Shares in FTSE 100 mining giant Glencore (GLEN) fell 1.1% to 244p as it reported lower production of most metals, coal and oil for 2020 due to disruption from the coronavirus pandemic, but did report higher gold, silver and zinc output.
The miner’s production of cobalt in particular, a metal which has been seen as key for electric vehicles with the firm having inked a deal for cobalt with Tesla, took a hit with output down 41% in 2020 to 27.4 kt.
Production of two other ‘transition metals’, i.e. ones needed for renewable energy infrastructure and electric vehicles, also fell, with Glencore’s copper production falling 8% to 1,258.1 kt and nickel output down 9% to 110.2 kt.
But the miner said 2021 production guidance is unchanged from December, with copper output set to be lower but coal and most other metals ramping back up.
‘Our mining assets performed well in difficult circumstances during 2020. Various precautionary operating changes made in Q2 continued into the second half, with sustainable and safe working practices embedded for the pandemic era,’ said chief executive Ivan Glasenberg, who is set to retire by the summer and hand over the reins to Gary Nagle, head of the firm’s coal mining business.
WHAT TO EXPECT FROM ANNUAL RESULTS
The production report comes ahead of the firm’s annual results on 16 February.
Analysts are expecting a 27% drop in revenues to $157.2 billion as a result of the pandemic, while they will also be on the lookout for progress regarding the sale of non-core assets, wanting Glencore to focus on the 14 major operations that make up 90% of its core earnings.
The company has started to make progress on this front and has agreed terms for the sale of its 73% stake in the Mopani copper mine in Zambia in a deal worth $1.5 billion, with completion expected within the first half of the year.
Glasenberg said in the production report that work continues to ‘advance options around other non-core assets within the group.’
Investors will also await an update on the dividend, which was scrapped in 2020 but will be reinstated if net debt falls below $16 billion.
Glencore is also under pressure to spin-off its coal assets, and has plans to wind up its Colombian coal mines by 2035 as it focuses on the aforementioned ‘transition’ commodities like cobalt, nickel and zinc.
