Business

Glencore slashes zinc production by third

Zinc mine Image copyright Glencore

Embattled mining giant Glencore is dramatically cutting its zinc production in reaction to a 30% plummet in the price in the past few months.

The company is cutting 500,000 tonnes of zinc production, 4% of the world's total supply.

Zinc prices have been at five-year lows, but news of Glencore's actions sent its price up 6%.

Most of the cutbacks will be in Australia where more than 500 jobs will be lost.

Other centres of output that will be trimmed are in South America and Kazakhstan.

Glencore said in a statement: "Glencore remains positive about the medium and long term outlook for zinc, lead and silver, however we are taking a proactive approach to manage our production in response to current prices."

Glencore is in the throes of trying to reduce $30bn of debt, created by its ambitious 2013 takeover of Xstrata. That deal added dozens of mines in numerous countries to the commodity trader's business leaving it as one of the world's biggest miners and traders of the products of those mines.

It has so far cut copper production, suspended dividend payments to shareholders and is issuing new shares to raise money.

Shares in Glencore rose 6.5% to 128.50p in early trade in London.

Glencore's shares are listed in London and Hong Kong, although its headquarters are in Switzerland.

When Glencore listed on the London market in 2011 it priced its shares at 530p. However, since then its share price has slid as - along with the rest of the mining sector - the company has been hit by the decline in commodity prices.

Last week, its share price fell by one third in one day to a record low after analysts at Investec warned that Glencore's high debts together with low metals prices "could see almost all equity value eliminated".

However, Glencore responded by saying it was "operationally and financially robust".

On Monday, its shares jumped 17% on reports that it was in talks to sell a stake in its agricultural business.

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