The commodities giant will close two mines and cut up to 1,600 jobs globally as zinc prices slump
SYDNEY—Commodities trader Glencore PLC, which has faced intense pressure from investors over its debt pile, said it would cut global zinc production by a third after a collapse in prices of the industrial metal.
The Switzerland-headquartered commodities group said it would cut annual zinc production by roughly a third, or 500,000 metric tons, including closing its Lady Loretta mine in Australia and Iscaycruz mine in Peru. The changes will also reduce its annual output of lead, also produced at those mines, by about 100,000 tons, it said.
Shares in Glencore, the world’s biggest miner of the industrial metal, rose more than 6% in response to the move.
They are the latest in a string of mine closures for Glencore, from coal to platinum deposits, as sliding commodity prices make it harder for the resources giant to turn a profit. It comes at a time when the company has been under scrutiny by investors, concerned that falling raw-material prices could strain the mining and commodity-trading group’s finances. Glencore has already raised equity and suspended its dividend to help fireproof its balance sheet.
Zinc is primarily used for steel coatings, but goes into many products including car tires and sunscreen, and has few substitutes.
The move could help buoy prices in the 13-million-ton-a-year global market. The price of zinc has tumbled almost 30% since April to a five-year low, as world markets have fretted over the outlook for demand at a time when China—the biggest zinc buyer, accounting for nearly half of all demand—is slowing.
“Fading investor favor has transformed zinc from hero to zero this year,” Citi commodities analyst David Wilson wrote in a report earlier this week.
The price of zinc rose more than 3% on the London Metal Exchange early in Asia trade on Friday.
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