Glencore has greeted 2020 with a steep decline to its Australian coking coal production, but its thermal coal portfolio offset the blow.
The company produced 1.8 million tonnes of coking coal in the first quarter of this year, a drop of 31 per cent from the prior corresponding period.
The drop was blamed on mining sequencing challenges in the Australian portfolio. It reflects the timing of coking coal extraction at the Hail Creek mine in Queensland, which Glencore expects to make up later in the year.
The performance contrasts with Glencore’s thermal and semi-soft coal portfolios in Australia. The company recorded a 2 per cent rise from the first quarter of 2019 to 18.1 million tonnes during the same period this year.
Glencore nonetheless revised its 2020 full year production guidance for coal to 132 million tonnes down from 135 million tonnes due to temporary suspensions of the Prodeco and Cerrejon mines in Colombia, the latter of which is a joint venture with Anglo American and BHP.
Glencore confirmed earlier this year that it planned to reduce the company’s scope three emissions by around 30 per cent by 2035.
The company intended to deplete its coal resource base in Colombia, and to a lesser extent, Australia and South Africa.
Glencore’s copper and cobalt portfolios also showed a resounding drop in their March quarterly production, with the commodities’ 2020 full year guidance revised accordingly.
The company aims to preserve “solid levels of overall industrial asset free cash flow generation” in this environment.
“Copper unit costs are now guided lower to 105 cents ($1.63) per pound, zinc unit costs 39 per cent lower at 14 cents per pound and thermal coal guided unit cash costs are $US3 per tonne lower at $US42 per tonne,” Glencore chief executive Ivan Glasenberg concluded.
“We also expect (around) $US1–$US1.5 billion reduction in 2020 capex (capital expenditure) compared to our original 2020 guidance of $US5.5 billion.
“Given our 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.”