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Glencore drops copper guidance

Diverse miner Glencore has downgraded its copper production guidance for the year by 3% to 1.46 million tonnes due to Mopani safety and smelter outages and mine plan changes at other operations.
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Glencore has reduced its copper guidance for the year after a weak March quarter

Copper production for the March quarter dropped 7% year-on-year to 320,700 tonnes, hit by the issues at Mopani, as well as severe flooding in Queensland, depletion at the Alumbrera openpit operation, and the sale of Punitaqui.

However, cobalt output rose 56% on the year to 3,900t, despite Katanga having to manage excess levels of uranium content in its cobalt, constraining exports.

Glencore said Katanga made no cobalt sales during the quarter, though it had been allowed to resume export and sale of a limited quantity of cobalt from April, as long as it complied with regulations.

"Such resumption of exports remains subject to the relevant DRC export procedures, which include continued monitoring by the relevant authorities," the company said.

Zinc and lead production climbed 8% and 29% year-on-year, respectively, to 262,300t and 73,900t, with the former boosted by the restart of the Lady Loretta mine, partly offset by lower production at Kazzinc where there was a safety-related investigation at one mine.

Total coal production rose 8% on the year to 33.2 million tonnes, due to the HVO and Hail Creek acquisitions and an improvement at Prodeco, which went through mine plan optimisation and development last year, partly offset by the sale of Tahmoor in April 2018.

Nickel output fell 10% to 27,100t, due to maintenance at Koniambo and severe weather in Canada affecting the timing of deliveries to the Nikkelverk refinery, with the weak start to the year at Koniambo also resulting in full-year nickel guidance being reduced by 7% to 128,000t.

Ferrochrome production was down just 2% to 402,000t, but the full-year guidance was decreased by 3% to 1.64Mt, due to additional maintenance and extended winter shutdowns, amid reduced power availability and challenges in South Africa.

Gold and silver output fell 13% and 8%, respectively, to 202,000 ounces and 7.6 million ounces.

All other guidance was left unchanged.

BMO's Edward Sterck said Glencore had missed a number of the bank's estimates, with copper and zinc 11% under, nickel and cobalt 18% below, and thermal coal missing by 5%.

He said the trimmed production guidance levels suggested a return to targeted quarterly production run-rates from the June quarter.

Glencore's shares dipped 2.69% Tuesday after the results to £3.04 (US$3.95) per share, down 4.5% in the last six months.