“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 Glencore announcement said.

Glencore’s operations at Lady Loretta in Australia and Iscaycruz in Peru are being suspended, and its operations at George Fisher and McArthur River in Australia and various mine operations in Kazakhstan are reducing their production levels. The cutbacks also will reduce Glencore’s estimated annual production of mined lead by about 100,000 mt/y.

Glencore said it remains positive about the medium- and long-term outlook for zinc, lead and silver prices; and in the immediate aftermath of its announcement, the three-month price of zinc on the London Metal Exchange jumped 11% to $1,856.50/mt, trading around its highest level in two months. However, by late in the month, the three-month price had retreated to around $1,770/mt.

Glencore’s announcement regarding reductions in its zinc production followed an announcement of potential 18- month suspensions of copper production at two of its African copper subsidiaries, Katanga Mining in the Democratic Republic of the Congo and Mopani Copper Mines in Zambia (E&MJ, October 2015, p. 6). If both of those suspensions come into full effect, they will remove about 400,000 mt of copper cathode from the market over the 18- month period.

Proposed Copper Mine Sales: In other news from Glencore, the company announced on October 12 that it has initiated a process to sell its wholly owned Cobar copper mine in Australia and its Lomas Bayas copper mine in Chile. “The sale process is in response to Glencore receiving a number of unsolicited expressions of interest for these mines from various potential buyers. 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,” the announcement said.

Cobar is a high-grade underground copper mine and concentrator in centralwestern New South Wales, Australia. Plant throughput is approximately 1.1 million mt/y of ore to produce approximately 50,000 mt/y of copper in concentrate. Lomas Bayas is a low-cost, open-pit copper mine in the Atacama desert, 120 km northeast of the port of Antofagasta, Chile. The mine’s low-grade copper ore is processed by heap leaching, followed by production of approximately 75,000 mt/y of copper cathode at an SX-EW plant.