Glencore cut its forecast for zinc, nickel and coal production as disruptions from the war in Ukraine, flooding in Australia and industrial action cut output.
The deteriorating outlook reflects the rest of the mining industry, which is under pressure from bad weather, rising costs and supply chain challenges.
The Swiss-based resource company, the world’s largest publicly traded commodities trading firm and one of the most profitable mining groups, lowered its forecast for coal – its biggest cash generator – by 9 % for the whole year.
During the third quarter, Glencore production coal, zinc and nickel from its mining operations was below expectations, forcing the company to lower its full-year guidance for these products. The company record revenues posted of $18.9 billion in the first half of this year.
Its share price fell 2% to 489.35p on Friday morning. Glencore does not publish third quarter financial results, only production figures.
The company, which trades commodities ranging from oil and metals to carbon credits, said the decline in coal production was due to the La Niña phenomenon – a weather pattern in the Pacific Ocean that brings wet weather and floods in Australia. The group warned that this should continue in the fourth quarter.
Flooding in Australia has also affected coal production at other miners this season, including BHP and Anglo American. Duncan Wanblad, chief executive of Anglo American, said the company was feeling “dislocations in the global economy”, pointing to energy costs and labor markets.
Tyler Broda, analyst at RBC Capital Markets, said: “We have seen across the sector over this period very consistent underperformance and higher costs.
“We expected Glencore to have a tough third quarter,” he added, noting that the company will still benefit from high coal prices this year.
Its trading arm, which benefited from significant volatility in commodity markets during the first half of this year, is expected to generate profits of more than $1.6 billion in the second half. That compares to $3.7 billion in the first half.
On Friday, the company released the results of its climate strategy shareholder consultation, a process that was triggered when 23% of investors voted against its climate progress report.
glencore said he would improve the information in his report and provide more detail on his board’s handling of climate activities.
The company reduced its zinc forecast due to supply chain issues in Kazakhstan, reflecting the effects of the war in ukraine. The forecast for nickel has been reduced due to strikes at mines in Quebec and Norway.
Glencore was honored this year after To plead guilty to charges of misconduct and market manipulation, following an investigation by US, UK and Brazilian authorities. It set aside $1.5 billion for fines and penalties related to those cases. A hearing in London to determine the British sanction will take place next week.
Australian authorities also said on Friday they had rejected Glencore’s request to expand the Glendell coal mine in the Hunter Valley region of New South Wales. The company said it was “extremely disappointed” with the decision.