The Swiss mining and commodities giant Glencore on Thursday announced further spending cuts for 2015 and a reduction in the value of its Chad operation due to low crude prices. The company, which reported its half-year commodity production results, said it projected $6.0 billion (5.3 billion euros) for capital expenditure for 2015, down from the $6.5-6.8 billion projected in February. The latest spending cut was the second for Glencore this year.
The initial capital expenditure projection for 2015, as announced in December, was $7.9 billion. Glencore shares have fallen 40 percent this year as investors back away from mining firms, especially over fears that demand in China will continue to fall amid slowing economic growth. The company said its Chad operation, which it only bought last year, would be devalued by $790 million dollars.
"Following the sharp decline in oil prices in late 2014 and continuing into 2015, significant amendments were made to Chad's work programme with the objective of preserving value for the long term, while reducing cash outlays in the near term," a statement said. The half-year report included a breakdown of its global commodities production, highlighted by a three-percent fall in copper output and a 12-percent rise in own-sourced zinc production.
Glencore has in recent months announced hundreds of job cuts in South Africa and on August 4 said it was putting its Optimum Coal Mine, which supplies the state-owned power generator Eskom, into a form of bankruptcy protection. The announcement triggered an urgent response from the government in Pretoria, which met with Glencore and other mining industry leaders in a bid to save jobs. Glencore said that "if the supply agreement with Eskom can be renegotiated, there is a reasonable prospect of rescuing Optimum." The company will publish its full half-year results this week.
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