28th June 2022
Olivier Aeschlimann, Senior Financial Analyst
The Glencore Group expects its trading division’s operating profit to exceed USD 3.2 billion in the first half of the year, almost in line with the full-year result of a normal financial year. The commodity trading sector is indeed going through one of its most profitable periods, as a result of the disruption created by Russia’s invasion of Ukraine. Phases of extreme volatility, supply disruption and relative scarcity create abnormally favorable conditions for traders. That said, rising commodity prices are also impacting operational costs. The profitability of the mining division will therefore be affected. Extraction costs have thus risen on average over one year from USD 59.3 to USD 78 per ton. In addition, government royalties, explosives, logistics and electricity also increased sharply. However, in the second half of the year, market conditions should return to a more normal level, according to the company.