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Glencore warns of gloomy outlook

Published: 01 Nov 2012 11:37 GMT+01:00

"Overall performance in (the third quarter) was good, despite generally weaker commodity prices," the company said in a statement on Thursday.

Although Glencore, based in Baar in the canton of Zug, did not publish any numbers for its third quarter, it reported solid growth during the quarter, especially in its metals and agricultural products units.

It also hailed the "robustness" in its marketing division, which is in charge of selling commodities on world markets.

Glencore said its industrial activities unit performance meanwhile "reflected lower prices, but nevertheless delivered a sequential and year-on-year overall volume improvement," with particularly strong growth in the energy products sector.

Its thermal coal production, for instance, nearly doubled to 33 million tonnes over the first nine months of its accounting year, while it pumped nearly 17 million barrels of oil during the same period.

Glencore did not say how its oil production compared to the same period a year ago.

In metals, Glencore's zinc production slipped 5.7 percent to 511.9 million tonnes during the first nine months, while copper production fell 16.3 percent to 394.2 million tonnes.

Nickel extraction meanwhile increased 16.1 percent to 25.8 million tonnes over the same period. over the same period.

Glencore also said its agricultural product production grew 11 percent to 5.5 million tonnes.

But the outlook going forward is far from rosy, the company said, pointing out that "we are not assuming any short term material improvement in global macro conditions".

However, the company, which has reserves of around $9.0 billion, said it was "confident that in this environment our business model places us in a strongly competitive position".

Glencore is preparing to merge with another Swiss commodities giant, Xstrata, after the two companies managed at the beginning of October to put aside the differences that had been blocking their union for months.

If the deal passes the final stumbling blocks, the massive new company would be worth $87 billion and capable of out-muscling most other giants in the field.

The two companies' general assemblies are set to meet on November 20 in Zug and should give their stamps of approval before the end of the year.

In order to receive a green light from regulatory authorities, Glencore may decide to exit some of its existing activities, the Financial Times reported.

Amid European Commission concern over the weight the merged company would have in the European zinc market, Glencore is considering backing out of a contract with Belgian-Swiss mining group Nyrstar, which is the world's biggest zinc producer, the British financial daily reported.

Glencore declined to comment on the report.

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