UPDATE 2-Glencore posts solid growth in copper; nickel, zinc output dip

Wed Aug 13, 2014 4:12am EDT

* Zinc output falls 11 pct, nickel down 8 pct

* Koniambo produced 4,100 tonnes in H1

* Revised target for Koniambo to be announced next week

* Coal prices still a drag on Glencore - analyst (Adds production data, comments, Koniambo details)

By Silvia Antonioli

LONDON, Aug 13 (Reuters) - Mining company Glencore posted a 13 percent increase in first-half copper output, in line with market forecasts and boosted by growth at its African and South American mines but its zinc and nickel production dipped.

The London-listed company, which is due to report half-year results next week, makes almost half of its profit from the red metal and said its total copper output using feed from its own sources rose to 741,000 tonnes in the first half of this year.

That compares with analysts' forecasts of 739,000-754,000 tonnes.

The increase in copper was mostly on the back of higher production at its Mutanda and Katanga mines in the Democratic Republic of Congo and at its Antapaccay mine in Peru. Operational improvements at Collahuasi in Chile, a joint venture with Anglo American, also helped.

"Second-quarter production was broadly in line with our forecasts. The production profile for the group is weighted towards the second half and we therefore expect volume improvements going forward," Citi analysts said in a note.

However, output of zinc, another large contributor to Glencore's bottom line, dropped 11 percent in the first half to 650,400 tonnes and nickel production fell 8 percent to 49,100 tonnes, as some mines were placed on care and maintenance.

The Koniambo mine in New Caledonia, a multi-billion greenfield project that has seen cost overruns and delays, produced 4,100 tonnes of nickel in ferronickel in the first half.

In May, Glencore said it would review its annual production target from Koniambo after flagging some start-up difficulties due to issues such as power instability and maintenance stoppages.

Its previous goal for Koniambo was 55,000 tonnes by 2016 but a revised target should be announced next week.

"The ramp up of Koniambo is still likely to take longer than expected, and could be an incremental downside risk," Nomura analysts said in a note.

In coal, Glencore posted a 5 percent increase to 71.2 million tonnes, due to some improvements at existing mines and expansion projects in Australian thermal coal.

Prices for thermal and metallurgical coal, however, are depressed due to poor demand and excess supply. Analysts expect them to remain weak in the medium term.

"Glencore still gets good exposure to commodities such as copper, nickel, zinc, all of which could perform well over the next couple of years or so but coal remains a difficult space. The company produces a lot of it and prices are weak," Investec analyst Marc Elliott said.

Glencore shares were down 1.2 percent at 0711 GMT, in line with a 1 percent fall in the UK-listed mining sector .

The miner said it received $6.5 billion after tax from the sale of its Peruvian copper project Las Bambas to a Chinese consortium earlier this year. (Editing by Erica Billingham and Dale Hudson)

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