Glencore cuts mining production in first quarter, as expected

Glencore held its full year production guidance largely steady as copper, zinc, lead, oil and coal volumes all were cut in the first quarter as part of the commodities giant's plan to draw in its horns during this low point in the cycle.

Overnight it emerged that Glencore is mulling the sale of its 70%-owned Vasilkovskoye gold mine in Kazakhstan, according to reports from Reuters and the Financial Times. A quoted valuation of $2bn for the mine sounded a little high, according to some analysts.

The only change to 2016 guidance was where contraction of the oil drilling campaign have led to a 0.3m barrel reduction compared to previous guidance.

Guidance for marketing earnings before interest, tax (EBIT) for 2016 was also unchanged at $2.4-2.7bn.

Copper production of 335,000 tonnes was 4% down on the same period in 2015 after suspensions and reductions in Africa, partly offset by increased production from South America.

Zinc production was cut 28% to 257,100 tonnes after reductions in Australia, Peru and Kazakhstan, while coal production was down 17% to 29.7m tonnes with some mining restrictions in Columbia added to other known factors.

Nickel was a rare 16% rise to 27,600 tonnes as Glencore generated a higher mix of its own feed treated at Norway's Nikkelverk and a strong performance at the Murrin Murrin joint venture in Western Australia.

Crush volumes from Agricultural Products were up 89% to 1.2m tonnes due to the improved economic conditions in Argentina and the acquisitions in 2015 of plants in Becancour, Canada and Warden in the US.

Analyst Yuen Low at Shore Capital said the lower production numbers "should not represent a negative surprise", given the production cuts and disposals Glencore announced last year.

"For us, the important things were that full-year 2016 production guidance remains unchanged...and that marketing EBIT guidance likewise remains unchanged."

For analysts at Cancaccord, the report was "mixed but slightly better", on average 4% better than anticipated thanks to Ags and zinc the only major metal to miss forecasts.

Reports on Wednesday morning said Glencore had appointed Deutsche Bank and BMO Capital Markets as advisers to a potential sale of its Kazakh gold mine, as it looks to continue slimming down and paying down debt.

A Chinese buyer is felt to be the most likely due to the West's concerns about buying businesses in Kazakhstan.

Shares in Glencore were down 1.6% at 147.35p by 0915 BST on Wednesday.