Glencore to cut 500,000T of zinc output as prices slide

Zinc prices have fallen to five month lows
Zinc prices have fallen to five month lows

Commodities giant Glencore said on Friday it will cut 500,000 tonnes of global zinc production, around one third of its annual zinc output, due to low prices.

"Glencore is announcing today a 500,000 tonne reduction of contained zinc metal mine production across its operations in Australia, South America and Kazakhstan," the company, which is the world's biggest zinc miner, said in a release to the Hong Kong Stock Exchange.

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Zinc prices have fallen 30 percent since May to five-year lows.

"Glencore believes that current prices do not correctly value the scarcity of our zinc resources," the company said, adding: "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."

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 said operations at Lady Loretta in Australia and Iscaycruz in Peru would be suspended, while George Fisher and McArthur River in Australia and various mines in Kazakhstan will cut production levels.

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Glencore said the move would trigger job cuts across its operations and it would start talks with employees in coming days. Dow Jones reported that about 535 jobs would be "impacted."

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.

The zinc cuts come on top of an array of measures Glencore announced last month to help it slash its $30 billion in net debt by a third, including lower copper production, suspension of its dividends and a sale of new shares.