Glencore – Page 32 – Republic of Mining

Glencore woes cast shadow over coal M&A – by Sarah McFarlane (Reuters U.S. – October 20, 2015)

October 20, 2015

http://www.reuters.com/

BARCELONA – Oct 20 Glencore’s efforts to reduce debts to turn around its share price will limit its ability to do deals on coal assets and its absence is expected to slow consolidation in the depressed sector.

As the largest shipper of thermal coal, Glencore has been omnipresent in deals concerning assets in the sector, where a glut of supply has sent prices to multi-year lows, prompting expectations for a wave of consolidation among miners.

This changed in September, however, when Glencore succumbed to shareholder pressure and announced plans to reduce its debt to $20 billion from the current $30 billion, including a share issue and asset sales.

“Glencore, if they had been financially powerful, would have accelerated the consolidation of the thermal coal industry,” a trader at a mining company said.

Glencore declined to comment on its ability to make acquisitions.

Glencore likely to cut back nickel production, says analysts – Paul Ploumis (Scrap Monster.com – October 14, 2015)

October 16, 2015

http://www.scrapmonster.com/

After copper and zinc, Glencore may now announce production cut in Nickel, says analysts.

SEATTLE (Scrap Monster): According to analysts speculations, Glencore may cut back Nickel production. The company had earlier announced cuts to its copper and zinc production.

Gavin Wendt, analyst at Minelife commodities noted that cut in nickel output is likely to save millions of dollars for the company and lift the prices of the metal in the process. Production cut by Glencore will have immense impact on global nickel market and could lead to a rally in beaten-up nickel prices, he added.

According to UBS analyst Daniel Morgan, not many nickel miners have resorted to production cuts when compared with other commodities. The notable cut in production so far has come from Canadian Sherritt International Corp. which reduced its nickel production targets in July from earlier estimate of 80,000-86,000 tonnes to 78,000-82,000 tonnes. He added that nearly 50% of the world’s nickel production is at loss at today’s price. Moreover, LME warehouses hold excessive nickel inventory levels of 440,000 tonnes as on date.

Glencore’s Zinc Rationale Defies History – by Liam Denning (Bloomberg News – October 15, 2015)

October 16, 2015

http://www.bloomberg.com/

“You shut up!/No, YOU shut up!” is how schoolyard scuffles kick off. Miners tweak it slightly to: “You shut down!/No, YOU shut down!”

Ivan Glasenberg, the chief executive of Glencore, has long bemoaned miners’ tendency to literally dig themselves into a hole with too much supply. As concern about Glencore’s swollen debt has hit the stock price, Glasenberg has recently taken himself at his word, ordering a temporary shutdown of some of the company’s zinc output. That caused the price of the metal to jump 10 percent last Friday.

But history suggests Glencore’s fight to raise zinc prices sustainably could be a tough one. Taking yourself out of the market in order to reduce excess supply can be a great strategy— but primarily for those rivals who keep producing and benefit from higher prices while your own reserves stay in the ground.

Sure enough, this week the marketing chief at one of said rivals, BHP Billiton, confessed himself “quite intrigued” about all the talk of cutting production, as he hadn’t seen any capacity being shut-in that was making cash.

COLUMN-Glencore changes the debate, but can it change the zinc market? – by Andy Home (Reuters U.S. – October 15, 2015)

October 15, 2015

http://www.reuters.com/

Oct 15 (Reuters) – Everyone’s talking about Glencore. The Swiss trading and mining giant is the hot topic of conversation in the myriad meetings and cocktail parties taking place in London for LME Week.

And, Glencore executives will be pleased to note, this isn’t speculation as to whether the company is about to go bust. That particular panic seems to have passed for now after a flurry of announcements intended to shore up its balance sheet, most recently the proposed sale of two copper mines.

Rather, it was Glencore’s announcement on Friday of massive cuts to its zinc and lead production portfolio that has been exercising the minds of the thousands of metal executives meeting in London this week.

The London zinc price went on a super-charged rally on the news, exploding from its opening at $1,701 per tonne to $1,875 in a matter of hours. As with last month’s announcement of 400,000 tonnes of copper cutbacks, the timing was exquisite, catching off guard a market that had been grinding steadily lower for months under the weight of relentless short selling.

