Bloomberg News

Glencore Reports Record Quarterly Coal Output, Copper Up 33%

November 17, 2011

(Updates with closing share price in sixth paragraph.)

Nov. 17 (Bloomberg) -- Glencore International Plc, the largest publicly traded commodities company, reported record third-quarter output of thermal coal and a 33 percent jump in copper, saying it has the funds to spur further expansion.

Coal used in power stations climbed 30 percent to 6 million metric tons from a year earlier, the Baar, Switzerland-based company said in an interim management statement. Copper from the company’s own sources rose to 98,700 tons from 74,200 tons.

Shares in Glencore, which owns mines, plants and warehouses, have rebounded from a slump of as much as 35 percent since it sold $10 billion in stock in May in the world’s biggest initial public offering this year. The company, which ended more than three decades of operating as a closely held partnership, is still down more than 20 percent from the offer price.

“Glencore released a positive third-quarter IMS, with production numbers for industrial divisions coming in slightly better than expected in copper, coal and zinc,” Heath Jansen, a London-based analyst at Citigroup Inc., said in a report. “The only area of disappointment was on gold production.”

Gold output rose 22 percent to 171,000 ounces in the quarter, Glencore said, forecasting 450,000 ounces for 2011. Jansen’s estimate was for 500,000 ounces, he said in the note. Zinc production gained 9.1 percent to 140,100 tons in the quarter and lead output jumped 51 percent to 20,800 tons.

Shares Advance

Glencore climbed 7.8 pence, or 1.9 percent, to 412.9 pence at the close in London, valuing the company at 28.6 billion pounds ($45 billion).

“The increased metal production was delivered into stronger metal prices,” London-based analysts at Collins Stewart said in a note. “There is no guidance on costs, so the overall impact is unclear.”

Copper for three-month delivery on the London Metal Exchange traded at an average of $8,992.91 a ton in the quarter, 24 percent higher than a year earlier. The Standard & Poor’s GSCI Spot Index of 24 commodities averaged 28 percent higher.

Thermal coal output at the Prodeco mines in Colombia grew 69 percent to 3.8 million tons, contributing to the record volumes. Even after equipment delays and unfavorable weather, Glencore is scheduled to meet a planned 20 million tons of annualized output by the fourth quarter of 2013, it said.

Mining machinery orders from Japan were delayed and the company has faced heavy rains since October that, if continued, may affect fourth-quarter output, according to the statement.

Spare Funds

“Despite the financial market uncertainty and some weather and equipment-driven disruptions, Glencore’s overall healthy operational and financial performance has continued,” it said in the statement. The company had more than $10 billion of spare funds at the end of the quarter “to further increase Glencore’s organic and other growth prospects” if desired, it said.

In August, Glencore reported a 57 percent jump in first- half net income before significant items to $2.45 billion. It may post adjusted net income of $5.1 billion for 2011, according to the average estimate of 14 analysts surveyed by Bloomberg.

--Editors: John Viljoen, Amanda Jordan

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

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


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