Glencore slumps 30% as debt fears grow – by Lionel Laurent and Sudip Kar-Gupta (Reuters/Globe and Mail – September 28, 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.

LONDON — Reuters – Glencore shares tumbled more than 30 per cent to an all-time low on Monday on fears that the mining and trading company was not doing enough to rein in its debt to withstand a prolonged fall in global metals prices.

About 3.5 billion pounds ($5.33-billion) in market value was wiped off the firm, which is in the middle of a drive to sell assets and raise cash to help cut its $30-billion debt pile and protect its credit rating after a crunch in prices of its main products, copper and coal.

Swiss-based and London-listed Glencore earlier this month raised $2.5-billion through a share placement, part of a wider plan to cut its net debt by a third by the end of 2016.

Glencore’s top individual shareholders, according to Thomson Reuters Eikon data, include CEO Ivan Glasenberg, with an 8.4 per cent stake, and Qatar Holding, with 8.2 per cent. Qatar is also a top shareholder of German auto maker Volkswagen , another beaten-up blue-chip.

Monday’s fall spread to the broader UK mining sector, which has also felt the pain from an emerging-markets slowdown and a crash in commodities prices. The FTSE 350 mining index sank to its lowest level since Dec. 2008.

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UPDATE 1-Glencore slump spoils commodity trader appetite for IPOs – by Sarah McFarlane and Dmitry Zhdannikov (Reuters U.S. – September 23, 2015)

http://www.reuters.com/

LONDON, Sept 23 (Reuters) – Unprecedented shareholder pressure over the past six months at listed commodities firms Noble and Glencore have taught their private rivals an unforgettable lesson – think twice before going public or amassing large physical assets.

Noble’s stock is trading near its lowest since the 2008 global financial crisis and Glencore’s touched an all-time low on Tuesday due to plunging commodities prices and earnings.

“In the last two years you were possibly better off being private and not being listed, with the short sellers being so active in commodity companies,” said Karel Valken, global head of trade and commodity finance at Dutch bank Rabobank.

After the record $10 billion Glencore share offering in 2011, which turned its managers into billionaire shareholders, commodity traders had come under an unprecedented spotlight.

Even though most unlisted merchants kept insisting they saw the private model as the most appropriate for now, many market watchers said it was only a matter of time before the likes of Louis Dreyfus followed suit to raise money for expansion via listings.

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UPDATE 1-Glencore’s Zambian unit plans to cut more than 3,800 jobs – govt sources – by Chris Mfula (Reuters U.K. – September 23, 2015)

http://uk.reuters.com/

(Reuters) – Glencore’s Zambian unit Mopani Copper Mines (MCM) has notified the government that it plans to lay off more than 3,800 workers due to lower metal prices and high production costs, government sources said.

An electricity shortage in the southern African nation and weaker copper prices have put pressure on its mining industry, threatening output, jobs and economic growth in Africa’s second-biggest producer of the metal.

Mopani had initially said it planned to cut 4,300 citing lower metal prices and high production costs.

“Mopani has served the labour commissioner with a notice stating that they plan to declare 3,817 workers redundant,” a source at the labour ministry told Reuters late on Tuesday.

“They now have to wait for the labour commissioner’s opinion. The labour commissioner has to consent before they can implement the plan,” the source said.

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Analysis – Copper market may get a 2003-style supply shock from Glencore closures – by Josephine Mason (Reuters U.K. – September 22, 2015)

http://uk.reuters.com/

NEW YORK – As copper miners start to slash spending and shutter mines because of the plunge in the price of the metal, experts who analyse the market in the base metal are suddenly getting a little more cheery.

They are seeing the potential for a re-run of 2003 when Chile’s Codelco [COBRE.UL], the world’s top copper producer stockpiled 200,000 tonnes of the metal that is used in everything from pipes to autos, providing the market with a supply shock that soon drove copper prices back up.

