LONDON (ShareCast) – (ShareCast News) – Miner Glencore said it will cut its capital expenditure target for the year and book an impairment charge on the value of its assets in Chad as a result of falling oil prices, as it reported mixed first-half production. The company said that following the sharp decline in oil prices in late 2014 and continuing into this year, 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.
This included changes to the fields’ capital expenditure and production profiles and a significant reduction to the number of drilling rigs in operation. As a result, Glencore (Xetra: A1JAGV – news) now expects to impair the value of these operations by some $ 790m in its interim accounts.
In addition, difficult market conditions have led the miner to cut its capex target for the year to $ 6bn from a previous range of $ 6.5bn to $ 6.8bn announced in February. In the first half, industrial capex was around $ 3bn.
In terms of output, sourced copper production was down 3% to 730,900 tonnes as a result of grade changes at the Alumbrera and Antamina mines and planned maintenance activities at Collahuasi mine.
Zinc production was up 12% to 730,300 tonnes, mainly due to the ramp-up of the expansion projects in Australia, while nickel output was consistent with the first half of last year at 48,900 tonnes.
Attributable ferrochrome production was up 16% on last year at 756,000 tonnes due to the Lion (Other OTC: LIOPF – news) 2 expansion project, which is now fully ramped up, while coal production fell 4% from 2014 to 68.7m tonnes, primarily due to the market-driven decision to cut back production.
Glencore’s oil entitlement production was up 68% to 5.3m barrels on the back of increased output from Badila and Mangara in Chad, and the company’s higher ownership interest in these fields following the Caracal acquisition.