Zinc turning bull? – by Kip Keen (Mineweb.com – October 13, 2015)

October 14, 2015

http://www.mineweb.com/

We look at the question of how much Glencore’s zinc cuts matter.

HALIFAX, NS – There’s no doubt that Glencore, in planning to axe some 500 000 tonnes zinc output, is throwing it’s weight around in the zinc market. The cut amounts to nearly 4% of world supply from mines. Indeed, zinc is a market where Glencore can, acting alone, make a difference to the big picture by curtailing operations.

But with demand growth for zinc and other metals waning in China somewhat, with a notable downturn in new construction there among other things, you wonder if, or to what degree, Glencore is chasing down a declining market (in growth terms).

With this question in mind, we asked BMO analyst Jessica Fung her view on how much of a difference Glencore’s zinc cuts make to the zinc market. She responds, “Glencore’s cuts do matter.”

To give perspective, she puts the zinc cut in copper terms. “Another way I have been explaining the impact of these cuts is that if this were announced in the copper market, it would be equivalent to 1 million tonnes of mine supply, which would be a very big cut from a copper miner.”

X2 Said to Be Last Remaining Bidder for Rio Australia Mines – by Brett Foley, Dinesh Nair and Thomas Biesheuvel (Bloomberg News – October 12, 2015)

October 14, 2015

http://www.bloomberg.com/

X2 Resources, the private-equity firm founded by former Xstrata Ltd. chief Mick Davis, has emerged as the last remaining bidder for control of two Rio Tinto Group coal mines in Australia, people with knowledge of the matter said.

X2 is progressing in negotiations with Rio as the other interested parties, including Glencore Plc and New Hope Corp., are no longer in talks to buy the assets in New South Wales state’s Hunter Valley region, according to the people. The mine stakes may fetch more than A$3 billion ($2.2 billion), one of the people said, asking not to be identified because the talks are private.

Rio Chief Executive Officer Sam Walsh has sold $4.5 billion of less-profitable assets since January 2013, reducing its coal portfolio amid falling prices in order to focus on larger iron ore and copper operations. Any deal would be the first purchase for Davis’s X2 fund since he raised several billion dollars from investors to pursue mining acquisitions.

New Hope, which agreed last month to buy Rio’s 40 percent stake in the Bengalla coal venture in Australia for $606 million, isn’t pursuing the other mines Rio is selling in the country, according to the people.

Rio Boss Sam Walsh Says No Interest in Bidding for Glencore – by Scott Patterson and Alex MacDonald (Wall Street Journal – October 13, 2015)

October 13, 2015

http://www.wsj.com/

Businesses are not well-aligned and operate in different geographic areas

LONDON— Rio Tinto PLC Chief Executive Sam Walsh said he isn’t interested in making a bid for Glencore PLC despite the sharp decline in the embattled Swiss miner’s stock in the past few months.

Mr. Walsh said in an interview Tuesday that he doesn’t think Rio’s and Glencore’s businesses are well aligned and that Glencore operates in different geographic areas than Rio.

“It is a different culture” at Glencore, Mr. Walsh said. A Glencore spokesman declined to comment.

Rio last year rebuffed a proposal by Glencore CEO Ivan Glasenberg to merge the two mining giants. Industry watchers thought Mr. Glasenberg would likely make another move for Rio this year, but the company’s sharp stock decline has sidelined any plans for big deals at Glencore for now.

Nickel prices rebound, boosted by speculation of Glencore output cuts – by James Regan and MElanie Burton (Reuters U.K. – October 13, 2015)

October 13, 2015

http://uk.reuters.com/

SYDNEY/MELBOURNE – Oct 13 Nickel prices have rebounded after dropping to a near seven-year low last week, buoyed by market speculation that heavily indebted miner and trader Glencore Plc could curb output following cuts to its copper and zinc production.

Glencore is the world’s fifth-biggest producer of nickel, with operations in Australia, Canada, Norway, New Caledonia, and Dominican Republic, much of which was acquired in its 2013 takeover of Xstrata.

