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GLN - First Quarter 2020 Production Report and General Update
GLENCORE PLC
(Incorporated in Jersey under the Companies (Jersey) Law 1991)
(Registration number 107710)
JSE Share Code: GLN
LSE Share Code: GLEN
HKSE Share Code: 805HK
ISIN: JE00B4T3BW64
NEWS RELEASE
Baar, 30 April 2020
First Quarter 2020 Production Report and General Update
Glencore Chief Executive Officer, Ivan Glasenberg:
“The global impact of the COVID-19 pandemic is an unprecedented challenge for individuals, governments and
companies alike. Disruptions to our business have, to date, been manageable and the majority of our assets are
operating relatively normally, a credit to our people that have stepped up to the challenge of a changed working
environment, especially those who continue to carry out their work on site at our industrial assets – Glencore’s
frontline. Some industrial assets have been temporarily suspended, generally in line with national and regional
lockdowns. Our updated full year production guidance reflects these impacts.
“A rigorous focus on optimising our asset portfolio has helped to preserve solid levels of overall Industrial Asset free
cash flow generation in the current operating environment. Focussed cost control, lower energy costs, favourable
movements in producer currencies and higher precious metals’ by-product credits, have underpinned reductions in
forecast full year unit cash costs for our key commodity departments. Copper unit costs are now guided lower to
105c/lb, zinc unit costs 39% lower at 14c/lb and thermal coal guided unit cash costs are $3/t lower at $42/t. We also
expect a c$1.0 to $1.5 billion reduction in 2020 capex compared to our original 2020 guidance of $5.5 billion.
“Furthermore, notwithstanding global macroeconomic / demand headwinds , the volatile and complex commodity
trading environment has provided opportunities for our Marketing business, such that, to date, we have generated
annualised earnings within our $2.2 to $3.2 billion p.a. long-term guidance range.
“Given our strong liquidity position and resilient business model, we are well positioned to navigate the current
challenges. We recognise the uncertainty caused by the current environment and endeavour to support our
stakeholders, as appropriate.”
Glencore Q1 2020 Production Report and General Update
Highlights
Production from own sources – Total(1)
Q1 2020 Q1 2019 Change %
Copper - excl. African Copper kt 226.0 225.4 –
Copper - African Copper, in development/optimisation
phases kt 67.3 95.3 (29)
Copper kt 293.3 320.7 (9)
Cobalt kt 6.1 10.9 (44)
Zinc kt 295.6 262.3 13
Lead kt 61.7 73.9 (17)
Nickel kt 28.2 27.1 4
Gold koz 199 202 (1)
Silver koz 7,778 7,620 2
Ferrochrome kt 388 402 (3)
Coal - coking mt 1.8 2.6 (31)
Coal - semi-soft mt 1.6 1.0 60
Coal - thermal mt 28.5 29.6 (4)
Coal mt 31.9 33.2 (4)
Oil (entitlement interest basis) kbbl 1,806 1,145 58
1 Controlled industrial assets and joint ventures only. Production is on a 100% basis, except as stated later in this
report.
COVID-19 situation report and outlook
• The COVID-19 pandemic is an unprecedented challenge for all of us, including our colleagues, families, local
communities and society at large. As a responsible operator, our top priority is to protect the safety and health of our
people and the communities that host our businesses.
• Glencore operates more than 180 sites and offices in over 35 countries. The scale and diversity of our operations
means that the impact of the virus varies by location. In addition, many of our operations are located in remote areas
with limited public health care systems. Our teams are working closely with governments, health agencies and others
key responders to provide effective local solutions.
• We have introduced a number of precautionary measures across our offices and industrial assets in response to
COVID-19. This includes the implementation of enhanced hygiene and cleaning measures, application of social
distancing and identification of higher risk groups. Our goal is to operate only when we can keep our people safe and
healthy, while safeguarding jobs and providing support to our local communities. A near-total restriction on non-
essential travel has been implemented as well as remote working, where possible.
• The majority of our industrial assets continue to operate relatively normally, accounting for the various changed
practices noted above. Various operations have been temporarily suspended, where national/regional lockdowns or
other circumstances have dictated such.
• The assets that have been principally impacted are noted below:
Jurisdiction Asset Commodity Expected impact in 2020
Canada Raglan Nickel Operations stopped late March. Now recommenced and in process
(Quebec) of being ramped up. Impact is less than one month of output
Canada Matagami Zinc Operations stopped late March. Now recommenced and in process
(Quebec) of being ramped up. Direct impact is less than one month of output
Chad Oilfields Oil On care and maintenance since mid-April
Colombia Cerrejon JV Coal Mining operations ramped down from late March. See below
Colombia Prodeco Coal On care and maintenance since late March. See below
DRC Katanga Copper / cobalt Acid plant project commissioning delayed from H1 2020 to H2 2020.
