February 11, 2014 / 8:05 AM / 6 years ago

UPDATE 2-Strong copper output growth boosts miner Glencore Xstrata

* Copper output up 26 pct; coal up 4 pct

* Zinc, lead, nickel production down amid weak metal prices

* Glencore sees zinc output back to growth in 2014

By Silvia Antonioli

LONDON, Feb 11 (Reuters) - Miner and trader Glencore Xstrata on Tuesday beat analysts’ forecasts with a 26 percent rise in annual copper output, boosted by strong growth at its African and Chilean mines.

Output of both copper and coal, the two biggest earners for Glencore’s industrial side, rose in the year to the end of December, offsetting a decline in nickel, lead and zinc.

The company, which of the diversified miners has the biggest exposure to copper, said its own-sourced copper production rose by more than a quarter to 1.5 million tonnes in 2013, passing analysts’ expectations for a rise of 16-25 percent.

The division, which accounts for about 30 percent of the company’s profits, benefited from strong growth at its Congolese mines and at Collahuasi in Chile, a joint venture with rival Anglo American inherited with the acquisition of Xstrata last year.

“Copper is central to our bullish stance on Glencore Xstrata given our positive view on the future price development of the commodity and the strong prospects for Glencore to grow production,” Bernstein research analysts said in a note.

“Today’s Q4 production results were positive and the excellent performance of the company’s African copper assets in particular makes us confident that full year financial results for 2013 will be strong and that 2014 numbers will also likely be better than many think.”

At 0850 GMT, Glencore shares were up more than 1 percent.

Glencore produced a total of 750,600 tonnes of copper cathode in 2013, up 21 percent on the year before, mainly due to a recovery at copper smelter Pasar, in the Philippines, which was affected by a fire in 2012.

Pasar has been shut since November due to structural damage sustained when a powerful typhoon battered the Philippines.

A restart is now expected in the first quarter this year.

In coal, the second-biggest earner for the company’s industrial side, output rose 4 percent to 138.1 million tonnes, in line with analysts’ expectations, driven by growth at Prodeco, in Colombia, and at the Australian operations, even as the company cut back output at less profitable mines due to depressed coal prices.

WEAKER ZINC, LEAD, NICKEL

Production of zinc, another key source of revenue for the group, fell 9 percent to 1.4 million tonnes, while lead output dropped 2 percent to 315,000 tonnes.

The decline in both metals was due to the Brunswick and Perseverance mines in Canada reaching the end of their lives and ceasing production in June 2013.

Glencore, however, expects its zinc production to return to growth in 2014, mainly due to growth at its Australia operations.

“Nickel and zinc were below expectations but that reflects tough market conditions for both metals and the end of mine life at some assets,” Investec analyst Marc Elliott said.

Output of stainless steel material nickel also fell, by 4 percent to 98,400 tonnes, mainly due to the Falconado operations in the Dominican Republic being placed on maintenance in response to poor nickel prices.

The company did not give any update on the sale process of its Las Bambas copper mine in Peru but said that ore reserves at Las Bambas contained 6.9 million tonnes of copper.

“Interestingly they have reported the reserves of Las Bambas which might imply that they are preparing to keep it,” Elliott said.

China’s Minmetals has so far been seen as the front runner for the $5.9 billion Las Bambas project but some say Glencore might now be considering keeping the mine.

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