THERE was a good deal of trepidation in January 2016 as analysts and executives forecast another year of nail-biting austerity. And whilst it’s not yet beer and skittles for the world’s mining sector, there were some moments of cheery illumination of which the following is a rough sketch.
1. Ivan Glasenberg: The recovery of Glencore.
Glencore’s €10.5bn swoop for 19.5% of Russian oil company, Rosneft this month signalled a return to deal-making for the Swiss-based firm which also brought the curtain down on its self-help programme.
Some 18 months earlier short traders ran Glencore’s stock down 27% using fears about runaway debt for tinder. The response from Glencore was described in November by one analyst as ‘stunning’.
Not only had the group reduced net debt to less than $17bn – far in excess of the original $1bn to $2bn sell off ambition – but it also set down the basis for a resumption of dividend payments: a $1bn payout in two halves during the 2017 financial year and a new distribution policy in 2018 in which a $1bn fixed payout from the marketing division would be supplemented with 25% of free cash from its mining assets. That was remarkable.
2. The commodity market.
Initially imputed to restocking by the Chinese, the sudden improvement in commodity prices during the first quarter of the year actually turned into a more prolonged recovery that suggested the worst was over for the mining sector.
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