Glencore sees decline in metals production for 2024: here’s why

Glencore, a multinational commodity trading and mining company, released its production results for the year 2024 on Thursday. 

The report indicated a decline in the production of several key commodities, including copper, cobalt, zinc, nickel, and thermal coal. 

However, the company stated that these figures were consistent with the guidance it had previously provided to the market.

Copper output

In 2024, the company experienced a decline in copper production, outputting 951,600 tons.

This figure represents a 6% decrease compared to the 1.01 million tons produced in 2023. 

The company had previously forecast a production range of 950,000 to 1.01 million tons for the year, and the actual production fell at the lower end of this projection. 

This decrease in production across multiple commodities reflects the various challenges faced by the mining industry in 2024.

These challenges possibly include factors such as operational disruptions, supply chain bottlenecks, labour shortages, geopolitical tensions, and fluctuating commodity prices. 

Copper is essential for electric vehicles (EVs), green energy plants, and data centers. 

The rising demand for copper in these sectors is expected to outpace the available supply due to declining ore grades at existing copper mines. 

This supply-demand imbalance could lead to higher copper prices, increasing the costs of EVs, renewable energy infrastructure, and digital technologies, and potentially slowing the adoption of clean energy solutions and efforts to combat climate change.

Management

Despite these hurdles, Glencore's ability to align its production with its guidance suggests effective management and a clear understanding of the market dynamics.

The company's performance in 2024 will be closely watched by investors and analysts, as it provides insights into the overall health of the mining sector and the company's strategic direction. 

Glencore's ability to navigate these challenges and adapt to the changing market conditions will be crucial for its future success.

Glencore announced that it will release production guidance for 2025 and beyond on February 19, as part of its annual financial results.

Previously, the company stated that it anticipated its full-year marketing earnings before interest and tax (EBIT) to be in the $3 billion-$3.5 billion range, which is around the top end of its long-term forecast range of $2.2 billion-$3.2 billion.

The trading division deals in coal, oil, liquefied natural gas, related products, and metals. Its profit reached a record $6.4 billion in 2022.

Retaining coal business

The mining company has decided to retain its coal business.

This strategic decision comes after the successful acquisition of Teck Resources' coking coal assets and, importantly, securing the support of a majority of its investors. 

These investors see the potential for significant profits from the continued operation of the coal business, driven by the lucrative earnings that can be generated from fossil fuels.

Glencore's steelmaking coal production increased significantly from 7.5 million tons in 2023 to 19.9 million tons in 2024. 

The company also produced 99.6 million tons of thermal coal in 2024, compared to 106.1 million tons the prior year.