MELBOURNE (REUTERS, BLOOMBERG) - Commodities giant Glencore said on Friday (Oct 9) it will cut 500,000 tonnes of zinc production, or around 4 per cent of global supply, in its latest move to withstand weak commodities prices.
The cuts will affect about a third of the company's annual zinc output, mostly from mines in Australia, where 535 jobs will be lost, as well as operations in South America and Kazakhstan.
The zinc cuts come on top of an array of measures Glencore announced last month to help it slash its US$30 billion in net debt by a third, including lower copper production, suspension of its dividends and a sale of new shares.
Shares in Glencore dropped by 30 per cent on Sept 28, before recovering in subsequent days after media reports have said Glencore is talking to potential buyers, including Singapore sovereign wealth fund GIC, about taking a minority stake in its agriculture business.
Glencore, the world's largest miner of zinc ore, said at current prices it was better to keep its resources in the ground. Zinc prices have fallen 30 per cent since May to five-year lows as weaker growth in China, the largest commodities consumer, has curbed demand for metals.
"Glencore believes that current prices do not correctly value the scarcity of our zinc resources," the company said in a statement to the Hong Kong stock exchange.
The cuts will reduce the company's fourth quarter production by 100,000 tonnes. It had previously expected to produce between 1.52 million tonnes and 1.57 million tonnes of zinc this year.
"Glencore remains positive about the medium and long term outlook for zinc, lead and silver, however we are taking a proactive approach to manage our production in response to current prices," it said.
A Glencore spokesman in Australia declined to say how much the output cut would save in working capital or pay, nor how long it expected the cuts to last.