At Glencore, a Mining Emperor Tries to Save His Realm – by Scott Patterson and John W. Miller (Wall Street Journal – October 1, 2015)

http://www.wsj.com/

CEO Ivan Glasenberg struggles to reassure investors amid a rout in commodity prices

LONDON—The morning he closed the biggest mining deal in history, Ivan Glasenbergpulled out a map dotted with mines around the world.

The hard-charging chief executive of Glencore PLC was jubilant. It was May 3, 2013, and his trading company had just merged with Xstrata, one of the world’s biggest mining companies, in a $29.5 billion deal. And he had won a boardroom struggle to stay in control.

The map detailed his sprawling new empire of mines for everything from copper to coal to zinc. He had even circled competitors’ mines that he could add to his collection.

“Damn sure I’m going to be opportunistic,” he told Wall Street Journal reporters and editors at his London headquarters. “We’ll buy anything if it makes economic sense.”

Then he struck a note of caution: “Will commodity prices stay strong” and “justify putting this much money into an asset-rich company? Have we done the right thing? This is my biggest fear.”

More than two years later, those fears have become a reality for Glencore, the large mining company hit worst by declining prices for raw industrial materials such as copper and coal.

Glencore lost $676 million in the first half of 2015, and its debt levels have sent investors fleeing. Glencore’s stock price has fallen by nearly three-quarters since the Xstrata deal—including a 29% drop Monday that has since been partially erased. Glencore executives are trying to stop the bleeding by selling assets and cutting billions of dollars in debt.

The company last month said it would suspend its dividend and raise $2.5 billion in a share offering. For years, Mr. Glasenberg’s brash style and candor had charmed investors and rankled competitors. But his two big bets—taking Glencore public and buying Xstrata—have soured, with nearly 83% of the company’s market value wiped out since the initial public offering in 2011.

World tour

Now Mr. Glasenberg is on his heels. He has been jetting around the world visiting mines, trading offices and banks, sometimes touching down in two countries a day, to gather information and reassure bankers, investors and employees.

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