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. We get very concerned when pronouncements are made about retrenchments,” Zambia mining minister Christopher Yaluma told reporters. “Glencore is a parent company, so when they talk, they are talking at that level. That is a little bit distant.”
Officials at Mopani were not available to comment.
Moody’s affirmed its Baa2 ratings on Glencore but changed the outlook to negative “to reflect the scope for a prolonged difficult market that may cause a slower recovery in Glencore’s financial profile”.
The agency said the measures announced by Glencore would help strengthen its credit profile although challenges could mount if copper prices stayed lower for longer because of a slowdown in China.
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