Glencore has suspended mining at two of its higher cost copper mines – Katanga, in the Democratic Republic of Congo, and Mopani, in Zambia. The operations are expected to remain closed for 18 months until the completion of the expansionary and upgrade projects, which are planned to reduce operational costs. The suspension of these operations will remove approximately 400 kt of copper cathode from the market.
The suspension of copper production comes as rival miner, Rio Tinto, affirms its confidence in the longer term health of the copper market. Speaking to Bloomberg, , Jean-Sebastien Jacques, head of Rio’s copper and coal operations, said that signs of improvement in China’s property market are boosting prospects for the metal and that the company had “ no issues whatsoever in placing the products (copper from its Oyu Tolgoi mine) out of Mongolia being sold into China”.
Mr Jacques (commenting before Glencore’s suspension announcement) expects that the copper market will be in a surplus for the next two to three years and so believes that prices will be volatile.
Glencore’s moves to restructure parts of its copper business to adapt to the current weak commodity environment are part of the company’s wider plans to reduce net debt and optimise its business. These plans include a proposal to issue US$2.5 billion of new equity; the suspension of dividends, a reduction in capital spending and sales of assets (collectively saving US$7.7 billion).
Glencore suspends copper production at two mines; plans US$2.5 billion equity raise: GLEN