Bank of America: Glencore’s third-quarter copper output weak; BofA cuts earnings forecasts and watches asset sales

Which third-quarter production figures missed expectations?

Glencore’s third-quarter copper production was 202 thousand tonnes, down 16% year on year, up 2% quarter on quarter and 3% below company-compiled market expectations. Coking coal production was 8 million tonnes, down 11% year on year and 5% below those expectations.
Thermal coal performed strongly, with third-quarter production of 27 million tonnes, up 5% year on year and 8% quarter on quarter, and 4% above company-compiled expectations. Zinc production was 182 thousand tonnes; although 4% above expectations, it was still down 26% year on year.
The company maintained its full-year production guidance: copper and coking coal are expected near the lower ends of their respective ranges, and zinc and thermal coal near the upper ends. Based on BofA’s second-half forecasts, third-quarter copper and coking coal production accounted for only 45% and 46% respectively, so stronger production is needed in the fourth quarter.

BofA cut its 2026 adjusted EBITDA forecast by 5%, from 21.635 billion dollars to 20.47 billion dollars, and lowered its adjusted earnings per share forecast from 0.56 dollars to 0.52 dollars.
The reductions were concentrated in the metals and minerals industrial business: the bank cut its 2026 EBITDA forecast for the segment from 10.417 billion dollars to 9.141 billion dollars. It slightly raised its forecast for the energy industrial business from 6.227 billion dollars to 6.338 billion dollars.
The report’s 2026 copper, zinc and thermal coal price assumptions were unchanged, indicating that the revisions focused on business forecasts rather than changes to those commodity price assumptions.

In Peru, Glencore has completed the land acquisition required for the Coroccohuayco project. The expansion is expected to double output to approximately 300 thousand tonnes per year. Argentina’s MARA copper project has also received approval under the local large-investment incentive framework.
On asset sales, the company plans to sell an approximately 40% stake in its Democratic Republic of the Congo copper business at an appropriate value and is also watching Kazzinc. BofA estimates that the Congo copper assets, Kazzinc and its 17% stake in Bunge are together worth approximately 11 billion dollars, equivalent to about 13% of the company’s market value; Bunge was included at its market value at the time.

Glencore raised its medium-term earnings before interest and tax guidance for commodity marketing from 2.3 billion–3.5 billion dollars to 2.8 billion–4.2 billion dollars. BofA believes tight market supply, high prices and volatility support marketing profits.
The company explained that rising commodity prices increased the value of readily marketable inventories committed to the marketing business. Financing costs have also risen and been passed on to customers, requiring higher profits to offset them. BofA maintained its Buy rating and 650 pence price target; its sum-of-the-parts valuation combines discounted cash flow, valuation multiples and the market value of listed assets.