No impact on 2020 production
Kazakhstan Kazzinc Zinc Zhairem mine development to be completed, but delivery to market
of expected zinc production being intentionally delayed to 2021
New Koniambo Nickel The planned maintenance shutdown on one production line (of two)
Caledonia was extended, with restart delayed by approximately two months
Peru Antamina JV Copper and Operations were initially halted for a two-week period from 13 April.
zinc This has now been extended, with restart timing subject to Antamina
being able to ensure the workforce’s ongoing health and wellbeing
South Africa Ferroalloys Chrome and All mining and smelting operations were suspended for the duration
production vanadium of the lockdown, a staggered start-up is currently in progress
South Africa SA Coal Coal Major complexes supplying domestic power and exports continued
to operate. A smaller complex was temporarily closed
South Africa Astron Energy Oil refining The planned Q1 refinery maintenance turnaround has been
extended
Zambia Mopani Copper Operating scenarios under discussion with the Zambian government.
• Colombian coal – given the continued pressure on European coal pricing, production volumes are at risk of further
reduction.
• Volcan – excluded from Glencore’s production statistics due to our relatively small equity interest (c.23%). Operations
were suspended on 19 March due to national government restrictions in Peru, and will restart when such restrictions
are lifted.
Production guidance and updated financial outlook
• Full year 2020 production guidance, including accounting for latest expected business interruptions due to COVID-
19 noted above, is set out below, with further remarks on page 19.
Actual Previous Current
FY guidance guidance 2020 weighting
2019 2020 2020 H1 H2
Copper - excl. African Copper kt 1,001 975 ± 25 975 ± 20 47% 53%
Copper - African Copper kt 370 325 ± 25 280 ± 25 50% 50%
Copper kt 1,371 1,300 ± 50 1,255 ± 45 48% 52%
Cobalt kt 46 29 ± 4 28 ± 2 48% 52%
Zinc kt 1,078 1,265 ± 30 1,160 ± 30 (1) 50% 50%
Nickel kt 121 125 ± 5 122 ± 5 46% 54%
Ferrochrome kt 1,438 1,340 ± 25 1,000 ± 25 47% 53%
Coal mt 140 135 ± 4 132 ± 3 47% 53%
Oil mbbl 5.5 6.5 ± 0.2 See below (2) n.a. n.a.
1 Excludes Volcan
2 Oil updated guidance under review, but will be materially lower as the field operations in Chad have been suspended,
relating to COVID-19 disruption in international mobility, transportation and supply chains
• Industrial Assets unit cost guidance updated for changes to production and current producer currency levels, energy
costs and by-product pricing, is as follows:
Actual Previous Current FYE 2020 split
FY guidance guidance
2019 2020 2020 H1 H2
Copper - excl. African Copper c/lb 81 82 83 (1) 90 78
Copper c/lb 148 120 105 (1) 116 94
Zinc – excl. gold credit c/lb 47 58 58 (2) 65.1 50
Zinc c/lb 13 23 14 (2) 27 1
Nickel – excl. Koniambo c/lb 277 227 240 220 257
Nickel c/lb 398 351 382 391 372
Coal $/t 45 45 42 44 40
1 Copper unit cost guidance excludes costs associated with non-operating or significantly curtailed assets, including
those on care and maintenance. In this regard, an estimated combined approximately $400 million of net operating
costs is expected to be incurred in relation to Mopani, Mutanda, Alumbrera and Polymet in 2020. Comparable to
previous guidance, the 120c/lb cost would have been 106c/lb, plus approximately $300 million of net operating costs
associated with the non-operating or significantly curtailed assets
2 Excludes Volcan.
• Industrial Assets capex for 2020 now expected to be in the $4.0-4.5 billion range (previous guidance: $5.5 billion)
reflecting some assets curtailing production levels (with associated capex savings), various deferrals and lower
equivalent USD costs due to generally weaker producer currencies and lower input costs, particularly through oil
price changes.
• Our Marketing business is delivering annualised Adjusted EBIT performance within our through the cycle long-term
guidance range of $2.2 to $3.2 billion p.a.
• As previously announced, Glencore’s revolving credit facilities have been refinanced and extended, effective 22 May
2020, on the same commercial terms as our 2019 facilities. These comprise:
- a $9.975 billion 12-month facility, with a 12-month term-out option at Glencore’s discretion; and
- a $4.65 billion 5-year revolving credit facility.
