TORONTO/MELBOURNE (Reuters) – As shareholders push the world’s cash-rich miners to maintain lush dividends and make the most of existing assets, Glencore is taking a slightly different tactic that positions it for shrewd acquisitions.
Like other big rivals, Glencore is expected to lift its dividend payout when it reports results next week, but the Swiss miner and trader is also “open for business” when it comes to buying mines or companies, its chief financial officer said in December.
“Glencore’s deal-making is now very strategic. They’re trying to find businesses with the highest margin and get into sectors where they will have a competitive advantage,” said David Neuhauser, managing director of Livermore Partners, which holds Glencore shares.
“They want to do deals where they are not just first movers, but can become leaders,” he added.Rising commodity prices, cost cuts and global growth have improved their balance sheets, but most miners are not plowing money into mega-mines or big acquisitions – caution welcomed by investors burned by massive losses in the last downturn.
“I don’t think they’ve really got a mandate to do that (spend on major projects) at this stage,” said Rohan Walsh, investment manager at Melbourne-based Karara Capital, which holds BHP and Rio shares, a view echoed by multiple investors interviewed by Reuters.