Glencore’s coal output up 9% as prices touch 5-year low
European thermal coal for delivery next year headed for its lowest-ever close as one of the major producer, Glencore (LON:GLEN) reported Tuesday a 9.2% increase in third-quarter output amid a glut of supply in the seaborne market.
Next-year coal for delivery to northwest Europe dropped as much as 1.1% to $70.35 a metric ton by 7:35 a.m. ET. That’s the lowest intraday price since March 2009 and would be the lowest close since at least September 2007, according to Bloomberg.
Coal prices have been dangerously flirting with a predicted five-year low this year and analysts don’t see the situation getting better anytime soon, as China’s demand weans.
The increase in coal production was driven by expansions at its Australian mines, the Swiss firm said. This year’s average price for the power-station fuel from Australia’s Newcastle port, a benchmark for Asia, went down 14%to $73 a ton from a year ago, it added.
Production of copper, the other main contributor to Glencore’s earnings, dropped 5.3% to 391,300 tons from a year earlier. However production of the red metal from the miner’s sources rose to 1,148,600 tonnes in the first nine months of the year, driven by expansion at its Mutanda and Katanga mines in the Democratic Republic of Congo.
The miner and commodity trader approached Rio Tinto (LON:RIO) in August with a merger proposal that would have created a $160 billion mining and trading giant. Rio rejected the offer, despite estimations that a fusion of both mining giant would up bring them savings of up to $500 million.