GLENCORE PLC 
Baar, 4 November 2015
Corporate update and Third Quarter 2015 Production Report
Corporate updateFurther to Glencore's recent announcements on debt reduction plans (7 September) and funding (6 October factsheet), we are pleased to report significant progress on the delivery of such measures, which seek to reduce Net debt to the low $20s billion by the end of 2016.
$2.5bn raised from the equity placement on 16 September.
$2.4bn saved from the suspension of the 2015 final distribution and 2016 interim distribution.
$0.9bn raised from our first precious metals streaming transaction (see separate RNS announcement). Additional streaming transaction is in progress and we expect to make an announcement prior to year end.
Sales processes commenced for the minority stake in the Agriculture business as well as the Lomas Bayas and Cobar copper operations.
Material progress on reducing working capital, LT loans/advances and industrial capex.
Available committed liquidity at 30 September increased to $13.8bn (from $10.5bn at 30 June), reflecting $1.7bn of net capital raised (equity placement less interim dividend), as well as continued cash generation from the underlying operations and further release of RMI over the quarter.
Targeting Net funding and Net debt of c. $40bn and c.$25bn respectively by year end, down some 15-20% from their respective 30 June 2015 and 31 December 2014 amounts.
Post 30 September 2015:
Three bonds amounting to $1.95bn were repaid.
c.$400m of bonds (mainly 2016 and 2017 maturities) were repurchased (not cancelled).
We reiterate our 2015 full year marketing Adjusted EBIT guidance of $2.5 to $2.6bn. Marketing was stronger over the quarter, with improved contributions from metals and minerals and agricultural products.
An investor update call is scheduled for 10 December 2015, where updated guidance on expected Group industrial production, capex and cost structure for the 2016 to 2018 period will be discussed. Call details will be provided closer to the date.
Update on plans to reduce mined copper production by 455,000 tonnes by end 2017The shutdown and restart plans for Katanga and Mopani have been completed.
The suspension of processing operations at Katanga was implemented in the days following our announcement on 7 September, with no incremental copper production expected during the remainder of 2015 and 2016. Under the finalised plan, a phased restart and ramp-up is planned for H1 2017.
At Mopani, post completion of the optimisation study, the smelter will continue to operate either at reduced level or in campaigns to service ongoing long-term third party concentrate purchase contracts. In order to run the smelter at an optimal level, some own sourced concentrates primarily from the development of the Synclinorium and Mopani Deeps projects will be processed. We have deferred investment in the new concentrator to 2017, and full production will be resumed in 2018 upon completion of this project.
We noted on 7 September that these changes would reduce production by approximately 400,000 tonnes of copper over 18 months compared to previous plans. With the phased approach to restarting Katanga and deferral of Mopani's concentrator investment, we revise this estimate to 455,000 tonnes by end 2017. Our guidance for 2015 full year copper production has been reduced accordingly (see page 21).
To preserve the value of Glencore's reserves in an environment of low zinc and lead prices, 500,000 tonnes p.a. of mined zinc and 100,000 tonnes p.a. of mined lead production have been curtailed until such time that prices return to sustainably higher levels.
As noted in the announcement of 9 October, these measures will reduce 2015 full year mined zinc and lead production by around 100,000 and 50,000 tonnes respectively (see page 21).
Year to date production highlightsOwn sourced copper production was down 2% to 1,127,500 tonnes in the nine months to 30 September 2015, primarily due to the anticipated lower production from Alumbrera (nearing end of mine-life) and some Katanga suspension impact, partly offset by Antapaccay's successful ramp-up.
Own sourced zinc production was up 13% to 1,127,100 tonnes, due to the impact of the expansion projects at Mount Isa and McArthur River. As noted above, the production suspensions / reductions announced in October will affect future reporting periods. Nevertheless, the ramp-ups achieved to date reflect the significant progress made in Australia and these sites are well positioned to bring back production as and when commercial conditions dictate
Own sourced nickel production was down 8% to 68,700 tonnes, reflecting the planned extended shutdown at Sudbury smelter and the use of a greater proportion of third party feeds to better manage smelter performance.
Attributable ferrochrome production was 1,072,000 tonnes, 14% up on the comparable period, as the Lion 2 smelter has now fully ramped up.
Own sourced coal production was down 8% to 102.7 million tonnes as we continue to limit production in the current weak market environment.
Glencore's oil entitlement production up 57% to 8.0 million barrels, due to increased attributable production from the Badila and Mangara fields in Chad. The drilling programme has been significantly reduced from initial plan in order to manage cash flows in the short term and preserve value for the future.
The Pasar copper smelter is in the process of being ramped up with its newly installed equipment enabling expansion to some 330,000 tonnes.
