)
1 Represents the Group's share of revenue in these JVs.
Metals and Minerals
US$ million H1 2014 H1 2013 Change %
Adjusted EBITDA
Copper assets
African copper 464 378 23
Collahuasi(1) 393 176 123
Antamina(1) 318 334 (5)
Other South America 611 547 12
Australia 232 351 (34)
Custom metallurgical 132 49 169
Copper 2,150 1,835 17
Adjusted EBITDA mining margin(2) 39% 38%
Zinc assets
Kazzinc 295 377 (22)
Australia 145 117 24
European custom metallurgical 85 87 (2)
North America 99 225 (56)
Other Zinc 29 34 (15)
Zinc 653 840 (22)
Adjusted EBITDA mining margin(2) 21% 26%
Nickel assets
Integrated Nickel Operations 467 403 16
Australia 43 (32) n.m.
Falcondo 1 (7) n.m.
Koniambo - (1) n.m.
Nickel 511 363 41
Adjusted EBITDA margin 35% 21%
Ferroalloys 208 148 41
Aluminium/Alumina (10) (28) n.m.
Iron ore - (5) n.m.
Metals and minerals Adjusted EBITDA – segmental measure 3,512 3,153 11
Adjusted EBITDA mining margin(2) 32% 29%
Impact of presenting joint ventures on an equity accounting basis (339) (315) n.m.
Metals and minerals Adjusted EBITDA – reported measure 3,173 2,838 12
1 Represents the Group's share of EBITDA in these JVs.
2 Adjusted EBITDA mining margin is Adjusted EBITDA (excluding custom metallurgical assets) divided by Revenue (excluding custom metallurgical assets
and intergroup revenue elimination) i.e. the weighted average EBITDA margin of the mining assets. Custom metallurgical assets include the Copper
custom metallurgical assets and Zinc European custom metallurgical assets and the Aluminium/Alumina group, as noted in the table above.
Metals and Minerals
US$ million H1 2014 H1 2013 Change %
Adjusted EBIT
Copper assets
African copper 244 194 26
Collahuasi(1) 276 83 233
Antamina(1) 232 201 15
Other South America 411 353 16
Australia 110 128 (14)
Custom metallurgical 111 25 344
Copper 1,384 984 41
Zinc assets
Kazzinc 81 171 (53)
Australia 11 24 (54)
European custom metallurgical 43 50 (14)
North America 47 177 (73)
Other Zinc (35) (23) n.m.
Zinc 147 399 (63)
Nickel assets
Integrated Nickel Operations 235 180 31
Australia 13 (86) n.m.
Falcondo 1 (7) n.m.
Koniambo - (1) n.m.
Nickel 249 86 190
Ferroalloys 140 79 77
Aluminium/Alumina (17) (35) n.m.
Iron ore (1) (5) n.m.
Metals and minerals Adjusted EBIT – segmental measure 1,902 1,508 26
Impact of presenting joint ventures on an equity accounting basis (136) (92) n.m.
Metals and minerals Adjusted EBIT – reported measure 1,766 1,416 25
1 Represents the Group's share of EBIT in these JVs.
Metals and Minerals
US$ million H1 2014 H1 2013
Sustaining capex
Copper assets
African copper 285 202
Collahuasi(1) 83 128
Antamina(1) 99 106
Other South America 193 200
Australia and Asia 117 184
Custom metallurgical 44 35
Copper 821 855
Zinc assets
Kazzinc 85 81
Australia 204 291
European custom metallurgical 17 23
North America 33 21
Other Zinc 71 67
Zinc 410 483
Nickel assets
Integrated Nickel Operations 60 60
Australia 8 35
Falcondo - -
Nickel 68 95
Ferroalloys 53 50
Aluminium/Alumina 16 12
Total sustaining capex – segmental measure 1,368 1,495
Impact of presenting joint ventures on an equity accounting basis (182) (234)
Total sustaining capex – reported measure 1,186 1,261
1 Represents the Group's share of sustaining capex in these JVs.
Metals and Minerals
US$ million H1 2014 H1 2013
Expansion capex
Copper assets
African copper 417 322
Collahuasi(1) 3 47
Antamina(1) 10 29
Las Bambas(2) 798 899
Other South America 9 32
Australia 60 141
Custom metallurgical 27 30
Copper 1,324 1,500
Zinc assets
Kazzinc 36 32
Australia 132 352
European custom metallurgical 10 22
North America 13 73
Other Zinc - 68
Zinc 191 547
Nickel assets
Integrated Nickel Operations 95 125
Australia - 5
Falcondo - 1
Koniambo 419 565
Other nickel projects 5 4
Nickel 519 700
Ferroalloys 68 105
Iron ore 25 49
Total expansion capex – segmental measure 2,127 2,901
Impact of presenting joint ventures on an equity accounting basis (13) (76)
Total expansion capex – reported measure 2,114 2,825
1 Represents the Group's share of expansion capex in these JVs.
2 Asset held for sale.
Metals and Minerals
US$ million H1 2014 H1 2013
Total capex
Copper assets
African copper 702 524
Collahuasi(1) 86 175
Antamina(1) 109 135
Las Bambas(2) 798 899
Other South America 202 232
Australia 177 325
Custom metallurgical 71 65
Copper 2,145 2,355
Zinc assets
Kazzinc 121 113
Australia 336 643
European custom metallurgical 27 45
North America 46 94
Other Zinc 71 135
Zinc 601 1,030
Nickel assets
Integrated Nickel Operations 155 185
Australia 8 40
Falcondo - 1
Koniambo 419 565
Other nickel projects 5 4
Nickel 587 795
Ferroalloys 121 155
Aluminium/Alumina 16 12
Iron ore 25 49
Total capex – segmental measure 3,495 4,396
Impact of presenting joint ventures on an equity accounting basis (195) (310)
Total capex – reported measure 3,300 4,086
1 Represents the Group's share of capex in these JVs.
2 Asset held for sale.
Metals and Minerals
Production from own sources – Total(1)
H1 H1 Change
2014 2013 %
Total Copper kt 741.0 658.0 13
Total Zinc kt 650.4 729.5 (11)
Total Lead kt 148.9 153.2 (3)
Total Nickel kt 49.1 53.1 (8)
Total Gold koz 450 478 (6)
Total Silver koz 16,621 19,761 (16)
Total Cobalt kt 9.8 9.1 8
Total Ferrochrome kt 652 561 16
Total Platinum(2) koz 43 44 (2)
Total Palladium(2) koz 24 24 -
Total Rhodium(2) koz 8 8 -
Total Vanadium Pentoxide mlb 9.7 9.8 (1)
Production from own sources – Copper assets(1)
H1 H1 Change
2014 2013 %
African Copper (Katanga, Mutanda, Mopani)
Total Copper metal(3) kt 212.3 171.5 24
Total Cobalt(4) kt 8.1 7.4 9
Collahuasi(5)
Copper metal kt 4.3 7.1 (39)
Copper in concentrates kt 101.6 60.1 69
Silver in concentrates koz 1,355 747 81
Antamina(6)
Copper in concentrates kt 61.4 62.2 (1)
Zinc in concentrates kt 27.1 53.2 (49)
Silver in concentrates koz 2,005 2,377 (16)
Other South America (Alumbrera, Lomas Bayas, Antapaccay, Punitaqui)
Total Copper metal kt 35.3 45.4 (22)
Total Copper in concentrates kt 138.6 121.8 14
Total Gold in concentrates and in doré koz 176 184 (4)
Total Silver in concentrates and in doré koz 919 1,148 (20)
Australia (Ernest Henry, Mount Isa, Cobar)
Total Copper in anode kt 92.5 88.9 4
Total Copper in concentrates kt 23.5 22.6 4
Total Gold koz 27 16 69
Total Silver koz 625 711 (12)
Total Copper department
Total Copper kt 669.5 579.6 16
Total Cobalt kt 8.1 7.4 9
Total Zinc kt 27.1 53.2 (49)
Total Gold koz 203 200 1
Total Silver koz 4,904 4,983 (2)
Production from own sources – Zinc assets(1)
H1 H1 Change
2014 2013 %
Kazzinc
Zinc metal kt 99.2 105.6 (6)
Lead metal kt 11.5 15.6 (26)
Copper metal kt 19.1 26.8 (29)
Gold koz 246 277 (11)
Silver koz 1,889 2,848 (34)
Australia (Mount Isa, McArthur River)
Total Zinc in concentrates kt 302.2 298.4 1
Total Lead in concentrates kt 107.0 97.8 9
Total Silver in concentrates koz 4,149 3,740 11
North America (Matagami, Kidd, Brunswick)
Total Zinc in concentrates kt 69.0 131.6 (48)
Total Lead in concentrates kt - 13.5 (100)
Total Copper in concentrates kt 23.0 24.4 (6)
Total Silver in concentrates koz 891 3,371 (74)
Other Zinc (AR Zinc, Los Quenuales, Sinchi Wayra, Rosh Pinah, Perkoa)
Zinc metal kt 10.2 16.0 (36)
Zinc in concentrates kt 142.7 124.7 14
Lead metal kt 5.4 4.9 10
Lead in concentrates kt 25.0 21.4 17
Copper in concentrates kt 1.6 0.8 100
Silver metal koz 292 324 (10)
Silver in concentrates koz 4,496 4,495 -
Total Zinc department
Total Zinc kt 623.3 676.3 (8)
Total Lead kt 148.9 153.2 (3)
Total Copper kt 43.7 52.0 (16)
Total Gold koz 246 277 (11)
Total Silver koz 11,717 14,778 (21)
Production from own sources – Nickel assets(1)
H1 H1 Change
2014 2013 %
Integrated Nickel Operations (Sudbury, Raglan, Nikkelverk)
Total Nickel metal kt 27.1 23.6 15
Total Nickel in concentrates kt 0.3 0.3 -
Total Copper metal kt 8.0 8.6 (7)
Total Copper in concentrates kt 19.8 17.6 13
Total Cobalt metal kt 0.4 0.3 33
Australia (Murrin Murrin, XNA)
Total Nickel metal kt 17.6 19.1 (8)
Total Nickel in concentrates kt - 3.1 (100)
Total Copper in concentrates kt - 0.2 (100)
Total Cobalt metal kt 1.3 1.3 -
Total Cobalt in concentrates kt - 0.1 (100)
Falcondo Nickel in ferronickel kt - 7.0 (100)
Koniambo Nickel in ferronickel kt 4.1 - n.m.
Total Nickel department
Total Nickel kt 49.1 53.1 (8)
Total Copper kt 27.8 26.4 5
Total Cobalt kt 1.7 1.7 -
Production from own sources – Ferroalloys assets(1)
H1 H1 Change
2014 2013 %
Ferrochrome(7) kt 652 561 16
PGM(8) Platinum koz 43 44 (2)
Palladium koz 24 24 -
Rhodium koz 8 8 -
Gold koz 1 1 -
4E koz 76 77 (1)
Vanadium Pentoxide mlb 9.7 9.8 (1)
Total production – Custom metallurgical assets(1)
H1 H1 Change
2014 2013 %
Copper (Altonorte, Townsville, Pasar, Horne, CCR)
Copper metal kt 345.1 373.7 (8)
Custom copper anode kt 266.0 257.0 4
Zinc (Portovesme, San Juan de Nieva, Nordenham, Northfleet)
Zinc metal kt 388.2 372.7 4
Lead metal kt 100.5 78.6 28
Silver koz 5,165 3,280 57
Ferroalloys
Ferromanganese kt 57 52 10
Silicon Manganese kt 52 42 24
Aluminium (Sherwin Alumina)
Alumina kt 776 777 -
1 Controlled industrial assets and joint ventures only. Production is on a 100% basis, except as stated.
2 Relating to the PGM business within ferroalloys only.
3 Copper metal includes copper contained in copper concentrates and blister.
4 Cobalt contained in concentrates and hydroxides.
5 The Group's pro-rata share of Collahuasi production (44%).
6 The Group's pro-rata share of Antamina production (33.75%).
7 The Group's 79.5% share of the Glencore-Merafe Chrome Venture.
8 Consolidated 100% of Eland and 50% of Mototolo.
OPERATING HIGHLIGHTS
Copper assets
Total own sourced copper production was 741,000 tonnes, 13% (83,000 tonnes) higher than the comparable period. The
increase mainly relates to the ramp-up in production at Mutanda, Katanga and Antapaccay, plus improved production at
Collahuasi as the operation continues to process at the higher levels achieved during H2 2013, following the restart of
the SAG mill.
African copper
African copper production was 212,300 tonnes, 24% (40,800 tonnes) ahead of the comparable period. The increase
primarily relates to the ramp up at Mutanda, which produced 98,600 tonnes, an increase of 37,400 tonnes (61%) and
reflects the recent expansion to 200,000 tonnes per annum. Katanga also increased production by 12,300 tonnes (20%)
relating to the ongoing commissioning of phase IV. Katanga production is expected to ramp up further during the rest of
2014 as phase V is completed and further operational improvements, including adding some back-up power generator
capacity, are implemented.
Cobalt production was 8,100 tonnes, 9% higher than the comparable period and relates to the Mutanda expansion.
Collahuasi
The group's share of production was 105,900 tonnes, 58% (38,700 tonnes) above the comparable period. The increase
in production reflects a continuation of the high levels of processing seen in H2 2013 following the SAG mill restart and
higher head grades.
Antamina
The group's share of copper production was 61,400 tonnes, in line with the comparable period. Copper production has
benefited from higher milled volumes, offset by lower grades and recoveries in Q2 2014, due to the processing of long
term lower grade stockpiles.
Zinc production was 27,100 tonnes, 49% lower than the comparable period and relates to the mining of higher grade
copper / lower grade zinc areas during the period.
Other South America
Copper production from Other South America was 173,900 tonnes, 4% (6,700 tonnes) higher than the comparable
period. The increase relates to higher milling rates at Antapaccay, partially offset by the closure of the Tintaya SX/EW
operations in October 2013.
Gold production was 176,000 oz, 4% lower than the comparable period, relating to expected lower head grades at
Antapaccay.
Australia
Australia copper production was 116,000 tonnes, 4% (4,500 tonnes) higher than the comparable period, relating to
higher own sourced production at the Mount Isa smelter due to the production of more own sourced concentrates.
Gold production was 27,000 oz, 69% higher than the comparable period relating to the treatment of a higher proportion
of Ernest Henry concentrate (containing gold) versus Mount Isa concentrate (containing no gold) than in H1 2013.
Custom metallurgical assets
Custom copper cathode production was 345,100 tonnes, 8% (28,600 tonnes) lower than the comparable period. The
reduction mainly relates to lost production at Pasar due to the damage caused by typhoon Haiyan, offset by higher
throughput at Townsville. Pasar restarted production at the end of Q1 2014, ramping up during Q2 2014.
Custom copper anode production was 266,000 tonnes, 4% higher than the comparable period, relating to higher
throughput at Horne.
Zinc assets
Total own sourced zinc production was 650,400 tonnes, 11% (79,100 tonnes) below the comparable period. The
reduction mainly relates to the end of mine closure of the Perseverance and Brunswick mines in June 2013 and, to a
lesser degree, the lower grades being mined at Antamina in the current year.
Total own sourced lead production was 148,900 tonnes, 3% (4,300 tonnes) lower than the comparable period. The
principal movements relates to the lost production from the closure of Brunswick (13,500 tonnes) as noted above, offset
by growth (11,700 tonnes) at the Lady Loretta mine (part of Mount Isa complex).
Kazzinc
Zinc production from own sources was 99,200 tonnes, 6% below the comparable period, reflecting an opportunistic
decision (cost savings etc.) to treat more third party sulphide material and therefore less own source oxide ore. Total zinc
production including third party material was up 3% at 151,200 tonnes.
Gold production from own sources was 246,000 oz, 11% lower than the comparable period due to the decision to once
again treat less own source concentrates in favour of more third party precious metal containing material. Own sourced
concentrate production (and gold contained) was in line with the comparable period, with the untreated concentrates
remaining in inventory for treatment in future periods. Total gold production (including third party material) was only
slightly less than the comparable period.
Lead production from own sources was 11,500 tonnes, down 26% versus the comparable period and relates to lower
work in progress being processed at the smelters in 2014 and an expected small reduction in head grades. On a total
metal basis (including third party material), lead production was 61,500 tonnes, up 41% on the comparable period and
reflects the higher output of the new Isa lead smelter.
Copper production from own sources was 19,100 tonnes, down 29% versus the comparable period, relating to temporary
repair work, plus the impact of processing less work in progress at the smelters in 2014. Total copper metal production
(including third party material), was similarly impacted, down 19% over the comparable period.
Australia
Australia zinc production was 302,200 tonnes, in line with the comparable period. This relates to higher production at
Mount Isa (growth from the Lady Loretta expansion), partially offset by a reduction at McArthur River as a result of lower
head grades due to mine sequencing and minor disruptions associated with the expansion project.
