Glencore Copper Output Down, Backs View; Signs $900 Mln Streaming Deal; Stock Up

(RTTNews) - Glencore Plc. (GLCNF.PK, GLNCY.PK, GLEN.L) reported Wednesday a decline in copper and coal production in the nine months, while production of zinc increased. Further, the company backed its fiscal 2015 marketing EBIT view, and said it made significant progress on its debt reduction plan.

Separately, Glencore announced that its unit Anani Investment Ltd. has entered into a $900 million long-term streaming agreement with a unit of Silver Wheaton Corp. (SLW, SLW.TO) for delivery of silver calculated by reference to silver produced at the Antamina mine, located in Peru.

Shares of the Anglo-Swiss commodities trader and miner were gaining around 6 percent in the morning trading in London.

For the nine months to September, Glencore's owned source copper production declined 2 percent from last year to 1.127 million tonnes, primarily due to the anticipated lower production from Alumbrera as it nears the end of its mine life and some Katanga suspension impact. This was partly offset by Antapaccay's ramp up.

Own sourced zinc production, however, grew 13 percent to 1.127 million tonnes, mainly due to the impact of the expansion projects at Mount Isa ad McArthur River.

Own sourced nickel production declined, and own sourced coal production was down as the company continued to limit production in the current weak market environment.

Further, Glencore reiterated its 2015 full year marketing adjusted earnings before interest and tax or EBIT guidance of $2.5 billion to $2.6 billion. The company noted that marketing was stronger over the quarter, with improved contributions from metals and minerals and agricultural products.

Glencore said it has made significant progress on its debt reduction plan to reduce net debt to the low $20s billion by the end of 2016.

The company further said that the shutdown and restart plans for Katanga and Mopani have been completed. The company now plans to reduce mined copper production by 455,000 tonnes by end 2017. The company previously expected to reduce production by approximately 400,000 tonnes of copper over 18 months.

The company's guidance for 2015 full year copper production has been reduced accordingly.

Regarding deal with Silver Wheaton, the company said the transaction forms part of Glencore's debt reduction plans announced earlier. Glencore owns 33.75 percent of Compañía Minera Antamina S.A., which owns and operates the Antamina mine.

Silver Wheaton will make an advance payment of $900 million to Glencore five business days after the closing of the deal, expected to occur prior to the end of November 2015.

Thereafter, Silver Wheaton will pay 20 percent of the spot price at the time of delivery for each ounce of silver delivered to Silver Wheaton under the streaming agreement. In return, Glencore will deliver silver to Silver Wheaton equivalent to 33.75 percent of silver produced by the Antamina mine at a 100 percent payable rate.

In London, Glencore shares were gaining 6.20 percent at 126.85 pence.