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Glencore Xstrata copper production up 20% as projects ramp up

14th August 2013

By: Leandi Kolver

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – Diversified miner Glencore Xstrata on Wednesday reported a 20% year-on-year increase in copper production to 673 400 t, mainly driven by the ramp-ups of various projects in Africa, South America and Australia. 

African copper production for the six months ended June increased by 42% over the comparable period to 171 500 t, reflecting strong sequential semi-annual growth at the company’s Katanga and Muthanda operations, in the Democratic Republic of Congo, which are expected to deliver annualised production of up to 270 000 t and 200 000 t respectively, the company stated in its 2013 half-year production report.

London-based Liberum Capital commented that Glencore Xstrata’s strong growth in African copper production should increase market confidence in the company’s ability to develop and operate assets.

“While it is early days, we feel that the overall result should diminish fears that the merger, which took place in May this year, resulted in the loss of key operational personnel,” Liberum said.

Meanwhile, production ramp-up at the company’s Antapaccay operation, in Peru, successfully continued following the start of commercial production in November 2012, with the plant having delivered mill throughput rates in excess of its nameplate capacity of 70 000 t/d in June.

The company’s Ernest Henry copper operation, in Australia, also increased production by 117% to 32 400 t, reflecting the ramp-up of the underground decline mine and the satellite Mount Margaret openpit mine, which started production in September last year.

Further, Glencore Xstrata reported that zinc production declined by 3%.  “The key movements were gains from the recently acquired Rosh Pinah operation and the Australian growth projects, however, these were not quite able to offset the declines from the North American Brunswick and Perserverance operations reaching the end of their mine lives,” the company said.

The company’s Koniambo nickel operation, in New Caledonia, generated its first commercial grade ferronickel during April, with the Line 1 power station having been completed and production expected to ramp up towards the end of the year.

Liberum commented that the ramp-up of the Line 2 power station, which was now expected to take place from the first quarter of next year, was slower than what was indicated prior to the Glencore Xstrata merger, but still broadly in line with market expectations.

Glencore Xstrata’s total coal production was 67.8-million tons for the six-month period, which amounted to a 4% increase year-on-year.

“While coal volumes were slightly weaker than anticipated this is mostly due to a reduction in South African higher-cost domestic coal volumes in response to soft coal prices, which should help protect margins,” Liberum stated. 

Further, the Prodeco coal mine expansion, in Colombia, resulted in a 22% boost to production to 9.6-million tons, which alongside switching from barging to direct loading, aided a 12% reduction in unit cash costs.

Meanwhile, the company’s gold production increased by 14%, reflecting the continued ramp-up at the Vasilkovskoye operation, operated by Glencore-controlled zinc producer Kazzinc, in Kazakhstan.

Glencore Xstrata further pointed out that its Alen oil field project in Equatorial Guinea started production at the end of the second quarter of this year, ahead of schedule and under budget, with full operations expected by the end of the third quarter.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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