11th Feb 2016 07:43
LONDON (Alliance News) - Glencore PLC on Wednesday reported mixed production results for 2015 and said most commodities will see production fall this year.
The FTSE 100 miner and commodities trading company reported year-on-year falls in production of copper, nickel and coal in 2015, whilst production of zinc, ferrochrome and oil increased - with commodities continuing to receive lower prices.
Glencore reported a 3% fall in own-sourced copper production to 1.5 million tonnes due to its decision to suspend processing operations at the Katanga mine in the Democratic Republic of Congo and a significant curtailment of production at the Mopani mine in Zambia.
Copper production will continue to fall in 2016 to around 1.4 million tonnes.
Own-sourced nickel production was down 5% year-on-year to 96,200 tonnes due to the six-week planned shutdown of the Sudbury smelter and the negative impact of the metal leak experienced at Koniambo in late 2014, it said.
However, nickel production will rise this year to around 116,000 tonnes, Glencore said.
Coal production experienced the largest fall in 2015, down 10% to 131.5 million tonnes. However, that was mainly due to the decision to reduce production in response to market conditions.
The company said coal production will continue to fall this year to around 130.0 million tonnes.
Glencore's oil entitlement reported the largest rise, totalling 10.6 million barrels in 2015, up 44% from last year. That was mainly thanks to increased attributable production from the Badila and Mangara fields in Chad.
That large rise in 2015 will not be repeated this year, with Glencore guiding oil production of 8.5 million barrels in 2016.
Attributable ferrochrome production also experienced a substantial 13% lift from 2014 to total 1.5 million tonnes as the Lion 2 smelter contirbuted its first full year of operations.
Ferrochrome production in 2016 will continue to rise to around 1.6 million tonnes.
Own-sourced zinc production was up 4% in 2015 to 1.5 million tonnes as its assets in Australia ramped up production.
Zinc production this year will experience a substantial fall to around 1.1 million tonnes.
In a separate announcement late Wednesday, Glencore said it has signed a long-term streaming agreement with Franco-Nevada Corp that will result in Glencore supplying silver and gold to the company from the Antapaccay mine in Peru.
The sales agreement will assist Glencore in reducing its debt, the company's current priority, as Franco-Nevada will make an advanced payment of USD500.0 million to Glencore's subsidiary once the agreement is finalised, which is expected to occur before the end of this month.
The deal has pushed the total value of Glencore's upfront proceeds from streaming agreements to USD1.40 billion.
In return, Glencore's subsidiary, Narila Investments Ltd, will deliver gold and silver produced at the mine to Franco-Nevada. The amount of gold and silver shipped will be dependent on the amount of copper being produced at the mine.
Narila will deliver 300 ounces of gold per 1,000 tonnes of copper in concentrate produced until total deliveries hit 630,000 ounces, after which, 30% of all gold production from the mine will be shipped to Franco-Nevada.
In addition, 4,700 ounces of silver per 1,000 tonnes of copper in concentrate will be delivered by Narila until 10.0 million ounces of silver has been delivered, after which 30% of all silver production will be shipped to Franco-Nevada.
Franco-Nevada will make ongoing payments of 20% of the spot gold and silver price per ounce delivered which will increase to 30% of the respective spot prices after 750,000 ounces of gold and 12.8 million ounces of silver have been delivered, said Glencore.
By Joshua Warner; [email protected]; @JoshAlliance
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