TIDMGLEN
RNS Number : 3710L
Glencore PLC
30 April 2020
GLENCORE PLC
NEWS RELEASE
Baar, 30 April 2020
First Quarter 2020 Production Report and General Update
Glencore Chief Executive Officer, Ivan Glasenberg:
"The global impact of the COVID-19 pandemic is an unprecedented
challenge for individuals, governments and companies alike.
Disruptions to our business have, to date, been manageable and the
majority of our assets are operating relatively normally, a credit
to our people that have stepped up to the challenge of a changed
working environment, especially those who continue to carry out
their work on site at our industrial assets - Glencore's frontline.
Some industrial assets have been temporarily suspended, generally
in line with national and regional lockdowns. Our updated full year
production guidance reflects these impacts.
"A rigorous focus on optimising our asset portfolio has helped
to preserve solid levels of overall Industrial Asset free cash flow
generation in the current operating environment. Focussed cost
control, lower energy costs, favourable movements in producer
currencies and higher precious metals' by-product credits, have
underpinned reductions in forecast full year unit cash costs for
our key commodity departments. Copper unit costs are now guided
lower to 105c/lb, zinc unit costs 39% lower at 14c/lb and thermal
coal guided unit cash costs are $3/t lower at $42/t. We also expect
a c$1.0 to $1.5 billion reduction in 2020 capex compared to our
original 2020 guidance of $5.5 billion.
"Furthermore, notwithstanding global macroeconomic / demand
headwinds , the volatile and complex commodity trading environment
has provided opportunities for our Marketing business, such that,
to date, we have generated annualised earnings within our $2.2 to
$3.2 billion p.a. long-term guidance range.
"Given our strong liquidity position and resilient business
model, we are well positioned to navigate the current challenges.
We recognise the uncertainty caused by the current environment and
endeavour to support our stakeholders, as appropriate."
Production from own sources - Total(1)
Change
Q1 2020 Q1 2019 %
---------------------------------------------------------- ------------ ----------- ----------- -------------
Copper - excl. African Copper kt 226.0 225.4 -
Copper - African Copper, in development/optimisation
phases kt 67.3 95.3 (29 )
---------------------------------------------------------- ------------ ----------- ----------- -------------
Copper kt 293.3 320.7 (9 )
Cobalt kt 6.1 10.9 (44 )
Zinc kt 295.6 262.3 13
Lead kt 61.7 73.9 (17 )
Nickel kt 28.2 27.1 4
Gold koz 199 202 (1 )
Silver koz 7,778 7,620 2
Ferrochrome kt 388 402 (3 )
Coal - coking mt 1.8 2.6 (31 )
Coal - semi-soft mt 1.6 1.0 60
Coal - thermal mt 28.5 29.6 (4 )
---------------------------------------------------------- ------------ ----------- ----------- -------------
Coal mt 31.9 33.2 (4 )
Oil (entitlement interest basis) kbbl 1,806 1,145 58
1 Controlled industrial assets and joint ventures only.
Production is on a 100% basis, except as stated later in this
report.
COVID-19 situation report and outlook
-- The COVID-19 pandemic is an unprecedented challenge for all
of us, including our colleagues, families, local communities and
society at large. As a responsible operator, our top priority is to
protect the safety and health of our people and the communities
that host our businesses.
-- Glencore operates more than 180 sites and offices in over 35
countries. The scale and diversity of our operations means that the
impact of the virus varies by location. In addition, many of our
operations are located in remote areas with limited public health
care systems. Our teams are working closely with governments,
health agencies and others key responders to provide effective
local solutions.
-- We have introduced a number of precautionary measures across
our offices and industrial assets in response to COVID-19. This
includes the implementation of enhanced hygiene and cleaning
measures, application of social distancing and identification of
higher risk groups. Our goal is to operate only when we can keep
our people safe and healthy, while safeguarding jobs and providing
support to our local communities. A near-total restriction on
non-essential travel has been implemented as well as remote
working, where possible.
-- The majority of our industrial assets continue to operate
relatively normally, accounting for the various changed practices
noted above. Various operations have been temporarily suspended,
where national/regional lockdowns or other circumstances have
dictated such.
-- The assets that have been principally impacted are noted below:
Jurisdiction Asset Commodity Expected impact in 2020
Canada Raglan Nickel Operations stopped late March. Now recommenced
(Quebec) and in process of being ramped up. Impact
is less than one month of output
Canada Matagami Zinc Operations stopped late March. Now recommenced
(Quebec) and in process of being ramped up. Direct
impact is less than one month of output
Chad Oilfields Oil On care and maintenance since mid-April
Colombia Cerrejon Coal Mining operations ramped down from late
JV March. See below
Colombia Prodeco Coal On care and maintenance since late March.
