Glencore Takes $7bn Hit On Xstrata Assets

Glencore Xstrata has written down $7.7bn (£4.9bn) of assets inherited from Xstrata.

It comes as the company announced its half-year results, reporting a 9% drop in pre-tax profit to $6bn (£3.8bn).

It is the first full set of results since Glencore took over Xstrata in May, and reveals a smaller than expected fall in profit.

It is thought mining projects and operations in minerals such as nickel and copper took the brunt of pain, with Xstrata's $5bn (£3.2bn) Koniambo operation in New Caledonia hit hard.

Nickel prices are now less than a third of their 2007 highs and supply continues to outstrip demand.

The mining industry has been struck by billions of dollars in write-downs since the start of the year as prices have weakened.

Chief financial officer Steven Kalmin said: "We just had to value the business with a blank sheet of paper and say what have we acquired.

"There are clearly areas where we have taken a fairly conservative approach to value in the current environment, including the green field, early stage projects in which Xstrata had committed spending."

The merger of Glencore and Xstrata created a company that controls a chain of businesses from mining to refining, storage and shipping of basic commodities like coal, copper and corn.

The company said its net income, which slid 39% to $2.04bn (£1.3bn) in the six months to June, reflected "the broader negative mining industry environment".

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