Glencore Xstrata Copper Output Gains 18% on Mines in Africa

Glencore Xstrata Plc (GLEN), the biggest exporter of coal for power stations, said first-quarter copper production rose 18 percent after gains at its mines in Africa.

Output was 321,800 metric tons, Baar, Switzerland-based Glencore said today in a statement, compared with 273,200 tons a year earlier. African production jumped 44 percent, it said. The figures include operations acquired from Xstrata Plc.

Glencore completed a 15-month long takeover of Xstrata this month to create the fourth-largest mining company with a market value of $70 billion. The combined group has interests in about 35 coal mines in Colombia, Africa and Australia, accounting for about 10 percent of global seaborne supplies of the fuel.

Coal output grew 1 percent to 32.7 million tons, it said. Prices for the fuel exported from Australia, its largest coal producing region, were 23 percent lower, it said.

“Despite a poor quarter for thermal coal, the company produced a relatively solid quarter for copper, zinc and other operations,” BMO Capital Markets analyst Tony Robson said in a note. Coal output was 9 percent less than BMO forecast, he said.

Glencore Xstrata has halted work on the Balaclava Island export terminal in Australia’s Queensland state because of poor market conditions and overcapacity, it said earlier in an e-mailed statement. The facility had planned export capacity of 35 million tons a year, according to the company’s website.

The stock advanced 0.4 percent to close at 345.3 pence in London trading. The shares are down 1.7 percent this year.

Zinc, Nickel

Zinc output was little changed at 386,900 tons, lead rose 10 percent to 80,000 tons and Nickel 4 percent to 25,500 tons.

Spending on new projects is estimated at $29 billion in the next three years, Glencore said this month. After 2015, spending is set to “materially decline” to $4 billion to $5 billion. Expanding the Katanga and Mutanda copper mines in the Democratic Republic of Congo is on schedule for completion this year.

The group employs about 190,000 people in more than 50 countries across its industrial and trading divisions. The takeover of Xstrata was completed almost two years after Glencore’s $10 billion initial public offering that ended more than three decades of it operating as a closely held company.

The Xstrata acquisition will reduce the trading arm’s contribution to earnings to 28 percent from 63 percent, Deutsche Bank AG analysts Rob Clifford and Grant Sporre wrote in a May 2 report. The copper and coal divisions will be the biggest contributors to profit this year, according to Deutsche Bank.

The performance by the marketing division in the quarter was “broadly in line with our expectations,” Glencore said.

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

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

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