Glencore, whose shares have been hammered by worries about its debt burden, declined to comment on the speculation.

“In nickel, as in copper and zinc, an output cut by Glencore could have an immense impact,” said Minelife commodities analyst Gavin Wendt.

“It would not only send the right message to Glencore’s investors and bankers, it would be saving the company money and probably lift the nickel price in the process.”

Glencore to sell copper mines in Australia, Chile – by OLIVIA KUMWENDA-MTAMBO AND SONALI PAUL (Reuters U.K. – October 12, 2015)

October 13, 2015

http://uk.reuters.com/article/

LONDON/MELBOURNE – Glencore (GLEN.L) plans to sell copper mines in Australia and Chile as the mining and trading company aims to reduce a debt burden accumulated in an asset buying spree that has shaken confidence in the Swiss-based firm.

Selling assets is one element of a broad plan to cut about a third of Glencore’s $30 billion (19.6 billion pounds) net debt and to regain the trust of investors after its shares tumbled to record lows this year amid weak global commodity prices.

Glencore said it would sell its wholly-owned Cobar copper mine in Australia and Lomas Bayas copper mine in Chile after receiving interest from potential buyers.

“This will allow potential buyers to bid to purchase either one or both of the mines and may or may not result in a sale,” Glencore said in a statement on Monday.

A London-based analyst said the Cobar and Lomas Bayas mines together could fetch less than $300 million as they are very small.

Glencore Cutbacks Shift to Zinc in Metal Rout – by Rhiannon Hoyle (Wall Street Journal – October 8, 2015)

October 9, 2015

http://www.wsj.com/

The commodities giant will close two mines and cut up to 1,600 jobs globally as zinc prices slump

SYDNEY—Commodities trader Glencore PLC, which has faced intense pressure from investors over its debt pile, said it would cut global zinc production by a third after a collapse in prices of the industrial metal.

The Switzerland-headquartered commodities group said it would cut annual zinc production by roughly a third, or 500,000 metric tons, including closing its Lady Loretta mine in Australia and Iscaycruz mine in Peru. The changes will also reduce its annual output of lead, also produced at those mines, by about 100,000 tons, it said.

Shares in Glencore, the world’s biggest miner of the industrial metal, rose more than 6% in response to the move.

They are the latest in a string of mine closures for Glencore, from coal to platinum deposits, as sliding commodity prices make it harder for the resources giant to turn a profit. It comes at a time when the company has been under scrutiny by investors, concerned that falling raw-material prices could strain the mining and commodity-trading group’s finances. Glencore has already raised equity and suspended its dividend to help fireproof its balance sheet.

Analysts say major U.S. banks on hook to Glencore – by Kate Kelly (CNBC.com – October 7, 2015)

October 8, 2015

http://www.cnbc.com/

A new report estimates that Bank of America, Citigroup, JPMorgan Chase, and Morgan Stanley have lent $350 million apiece to the troubled commodity giant Glencore PLC — meaning they will be on the hook for potential losses if things deteriorate at the trading and mining company.

In a note issued late Wednesday afternoon, analysts at CreditSights used accountings of bank loans prepared by the data firm Dealogic to estimate who had lent what to Glencore as part of its $15.3 billion revolving credit facility.

The analysts deduced that “North American banks accounted for 20 percent” of the revolver, according to the note, with four major U.S. banks taking the lead and four Canadian banks in similar positions. Goldman Sachs and Wells Fargo were notably absent.

Of the 60 or so lenders reportedly part of the revolving credit facility, which is broken up in to a one-year and a five-year tranche, about 34 banks are in lead positions, said someone familiar with the credit structure, with equal dollar exposure to Glencore.

Glencore’s pursuit of Rio Tinto has come full circle – by Peter Kerr (Sydney Morning Herald – October 8, 2015)

October 8, 2015

http://www.smh.com.au/

It was supposed to be the year that advanced Ivan Glasenberg’s plans for global domination of the commodities sector.

But the year since Rio Tinto rebuffed merger overtures from Glasenberg’s Glencore, which was marked on Thursday, has become the South African entrepreneur’s annus horribilis.

