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Glencore earnings cut in half but CEO says things are healthy

Company is still planning to acquire other mining operations to improve its global stake in transition metals
Nickel Rim South Mine, owned by Sudbury Integrated Nickel Operations, a Glencore company, is located northeast of Sudbury.

Glencore share values have nosedived on the FTSE 100 Exchange in the UK, but the company said it is still in mergers-and-acquisitions mode despite the low revenue numbers for the first half of the year. 

The Switzerland-based mining and trading group, which has substantial holdings in Northern Ontario, the company has reported a major drop in earnings.

Glencore's adjusted core earnings, or earnings before interest, tax, depreciation and amortization (EBITDA), fell to US$9.39 billion in the six months through June, from US$18.92 billion a year earlier, said a summarized report from Reuters. 

Glencore’s Chief Executive Officer, Gary Nagle, said considering the volatility of the commodity markets, Glencore's earnings were "healthy".

Many analysts called the H2 results disappointing, but at the same time, the company was able to return $2.2 billion to shareholders.

“Against the backdrop of a normalization of commodity market imbalances and volatility, primarily across the energy spectrum, our marketing and industrial segments posted a healthy earnings performance, delivering Group Adjusted EBITDA of $9.4 billion, cash generated by operating activities of $8.4 billion and Net income attributable to equity holders of $4.6 billion," said Nagle. 

“As the world moves towards a low-carbon economy, we remain focused on supporting the energy needs of today whilst investing in our transition metals portfolio. Over the year to date, we committed $1.25 billion, mainly on purchasing the balance of the large, long-life MARA copper project (Argentina), not already held by Glencore, and acquiring a minority stake in Alunorte, a world class alumina refinery, thereby providing Glencore with long-term exposure to lower-quartile carbon alumina," said Nagle.

Reuters also reported that Glencore has made offers to buy Canadian miner Teck Resources

Glencore's H2 financial statement also revealed that the company is still investing in "transition metals" as the company moves towards low carbon products that can be used in the battery electric vehicles industry. This includes: 

  • $1.25 billion of recent investment commitments in transition metals, comprising:
  • $700 million to acquire a 30 per cent equity stake in Alunorte and a 45 per cent equity stake in Mineracão Rio do Norte S.A., from Norsk Hydro;
  • $475 million to acquire the remaining 56.25 per cent interest in the MARA copper project, not already owned, from Pan American Silver, taking Glencore to 100% ownership;
  • $73 million to acquire the remaining 18 per cent in Polymet not already owned, a 50:50 JV-partner in the New Range Copper Nickel venture with Teck Resources in Minnesota. 

Glencore has significant mining and refining operations in Sudbury which include the INO (Sudbury Integrated Nickel Operations) Fraser Mine and the Nickel Rim South Mine. Glencore is also in the process of developing the Onaping Depth, a new venture beneath the former Craig Mine. 

Len Gillis covers mining for