Q1 production highlights
• For the most part, the disruptions noted above took effect close to or after 31 March. Q1 production was therefore
largely unaffected by them.
• Own sourced copper production of 293,300 tonnes was 27,400 tonnes (9%) lower than Q1 2019. No production was
reported in the quarter for Mutanda (on care and maintenance) and Mopani (Q1 smelter restart processed 5.0kt (of
10.6kt) of copper contained concentrates produced and reported in H2 2019, while the smelter underwent a major
multi-month rebuild).
• Own sourced zinc production of 295,600 tonnes was 33,300 tonnes (13%) higher than Q1 2019, mainly relating to
the Antamina joint venture, the Iscaycruz mine in Peru that restarted in Q3 2019 and higher grades from Canada.
• Own sourced nickel production of 28,200 tonnes was 1,100 tonnes (4%) higher than Q1 2019, reflecting the offsetting
effects of disruptions in the base period at INO and Koniambo, and maintenance in the current period at Murrin
Murrin.
• Attributable ferrochrome production of 388,000 tonnes was 14,000 tonnes (3%) lower than Q1 2019.
• Coal production of 31.9 million tonnes was 1.3 million tonnes (4%) lower than Q1 2019, mainly reflecting operating
challenges in South Africa and mining sequencing in the Australian coking portfolio, partly offset by higher Australian
thermal coal production.
• Entitlement interest oil production of 1.8 million barrels was 0.7 million barrels (58%) higher than in Q1 2019, primarily
reflecting the drilling campaign in Chad and, from Q3 2019, the Bolongo field in Cameroon.
To view the full report please click:
https://www.glencore.com/dam:jcr/9c31e323-e61c-4034-a424-f08a12a5ecc0/GLEN_2020-Q1_ProductionReport.pdf
For further information please contact:
Investors
Martin Fewings t: +41 41 709 2880 m: +41 79 737 5642 martin.fewings@glencore.com
Maartje Collignon t: +41 41 709 32 69 m: +41 79 197 42 02 maartje.collignon@glencore.com
Media
Charles Watenphul t: +41 41 709 2462 m: +41 79 904 3320 charles.watenphul@glencore.com
www.glencore.com
Glencore LEI: 2138002658CPO9NBH955
Notes for Editors
Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer
of more than 60 responsibly-sourced commodities that advance everyday life. The Group's operations comprise around
150 mining and metallurgical sites and oil production assets.
With a strong footprint in over 35 countries in both established and emerging regions for natural resources, Glencore's
industrial activities are supported by a global network of more than 30 marketing offices.
Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, battery
manufacturing and oil sectors. We also provide financing, logistics and other services to producers and consumers of
commodities. Glencore's companies employ around 160,000 people, including contractors.
Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council
on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.
Glencore Q1 2020 Production Report and General Update 5
Important notice concerning this document including forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are
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achieved. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations,
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financial condition and discussions of strategy.
By their nature, forward-looking statements involve known and unknown risks and uncertainties, many of which are
beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do
differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to,
those disclosed in the last published annual report and half-year report, both of which are freely available on Glencore’s
website.
For example, our future revenues from our assets, projects or mines will be based, in part, on the market price of the
commodity products produced, which may vary significantly from current levels. These may materially affect the timing
and feasibility of particular developments. Other factors include (without limitation) the ability to produce and transport
products profitably, demand for our products, changes to the assumptions regarding the recoverable value of our tangible
and intangible assets, the effect of foreign currency exchange rates on market prices and operating costs, and actions
by governmental authorities, such as changes in taxation or regulation, and political uncertainty.
Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will
actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as
of the date of this document.
Except as required by applicable regulations or by law, Glencore is not under any obligation and Glencore and its affiliates
expressly disclaim any intention, obligation or undertaking, to update or revise any forward looking statements, whether
as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any
implication that there has been no change in the business or affairs of Glencore since the date of this document or that
the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and past performance cannot be relied
on as a guide to future performance. This document does not constitute or form part of any offer or invitation to sell or
issue, or any solicitation of any offer to purchase or subscribe for any securities.
The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this
document, “Glencore”, “Glencore group” and “Group” are used for convenience only where references are made to
Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not
imply any other relationship between the companies. Likewise, the words “we”, “us” and “our” are also used to refer
collectively to members of the Group or to those who work for them. These expressions are also used where no useful
purpose is served by identifying the particular company or companies.
Sponsor
Absa Corporate and Investment Bank, a division of Absa Bank Limited
Date: 30-04-2020 08:00:00
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