Not only did the merger, seen by some as inevitable and by others as unlikely, not come to fruition, but the process prompted the market to compare the two companies thoroughly. That comparison has not flattered Glencore.

The merger approach came amid the peak of the iron ore crisis – prices had fallen by 44 per cent in 12 months, and Glasenberg had whipped up a debate about both Rio Tinto’s reliance on the bulk commodity and its controversial strategy of continuing to expand exports into weak markets.

Glasenberg, on the other hand, portrayed himself as the commodities guru with the better-placed, more-diversified portfolio that had an oil hedge and exposure to the base metals that most predicted would shine in 2015.

Glencore Stock’s Roller-Coaster Ride Continues Amid Commodity-Price Concerns – by Alex MacDonald (Wall Street Journal – October 6, 2015)

October 6, 2015

http://www.wsj.com/

Chief Executive Ivan Glasenberg has been talking up prospects for copper prices

LONDON— Glencore PLC’s roller-coaster stock-market ride continued Tuesday, with the shares falling sharply after hefty gains the day before amid management’s efforts to assure investors that the commodities group remains financially robust.

Shares in the Swiss commodities trader and producer fell as much as 8.1% to an intraday low of 106.15 pence a share before paring the losses to a 1.8% drop. The stock is still the worst performer in the U.K.’s blue-chip FTSE 100 index, outpacing the FTSE 350 mining index’s 0.86% fall and the FTSE 100’s 0.1% decline.

Glencore’s shares have been pummeled by concerns that the world’s largest copper supplier and thermal coal exporter may struggle to safeguard its credit rating in light of its heavy debt burden, which is among the highest in the industry.

Investors are concerned about Glencore’s exposure, as a major commodities producer and trader, to slumping prices. Demand has fallen sharply given slower economic growth in China, the world’s largest consumer of many industrial raw materials, while global supplies remain plentiful.

Glencore CEO bets on copper production cuts as shares surge – by Dmitry Zhdannikov and Olivia Kumwenda-Mtambo (Reuters U.S. – October 5, 2015)

October 6, 2015

http://www.reuters.com/

LONDON – Glencore Chief Executive Ivan Glasenberg said steep output cuts by copper miners will help lift prices in the next 18 months, in some of his first public comments since fears about commodities demand and the company’s debt battered the company’s shares.

Trader and miner Glencore’s stock jumped as much as 72 percent in illiquid trade in Hong Kong and as much as 20 percent in London, partly on prospects the company will sell some assets to cut debt.

The stock has recouped all of its losses from the past week, with several brokers saying a recent sell-off was overdone as the miner and trader had the ability to withstand the crunch on commodity prices.

The price of copper, Glencore’s largest earner, hit six-year lows below $5,000 a tonne in August due to a slowdown in China, one of the world’s biggest consumers of metals and other raw materials. It was around $5,180 on Monday.

“Supply will ultimately tighten… Fundamentals will prevail,” Glasenberg told the FT African Summit on Monday.

Glencore surges as speculation swirls around takeover, Viterra sale – by Eric Reguly (Globe and Mail – October 5, 2015)

October 5, 2015

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

ROME — Glencore rallied strongly on Monday as CEO Ivan Glasenberg of the world’s biggest commodities trader pleaded for the closure of copper mines in a glutted market, and analysts suggested the company’s shares were oversold last week, when they plunged 30 per cent in one day.

In midafternoon trading in London, the shares were up 18 per cent. In overnight Hong Kong trading, Glencore surged more than 70 per cent on speculation that it is open to takeover offers and is close to selling its Canadian agriculture business.

But analysts dismissed the Hong Kong trading as essentially meaningless since Glencore shares have very little liquidity in that market and are prone to wild swings. Monday’s rise in both markets was so sharp and fast that the Swiss company was forced to put out a statement denying that any deal was imminent. It said “the board confirms that is not aware for any reason for these price and volume movements.”

Speaking on a panel in London at the Financial Times Africa Summit, Mr. Glasenberg made no comment on the extreme volatility in recent weeks in Glencore’s share price.