Glencore Plc is planning to shut down its Mutanda project in the Democratic Republic of Congo due to reduced economic viability, the firm’s chief executive has said.
Mr Ivan Glasenberg announced the plans even as the international mining firm reported he weakest profit in three years which he attributed to “challenging economic backdrop for our commodity mix.”
“Our performance in the first half reflected a challenging economic backdrop for our commodity mix, as well as operating and cost setbacks within our ramp-up/development assets,” said Mr Glasenberg.
Adjusted Earnings before interest, tax, depreciation and amortization (EBITDA) declined 32% to $5.6 billion.
But chief executive remained optimistic about the rest of the firms’ business.
“We continue to remain strong and our other business performed well. Excluding our African copper assets and Koniambo, our metals and coal industrial assets delivered robust Adjusted EBITDA mining margins of 39%,” he noted.
In particular, Mr Glasenberg observed, copper business, excluding African copper, recorded an EBITDA mining margin of 52% and a full unit cash cost of 72c/lb, while coal business again generated margins in excess of $30/t, basis a $46/t thermal unit cash cost.
Similarly, he said marketing business is tracking towards the middle of full year Adjusted EBIT guidance range of $2.2-$3.2 billion, after adjusting for some $350 million of non-cash cobalt losses reported in the first half.
Mr Glasenberg said that the company waw moving 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.”
“Looking ahead, we are confident that commodity fundamentals will move in our favour and that our diverse commodity portfolio will continue to play a key role in global growth and the transition to a low-carbon economy.”
Mr Glasenberg concluded,”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.”