CAPE TOWN, Feb 11 (Reuters) – Miner and commodities trader Glencore will spin-off its stake in troubled platinum producer Lonmin and cut capital spending to help it cope with a plunge in commodity prices, it said on Wednesday.
Like peers, Glencore has been hit by a rout in prices of commodities such as copper, coal and oil in recent months. Its shares have fallen by about 9 percent this year.
“What this feels like to me is that Ivan (Glasenberg, Glencore’s CEO) is trying to get ahead of the story again, to make himself look proactive and everyone else reactive,” said Bernstein analyst Paul Gait, who rates Glencore “outperform”.
“Both of those measures fit the same strategic goal from a Glencore perspective: to show leadership, like they did with the buyback.” Last year Glencore was the first mining firm to deliver on promises to return cash to shareholders.
Responding to what it called a “volatile market backdrop,” Swiss-based Glencore said it would cut “sustaining and expansionary” capital spending for this year to $6.5-$6.8 billion, with reductions across its businesses. In December, it had forecast spending of $7.9 billion this year.
“(This) suggests the slowdown in commodity prices has surprised them,” Citi analysts said in a note. They have a “buy” rating on Glencore shares.
Glencore also said it would distribute its 23.9 percent stake in Lonmin to its shareholders in the first half this year. It had already signalled it would divest the stake, inherited through the purchase of Xstrata in 2013, as platinum is not one of the commodities it trades.
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