Ivanhoe’s Kipushi zinc mine in the DRC officially reopens
The restart marked exactly a century since the mine first went into production.
Glencore Plc joined rivals in cutting spending plans this year as the world’s biggest commodity trader moves to protect its balance sheet from the global pandemic.
The company will reduce capital expenses in 2020 to between $4 billion and $4.5 billion from its previous forecast of $5.5 billion. The cuts are a result of some project deferrals, lower production and falling input costs. Glencore also lowered output forecasts for metals such as zinc and ferrochrome after operations were disrupted.
Several mines around the world have been forced to slow or temporarily close as countries wrestle to contain the spread of Covid-19. Other producers including BHP Group and Rio Tinto Group have also announced plans to review or lower capital spending, putting the brakes on development projects as they seek to maximize cash.
“Given our strong liquidity position and resilient business model, we are well positioned to navigate the current challenges,” Glencore Chief Executive Officer Ivan Glasenberg said in a statement Thursday.
The world’s biggest mining companies have so far been comparatively unscathed by the global pandemic as demand from China holds up and many of the most important mines continue to operate. Still, there is growing concern that the spread of the virus could lead to disruption at key assets that drive profits.
Glencore has already taken measures to protect its balance sheet from a potential deterioration. Last month it said it will defer its proposed $2.6 billion dividend and will review the decision when it reports interim results later in the year. The company has also shuttered some unprofitable assets.
Glencore lowered the production goals for all its commodities, with the most material declines in zinc and ferrochrome, which have been disrupted by shutdowns in Canada, Peru and South Africa. It also suspended its oil output guidance as assets in Chad are moved to care and maintenance.
| Commodity | Old target | New target |
|---|---|---|
| Copper | 1.3m tons | 1.255m tons |
| Cobalt | 29,000 tons | 28,000 tons |
| Zinc | 1.265m tons | 1.160m tons |
| Nickel | 125,000 tons | 122,000 tons |
| Ferrochrome | 1.340m tons | 1m tons |
| Coal | 135m tons | 132m tons |
| Oil | 6.5m bbl | N/A |
The company lowered its cost forecasts after accounting for lower input costs such as oil and favorable foreign-exchange movements. It also benefited from higher prices for precious metals it mines as byproducts.
Glencore said earnings in the trading business are so far within its long-term guidance range of $2.2 billion to $3.2 billion.
The shares rose 1.3% by 8:12 a.m. in London, paring this year’s decline to 33%.
(By Thomas Biesheuvel)
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