Diversified miner trader Glencore Xstrata said Tuesday it sold 33.2 million mt of iron ore in 2013, a 68% annual rise in volumes, as it proceeds with studies for projects in Africa to gain marketing clout.
As a relatively new entrant to iron ore, Glencore Xstrata relies on some initial offtake agreements and trading activity as it seeks to build its own mines in partnerships to allow for marketing of its own ore.
The group has a number of iron ore projects being assessed for development in Africa, and highlighted two projects in Mauritania and the Zanaga project in Republic of Congo where studies are proceeding, according to an annual earnings statement.
Glencore Xstrata has an equity stake and an offtake agreement for 20 million mt over four year at Ferrous Resources, a Minas Gerais, Brazil-based producer expanding output from 2013's total 5.13 million mt in saleable ore.
For 2013, the iron ore business reported an adjusted EBIT loss of $3 million, which narrowed from 2012's $12 million loss for adjusted EBIT.
The company sold 4.7 million mt of metallurgical coal, which includes volumes sold via agency agreements, up from 4.1 million mt sold in 2012. Coke sales tripled to 600,000 mt from 200,000 mt.
Revenue for the Australian coking coal operations fell 22% to $1.09 billion, with total revenue for coking coal including contributions from non-operating businesses at $1.53 billion, down 9% from 2012. Adjusted EBIT from coking coal fell to $181 million in 2013, down 40% from a year earlier.
PRICE OUTLOOK
On pricing, Glencore Xstrata said the outlook for iron ore was less positive.
"We believe long-term pricing momentum is potentially down, with large increases in supply currently expected from major producers in the next few years," it said.
Met coal also was pressured by incremental supply, the company added. In the US, the coal industry continues to restructure and export volumes should fall, it said.
Expansion capital expenditure for iron ore fell to $89 million in 2013, down from $148 million in 2012. For Australian thermal and coking coal, total capex fell to $1.37 billion in 2013 from $2.67 billion in 2012, based on figures given for the combined operations.
Glencore Xstrata is conducting a feasibility study on the Zanaga iron ore joint venture in the Republic of Congo through a staged development with an initial 14 million mt/year, and is still waiting to make a final investment decision. The study started in Q4 2013.
The Switzerland-based group acquired interests in Mauritanian ore resources in 2010 through a A$428 million acquisition of Sphere Minerals. In Mauritania, El Aouj, at close to 4 billion mt of resources, has large-scale production potential and a pre-feasibility study for a 15 million mt/year first stage of development is nearing completion.
For its Askaf project in Mauritania, a 7.5 million mt/year open cut mining project has been identified, and a feasibility study is being finalized.
