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Glencore cut its 2020 capital expenditure and output targets on Thursday to reflect the impact of the coronavirus on its operations, saying the belt-tightening left it well placed to weather the pandemic.

The miner and trader, reporting first-quarter production data, said spending for the year would fall by $1 billion-$1.5 billion from an original expectation of $5.5 billion.

Government restrictions to curb the spread of COVID-19 forced miners including Glencore to shut some operations while the industry also lowered spending for the year.

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Glencore and its peers have strengthened their balance sheets since the commodities crash of 2015-16 by paying down debt, cutting costs and holding back on expensive transactions.

“Given our strong liquidity position and resilient business model, we are well positioned to navigate the current challenges,” CEO Ivan Glasenberg said in a statement.

Glencore closed some operations in Chad, Peru, Colombia, South Africa and Canada but most of its larger operations have been unscathed by the disruptions. It said it was re-opening some mines in Canada and South Africa.

Other miners including Antofagasta, Anglo American and Freeport-McMoRan have also cut capital expenditure due to the new coronavirus, while Rio Tinto cut its forecast for annual copper output.

'ROBUST’ BALANCE SHEET

Glencore said copper production in its first quarter to March 31 fell 9 per cent to 293,000 tonnes year on year, while cobalt output slid 44 per cent to 6,100 tonnes as it shut its Mutanda mine in Congo and its Zambia mine was closed.

The reduction in spending reflects lower production, deferrals and lower costs due to weaker local currencies, a slump in oil prices and higher prices for gold, which is a byproduct from its base metals mining.

Costs are expected to be down across the business, with copper lowered by 12 per cent, zinc by 39 per cent and coal by 6 per cent.

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For the full year, Glencore cut its production guidance for copper to 1.25 million tonnes from a previous 1.3 million tonnes and lowered zinc output expectations by 8 per cent to 1.16 million tonnes.

The miner also trimmed expectations for cobalt, ferrochrome, nickel and coal.

In March, it deferred a decision on paying its $2.6 billion dividend, citing worsening economic conditions brought on by the coronavirus.

Analysts at UBS said Glencore’s lower cost, production and capital expenditure targets implied a higher free cash flow yield, and the miner’s “robust” balance sheet and commodity mix positioned it well for recovery.

Glencore said its marketing business had benefited from the volatile trading environment, generating annualized earnings within its $2.2 billion to $3.2 billion per annum long-term guidance range.

Its shares were 0.3 per cent lower by 0940 GMT, performing better than a 1.1 per cent decline in the index of its London peers.

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