Lead production was 107,000 tonnes, 9% higher than the comparable period. The increase relates to the expansion at
Lady Loretta and strong production at Black Star (both Mount Isa), offset by lower production at McArthur River (noted
above).
North America
North America zinc produced 69,000 tonnes of zinc, 48% lower than the comparable period and no lead, reflecting the
end of mine life closures of Perseverance and Brunswick in June 2013. Excluding the impact of the closed mines, North
America zinc increased production by 25,100 tonnes, reflecting the ramp-up of the Bracemac mine (started production in
May 2013), offset by lower production from Kidd due to mining restrictions as a result of temporary stope unavailability
and a focus on higher copper grade areas.
Copper production was 23,000 tonnes, 6% lower than the comparable period, relating to lost copper production from the
closed Perseverance mine, offset by mining higher copper grade areas at the Kidd mine.
Other Zinc
The Other zinc asset group produced 152,900 tonnes, 12,200 tonnes (9%) above the comparable period, relating to the
ramp-up of Perkoa (24,900 tonnes), offset by net lower production from the other assets, including the maintenance
smelter shut down at AR Zinc.
Lead production was 30,400 tonnes, 16% (4,100 tonnes) above the prior year period, mainly relating to higher production
from AR Zinc due to increasing the milling capacity and higher head grades.
European custom metallurgical assets
Custom zinc and lead production were 388,200 tonnes and 100,500 tonnes, up 4% and 28% respectively versus the
prior year period. The increases mainly relate to the full period contribution from Portovesme's zinc and lead plants
following the respective SX plant commissioning and Kivcet plant restart in 2013.
Nickel assets
Own sourced nickel production was 49,100 tonnes, 4,000 tonnes (8%) lower than the comparable period. The decline
relates mainly to the XNA (Cosmos and Sinclair) and Falcondo operations, which together produced 10,100 tonnes in H1
2013, subsequently being placed into care and maintenance. The lost production was in part offset by production from
Koniambo as it ramps up and production growth at INO, due to increased output from the Raglan mine.
Integrated Nickel Operations ("INO")
INO's own sourced nickel production was 27,400 tonnes, 15% (3,500 tonnes) higher than the comparable period, due to
a higher proportion of own sourced feed (total nickel production was 44,700 tonnes, broadly in line with the comparable
period). The higher proportion of own source feed was driven primarily by increased production from the Raglan mine.
Own sourced copper production was 27,800 tonnes, 6% higher than the comparable period. The increase relates to the
maintenance shut at the Strathcona mill in Q1 2013, which resulted in a reduction in the quantity of Sudbury ore being
processed and better processing rates in general.
Australia
Own sourced nickel production was 17,600 tonnes, 21% below the comparable period. The reduction relates to the
Cosmos and Sinclair mines being placed in care and maintenance and a slight decline in average ore grades at Murrin
Murrin. Total packaged nickel at Murrin Murrin (including third party material) was 2% higher than the comparable period
due to higher throughput at the plant.
Koniambo
Koniambo production was 4,100 tonnes of nickel in ferronickel during the period. Ramp-up activities remain ongoing with
full annualised production expected in 2016.
Ferroalloys assets
Ferrochrome
Attributable ferrochrome production was 652,000 tonnes, 16% (91,000 tonnes) above the comparable period. The
increase relates to the non-recurring Eskom power buy-back programme that occurred during 2013 and the ramp up in
production of Lion phase 2 (furnaces C and D started production in April and June 2014 respectively).
Platinum Group Metals ("PGM")
PGM H1 2014 production was 76,000 oz, consistent with the comparable period.
Vanadium
Vanadium production was 9.7 million lbs, in line with the comparable period.
Manganese
Total manganese (ferromanganese and silicon manganese) production was 109,000 tonnes, 16% higher than the
comparable period. The increase relates to higher throughput in Norway (silicon manganese) due to efficiency
improvements and demand led increases in France (ferromanganese).
Aluminium assets
Sherwin Alumina
Alumina production was 776,000 tonnes, broadly in line with the comparable period, notwithstanding significant power
and steam outages caused by the third party energy supplier during 2014.
Energy Products
The H1 2013 information in this section has been presented on the pro forma basis
described in the Financial Review section
US$ million Marketing Industrial H1 2014 Marketing Industrial H1 2013
activities activities activities activities
Revenue 65,735 5,571 71,306 62,765 6,065 68,830
Adjusted EBITDA 252 1,468 1,720 519 1,566 2,085
Adjusted EBIT 227 394 621 501 581 1,082
Adjusted EBITDA margin 0.4% 26.4% 2.4% 0.8% 25.8% 3.0%
Market conditions
Selected average commodity prices
H1 H1 Change
2014 2013 %
S&P GSCI Energy Index 338 327 3
Coal API4 ($/t) 76 84 (10)
Coal McCloskey Newcastle (6,000 kcal NAR) ($/t) 75 88 (15)
Australian coking coal average realised export price ($/t) 123 155 (21)
Australian semi-soft coal average realised export price ($/t) 98 118 (17)
Australian thermal coal average realised export price ($/t) 75 86 (13)
Australian thermal coal average realised domestic price ($/t) 31 47 (34)
South African thermal coal average realised export price ($/t) 72 83 (13)
South African thermal coal average realised domestic price ($/t) 23 27 (15)
Prodeco (Colombia) thermal coal average realised export price ($/t) 78 88 (11)
Cerrejón (Colombia) thermal coal average realised export price ($/t) 68 76 (11)
Oil price – Brent ($/bbl) 109 108 1
Marketing
Highlights
Adjusted EBIT was $227 million, a reduction of 55% compared to H1 2013, due to challenging / oversupplied coal
markets, while relatively flat oil market conditions persisted throughout the first half of 2014.
Financial information
US$ million H1 2014 H1 2013 Change %
Revenue 65,735 62,765 5
Adjusted EBITDA 252 519 (51)
Adjusted EBIT 227 501 (55)
Selected marketing volumes sold
Unit H1 2014 H1 2013 Change %
Thermal coal(1) mt 46.1 36.8 25
Metallurgical coal(1) mt 1.7 2.8 (39)
Coke(1) mt 0.4 0.4 -
Crude oil mbbls 222 202 10
Oil products mbbls 325 343 (5)
1 Includes agency volumes
Coal
Demand levels remained strong in most importing countries across the Atlantic and Pacific markets during the period and
are expected to remain so going forward. The supply response to lower prices has, however, been slower than expected,
albeit there has been a drop off in coal exports from North America. We expect further reduction in supply in the short to
medium term as higher cost producers cut back loss making tonnage.
The coal market remains highly segmented, particularly, in terms of quality, and our overall supply base means that we
are well positioned to benefit from market arbitrages and disruption that inevitably occur from time to time.
Oil
Nearby Brent spent most of the first six months of the year within a narrow range of $105-$111 per barrel, except June,
when uncertainties over the situation in Iraq, inspired a brief rally. As a result of the relatively tight range, volatility in
crude continues to price near record lows, despite the renewal of broader geo-political uncertainty.
Following a similar pattern to last year, WTI / Brent began the year with WTI at a $12 discount and finished at a $7
discount. A major ongoing topic in the market has been if, and when, the US will allow sustained exports of condensates
as its domestic production continues to grow; a preliminary export approval has reportedly been granted to two parties.
In terms of crude curve structure, the most notable recent shift has occurred in the deferred years, where the significant
backwardation that has been present in both WTI and Brent was meaningfully eroded, with outer year prices for Brent
now approaching $100 per barrel once again, whilst those for WTI are uniformly over $85 per barrel.
Industrial activities
Highlights
Total industrial revenue in H1 2014 was $5,571 million, down 8% from $6,065 million in H1 2013, mainly relating to lower
coal prices. Adjusted EBITDA and EBIT were $1,468 million and $394 million, down 6% and 32% respectively, driven by
the lower coal result, with coal prices down between 10% and 20%, mitigated somewhat by higher production (up 5%)
and FX benefits from a weaker Australian dollar and South African rand against the US dollar.
Oil EBITDA and EBIT were $266 million and $147 million, up 45% and 8% respectively, reflecting higher production
volumes as Alen (Equatorial Guinea) and Badila (Chad), which came online in June and September 2013.
Financial information
US$ million H1 2014 H1 2013 Change %
Net revenue
Coal operating revenue
Coking Australia 395 560 (29)
Thermal Australia 2,237 2,377 (6)
Thermal South Africa 973 1,169 (17)
Prodeco 733 653 12
Cerrejón(1) 372 373 -
Coal operating revenue 4,710 5,132 (8)
Coal other revenue
Coking Australia 194 211 (8)
Thermal Australia 326 350 (7)
Thermal South Africa 8 53 (85)
Prodeco 6 - n.m.
Coal other revenue (buy-in coal) 534 614 (13)
Coal total revenue
Coking Australia 589 771 (24)
Thermal Australia 2,563 2,727 (6)
Thermal South Africa 981 1,222 (20)
Prodeco 739 653 13
Cerrejón(1) 372 373 -
Coal total revenue 5,244 5,746 (9)
Oil 327 319 3
Energy products revenue – segmental measure 5,571 6,065 (8)
Impact of presenting joint ventures on an equity accounting basis (372) (373) n.m.
Energy products revenue – reported measure 5,199 5,692 (9)
1 Represents the Group's share of revenue in this JV.
US$ million H1 2014 H1 2013 Change %
Adjusted EBITDA
Coking Australia 82 196 (58)
Thermal Australia 595 554 7
Thermal South Africa 203 372 (45)
Prodeco 184 133 38
Cerrejón(1) 138 128 8
Total coal 1,202 1,383 (13)
Adjusted EBITDA margin(2) 26% 27%
Oil 266 183 45
Adjusted EBITDA margin 81% 57%
Energy products Adjusted EBITDA – segmental measure 1,468 1,566 (6)
Adjusted EBITDA margin(2) 29% 29%
Impact of presenting joint ventures on an equity accounting basis (87) (86) n.m.
Energy products Adjusted EBITDA – reported measure 1,381 1,480 (7)
1 Represents the Group's share of EBITDA in this JV.
2 Coal EBITDA margin is calculated on the basis of Coal operating revenue, as set out in the preceding table.
US$ million H1 2014 H1 2013 Change %
Adjusted EBIT
Coking Australia 2 117 (98)
Thermal Australia 64 91 (30)
Thermal South Africa 16 139 (88)
Prodeco 97 50 94
Cerrejón(1) 68 48 42
Total coal 247 445 (44)
Oil 147 136 8
Energy products Adjusted EBIT – segmental measure 394 581 (32)
Impact of presenting joint ventures on an equity accounting basis (17) (57) n.m.
Energy products Adjusted EBIT – reported measure 377 524 (28)
1 Represents the Group's share of EBIT in this JV.
US$ million H1 2014 H1 2013
Sustaining capex
Australia (thermal and coking) 190 202
Thermal South Africa 83 125
Prodeco 4 30
Cerrejón(1) 14 68
Total sustaining capex – segmental measure 291 425
Impact of presenting joint ventures on an equity accounting basis (14) (68)
Total sustaining capex – reported measure 277 357
Expansion capex
Australia (thermal and coking) 218 624
Thermal South Africa 165 219
Prodeco 6 15
Cerrejón(1) 31 61
Total coal 420 919
Oil 288 597
Total expansion capex – segmental measure 708 1,516
Impact of presenting joint ventures on an equity accounting basis (31) (61)
Total expansion capex – reported measure 677 1,455
Total capex
Australia (thermal and coking) 408 826
Thermal South Africa 248 344
Prodeco 10 45
Cerrejón(1) 45 129
Total coal 711 1,344
Oil 288 597
Total capex – segmental measure 999 1,941
Impact of presenting joint ventures on an equity accounting basis (45) (129)
Total capex – reported measure 954 1,812
1 Represents the Group's share of capex in this JV.
Production data
Coal assets(1)
H1 H1 Change
2014 2013 %
Australian coking coal mt 2.9 4.0 (28)
Australian semi-soft coal mt 1.8 2.3 (22)
Australian thermal coal (export) mt 26.0 23.3 12
Australian thermal coal (domestic) mt 2.7 2.6 4
South African thermal coal (export) mt 10.2 9.8 4
South African thermal coal (domestic) mt 11.5 11.7 (2)
Prodeco mt 10.2 9.6 6
Cerrejón(2) mt 5.9 4.5 31
Total Coal department mt 71.2 67.8 5
1 Controlled industrial assets and joint ventures only. Production is on a 100% basis except for joint ventures, where the Group's attributable share of
production is included.
2 The Group's pro-rata share of Cerrejón production (33.3%).
Oil assets
H1 H1 Change
2014 2013 %
Gross basis
Equatorial Guinea kbbl 12,035 9,942 21
Chad kbbl 1,983 - n.m.
Total Oil department kbbl 14,018 9,942 41
Glencore entitlement interest basis
Equatorial Guinea kbbl 2,562 2,159 19
Chad kbbl 597 - n.m.
Total Oil department kbbl 3,159 2,159 46
OPERATING HIGHLIGHTS
Coal assets
Total own sourced production was 71.2 million tonnes, 5% higher than the comparable period. The increase arises from
Australian thermal coal, due to productivity improvements and ongoing expansion projects, and Cerrejón which was
impacted by a 32 day strike in Q1 2013. These increases were, in part, offset by a reduction in coking coal production
due to a decision to scale back production from higher cost mines and areas.
Australian coking
Australian coking coal production was 2.9 million tonnes, 28% lower than the comparable period. The decrease relates to
cost reduction initiatives, which led to mine plan and / or roster changes at Newlands, Oaky Creek and Collinsville, the
latter also being affected by industrial issues. Volumes were also temporarily impacted when mining through a fault zone
at Oaky North.
Australian thermal and semi-soft
Australian thermal and semi-soft coal production was 30.5 million tonnes, 8% higher than the comparable period. The
increase relates to the production ramp up at Ravensworth North and Rolleston, productivity gains at Ulan underground
and Bulga and the commencement of longwall operations at Ulan West.
South African thermal
South African thermal production was 21.7 million tonnes, in line with the comparable period. This reflects the opening of
Wonderfontein open cut mine in Q1 2014, offset by various operational challenges, including wet weather and strike
action at Goedgevonden, the closure of Klippan and Wonderfontein underground mines at the end of 2013 and the
closure of the Middelburg Steelcoal pit in Q1 2014.
Prodeco
Prodeco production was 10.2 million tonnes, 6% higher than the comparable period, relating to the ongoing expansion
project, plus productivity improvements at Calenturitas and improved equipment availability across the operations.
Cerrejón
Glencore's share of Cerrejón production was 5.9 million tonnes, 31% (1.4 million tonnes) higher than the comparable
period. The increase reflects the impact of the 32 day strike that occurred in Q1 2013.
Oil E&P assets
H1 2014 gross oil production was 14.0 million barrels, 41% (4.1 million barrels) above the comparable period, relating to
Alen (Equatorial Guinea) and Badila (Chad), which started production at the end of June and September 2013
respectively.
Agricultural Products
US$ million Marketing Industrial H1 2014 Marketing Industrial H1 2013
activities activities activities activities
Revenue 10,915 1,673 12,588 14,600 1,470 16,070
Adjusted EBITDA 546 73 619 123 3 126
Adjusted EBIT 473 35 508 15 (35) (20)
Adjusted EBITDA margin 5.0% 4.4% 4.9% 0.8% 0.2% 0.8%
Market conditions
Selected average commodity prices
H1 H1 Change
2014 2013 %
S&P GSCI Agriculture Index 384 434 (12)
CBOT wheat price (US¢/bu) 635 716 (11)
CBOT corn no.2 price (US¢/bu) 466 688 (32)
CBOT soya beans (US¢/bu) 1,414 1,459 (3)
ICE cotton price (US¢/lb) 88 84 5
NYMEX sugar # 11 price (US¢/lb) 17 18 (6)
Highlights
Adjusted EBITDA and EBIT in H1 2014 were $619 million and $508 million, up respectively some $500 million over the
comparable period. The increase reflects a stronger performance across both the marketing and the industrial activities,
including a robust contribution from Viterra's grain handling operations, on the back of a record crop in Canada and an
above-average crop in South Australia. In addition, Viterra's results benefitted from a full period of integration related cost
synergies. Glencore's traditional marketing business also delivered an overall improved performance, from a lacklustre
H1 2013.
European soft seed crushing performed satisfactorily, a healthy improvement on H1 2013. EU Biodiesel also improved
due to capacity rationalisation, resulting in a better margin environment. Our JV crushing plant at Timbues in Argentina
was fully operational during the period, which together with reasonable soya bean margins, delivered a higher period-
over-period result.
Marketing
Financial information
US$ million H1 2014 H1 2013 Change %
Revenue 10,915 14,600 (25)
Adjusted EBITDA 546 123 344
Adjusted EBIT 473 15 n.m.
