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Glencore reported a jump in its second-half copper production and an increase in its copper reserves as its deal talks with Rio Tinto near a key regulatory deadline.
The two companies are in talks over a combination that would create the largest mining company in the world, driven by Rio Tinto’s hunt to acquire more copper projects.
In a market update on Thursday, Switzerland-based Glencore said its copper resources were greater than previously reported.
Chief executive Gary Nagle, who wants to build Glencore into the world’s largest copper producer, welcomed the “notable increases” in the company’s copper mineral resource base.
The rise includes an additional 500mn tonnes of inferred mineral resources at the El Pachon project in Chile, which helped boost the total inferred mineral resources of Glencore’s South American copper projects by almost 20 per cent.
“Glencore and copper markets have managed to hit their stride at precisely the right time and no doubt helping its conversations with Rio Tinto,” RBC analyst Ben Davis wrote in a note to clients. He added that the company’s copper production had exceeded expectations, which is “something of a rarity”.
The talks with Rio Tinto, which have been taking place for months, are nearing a regulatory deadline of February 5, at which point Rio will either have to make an offer or withdraw from talks — although the deadline can be extended with agreement from both parties.
Glencore’s copper production in the second half of last year was 48 per cent higher than in the first half, although annual production was still lower than the previous year.
Copper prices hit fresh records this week above $14,000 per tonne, reflecting a broad-based metals rally, as well as concerns about copper supply disruptions.
Glencore shares were up 3 per cent in morning trading in London.