GLENCORE annnounced today the restart of its Alumbrera mine in Argentina by late 2026 as it sought to give fresh momentum to its struggling copper division.
Amid a downgrade of copper guidance for next year to 810,000 to 870,000 tons, the reopening of the open pit mine is a prelude to developing the neighbouring $3.5bn to $4.5bn MARA project and re-establishing Glencore’s credentials as one of the world’s largest producers of the red metal.
All in all, Glencore has targeted 1.6 million tons of copper by 2035 after showing how it would phase in a string of potential projects – enough, it said, to make it the largest miner of the metal globally.
“We have a clear pathway for our base copper business to exceed 1 million tons of annual production by the end of 2028, with a target to produce approximately 1.6Mt tons by 2035,” said Gary Nagle, CEO of Glencore at a capital markets presentation in London.
Alumbrera, which was put on care and maintenance in 2018, is forecast to produce 75,000 tons of copper and about 317,000 ounces of gold as well as 1,000 tons of molybdenum, (a steel-making ingredient), during four years of operations, said Glencore.
Alumbrera’s restart is also “a natural enabler” for Minera Agua Rica – Alumbrera (MARA), the group said. “It reduces ramp-up risk for the concentrator and downstream logistics, maintains and retrains the workforce ahead of MARA first ore and keeps critical infrastructure in operation,” Glencore said. There were also cost saving synergies as the MARA project would share infrastructure with Alumbrera.
Glencore has been criticised for its reluctance to approve projects which also include the Coroccohuayco expansion at Antapaccay, the El Pachon project, also in Argentina, as well as a joint venture with Teck called New Range, and potentially a fourth line at Collahuasi in Chile, subject to a feasibility.
“We are seeing a trend-change in the copper market,” said Nagle of his new-found confidence in the metal’s prospects which is in contrast to past conservatism. “That has given us comfort to sanction these projects and not cannabiise our product.”
According to its plans, Glencore will rank as the world’s fourth largest copper producer by 2029 with the Coroccohuayco project. MARA would come on stream in 2030 and El Pachon was expected to be in production by 2034 at a capital cost of $8.5bn to $10.5bn. New Range would add copper production in 2035, the group said.
Nagle said that while its copper production expansion plans would be funded internally the company would consider joint venture – such as with Antofagasta which has a project bordering El Pachon – and other strategic link-ups, though these financing options would only come to the fore as projects approached a final investment decision.
There was a risk the firm could pierce its current ceiling on net debt of $10bn whilst financing the projects. “Once we get to the promised land, the direction (of the net debt ceiling) is up,” said Steve Kalmin in response to questions from analysts following the presentation.
In October, Glencore trimmed its full year output of the red metal to 850,000 to 875,000 tons compared to previous guidance of up to 890,000 tons despite a recovery of grades at its African copper operations (KCC and Mutanda), and its Peru mines Antapaccay and Antamina which took third quarter output up 36% to 583,000 tons.
But there is scepticism about its operating performance. This has weighed heavily on Glencore’s shares this year, although the slump in the thermal coal price is an important factor in the company’s valuation.
“We see Glencore as being at a strategic crossroads. Our discussions with investors suggest that to outperform peers, it should revisit/rationalise its portfolio,” said Goldman Sachs analyst Matt Greene in a report on November 24.
Asked if asset disposals were still on the radar for Glencore, Nagle said at the “right price from the right buyer” even the company could be sold. “Everything has a price, but we have no interest in selling core, critical assets,” he said.
Commenting on its operational underperformance, Glencore said it had streamlined its management structure, and focused on improving operational performance. It had subsequently cut about 1,000 jobs. “We have heard what you say,” said Nagle of criticism about the group’s mines.
The market appeared to warm to Glencore management’s comments today. Shares in the company were nearly 5.5% higher at closing in Johannesburg on Wednesday.
