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Diversified miner and commodity trader Glencore says its SA thermal coal production fell almost a quarter in its half-year to end-June as it battles with rail constraints, but overall group output was up, and it is still cashing in on elevated energy prices.
SA thermal coal output fell 23% to 8.3-million tonnes to end-June, the miner said in an update, but group production rose 14% to 55.4-million tonnes, boosted by full-control of the Cerrejón mine in Columbia from January.
April’s flooding and reduced domestic demand added to pressure from SA’s logistics network, with Transnet battling with issues of maintenance, cable theft and locomotive availability. The miner, however, acquired the two-thirds of the Cerrejón coal mine it didn’t already own for $580m (R9.6bn), after Anglo American and BHP agreed to sell their stakes.
Glencore is one of the world’s largest global diversified miners, with more than 150 mining and metallurgical sites and oil production assets, with a footprint in over 35 countries. It is also one of the world’s largest traders of physical commodities, and that sets it apart from many of its peers, which rely mostly on physical production.
“Our financial performance (both industrial and marketing) was very strong during the period, particularly on account of buoyant energy markets, which will be a feature in the release of next week’s half-year report,” CEO Gary Nagle said in the production report.
“Allied with the strong results, particularly in marketing and mostly energy related, our net working capital has significantly increased during the period, in line with materially higher oil, gas and coal prices, and their elevated market volatilities,” he said.
Russia’s invasion of Ukraine has prompted unprecedented volatility in commodity markets, with records being set for merchandise including coal and aluminium in 2022. It has also forced companies to exit contracts with Russian firms, with that country targeted by unprecedented sanctions by the West.
Glencore kept most of its guidance unchanged, but cut its full-year copper guidance by 5%, or 50,000 tonnes, due to geotechnical issues in the Democratic Republic of the Congo.
Copper production fell 15% to 510,000 tonnes in its half-year.
In morning trade on Friday Glencore’s shares were up 1.79% to R91.89, having risen just over 13% in the year to date, and having more than doubled on a two-year basis.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.