Wednesday 20 February 2019 8:25 am

Congo cobalt mine takes chunk out of mining giant Glencore's full-year earnings

Mining giant Glencore’s shares were on the up this morning as it announced rising adjusted profits, despite missing analyst estimates and taking a huge 41 per cent hit net income hit from costs relating to its copper and cobalt mine in the Democratic Republic of Congo (DRC).

The firm also announced a $2bn (£1.53bn) share buyback program after shareholders suffered a tough year, involving a corruption probe and being hit by US sanctions on Russia.

Shares rose 2.89 per cent in early morning trading.

The figures

Glencore’s full-year net income fell 41 per cent to $3.4bn, mainly due to “non-cash impairments” at Mutanda and Mopani, totalling $1.4bn. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $15.7bn, up eight per cent on last year’s $14.5bn but still missing average analyst estimates of $16.2bn.

The firm saw today assets fall five per cent to $128bn from $135bn, while net debt rose 44 per cent to $14.7bn from $10.2bn.

Why it’s interesting

Glencore shareholders had a difficult 2018, with the firm’s stock falling 26.1 per cent from a 52-week high of 409.8p to 302.75p as it faced a major corruption probe in the US, as well as being hit by added costs relating to US sanctions on Russia.

Its stock underperformed compared to bitter rival BHP Group, and the share buyback program will likely be seen as a reward for sticking out the last 12 months.

The firm also said it would halve copper production at its Mutanda mine in the DRC this year, producing just 100,000 tons. The company said it would lay off workers at the site, where it also mines cobalt.

It also said it would invest in the low-carbon economy, with coal production to be limited to current levels, while added 2019 production was expected to increase overall in all its commodities.

What Glencore said

Chief executive Ivan Glasenberg said: “Our asset portfolio continued to deliver overall competitive all-in unit costs, which allowed the Company to capitalise on healthy average commodity prices and generate attractive margins.

“Our commodity portfolio and its key role in enabling the energy and mobility transition for a low-carbon economy enables us to look ahead with confidence and to remain focused on creating sustainable long-term value for all our shareholders.”

Glencore's companies employ around 158,000 people, including contractors, selling assets to the automotive, steel, power generation, oil and food processing sectors.