Diversified miner Glencore has warned of a $350-million noncash loss within its marketing division for the six months ended June 30, as a result of lower cobalt prices.

The miner reported that cobalt prices had decreased by about 50% year-on-year to $29 400/t.

Further, CEO Ivan Glasenberg on Wednesday reported that, while its overall copper, coal, zinc and nickel assets had performed largely in line with expectations during the six months under review, the African copper business had not met the expected operational performance.

The business, which includes the Katanga, Mutanda and Mopani operations, produced 183 800 t of copper metal – a 6% year-on-year decrease, while cobalt production increased by 32% year-on-year to 19 500 t.

The lower copper output reflected the offsetting impacts of the ramp-up at Katanga and the implementation of an updated mine plan at Mutanda.

Meanwhile, the higher cobalt output reflected a full six-month period of operation of Katanga’s cobalt circuit and improved cobalt recoveries at Mutanda.

Katanga continues to apply technical solutions to maximise cobalt hydroxide production within acceptable uranium limits.

“We have moved to address the challenges at Katanga with several management changes, as well as overseeing a detailed operational review, targeting multiple improvements to achieve consistent, cost-efficient production at design capacity,” Glasenberg informed.

He assured shareholders that the African copper assets retained significant potential and that they would play a key role in the transition to a low-carbon economy.

Katanga is conducting a comprehensive business review, which is expected to indicate lower production levels for this year. The review is nearing completion and updated guidance, with accompanying presentation material, is expected to be provided next week.

Repairs to the Mopani smelter are expected to be completed by the end of this year.

Glencore is also nearing the end of its multiyear site transformation projects, including plans to commission a new copper concentrator towards the middle of 2020 and the development of three new mining shafts.

OTHER OPERATIONS

Meanwhile, Glencore’s overall own-sourced copper production of 663 000 t was 5% lower year-on-year. This mainly reflected depletion at the Alumbrera operation, in Argentina, and the sale of the Punitaqui mine, in Chile, in the second half of 2018; the re-bricking of a furnace at Kazzinc, in Kazakhstan; and smelter outages at Mopani.

Own-sourced zinc production of 535 900 t was 8% higher year-on-year, reflecting the contribution of the Lady Loretta mine, in Australia, and a stronger performance at McArthur River, also in Australia. This was partially offset by expected reductions at Antamina, in Peru; reduced activity in Argentina; and the impact of a safety-related stoppage at Kazzinc.

Own-sourced nickel production of 55 400 t was 11% lower year-on-year, reflecting maintenance at Murrin Murrin, in Australia, and Koniambo, in New Caledonia, and the feed mix delivered to the INO refinery in Norway favouring third-party material.

Attributable ferrochrome production of 799 000 t was broadly in line with that produced in the first half of the prior financial year.

Coal production of 68.2-million tonnes was 10% higher year-on-year, reflecting the contribution of interests in the Hunter Valley Operations and Hail Creek, in Australia, that were acquired during 2018; higher production at Prodeco, in Colombia, following a period of increased mine development; and a strong operational performance in South Africa. This was partially offset by lower production at Cerrejón, in Colombia, to meet air quality requirements.