Glencore Reports Record Quarterly Coal Output, Copper Up 33%

Glencore International Plc, the largest publicly traded commodities company, reported record third-quarter output of thermal coal and a 33 percent jump in copper, saying it has the funds to spur further expansion.

Coal used in power stations climbed 30 percent to 6 million metric tons from a year earlier, the Baar, Switzerland-based company said today in an interim management statement. Copper from the company’s own sources rose to 98,700 tons from 74,200 tons a year earlier.

Glencore, which owns mines, plants and warehouses, has rebounded from a drop of as much as 35 percent in its shares since selling $10 billion in stock in May in the world’s biggest initial public offering this year. The company, which ended more than three decades of operating as a closely held partnership, is still down more than 20 percent from the offering price.

“Glencore released a positive 3Q IMS, with production numbers for industrial divisions coming in slightly better than expected in copper, coal and zinc,” Heath Jansen, a London- based analyst at Citigroup Inc., said in an e-mailed report. “The only area of disappointment was on gold production and ramp-up at Altyntau, due to lower-than-expected recover rates.”

Gold production rose 22 percent to 171,000 ounces in the quarter, Glencore said, estimating 450,000 ounces for 2011. Jansen’s estimate was for 500,000 ounces, he said in the note.

‘Stronger Prices’

Glencore rose 1.2 percent to 410 pence by 2:14 p.m. in London, giving it a value of 28.4 billion pounds ($45 billion).

“The increased metal production was delivered into stronger metal prices,” analysts in London at Collins Stewart said in a note. “There is no guidance on costs, so the overall impact is unclear. However should still see the shares better.”

Thermal coal output at the Prodeco mines being developed in Colombia grew 69 percent to 3.8 million tons, contributing to the record volumes. Even after equipment delays and unfavorable weather, Glencore is scheduled to meet a planned 20 million tons of annualized output by the fourth quarter of 2013, it said.

Mining machinery orders from Japan were delayed and the company has faced heavy rains since October that, if continued, may affect fourth-quarter output, according to the statement.

Spare Funds

“Despite the financial market uncertainty and some weather and equipment-driven disruptions, Glencore’s overall healthy operational and financial performance has continued,” it said in the statement. The company had more than $10 billion of spare funds at the end of the quarter “to further increase Glencore’s organic and other growth prospects” if desired, it said.

Zinc production gained 9.1 percent to 140,100 tons in the quarter and lead output rose 51 percent to 20,800 tons.

In August, Glencore reported a 57 percent jump in first- half net income before significant items to $2.45 billion. It may post adjusted net income of $5.1 billion for 2011, according to the average estimate of 14 analysts compiled by Bloomberg.

The Standard & Poor’s GSCI Spot Index of 24 commodities dropped 11 percent in the third quarter, while averaging 28 percent higher in the period than a year earlier.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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