Newly-merged commodities and mining group Glencore Xstrata today reported a near $9 billion first-half loss as it wrote down the value of its mining assets by a hefty $7.66 billion.
The merger, completed in May, created an industry giant that controls a chain of businesses from mining to refining, storage and shipping of basic commodities like coal, copper and corn.
But trading conditions have been tough for the new company.
The write-down, the Swiss-based company said in its half-year results, reflected "the broader negative mining industry environment" and the heightened risks of taking on some big projects during the six months from January to June.
The charge was more than the $7 billion expected by most analysts.
Overall, the company said its net income excluding exceptional items fell 39% to $2.04 billion from the $3.36 billion it would have made a year earlier.
However, when charges, including the write-down of the mining assets are incorporated into the results, the company reported an $8.9 billion loss, in contrast to a $2.3 billion profit last year.
The company said it was impacted by weaker prices in core commodities, but that was partially offset by improved production at many of its industrial operations. The production advance included a 20% increase in copper production owing to improvements at some of its African and South American mines.
"We remain positive on the market outlook and continue to see solid end-use demand growth in our major commodities," chief executive Ivan Glasenberg said.
Commodities trader Glencore already was the world's largest commodities trading company before it took over Xstrata, the world's biggest exporter of thermal coal. Both were already based in the Swiss canton of Zug, a Zurich-area haven for multinational business drawn by low taxes and high living standards.