In its preliminary 2015 fourth-quarter earnings statement, Glencore earned $8.7 billion, down 32% from 2014, due to substantially weaker commodity prices, partially offset by cost efficiencies and favorable producer country currencies. The company plans to cut its 2016 industrial capital expenditure by $300 million to $3.5 billion. It managed significant real unit cost reductions in 2015 and is targeting a further $400 million in savings during 2016. The company also realized $1.6 billion through asset sales, which includes $1.4 billion from precious metals streaming transactions.
Bids for the potential sale of Cobar and Lomas Bayas are expected to be finalized during the second quarter of 2016, and the company is confident it can achieve an additional $4 billion-$5 billion in asset sales during the remainder of 2016.
After signing $7.7 billion in commitments from 37 banks, Glencore recently refinanced the one-year tranche of a revolving credit facility. The company now plans to broaden the facility via the launch of general syndication to 30 additional banks during the second quarter of 2016.
“Our rigorous focus on debt reduction, supply discipline and cost efficiencies enabled Glencore to record a robust performance in difficult market conditions,” said Ivan Glasenberg, CEO, Glencore. “Our diversified portfolio, based around a core of Tier 1 assets, combined with our highly resilient marketing business, underpins our ability to continue to be comfortably cash generative at current and even lower commodity prices.”
Earnings for the company’s metals and minerals division totaled $5.3 billion, down 38% compared to 2014. Earnings for the company’s other two divisions, energy minerals (coal) and agricultural products, were down by 9% and 39%, respectively.
Glencore produced more than 1.5 million metric tons of copper (mt) in 2015. That figure was 3% lower than 2014, reflecting the production cuts in Africa. Positive variances were achieved mainly at Antapaccay, following the restart of the Tintaya mill in May 2015 and at Antamina, on account of higher throughput rates.
Total zinc production for 2015 was more than 1.4 million mt, 4% higher than 2014, reflecting the successful ramp up of the Australian zinc assets during the first nine months of the year. Following the October 2015 decision to reduce production at a number of assets, Q4 2015 zinc production was 20% below Q3 2015.
Similarly, Q4 2015 lead production was lower, as expected, compared to previous quarters, which resulted in total full year own-sourced lead production of a little less than 300,000 mt, 3% lower than in 2014.
Nickel production in 2015 was 96,200 mt, 5% lower than 2014, reflecting the impact of the metal leak at Koniambo in December 2014 and the planned extended shutdown at the Sudbury smelter.