See below
DRC Katanga Copper / Acid plant project commissioning delayed
cobalt from H1 2020 to H2 2020. No impact on
2020 production
Kazakhstan Kazzinc Zinc Zhairem mine development to be completed,
but delivery to market of expected zinc
production being intentionally delayed
to 2021
New Caledonia Koniambo Nickel The planned maintenance shutdown on one
production line (of two) was extended,
with restart delayed by approximately
two months
Peru Antamina Copper and Operations were initially halted for a
JV zinc two-week period from 13 April. This has
now been extended, with restart timing
subject to Antamina being able to ensure
the workforce's ongoing health and wellbeing
South Africa Ferroalloys Chrome and All mining and smelting operations were
production vanadium suspended for the duration of the lockdown,
a staggered start-up is currently in progress
South Africa SA Coal Coal Major complexes supplying domestic power
and exports continued to operate. A smaller
complex was temporarily closed
South Africa Astron Energy Oil refining The planned Q1 refinery maintenance turnaround
has been extended
Zambia Mopani Copper Operating scenarios under discussion with
the Zambian government.
-- Colombian coal - given the continued pressure on European
coal pricing, production volumes are at risk of further
reduction.
-- Volcan - excluded from Glencore's production statistics due
to our relatively small equity interest (c.23%). Operations were
suspended on 19 March due to national government restrictions in
Peru, and will restart when such restrictions are lifted.
Production guidance and updated financial outlook
-- Full year 2020 production guidance, including accounting for
latest expected business interruptions due to COVID-19 noted above,
is set out below, with further remarks on page 19.
Actual Previous Current
FY guidance guidance 2020 weighting
2019 2020 2020 H1 H2
--------------------------------- ------- -------- ---------- --------- --- -------- --------
975 +/- 975 +/-
Copper - excl. African Copper kt 1,001 25 20 47% 53%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
325 +/- 280 +/-
Copper - African Copper kt 370 25 25 50% 50%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
1,300 1,255
Copper kt 1,371 +/- 50 +/- 45 48% 52%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
29 +/- 28 +/-
Cobalt kt 46 4 2 48% 52%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
1,265 1,160
Zinc kt 1,078 +/- 30 +/- 30 (1) 50% 50%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
125 +/- 122
Nickel kt 121 5 +/- 5 46% 54%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
1,340 1,000
Ferrochrome kt 1,438 +/- 25 +/- 25 47% 53%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
135 +/- 132
Coal mt 140 4 +/- 3 47% 53%
--------------------------------- ---------- -------- ---------- --------- --- -------- --------
6.5 +/-
Oil mbbl 5.5 0.2 See below (2) n.a. n.a.
1 Excludes Volcan
2 Oil updated guidance under review, but will be materially
lower as the field operations in Chad have been suspended, relating
to COVID-19 disruption in international
mobility, transportation and supply chains
-- Industrial Assets unit cost guidance updated for changes to
production and current producer currency levels, energy costs and
by-product pricing, is as follows:
Actual Previous Current FYE 2020 split
FY guidance guidance
2019 2020 2020 H1 H2
------------------------------ --------- -------- --------- --------- --- -------- --------
Copper - excl. African Copper c/lb 81 82 83 (1) 90 78
Copper c/lb 148 120 105 (1) 116 94
------------------------------ --------- -------- --------- --------- --- -------- --------
Zinc - excl. gold credit c/lb 47 58 58 (2) 65.1 50
Zinc c/lb 13 23 14 (2) 27 1
------------------------------ --------- -------- --------- --------- --- -------- --------
Nickel - excl. Koniambo c/lb 277 227 240 220 257
Nickel c/lb 398 351 382 391 372
------------------------------ --------- -------- --------- --------- --- -------- --------
Coal $/t 45 45 42 44 40
1 Copper unit cost guidance excludes costs associated with
non-operating or significantly curtailed assets, including those on
care and maintenance. In this regard, an
estimated combined approximately $400 million of net operating
costs is expected to be incurred in relation to Mopani, Mutanda,
Alumbrera and Polymet in 2020.
Comparable to previous guidance, the 120c/lb cost would have
been 106c/lb, plus approximately $300 million of net operating
costs associated with the non-operating or
significantly curtailed assets
2 Excludes Volcan.
-- Industrial Assets capex for 2020 now expected to be in the
$4.0-4.5 billion range (previous guidance: $5.5 billion) reflecting
some assets curtailing production levels (with associated capex
savings), various deferrals and lower equivalent USD costs due to
generally weaker producer currencies and lower input costs,
particularly through oil price changes.
-- Our Marketing business is delivering annualised Adjusted EBIT
performance within our through the cycle long-term guidance range
of $2.2 to $3.2 billion p.a.
-- As previously announced, Glencore's revolving credit
facilities have been refinanced and extended, effective 22 May
2020, on the same commercial terms as our 2019 facilities. These
comprise:
- a $9.975 billion 12-month facility, with a 12-month term-out
option at Glencore's discretion; and
- a $4.65 billion 5-year revolving credit facility.
Q1 production highlights
-- For the most part, the disruptions noted above took effect
close to or after 31 March. Q1 production was therefore largely
unaffected by them.