Selected marketing volumes sold
Unit H1 2014 H1 2013 Change %
Grains mt 19.5 21.9 (11)
Oil/oilseeds mt 10.6 12.2 (13)
Cotton mt 0.2 0.2 -
Sugar mt 0.3 0.3 -
Industrial activities
Financial information
US$ million H1 2014 H1 2013 Change %
Revenue 1,673 1,470 14
Adjusted EBITDA 73 3 n.m.
Adjusted EBIT 35 (35) n.m.
Adjusted EBITDA margin 4.4% 0.2%
Sustaining capex 14 24
Expansionary capex 49 70
Total capex 63 94
Agricultural Products processing / production data
H1 H1 Change
2014 2013 %
Farming kt 266 385 (31)
Crushing kt 2,678 1,548 73
Long term toll agreement kt 206 289 (29)
Biodiesel kt 341 252 35
Rice milling kt 127 120 6
Wheat milling kt 525 555 (5)
Sugarcane processing kt 723 509 42
Total agricultural products kt 4,866 3,658 33
OPERATING HIGHLIGHTS
Agriculture produced / processed 4.9 million tonnes in H1 2014, 33% higher than the comparable period. The increase in
volumes mainly relates to the continued ramp up at Timbues (Argentinean crush plant), including the impact of Glencore
increasing its stake from 33% to 50%, plus higher sugarcane processing volumes, reflecting the increase in processing
capacity, as part of Rio Vermelho's ongoing expansion.
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
- the condensed set of consolidated financial statements has been prepared in accordance with IAS 34 Interim
Financial Reporting as endorsed and adopted by the European Union;
- the interim report includes a fair review of the information required by DTR 4.2.7R (being an indication
of important events that have occurred during the first six months of the financial year, and their impact
on the interim report and a description of the principal risks and uncertainties for the remaining six months
of the financial year); and
- the interim report includes a fair review of the information required by DTR 4.2.8R (being disclosure of
related party transactions that have taken place in the first six months of the current financial year
and that have materially affected the financial position or the performance of the Group during that period
and any changes in the related party transactions described in the last annual report that could have a material
effect on the financial position or performance of the Group in the first six months of the current financial year).
By order of the Board,
Steven Kalmin
Chief Financial Officer
19 August 2014
Independent review report to
Glencore plc
We have been engaged by the company to review the condensed interim consolidated financial statements in the half-year
financial report for the six months ended 30 June 2014 which comprises the condensed consolidated statements of
income/(loss), comprehensive income/(loss), financial position, cash flows and changes in equity and related notes 1 to 25.
We have read the other information contained in the half-year financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland)
2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state
to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half-year financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-year financial report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the company are prepared in accordance with International
Financial Reporting Standards as adopted by the European Union and International Financial Reporting Standards.
The condensed set of financial statements included in this half-year financial report has been prepared in accordance
with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-year
financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed interim consolidated
financial statements in the half-year financial report for the six months ended 30 June 2014 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
19 August 2014
Condensed consolidated statement of
income/(loss)
For the six months ended 30 June (unaudited)
US$ million Notes 2014 2013
Restated(1)
Revenue 114,064 112,035
Cost of goods sold (110,334) (109,977)
Selling and administrative expenses (720) (589)
Share of income from associates and joint ventures 9 369 208
Loss on sale on investments – net - (40)
Other expense – net 4 (117) (10,487)
Dividend income 18 39
Interest income 147 190
Interest expense (929) (859)
Income/(loss) before income taxes 2,498 (9,480)
Income tax (expense)/credit 6 (717) 163
Income/(loss) for the period 1,781 (9,317)
Attributable to:
Non-controlling interests 61 69
Equity holders 1,720 (9,386)
Earnings/(Loss) per share:
Basic (US$) 15 0.13 (1.04)
Diluted (US$) 15 0.13 (1.04)
1 Certain amounts shown here reflect the revised previously reported fair values associated with the Xstrata acquisition made in 2013 (see note 19), and
therefore do not correspond to the condensed consolidated statement of income/(loss) for the period ended 30 June 2013.
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Condensed consolidated statement of
comprehensive income/(loss)
For the six months ended 30 June (unaudited)
US$ million Notes 2014 2013
Restated(1)
Income/(Loss) for the period 1,781 (9,317)
Other comprehensive income/(loss)
Items not to be reclassified to the statement of income in subsequent
periods:
Defined benefit plan actuarial (losses)/gains, net of tax of $19 million (2013: (54) 155
$46 million
Net items not to be reclassified to the statement of income in (54) 155
subsequent periods
Items that are or may be reclassified to the statement of income in
subsequent periods:
Exchange loss on translation of foreign operations (167) (906)
Gains/(losses) on cash flow hedges, net of tax of $25 million 326 (322)
(2013: $29 million)
Gain on available for sale financial instruments - net 9 208 -
Share of comprehensive income/(loss) from associates and joint ventures 9 38 (15)
Cash flow hedges transferred to the statement of income, net of tax of $Nil - 11
million (2013: $5 million)
Net items that are or may be reclassified to the statement of income in 405 (1,232)
subsequent periods
Other comprehensive income/(loss) 351 (1,077)
Total comprehensive income/(loss) 2,132 (10,394)
Attributable to:
Non-controlling interests 60 (26)
Equity holders 2,072 (10,368)
1 Certain amounts shown here reflect the revised previously reported fair values associated with the Xstrata acquisition made in 2013 (see note 19), and
therefore do not correspond to the condensed consolidated statement of comprehensive income/(loss) for the period ended 30 June 2013.
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Condensed consolidated statement of
financial position
As at 30 June 2014 and 31 December 2013
US$ million Notes 2014 2013
(unaudited) (audited)
Restated1
Assets
Non-current assets
Property, plant and equipment 7 68,374 67,233
Intangible assets 8 9,100 9,158
Investments in associates and joint ventures 9 12,261 12,156
Other investments 9 1,311 923
Advances and loans 10 4,717 3,995
Deferred tax assets 2,351 2,105
98,114 95,570
Current assets
Inventories 11 23,181 22,753
Accounts receivable 12 23,819 24,536
Other financial assets 21 3,251 2,904
Prepaid expenses and other assets 508 578
Marketable securities 41 36
Cash and cash equivalents 3,237 2,849
54,037 53,656
Assets held for sale 13 6,688 5,636
60,725 59,292
Total assets 158,839 154,862
Equity and liabilities
Capital and reserves – attributable to equity holders
Share capital 14 133 133
Reserves and retained earnings 49,809 49,180
49,942 49,313
Non-controlling interests 3,214 3,368
Total equity 53,156 52,681
Non-current liabilities
Borrowings 17 40,727 38,712
Deferred income 1,245 1,337
Deferred tax liabilities 7,065 6,698
Other financial liabilities 21 1,071 1,044
Provisions 7,966 8,064
58,074 55,855
Current liabilities
Borrowings 17 16,964 16,461
Accounts payable 18 26,501 26,041
Deferred income 162 145
Provisions 417 323
Other financial liabilities 21 2,449 2,366
Income tax payable 513 489
47,006 45,825
Liabilities held for sale 13 603 501
47,609 46,326
Total equity and liabilities 158,839 154,862
1 Certain amounts shown here reflect the revised previously reported fair values associated with the Xstrata acquisition made in 2013 (see note 19), and
therefore do not correspond to the consolidated statement of financial position for the year ended 31 December 2013.
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Condensed consolidated statement of
cash flows
For the six months ended 30 June (unaudited)
US$ million Notes 2014 2013
Restated(1)
Operating activities
Income/(loss) before income taxes 2,498 (9,480)
Adjustments for:
Depreciation and amortisation 2,567 1,483
Share of income from associates and joint ventures (369) (208)
Decrease in other long-term liabilities (50) (31)
Loss on sale of investments – net - 40
Unrealised mark to market movements on other investments (19) 568
Impairments - 8,939
Other non-cash items – net 167 932
Interest expense – net 782 669
Cash generated by operating activities before working capital changes 5,576 2,912
Working capital changes
Decrease in accounts receivable(2) 519 124
(Increase)/decrease in inventories (549) 5,366
Increase/(decrease) in accounts payable(3) 277 (568)
Total working capital changes 247 4,922
Income taxes paid (584) (378)
Interest received 24 44
Interest paid (826) (902)
Net cash generated by operating activities 4,437 6,598
Investing activities
Increase in long-term advances and loans (655) (971)
Net cash received from acquisition of subsidiaries 19 - 1,477
Purchase of investments (479) (143)
Proceeds from sale of investments 82 33
Purchase of property, plant and equipment (3,787) (3,011)
Capital expenditures related to assets held for sale (798) (334)
Proceeds from sale of property, plant and equipment 77 94
Dividends received from associates and joint ventures 641 38
Net cash used by investing activities (4,919) (2,817)
1 Certain amounts shown here reflect the revised previously reported fair values associated with the Xstrata acquisition made in 2013 (see note 19), and
therefore do not correspond to the condensed consolidated statement of cash flows for the period ended 30 June 2013.
2 Includes movements in other financial assets, prepaid expenses, other assets and assets held for sale.
3 Includes movements in other financial liabilities, provisions, deferred income and liabilities held for sale.
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Condensed consolidated statement of
cash flows (continued)
For the six months ended 30 June (unaudited)
US$ million Notes 2014 2013
Restated(1)
Financing Activities(2)
Proceeds from issuance of capital market notes 3,686 4,974
Repurchase of convertible bonds (587) -
Repayment of capital market notes (951) -
Proceeds from/(repayment of) other non-current borrowings 329 (252)
Margin receipts/(payments) in respect of financing related hedging activities 202 (168)
Proceeds from/(repayment of) current borrowings 10 (5,968)
Acquisition of additional interest in subsidiaries (61) (7)
Return of capital/dividends to non-controlling interests (144) (29)
Net purchase of own shares (30) (4)
Payment of profit participation certificates (127) (229)
Dividend paid to equity holders of the parent 16 (1,457) (1,355)
Net cash generated/(used) by financing activities 870 (3,038)
Increase in cash and cash equivalents 388 743
Cash and cash equivalents, beginning of period 2,849 2,782
Cash and cash equivalents, end of period 3,237 3,525
1 Certain amounts shown here reflect the revised previously reported fair values associated with the Xstrata acquisition made in 2013 (see note 19), and
therefore do not correspond to the condensed consolidated statement of cash flows for the period ended 30 June 2013.
2 Presented net of directly attributable issuance costs where applicable.
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Condensed consolidated statement of
changes in equity
For the six months ended 30 June (unaudited)
US$ million (Deficit)/ Share Other Own Total Share Total Non- Total
retained premium reserves shares reserves capital equity controlling equity
earnings and attributable interests
(deficit)/ to equity
retained holders
earnings
1 January 2013 5,248 26,688 (868) - 31,068 71 31,139 3,034 34,173
Loss for the period - (9,386) - - - (9,386) - (9,386) 69 (9,317)
restated1
Other comprehensive 140 - (1,122) - (982) - (982) (95) (1,077)
income
Total comprehensive (9,246) - (1,122) - (10,368) - (10,368) (26) (10,394)
income
Issue of share capital(2) 383 30,073 - (1,041) 29,415 62 29,477 - 29,477
Own share purchases - - - (13) (13) - (13) - (13)
Own share disposal (244) - - 253 9 - 9 - 9
Equity settled share- 23 - - - 23 - 23 - 23
based expenses
Change in ownership - - (7) - (7) - (7) - (7)
interest in subsidiaries
Acquisition of subsidiaries - - - - - - - 1,123 1,123
Dividend paid(3) - (1,355) - - (1,355) - (1,355) (29) (1,384)
30 June 2013 - restated(1) (3,836) 55,406 (1,997) (801) 48,772 133 48,905 4,102 53,007
1 January 2014 (1,768) 54,777 (2,418) (767) 49,824 133 49,957 3,192 53,149
Restatement(1) (644) - - - (644) - (644) 176 (468)
1 January 2014 - (2,412) 54,777 (2,418) (767) 49,180 133 49,313 3,368 52,681
Restated(1)
Income for the period 1,720 - - - 1,720 - 1,720 61 1,781
Other comprehensive (16) - 368 - 352 - 352 (1) 351
income
Total comprehensive 1,704 - 368 - 2,072 - 2,072 60 2,132
income
Own share purchases - - - (38) (38) - (38) - (38)
Own share disposal (34) - - 49 15 - 15 - 15
Equity settled share- 28 - - - 28 - 28 - 28
based expenses
Equity portion of partially
repurchased convertible 22 - (22) - - - - - -
bonds
Change in ownership - - 9 - 9 - 9 (70) (61)
interest in subsidiaries
Dividend paid(3) - (1,457) - - (1,457) - (1,457) (144) (1,601)
30 June 2014 (692) 53,320 (2,063) (756) 49,809 133 49,942 3,214 53,156
1 Certain amounts shown here reflect the revised previously reported fair values associated with the Xstrata acquisition made in 2013 (see note 19), and
therefore do not correspond to the condensed consolidated statement of changes in equity for the period ended 30 June 2013.
2 See note 19.
3 See note 16 for the Group's final dividend.
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
Notes to the unaudited condensed interim
consolidated financial statements
For the six months ended 30 June (unaudited)
1. Corporate information
Glencore is a leading integrated producer and marketer of natural resources, with worldwide activities in the production,
refinement, processing, storage, transport and marketing of metals and minerals, energy products and agricultural
products. Glencore operates on a global scale, marketing and distributing physical commodities sourced from third party
producers and own production to industrial consumers, such as those in the automotive, steel, power generation, oil and
food processing industries. Glencore also provides financing, logistics and other services to producers and consumers of
commodities. In this regard, Glencore seeks to capture value throughout the commodity supply chain. Glencore's long
experience as a commodity producer and merchant has allowed it to develop and build upon its expertise in the
commodities which it markets and cultivate long-term relationships with a broad supplier and customer base across
diverse industries and in multiple geographic regions.
The ultimate parent entity of Glencore, Glencore plc, formerly Glencore Xstrata plc, (the "Company" or the "Parent"), is a
publicly traded limited company incorporated in Jersey and domiciled in Switzerland. Its ordinary shares are traded on
the London, Hong Kong and Johannesburg stock exchanges.
These unaudited condensed interim consolidated financial statements for the six months ended 30 June 2014 were
authorised for issue in accordance with a resolution of the directors on 19 August 2014.
2. Accounting policies
Basis of preparation
These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting issued by the International Accounting Standards Board (IASB) and interpretations of the
IFRS Interpretations Committee (IFRIC), IAS 34 Interim Financial Reporting as adopted by the European Union (EU),
and the Disclosure and Transparency Rules of the Financial Services Authority effective for Glencore's reporting for the
period ended 30 June 2014. These unaudited condensed interim consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto included in the audited 2013 Annual Report of
Glencore Xstrata plc and subsidiaries (2013 Annual Report) available at www.glencore.com. These financial statements
for the six months ended 30 June 2014 and 2013, and financial information for the year ended 31 December 2013 do not
constitute statutory accounts. Certain financial information that is included in the audited annual financial statements but
is not required for interim reporting purposes has been condensed or omitted.
The interim financial report for the six months ended 30 June 2014 has been prepared on a going concern basis as the
directors believe there are no material uncertainties that lead to significant doubt that the Group can continue as a going
concern in the foreseeable future, a period not less than 12 months from the date of this report. Further information is
included on page 9 of the Financial Review.
All amounts are expressed in millions of United States Dollars, unless otherwise stated, consistent with the predominant
functional currency of Glencore's operations.
The impact of seasonality or cyclicality on operations is not regarded as significant to the unaudited condensed interim
consolidated financial statements.
Significant accounting policies
Adoption of new and revised Standards
These unaudited condensed interim consolidated financial statements are prepared using the same accounting policies
as applied in the audited 2013 Annual Report, except for the adoption of the following new amendments to existing
standards and interpretations as of 1 January 2014:
Amendments to IFRS 10, IFRS 12 and IAS 27 – Investment Entities
These amendments provide an exception to the consolidation requirement for entities that meet the definition of an
investment entity under IFRS 10 Consolidated Financial Statements. The exception to consolidation requires investment
entities to account for subsidiaries at fair value through profit or loss.
Amendments to IAS 32 – Offsetting Financial Assets and Financial Liabilities
The amendments to IAS 32 Financial Instruments: Presentation clarify the requirements relating to the offset of financial
assets and liabilities. Specifically, the amendments clarify the meaning of "currently has a legally enforceable right to set-
off" and "simultaneous realisation and settlement".
Amendments to IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting
The amendments to IAS 39 Financial Instruments: Recognition and Measurement clarify the criteria required to be met
such that there would be no need to discontinue hedge accounting if a hedging derivative was novated.
IFRIC 21 – Levies
The interpretation clarifies that an entity recognises a liability for a levy no earlier than when the activity that triggers
payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only
if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy
that is triggered upon reaching a minimum threshold, no liability is recognised before the specified minimum threshold is
reached. The interpretation requires these same principles to be applied in interim financial statements. IFRIC 21 is
effective for annual periods beginning on or after 1 January 2014 and is applied retrospectively. It is applicable to all
levies imposed by governments under legislation, other than outflows that are within the scope of other standards (e.g.
