London — Glencore PLC reported a decline in the production of copper, cobalt, zinc, nickel, and thermal coal for the first nine months of 2024 but maintained that it expects trading profits to land at the high end of its long-term forecast, potentially reaching $3.5 billion. The mining giant’s mixed output results reflect ongoing supply constraints and operational challenges amid increased investor interest in its lucrative coal business, which it has chosen to retain even as it expands steelmaking coal production.
Metals Production Declines, Energy Transition Demand Remains Steady
Glencore‘s copper production, a crucial metal in energy transition technologies, fell by 4% to 705,200 metric tons from January to September. Cobalt production, essential for electric vehicle batteries, also dropped significantly—down 18% to 26,500 tons. Despite the declines, Glencore kept its annual copper production forecast steady at between 950,000 and 1.01 million tons, signaling confidence in meeting long-term supply commitments for this in-demand metal.
Robust Trading Division Offsets Production Losses
The company’s trading arm, which handles an extensive portfolio of commodities, has remained a bright spot. After posting a record profit of $6.4 billion in 2022, the division is on track to close 2024 with earnings before interest and tax (EBIT) at the high end of the $3 billion-$3.5 billion forecast range. This division, encompassing coal, oil, liquefied natural gas, and metals, continues to provide a reliable profit buffer amid fluctuating production volumes in Glencore’s own mining operations.
In a volatile market, trading margins have benefitted from price swings across energy and metal markets, driven by the energy transition and geopolitical factors. Glencore’s dual role as both a producer and trader of critical raw materials has allowed it to maintain financial stability despite the global mining industry’s headwinds.
Coal Production Resilient Amid Strategic Expansion
As global miners weigh ESG pressures, Glencore has reinforced its commitment to coal, concluding the acquisition of Teck Resources’ coking coal assets earlier this year. With broad support from investors who see long-term profitability in the fossil fuel segment, Glencore has signaled plans to increase its steelmaking coal output from the current 7 million-9 million tons to between 19 million and 21 million tons annually. This positions Glencore to meet consistent demand from the steel industry, a sector facing limited short-term alternatives to coal.
In 2024, Glencore expects its thermal coal output to range between 98 million and 106 million tons. Despite lower year-to-date production, which stands at 73.1 million tons (a 7% decrease from last year), the company’s coal business remains a key revenue driver amid stable global coal demand, particularly in emerging markets. CEO Gary Nagle indicated in August that Glencore is open to further acquisitions in steelmaking coal, a stance likely aimed at securing a larger share of this essential input for global infrastructure development.
Outlook: Strengthened Profit Guidance Against Challenging Production Environment
While production constraints across Glencore’s metals portfolio persist, its reaffirmed profit guidance underscores the stabilizing role of its trading operations and diversified asset base. Investors have rallied behind Glencore’s dual approach, which capitalizes on current energy needs while enabling strategic flexibility in commodities crucial for the global transition to cleaner energy.
In the face of tightening global supply chains and rising ESG demands, Glencore’s strategic coal acquisitions and steady trading revenues are positioning it as a resilient player in an otherwise turbulent commodities market.