This time around hopes are pinned on the announcement earlier this month from Glencore (GLEN.L) of a sweeping strategy to shore up cash and cut spending, including plans to shutter two major, high-cost copper mines in Zambia and the Democratic Republic of Congo over the next 18 months. That will cut company output by 400,000 tonnes and remove some 2 percent of global supply from the market.

For Glencore CEO Ivan Glasenberg, the plan helped placate shareholders worried about $30 billion (£19 billion) of debt as prices of its main products from copper to coal sank to six-year lows amid worries about China’s waning appetite for such commodities.

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Even the stars of mining deals are sidelined in sinking market – by Eric Reguly (Globe and Mail – September 19, 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 — You know that something is seriously awry in the global mining industry when the two smartest men in the room – Ivan Glasenberg and Mick Davis – are crouching under rocks. Mr. Glasenberg, CEO and co-founder of Glencore , the world’s top commodities trader, is busy whittling down a mountain of debt in the wake of the company’s submarine performance on the London Stock Exchange. Mr. Davis, the former CEO of Xstrata , launched X2 Resources a couple of years ago but has yet to do a deal.

The mining market, in other words, is moribund. No one is selling, no one is buying and values are still in retreat. If either Mr. Glasenberg or Mr. Davis were convinced the bottom had been reached, you would think they would find ways to swing back into deal-making mode, for that was what they did best.

Today’s commodities markets are not about growth; they are about survival, and the body language of the industry’s biggest players suggests that won’t change any time soon.

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Glencore inventory sale could sink world zinc prices further – by Eric Onstad (Reuter U.S. – September 18, 2015)

http://www.reuters.com/

LONDON, Sept 18 (Reuters) – Substantial amounts of base metal zinc could be released onto world markets, weighing further on fast falling prices, as major producer Glencore implements a plan to liquidate some of its commodity inventories to help pay off debt.

The overhang of inventories in London Metal Exchange (LME) storage facilities, which has surged more than 40 percent since early August, has wrong-footed investors who had earlier this year targeted zinc as a top bet in metals due to closures of big mines that would create shortages.

Zinc, mainly used to galvanize steel to protect against rust in autos and construction, has slumped from being one of the best performing industrial metals earlier in the year to one of the worst due to the inventory change.

“It’s been a big shock to the market, this massive flood into the LME warehouses,” said Stephen Briggs, metals strategist at BNP Paribas.

But mining and trading company Glencore may add further to a plentiful supply situation after announcing a raft of measures to slash its net debt of $30 billion.

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Glencore Gives New Details on Debt-Reduction Plan – by Alex MacDonald (Wall Street Journal – September 15, 2015)

http://www.wsj.com/

Commodities firm will issue new shares representing just under 10% of existing share capital

LONDON— Glencore PLC on Tuesday said it would issue new shares representing up to 9.99% of its existing share capital to institutional investors to further reduce its debt.

The Switzerland-based miner and trader said it would issue 1.31 billion new shares, which at Tuesday’s closing price of £1.28, would add up to about $2.57 billion in new capital. The company is likely to offer the shares at a discount, said analysts, and had said it would raise only up to $2.5 billion.

Its announcement came just after the close of trading on the London Stock Exchange and a wild trading day for Glencore. The company’s stock plunged 8% in early trading to a new low of £1.18, before rallying late in the day. Glencore has been the worst performer in the U.K.’s blue chip FTSE 100 index this year and has been under pressure to cut debt and improve profits as prices collapse for a range of commodities it produces and sells.

The stock issuance was part of a series of moves Glencore last week proposed to shed up to $10 billion in debt. The company also scrapped its dividend, pledged to cut spending, sell assets and temporarily shut down two unprofitable mines in Africa.

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Vale Rules Out Following Glencore Path as Mining Pain Deepens – by Juan Pablo Spinetto (Bloomberg News – September 15, 2015)

http://www.bloomberg.com/

The world’s top iron-ore miner is betting that cost cuts and growing market share will be enough to endure low prices, shunning the path of equity sales and halted dividends taken by rival Glencore Plc.

