Glencore will close one of its Australian zinc operations, and will sell a key Australian copper mine, as part of its ongoing response to a downturn across multiple commodities sectors.
The Swiss-headquartered trader will sell its Cobar copper mine in central-western NSW.
Cobar is a high-grade underground copper mine and concentrate plant. The plant throughput is roughly 1.1 million tonnes of ore per annum, producing around 50,000 tonnes of copper concentrate per annum.
Glencore will also sell its Lomas Bayas copper mine in Chile, which produces around 75,000 tonnes of copper cathode every year.
Together, the copper asset sales are tipped to raise around A$1.4 billion.
“The sale process is in response to Glencore receiving a number of unsolicited expressions of interest for these mines from various potential buyers,” the company said on October 12.
“This will allow potential buyers to bid to purchase either one or both of the mines and may or may not result in a sale.
“Glencore will issue an update only in the event a sale is agreed or disclosure is otherwise required.”
Glencore will also close its Lady Loretta zinc operation, and slow production at its George Fisher operation, both near Mt. Isa, in north-west Queensland. It will also slow production at its McArthur River lead, zinc and silver operation in the Northern Territory.
The Mt. Isa closure and slowdown will result in a 245,000 tonne annual reduction in Glencore’s annual zinc production, while the McArthur River slowdown will result in a 135,000 tonne reduction in zinc, as well as an undefined reduction in lead production.
Outside Australia, Glencore will also sell zinc operations in South America and Kazakhstan, reducing its zinc production by 80,000 tonnes and 40,000 tonnes per annum, respectively.
Glencore says the zinc moves are to preserve ore reserves for better days.
“The main reason for the reduction is to preserve the value of Glencore’s reserves in the ground at a time of low zinc and lead prices, which do not correctly value the scarce nature of our resources,” the company said on October 9.
“Glencore’s operations at Lady Loretta in Australia and Iscaycruz in Peru will be suspended and operations at George Fisher and McArthur River in Australia and various mine operations in Kazakhstan will reduce production levels.
“Glencore remains positive about the medium and long term outlook for zinc, lead and silver prices.
“This decision will ensure that our zinc operations are sustainable well into the future, providing jobs in the communities where we operate and returns to shareholders.
“These changes, although temporary, will unfortunately affect employees at our operations. This decision has not been taken lightly.”
The mining moves in Australia add to the news last week that Glencore is looking set to sell a minority stake in its agricultural business, which owns roughly 30,000 hectares of farmland across NSW, Victoria and South Australia.
According to a report in The Australian, Singapore’s sovereign wealth fund GIC and Japanese conglomerate Mitsui have been linked to the sale process for the company’s agricultural assets, with the sale being run for Glencore by Citi and Credit Suisse.