Glencore, a mining major with a diversified portfolio of assets cut its production guidance for the year, following a decline in output in the first quarter of 2022.
The company identified a number of temporary impacts to have led to this, including geotechnical challenges at its Katanga mine and Covid-19 absenteeism, particularly in Australia.
As a result of these impacts, annual production guidance was reduced 3 per cent for copper and 6 per cent for cobalt due to the issues at Katanga, while nickel and ferrochrome output guidance were both lifted 3 per cent, following a strong first quarter.
Particularly, copper production from the company’s own sources declined 14% from the first quarter of 2021 due to temporary geotechnical constraints at its Katanga operation, the sale of Ernest Henry in January 2022 and lower copper units produced within Glencore’s zinc business.
Similarly, its zinc output dropped 15% from the previous year’s quarter, reflecting COVID-19 related absenteeism at Mount Isa in Australia and the planned end of mining at Iscaycruz last year.
Production in line with expectation
Glencore’s own sourced nickel production of 30,700 tonnes was 5,500 tonnes (22%) higher than Q1 2021, primarily reflecting Koniambo operating both production lines in 2022. Also, attributable ferrochrome production increased to 387,000 tonnes in Q1 2022, 12,000 tonnes (12%) below Q1 2021.
Its gold production also declined to 189,000 ounces of gold from 224,000 ounces of gold in Q1 2021, reflecting a 16 per cent decline in production.
Glencore’s chief executive, Gary Nagle, said:
“For the most part, the group’s quarterly production was in line with our expectations. However, production in Q1 2022 reflects a number of temporary impacts, including geotechnical challenges at Katanga and COVID-19 absenteeism, particularly in Australia.
“Reflecting the Q1 production performance, full-year guidance is reduced for copper and cobalt, but increased for nickel and ferrochrome, while the slower-than-expected ramp-up at Zhairem reduces full-year zinc production guidance by 9%.”
Gary Nagle
Glencore’s Coal Production for Q1 2022
Overall coal production, on a like-for-like basis, reflecting its increased Cerrejón ownership, was broadly flat quarter-on-quarter, it said. Specifically, coal production was 4 million tonnes, being 16 per cent more than in Q1 2021, and reaching 28.5 million ounces in Q1 2022.
This reflects higher attributable production from Cerrejón, following the acquisition in January 2022 of the remaining two-thirds interest that Glencore did not already own.
In its oil business, Glencore said its entitlement interest oil production of 1.5 million barrels of oil equivalent was 0.4 million barrels (40%) higher than Q1 2021, due to commencement of the gas phase of the Alen project in Equatorial Guinea from March 2021.
According to media reports, the Financial Times Stock Exchange (FTSE) 100 group, which generates about 10-15 per cent of underlying earnings through coal, is putting its climate transition report up for scrutiny at its annual meeting today, April 28, 2022.
Following its first-quarter performance, Glencore expects Marketing’s full-year earnings to comfortably exceed the top end of its long-term adjusted EBIT guidance range of US$2.2-3.2 billion per year.
This is because, “Our Marketing activities were supported during the quarter by tight physical market conditions and periods of extreme volatility,” the company said.
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