Glencore Hit by Geotechnical Issues at DRC, Slow Kazakhstan Ramp-Up -- Commodity Comment
April 28 2022 - 3:28AM
Dow Jones News
By Jaime Llinares Taboada
Glencore on Thursday downgraded production guidance for copper
and cobalt due to geotechnical constraints at the Katanga mine in
the Democratic Republic of the Congo, whereas the zinc outlook was
hit by a slower ramp-up of Zhairem in Kazakhstan. Here's what the
commodity mining and trading giant had to say:
On 1Q performance:
"For the most part, the group's quarterly production was in line
with our expectations. However, production in Q1 2022 reflects a
number of temporary impacts, including geotechnical challenges at
Katanga and Covid-19 absenteeism, particularly in Australia.
Koniambo's Q4 2021 higher operating rates continued into Q1 this
year, while overall coal production, on a like-for-like basis,
reflecting our increased Cerrejon ownership, was broadly flat
period-on-period."
"Own sourced copper production of 257,800 tonnes was 43,400
tonnes (14%) lower than Q1 2021, reflecting temporary geotechnical
constraints at Katanga (14,000 tonnes), the basis change arising
from the sale of Ernest Henry in January 2022 (11,000 tonnes) and
lower copper units produced within Glencore's zinc business."
"Own sourced zinc production of 241,500 tonnes was 41,000 tonnes
(15%) lower than Q1 2021, reflecting Mount Isa Covid-19 related
absenteeism (21,300 tonnes) and the planned mining cessation of
Iscaycruz in Peru in Q3 2021 (20,300 tonnes)."
"Own sourced nickel production of 30,700 tonnes was 5,500 tonnes
(22%) higher than Q1 2021, primarily reflecting Koniambo operating
both production lines in 2022."
"Attributable ferrochrome production of 387,000 tonnes was
12,000 tonnes (3%) below Q1 2021."
"Coal production of 28.5 million tonnes was 4.0 million tonnes
(16%) higher than Q1 2021, mainly reflecting higher attributable
production from Cerrejon, following the acquisition in January 2022
of the remaining two-thirds interest that Glencore did not already
own."
"Entitlement interest oil production of 1.5 million barrels of
oil equivalent was 0.4 million barrels (40%) higher than Q1 2021,
due to commencement of the gas phase of the Alen project in
Equatorial Guinea from March 2021."
On 2022 guidance:
"Reflecting the Q1 production performance, full-year guidance is
reduced for copper and cobalt, but increased for nickel and
ferrochrome, while the slower than expected ramp-up at Zhairem
reduces full-year zinc production guidance by 9%."
"Changes to guidance mainly reflect:
-- Copper: down 40kt (3%) and cobalt down 3kt (6%) - Katanga's
temporary geotechnical constraints
-- Nickel: up 3kt (3%) and ferrochrome up 40kt (3%) - Q1
quarterly performance
-- Zinc: down 100kt (9%) - persistent challenges in ramping up
processing capabilities at Kazzinc's Zhairem operation"
"Our marketing activities were supported during the quarter by
tight physical market conditions and periods of extreme volatility.
Extrapolating our Q1 performance would see our marketing segment's
full-year earnings comfortably exceeding the top end of our
long-term adjusted EBIT guidance range of $2.2-3.2bn p.a."
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
April 28, 2022 03:13 ET (07:13 GMT)
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