GLEN Glencore Plc

By Alex MacDonald 

LONDON--A rebound in commodity prices and slashed costs weren't enough to pull Glencore PLC's earnings out of the red in the first half of the year.

The world's third-largest diversified miner by market value reported a $369 million net loss in the six months to end-June compared with a $676 million net loss in the same period last year.

In Glencore's first half-year report since it embarked on a sweeping plan to repair its balance sheet, the company said it is on track to continue reducing debt through a combination of asset sales, cost cuts and a bounce in commodity prices.

"We have made considerable progress toward achieving our goals," Glencore Chief Executive Ivan Glasenberg said on Wednesday.

Glencore launched the plan last year when investors were worried about the company's then nearly $30 billion in net debt. The shares fell sharply, dropping almost 30% in one day. Glencore's shares have since rebounded, more than doubling so far this year, driven by the rally in commodity prices and its progress in slashing debt. The stock fell 4.4% in morning trading in London.

The company is on track to reinstate its dividend, which it suspended last year as part of its debt-cutting plan, some time in 2017, Glencore's CEO said.

Mr. Glasenberg, once one of the mining industry's most voracious deal-makers, said the company doesn't have plans to acquire new assets soon. Some investors have said they want the company to keep cutting debt and reinstate the dividend before snapping up new mines.

"There is nothing we're really looking at right now," Mr. Glasenberg said.

Mr. Glasenberg remained confident that the market for the commodities his company mines and sells will continue to improve, helped by demand in China and elsewhere. Prices for zinc and coal are up 43% and roughly a third respectively this year, driven by production cuts and Beijing's measures to stimulate the Chinese economy.

"We see demand looking not bad around the world," Mr. Glasenberg said on a conference call with reporters. "Demand in China is still pretty good."

Mr. Glasenberg said one disappointment this year has been a relatively flat price for copper, one of the company's biggest earnings drivers. He said the market is unnecessarily worried about a "big wall of supply" expected to come into the market in the coming years.

"We don't see it," he said. "Inventory levels aren't indicating that copper should be at these levels."

Glencore's first-half revenue fell 6% to $69.4 billion, largely because of lower commodity prices in addition to lower copper, zinc, coal and oil production in the first half compared with the same period a year before. The company had cut production at some of its coal, zinc and copper mines in response to low prices and an oversupply of the commodities.

Glencore said it has largely achieved a major plank of its debt-reduction plan, agreeing to $3.9 billion in asset sales so far this year. It has a target of between $4 billion and $5 billion in such sales.

In the latest move, Glencore said late Tuesday it struck a deal to sell a stream of future gold production and other metals from an Australian mine to Evolution Mining Ltd. for $670 million. The deal comes on top of a pair of other so-called streaming deals for gold and silver for a combined $1.4 billion.

The proceeds will be used to pay down net debt, which is now on track to fall to a revised $16.5 billion to $17.5 billion by year-end, down from a previous target of between $17 billion to $18 billion.

Net debt was $23.6 billion as of June end, down from $25.9 billion at the end of December.

Write to Scott Patterson at scott.patterson@wsj.com and Alex MacDonald at alex.macdonald@wsj.com

(END) Dow Jones Newswires

August 24, 2016 05:38 ET (09:38 GMT)

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