1st Feb 2019 10:29
LONDON (Alliance News) - Glencore PLC reported strong growth in annual production on Friday, despite issues with one of its subsidiaries in the Democratic Republic of the Congo.
Problems continue at subsidiary Katanga Mining Ltd's cobalt operations in the DRC as the government on Wednesday requested the creation of an ion exchange plant be suspended.
Own-sourced copper production was up 11% in 2018 to 1.5 million tonnes, which mainly reflected the restart of Katanga Mining Ltd's processing operations in late 2017. Copper sales in 2018 were around 22,000 tonnes lower than production due to timing of shipments, Glencore added.
Cobalt production jumped 54% to 42,200 tonnes, which the miner said mainly related to Katanga, which operates in the DRC.
"Katanga's current cobalt production is being temporarily stockpiled on site, pending introduction of a long-term solution to remove excess uranium levels in such cobalt," Glencore explained.
Katanga, in which Glencore holds a majority stake, in November last year said its operating subsidiary had suspended the sale and export of cobalt at the Kamoto project.
Katanga said the suspension was due to the presence of uranium above "the acceptable limit allowed" for export through main African ports.
To resolve this, Katanga said its operating subsidiary, Kamoto Copper Co SA, intended to construct an ion exchange system to remove uranium from cobalt produced at the project.
Providing an update on this on Friday, Katanga said Kamoto received a letter from the DRC Minister of Mines on Wednesday following an inspection conducted by the government late last year.
"The Minister of Mines raised certain concerns with the technical solutions identified by Kamoto and requested Kamoto suspend the project to build an ion exchange plant until further notice. Kamoto intends to engage with the Ministry of Mines to understand and address their concerns," Katanga said.
Accordingly, Katanga said annual cobalt production for 2019 is unchanged at 26,000 tonnes but sales of this are expects to be mostly recognised in 2020.
Turning back to Glencore's production, own-sourced zinc production was in line with a year ago at 1.1 million tonnes, with disposals of African zinc assets in August 2017 balanced out by the restart of mining at Lady Loretta in Australia, in mid-2018.
Own-sourced nickel production of 123,800 tonnes was up 13% on last year, while attributable ferrochrome production of 1.6 million tonnes was roughly the same as last year.
Attributable coal production of 129.4 million tonnes was up 7% on 2017, while oil entitlement interest production of 4.6 million barrels was down 8%.
The fall in oil output was due to Equatorial Guinea fields being in a period of natural decline, the FTSE 100 constituent said, though this was partly offset by an 11% increase in Chad production.
Glencore realised an average copper price of USD5,950 per tonne in 2018 and an average zinc price of USD2,836 per tonne.
Looking at the fourth quarter alone, copper production climbed 27% year-on-year to 390,600 tonnes, marking the best quarter for Glencore that year.
Cobalt production was 6% higher year-on-year at 13,700 tonnes and zinc up 7% to 282,100 tonnes. Coal output in the quarter rose 10% to 32.7 million.
The miner retained its production guidance for 2019 following the performance.
Copper output is expected around 1.5 million tonnes, while cobalt is expected at roughly 57,000 tonnes, zinc at 1.2 million tonnes, lead at 345,000 tonnes, nickel at 138,000 tonnes and coal at 145.0 million tonnes. Oil is forecast at 6.2 million barrels in 2019.
Separately on Friday, Russian firm En+ Group said it has completed its equity swap deal with Glencore.
As part of a move to allow the removal of aluminium and power firm En+ from the US sanctions list against Russia, Glencore will transfer its 8.8% stake in aluminium firm Rusal PLC to En+ in return for global depositary receipts worth around 11% of En+.
The first stage, now completed, saw around 2% being transferred, and then the rest will be moved 12 months later.
Currently En+ owns a 50.1% stake in Rusal. The transfer of additional 6.75% should be finished no later than in February 2020.
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