Mining giant Glencore having its coal operations in South Africa, Australia, and Colombia has released its first quarter (Jan-Mar) results for 2020.
The coronavirus pandemic has forced the commodities giant to halt operations in countries such as South Africa, Chad, Peru, Colombia and Canada and the shutdowns have seen production fall at some of its sites.
The company’s coal output in q1 2020 has registered a drop of 4% y-o-y basis at 31.9 MnT against 33.2 MnT in Q1 2019. This drop mainly reflects operating challenges in South Africa and mining sequencing in the Australian coking portfolio, partly offset by higher Australian thermal coal production.
While the company ramped down its coal mining operations in Cerrejon mines in Colombia in late March, the Prodeco mine operations were subjected to care and maintenance. In case of South Africa, major complexes supplying domestic power and exports continued to operate whereas a smaller complex was temporarily closed.
| Glencore Coal Assets (Qty in MnT) | Q1 2019 | Q1 2020 | % Change |
| S.African Thermal Coal Export | 3.8 | 3.7 | -3% |
| S.African Thermal Coal Domestic | 3.3 | 2.5 | -24% |
| Australian Thermal Coal Export | 14.9 | 14.5 | -3% |
| Australian Thermal Coal Domestic | 1.8 | 2 | 11% |
| Prodeco | 3.6 | 3.8 | 6% |
| Coerrejon | 2.2 | 2 | -9% |
| Australian Coking Coal | 2.6 | 1.8 | -31% |
| Australian Semi-soft Coal | 1.6 | 1 | 60% |
Revision in production guidance for 2020
Glencore has revised its production guidance for ongoing year 2020. Due to production disruptions caused by COVID-19 and weaker demand from Europe, the coal output forecast has been revised to 132 MnT from 135 MnT in previous forecast for 2020 and 140 MnT in 2019. Thermal coal will contribute to the bulk of this quantity, with coking coal and semi-soft coal accounting for a minor share.
The company has lowered its projected average thermal coal unit cost for 2020 due to lower energy costs, favourable currency movements and cost controlling measures. The cost is forecast at USD 42/MT on a fob basis, down from its previous guidance of USD 45/MT, which was also its 2019 price. The unit cost is expected to fall to USD 40/MT in the second half of 2020 from USD 44/MT in the first half of the year.
In terms of prices, the average price for South African thermal coal (API4) in Q1 2020 stood at USD 73/MT against USD 83/MT in Q1 2019 whereas Newcastle 6,000 NAR price IN Q1 2020 stood at USD 96/MT against USD 73/MT in Q1 2019.
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