Glencore Cutbacks Shift to Zinc in Metal Rout -- Update
October 08 2015 - 9:20PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY-- Glencore PLC stepped up production cutbacks, this time
slashing zinc output including the suspension of two mines after a
collapse in prices for the industrial metal.
The Switzerland-headquartered commodities group said it would
cut annual zinc production by roughly a third, or 500,000 metric
tons, including closing its Lady Loretta mine in Australia and
Iscaycruz mine in Peru. The changes will also reduce its annual
output of lead, also produced at those mines, by about 100,000
tons, it said.
They are the latest in a string of mine closures for Glencore,
from coal to platinum deposits, as sliding commodity prices make it
harder for the resources giant to turn a profit. It comes at a time
when the company has been under intense scrutiny by investors,
concerned that falling raw-material prices could strain the mining
and commodity-trading group's finances.
Zinc is primarily used for steel coatings, but goes into many
products including car tires and sunscreen, and has few
substitutes.
The company, which has zinc operations across Australia,
Kazakhstan and South America, said it would be better off holding
on to the resource until market prices improve. In addition to
closing the two mines, its operations at George Fisher and McArthur
River in Australia and various sites in Kazakhstan will pare
production, it said.
It forecast fourth-quarter zinc output to fall by about 100,000
tons.
"Glencore believes that current prices do not correctly value
the scarcity of our zinc resources," it said in a statement on
Friday. "Our finite resources are valuable and reducing production,
in response to current prices, preserves value and optionality for
all stakeholders."
The company said it was upbeat on the longer-run prospects for
zinc and lead prices.
Earlier this week, Glencore said it was closing its Eland
platinum mine in South Africa, citing falling platinum prices and
rising energy and labor costs there.
Last month, it said it would suspend operations at two copper
mines, Katanga and Mopani, in the Democratic Republic of the Congo
and Zambia, respectively, until it completes cost-reduction
projects, which are due to end in the first half of 2017.
It has also closed coal mines in Australia in recent years amid
a protracted slump in the market for that commodity, and has been
trimming output at other mines this year as the market remains
oversupplied.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
October 08, 2015 21:05 ET (01:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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