Newly-formed mining giant Glencore Xstrata has written down the value of Xstrata’s assets by $7.7bn (£4.9bn), and reported a drop in revenues.
It is the first earnings report from Glencore Xstrata since the two firms merged
The firm, which was created in May, said the write-down reflected tougher conditions in the mining sector.
Revenues in the first half of 2013 fell 2% to $121.4bn. The firm recorded an $8.9bn loss due to the write-downs.
Mining firms have been hit by falling prices, as demand from China eases following the slowdown in its economy.
In its first set of results since the merger between Glencore and Xstrata was completed, the firm said that metal prices had fallen by 15% on average during the first six months of 2013.
Ignoring the one-off costs associated with the impairment of its Xstrata assets, the company still saw its underlying profits fell by a third in the first half of the year, to $1.2bn from the combined profit of $1.8bn earned by the two companies a year earlier.
Nonetheless, Glencore said that the progress in integrating Xstrata had “exceeded its expectations”, and cost savings would be “materially in excess” of the previous guidance of $500m a year.
Last month, the company suspended its iron ore mining Australian due to weak demand and rising costs.
It also announced that it had begun the sale of its Las Bambas copper mine in Peru to comply with demands from the Chinese authorities.
The sale of its entire stake in the mining project was required by the Chinese Ministry of Commerce as a condition for allowing Glencore’s merger with Xstrata.
Agencies
