Glencore overhauls embattled Canadian smelters as margins plunge

Glencore Plc is doubling down on a cost-cutting drive at its Canadian copper and zinc plants following job cuts last year, in a further overhaul of its global smelting business following a collapse in processing margins.

The company’s copper plants in Quebec — as well as several recycling sites in the US — will be absorbed into the miner’s global zinc smelting division, with the aim of increasing business synergies and operational efficiency, according to internal memos seen by Bloomberg.

The consolidation comes as Glencore pushes ahead with a sweeping review of its global copper and zinc smelting assets, following an industrywide slump in profitability fueled by increased competition for mined ores. Glencore has already written down the value of several smelters and mothballed a copper plant in the Philippines, and is now pursuing major cost cuts at its assets in Canada.

“Our smelting and refining business continues to be under a high level of economic pressure due to challenging market conditions that have led to historically low treatment charges,” Suresh Vadnagra, Glencore’s head of zinc assets, said in an internal memo this week.

Xavier Wagner, Glencore’s chief operating officer, and Jon Evans, its head of industrial copper assets, are meeting locally with staff this week to “discuss the changes and importantly, the future of our Canadian copper and zinc metallurgical assets,” Vadnagra wrote.

The overhaul comes after Glencore in December let go about 85 of the roughly 100-strong team based in Montreal that was overseeing its Canadian copper and zinc assets, according to people familiar with the matter.

A Glencore spokesman declined to comment.

Glencore’s Canadian smelting assets comprise of Horne copper smelter in northern Quebec as well as Canadian Copper Refinery east of Montreal and CEZinc in southern Quebec. The operations collectively employ more than 2,300 people. CEZinc is North America’s second-largest zinc plant.

The Quebec smelters benefit from access to low energy costs, skilled labor and proximity to US consumers, but margins at the plants have come under threat after a massive expansion in global smelting capacity. The increased competition has made feedstock including copper and zinc ores and concentrates harder and pricier to get hold of, and soaring raw-material costs have strained smelters’ cashflows.

Last month, Glencore suspended operations at a copper smelter in the Philippines and took a $1.5 billion writedown on various smelting units. The company said it is strategically evaluating the longer-term business case for all of the assets, which also include plants in Spain, Italy, Germany and Australia.

Canadian metal producers are also contending with the threat of tariffs on shipments to its southern neighbor. US President Donald Trump already imposed a 25% tariff on global aluminum and steel imports, and he’s also exploring copper levies. Trump briefly imposed 25% duties on most Canadian and Mexican goods earlier this month, before giving a reprieve to April 2 by exempting goods covered by a North American free trade agreement.

Horne processes electronic scrap and concentrates to produce copper for the North American market, with an annual capacity to produce 210,000 metric tons of copper anodes. It is also the largest electronic-scrap processor on the continent, and is partly fed by collection plants run by Glencore in the US.

(By Julian Luk and Thomas Biesheuvel)