Glencore sells silver output to cut debt
AFP · 4 Nov 2015, 11:12
Published: 04 Nov 2015 11:12 GMT+01:00
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Glencore, one of the world's largest miners and producers of copper, said in a statement Wednesday that its copper production had slipped two percent over the past nine months to 1,127,500 tonnes.
The Zug-based company explained the dip with dwindling production at its Alumbrera mine in Argentina, which is reaching the end of its mining life, as well as its suspension of activities at the Katanga mine in the Democratic Republic of Congo.
Glencore, which has been hard-hit by a commodity price collapse, announced at the beginning of September a series of drastic moves aimed at cutting its towering $30-billion debt by a third and to pull down its production.
As part of its debt-reduction plan, the company announced late Tuesday it had reached a long-term streaming deal to deliver silver to Silver Wheaton of Canada, which would hand over $900 million up front once the deal is concluded, likely by the end of this month.
Silver Wheaton will then pay 20 percent of the spot price upon delivery, Glencore said, adding it would initially provide the Canadian company with around 34 percent of the silver produced at the Antamina mine in Peru — the equivalent of its stake in the mine.
In Wednesday's production update, Glencore said it was making "significant progress" towards bringing its debt down to the "low $20s billion by the end of 2016."
Among other measures, it has already raised $2.5 billion in share sales, has saved another $2.4 billion by halting dividend payments until further notice, and is preparing to sell off a number of assets.
Faced with shrinking metals prices, Glencore has meanwhile mothballed copper output at the Katanga mine, as well as at the Mopani mine in Zambia, and closed a platinum mine in South Africa.
Both the African copper mines are being upgraded and are not set to resume production until early 2017, Glencore said.
Their temporary closure is expected to reduce its copper production by 455,000 tonnes by the end of 2017, it said.
Glencore, which employs around 181,000 people worldwide, meanwhile maintained its outlook for the full year 2015, saying it still expects its trading division to rake in earnings before interest and tax of $2.5-$2.6 billion.