Glencore, Half-Year Production Report 2022

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Algemeen advies 01/08/2022 07:39
Glencore Chief Executive Officer, Gary Nagle:

“Overall production was mixed period-over-period (5 commodities up and 5 down in the table below), reflecting the Ernest Henry (copper/gold) and Bolivia (zinc) portfolio disposals, and geotechnical and processing challenges at Katanga, offset by improved cobalt, nickel and ferrochrome production levels and the additional contribution from Cerrejon, reflecting its full ownership from early January.

“Our full year production guidance remains unchanged with the exception of copper, where the ongoing geotechnical constraints relating to Katanga’s open pit and continued management of higher levels of acid-consuming ore, largely account for the reduced guidance of 1,060kt (previously 1,110kt).

“We remain focused on the health and safety of our workforce. Unfortunately we recorded the loss of one life at Glencore’s managed operations during the first half of 2022. We continue to believe that we can and must eliminate all fatalities, and we will continue to drive the management of safety across the business to achieve this. Our Total Recordable Injury Frequency rate of 2.3 incidents per million hours worked over the six months to June was 3% lower year-on-year and 14% lower over two years.

“Our financial performance (both industrial and marketing) was very strong during the period, particularly on account of buoyant energy markets, which will be a feature in the release of next week’s Half-Year Report. Allied with the strong results, particularly in marketing and mostly energy related, our net working capital has significantly increased during the period, in line with materially higher oil, gas and coal prices, and their elevated market volatilities. These factors result in a timing mismatch between the net positive fair value of physical forward contracts (which are not margined) and related derivative hedging requirements (which are margined). The various commodity exchanges have also significantly increased their initial margining requirements.”

Production from own sources – Total1
H1 2022. H1 2021 Change %

Copper kt 510 598 (15 )
Cobalt k 20.7 14.8 40
Zinc kt 480.7 581.8 (17 )
Lead k 95.1 117.0 (19 )
Nickel k 57.8 47.7 21
Gold ko 334 423 (21 )
Silver koz 12,579 15,984 (21 )
Ferrochrome kt 786 773 2
Coal mt 55.4 48.7 14
Oil (entitlement interest basis) kboe 3,132 2,557 22
1 Controlled industrial assets and joint ventures only. Production is on a 100% basis, except as stated later in this report.

H1 production highlights
Own sourced copper production of 510,200 tonnes was 87,700 tonnes (15%) lower than H1 2021 due to ongoing geotechnical constraints at Katanga (35,500 tonnes), the basis change arising from the sale of Ernest Henry in January 2022 (21,900 tonnes), Collahuasi mine sequencing (18,100 tonnes) and lower copper units produced within Glencore’s zinc business.
Own sourced zinc production of 480,700 tonnes was 101,000 tonnes (17%) lower than H1 2021 reflecting progressive reduction in the South American portfolio through disposals and closures (49,600 tonnes), Covid-19 related absenteeism leading to lower development rates and sequence changes at Mount Isa (34,800 tonnes) and somewhat lower Antamina production.
Own sourced nickel production of 57,800 tonnes was 10,100 tonnes (21%) higher than H1 2021 reflecting Koniambo operating both production lines in 2022 and Murrin stable operations compared to maintenance in base period.
Attributable ferrochrome production of 786,000 tonnes was 13,000 tonnes (2%) higher than H1 2021, reflecting consistent smelter performance.
Coal production of 55.4 million tonnes was 6.7 million tonnes (14%) higher than H1 2021, mainly reflecting higher attributable production from Cerrejón, following the acquisition in January 2022 of the remaining two-thirds interest that Glencore did not already own. On a like for like basis, overall Group production declined by 0.5 million tonnes (1%).
Entitlement interest oil production of 3.1 million barrels of oil equivalent was 0.6 million barrels (22%) higher than H1 2021, due to commencement of the gas phase of the Alen project in Equatorial Guinea from March 2021.
Realised prices

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