Vale SA, the Brazilian mining giant which is also the largest nickel producer, is focused on reducing expenses further as the start of its lowest cost producing project approaches, Chief Executive Officer Murilo Ferreira told reporters in Belo Horizonte, Brazil, during an industry gathering.

“We aren’t studying a model like the one taken by Glencore, because we don’t consider it necessary for Vale,” Ferreira said, adding that he only has “superficial” knowledge of the operations of the Baar, Switzerland-based trader.

“The Vale team did the diagnosis of the end of the supercycle at the right moment. There was an expressive reduction in Vale’s costs and there is a lot still to come.”

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Glencore stock dives again on rating outlook, Zambia – by Chris Mfula (Reuters U.S. – September 10, 2015)

http://www.reuters.com/

LUSAKA/LONDON (Reuters) – Shares Glencore fell almost eight percent on Thursday after Zambia said it wanted to save jobs at mines the commodities giant plans to suspend and ratings agency Moody’s changed its outlook on the company to negative.

Glencore acknowledged on Monday the severity of the commodity market slump as it suspended dividends and said it would sell assets and new shares to cut debt by a third to around $20 billion – built up through years of rapid expansion – to protect its rating.

The strategy, which also includes plans to shut down some copper mines to support flagging prices, had triggered a rally in Glencore’s stock and propelled copper – hit by worries over the Chinese economy – to a seven-week high.

But on Thursday the stock – which this month fell to the lowest level since being floated in 2011 – resumed its fall after Zambia said it would hold talks with Mopani Copper Mines (MCM) over parent Glencore’s plan to suspend operations after a drop in the metal’s price.

“We are about to start discussions with Mopani.

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Moody’s Downgrades Glencore’s Credit Outlook to Negative – by Alex MacDonald and Scott Patterson (Wall Street Journal – September 11, 2015)

http://www.wsj.com/

Move follows similar one by S&P as mining giant looks to trim debt amid soft commodity prices

LONDON— Glencore PLC suffered a fresh blow Thursday, when Moody’s Investors Service downgraded the outlook for the commodity giant’s credit rating due to concerns over continued weakness in commodity prices, just days after the company unveiled plans to slash its heavy debt load.

Moody’s said it wasn’t changing the miner and trader’s investment-grade credit rating, but revising its outlook on that rating to negative from stable.

Standard & Poor’s Ratings Services, which downgraded its outlook on Glencore last week amid concerns about its debt and soft commodity prices, said late Wednesday that its outlook remains negative despite the mining giant’s recent moves to trim its debt.

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Mick Davis’ timing haunts Glencore’s Glasenberg – by Robert Gottliebsen (The Australian – September 9, 2015)

http://www.theaustralian.com.au/

Former Xstrata founder Mick Davis may have a wry smile at the sight of Glencore being forced to raise $US2.5 billion in new equity to reduce its debt.

Davis has a remarkable record for being part of groups that buy assets cheaply and sell them at high points in the market.

Glencore is in trouble partly because in 2013 it paid some $US40bn for the two thirds of Xstrata it didn’t own. Mick Davis had sold at the top of the market. It is true Xstrata shareholders received Glencore shares but they had time to sell them before the market declined sharply.

That sale was Davis’s second coup. Back in 1997 he became chief financial officer and an executive director of Billiton, which sold out to BHP four years later in 2001. BHP never made a success of most of those Billiton assets and a large number were floated off in South32 earlier this year.

After BHP took control of Billiton, Davis made his exit and established Xstrata in the belief that around Australia there were a large number of mining assets that were underpriced because there was a looming boom coming on the back of a big rise in demand for minerals from China.

