Glencore in Congo standoff as production increases

Glencore unearthed more copper, cobalt and nickel in the fourth quarter of 2018 compared to the quarter before, but has had another run-in with the Democratic Republic of Congo.

The FTSE 100 group is having to stockpile all cobalt production from its Katanga operations in DR Congo after being told by the government to suspend a project to build a new system to remove uranium from its the battery metal.

“On January 30, 2019, the company's 75% operating subsidiary Kamoto Copper Company received a letter from the DRC Minister of Mines following the inspection conducted by the DRC Government in the fourth quarter of 2018,” Katanga said in a statement overnight.

“The Minister of Mines raised certain concerns with the technical solutions identified by KCC and requested that KCC suspend the project to build an Ion exchange plant until further notice. KCC intends to engage with the Ministry of Mines to understand and address their concerns.”

Glencore said in its statement on Friday that a "long-term solution" is sought to remove excess uranium levels.

Cobalt output came for 2018 of 42.2 kilotonnes was up 54% on the previous year, with the fourth quarter's 13.7kt up 16% on the third quarter and 6% on the previous year, after Katanga came back on stream at the end of 2017.

In December Glencore agreed to buy out Israeli mining magnate Dan Gertler’s stakes in Kamoto and the second copper mine that Katanga operates in the Democratic Republic of Congo for a total of $534m. It emerged last month that Glencore paid at least $100m in royalties and other payments to Gertler over the four years to 2016.

Turning back to the production report, the mining and commodities trading giant said it turned out 1.45m tonnes of copper last year, up 11% than the year before after the restart of processing at Katanga at the end of the previous year. Production in the fourth quarter of 390,600 tonnes was the highest in the year, up 7% on the prior quarter and 27% year on year.

Sales of own-sourced copper during the year were around 22,000 tonnes lower than production, reflecting shipment timings.

On average over the year, Glencore achieved a copper price of $5,950 per tonne, with zinc at $2,836 per tonne, nickel at $13,007 per tonne if excluding Koniambo or $12,875 if including it.

Own sourced zinc production of 1.07m tonnes for 2018 was down 2% on 2017, though finishing the year with the strongest two quarters as the disposals of the African zinc assets in August 2017 was offset by the restart of mining at Lady Loretta, Australia in middle of 2018.

Nickel production of 123,800 tonnes up 13%, mainly reflecting Koniambo running two production lines throughout the year.

Annual gold production of just over 1m oz was down 3% on the year with the fourth quarter's 229koz down 13% on the previous year.

Silver output of 34.9koz for the year was down 8%, as the peak from the third quarter levelled off.

Oil entitlement interest production of 4.6m barrels was 8% down on the year before, reflecting the natural decline of the fields in Equatorial Guinea, while there was an increase in Chad.