Scarpa, most of the cobalt might come from the DRC, but Glencore is shutting its largest mine there down. This is due to over supply, problems with the DRC Government and the new mining code, high cost for their African mine and mine invasion that left 40 dead this year. So mining there is not all roses and sunshine, which would support the discount that is levied for such operations. The article is below.
With regards to the valuation of LTR and its prospects, I don't think that posters compare this to PLS and AJM, but make references to prices offered by SQM and WES for the mining assets there and on that basis LTR SP has further to improve. IMO
Mine to go as Glencore cuts costs
Chunks of raw cobalt at a plant in DR Congo.
Glencore’s first-half earnings fell by a third and the commodities giant said last night it will close one of its largest copper and cobalt mines, as concerns over the global economy and the trade war between the US and China hit commodity prices.
The Anglo-Swiss miner and commodities trader said it would mothball the Mutanda mine in the Democratic Republic of Congo by the end of the year because of a slump in cobalt prices.
The closure will remove about 20 per cent of the global market’s cobalt supply, according to Macquarie, and about 0.5 per cent of the copper market.
READ NEXTAs one of the world’s largest producers of cobalt, Glencore was expected to benefit from a revolution in electric vehicles and smartphones — the metal is a key ingredient in the lithium-ion batteries that power them. But the expected demand has yet to materialise, while potential supply has increased, leading to a 58 per cent fall in cobalt’s price in the first half of this year over the same period last year.
Copper and cobalt prices were broadly stable in early trading.
The global economic outlook “is affecting sentiment in the market, there is no doubt about it”, Glencore chief executive Ivan Glasenberg said yesterday.
The US recently announced increased tariffs on Chinese goods and Beijing has retaliated, adding to pressure on the global economy.
Glencore said in February it would curb production at Mutanda as it explored new copper-mining methods for the facility.
Adjusted earnings before interest, taxes, depreciation and amortisation — a key metric for the company, which strips out exceptional items — for the six months to June 30 fell to $US5.58 billion ($8.29bn) from $US8.18bn for the same period a year earlier.
An estimate taken from 12 analysts’ forecasts and compiled by Vuma Consensus expected adjusted EBITDA of $US5.94bn.
Glencore said net profit for the first half of the year fell 92 per cent to $US226 million, largely because of lower commodity prices and impairments across its portfolio. Revenue fell to $US107.1bn, from $US108.6bn in the first half of 2018, it said.
The company’s African copper operations were particularly hard hit, amid higher costs and an 11 per cent fall in the price of copper.
The business is expected to be a continuing headache for Glencore, including a rift with the DRC over a new mining code and mine invasions by illegal miners that left more than 40 dead this year.
Mr Glasenberg said that while sentiment had deteriorated, demand for metals, particularly from China, hadn’t. Moreover, low inventory levels of key metals should help support prices going forward.
(20min delay)