Glencore Xstrata’s write-down bigger than expected: $7.7 billion
In its first half-year filing since becoming Glencore Xstrata (LON:GLEN), the mining company and commodities trader has added another massive write-down to the list of impairment-ridden miners this quarter: $7.7 billion.
As reported on Monday, the charges stem from a weak commodities sector, particularly low nickel prices.
Even before the impairments, the company’s industrial arm shows a 39% drop in operating profit – a figure also attributed to low commodity prices.
However, while prices tumbled production did not: Output at the firm`s African copper operations was up 42% compared to the first half of 2012. Prodeco coal facilities in Colombia were shipping out 22% more product.
The total write-down – including all Glencore sectors – reached nearly $9 billion.
But the mining giant is not dismayed or discouraged.
“These results again demonstrate the benefits of diversification, with strong outperformance in some divisions offsetting weaker market conditions elsewhere,” the company wrote in the half-year report.
CEO Ivan Glasenberg dismissed the negative economic environment, reassuring investors in a statement that Europe’s “ability to dominate the global financial agenda” has been dampened by growth in overseas markets.
The markets proved slightly punishing as results came out, dropping the miner’s share price by 1.5%, adding to Monday’s loss of more than 2%.