Glencore warns high costs threat to Aussie operations
Glencore boss Gary Nagle says the mining industry has been a ‘whipping boy’ in Australia in recent years, and warned high power costs were a major threat to its Mt Isa Mines copper smelter and refinery.
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Glencore says its Australian coal operations are likely to be spared under plans to cut back global production in response to weaker prices, but is less certain about the future of other mining and processing assets.
Chief executive Gary Nagle says mining had been a “whipping boy” in Australia in recent years, and warned high power costs were a major threat to the Mt Isa Mines copper smelter and refinery.
“The smelter is challenged given high power costs. We’ve seen power costs in Australia more than double some other places in the world,” he said.
“The only way to survive that you have a competitive cost line, and a big input into that is the cost of power. Unfortunately, the cost of power in Australia, versus where other smelters are in the world, is significantly higher.”
Glencore has said previously it will continue to invest in the long-term future of Mount Isa Mines, including the George Fisher mine, and its zinc-lead processing assets.
Mr Nagle said the Queensland’s new LNP government was offering to help Glencore keep the smelter open as it prepares to shut its underground copper operations.
“They are aware of these challenges and are looking for ways to assist us in ensuring we can keep that smelter running longer term and hopefully be able to invest in a rebrick if the operating and cost conditions are right,” he said.
Glencore, a diversified commodities producer and trader, flagged the closure of various smelters and underperforming businesses after reporting a fall in full year profits.
Swiss-based Glencore reported adjusted earnings before interest, tax, depreciation and amortisation of $US14.36bn, down 16 per cent on last year but in line with analyst consensus estimates of $US14.55bn.
Glencore has flagged moving its listing from London to New York based on an increase in investors based in the US and negativity about coal in Europe and the UK.
The company has been hard hit by falling prices for coal, one of its biggest earners, and is now looking to cut supply. Glencore is also in no rush to boost copper supply from projects in South America, with prices at current levels.
Mr Nagle declined to comment on reports Glencore and Rio Tinto had discussed a mining meg-merger but said that across the sector the door was still open to big M&A deals if the right opportunities came up.
Australia’s biggest coal miner with 15 operations across NSW and Queensland, Glencore provided guidance indicating its production here would remain flat to 2028.
The Australian thermal coal operations produced $US2.7n billion in adjusted EBITDA in 2024, down sharply from more than $US6bn, and steelmaking coal operations $US706m, down from $US944m.
“At the moment, we’re guiding on keeping Australia pretty much flat. So, no material changes there, of course, depending on what decisions we make around where we need to balance the market,” Mr Nagle said.
“Australia produces a very high-quality coal, and that’s a contributing factor.”
On nickel, Mr Nagle said the Murrin Murrin mine in WA faced similar challenges to the Mt Isa Mines business, and took a swipe at some of the input cost pressures in Australia and the Albanese government’s industrial relations policy changes.
“Unfortunately, at the moment, some of the input costs coming into Murrin aren’t necessarily global, but are very specific to Australia,” he said.
“We have high energy costs in WA, labour costs remain high and exacerbated by recent labour legislation changes.
“Despite this challenging environment where we have seen virtually every other nickel producer in Australia shut down, we continue to operate, although not making much cash.
“We have no plans at this time to be curtailing operations at Murrin.”
The mine employs about 1500 people, and is also the nation’s biggest source of cobalt.
BHP suspended nickel operations in WA that employed about 3000 people last year after huge impairments and losses.
Originally published as Glencore warns high costs threat to Aussie operations
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