UPDATE 2-Glencore beats copper forecasts and metals boost trading

Thu Oct 31, 2013 5:30am EDT

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By Clara Ferreira-Marques

LONDON Oct 31 (Reuters) - Glencore Xstrata beat market forecasts with copper output that rose more than a third in the quarter, boosted by improvements in its Congolese and Chilean mines, and metals helped its trading arm perform "in line" with its expectations.

Copper and coal production accounts for over two-thirds of profit from the industrial side of Glencore's business, and output at both climbed in the quarter and the nine months to the end of September - offsetting expected weakness in nickel and zinc, where ageing or costly mines have closed.

Glencore Xstrata has the biggest exposure to copper among the diversified miners, and it said total copper contained - using feed from its own sources - climbed to 412,900 tonnes in the third quarter. African production alone rose 30 percent.

Having inherited a hefty position in copper with the acquisition of Xstrata earlier this year, it also benefitted from the ramp up of the newly commissioned Antapaccay mine in Peru and operational improvements at Collahuasi in Chile, a joint venture with rival Anglo American.

"Copper, coal and oil benefited from better than expected project growth and 2013/14 guidance looks highly achievable," Credit Suisse analysts said in a note, adding average group production was 2 to 3 percent ahead of their estimates.

At 0800 GMT, Glencore shares were down 0,8 percent.

Total coal production rose 9 percent in the third quarter compared with last year, helped by expansions in Australian thermal coal that helped lift exports. Coking coal, though, saw production dented by the ramp down ahead of the closure of Collinsville and reductions in high cost output elsewhere.

Zinc output, another key source of revenue for the combined group, dipped 12 percent to 332,200 tonnes, held back by the end of operations at depleted Brunswick and Perseverance in Canada.

Nickel, meanwhile, was hit by the closure of higher-cost mines moved into care and maintenance, falling 6 percent. Falcondo, in the Dominican Republic, was mothballed in October.

Glencore gave little detail on the performance of its trading arm, which represents a smaller slice of just over a fifth of group profit since the merger with Xstrata - but said profitability there was "broadly in line with expectations".

"Metals and energy remain the strongest, however we are also witnessing an improvement in agricultural performance," it said on Thursday.

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