For further information please contact:
Investors | |||
Paul Smith | t: +41 41 709 24 87 | m: +41 79 947 13 48 | paul.smith@glencore.com |
Martin Fewings | t: +41 41 709 28 80 | m: +41 79 737 56 42 | martin.fewings@glencore.com |
Elisa Morniroli | t: +41 41 709 28 18 | m: +41 79 833 05 08 | elisa.morniroli@glencore.com |
Media | |||
Charles Watenphul | t: +41 41 709 24 62 | m: +41 79 904 33 20 | charles.watenphul@glencore.com |
Pam Bell | t: +44 20 7412 3471 | m: +44 77 3031 9806 | pam.bell@glencore.co.uk |
www.glencore.com
Metals and Minerals
YTD 2015 | YTD 2014 | Change % | ||
Copper | kt | 1,127.5 | 1,148.6 | (2) |
Zinc | kt | 1,127.1 | 997.7 | 13 |
Lead | kt | 228.5 | 223.3 | 2 |
Nickel | kt | 68.7 | 75.0 | (8) |
Gold | koz | 663 | 688 | (4) |
Silver | koz | 26,154 | 25,467 | 3 |
Cobalt | kt | 16.8 | 15.7 | 7 |
Ferrochrome | kt | 1,072 | 939 | 14 |
Platinum2 | koz | 66 | 67 | (1) |
Palladium2 | koz | 35 | 37 | (5) |
Rhodium2 | koz | 11 | 12 | (8) |
Vanadium Pentoxide | mlb | 15.4 | 15.2 | 1 |
YTD 2015 | YTD 2014 | Change % | ||
African Copper (Katanga, Mutanda, Mopani) | ||||
Copper metal3 | kt | 354.0 | 344.3 | 3 |
Cobalt4 | kt | 14.1 | 13.1 | 8 |
Collahuasi5 | ||||
Copper metal | kt | 8.4 | 7.0 | 20 |
Copper in concentrates | kt | 130.4 | 147.4 | (12) |
Silver in concentrates | koz | 1,742 | 1,885 | (8) |
Antamina6 | ||||
Copper in concentrates | kt | 93.2 | 88.1 | 6 |
Zinc in concentrates | kt | 59.7 | 51.8 | 15 |
Silver in concentrates | koz | 4,169 | 3,065 | 36 |
Other South America (Alumbrera, Lomas Bayas, Antapaccay, Punitaqui) | ||||
Copper metal | kt | 51.6 | 50.7 | 2 |
Copper in concentrates | kt | 194.3 | 207.4 | (6) |
Gold in concentrates and in doré | koz | 214 | 261 | (18) |
Silver in concentrates and in doré | koz | 1,346 | 1,388 | (3) |
Australia (Mount Isa, Ernest Henry, Townsville, Cobar) | ||||
Copper metal | kt | 150.6 | 153.6 | (2) |
Copper in concentrates | kt | 37.1 | 35.2 | 5 |
Gold | koz | 66 | 46 | 43 |
Silver | koz | 1,178 | 1,043 | 13 |
Total Copper department | ||||
Copper | kt | 1,019.6 | 1,033.7 | (1) |
Cobalt | kt | 14.1 | 13.1 | 8 |
Zinc | kt | 59.7 | 51.8 | 15 |
Gold | koz | 280 | 307 | (9) |
Silver | koz | 8,435 | 7,381 | 14 |
Production from own sources - Copper assets1
Metals and Minerals
YTD 2015 | YTD 2014 | Change % | ||
Kazzinc | ||||
Zinc metal | kt | 142.0 | 147.0 | (3) |
Lead metal | kt | 18.2 | 18.2 | - |
Copper metal | kt | 37.3 | 34.5 | 8 |
Gold | koz | 382 | 380 | 1 |
Silver | koz | 2,607 | 3,095 | (16) |
Australia (Mount Isa, McArthur River) | ||||
Zinc in concentrates | kt | 600.6 | 460.6 | 30 |
Lead in concentrates | kt | 169.1 | 157.4 | 7 |
Silver in concentrates | koz | 6,393 | 5,953 | 7 |
North America (Matagami, Kidd) | ||||
Zinc in concentrates | kt | 86.0 | 101.3 | (15) |
Copper in concentrates | kt | 33.7 | 36.2 | (7) |
Silver in concentrates | koz | 1,799 | 1,354 | 33 |
Other Zinc (AR Zinc, Los Quenuales, Sinchi Wayra, Rosh Pinah, Perkoa) | ||||
Zinc metal | kt | 20.4 | 18.2 | 12 |
Zinc in concentrates | kt | 218.4 | 218.8 | - |
Lead metal | kt | 9.2 | 8.5 | 8 |
Lead in concentrates | kt | 32.0 | 39.2 | (18) |
Copper in concentrates | kt | 1.8 | 2.3 | (22) |
Silver metal | koz | 481 | 440 | 9 |
Silver in concentrates | koz | 6,439 | 7,244 | (11) |
Total Zinc department | ||||
Zinc | kt | 1,067.4 | 945.9 | 13 |
Lead | kt | 228.5 | 223.3 | 2 |
Copper | kt | 72.8 | 73.0 | - |
Gold | koz | 382 | 380 | 1 |
Silver | koz | 17,719 | 18,086 | (2) |
Production from own sources - Zinc assets1
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