MARKETS

Energy division improves for Glencore Xstrata

NEWLY merged Glencore Xstrata has announced its energy division saw “markedly improved profitability” during the first quarter.

Hannah Vickers

Coal production increased just 1% from the year previous period to 32.7 million tonnes, with decreases in South African production offset by gains in the Australian sector, including a 29% bump in coking coal production to 1.8Mt and a 15% increase in thermal coal exports to 11Mt.

The figure was a 2% decrease from previous quarter production of 33.6Mt, with most divisions down.

The company saw an 18% boost year-on-year for copper production in the first quarter, largely due to increases from its African mines.

This was the first production report for the combined company, which formally completed its merger between Glencore International and Xstrata at the beginning of May.

Copper output was up to 321,800 tonnes from 273,200t in the March quarter 2012, with production in Africa gaining 44% to 83,600t thanks to expansion projects at Mutanda and Katanga mines.

The Katanga mine increased production by 53% to 28,600t in the three months to March 31, while the Mutanda operation saw an 80% increase, from 16,600t to 29,800t.

The Swiss-based mining giant said the anticipated merger of the Mutanda and Kansuki sites would be completed during the first half.

Cobalt production from the African projects gained 35% to 3100t.

“Overall, marketing performance during the quarter was broadly in line with our expectations,” the company said.

“Metals and minerals delivered solid results despite some softening in prices towards the end of the quarter.

Production from Australian operations also contributed to the jump, with the Ernest Henry mine in Queensland more than doubling copper production from 7300t to 15,100t, while the Mount Isa operations saw a 22% increase to 37,300t on increased mining rates and higher recoveries.

Glencore Xstrata said that it expected Ernest Henry to begin commissioning of the hoisting shaft infrastructure by the end of the year to expand the underground mine from the current rates of 3 million tonnes per annum to 6Mtpa.

Some of the South American operations saw decreases in copper production, including the Collahuasi project in Chile, where output fell 13% due to expected reductions in grade and a planned shutdown of the SAG mill. The Peruvian Antamina mine experienced a 19% drop in copper output due to lower copper head grades and recoveries.

These were offset by the Antapaccay mine in Peru, which began commercial production in November and produced 34,200t of copper in concentrates in the first quarter.

The group’s North American copper assets also experienced a decrease with a 16% drop in production primarily due to lower grades.

Nickel production across the group increased 4% year-over-year to 25,500t, while zinc production was 386,900t in the first quarter, broadly in line with the first quarter 2012 though Australian operations saw an 11% increase in the period.

Compared with the December 2012 quarter, copper production fell 3% from 330,500t, while zinc output decreased 7% and nickel production fell 16% from 30,200t.

Oil production increased 2% year-on-year, but dropped 4% from the December quarter to 5.4 million barrels.

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