Glencore to cut annual zinc production by 500,000 tonnes
10 Oct 2015
Commodities giant Glencore said on Friday announced plans to cut 500,000 tonnes or a third of its annual zinc production, in a move that would reduce global supplies by around 4 per cent, amidst a weakening of commodity prices.
The cuts will mostly affect mines in Australia, where 535 jobs will be lost, as well as operations in South America and Kazakhstan.
Glencore had, last month, announced several measures to help slash its $30 billion in net debt by a third, including lower copper production, suspension of its dividends and a sale of new shares (See: Mining and commodities major Glencore to suspend dividends, sell assets).
Glencore, the world's largest miner of zinc ore, said at current prices it was better to keep its resources in the ground. Zinc prices have fallen 30 per cent since May to five-year lows.
"Glencore believes that current prices do not correctly value the scarcity of our zinc resources," the company said in a statement to the Hong Kong stock exchange.
The cuts will reduce the company's fourth quarter production by 100,000 tonnes. It had previously expected to produce between 1.52 million tonnes and 1.57 million tonnes of zinc this year.
"Glencore remains positive about the medium and long term outlook for zinc, lead and silver, however we are taking a proactive approach to manage our production in response to current prices," it said.
Glencore expects the reduction in output to help prices while saving on working capital while it lasts.
