* Signs of improvement in past three months
* Details on future plans expected March 5
LONDON Feb 12 Commodities trader Glencore
and miner Xstrata, weeks from completing one of
the sector's biggest tie-ups, posted a drop in combined 2012
production across key metals on Tuesday.
Hit by power cuts in Congo and a push to replace ageing
operations, the companies' joint production numbers released by
Glencore showed a 9 percent fall in total copper production - a
number broadly in line with market expectations - while zinc
dipped 1 percent.
Figures for the past three months, however, show signs of
improvement, as Xstrata ramps up new and expanded operations to
substitute depleted mines and Glencore tackles power woes that
cost its Katanga operation more than two months of lost
Among diversified miners, the combined Glencore-Xstrata
group will have the most significant exposure to copper, one of
the best-performing industrial metals. Supply persistently fails
to match demand and large copper finds have been rare.
"This does show that towards the end of 2012 production was
on an upswing for both companies across their different
commodities. So aside from a few problem areas such as
Collahuasi and Cerrejon in Colombia, where they are currently
experiencing a strike (by workers), production looks to be on a
pretty firm footing going into 2013," Macquarie analyst Jeff
Xstrata has struggled with poor performance and bad weather
at Collahuasi, the world's third-largest copper mine, which it
owns jointly with Anglo American. It has since replaced
management and said on Tuesday that annual production there
would be restored to about 400,000 tonnes this year.
"The fourth-quarter implied (copper) production shows
volumes are in a recovery phase. They have some way to go, but
it does look like in 2013 volumes will be better," Largey said.
Xstrata, the world's fourth-largest copper miner, said its
own mined production of the red metal hit 747,000 tonnes in
2012, down 16 percent on 2011. The fourth quarter, however, was
up almost 9 percent on the previous three months.
Glencore, for its part, said that its Katanga unit achieved
a 2 percent increase in output over the year after power
disruptions cost it 67 days of production.
Mutanda, a second Congo operation that Glencore hopes to
merge with nearby Kansuki in the first half of this year,
boosted production by 37 percent.
Analysts and investors are keenly awaiting pronouncements
from Glencore's management on plans for the combined group after
the $36 billion takeover of Xstrata. This includes expected
spending cuts, asset sales and the acquisitive Glencore team's
appetite for further deals.
But neither side gave an indication of future direction on
Tuesday, leaving the market to wait until March 5, when both
sides publish full earnings for the year.
Shares in both Xstrata and Glencore traded down by about 1
percent at 1155 GMT, against a 0.7 percent drop in the broader
Coal provided a brighter spot for the mining and trading
giant, with combined production rising by more than a quarter
despite a three-month strike at Glencore's La Jagua mine and
engineering hiccups at Xstrata's coking coal operation in
In oil, where Glencore has been pushing to produce as well
as trade, the trader said that first production from the Alen
field in equatorial Guinea was scheduled for the third quarter,
while its existing Aseng field produced at a rate of 61,700
barrels per day. Glencore's first operated exploration well, off
Cameroon, will be appraised in the second half of the year.
Glencore is still awaiting final regulatory approval from
China for its acquisition of Xstrata but is scheduled to
complete the deal next month.