DRC businesses drain Glencore’s earnings


DRC businesses drain Glencore’s earnings

Published Date: 2019-08-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

DRC businesses drain Glencore’s earnings

The commodities group says it has taken measures to address challenges at its copper and cobalt operations and plans to halt production at Mutanda.

Glencore plans to put its Mutanda copper and cobalt operation in the Democratic Republic of Congo (DRC) on care and maintenance, stopping production at the world's biggest cobalt mine due to rising supply of the metal and falling prices. It's also taking measures to address challenges at its other copper and cobalt operations in DRC.

Releasing its interim results yesterday, the commodities producer and trader said it had made management changes at Katanga and Mopani and was overseeing a detailed operational review of the mines, which didn't meet their expected operational performances over the period.

Impairments of its African copper portfolio and its oil business in Chad, together with lower average commodity prices, resulted in a 92% decline in net profit to $226 million for the six months to end-June. Adjusted earnings before interest, tax, depreciation and amortisation fell 32% to $5.58 billion and earnings per share dropped 89% to 2c. However, it said cash generation was still healthy at $5.4 billion, down 21%, despite the lower commodity prices.

Excluding the DRC businesses and its interest in the Koniambo nickel mine in New Caledonia, it said the rest of its business performed well in the six months to end-June. Its metals and coal industrial assets delivered strong profit margins, with its non-African copper assets doing particularly well.

While the group said its first-half performance reflected a challenging economic backdrop for its commodity mix, as well as operating and cost setbacks within the assets it's busy developing and ramping up, it believed in the prospects for metals like cobalt, which is used to make electric car batteries.

Its shares fell 2.2% to R41.14 yesterday.

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