IAS 12 Income Taxes) and fines or other penalties for breaches of legislation.
The adoption of these new amendments and interpretations has had no material impact on the Group.
New standards not yet effective
At the date of authorisation of these interim financial statements, the following new standards and amendments, which
are applicable to Glencore, were issued but are not yet effective:
Amendments to IFRS 11 – Acquisitions of Interests in Joint Operations – effective for year ends beginning on or after 1 January 2016
The amendments address how a joint operator should account for the acquisition of an interest in a joint operation in
which the activity of the joint operation constitutes a business. IFRS 11 Joint Arrangements, as amended now requires
that such transactions shall be accounted for using the principles related to business combinations according to IFRS 3
Business Combinations and other standards. These amendments do not apply where an entity acquires an additional
interest in a joint operation and as such previously held interests in existing joint operations are not remeasured.
IFRS 9 – Financial Instruments – effective for year ends beginning on or after 1 January 2018
IFRS 9 modifies the classification and measurement of certain classes of financial assets and liabilities. The most
significant change is to rationalise from four to two primary categories of financial assets.
IFRS 15 – Revenue from Contracts with Customers – effective for year ends beginning on or after 1 January 2017
IFRS 15 applies to revenue from contracts with customers and replaces all of the revenue standards and interpretations
in IFRS. The standard outlines the principles an entity must apply to measure and recognise revenue and the related
cash flows.
3. Segment information
Glencore is organised and operates on a worldwide basis in three core business segments – metals and minerals,
energy products and agricultural products, with each business segment responsible for the marketing, sourcing, hedging,
logistics and industrial investment activities of their respective products and reflecting the structure used by Glencore's
management to assess the performance of Glencore.
The business segments' contributions to the Group are primarily derived from the net margin or premium earned from
physical marketing activities (net sale and purchase of physical commodities), provision of marketing and related value-
add services and the margin earned from industrial asset activities (net resulting from the sale of physical commodities
over the cost of production and/or cost of sales) and comprise the following underlying key commodities:
- Metals and minerals: Copper, zinc, lead, alumina, aluminium, ferro alloys, nickel, cobalt and iron ore, including
smelting, refining, mining, processing and storage related operations of the relevant commodities;
- Energy products: Crude oil, oil products, steam coal and metallurgical coal supported by investments in coal mining
and oil exploration and production operations, ports, vessels and storage facilities; and
- Agricultural products: Wheat, corn, canola, barley, rice, oil seeds, meals, edible oils, biofuels, cotton and sugar
supported by investments in farming, storage, handling, processing and port facilities.
Corporate and other: consolidated statement of income amounts represent Glencore's share of income related to Xstrata
(prior to the date of acquisition), the technology services division and other unallocated Group related expenses
(including variable pool bonus charges). Statement of financial position amounts represent Group related balances.
The financial performance of the segments is principally evaluated with reference to Adjusted EBIT/EBITDA which is the
net result of revenue less cost of goods sold and selling and administrative expenses plus share of income from
associates and joint ventures, dividend income and the attributable share of underlying Adjusted EBIT/EBITDA of certain
associates and joint ventures.
The accounting policies of the operating segments are the same as those described in note 2 with the exception of
certain associates and joint ventures. Under IFRS 11, Glencore's investments in the Antamina copper/zinc mine (34%
owned) and the Cerrejón coal mine (33% owned) are considered to be associates as they are not subject to joint control
and the Collahuasi copper mine (44% owned) is considered to be a joint venture. Associates and joint ventures are
required to be accounted for in Glencore's financial statements under the equity method. For internal reporting and
analysis, Glencore evaluates the performance of these investments under the proportionate consolidation method
reflecting Glencore's proportionate share of the revenues, expenses, assets and liabilities of the investments. The
balances as presented for internal reporting purposes are reconciled to Glencore's statutory disclosures as outlined in
the following tables.
Six months ended 30 June 2014
US$ million Metals and Energy Agricultural Corporate Total
minerals products products and other
Revenue 31,585 71,306 12,588 71 115,550
Marketing activities
Adjusted EBIT 888 227 473 (76) 1,512
Depreciation and amortisation 14 25 73 - 112
Adjusted EBITDA 902 252 546 (76) 1,624
Industrial activities
Adjusted EBIT 1,902 394 35 (219) 2,112
Depreciation and amortisation(1) 1,610 1,074 38 6 2,728
Adjusted EBITDA 3,512 1,468 73 (213) 4,840
Total adjusted EBITDA 4,414 1,720 619 (289) 6,464
Depreciation and amortisation (1,624) (1,099) (111) (6) (2,840)
Total adjusted EBIT 2,790 621 508 (295) 3,624
Significant items(2)
Other expense – net(3) (117)
Share of associates' exceptional items(4) (74)
Interest expense – net(5) (772)
Income tax(6) (880)
Profit for the period 1,781
Total assets (as at 30 June 2014) 80,717 54,827 10,328 12,967 158,839
Capital expenditure (30 June 2014)(7) 3,663 1,021 140 1 4,825
1 Includes an adjustment of $273 million (2013: $88 million) to depreciation and amortisation expenses related to presenting certain associates and joint
ventures on a proportionate consolidation basis. Metals and minerals segment $203 million (2013: $78 million) and Energy products segment $70 million
(2013: $10 million), see table below, page 50.
2 Significant items of income and expense which, due to their financial impacts, nature or the expected infrequency of the events giving rise to them, have
been separated for internal reporting and analysis of Glencore's results.
3 See note 4.
4 Share of associates' exceptional items comprise Glencore's share of exceptional charges booked directly by various associates, predominantly Lonmin,
relating mainly to various costs incurred in connection with the prolonged platinum strikes in South Africa.
5 Includes an adjustment of $10 million (2013: $Nil) to interest expenses related to presenting certain associates and joint ventures on a proportionate
consolidation basis. Metals and minerals segment interest income of $12 million (2013: interest income of $2 million) and Energy products segment
interest expense of $2 million (2013: interest expense of $2 million), see table below, page 50.
6 Includes an adjustment of $163 million (2013: $58 million) to income tax expenses related to presenting certain associates and joint ventures on a
proportionate consolidation basis. Metals and minerals segment $148 million (2013: $29 million) and Energy products segment $15 million (2013: $29
million), see table below, page 50.
7 Includes an adjustment of $240 million (2013: $160 million) to capital expenditure related to presenting certain associates and joint ventures on a
proportionate consolidation basis. Metals and minerals segment $195 million (2013: $104 million) and Energy products segment $45 million (2013: $56
million), see table below, page 50.
Six months ended 30 June 2013
US$ million Metals and Energy Agricultural Corporate Total
minerals products products and other Restated(1)
Revenue 30,462 65,911 16,070 32 112,475
Marketing activities
Adjusted EBIT 711 501 15 (41) 1,186
Depreciation and amortisation 10 18 108 - 136
Adjusted EBITDA 721 519 123 (41) 1,322
Industrial activities
Adjusted EBIT 465 342 (35) 108 880
Depreciation and amortisation(2) 915 481 38 1 1,435
Adjusted EBITDA 1,380 823 3 109 2,315
Total adjusted EBITDA 2,101 1,342 126 68 3,637
Depreciation and amortisation (925) (499) (146) (1) (1,571)
Total adjusted EBIT 1,176 843 (20) 67 2,066
Significant items(3)
Other expense – net(4) (10,487)
Share of associates exceptional items(5) (51)
Mark to market loss on certain aluminium
positions(6) (95)
Unrealised intergroup profit elimination
adjustments(7) (146)
Loss on sale of investments (40)
Interest expense – net(8) (669)
Income tax credit(9) 105
Loss for the period - restated (9,317)
Total assets (as at 30 June 2013) - restated 74,949 51,952 11,943 17,008 155,852
Capital expenditure (30 June 2013)10 2,164 1,141 95 - 3,400
1 Other expense - net adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see notes 4 and 19).
2 Includes an adjustment of $88 million to depreciation and amortisation expenses related to presenting certain associates and joint ventures on a
proportionate consolidation basis. Metals and minerals segment $78 million and Energy products segment $10 million, see table below.
3 Significant items of income and expense which, due to their financial impacts, nature or the expected infrequency of the events giving rise to them, have
been separated for internal reporting and analysis of Glencore's results.
4 See note 4.
5 Share of associates' exceptional items comprise Glencore's share of exceptional charges booked directly by Xstrata relating mainly to various costs
incurred in connection with its acquisition by Glencore.
6 Represents an accounting measurement mismatch between spot and forward prices in respect of certain aluminium commercial hedging activities where
such amounts will reverse in future periods. Due to the hedging being done on a portfolio basis, hedge treatment for IFRS accounting purposes (where
such amounts would not impact the statement of income) is not achievable.
7 Represents the required adjustment to eliminate unrealised profit or losses arising on intergroup transactions. For Glencore, such adjustments arise on
the sale of product, in the ordinary course of business, from its Industrial operations to its Marketing arm and management assesses segment
performance prior to any such adjustments, as if the sales were to third parties.
8 Includes an adjustment of net $Nil to interest expenses related to presenting certain associates and joint ventures on a proportionate consolidation basis.
Metals and minerals segment $2 million interest income and Energy products segment $2 million interest expense, see table below.
9 Includes an adjustment of $58 million to income tax expenses related to presenting certain associates and joint ventures on a proportionate consolidation
basis. Metals and minerals segment $29 million and Energy products segment $29 million, see table below.
10 Includes an adjustment of $160 million to capital expenditure related to presenting certain associates and joint ventures on a proportionate consolidation
basis. Metals and minerals segment $104 million and Energy products segment $56 million, see table below.
The reconciliation of certain associates' and joint ventures' Adjusted EBIT to 'Share of net income from associates and
joint ventures' for the six month period ended 30 June 2014 is as follows:
US$ million Metals and Energy Agricultural Corporate Total
minerals products products and other
Revenue 31,585 71,306 12,588 71 115,550
Impact of presenting certain associates and joint ventures (1,114) (372) - - (1,486)
on a proportionate consolidation basis
Revenue - reported measure 30,471 70,934 12,588 71 114,064
Associates' and joint ventures' Adjusted EBITDA 711 138 - - 849
Depreciation and amortisation (203) (70) - - (273)
Associates' and joint ventures' Adjusted EBIT 508 68 - - 576
Net finance costs 12 (2) - - 10
Income tax expense (148) (15) - - (163)
Share of income from certain associates and joint 372 51 - - 423
ventures
Share of income from other associates (67) 12 1 - (54)
Share of income from associates and joint ventures 305 63 1 - 369
Capital expenditure (30 June 2014) 3,468 976 140 1 4,585
The reconciliation of certain associates' and joint ventures' Adjusted EBIT to 'Share of net income from associates and
joint ventures' for the six month period ended 30 June 2013 is as follows:
US$ million Metals and Energy Agricultural Corporate Total
minerals products products and other
Revenue 30,462 65,911 16,070 32 112,475
Impact of presenting certain associates and joint ventures on a (283) (157) - - (440)
proportionate consolidation basis
Revenue - reported measure 30,179 65,754 16,070 32 112,035
Associates' and joint ventures' Adjusted EBITDA 161 63 - - 224
Depreciation and amortisation (78) (10) - - (88)
Associates' and joint ventures' Adjusted EBIT 83 53 - - 136
Net finance costs 2 (2) - - -
Income tax expense (29) (29) - - (58)
Share of income from certain associates and joint ventures 56 22 - - 78
Share of income from other associates (7) 10 1 126 130
Share of income from associates and joint ventures 49 32 1 126 208
Capital expenditure (30 June 2013) 2,060 1,085 95 - 3,240
4. Other expense – net
US$ million Notes H1 2014 H1 2013
Restated(1)
Changes in mark to market valuations on investments held for trading - net 19 (244)
Foreign exchange (loss) (45) (75)
Premium on bond buybacks (95) -
Revaluation of previously held interests in newly acquired businesses - net - (1,160)
Impairments 5 - (8,939)
Xstrata acquisition related expenses - (131)
Changes in mark to market valuation of certain coal forward contracts(2) - 57
Other(3) 4 5
Total (117) (10,487)
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
2 This item, if classified by function of expense would be recognised in cost of goods sold. All other amounts in Other expense – net are classified by
function.
3 'Other' for the period ended 30 June 2014 mainly comprises restructuring and closure costs of $25 million, offset by a $39 million gain on the revaluation
of a loan to an industry counterparty, convertible into equity.
Together with foreign exchange movements and mark to market movements on investments held for trading, other
expense – net includes other significant items of income and expense which due to their non-operational nature or
expected infrequency of the events giving rise to them are reported separately from operating segment results. Other
expense – net includes, but is not limited to, impairment charges, revaluation of previously held interests in business
combinations and restructuring and closure costs.
Changes in mark to market valuations on investments held for trading – net
Primarily relates to movements on interests in other investments classified as held for trading and carried at fair value,
with Glencore's interest in Volcan Compania Minera S.A.A. accounting for the majority of the movement in 2013.
Premium on bond buybacks
During the period, Glencore tendered for and cancelled 25% of its outstanding convertible bonds and Canadian dollar
bonds originally issued by the Viterra Group (acquired by Glencore in 2012), booking the 'premium' over book carrying
value as a loss of $70 million (see note 17) and $25 million respectively.
Revaluation of previously held interests in newly acquired businesses - net
In May 2013, Glencore completed the acquisition of the additional 66% interest in Xstrata it did not previously own (see
note 19). At the date of acquisition, the previously owned interest was revalued to its fair value based on the share price
at 2 May 2013 (the "Acquisition Date") as prescribed by IFRS 13 Fair Value Measurement and as a result, a $1,160
million loss was recognised.
Xstrata acquisition related expenses
Expenses incurred in connection with the acquisition of Xstrata (see note 19), comprising $59 million of costs incurred
with the required cancellation of the Nyrstar offtake agreement, $38 million of professional / advisors' fees related to the
acquisition and $34 million of stamp duty and restructuring costs.
Changes in mark to market valuation of certain coal forward contracts
This previously represented movements in the fair value of certain fixed price forward coal sales contracts relating to
Prodeco Group's ("Prodeco") future production, into which it planned to physically deliver. Following the legal
reacquisition of Prodeco in March 2010, from an accounting perspective, these forward sales contracts could not
technically be classified as "own use" or as cash flow hedges, which would have deferred the income statement effect
until performance of the underlying future sale transactions. As at year end 2013, all tonnes of such coal had been
physically delivered.
5. Impairments
US$ million H1 2014 H1 2013
Restated(1)
Xstrata acquisition goodwill impairment - (8,124)
Available for sale investments - (324)
Property, plant and equipment - (491)
Total impairments(2) - (8,939)
1 The Xstrata acquisition goodwill impairment has been adjusted by $(466) million as a result of the finalisation of the fair value adjustments relating to the
acquisition of Xstrata (see note 19).
2 Impairments recognised during the period ended 30 June 2013 are allocated to Glencore's operating segments as follows: Metals and minerals $8,306
million, Energy products $633 million and Agricultural products $Nil.
Xstrata acquisition goodwill impairment
In accordance with IFRS 3, following a comprehensive process to identify and determine the fair value of all acquired
assets and liabilities in connection with the Xstrata acquisition (see note 19), Glencore recognised goodwill of $13.1
billion of which $5.0 billion was allocated to the metals and minerals, and coal marketing cash generating units ("CGUs")
(see note 8) and $8,124 million was allocated to the Xstrata mining operations' CGUs.
The goodwill allocated to the metals and minerals, and coal marketing operations was based on the value of expected
margin synergies to be realised by the Group's existing marketing operations as a result of increased product flows from
Xstrata, while the residual balance of $8,124 million was allocated to the Xstrata mining operations.
IAS 36 Impairment of assets requires that CGUs containing goodwill be tested for impairment whenever there are
indications that goodwill may be impaired. As at the Acquisition Date the assets and liabilities of the Xstrata mining
operations were recorded at fair value (including reserves and resources and expected operational synergies) and
following the finalisation of the extensive valuation process as at the Acquisition Date, there was an indicator that the
goodwill allocated to these operations was impaired.
Accordingly, Glencore completed an impairment test of the Xstrata mining operations based on the results of the final
purchase price allocation process (see note 19) and determined that the allocated goodwill was impaired and therefore
recorded a restated impairment charge at acquisition of $8,124 million.
The key circumstances that led to the impairment were:
- The IFRS 3 requirement to measure the consideration paid by reference to Glencore's share price at the Acquisition
Date and the significant time lag between pricing the acquisition in September 2012 and the Acquisition Date; and
- The negative broader macro-economic environment facing the extractive industry, particularly around the actual and
perceived heightened risks associated with greenfield and large scale expansion projects during the first half of
2013.
