Glencore Announces Cutback on Zinc Production

Metal production giant Glencore announced today that it will be cutting back on the worldwide production of industrial zinc. This is the company’s latest move to adjust its production in response to the recent decrease in both price and demand of commodities, largely due to a slowing economy in China.

The announcement on Friday stated that Glencore would cut zinc production by half a billion tons annually. This represents roughly one third of the company’s current annual output. The cuts will affect mines across Australia, Kazakhstan, and South America. The company noted in its statement that mining jobs will be negatively affected by these cuts, particularly at the Iscaycruz mine in Peru, where it will completely suspend operations until the worldwide market for metals has improved.

In response to this statement, Glencore’s share price experienced a substantial lift, rising 7% shortly after the cuts had been announced. Projected decrease in the global production of zinc by Glencore also prompted a rise in the price of that metal by about 4%. Copper prices also rose on Friday. A similar statement regarding copper production cuts had been made by Glencore at the end of last month.

The rally in share price was a welcome sign for those who already held stock in the mining giant, which has experienced a significant drop in share value over the past month. Slowing growth in the export based Chinese economy has created difficulties for the mining industry across the board, affecting everything from national economies dependent on mining jobs to manufacturers that produce mining equipment.