Glencore preliminary 2021 copper output falls 5% to 1.196 million mt

Global diversified natural resources company Glencore's preliminary 2021 own-sourced copper output decreased 5% year on year to 1.196 million mt, the company said Feb. 15.

The Switzerland-based company said the drop in output was due mainly due to the disposal of the Mopani mine in Zambia, expected lower copper grades at its Antapaccay operations in Peru and lower copper byproducts from its mature zinc and nickel mines.

At its Africa copper operations, own-sourced copper output decreased 8% year on year to of 277,200 mt, mainly due to Mopani, while in the Democratic Republic of Congo, the contribution from Mutanda's limited restart was largely offset by the impact of intermittent power outages at Katanga, the company said.

In South America, attributable copper production at Collahuasi in Chile was in line with 2020 at 277,200 mt, while at the Antamina mine in Peru attributable copper production increased 17% year on year to 150,000 mt, reflecting coronavirus-related mining suspensions in the period.

Other own-sourced copper output in the region decreased 9% year on year to 235,200 mt, due to lower grades at Antapaccay and temporarily reduced production at Lomas Bayas in Chile due to short-term leach pad issues, which have now been rectified.

In Australia, own-sourced copper production fell 11% year on year to 85,300 mt due to expected changes in mine sequencing at Ernest Henry and additional mine development at Cobar.

Glencore said full-year 2022 copper production guidance remains unchanged at 1.115 million mt, plus or minus 30,000 mt.

Cobalt output up, nickel and zinc down

The company's own-sourced cobalt production rose 14% year on year to 31,300 mt, due to the limited restart of production at Mutanda in 2021. Glencore had placed Mutanda, the world's largest cobalt mine, on care and maintenance in November 2019 for two years, citing increasing costs, low cobalt prices and higher taxes.

Glencore said full-year 2022 cobalt production guidance was set at 48,000 mt, plus or minus 3,000 mt.

The company's nickel output fell 7% year on year to 102,300 mt in 2021, due to the lengthy scheduled statutory shutdown and maintenance issues at Murrin Murrin operations in Australia earlier in the year. Murrin Murrin 2021 output fell 17% to 30,100 mt.

At the company's Sudbury Integrated Nickel Operations in Canada, nickel production decreased 3% to 55,200 mt.

At its Koniambo large-scale integrated ferronickel mining and processing complex in New Caledonia, output was unchanged year on year at 17,000 mt, following a much-improved Q4 2021 performance.

Full-year 2022 nickel production guidance was set at 115,000 mt, plus or minus 5,000 mt.

Own-sourced zinc production decreased 4% year on year to 1.118 million mt, due to the expected decline of Maleevsky mine in Kazakhstan and the slower than expected ramp-up of Zhairem mine tonnage.

Zinc production guidance for 2022 has been set at 1.11 million mt, plus or minus 30,000 mt.

Commenting on the results, Lord Ashbourne, director of energy and resources at investment research and consultancy firm Edison Group, said: "2021 was a strong year for Glencore owing to recovering demand for its metals and the emergence of a new commodity supercycle."

"As a result, the company posted an 84% year-on-year increase in adjusted EBITDA to a record $21.3 billion. Multi-year or record high prices for many of its commodities underpinned the 118% jump in Industrial adjusted EBITDA to $17.1 billion," Lord Ashbourne said.

Investigation

As previously disclosed, Glencore is subject to a number of investigations by regulatory and enforcement authorities, including the US Department of Justice, the US Commodity Futures Trading Commission, the UK Serious Fraud Office and the Brazilian Federal Prosecutor's Office.

The company said it hopes to resolve the investigations and has raised $1.5 billion, this representing the company's current best estimate of the costs to resolve these investigations.

"Significantly, the group expects long-running corruption probes by US and UK authorities to be resolved this year. Potential fines and further sanctions have weighed on the stock so the chance for resolution by the end of the year is likely to be welcomed by investors," Lord Ashbourne said. "They will also be buoyed by the announcement it will pay $3.4 billion in dividends with shareholder returns augmented further by a new $550 million share buyback."