The recoverable amount of the Xstrata mining operations was measured based on fair value less cost of disposal
determined in accordance with IFRS 13 and was primarily based on discounted cash flow techniques using, where
possible, market based forecasts and assumptions discounted using operation specific discount rates ranging from 8 -
13%.
Available for sale instruments
Glencore accounts for its interest in United Company Rusal plc ("UC Rusal") as an available for sale investment at fair
value with mark to market movements recognised in other comprehensive income ("OCI"). Previously at both 30 June
2013 and at 31 December 2013 it was determined that previously recognised negative fair value adjustments were of a
prolonged nature and thus were reclassified from OCI to the consolidated statement of income as required under IAS 39
(see note 9). During the period ended 30 June 2014, a positive UC Rusal mark to market movement of $208 million was
recognised in OCI.
Property, plant and equipment
In 2013, during the regular assessment of whether there is an indication of asset impairment or whether a previously
recorded impairment may no longer be required (as part of our regular portfolio review), the further decline in short and
medium term nickel price forecasts, resulted in an impairment charge of $452 million of property, plant and equipment at
our Murrin Murrin nickel operation. The recoverable amounts of the property, plant and equipment were measured based
on fair value less cost of disposal, determined by discounted cash flow techniques using, where possible, market
forecasts and assumptions discounted using operation specific discount rates ranging from 7.5 – 12%.
6. Income taxes
Income taxes consist of the following:
US$ million H1 2014 H1 2013
Current income tax expense (616) (220)
Deferred income tax (expense)/credit (101) 383
Total tax (expense)/credit (717) 163
The effective Group tax rate is different from the statutory Swiss income tax rate applicable to the Company for the
following reasons:
US$ million H1 2014 H1 2013
Restated(1)
Income/(Loss) before income taxes and attribution 2,498 (9,480)
Less: share of income from associates and joint ventures (369) (208)
Parent Company's and subsidiaries' income/(loss) before income tax and 2,129 (9,688)
attribution
Income tax (expense)/credit calculated at the Swiss income tax rate (319) 1,453
Tax effects of:
Different tax rates from the standard Swiss income tax rate and foreign exchange (273) 192
adjustments
Non-deductible Xstrata related revaluation and goodwill impairment charges - (1,393)
Non-deductible expenses and other permanent differences (125) (18)
Available tax losses not recognised and changes in the valuation of deferred tax assets - (71)
Income tax (expense)/credit (717) 163
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
7. Property, plant and equipment
US$ million Freehold Plant and Mineral Deferred Total
land and equipment and mining
buildings petroleum costs
rights
Net book value:
1 January 2014 4,753 41,397 20,050 1,307 67,507
Restatement(1) 6 (450) 169 1 (274)
1 January 2014 (Restated) 4,759 40,947 20,219 1,308 67,233
Additions 80 3,060 369 271 3,780
Disposals (8) (137) - - (145)
Depreciation (138) (1,725) (479) (155) (2,497)
Effect of foreign currency exchange movements 4 13 (30) - (13)
Other movements 146 (40) (345) 255 16
Net book value 30 June 2014 4,843 42,118 19,734 1,679 68,374
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
During the period ended 30 June 2013, Glencore added property, plant and equipment with a cost of $3,345 million and
disposed of property, plant and equipment with a net book value of $74 million.
8. Intangible assets
US$ million Goodwill Port Future Licenses, Royalty and Total
allocation warehousing trademarks acquired
rights fees and offtake
software arrangements
Net book value:
1 January 2014 5,998 2,442 13 257 343 9,053
Restatement(1) - 105 - - - 105
1 January 2014 (Restated) 5,998 2,547 13 257 343 9,158
Additions - - 2 4 1 7
Amortisation - (20) (5) (21) (24) (70)
Effect of foreign currency exchange
movements - (31) - - - (31)
Other movements - - 5 19 12 36
Net carrying value 30 June 2014 5,998 2,496 15 259 332 9,100
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
Port allocation rights
Port allocation rights represent contractual entitlements to export certain amounts of coal on an annual basis from
Richard Bay Coal Terminal in South Africa and have been recognised as part of the acquisitions of Optimum, Umcebo
and Xstrata. The rights are being amortised on a straight line basis over the estimated economic life of the port of 40
years.
9. Investments in associates, joint ventures and other investments
Investments in associates and joint ventures
US$ million 2014
1 January 2014 12,707
Restatement(1) (551)
1 January 2014 (Restated) 12,156
Additions 364
Disposals (33)
Share of income from associates and joint ventures 369
Share of other comprehensive income from associates and joint 38
ventures
Dividends received (641)
Other movements 8
30 June 2014 12,261
Of which:
Investments in associates 8,528
Investments in joint ventures 3,733
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
In May 2014, Glencore completed the acquisition of an effective 25.05% economic interest in the Clermont thermal coal
mine in Australia for $250 million. The acquisition was affected through a jointly controlled entity owned 50:50 by
Glencore and Sumitomo Corporation. Based on the contractual arrangement between Glencore and Sumitomo, the joint
investment constitutes a joint arrangement subject to joint control by virtue of the shareholders' agreement as defined
under IFRS 11 as unanimous consent is required for all key decisions regarding the relevant activities of the joint
investment. As the investment has been structured through a separate legal entity with both Glencore's and Sumitomo's
risks equating to their net investment in the entity, the investment is deemed to be a joint venture and therefore
accounted for using the equity method required by IFRS 11.
Other investments
US$ million as at as at
30.06.2014 31.12.2013
Available for sale
United Company Rusal plc 602 394
Fair value through profit and loss
Volcan Compania Minera S.A.A. 175 204
Century Aluminum Company cash settled equity swaps 143 95
Jurong Aromatics Corporation Pte Ltd 55 55
Caracal Energy Inc. 190 15
Other 146 160
709 529
Total 1,311 923
10. Advances and loans
US$ million as at as at
30.06.2014 31.12.2013
Loans to associated companies 1,056 909
Rehabilitation trust fund 335 317
Other long term receivables and loans(1) 3,326 2,769
Total 4,717 3,995
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
Other long term receivables and loans
At 30 June 2014, Glencore had advanced a net $525 million to the Chad State National Oil Company ("SHT") to be
repaid through future oil deliveries over 4 years. The advance is net of $725 million provided by a syndicate of banks, the
repayment terms of which are contingent upon and connected to the receipt of oil due from SHT under the prepayment.
Of the net amount advanced, $448 million is receivable after 12 months and is presented within Other long term
receivables and loans and $77 million is due within 12 months and as such is included within Accounts receivable.
11. Inventories
US$ million as at as at
30.06.2014 31.12.2013
Production inventories 6,186 6,108
Marketing inventories 16,995 16,645
Total 23,181 22,753
Production inventories consist of materials, spare parts and work in process. Marketing inventories are saleable
commodities held primarily by the marketing entities as well as finished goods and certain other readily saleable
materials held by the industrial assets. Marketing inventories of $13,489 million (2013: $12,997 million) are carried at fair
value less cost of disposal.
Fair value of inventories is a Level 2 fair value measurement (see note 21) valued using observable market prices
obtained from exchanges, traded reference indices or market survey services adjusted for relevant location and quality
differentials. There are no significant unobservable inputs in the fair value measurement of marketing inventories.
Glencore has a number of dedicated financing facilities, which finance a portion of its marketing inventories. In each
case, the inventory has not been derecognised as the Group retains the principal risks and rewards of ownership. The
proceeds received are recognised as current borrowings (see note 17). As at 30 June 2014, the total amount of inventory
secured under such facilities was $2,073 million (2013: $2,246 million), while the proceeds received and recognised as
current borrowings were $1,581 million (2013: $1,829 million).
12. Accounts receivable
US$ million as at as at
30.06.2014 31.12.2013
Trade receivables 17,356 18,029
Trade advances and deposits 3,183 3,516
Associated companies 379 452
Other receivables 2,901 2,539
Total 23,819 24,536
Glencore has a number of dedicated financing facilities, which finance a portion of its receivables. In each case, the
receivables have not been derecognised, as the Group retains the principal risks and rewards of ownership. The
proceeds received are recognised as current borrowings (see note 17). As at 30 June 2014, the total amount of trade
receivables secured was $3,352 million (2013: $4,034 million) and proceeds received and classified as current
borrowings amounted to $2,748 million (2013: $3,200 million).
13. Assets and liabilities held for sale
In accordance with the Merger Remedy Commitments made to the Ministry of Commerce of the Peoples' Republic of
China ("MOFCOM") for the Xstrata acquisition, Glencore commenced a process to sell its entire interest in the Las
Bambas copper mine project ("Las Bambas") in Peru.
As a result, assets of $4,366 million (restated) and liabilities of $539 million (restated) acquired in the Xstrata acquisition
(see note 19) were classified as held for sale within the metals and minerals segment. Subsequent to the acquisition
date, further capital expenditure has been incurred, such that the assets held for sale increased to $6,688 million and
liabilities held for sale increased to $603 million as at 30 June 2014.
In April 2014, Glencore reached an agreement to sell its entire interest in Las Bambas to a consortium owned 62.5% by
MMG Limited, 22.5% by GUOXIN International Investment Corporation Limited and 15.0% by CITIC Metal Co Limited for
cash consideration of $5.85 billion, plus all capital expenditure and other costs incurred in developing the mine in the
period from 1 January 2014 to completion of the sale.
On 31 July 2014, the Las Bambas sale transaction completed with Glencore receiving proceeds, net of tax, of
approximately $6.5 billion.
Assets and liabilities held for sale are classified as non-recurring Level 1 fair value measurements in accordance with
IFRS 13.
14. Share capital and reserves
Number of Share
shares Share capital premium
(thousand) (US$ million) (US$ million)
Authorised:
30 June 2014 Ordinary shares with a par value of $0.01 each 50,000,000
Issued and fully paid up:
1 January 2014 – Ordinary shares 13,278,405 133 54,777
Dividends paid - - (1,457)
30 June 2014 – Ordinary shares 13,278,405 133 53,320
Number of
shares
(thousand) US$ million
Own shares:
1 January 2014 156,790 (767)
Own shares purchased during the period 7,000 (38)
Own shares disposed during the period (9,488) 49
30 June 2014 – Own shares 154,302 (756)
Own shares
Own shares comprise shares of Glencore plc held by Orbis Trust (the Trust) to satisfy the potential future settlement of
the Group's employee stock plans, primarily assumed as part of the Xstrata acquisition (see note 19). The Trust also
coordinates the funding and manages the delivery of ordinary shares and free share awards under certain of Glencore's
share plans. The shares are acquired by either stock market purchases or share issues from the Company. The Trustee
is permitted to sell the shares and may hold up to 5% of the issued share capital of the Company at any one time. As at
30 June 2014, 154,301,555 shares (31 December 2013: 156,789,593 shares), equivalent to 1.2% of the issued share
capital were held at a cost of $756 million (31 December 2013: $767 million) and market value of $859 million
(31 December 2013: $813 million). The Trust has waived the right to receive dividends from the shares that it holds. Costs
relating to the administration of the Trust are expensed in the period in which they are incurred.
15. Earnings per share
US$ million H1 2014 H1 2013
Restated(1)
Profit/(loss) attributable to equity holders for basic earnings per share 1,720 (9,386)
Interest in respect of Convertible bonds(2) - -
Profit/(loss) attributable to equity holders for diluted earnings per share 1,720 (9,386)
Weighted average number of shares for the purposes of basic earnings per share
(thousand) 13,122,578 9,051,197
Effect of dilution:
Equity-settled share-based payments (thousand) 14,845 -
Convertible bonds2 (thousand) - -
Weighted average number of shares for the purposes of diluted earnings per share
(thousand) 13,137,423 9,051,197
Basic earnings/(loss) per share (US$) 0.13 (1.04)
Diluted earnings/(loss) per share (US$) 0.13 (1.04)
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (se note 19).
2 In both H1 2014 and 2013, the convertible bonds were anti-dilutive and therefore excluded from the diluted earnings per share calculation.
Headline earnings:
Headline earnings is a Johannesburg Stock Exchange ("JSE") defined performance measure. The calculation of basic
and diluted earnings per share, based on headline earnings as determined by the requirements of Circular 2/2013 as
issued by the South African Institute of Chartered Accountants ("SAICA"), is reconciled using the following data:
US$ million Notes H1 2014 H1 2013
Restated(1)
Profit/(loss) attributable to equity holders for basic earnings per share 1,720 (9,386)
Loss on acquisitions (no tax and non-controlling interest impact) 4 - 1,160
Loss on disposal of investments (no non-controlling interest impact) (4) 41
Loss on disposal of investments – tax 1 (10)
Impairments 5 - 8,939
Impairments – tax - (123)
Headline and diluted headline earnings for the period(2) 1,717 621
Headline earnings per share (US$) 0.13 0.07
Diluted headline earnings per share (US$) 0.13 0.07
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
2 In both H1 2014 and 2013, the convertible bonds were anti-dilutive and therefore excluded from the diluted headline earnings per share calculation.
16. Dividends
An interim 2014 dividend of $0.06 per share was declared by the board of directors on 19 August 2014 (2013: $0.054
per share) and is payable on 19 September 2014, based on a record date of 5 September 2014. This interim dividend,
amounting to $787 million (2013: $707 million), has not been recognised as a liability in this interim financial information.
It will be recognised in shareholders' equity in the year to 31 December 2014. The 2013 final dividend of $0.111 per
share, amounting to $1,457 million was paid on 30 May 2014.
17. Borrowings
US$ million as at as at
Notes 30.06.2014 31.12.2013
Non-current borrowings
Capital market notes 32,321 30,900
Ordinary profit participation certificates 64 110
Committed syndicated revolving credit facility 5,874 5,702
Finance lease obligations 317 344
Other bank loans(1) 2,151 1,656
Total non-current borrowings 40,727 38,712
Current borrowings
Committed secured inventory / receivables facilities 11/12 618 1,353
Uncommitted secured inventory / receivables facilities 11/12 3,711 3,676
Other committed secured facilities 552 590
Convertible bonds 1,699 2,236
U.S. commercial paper 3,486 1,645
Capital market notes 2,932 1,750
Ordinary profit participation certificates 143 223
Finance lease obligations 53 49
Other bank loans(2) 3,770 4,939
Total current borrowings 16,964 16,461
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
2 Comprises various uncommitted bilateral bank credit facilities and other financings.
Committed syndicated revolving credit facility
In June 2014, Glencore signed new revolving credit facilities for a total amount of $15.3 billion. These facilities refinanced
earlier $12,990 million of one-year and three-year revolving credit facilities (with the three-year tranche repaid and
cancelled) and amended / extended the $4,350 million five-year revolving credit facility signed in June 2013.
The new and amended facilities comprise:
- an $8.7 billion 12 month revolving credit facility with a 12 month term-out option and 12-month extension option;
and
- a $6.6 billion 5 year revolving credit facility with two 12 month extension options.
Convertible Bond
In June 2014, Glencore purchased and cancelled convertible bonds with a nominal value of $577 million for
consideration of $647 million, resulting in a premium loss of $70 million, which is recognised within other expenses (see
note 4).
2014 Bond issuances
Eurobonds
- In April 2014, Glencore issued in two tranches EUR 1.1 billion of interest bearing notes as follows:
- 7 year EUR 600 million, 2.750% fixed coupon bonds; and
- 12 year EUR 500 million, 3.750% fixed coupon bonds.
US$ bonds
- In April 2014, Glencore issued in two tranches $2 billion of interest bearing notes as follows:
- 5 year $1,000 million, 3.125% fixed coupon bonds; and
- 10 year $1,000 million, 4.625% fixed coupon bonds.
- In May 2014, Glencore issued 4 year $200 million, Libor plus 1.20% coupon notes.
18. Accounts payable
US$ million as at as at
30.06.2014 31.12.2013
Trade payables 22,810 21,815
Trade advances from buyers 826 640
Associated companies 481 648
Other payables and accrued liabilities 2,384 2,938
Total 26,501 26,041
19. Acquisition and disposal of subsidiaries
2014 Acquisitions
On 8 July 2014, Glencore completed the acquisition of the remaining issued and outstanding equity of Caracal Energy
Inc. ("Caracal"), an oil and gas exploration and development company with operations in the Republic of Chad, Africa for
a total consideration of $1,610 million. This increased Glencore's ownership from 13.2% to 100% and provides Glencore
the ability to exercise control over Caracal. As a result, as of the acquisition date, Glencore will consolidate Caracal
which reported total assets and liabilities of $1,922 million and $312 million, respectively as at 30 June 2014.
If the acquisition had taken place effective 1 January 2014, the operation would have contributed additional revenue of
$56 million and additional attributable loss of $25 million.
The acquisition of Caracal adds further value and expertise to Glencore's growing oil business in Africa, with the
enlarged portfolio allowing Glencore to take further advantage of opportunities across the Africa oil sector, as they arise.
Due to the timing of the transaction, management is in the preliminary stages of determining the fair values of the assets
and liabilities acquired and the associated accounting for the acquisition. Accordingly, certain disclosures relating to the
business combination, such as the fair value of net assets acquired have not been presented.
