Glencore Copper Production Increases 34% on African Mines

Glencore Xstrata Plc, created in a $29 billion deal five months ago, said quarterly copper output surged by 34 percent as African mines added to volumes.

Production from its own mines was 412,900 metric tons in the third quarter, up from 307,900 tons a year earlier, Baar, Switzerland-based Glencore said today in a statement. Copper output including feeds from third-party sources was 695,600 tons. The figures include operations acquired from Xstrata Plc.

Glencore completed a 15-month takeover of Xstrata in May to create the fourth-largest mining company, now valued at $72 billion. Copper and coal sales are the biggest contributors to profit. African output of the metal was boosted by the Mutanda, Katanga and Mopani mines, while coal volumes rose 9 percent.

The performance in both commodities was “particularly outstanding,” Morgan Stanley analyst Menno Sanderse wrote today in a report. Production was on average 2 percent to 3 percent higher than estimated, according to Credit Suisse Group AG.

Glencore slid 1.5 percent to close at 340 pence in London trading. The FTSE 350 Mining Index was 1.8 percent lower.

Profitability at the company’s trading arm “continued to be broadly in line with expectations,” Glencore said today. “Metals and energy remain the strongest, however we are also witnessing an improvement in agricultural performance.”

Seaborne Supply

The biggest exporter of power station coal has interests in more than 35 coal mines in Colombia, Africa and Australia, making up about 10 percent of global seaborne supply. It teamed up with Sumitomo Corp. last week to buy a $1 billion controlling stake in Australia’s third-largest thermal coal mine.

Total coal output rose to 36.8 million tons in the quarter. Zinc production fell 12 percent to 332,200 tons, lead gained 5 percent to 80,700 tons and nickel slid 6 percent to 22,500 tons.

The trader and minerals producer last month trimmed its spending budget for the three years through 2015 by $3.5 billion from $29 billion to combat declining demand and prices.

Glencore estimates cost savings of $2 billion in 2014 from the Xstrata deal, including $1.4 billion from closing 33 Xstrata offices, firing workers and cutting costs at current operations.

A review of 88 projects acquired with Xstrata resulted in activities at 44 being suspended, Glencore said in September. A month earlier, it wrote down the value of assets acquired in the takeover by $7.7 billion on a “broader negative mining industry environment,” leading to a first-half net loss of $8.9 billion.

The group employs about 190,000 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, which ended more than three decades of it operating as a closely held company.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director of Glencore Xstrata.

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