TIDMGLEN
RNS Number : 6803U
Glencore PLC
31 July 2020
NEWS RELEASE
Baar, 31 July 2020
Half-Year Production Report 2020
Glencore Chief Executive Officer, Ivan Glasenberg:
"Glencore has delivered an overall strong first-half operating
performance amid the unprecedented challenges presented by
Covid-19, reflecting both the ability and dedication of our teams
to adapt to these difficult conditions. As a responsible operator,
our top priority has been to protect the health and safety of our
people and the communities that host our businesses.
"Although some of our industrial operations were temporarily
suspended in line with national and regional guidance, or where our
risk assessment determined a suspension was appropriate, the
majority of our assets continued to operate relatively normally. I
am particularly pleased to report a strong operational performance
at Katanga, with its ramp-up on track to achieve design capacity by
the end of the year.
"Our Marketing business has also risen to the challenge,
delivering robust counter-cyclical earnings. A very strong
first-half performance allows us to now raise our full year 2020
EBIT expectations to the top end of our $2.2-$3.2 billion guidance
range.
"In the near-term, we remain alert to the continuing challenges
that Covid-19 presents. While we expect our operating cash flow to
remain solid, we are ready to adapt to changing market
conditions."
Production from own sources - Total(1)
Change
H1 2020 H1 2019 %
--------------------------------- ------------ ----------- ----------- ------------
Copper kt 588.1 663.0 (11)
Cobalt kt 14.3 21.3 (33)
Zinc kt 550.1 535.9 3
Lead kt 127.9 147.5 (13)
Nickel kt 55.2 55.4 -
Gold koz 385 423 (9)
Silver koz 14,185 15,490 (8)
Ferrochrome kt 466 799 (42)
Coal - coking mt 3.7 4.3 (14)
Coal - semi-soft mt 2.6 3.3 (21)
Coal - thermal mt 51.8 60.6 (15)
--------------------------------- ------------ ----------- ----------- ------------
Coal mt 58.1 68.2 (15)
Oil (entitlement interest basis) kbbl 2,612 2,240 17
1 Controlled industrial assets and joint ventures only.
Production is on a 100% basis, except as stated later in this
report.
Realised prices
Realised
------------ ------------
LME (average
6 months) Difference
US$ million c/lb $/t $/t %
------------ ----------- ----------- ------------ ------------
Copper 239 5,269 5,502 (4)
Zinc 94 2,072 2,049 1
Nickel 566 12,477 12,477 -
Realised prices differ from LME benchmarks, reflecting
provisional pricing adjustments, commercial terms / qualities,
etc.
-- The average spot Newcastle coal price for the period was
$62/t. After applying a portfolio mix adjustment (component of our
regular coal cash flow modelling guidance) of $1.70/t to reflect,
amongst other factors, movements in pricing of non-NEWC quality
coals, an average price of $60.30/t was realised across all coal
sales volumes.
Covid-19 situation - update report
-- While the majority of our assets continued to operate through
Q2 with minimal disruption, certain operations were temporarily
suspended, on account of mandatory governmental lockdown
provisions, or otherwise where a risk assessment determined such
action appropriate. The curtailed operations have mostly restarted
as follows:
Date Date
Jurisdiction Asset Commodity suspended restarted Comment
------------------ ----------------- ------------------- ----------------- ------------------ -------------------
Canada Raglan Nickel Late March Late April Expect to
(Quebec) make up the
majority
of lost
tonnes over
the
balance of
2020
Canada Matagami Zinc Late March Late April Production
(Quebec) restarted in
line with
historical
levels
Chad Oilfields Oil April Currently See
on care and "Operational
maintenance update"
below
Colombia Cerrejon Coal Late March Early May Limited
JV restart in
May.
FY 2020
attributable
production
expected in
the 6.5-7.0mt
range (2019:
8.6mt)
Colombia Prodeco Coal Late March Currently See
on care and "Operational
maintenance update"
below
DRC Katanga Copper/cobalt n.a n.a. No material
production
disruption;
acid plant
commissioning
delayed to
H2 2020
New Koniambo Nickel n.a. n.a. Delays to
Caledonia planned
maintenance
from
restrictions
impacting
availability
of key
maintenance
teams. Will
be operated
as a
single-line
operation
for the
balance of
2020
Peru Antamina Copper/zinc Mid April Late May Operations
JV restarted
with
a reduced
workforce;
expect
a phased
ramp-up
through
H2
South Africa Ferroalloys Chrome Late March Early May See
and vanadium "Operational
update"
below
South Africa SA Coal Coal n.a. n.a. Major
complexes
operated
relatively
normally
throughout
the SA
lockdown
South Africa Astron Oil refining Late March Operations Post delayed
Energy suspended turnaround,
refinery
restart
disrupted
by an
incident
requiring
major repair
and
remediation.
Fuel
marketing and
distribution
operations
unaffected
throughout,
although
underlying
demand
has been
weaker
Zambia Mopani Copper n.a. n.a. See
"Operational
update"
below
------------------ ----------------- ------------------- ----------------- ------------------ -------------------
Marketing update
-- Marketing performance in H1 2020 was very strong, with full
year EBIT expectations now raised to the top end of our long-term
$2.2-$3.2 billion range. Contributing towards H1 2020's EBIT
performance was a sizeable increase in carried inventory ("Carry
Trades") transactions / quantities (although the overall dollar
value of inventories was somewhat lower than December 2019, due to
lower commodity prices) and also a build in non-RMI net working
capital on account of the varying terms of trade in our respective
business units. In particular, our oil department, which in recent
years has managed its receivables portfolio days on hand to around
20 days and accounts payable around 45 days, saw a significant
reduction in its net payables position (payables less receivables)
via the sharp reduction in oil prices, as well as lower sales
volumes due to weaker product demand in H1 2020. Together with the
initial cash margining required to give effect to the additional
Carry Trades, this has led to an increase in our Net Debt as at 30
June 2020.