-- Own sourced copper production of 293,300 tonnes was 27,400
tonnes (9%) lower than Q1 2019. No production was reported in the
quarter for Mutanda (on care and maintenance) and Mopani (Q1
smelter restart processed 5.0kt (of 10.6kt) of copper contained
concentrates produced and reported in H2 2019, while the smelter
underwent a major multi-month rebuild).
-- Own sourced zinc production of 295,600 tonnes was 33,300
tonnes (13%) higher than Q1 2019, mainly relating to the Antamina
joint venture, the Iscaycruz mine in Peru that restarted in Q3 2019
and higher grades from Canada.
-- Own sourced nickel production of 28,200 tonnes was 1,100
tonnes (4%) higher than Q1 2019, reflecting the offsetting effects
of disruptions in the base period at INO and Koniambo, and
maintenance in the current period at Murrin Murrin.
-- Attributable ferrochrome production of 388,000 tonnes was
14,000 tonnes (3%) lower than Q1 2019.
-- Coal production of 31.9 million tonnes was 1.3 million tonnes
(4%) lower than Q1 2019, mainly reflecting operating challenges in
South Africa and mining sequencing in the Australian coking
portfolio, partly offset by higher Australian thermal coal
production.
-- Entitlement interest oil production of 1.8 million barrels
was 0.7 million barrels (58%) higher than in Q1 2019, primarily
reflecting the drilling campaign in Chad and, from Q3 2019, the
Bolongo field in Cameroon.
To view the full report please click:
https://www.glencore.com/dam:jcr/9c31e323-e61c-4034-a424-f08a12a5ecc0/GLEN_2020-Q1_ProductionReport.pdf
For further information please contact:
Investors
Martin Fewings t: +41 41 709 m: +41 79 737 martin.fewings@glencore.com
2880 5642
Maartje Collignon t: +41 41 709 m: +41 79 197 maartje.collignon@glencore.com
32 69 42 02
Media
Charles Watenphul t: +41 41 709 m: +41 79 904 charles.watenphul@glencore.com
2462 3320
www.glencore.com
Glencore LEI: 2138002658CPO9NBH955
Notes for Editors
Glencore is one of the world's largest global diversified
natural resource companies and a major producer and marketer of
more than 60 responsibly-sourced commodities that advance everyday
life. The Group's operations comprise around 150 mining and
metallurgical sites and oil production assets.
With a strong footprint in over 35 countries in both established
and emerging regions for natural resources, Glencore's industrial
activities are supported by a global network of more than 30
marketing offices.
Glencore's customers are industrial consumers, such as those in
the automotive, steel, power generation, battery manufacturing and
oil sectors. We also provide financing, logistics and other
services to producers and consumers of commodities. Glencore's
companies employ around 160,000 people, including contractors.
Glencore is proud to be a member of the Voluntary Principles on
Security and Human Rights and the International Council on Mining
and Metals. We are an active participant in the Extractive
Industries Transparency Initiative.
Important notice concerning this document including forward
looking statements
This document contains statements that are, or may be deemed to
be, "forward looking statements" which are prospective in nature.
These forward looking statements may be identified by the use of
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"outlook", "plans", "expects" or "does not expect", "is expected",
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"estimates", "aims", "forecasts", "risks", "intends", "positioned",
"predicts", "anticipates" or "does not anticipate", or "believes",
or variations of such words or comparable terminology and phrases
or statements that certain actions, events or results "may",
"could", "should", "shall", "would", "might" or "will" be taken,
occur or be achieved. Forward-looking statements are not based on
historical facts, but rather on current predictions, expectations,
beliefs, opinions, plans, objectives, goals, intentions and
projections about future events, results of operations, prospects,
financial condition and discussions of strategy.
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 disclosed in
the last published annual report and half-year report, both of
which are freely available on Glencore's website.
For example, our future revenues from our assets, projects or
mines will be based, in part, on the market price of the commodity
products produced, which may vary significantly from current
levels. These may materially affect the timing and feasibility of
particular developments. Other factors include (without limitation)
the ability to produce and transport products profitably, demand
for our products, changes to the assumptions regarding the
recoverable value of our tangible and intangible assets, the effect
of foreign currency exchange rates on market prices and operating
costs, and actions by governmental authorities, such as changes in
taxation or regulation, and political uncertainty.
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.
Except as required by applicable regulations or by law, 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 is correct as at any time subsequent to its
date.
No statement in this document is intended as a profit forecast
or a profit estimate and past performance cannot be relied on as a
guide to future performance. This document does not constitute or
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solicitation of any offer to purchase or subscribe for any
securities.
The companies in which Glencore plc directly and indirectly has
an interest are separate and distinct legal entities. In this
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convenience only where references are made to Glencore plc and its
subsidiaries in general. These collective expressions are used for
ease of reference only and do not imply any other relationship
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also used to refer collectively to members of the Group or to those
who work for them. These expressions are also used where no useful
purpose is served by identifying the particular company or
companies.
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END
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