Mining giant Glencore PLC yesterday reported reduced first-half losses, as the company pushed forward with an aggressive cost-cutting plan to recover from a brutal last year.
The Switzerland-based company posted a loss of US$369 million in the first six months, an improvement on the US$676 million loss it recorded in the same period last year.
The company, led by hard-nosed chief executive Ivan Glasenberg, has responded to the collapse of the commodities market by reining in spending, scrapping dividends and closing operations across the world. Glasenberg said Glencore was on track to continue reducing its daunting debt mountain — which stood at US$30 billion last year.
“We remain confident and focused on achieving even lower than previously indicated net funding and net debt levels by the end of this year,” he said in a statement.
Macquarie Group Ltd analyst Colin Hamilton told the Bloomberg news agency that the broader mining sector was “still in divestment mode,” but that Glencore was a step ahead.
“They are doing much more work to repair their balance sheet, I would say, than many of their peers,” he said.
Glencore has also agreed to a A$880 million (US$670 million) deal to sell future output from an Australian copper and gold mine to Evolution Mining Ltd.
Evolution, Australia’s second-largest gold producer, will receive the equivalent of 100 percent of future gold and 30 percent of copper and silver production from the Ernest Henry operation in Queensland, Glencore said in a separate statement.
Evolution will also take a 30 percent interest in the mine.
Adding output from Ernest Henry, which Glencore will continue to manage, will raise Evolution’s forecast gold output this fiscal year to between 800,000 and 860,000 ounces, the producer said in a separate statement. Evolution also announced a A$901 million capital raising to fund the deal, comprising a A$401 million sale of new shares to existing holders and a new A$500 million syndicated loan.
“The addition of low-cost gold production from Ernest Henry to our portfolio gives us exposure to another high-quality, long-life asset,” Evolution executive chairman Jake Klein said in the statement.
Evolution last week agreed to sell its Pajingo gold mine in Australia in a bid to improve the quality of its portfolio.
After rising as much as 9.1 percent by March, copper has now lost almost all its gains this year, as investors anticipate supply will outpace demand. It is the worst performer among the six major metals traded on the London Metal Exchange.
In contrast, gold has advanced 26 percent this year, as investors have sought haven assets amid global political and economic uncertainty.
Additional reporting by Bloomberg
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