Operational update
-- Mopani notified the Zambian government of its intention to
place the mining operations on care and maintenance to preserve
value and maintain the option to deliver its various growth
projects when conditions further improve. Mopani was notified by
the relevant authorities that its proposal was rejected. Mopani has
appealed this decision. Mining operations will continue pending the
outcome of the appeal and Mopani continues to engage with the
relevant authorities.
-- The outlook for Prodeco's business remains challenging due to
ongoing weakness in the Atlantic coal market, exacerbated by the
impact of Covid-19. Prodeco is in the process of optimising its
mine plans to account for the current market environment. This
process requires consultation and approval by a number of external
parties. An application has been made to the authorities for
Prodeco to remain on care and maintenance, which will help preserve
the value of the assets and the option to implement the revised
plans when the appropriate approvals have been obtained and market
conditions have improved.
-- Due to Covid-19 related disruptions to international
mobility, transportation and supply chains, the Chad oil fields
were placed on care and maintenance in April. These disruptions and
prevailing market conditions are being monitored to determine when
some restart of operations would be appropriate.
-- The Ferroalloys business has for some time experienced a
structurally worsening competitive environment across the South
African ferrochrome industry, including via substantial electricity
price increases. In January 2020, a consultation process was
initiated on the future of the Rustenburg smelter, and in June
2020, a further process commenced across the entire business, to
seek a more competitive operating cost structure. This is an
ongoing process with all alternatives being considered.
Production guidance and updated cost outlook
-- Full year 2020 production guidance, including accounting for
the latest expected business interruptions due to Covid-19 noted
above, is set out below, with further remarks on page 19.
Actual Current Previous
Q1 Q2 H1 ROY guidance guidance
2020 2020 2020 2020 2020 2020
------------ ------- -------- -------- -------- -------- --------- --- ---------
667 +/- 1,255 1,255
Copper kt 293 295 588 35 +/- 35 +/- 45
------------ --------- -------- -------- -------- -------- --------- --- ---------
14 +/- 28 +/- 28 +/-
Cobalt kt 6 8 14 2 2 2
------------ --------- -------- -------- -------- -------- --------- --- ---------
610 +/- 1,160 1,160
Zinc kt 296 255 550 30 +/- 30 (1) +/- 30
------------ --------- -------- -------- -------- -------- --------- --- ---------
59 +/- 114 +/- 122 +/-
Nickel kt 28 27 55 4 4 5
------------ --------- -------- -------- -------- -------- --------- --- ---------
534 +/- 1,000 1,000
Ferrochrome kt 388 78 466 25 +/- 25 +/- 25
------------ --------- -------- -------- -------- -------- --------- --- ---------
56 +/- 114 +/- 132 +/-
Coal mt 32 26 58 3 3 3
1 Excludes Volcan
-- 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 c/lb 148 105 106 (1) 109 104
------------------------- --------- ---------------------------------------------------------- --------- --------- --- -------- ---------
Zinc - excl. gold credit c/lb 47 58 48 (2) 64 32
Zinc c/lb 13 14 5 (2) 28 (20)
------------------------- --------- ---------------------------------------------------------- --------- --------- --- -------- ---------
Nickel - excl. Koniambo c/lb 277 240 257 230 281
Nickel c/lb 398 382 413 395 437
------------------------- --------- ---------------------------------------------------------- --------- --------- --- -------- ---------
Coal $/t 45 42 46 46 47
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 $350 million of net operating
costs is expected to be incurred in relation to Mopani, Mutanda,
Alumbrera and Polymet in 2020.
2 Excludes Volcan.
H1 production highlights
-- Own sourced copper production of 588,100 tonnes was 74,900
tonnes (11%) lower than H1 2019, mainly reflecting Mutanda being on
care and maintenance in the current period, expected lower grades
at Antapaccay and the short-term impact of Antamina's Covid-19
related demobilisation/remobilisation, partly offset by stronger
milling throughput at Collahuasi.
-- Own sourced zinc production of 550,100 tonnes was in line
with H1 2019, reflecting stronger grades at the Canadian mines and
the various temporary Covid-19 related suspensions at Antamina and
other South American operations.
-- Own sourced nickel production of 55,200 tonnes was in line
with H1 2019, reflecting a strong period of operations at Murrin
offsetting the delayed delivery of matte from the Sudbury smelter
to the Nikkelverk refinery.
-- Attributable ferrochrome production of 466,000 tonnes was
333,000 tonnes (42%) lower than H1 2019, mainly reflecting the
South African Covid-19 national lockdown during March/April.
Smelting operations partly resumed on 1 May, with further capacity
expected to be restarted towards the end of Q3.
-- Coal production of 58.1 million tonnes was 10.1 million
tonnes (15%) lower than H1 2019, mainly reflecting the Covid-19
related asset suspensions in Colombia.
-- Entitlement interest production of 2.6 million barrels was
0.4 million barrels (17%) higher than H1 2019, due to new wells
drilled in Equatorial Guinea and Cameroon, which helped to offset
the Covid-19 related suspension of the Chad assets.
To view the full report please click
www.glencore.com/dam/jcr:73768468-8e04-4bcf-ae43-f16844720672/GLEN_2020-HY_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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or statements that certain actions, events or results "may",
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occur or be achieved. Forward-looking statements are not based on
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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 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)
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contained herein is correct as at any time subsequent to its
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