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All Eyes on Anglo American After Glencore Cedes to Investors – by Jesse Riseborough and Thomas Biesheuvel (Bloomberg News – September 8, 2015)

http://www.bloomberg.com/

Glencore Plc’s billionaire chief executive caved this week to shareholder demands that the commodity-trader bolster its balance sheet. Now attention is turning to whether rival Anglo American Plc will follow.

The two companies have been among the hardest hit by China’s cooling demand for commodities on concern they’ll be unable to withstand raw-material prices at a 16-year low and pay off a combined $43.5 billion in debt. Measures might include cutting its dividend, which is yielding a record 9 percent, higher than the level in 2009, when the company last scrapped the payout.

The collapse in commodity prices is undermining Anglo’s Chief Executive Officer Mark Cutifani’s efforts to turn around the fortunes of a business that mines platinum and diamonds in Africa and iron ore in Brazil.

Glencore shares rallied the most in almost three years on Monday after the company outlined a $10 billion debt-reduction plan, including selling $2.5 billion in shares and suspending its dividend.

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Glencore, Battered Mining Giant, Retreats – by Scott Patterson and Alex MacDonald (Wall Street Journal – September 7, 2015)

http://www.wsj.com/

CEO Ivan Glasenberg scraps dividend, sells assets as commodities caught in price slump

LONDON—Collapsing commodity prices have forced one of the mining world’s most aggressive chief executives into retreat, pushing Glencore PLC’s Ivan Glasenberg on Monday to scrap the company’s dividend, issue more stock and sell assets.

The moves are the most dramatic yet among companies caught in the deepening, fast-ricocheting effects of the world-wide slump in prices for everything from copper to crude oil.

With a massive trading operation built years ago by founder and controversial financier Marc Rich, Glencore was supposed to be less vulnerable to swings in the energy market. Instead, the company has been hit especially hard.

In an interview, Mr. Glasenberg said the moves announced Monday weren’t necessary from his point of view but were made to soothe investor fears of a worst-case scenario in which commodity prices keep falling as demand from China slows further.

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Copper advances as Glencore plans mine shutdowns (Sydney Morning Herald – September 8, 2015)

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

Copper gained after commodities group Glencore announced plans to shut down loss-making mines to help to reduce a glut of supply that has weighed on prices.

Bearish investors scrambled to close out positions by buying futures, but analysts said it was uncertain whether Glencore’s move to close some African copper operations for 18 months would create a trend.

“It’s probably not enough to see prices go up (substantially), but it certainly supports the market,” said Grant Sporre, head of metals research at Deutsche Bank in London. “It also ensures that copper is probably not going to fall in the same way that iron ore and met (metallurgical) coal have done.”

Sporre had forecast a global copper supply/demand surplus of 350,000 tonnes for next year and said that Glencore’s move would bring the market close to balance, given that it is expected to remove 300,000 tonnes in 2016.

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Glencore Investors Force CEO Glasenberg to Prepare for Doomsday – by Javier Blas and Jesse Riseborough (Bloomberg News – September 8, 2015)

http://www.bloomberg.com/

After a breakfast meeting with a small group of hedge funds in New York last week, Glencore Plc Chief Executive Officer Ivan Glasenberg concluded that investors could no longer stomach his famously bullish outlook.

The meeting capped two weeks of discussions with shareholders from North America to Europe after the Swiss miner and trader reported a 56 percent decline in profit. His plan to trim Glencore’s $30 billion debt by 10 percent by the end of next year wasn’t enough to halt a plunge in the company’s market value, which has more than halved to about 17 billion pounds ($26 billion) this year. On Monday, the company announced a strategy to reduce debt much more quickly.

“This is definitely the first time you get the impression that shareholders are the most important voice in the room versus management,” Ben Davis, a mining analyst at Liberum Capital Ltd., said by phone from London. “Until now, a lot of the market has seen Ivan as the smartest guy in the room.”

The U-turn was unprecedented for the 58-year-old South African billionaire, who has run Glencore almost single-handedly from the sleepy lakeside Swiss city of Zug for a decade and a half.

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