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.

Investors have fled Glencore this year, driving its share price down nearly 60%. In comparison, rival Rio Tinto PLC has fallen 25%, while BHP Billiton Ltd. is down 12%. After Monday’s announcement, Glencore shares closed up about 7% in London Stock Exchange trading.

“If this doesn’t do the trick,” Mr. Glasenberg said about the moves, “we’d have a very difficult environment in the world.”

The slide by commodity prices to lows not seen since the depths of the financial crisis has been a big setback for Mr. Glasenberg, a star in the mining world who just a year ago made headlines by proposing a blockbuster merger with Anglo Australian mining giant Rio Tinto.

Rio rebuffed the deal, but industry watchers long held out expectations that Mr. Glasenberg, a steely-eyed trader, would eventually win the prize. The likelihood has dimmed because of the damaged stock price and debt concerns.

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