2014 Disposals
In 2014, there were no material disposals of subsidiaries.
In 2013, Glencore acquired controlling interests in Xstrata and other immaterial entities. The net cash used in the
acquisition of subsidiaries and the fair value of the assets acquired and liabilities assumed at the date of acquisition are
detailed below:
US$ million Xstrata Fair value Total Other Total
provisional fair adjustments Xstrata fair values fair values
values as to the final fair
reported provisional values
at 31.12.2013 allocation
Non-current assets
Property, plant and equipment 41,381 (274) 41,107 194 41,301
Intangible assets 2,314 105 2,419 6 2,425
Investments in associates and joint ventures 10,240 (551) 9,689 – 9,689
Advances and loans(1) 1,163 (100) 1,063 – 1,063
Deferred tax asset 253 – 253 – 253
55,351 (820) 54,531 200 54,731
Current assets
Inventories 6,068 – 6,068 47 6,115
Accounts receivable(1) 3,693 – 3,693 38 3,731
Other financial assets 518 – 518 – 518
Cash and cash equivalents 1,684 – 1,684 1 1,685
Assets held for sale 3,616 750 4,366 – 4,366
15,579 750 16,329 86 16,415
Non-controlling interest(2) (924) (176) (1,100) (9) (1,109)
Non-current liabilities
Borrowings (17,587) 12 (17,575) (4) (17,579)
Deferred income (973) (60) (1,033) – (1,033)
Deferred tax liabilities (4,270) (85) (4,355) (32) (4,387)
Other financial liabilities (325) – (325) (9) (334)
Provisions (7,312) 19 (7,293) (14) (7,307)
(30,467) (114) (30,581) (59) (30,640)
Current liabilities
Borrowings (1,726) – (1,726) (17) (1,743)
Accounts payable (4,981) – (4,981) (30) (5,011)
Deferred income (73) – (73) – (73)
Provisions (215) (59) (274) – (274)
Other financial liabilities (91) – (91) – (91)
Liabilities held for sale (314) (225) (539) – (539)
(7,400) (284) (7,684) (47) (7,731)
Total fair value of net assets acquired 32,139 (644) 31,495 171 31,666
Goodwill arising on acquisition(3) 12,480 644 13,124 30 13,154
Less: amounts previously recognised through (15,142) – (15,142) – (15,142)
investments and loans
Less: Fair value of ordinary shares issued (29,094) – (29,094) – (29,094)
Less: Fair value of share based awards (383) – (383) – (383)
Less: cash and cash equivalents acquired (1,684) – (1,684) (1) (1,685)
Acquisition related costs 275 – 275 – 275
Net cash (received from)/used in (1,409) – (1,409) 200 (1,209)
acquisition of subsidiaries
1 There is no material difference between the gross contractual amounts for loans and advances and accounts receivable and their fair value.
2 Non-controlling interest measured at its percentage of net assets acquired.
3 The goodwill arising on acquisition is not deductible for tax purposes.
Xstrata
On 2 May 2013, Glencore completed its acquisition of the remaining 66% (which it did not previously own) of the issued
and outstanding equity of Xstrata, a leading global diversified mining group, for consideration of $29.5 billion. The
acquisition was completed through an all share exchange which gave Xstrata shareholders 3.05 Glencore shares for
every Xstrata share, valuing Xstrata's equity at approximately $44.6 billion.
The acquisition accounting has now been finalised. The final fair value adjustments to the provisionally reported values
primarily relate to adjustments to property, plant and equipment and investments in associates and joint ventures
resulting from revisions to assumptions that existed at the acquisition date regarding mine plans, ramp-up schedules,
expected processing capacity and classification of acquired joint arrangements. Additionally, the Las Bambas assets and
liabilities held for sale were reassessed to reflect the fair value less cost of disposal, resulting from finalisation of the
sales process (see notes 13 and 25).
The acquisition of Xstrata creates a unique global natural resources group, well positioned to seize opportunities in a
world where trends continue to evolve towards a new global map, reflecting the degree to which changes are unfolding
relating to where natural resources are consumed and supplied, especially as a result of demand from and emerging
supply growth in developing economies.
If the acquisition had been effective 1 January 2013, the operations would have contributed additional revenue of $9,443
million and an increase in attributable income of $259 million. From the date of acquisition until 30 June 2013, the
operations contributed $4,192 million and $511 million of revenue and attributable income, respectively.
Other (2013)
Other acquisitions primarily consist of the acquisition of an 89.5% controlling interest in Orion Minerals LLC, an entity
holding two operations in northern Kazakhstan, for cash consideration of $175 million. If the other acquisitions had taken
place effective 1 January 2013, the operations would have contributed additional revenue of $4 million and additional
attributable income of $1 million. From the date of acquisition until 30 June 2013, the other acquisitions contributed $17
million and $3 million to Glencore's revenue and attributable income, respectively.
2013 Disposals
In 2013, Glencore disposed of controlling interests in various businesses that were acquired as part of the Viterra
business combination in December 2012. The carrying value of the assets and liabilities over which control was lost and
net cash received from these disposals are detailed below:
US$ million Dakota Growers Joe White Total
Pasta Company Maltings
Property, plant and equipment 320 355 675
Intangible assets 42 1 43
Inventories 35 23 58
Accounts receivable 24 38 62
Cash and cash equivalents 3 – 3
Deferred tax liabilities (40) – (40)
Accounts payable (21) (33) (54)
Financial liabilities – (3) (3)
Total carrying value of net assets disposed 363 381 744
Cash and cash equivalents received 366 381 747
Less: cash and cash equivalent disposed (3) – (3)
Total consideration received 363 381 744
Gain/(loss) on disposal – – –
20. Financial instruments
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore's financial instruments. Fair value is the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most
advantageous) market at the measurement date under current market conditions. Where available, market values have
been used to determine fair values. When market values are not available, fair values have been calculated by
discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been
determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the
amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally
approximate the fair values with the exception of $57,691 million (2013: $55,173 million) of borrowings, the fair value of
which at 30 June 2014 was $59,004 million (31 December 2013: $56,723 million) based on observable market prices
applied to the borrowing portfolio (a Level 2 fair value measurement).
As at 30 June 2014
US$ million Carrying Available for FVtPL(2) Total
value(1) sale
Assets
Other investments(3) – 602 709 1,311
Advances and loans 4,717 – – 4,717
Accounts receivable 23,819 – – 23,819
Other financial assets (see note 21) – – 3,251 3,251
Cash and cash equivalents and marketable securities(4) – – 3,278 3,278
Total financial assets 28,536 602 7,238 36,376
Liabilities
Borrowings 57,691 – – 57,691
Non-current other financial liabilities (see note 21) – – 1,071 1,071
Accounts payable 26,501 – – 26,501
Other financial liabilities (see note 21) – – 2,449 2,449
Total financial liabilities 84,192 – 3,520 87,712
As at 31 December 2013
US$ million Carrying Available FVtPL(2) Total
value(1) for sale Restated(5)
Assets
Other investments(3) – 394 529 923
Advances and loans(5) 3,995 – – 3,995
Accounts receivable 24,536 – – 24,536
Other financial assets (see note 21) – – 2,904 2,904
Cash and cash equivalents and marketable securities(4 ) – – 2,885 2,885
Total financial assets 28,531 394 6,318 35,243
Liabilities
Borrowings(5) 55,173 – – 55,173
Non-current other financial liabilities (see note 21) – – 1,044 1,044
Accounts payable 26,041 – – 26,041
Other financial liabilities (see note 21) – – 2,366 2,366
Total financial liabilities 81,214 – 3,410 84,624
1 Carrying value comprises investments, loans, accounts receivable, accounts payable and other liabilities measured at amortised cost.
2 FVtPL – Fair value through profit and loss – held for trading.
3 Other investments of $1,210 million (2013: $772 million) are classified as Level 1 measured using quoted market prices with the remaining balance of
$101 million (2013: $151 million) being investments in private companies whose fair value cannot be reliably measured which are carried cost.
4 Classified as Level 1 measured using quoted exchange rates and/or market prices.
5 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
Offsetting of financial assets and liabilities
In accordance with IAS 32 the Group reports financial assets and liabilities on a net basis in the consolidated statement
of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to
settle on a net basis, or to realise the asset and settle the liability simultaneously. The financial assets and liabilities
subject to offsetting, enforceable master netting and similar agreements as at 30 June 2014 were as follows:
US$ million Total as
presented in
the
Amounts consolidated
not subject statement of
Amounts eligible for set off Related amounts not set off to netting financial
As at 30 June 2014 under netting agreements under netting agreements agreements position
Gross Amounts Net Financial Financial Net
amount offset amount instruments collateral amount
Derivative assets(1) 4,984 (3,695) 1,289 (362) (339) 588 1,962 3,251
Derivative liabilities(1) 4,364) 3,695 (669) 362 154 (153) (1,780) (2,449)
1 Presented within current other financial assets and current other financial liabilities.
For the financial assets and liabilities subject to enforceable master netting or similar arrangements above, each
agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and
liabilities when both elect to settle on a net basis. In the absence of such an election, financial assets and liabilities may
be settled on a gross basis, however, each party to the master netting or similar agreement will have the option to settle
all such amounts on a net basis in the event of default of the other party. Per the terms of each agreement, an event of
default includes failure by a party to make payment when due, failure by a party to perform any obligation required by the
agreement (other than payment) if such failure is not remedied within periods of 30 to 60 days after notice of such failure
is given to the party or bankruptcy.
21. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market
inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the
fair values of its financial instruments into a three level hierarchy based on the degree of the source and observability of
the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can
assess at the measurement date; or
Level 2 Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly
or indirectly; or
Level 3 Unobservable inputs for the assets or liabilities, requiring Glencore to make market based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded,
whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options,
swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily
observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair
value predominately from models that use broker quotes and applicable market based estimates surrounding location,
quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances
where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different
valuation model could produce a materially different estimate of fair value.
It is Glencore's policy that transactions and activities in trade related financial instruments be concluded under master
netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the
event of default, insolvency or bankruptcy by the counterparty.
The following tables show the fair values of the derivative financial instruments including trade related financial and
physical forward purchase and sale commitments by type of contract and non-current other financial liabilities as at
30 June 2014 and 31 December 2013. Other assets and liabilities which are measured at fair value on a recurring basis are
marketing inventories, other investments, cash and cash equivalents and marketable securities. There are no non-
recurring fair value measurements.
Other financial assets
As at 30 June 2014
US$ million Level 1 Level 2 Level 3 Total
Commodity related contracts
Futures 384 116 – 500
Options 19 5 4 28
Swaps 108 194 – 302
Physical forwards 1 1,045 304 1,350
Financial contracts
Cross currency swaps – 782 – 782
Foreign currency and interest rate contracts 36 253 – 289
Total 548 2,395 308 3,251
As at 31 December 2013
US$ million Level 1 Level 2 Level 3 Total
Commodity related contracts
Futures 444 261 – 705
Options 26 2 – 28
Swaps 65 94 – 159
Physical forwards – 701 481 1,182
Financial contracts
Cross currency swaps – 519 – 519
Foreign currency and interest rate contracts(1) 41 270 – 311
Total 576 1,847 481 2,904
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
Other financial liabilities
As at 30 June 2014
US$ million Level 1 Level 2 Level 3 Total
Commodity related contracts
Futures 531 139 – 670
Options 21 1 46 68
Swaps 21 148 – 169
Physical forwards – 719 248 967
Financial contracts
Cross currency swaps – 407 – 407
Foreign currency and interest rate contracts 35 133 – 168
Current other financial liabilities 608 1,547 294 2,449
Non-current other financial liabilities
Non-discretionary dividend obligation(1) – – 386 386
Put option over non-controlling interest(2) – – 685 685
Non-current other financial liabilities – – 1,071 1,071
Total 608 1,547 1,365 3,520
As at 31 December 2013
US$ million Level 1 Level 2 Level 3 Total
Commodity related contracts
Futures 542 84 – 626
Options 15 4 31 50
Swaps 27 72 – 99
Physical forwards 9 572 266 847
Financial contracts
Cross currency swaps – 512 – 512
Foreign currency and interest rate contracts(3) 60 172 – 232
Current other financial liabilities 653 1,416 297 2,366
Non-current other financial liabilities
Non-discretionary dividend obligation(1) – – 359 359
Put option over non-controlling interest(2) – – 685 685
Non-current other financial liabilities – – 1,044 1,044
Total 653 1,416 1,341 3,410
1 Relates to a ZAR denominated derivative liability of $386 million (2013: $359 million) payable to ARM Coal, one of the Group's principal coal joint
operations based in South Africa. The liability arises from ARM Coal's rights as an investor to a share of agreed free cash flows from certain coal
operations in South Africa and is valued based on those cash flows using a risk adjusted discount rate. The derivative liability is settled over the life of
those operations and has no fixed repayment date and is not cancellable within 12 months.
2 Relates to a put option over the remaining 31% of Mutanda that is exercisable in two equal tranches in July 2016 and July 2018. The exercise price of the
put option is subject to the fair value of Mutanda at the date of exercise.
3 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
Physical Options Loans and Total Level 3
US$ million forward other
1 January 2014 215 (716) (359) (860)
Total gain /(loss) recognised in cost of goods sold (222) (14) (27) (263)
Realised 63 3 – 66
30 June 2014 56 (727) (386) (1,057)
During the period no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts
were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial
liabilities.
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting
period. The following table provides information about how the fair values of these financial assets and financial liabilities
are determined, in particular, the valuation techniques and inputs used.
Fair value of financial assets/financial liabilities As at As at
US$ million 30.06.2014 31.12.2013
Futures – Level 1 Assets 384 444
Liabilities (531) (542)
Valuation techniques and key inputs: Quoted bid prices in an active market
Significant unobservable inputs: None
Futures – Level 2 Assets 116 261
Liabilities (139) (84)
Valuation techniques and key inputs: Discounted cash flow model
Inputs include observable quoted prices sourced from exchanges or traded
reference indices in active markets for identical assets or liabilities. Prices are
adjusted by a discount rate which captures the time value of money and
counterparty credit considerations, as required.
Significant unobservable inputs: None
Options – Level 1 Assets 19 26
Liabilities (21) (15)
Valuation techniques and key inputs: Quoted bid prices in an active market
Significant unobservable inputs: None
Options – Level 2 Assets 5 2
Liabilities (1) (4)
Valuation techniques and key inputs: Discounted cash flow model
Inputs include observable quoted prices sourced from exchanges or traded
reference indices in active markets for identical assets or liabilities. Prices are
adjusted by a discount rate which captures the time value of money and
counterparty credit considerations, as required.
Significant unobservable inputs: None
Fair value of financial assets/financial liabilities As at As at
US$ million 30.06.2014 31.12.2013
Options – Level 3 Assets 4 -
Liabilities (46) (31)
Valuation techniques and key inputs: Standard option pricing model
Significant unobservable inputs: Prices are adjusted by differentials, as required, including:
- Volatility; and
- Credit risk.
These significant unobservable inputs generally represent 2% - 20% of the
overall value of the instruments. These differentials move in symmetry with
each other, e.g. a decrease in volatility leads to a decrease in credit risk,
resulting in no material change in the underlying value.
Swaps – Level 1 Assets 108 65
Liabilities (21) (27)
Valuation techniques and key inputs: Quoted bid prices in an active market
Significant unobservable inputs: None
Swaps – Level 2 Assets 194 94
Liabilities (148) (72)
Valuation techniques and key inputs: Discounted cash flow model
Inputs include observable quoted prices sourced from exchanges or traded
reference indices in active markets for identical assets or liabilities. Prices are
adjusted by a discount rate which captures the time value of money and
counterparty credit considerations, as required.
Significant unobservable inputs: None
Physical Forwards – Level 1 Assets 1 –
Liabilities – (9)
Valuation techniques and key inputs: Quoted bid prices in an active market
Significant unobservable inputs: None
Physical Forwards – Level 2 Assets 1,045 701
Liabilities (719) (572)
Valuation techniques and key inputs: Discounted cash flow model
Inputs include observable quoted prices sourced from exchanges or traded
reference indices in active markets for identical assets or liabilities. Prices are
adjusted by a discount rate which captures the time value of money and
counterparty credit considerations, as required.
Significant unobservable inputs: None
Fair value of financial assets/financial liabilities As at As at
US$ million 30.06.2014 31.12.2013
Physical Forwards – Level 3 Assets 304 481
Liabilities (248) (266)
Valuation techniques and key inputs: Discounted cash flow model
Significant unobservable inputs: Prices are adjusted by differentials, as required, including:
- Quality;
- Geographic location;
- Local supply & demand;
- Customer requirements; and
- Counterparty credit considerations.
These significant unobservable inputs generally represent 2% - 50% of the
overall value of the instruments. These differentials are generally symmetrical
with an increase/decrease in one input resulting in an opposite movement in
another input, resulting in no material change in the underlying value.
