Glencore Raises Coal Price, Cost Guidance Amid 'Unprecedented' Environment -- Update
June 17 2022 - 3:58AM
Dow Jones News
By Jaime Llinares Taboada
Glencore PLC on Friday raised the price and cost guidance for
its coal operations and said the trading business is set to achieve
its long-term annual earnings target in the first six months of
this year.
The commodity mining and trading giant said that "unprecedented
dislocation" in energy markets has resulted in record pricing
differentials between coal benchmarks and quality categories.
As a result of these larger differentials, Glencore has
increased the mix adjustment guidance for its coal portfolio for
the first half to $82-$86 a metric ton relative to an expected
Newcastle thermal coal pricing benchmark of $318 a ton. This
compares with previous 2022 guidance of $32.80, based on a
Newcastle price of $175.
The company's mix adjustment guidance is a discount used to
calculate the realized price for its overall coal portfolio, as a
deduction against the Newcastle price. Glencore has coal mines in
three countries with various quality types.
In line with higher prices, Glencore is also increasing first
half cost expectations for its coal operations to $75-$78 a ton, up
from previous 2022 guidance of $59.30 a ton. This reflects higher
government royalties and input costs for diesel, explosives,
logistics and electricity.
RBC's mining analyst Tyler Broda said this update should lead to
upgrades to consensus expectations, as the benchmark Newcastle
price is higher than expected by the market.
Glencore's coal mines generated adjusted earnings before
interest and tax of $3.06 billion in 2021, contributing to the
group's total of $14.50 billion.
In addition, the company said its marketing segment--Glencore's
trading business--is expected to deliver half-year adjusted Ebit of
more than $3.2 billion. This is the top end of the company's
long-term annual guidance for the marketing arm of $2.2 billion to
$3.2 billion. In the whole of 2021, the division generated adjusted
Ebit of $3.7 billion.
"Against this challenging and elevated risk backdrop, our
marketing segment's financial performance has continued to be
supported by periods of heightened to extreme levels of market
volatility, supply disruption and tight physical market conditions,
particularly relating to global energy markets," Glencore said.
Shares at 0722 GMT were up 1.2% at 469.70 pence.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
June 17, 2022 03:43 ET (07:43 GMT)
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