Glencore hits targets, keeps its forecast

Glencore, one of the world’s major commodity suppliers and traders, hit its targets for last year’s output and kept its forecasts for this year unchanged.

Shares in London-listed Glencore, a Swiss-based company headed by South African Ivan Glasenberg, extended this year’s gains slightly, with the stock up 18%, in line with its peers which have rallied on generally firmer commodity prices.

Among the closely watched commodities within Glencore, which is the world’s largest producer of ferrochrome from its South African operations, was copper.

Copper output of 1.42-million tonnes was 5% lower in 2016 than the previous year because of the suspension of its African copper assets, which was offset by improvements at its South American mines.

In zinc, production was 24% lower year on year at 1.09-million tonnes as the company mothballed an estimated 4% of the world’s capacity because of low prices. For this year, Glencore kept its forecast output of 1.19-million tonnes intact.

“Overall, we see today’s results as positive. We have seen already that the company is getting the job done on the financing and deleveraging side of the business; today’s report shows it is also delivering on the operational side,” said Bernstein analyst Paul Gait. “There were no surprises from the report today, and this is good. The mining business appears strong enough now to support the restructuring of the business [which is near completion in our opinion].”

In SA, thermal coal production fell by 21% to 29.3-million tonnes, with a number of mine closures and the sale of Optimum colliery.

The report alleged Eskom had made it difficult for Glencore to continue with the colliery, which was later sold to Tegeta Resources, a company linked to the Gupta family.