Glencore post a drop in copper production
(Kitco News) - The overall drop in production had been expected for Glencore (GLEN:LSE) as the COVID-19 pandemic hit the mining industry hard in 2020.
In terms of specifics, only copper production was above the guidance with 1,258kt mined vs 1,220 - 30kt. Cobalt, zinc and nickel all came just under the guidance ranges.
In terms of comparisons against the pervious years numbers. Copper production was 8% lower but zinc production increased by 9%. Gold and silver production also increased by 3% and 2% respectively.
The firm says the FY 2021 guidance as per our investor presentation in December 2020 is still current.
Copper - 1,220/30
Nickel - 117/5
Zinc - 1,250/30
Cobalt - 35/2
Glencore Chief Executive Officer, Ivan Glasenberg said "Our mining assets performed well in difficult circumstances during 2020. Various precautionary operating changes made in Q2 continued into the second half, with sustainable and safe working practices embedded for the pandemic era. Production picked up accordingly, with year-over-year increases in zinc, gold and silver production."
He added "Excluding Mutanda (currently on care and maintenance), 2020 copper production was in line with 2019, while cobalt production was 6,200 tonnes higher, reflecting Katanga's continued successful ramp-up to design capacity levels. Required Covid-19 related mandatory suspensions and international mobility restrictions significantly impacted 2020 production of ferrochrome in South Africa, oil in Chad and nickel at Koniambo. Furthermore, various proactive market-related supply reductions were initiated in H2 2020, primarily with respect to coal production from Australia.
Lastly, Mr. Glasenberg said "As noted at our recent 2020 Investor Update, we continue to progress portfolio optimisation, and, in this regard, recently agreed terms for the sale of Mopani to an existing minority shareholder. Work continues to advance options around other non-core assets within the Group.".
The weekly chart shows the effectiveness of the trendline which originates at the 2018 highs. The trendline has been retested and rejected and we could see a move higher. The stronger dollar is playing havoc on the base metals mining firms at the moment but if it abates then base metals and their producers could recover in the short to medium term.