Multi-commodity mining giant, Glencore, yesterday briefed investors on its preparedness for a lower price environment.
The company has reduced 2015 capex from US$6 billion to US$5.7 billion, and expects to reduce 2016 capex to US$3.8 billion. For its main mineral products it expects low cost profiles of US$1.10/lb copper, US$0.33/lb zinc, US$2.95/lb nickel and US$39/t coal.
It now forecasts EBITDA in 2016 of US$7.7 billion and free cashflow, after the capex reduction, of US$2.3 billion.
The company is targeting US$13 billion in capital preservation/debt reduction measures to reduce net debt to US$18-19 billion by end 2016 and it has already achieved US$8.7 billion. Other measures in progress include the sale of a minority stake in the Agriculture business, additional streaming transaction(s), and potential copper asset sales.
The company’s previous production guidance a for 2015 was 1,500-1,550 kt of copper, 1,520-1,700 kt of zinc, 335-360 kt of lead, 98-108 kt of nickel and 135-139 Mt of coal. For 2016, it is guiding production of 1,365-1,420 kt of copper, 1,070-1,120 kt of zinc, 275-295 kt of lead, 112-120 kt of nickel and 127-133 Mt of coal.
After an initial positive market reaction to the news, Glencore’s shares were trading slightly down this morning in London.
Glencore’s outlines plans for lower price environment: GLEN