Glencore’s fall in coking coal output softened by thermal coal
Glencore has greeted 2020 with a steep decline to its
Australian coking coal production, but its thermal coal portfolio offset the
blow.
The company produced 1.8 million tonnes of coking coal in
the first quarter of this year, a drop of 31 per cent from the prior corresponding
period.
The drop was blamed on mining sequencing challenges in the
Australian portfolio. It reflects the timing of coking coal extraction at the
Hail Creek mine in Queensland, which Glencore expects to make up later in the
year.
The performance contrasts with Glencore’s thermal and
semi-soft coal portfolios in Australia. The company recorded a 2 per cent rise
from the first quarter of 2019 to 18.1 million tonnes during the same period
this year.
Glencore nonetheless revised its 2020 full year production
guidance for coal to 132 million tonnes down from 135 million tonnes due to
temporary suspensions of the Prodeco and Cerrejon mines in Colombia, the latter
of which is a joint venture with Anglo American and BHP.
Glencore confirmed earlier this year that it planned to
reduce the company’s scope three emissions by around 30 per cent by 2035.
The company intended to deplete its coal resource base in
Colombia, and to a lesser extent, Australia and South Africa.
Glencore’s copper and cobalt portfolios also showed a
resounding drop in their March quarterly production, with the commodities’ 2020
full year guidance revised accordingly.
The company aims to preserve “solid levels of overall
industrial asset free cash flow generation” in this environment.
“Copper unit costs are now guided lower to 105 cents ($1.63)
per pound, zinc unit costs 39 per cent lower at 14 cents per pound and thermal
coal guided unit cash costs are $US3 per tonne lower at $US42 per tonne,”
Glencore chief executive Ivan Glasenberg concluded.
“We also expect (around) $US1–$US1.5 billion reduction in
2020 capex (capital expenditure) compared to our original 2020 guidance of
$US5.5 billion.
“Given our liquidity position and resilient business model,
we are well positioned to navigate the current challenges. We recognise the
uncertainty caused by the current environment and endeavour to support our
stakeholders, as appropriate.”
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