Glencore Maintains 2025 Production Guidance Amid Operational Challenges and Strategic Adjustments

Glencore PLC has reaffirmed its 2025 production targets across key commodities, signaling confidence in its ability to navigate operational headwinds and market uncertainties. Despite a sluggish start to the year, particularly in copper and energy coal, the company’s revised operational plans and strategic pivots underpin its unchanged guidance. Here’s a breakdown of the factors driving its confidence—and the risks investors must weigh.

Copper: Q1 Underperformance, H2 Recovery in Focus

Copper production in Q1 2025 fell 30% year-on-year to 167,900 tonnes, with delays at key mines like Collahuasi (-29,400 tonnes) and Antapaccay (-20,800 tonnes). However, management insists the half-year weighting of production—42% in H1 and 58% in H2—remains intact. The CEO highlighted Q1 as the “lowest quarter,” citing operational adjustments:
- Collahuasi: Pit reorientation will reduce strip ratios, boosting ore grades.
- Antapaccay: Lower strip ratios in H2 are expected to improve throughput.
- KCC (Katanga Copper Cobalt): Transition to run-of-mine feed will increase processing volumes.

The unchanged 2025 guidance of 850–910 kt assumes a strong H2 rebound. Investors should monitor copper prices, which remain volatile amid China’s demand slowdown and U.S. inventory trends.

Cobalt: DRC Export Ban, but Storage Mitigates Impact

Despite a 44% jump in Q1 cobalt production to 9,500 tonnes, Glencore faces a ban on cobalt exports from the Democratic Republic of Congo (DRC). The company is storing production from KCC and Mutanda temporarily, but sales are expected to resume “in due course.” While this complicates short-term liquidity, it avoids a write-off, preserving the 40–45 kt annual guidance.

Zinc and Steelmaking Coal: Growth Drivers

• Zinc: Q1 output rose 4% to 213,600 tonnes, driven by higher grades at Antamina and Australian mines. The 930–990 kt 2025 target remains achievable.
• Steelmaking Coal: The acquisition of Elk Valley Resources (EVR) added 6.6 million tonnes in Q1, boosting production to 8.3 million tonnes. The 30–35 Mt 2025 guidance is now firmly within reach, thanks to EVR’s low-cost operations.

Energy Coal: Reduced Guidance Reflects Strategic Cuts

The most notable change is a 5 Mt reduction in energy coal guidance to 87–95 Mt, reflecting Cerrejón’s decision to cut output by 5–10 Mt annually. Q1 production fell 7% to 23.4 million tonnes as Glendell and Integra mines were closed. This adjustment aligns with Glencore’s focus on rebalancing supply and prioritizing higher-margin segments like steelmaking coal.

Risks and Challenges

• Market Volatility: Geopolitical tensions (e.g., U.S. tariffs) and slowing global growth could pressure commodity prices.
• Operational Risks: Climate policies threaten coal assets, while cobalt storage solutions remain uncertain.
• Cost Pressures: Copper’s net unit cash cost rose 3.7% in 2024, though steelmaking coal costs fell 19% due to EVR.

Conclusion: A Wait-and-See Stance for Investors

Glencore’s unchanged 2025 guidance reflects operational optimism, particularly in copper’s H2 recovery and EVR’s coal contributions. However, the path to delivery hinges on factors like:
- Copper Output: Achieving 58% of annual production in H2 requires flawless execution at Collahuasi and Antapaccay.
- Cobalt Sales: Resolving the DRC export ban without impairing value.
- Energy Coal: Avoiding further cuts as Cerrejón’s strategy unfolds.

For investors, Glencore offers exposure to critical commodities like copper and zinc, but its coal-heavy portfolio remains vulnerable to regulatory and climate risks. The stock’s valuation—currently trading at 10.2x EV/EBITDA (2024 estimates)—reflects these dual dynamics. While the unchanged guidance signals operational resilience, success in 2025 will depend on execution in H2 and external market stability. A cautious, long-term approach may be warranted, with close attention to quarterly production updates and cobalt sales progress.

In short, Glencore’s story remains one of strategic bets on cyclical commodities and operational turnaround. Investors must decide whether the risks to its guidance outweigh the potential rewards of a commodities rebound.