Glencore lowers energy coal outlook after mixed quarter

(Sharecast News) - Glencore reported a sharp decline in copper production during the first quarter on Wednesday, while output of cobalt and steelmaking coal rose strongly, supported by higher grades and recent acquisitions. The FTSE 100 mining giant said own-sourced copper production fell 30% year-on-year to 167,900 tonnes, driven by weaker performance at Collahuasi, Antapaccay and KCC.

It cited lower mining rates, grades and recoveries across these operations.

In contrast, cobalt output rose 44% to 9,500 tonnes, mainly due to improved volumes and grades at the Mutanda mine in the Democratic Republic of Congo.

Zinc production increased by 4% to 213,600 tonnes, supported by stronger grades at Antamina and higher output from Australia.

Nickel output dropped 21% to 18,800 tonnes, but was broadly flat after adjusting for the prior-year contribution from Koniambo, which had since been placed on care and maintenance.

Steelmaking coal production surged to 8.3 million tonnes, largely reflecting the addition of Elk Valley Resources, acquired in July last year.

That business accounted for 6.6 million tonnes in the quarter.

Australian production also rose on improved operational performance.

Energy coal output declined 7% to 23.4 million tonnes due to scheduled mine closures in Australia.

Glencore maintained full-year production guidance across all major commodities, except for a slight reduction in energy coal, now forecast at 87 to 95 million tonnes, down from 92 to 100 million tonnes previously.

"While still early in the year, basis marketing's performance over the first quarter, and accounting for general market uncertainty and global economic growth scenarios trending lower, we currently expect full year marketing adjusted EBIT around the middle of our long-term $2.2bn to $3.2bn per annum guidance range," said chief executive officer Gary Nagle.

"Since quarter-end, financial markets, including commodities, have been highly volatile and unpredictable, responding rapidly to US tariff newsflow and uncertainty.

"In such an unpredictable environment, risk management has been a primary focus, noting the many complex supply chains we are exposed to, including the US, China, Europe and Canada."

Nagle said that despite the "noise", primary commodity trade routes to date had not been meaningfully disrupted.

"However, owing to the various proposed and currently being implemented tariffs across commodity supply chains, it is likely that some physical trade flow re-orientation and dislocation will manifest over the coming months, which may present opportunities for our marketing business."

At 0905 BST, shares in Glencore were down 4.3% at 252.57p.

Reporting by Josh White for Sharecast.com.