Global mining and trading company, Glencore, has reported a decrease in its copper, nickel, and cobalt production for the year 2023 and has signaled the possibility of further declines in output for 2024.
Copper, nickel, and cobalt are vital materials used in the production of electric vehicles, which play a crucial role in the ongoing energy transition. Despite the challenges faced by the industry, including production issues, Glencore remains optimistic about the future, as analysts believe that limited supply growth in most mining commodities could lead to higher prices in the next 12+ months, ultimately offsetting the negative impact of declining production volumes.
Glencore, a London-listed company, has reiterated its expectation that its trading division will yield profits of $3.5 billion for 2023, surpassing its long-term guidance range, which typically falls between $2.2 billion and $3.2 billion. In terms of copper production, Glencore reported a total of 1.01 million metric tons in 2023, marking a 5% decrease from the previous year when it produced 1.04 million tons. For the year ahead, the company anticipates copper production to range from 950,000 to 1.01 million tons. This adjustment is attributed to the sale of its Cobar mine in Australia. Analysts have projected a copper deficit for this year, as signs indicate that supply might not be as robust as previously assumed. This is further supported by Panama’s order to close First Quantum’s 350,000 ton-a-year mine and lowered guidance from major producers such as Anglo American, Codelco, and Vale Base Metals.
In the case of nickel, Glencore reported production of 97,600 tons in 2023, which was below the revised October guidance, primarily due to a maintenance shutdown at its Murrin Murrin mine in Australia. The company anticipates producing approximately 80,000 to 90,000 tons of nickel in 2024. Other major producers, including the world’s largest listed miner BHP, have decided to postpone nickel projects in response to declining nickel prices.
Finally, Glencore’s cobalt production for 2023 reached 41,300 tons. The company expects cobalt production to range between 35,000 and 40,000 tons for the current year. While Glencore faces challenges in maintaining production levels for these critical materials, it remains hopeful that higher prices driven by limited supply growth will help mitigate the impact of declining volumes. These developments highlight the complex dynamics of the mining industry and its role in supporting the transition to cleaner energy sources, particularly in the electric vehicle sector.
Cobalt, another crucial material for electric vehicle batteries, also experienced reduced production by Glencore in 2023, with the company reporting 41,300 tons. For the current year, Glencore expects cobalt production to be in the range of 35,000 to 40,000 tons.
Despite these production challenges, Glencore remains optimistic about its financial outlook. The company has emphasized that the current difficulties in production are not unique to its operations but have become common throughout the mining industry. Many commodities are experiencing a lack of supply growth, which is expected to drive prices higher over the next 12+ months. Analysts at Jefferies have suggested that these higher prices should offset the negative impact of declining volumes on Glencore’s profitability.
It’s worth noting that Glencore’s commitment to addressing these challenges and its ability to adapt to changing market dynamics will play a crucial role in shaping the future of the electric vehicle industry, as these materials are fundamental to the production of electric cars. As the world continues to transition toward cleaner energy sources and reduced carbon emissions, securing a stable supply of these key materials remains a top priority for various industries and governments worldwide.