Cross currency swaps – Level 2 Assets 782 519
Liabilities (407) (512)
Valuation techniques and key inputs: Discounted cash flow model
Inputs include observable quoted prices sourced from exchanges or traded
reference indices in active markets for identical assets or liabilities. Prices are
adjusted by a discount rate which captures the time value of money and
counterparty credit considerations, as required.
Significant unobservable inputs: None
Foreign currency and interest rate contracts – Level 1 Assets 36 41
Liabilities (35) (60)
Valuation techniques and key inputs: Quoted bid prices in an active market
Significant unobservable inputs: None
Foreign currency and interest rate contracts – Level 2 Assets 253 270
Liabilities (133) (172)
Valuation techniques and key inputs: Discounted cash flow model
Inputs include observable quoted prices sourced from exchanges or traded
reference indices in active markets for identical assets or liabilities. Prices are
adjusted by a discount rate which captures the time value of money and
counterparty credit considerations, as required.
Significant unobservable inputs: None
Fair value of financial assets/financial liabilities As at As at
US$ million 30.06.2014 31.12.2013
Non-discretionary dividend obligation – Level 3 Assets – –
Liabilities (386) (359)
Valuation techniques: Discounted cash flow model
Significant observable inputs: - Forecast commodity prices; and
- Discount rates using weighted average cost of capital methodology.
Significant unobservable inputs - Production models;
- Operating costs; and
- Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the
underlying mining operation. Increases/decreases in forecast commodity prices
will result in an increase/decrease to the value of the liability though this will be
partially offset by associated increases/decreases in the assumed production
levels, operating costs and capital expenditures which are inherently linked to
forecast commodity prices. There are no reasonable changes in assumptions
which would result in a material change to the fair value of the underlying
liability.
Put option over non-controlling interest – Level 3 Assets – –
Liabilities (685) (685)
Valuation techniques: Discounted cash flow model
Significant observable inputs: - Forecast commodity prices
- Discount rates using weighted average cost of capital methodology
Significant unobservable inputs - Production models;
- Operating costs; and
- Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the
underlying mining operation. Increases/decreases in forecast commodity prices
will result in an increase/decrease to the value of the liability though this will be
partially offset by associated increases/decreases in the assumed production
levels, operating costs and capital expenditures which are inherently linked to
forecast commodity prices. There are no reasonable changes in assumptions
which would result in a material change to the fair value of the underlying
liability.
22. Future commitments
Capital expenditure for the acquisition of property, plant and equipment is generally funded through the cash flow
generated by the respective industrial entities. As at 30 June 2014, $2,016 million (31 December 2013: $2,817 million), of
which 66% (31 December 2013: 74%) relates to expenditure to be incurred over the next year, was contractually
committed for the acquisition of property, plant and equipment.
Certain of Glencore's exploration tenements and licenses require it to spend a minimum amount per year on
development activities, a significant portion of which would have been incurred in the ordinary course of operations. As at
30 June 2014, $599 million (31 December 2013: $623 million) of such development expenditures are to be incurred, of
which 64% (31 December 2013: 55%) are for commitments to be settled over the next year.
Glencore procures seagoing vessels/chartering services to meet its overall marketing objectives and commitments. As at
30 June 2014, Glencore has committed to future hire costs to meet future physical delivery and sale obligations and
expectations of $926 million (31 December 2013: $1,035 million), of which $578 million (31 December 2013: $578 million
are with associated companies. 50% (31 December 2013: 56%) of the total charters are for services to be received over
the next two years.
As part of Glencore's ordinary sourcing and procurement of physical commodities and other ordinary marketing
obligations, the selling party may request that a financial institution act as either a) the paying party upon the delivery of
product and qualifying documents through the issuance of a letter of credit or b) the guarantor by way of issuing a bank
guarantee accepting responsibility for Glencore's contractual obligations. As at 30 June 2014, $14,458 million (31
December 2013: $13,886 million) of such commitments have been issued on behalf of Glencore, which will generally be
settled simultaneously with the payment for such commodity.
23. Contingent liabilities
The Group is subject to various claims which arise in the ordinary course of business as detailed below. These
contingent liabilities are reviewed on a regular basis and where practical an estimate is made of the potential financial
impact on the Group.
Litigation
Certain legal actions, other claims and unresolved disputes are pending against Glencore. Whilst Glencore cannot
predict the results of any litigation, it believes that it has meritorious defences against those actions or claims. Glencore
believes the likelihood of any liability arising from these claims to be remote and that the liability, if any, resulting from
any litigation will not have a material adverse effect on its consolidated income, financial position or cash flows.
Environmental contingencies
Glencore's operations, predominantly those arising from the ownership in industrial investments, are subject to various
environmental laws and regulations. Glencore is in material compliance with those laws and regulations. Glencore
accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such
accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation
costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At
this time, Glencore is unaware of any material environmental incidents at its locations.
Tax audits
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information
available. For those matters where it is probable that an adjustment will be made, the Group records its best estimate of
these tax liabilities, including related interest charges. Inherent uncertainties exist in estimates of tax contingencies due
to complexities of interpretation and changes in tax laws. Whilst Glencore believes it has adequately provided for the
outcome of these matters, future results may include favourable or unfavourable adjustments to these estimated tax
liabilities in the period the assessments are made, or resolved. The final outcome of tax examinations may result in a
materially different outcome than assumed in the tax liabilities.
24. Related party transactions
In the normal course of business, Glencore enters into various arm's length transactions with related parties, including
fixed price commitments to sell and to purchase commodities, forward sale and purchase contracts, agency agreements
and management service agreements. Outstanding balances at period end are unsecured and settlement occurs in
cash. There have been no guarantees provided or received for any related party receivables or payables.
All transactions between Glencore and its subsidiaries are eliminated on consolidation along with any unrealised profits
and losses between its subsidiaries and Associates. Over the six month period ended 30 June 2014, sales and
purchases with Associates amounted to $350 million (2013: $1,217 million) and $1,364 million (2013: $3,928 million)
respectively. Also see notes 12 and 18.
25. Subsequent events
- On 8 July 2014, Glencore completed the acquisition of Caracal for consideration of $1.6 billion (see note 19).
- On 31 July 2014, the sale of the Las Bambas project completed and Glencore received proceeds, net of tax, of
approximately $6.5 billion (see note 13).
Appendix
Reconciliation of selected pro forma financial information
(unaudited and unreviewed)
Six months ended 30 June 2013
US$ million Adjusted Adjusted Net income Net loss
EBITDA EBIT before after
significant significant
items items(1)
Reported – before adjustments for certain associates 3,491 2,008 1,207 (9,386)
and joint ventures
Impact of presenting certain associates and joint ventures on 146 58 – –
a proportionate consolidation basis
Reported in the financial review section 3,637 2,066 1,207 (9,386)
Less: Glencore's pre-acquisition share of Xstrata's earnings (176) (176) (176) (125)
Add: Xstrata's pre-acquisition earnings on a consolidated 2,130 902 536 498
basis
Add: effect of fair value adjustments(2) 411 390 254 203
Add: deferred tax impact – – 39 –
Add back: Xstrata acquisition goodwill impairment(3) – – – 8,124
Add back: revaluation of previously held interests in newly- – – – 1,200
acquired businesses and losses on sale of investment in
associates(3)
Add back: transaction costs directly associated with the – – – 131
acquisition(3)
Reported pro forma financial information 6,002 3,182 1,860 645
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
2 The fair value adjustments are determined in accordance with the basis of preparation on page 4. The fair value adjustments for the six months ended 30
June 2013 include the pro forma impact for the four month period prior to acquisition. These incorporate adjustments for depreciation, amortisation and
onerous contracts, although the major impact is the reversal of the non-cash inventory uplift adjustment of $275 million. Inventories held by Xstrata at the
date of acquisition were required to be recognised at fair value under IFRS. This results in negligible margins upon the subsequent sale of these
inventories. The income impact of fair value uplift on inventory has been excluded from the pro forma financial information to accurately present the
underlying operating margins and provide more useful information about the performance of the Group.
3 Considered for the purposes of the pro forma to have occurred immediately prior to the commencement of the accounting period.
Six months ended 30 June 2013
US$ million Metals and Energy Agricultural Corporate Total
minerals products products and other
Revenue 36,390 68,830 16,070 103 121,393
Impact of presenting certain associates and (850) (373) – – (1,223)
joint ventures on proportionate consolidation
basis
Revenue - reported measure 35,540 68,457 16,070 103 120,170
Marketing activities
Adjusted EBIT 711 501 15 (41) 1,186
Depreciation and amortisation 10 18 108 – 136
Adjusted EBITDA 721 519 123 (41) 1,322
Industrial activities
Adjusted EBIT 1,508 581 (35) (58) 1,996
Depreciation and amortisation 1,645 985 38 16 2,684
Adjusted EBITDA 3,153 1,566 3 (42) 4,680
Total adjusted EBITDA 3,874 2,085 126 (83) 6,002
Depreciation and amortisation (1,655) (1,003) (146) (16) (2,820)
Total adjusted EBIT 2,219 1,082 (20) (99) 3,182
Net finance and income tax expense in certain (149)
associates and joint ventures
Total adjusted EBIT- reported measure 3,033
Interest expense – net (766)
Income tax expense(1) (279)
Non-controlling interests (128)
Profit for the period before significant items 1,860
1 The tax charge has been updated, consistent with the methodology applied to the effective tax rate calculation for the FY 2013.
Glossary
Available committed liquidity
US$ million as at as at
30.06.2014 31.12.2013
Cash and cash equivalents and marketable securities 3,278 2,885
Headline committed syndicated revolving credit facilities 15,300 17,340
Amount drawn under syndicated revolving credit facilities (5,874) (5,702)
Amounts drawn under U.S. commercial paper program (3,486) (1,645)
Total 9,218 12,878
Adjusted current ratio
Current assets over current liabilities, both adjusted to exclude current other financial liabilities.
Adjusted EBIT/EBITDA
Adjusted EBIT is revenue less cost of goods sold and selling and administrative expenses plus share of income from
associates and joint ventures, dividend income and the attributable share of underlying Adjusted EBIT of certain
associates and joint ventures. Adjusted EBITDA consists of Adjusted EBIT plus depreciation and amortisation.
US$ million H1 2014 H1 2013
Revenue 114,064 112,035
Cost of goods sold (110,334) (109,977)
Selling and administrative expenses (720) (589)
Share of associates and joint ventures 369 208
Share of associates exceptional items 74 51
Dividend income 18 39
Mark to market valuation on certain contracts – 95
Unrealised intergroup profit elimination – 146
Adjusted EBIT - reported 3,471 2,008
Net finance and tax expense in certain associates and joint ventures 153 58
Adjusted EBIT – segmental reporting 3,624 2,066
Depreciation and amortisation 2,567 1,483
Depreciation and amortisation in certain associates and joint ventures 273 88
Adjusted EBITDA – segmental reporting 6,464 3,637
Current capital employed
Current capital employed is current assets less accounts payable, current deferred income, current provisions, current
other financial liabilities and income tax payable.
Readily marketable inventories
Readily marketable inventories are readily convertible into cash due to their very liquid nature, widely available markets
and the fact that the price is covered either by a physical sale transaction or hedge transaction.
Reconciliation of selected reported financial information to those
applying the proportionate consolidation method to certain associates
and joint ventures
For internal reporting and analysis, management evaluates the performance of Antamina copper/zinc mine (34% owned),
Cerrejon coal mine (33% owned) and the Collahuasi copper mine (44% owned) under the proportionate consolidation
method reflecting Glencore's proportionate share of the revenues, expenses, assets and liabilities of these investments.
Below are reconciliations of selected reported financial information to those of applying the proportionate consolidation
method to these investments.
Cash flow related adjustments – six months ended 30 June 2014
US$ million Reported Adjustment for Adjusted
measure proportionate reported
consolidation measure
Cash generated by operating activities before working capital 5,576 – 5,576
changes
Addback EBITDA of certain associates and joint ventures – 849 849
Cash generated by operating activities before working capital 5,576 849 6,425
changes
Income taxes paid (584) (188) (772)
Interest received 24 – 24
Interest paid (826) – (826)
Dividend received from associates and joint ventures 641 (583) 58
Funds from operations ("FFO") 4,831 78 4,909
Working capital changes, excluding readily marketable inventory inflows 587 30 617
Receipts from/(payments of) non-current advances and loans (655) 117 (538)
Purchase of investments (479) – (479)
Proceeds from sale of investments 82 – 82
Purchase of property, plant and equipment (3,787) (240) (4,027)
Capital expenditures related to assets held for sale (798) – (798)
Proceeds from sale of property, plant and equipment 77 – 77
Margin receipts in respect of financing related hedging activities 202 – 202
Acquisition of additional interests in subsidiaries (61) – (61)
Return of capital/dividends to non-controlling interests (144) – (144)
Proceeds from own shares (30) – (30)
Dividends paid to equity holders of the parent (1,457) – (1,457)
Cash movement in net debt (1,632) (15) (1,647)
Net debt at 30 June 2014
US$ million Reported Adjustment for Adjusted
measure proportionate reported
consolidation measure
Non-current borrowings 40,727 40 40,767
Current borrowings 16,964 100 17,064
Total borrowings 57,691 140 57,831
Less: cash and cash equivalents and marketable securities (3,278) (200) (3,478)
Less: readily marketable inventories (16,758) – (16,758)
Net debt 37,655 (60) 37,595
Net debt at 31 December 2013
US$ million Adjustment for Adjusted
Reported proportionate reported
measure(1) consolidation measure
Non-current borrowings 38,712 42 38,754
Current borrowings 16,461 68 16,529
Total borrowings 55,173 110 55,283
Less: cash and cash equivalents and marketable securities (2,885) (182) (3,067)
Less: readily marketable inventories (16,418) – (16,418)
Net debt 35,870 (72) 35,798
1 Adjusted for the final fair value adjustments in relation to the acquisition of Xstrata (see note 19).
Production Q2 2013 to Q2 2014
Metals and Minerals
Production from own sources – Total(1)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Total Copper kt 350.3 412.9 425.8 381.9 359.1 741.0 658.0 13
Total Zinc kt 357.1 332.2 336.8 306.4 344.0 650.4 729.5 (11)
Total Lead kt 74.1 80.7 81.1 79.0 69.9 148.9 153.2 (3)
Total Nickel kt 26.8 22.5 22.8 22.3 26.8 49.1 53.1 (8)
Total Gold koz 254 278 267 234 216 450 478 (6)
Total Silver koz 10,178 9,652 9,843 8,768 7,853 16,621 19,761 (16)
Total Cobalt kt 5.2 5.6 4.7 4.6 5.2 9.8 9.1 8
Total Ferrochrome kt 301 332 345 335 317 652 561 16
Total Platinum(2) koz 23 24 22 21 22 43 44 (2)
Total Palladium(2) koz 12 14 12 12 12 24 24 -
Total Rhodium(2) koz 4 4 3 4 4 8 8 -
Total Vanadium Pentoxide mlb 4.2 6.1 5.7 5.5 4.2 9.7 9.8 (1)
Production from own sources – Copper assets(1)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
African Copper (Katanga, Mutanda, Mopani, Sable)
Katanga Copper metal(3) kt 31.7 34.5 41.4 31.6 41.0 72.6 60.3 20
Cobalt kt 0.7 0.8 0.5 0.5 0.5 1.0 1.0 -
Mutanda Copper metal(3) kt 31.4 40.3 49.1 47.1 51.5 98.6 61.2 61
Cobalt(4) kt 3.6 3.8 3.5 3.3 3.8 7.1 6.4 11
Mopani Copper metal kt 24.8 30.4 31.4 27.7 13.4 41.1 50.0 (18)
African Copper - total production including third party feed
Mopani Copper metal kt 53.6 55.9 53.6 48.5 31.9 80.4 102.5 (22)
Sable Copper metal kt 3.7 3.7 3.7 2.5 1.3 3.8 7.2 (47)
Cobalt(3) kt 0.1 0.1 0.2 0.1 0.2 0.3 0.1 200
Total Copper metal(3) kt 87.9 105.2 121.9 106.4 105.9 212.3 171.5 24
Total Cobalt(4) kt 4.3 4.6 4.0 3.8 4.3 8.1 7.4 9
Collahuasi5 Copper metal kt 3.7 3.0 2.4 2.3 2.0 4.3 7.1 (39)
Copper in concentrates kt 34.1 60.6 62.4 50.0 51.6 101.6 60.1 69
Silver in concentrates koz 420 663 807 675 680 1,355 747 81
Antamina6 Copper in concentrates kt 36.1 43.4 43.9 34.2 27.2 61.4 62.2 (1)
Zinc in concentrates kt 30.5 14.9 19.8 11.1 16.0 27.1 53.2 (49)
Silver in concentrates koz 1,441 1,339 1,500 1,068 937 2,005 2,377 (16)
Other South America (Alumbrera, Lomas Bayas, Antapaccay, Punitaqui)
Alumbrera Copper in concentrates kt 26.0 26.0 34.8 26.1 23.3 49.4 48.8 1
Gold in concentrates and in doré koz 80 77 90 81 65 146 146 -
Silver in concentrates and in doré koz 409 350 177 180 179 359 618 (42)
Lomas Bayas Copper metal kt 18.8 18.4 18.2 18.0 17.3 35.3 37.6 (6)
Antapaccay Copper metal kt 4.2 4.1 0.3 - - - 7.8 (100)
Copper in concentrates kt 33.5 39.9 31.4 37.3 46.0 83.3 67.7 23
Gold in concentrates koz 19 30 11 12 18 30 38 (21)
Silver in concentrates koz 242 280 188 220 301 521 478 9
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Punitaqui Copper in concentrates kt 2.5 3.3 3.2 3.3 2.6 5.9 5.3 11
Silver in concentrates koz 22 24 25 21 18 39 52 (25)
Punitaqui - total production including third party feed
Copper in concentrates kt 2.6 3.3 3.3 3.3 2.6 5.9 5.4 9
Silver in concentrates koz 23 25 25 22 18 40 53 (25)
Total Copper metal kt 23.0 22.5 18.5 18.0 17.3 35.3 45.4 (22)
Total Copper in concentrates kt 62.0 69.2 69.4 66.7 71.9 138.6 121.8 14
Total Gold in concentrates and in doré koz 99 107 101 93 83 176 184 (4)
Total Silver in concentrates and in doré koz 673 654 390 421 498 919 1,148 (20)
Australia (Ernest Henry, Mount Isa, Cobar)
Ernest Henry mine, Copper anode kt 51.2 55.0 57.2 54.6 37.9 92.5 88.9 4
Mt Isa mine and smelter Copper in concentrates kt - 2.9 - - - - - n.m.
