Mining Stocks Climb on Output-Cut Plans to Stem Rout in Metals

Updated on
  • Glencore says more production cuts coming if prices persist
  • China Hongqiao plans to cut 250,000 tons of aluminum capacity

Glencore Plc and Freeport-McMoRan Inc. rose as mining stocks gained after producers pledged deeper cutbacks to help stem a metals glut that’s sent prices to the lowest in six years. Copper futures gained a third straight day.

Phoenix-based Freeport advanced 3.7 percent in New York, heading for a second straight increase. Glencore, the Swiss producer and trader jumped as much as 14 percent in London after saying it will cut debt further, scale back operations and sell more assets. The Bloomberg World Mining Index extended its rebound from a seven-year low.

Glencore said Thursday that it sees more production reductions and expansion delays should prices fall further. Chief Executive Officer Ivan Glasenberg said on a conference call that it’s important to lower output, even from profitable operations. Freeport this week said it would deepen copper production cutbacks, and China’s top aluminum producer China Hongqiao Group Ltd. also pledged curtailments.

“Other mining companies are likely to follow Glencore’s example and likewise consider further cuts, which should lend support to prices in the medium to long term,” Commerzbank AG wrote in a note to investors.

Metals Prices

An index of six main metals traded on the London Metal Exchange has slumped 26 percent this year and is near the lowest since 2009, as the slowest Chinese economic growth in a generation cuts demand for raw materials. Even as some miners announced output cuts in the last few months, prices kept falling because production is still more than the world consumes.

The Bloomberg gauge of mining stocks climbed 0.6 percent by 1:20 p.m. New York time. Glencore gained 7 percent to 88.90 pence. Vancouver-based Teck Resources Ltd. advanced 2.4 percent, while South African gold producers AngloGold Ashanti Ltd. and Gold Fields Ltd. surged more than 9 percent.

On the Comex in New York, copper futures for March delivery rose 0.3 percent to settle at $2.0725 a pound. The metal has dropped 27 percent this year.

China Hongqiao will cut 250,000 metric tons of primary aluminum capacity starting now, according to an e-mailed statement from the company. The announcement followed a meeting in the southwestern city of Kunming, where smelters discussed reducing output and other steps to counter the metals rout.

Freeport, the biggest publicly traded copper producer, will extend spending and production cutbacks, including lower expenditures at its energy operations, additional curtailments in copper and molybdenum output and the suspension of its common stock dividend as it battles against low prices.

— With assistance by Joe Deaux, and Alfred Cang

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