JOHANNESBURG (miningweekly.com) – The first-half performance of Glencore reflected a challenging economic backdrop for the diversified mining and marketing company’s commodity mix, along with setbacks to its ramp-up and development assets, Glencore CEO Ivan Glasenberg said on Wednesday, when the company reported a 32% fall in earnings before interest, taxes, depreciation and amortisation (Ebitda) to $5.6-billion.

However, the rest of the business remained strong and performed well, Glasenberg stated in a release to Mining Weekly Online.

“Looking ahead, we are confident that commodity fundamentals will move in our favour,” he said.

The diverse commodity portfolio of the London- and Johannesburg-listed company would continue to play a key role in global growth and the transition to a low-carbon economy.

“Our asset teams are focussed on delivering the full potential of our business, which together with our promising range of commodities, should see us well positioned for the future. Through continued constructive collaboration, we remain focussed on creating sustainable long-term value for all stakeholders,” he added.

Excluding the company’s African copper assets and the Koniambo nickel mine in New Caledonia, its metals and coal industrial assets delivered robust Ebitda mining margins of 39%.

In particular, its copper business, excluding African copper, recorded an Ebitda mining margin of 52% and a full unit cash cost of 72c/lb.

The South Africa-focused coal business again generated margins of more than $30/t, based on a $46/t thermal unit cash cost.

Similarly, its marketing business is tracking towards the middle of the full-year Ebit guidance range of $2.2-billion to $3.2-billion, after adjusting for $350-million worth of noncash first-half cobalt losses.

“However, our African copper business did not meet expected operational performance. We have moved to address the challenges at Katanga and Mopani with several management changes as well as overseeing a detailed operational review, targeting multiple improvements to achieve consistent, cost-efficient production at design capacity.

“Our teams have identified a credible roadmap towards delivering on the significant cashflow generation potential of these assets, at targeted steady state production levels,” Glasenberg said.

At Mutanda, the company is planning to transition the operation to temporary care and maintenance by year-end, reflecting its reduced economic viability in the current market environment, primarily in response to low cobalt prices.

Studies on the potential of the sulphide project extending operations for many years continue, with an update likely in December.

Credit Suisse diversified metals and mining analysts said that despite the very disappointing performance from African Copper, Glencore appeared to be reaffirming its longer term plans for these copper and cobalt assets.

"Despite the likelihood of further negative news flow, our 'outperform' rating is underpinned by Glencore’s highly attractive valuation versus its peers and its longer-term valuation which underpins the positive rating on the stock at present," Credit Suisse added.

As one of the world’s largest global diversified natural resource companies, Glencore produces and markets more than 90 commodities. It has around 150 mining and metallurgical sites, oil production assets and agricultural facilities in established and emerging regions. Its industrial and marketing activities benefit from a global network of more than 90 offices located in over 50 countries.