Gold in anode koz 8 16 18 15 12 27 16 69
Gold in concentrates koz - 1 - - - - - n.m.
Silver in anode koz 265 312 305 241 172 413 493 (16)
Silver in concentrates koz - - 11 - - - - n.m.
Ernest Henry mine, Mount Isa mine and smelter - total production including third party feed
Copper anode kt 53.6 57.6 57.2 54.7 38.9 93.6 93.0 1
Copper in concentrates kt - 2.9 - - - - - n.m.
Gold in anode koz 10 16 18 15 12 27 18 50
Gold in concentrates koz - 1 - - - - - n.m.
Silver in anode koz 265 312 305 241 172 413 493 (16)
Silver in concentrates koz - - 11 - - - - n.m.
Cobar Copper in concentrates kt 11.4 11.5 11.5 12.6 10.9 23.5 22.6 4
Silver in concentrates koz 116 103 107 113 99 212 218 (3)
Total Copper in anode kt 51.2 55.0 57.2 54.6 37.9 92.5 88.9 4
Total Copper in concentrates kt 11.4 14.4 11.5 12.6 10.9 23.5 22.6 4
Total Gold koz 8 17 18 15 12 27 16 69
Total Silver koz 381 415 423 354 271 625 711 (12)
Total Copper department
Total Copper kt 309.4 373.3 387.2 344.8 324.7 669.5 579.6 16
Total Cobalt kt 4.3 4.6 4.0 3.8 4.3 8.1 7.4 9
Total Zinc kt 30.5 14.9 19.8 11.1 16.0 27.1 53.2 (49)
Total Gold koz 107 124 119 108 95 203 200 1
Total Silver koz 2,915 3,071 3,120 2,518 2,386 4,904 4,983 (2)
Production from own sources – Zinc assets(1)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Kazzinc
Zinc metal kt 53.0 54.7 55.9 49.2 50.0 99.2 105.6 (6)
Lead metal kt 7.4 7.0 7.2 7.4 4.1 11.5 15.6 (26)
Copper metal kt 13.4 12.4 11.7 10.8 8.3 19.1 26.8 (29)
Gold koz 146 154 148 126 120 246 277 (11)
Silver koz 1,022 1,146 1,257 1,132 757 1,889 2,848 (34)
Kazzinc - total production including third party feed
Zinc metal kt 75.0 76.1 77.1 75.3 75.9 151.2 147.2 3
Lead metal kt 21.7 23.2 23.9 32.2 29.3 61.5 43.5 41
Copper metal kt 16.0 15.0 16.3 15.4 9.8 25.2 31.1 (19)
Gold koz 174 190 190 161 159 320 328 (2)
Silver koz 4,772 5,000 4,599 5,014 6,065 11,079 9,082 22
Australia (Mount Isa, McArthur River)
Mount Isa Zinc in concentrates kt 103.2 106.4 102.7 100.8 102.9 203.7 196.0 4
Lead in concentrates kt 39.0 46.5 46.8 47.2 39.0 86.2 74.5 16
Silver in concentrates koz 1,435 2,057 1,927 2,054 1,461 3,515 2,886 22
McArthur River Zinc in concentrates kt 47.5 53.6 47.3 45.2 53.3 98.5 102.4 (4)
Lead in concentrates kt 11.4 11.6 10.9 9.3 11.5 20.8 23.3 (11)
Silver in concentrates koz 392 347 379 297 337 634 854 (26)
Total Zinc in concentrates kt 150.7 160.0 150.0 146.0 156.2 302.2 298.4 1
Total Lead in concentrates kt 50.4 58.1 57.7 56.5 50.5 107.0 97.8 9
Total Silver in concentrates koz 1,827 2,404 2,306 2,351 1,798 4,149 3,740 11
North America (Matagami, Kidd, Brunswick, CEZ Refinery)
Matagami/Perseverance Zinc in concentrates kt 18.0 15.1 20.0 17.9 19.0 36.9 39.4 (6)
Copper in concentrates kt 2.2 2.0 2.7 2.1 2.5 4.6 4.4 5
Kidd Zinc in concentrates kt 19.3 13.6 14.0 10.1 22.0 32.1 40.2 (20)
Copper in concentrates kt 9.9 10.6 9.3 10.3 8.1 18.4 17.0 8
Silver in concentrates koz 1,153 606 572 385 506 891 2,056 (57)
Brunswick Mine Zinc in concentrates kt 9.2 - - - - - 52.0 (100)
Lead in concentrates kt 2.4 - - - - - 13.5 (100)
Copper in concentrates kt 0.3 - - - - - 3.0 (100)
Silver in concentrates koz 658 - - - - - 1,315 (100)
Total Zinc in concentrates kt 46.5 28.7 34.0 28.0 41.0 69.0 131.6 (48)
Total Lead in concentrates kt 2.4 - - - - - 13.5 (100)
Total Copper in concentrates kt 12.4 12.6 12.0 12.4 10.6 23.0 24.4 (6)
Total Silver in concentrates koz 1,811 606 572 385 506 891 3,371 (74)
North America - total production including third party feed
Brunswick Mine Zinc in concentrates kt 13.3 - - - - - 56.1 (100)
Lead in concentrates kt 3.5 - - - - - 14.6 (100)
Copper in concentrates kt 0.3 - - - - - 3.0 (100)
Silver in concentrates koz 745 - - - - - 1,402 (100)
Brunswick Smelter Lead metal kt 18.0 19.2 20.1 18.7 17.5 36.2 36.0 1
Silver metal koz 4,022 4,098 4,555 3,120 2,852 5,972 7,493 (20)
CEZ Refinery(7) Zinc metal kt 17.1 15.3 16.8 14.9 15.6 30.5 34.2 (11)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Other Zinc (AR Zinc, Los Quenuales, Sinchi Wayra, Rosh Pinah, Perkoa)
Zinc metal kt 9.5 7.5 6.2 1.9 8.3 10.2 16.0 (36)
Zinc in concentrates kt 66.9 66.4 70.9 70.2 72.5 142.7 124.7 14
Lead metal kt 2.8 3.1 3.0 2.4 3.0 5.4 4.9 10
Lead in concentrates kt 11.1 12.5 13.2 12.7 12.3 25.0 21.4 17
Copper in concentrates kt 0.3 0.7 0.6 0.8 0.8 1.6 0.8 100
Silver metal koz 177 161 185 133 159 292 324 (10)
Silver in concentrates koz 2,426 2,264 2,403 2,249 2,247 4,496 4,495 -
Other Zinc - total production including third party feed
Zinc metal kt 10.5 10.9 9.5 2.4 9.3 11.7 17.5 (33)
Zinc in concentrates kt 66.9 66.4 70.9 70.2 72.5 142.7 124.7 14
Lead metal kt 2.8 3.1 3.0 2.4 3.0 5.4 4.9 10
Lead in concentrates kt 11.1 12.5 13.2 12.7 12.3 25.0 21.4 17
Copper in concentrates kt 0.3 0.7 0.6 0.8 0.8 1.6 0.8 100
Silver metal koz 177 161 185 133 159 292 324 (10)
Silver in concentrates koz 2,426 2,264 2,403 2,249 2,247 4,496 4,495 -
Total Zinc department
Total Zinc kt 326.6 317.3 317.0 295.3 328.0 623.3 676.3 (8)
Total Lead kt 74.1 80.7 81.1 79.0 69.9 148.9 153.2 (3)
Total Copper kt 26.1 25.7 24.3 24.0 19.7 43.7 52.0 (16)
Total Gold koz 146 154 148 126 120 246 277 (11)
Total Silver koz 7,263 6,581 6,723 6,250 5,467 11,717 14,778 (21)
Production from own sources – Nickel assets(1)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Integrated Nickel Operations (Sudbury, Raglan, Nikkelverk)
Total Nickel metal kt 11.3 10.1 13.4 13.3 13.8 27.1 23.6 15
Total Nickel in concentrates kt 0.1 0.1 0.1 0.2 0.1 0.3 0.3 -
Total Copper metal kt 4.2 3.7 4.4 3.8 4.2 8.0 8.6 (7)
Total Copper in concentrates kt 10.5 10.1 9.9 9.3 10.5 19.8 17.6 13
Total Cobalt metal kt 0.2 0.2 0.2 0.2 0.2 0.4 0.3 33
Integrated Nickel Operations - total production including third party feed
Total Nickel metal kt 22.5 23.0 23.2 21.7 22.6 44.3 44.8 (1)
Total Nickel in concentrates kt 0.2 0.1 0.2 0.2 0.2 0.4 0.4 -
Total Copper metal kt 9.0 9.2 9.9 8.7 7.8 16.5 18.4 (10)
Total Copper in concentrates kt 12.9 12.5 12.3 11.7 13.5 25.2 21.5 17
Total Cobalt metal kt 0.8 0.8 1.0 0.8 0.9 1.7 1.6 6
Australia (Murrin Murrin, XNA)
Total Nickel metal kt 10.4 9.3 7.5 7.8 9.8 17.6 19.1 (8)
Total Nickel in concentrates kt 1.7 1.0 - - - - 3.1 (100)
Total Copper in concentrates kt 0.1 0.1 - - - - 0.2 (100)
Total Cobalt metal kt 0.7 0.8 0.5 0.6 0.7 1.3 1.3 -
Total Cobalt in concentrates kt - - - - - - 0.1 (100)
Australia - total production including third party feed
Total Nickel metal kt 11.6 11.2 8.9 9.4 12.2 21.6 21.2 2
Total Nickel in concentrates kt 1.7 1.0 - - - - 3.1 (100)
Total Copper in concentrates kt 0.1 0.1 - - - - 0.2 (100)
Total Cobalt metal kt 0.8 0.8 0.5 0.6 0.8 1.4 1.4 -
Total Cobalt in concentrates kt - - - - - - 0.1 (100)
Falcondo Nickel in ferronickel kt 3.3 2.0 0.4 - - - 7.0 (100)
Koniambo Nickel in ferronickel kt - - 1.4 1.0 3.1 4.1 - n.m.
Total Nickel department
Total Nickel kt 26.8 22.5 22.8 22.3 26.8 49.1 53.1 (8)
Total Copper kt 14.8 13.9 14.3 13.1 14.7 27.8 26.4 5
Total Cobalt kt 0.9 1.0 0.7 0.8 0.9 1.7 1.7 -
Production from own sources – Ferroalloys assets(1)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Ferrochrome8 kt 301 332 345 335 317 652 561 16
PGM9 Platinum koz 23 24 22 21 22 43 44 (2)
Palladium koz 12 14 12 12 12 24 24 -
Rhodium koz 4 4 3 4 4 8 8 -
Gold koz 1 - - - 1 1 1 -
4E koz 40 42 37 37 39 76 77 (1)
Vanadium Pentoxide mlb 4.2 6.1 5.7 5.5 4.2 9.7 9.8 (1)
Total production – Custom metallurgical assets(1)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Copper (Altonorte, Townsville, Pasar, Horne, CCR)
Copper metal kt 191.3 197.5 179.4 153.7 191.4 345.1 373.7 (8)
Copper anode kt 127.6 129.2 128.3 125.0 141.0 266.0 257.0 4
Zinc (Portovesme, San Juan de Nieva, Nordenham, Northfleet)
Zinc metal kt 181.3 181.3 191.0 193.6 194.6 388.2 372.7 4
Lead metal kt 31.2 43.1 52.5 48.5 52.0 100.5 78.6 28
Silver koz 1,244 2,162 2,428 2,342 2,823 5,165 3,280 57
Ferroalloys
Ferromanganese kt 23 24 23 30 27 57 52 10
Silicon Manganese kt 22 24 26 26 26 52 42 24
Aluminium (Sherwin Alumina)
Alumina kt 393 410 419 385 391 776 777 -
1 Controlled industrial assets and joint ventures only. Production is on a 100% basis, except as stated.
2 Relates to the PGM business in ferroalloys only.
3 Copper metal includes copper contained in copper concentrates and blister.
4 Cobalt contained in concentrates and hydroxides.
5 The Group's pro-rata share of Collahuasi production (44%).
6 The Group's pro-rata share of Antamina production (33.75%).
7 The Group's pro-rata share of CEZ production (25%).
8 The Group's 79.5% share of the Glencore-Merafe Chrome Venture.
9 Consolidated 100% of Eland and 50% of Mototolo.
Energy Products
Production from own sources
Coal assets(1)
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Australian coking coal mt 2.2 1.6 1.7 1.5 1.4 2.9 4.0 (28)
Australian semi-soft coal mt 1.2 1.0 1.2 0.9 0.9 1.8 2.3 (22)
Australian thermal coal (export) mt 12.3 13.7 11.1 11.8 14.2 26.0 23.3 12
Australian thermal coal (domestic) mt 1.0 1.3 1.2 1.4 1.3 2.7 2.6 4
South African thermal coal (export) mt 4.9 5.3 5.5 5.0 5.2 10.2 9.8 4
South African thermal coal (domestic) mt 5.9 6.1 5.1 5.4 6.1 11.5 11.7 (2)
Prodeco mt 4.6 4.6 4.4 5.2 5.0 10.2 9.6 6
Cerrejón(2) mt 3.0 3.2 3.3 2.9 3.0 5.9 4.5 31
Total Coal department mt 35.1 36.8 33.5 34.1 37.1 71.2 67.8 5
1 Controlled industrial assets and joint ventures only. Production is on a 100% basis except for joint ventures, where the Group's attributable share of
production is included.
2 The Group's pro-rata share of Cerrejón production (33.3%).
Oil assets
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Gross basis
Equatorial Guinea kbbl 4,556 5,862 6,113 6,304 5,731 12,035 9,942 21
Chad kbbl - - 619 1,067 916 1,983 - n.m.
Total Oil department kbbl 4,556 5,862 6,732 7,371 6,647 14,018 9,942 41
Glencore entitlement interest basis
Equatorial Guinea kbbl 1,020 1,246 1,394 1,368 1,194 2,562 2,159 19
Chad kbbl - - 186 321 276 597 - n.m.
Total Oil department kbbl 1,020 1,246 1,580 1,689 1,470 3,159 2,159 46
Agricultural Products
Processing / production data
Q2 Q3 Q4 Q1 Q2 H1 H1 Change
2013 2013 2013 2014 2014 2014 2013 H1 14 vs
H1 13
%
Farming kt 33 262 236 232 34 266 385 (31)
Crushing kt 943 1,128 966 1,062 1,616 2,678 1,548 73
Long term toll agreement kt 257 151 101 49 157 206 289 (29)
Biodiesel kt 109 181 191 172 169 341 252 35
Rice milling kt 85 83 70 36 91 127 120 6
Wheat milling kt 273 299 267 262 263 525 555 (5)
Sugarcane processing kt 509 933 809 - 723 723 509 42
Total Agricultural products kt 2,209 3,037 2,640 1,813 3,053 4,866 3,658 33
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By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore's
control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results.
Important factors that could cause these uncertainties include, but are not limited to, those discussed in Glencore's Annual Report 2013
and "Risks and uncertainties" in Glencore's Half-Year Results 2014.
Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are
cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than
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the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its
affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a
result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that
there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein
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No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be
interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the
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