Maintenance shutdowns at a smelter and the fallout from strike action in its Canadian operations mean that Glencore will produce almost a tenth less nickel than previously expected this year.
In a third-quarter update, Gary Nagle, 48, chief executive of the FTSE 100 miner and commodities trader, said that it had delivered a “solid production performance” so far this year.
Key copper, coal and zinc assets had “performed in line with expectations and previously communicated guidance”, leading the company to maintain its full-year guidance for these commodities.
However, its nickel operations were affected by maintenance work at the Sudbury smelter in Ontario and “a longer than expected recovery period” after prolonged strike action at its Raglan mine in Quebec last year. “The strike at Raglan in 2022 has impacted 2023 nickel production, given the long lead time from ore mining in northern Quebec to finished nickel production in Norway,” it said.
Nickel output from the Koniambo mine in New Caledonia in the South Pacific was also revised down. As a result Glencore expects to produce about 102,000 tonnes of nickel this year, down from previous forecasts of 112,000 tonnes.
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It has also trimmed its ferrochrome output guidance from 1.31 million tonnes to 1.2 million tonnes, citing “additional smelter offline days and further curtailments in response to ferrochrome market conditions”.
Glencore is based in Switzerland and reported net profits of $17.3 billion last year as its coalmining operations and commodities traders benefited from high and volatile prices during the energy crisis. The company reiterated yesterday that its traders were expected to make adjusted earnings before interest and tax of between $3.5 billion and $4 billion this year, down from the record $6.4 billion of last year but well above the $3.2 billion top end of its long-term guidance range.
Ephrem Ravi, an analyst at Citigroup, described the update as a “mixed bag”, with “sequential acceleration for copper production across major operations, strong recovery in cobalt and coal production maintaining elevated levels. However, this was offset by weakness in production for nickel, while zinc production increase was also lower than our estimate.”
Glencore shares were up 5¾p, or 1.3 per cent, at 451p at the close.
