THE sale by Glencore of its GRail coal haulage facilities in Australia for some $870m sees the Swiss-headquartered group lower net debt by $5.4bn through asset sales alone in just over a year, some $400m in excess of its target.
This is a quite breathtaking response to the crisis of last year in which shares in Glencore fell 16% in a day amid concerns among its key shareholders that its net debt target of $27bn by end-2016 was insufficient.
The company raised $2.5bn through an equity issue, and immediately cut the dividend. It then set down asset sales, adjusting its net debt target to the ‘low 20s’, meaning $21bn to $23bn. It could, in fact, do much better than that target before the year is out.
There’s still the possibility Glencore could sell its Lomas Bayas copper mine in Chile as well as the Vasilkovskoye gold mine in Kazakhstan which could see the net debt figure reduced through asset sales by another $1bn.
What’s most impressive Glencore, however, is that it hasn’t sold any of its prize mines; not even close. This has much to do with the “breadth” of the company which makes it like no other large, diversified mining group listed in Johannesburg.
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