Glencore profits halve on weaker commodity prices

Mining giant Glencore saw earnings halve in the first six months of the year on weaker commodity prices, which had surged in response to Russia's unprovoked invasion of Ukraine last year.

Adjusted core earnings, slumped to $9.39bn from $18.92bn a year earlier, against expectations of $9.9bn.

“In addition to the significant weakening in energy markets, the recent overall cycle of inflation, tighter monetary conditions and limited global economic growth, contributed to average period-over-period price reductions in copper, cobalt, nickel and zinc of 11%, 59%, 13% and 26% respectively,” the company said on Tuesday.

“While lower energy prices have recently tempered some of the inflationary pressures in key Western markets, the restart of previously shuttered energy-intensive industries, including some steel, zinc and aluminium production, has been limited by weak end-user markets, particularly in Europe.”

Glencore also said it was paying out $1bn as a special dividend and buying back another $1.2bn of its shares until next February. This is significantly lower than the extra $4.5bn in the same period of 2022, including a $1.45bn special dividend and a $3bn share buyback.

The Swiss-based company revealed that it had set aside $2bn in cash as part of its $22.5bn plan to by Teck Resources' coal business as a standalone unit, having been rejected twice.

As part of the proposed deal, Glencore would spin-off and merge its thermal coal business with Teck's steelmaking coal one to form a separate New York-listed company.

Reporting by Frank Prenesti for Sharecast.com