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Glencore

Glencore returns to bond market as sentiment improves – by Neil Hume, Dan McCrum and Gavin Jackson (Financial Times – April 26, 2016)

http://www.ft.com/

Mining group Glencore has returned to the bond market for the first time in a year as it continues its recovery from the worst commodity rout in decades.

The FTSE 100 company, led by billionaire Ivan Glasenberg, has been effectively locked out of the debt market since September when concerns about its ability to manage borrowings — which stood at $30bn last June — sent its equity and bond prices into a tailspin.

But a big debt reduction plan, including the sale of a 40 per cent stake in its agricultural business last month, has triggered a sharp rally in Glencore’s share price — making it the second-best performing blue-chip share in London in 2016.

While Tuesday’s bond offering was small, at SFr250m ($257m), it indicated that sentiment towards the mining sector was improving as raw material prices rebound.

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Deals Help Shrink Glencore’s Mountain of Debt – by Jesse Riseborough (Bloomberg News – April 6, 2016)

http://www.bloomberg.com/

Glencore Plc’s $2.5 billion agriculture deal is another milestone to solving Chief Executive Officer Ivan Glasenberg’s biggest problem last year — reducing a mountain of debt.

Canada’s biggest pension fund will buy a 40 percent stake in the agriculture business and Glencore said it may sell an additional 20 percent, which could be worth $1.25 billion based on Wednesday’s deal. Other transactions are in the works, including the sale of two small copper mines and Australian coal and rail assets.

The latest deal “shows continued asset disposals as promised, but perhaps a lower price than hoped,” Marc Elliott, a mining analyst at Investec Plc in London. His September research note on Glencore’s debt helped send the shares plunging 29 percent in one day.

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CPPIB to acquire stake in Glencore agriculture unit in $2.5-billion deal – by Ian McGugan (Globe and Mail – April 7, 2016)

http://www.theglobeandmail.com/

The Canada Pension Plan Investment Board has snagged itself a bargain – but it needs an outburst of volatility in farm prices to really make its new acquisition pay off.

The guardian of a big slice of Canadians’ collective retirement wealth is paying $2.5-billion (U.S.) for a 40-per-cent stake in Glencore PLC’s agricultural trading operations. The price values all of the Glencore Agricultural Products unit at just $6.25-billion, which is at least a billion dollars less than most investment banks had pegged the business at in more prosperous times.

“I think it’s a pretty good deal for the pension board,” said Craig Pirrong, a professor of finance at the University of Houston and expert on commodity trading. Glencore is under pressure to raise cash and pay down its massive debt, which probably resulted in the very reasonable price, he said.

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UPDATE 2-Glencore to invest $1.1 bln in Zambia, kwacha gains – by Chris Mfula (Reuters U.S. – March 30, 2016)

http://www.reuters.com/

LUSAKA, March 30 Glencore will invest over $1.1 billion in Zambia to sink three copper mine shafts with new technology that will extend mine life by over 25 years, pushing the kwacha to its highest in two months.

By 1040 GMT the currency of Africa’s number 2 copper producer had gained 1.3 percent to 11.1100 per dollar, its firmest level since Jan. 19.

“The news from Glencore obviously sent a positive signal but overall we are seeing a lot of dollar supply with very little demand,” analyst Maambo Hamaundu said.

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Nerves of steel: Glencore’s brave call in battle with short-sellers (Reuters U.K. – March 18, 2016)

http://uk.reuters.com/

March 18 (IFR) – Markets were panicking about Glencore on the morning of January 14. A rout in metals, agricultural and energy prices had hit the commodity trading company hard, making it a target for short-sellers who were betting on its collapse.

Glencore shares started trading that morning at 70.83p, their lowest open ever and down almost 90% from its IPO less than five years earlier. Its bonds with just a year to maturity were yielding over 10%, an unmistakeable sign of stress, while the cost of five-year default protection was quoted above 1,000bp for the first time since October 2008.

“People were starting to see ghosts,” said one banker who has closely worked with the company for a decade. “They thought Glencore was going bankrupt.”

From the outside, there looked to be plenty of reason to worry. Lured by surging commodity prices and growing demand from China, the company had gorged on cheap debt in the late 2000s, doubling its borrowings at a time when much of the corporate world was cutting back.

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Glencore News Release: Geotechnical failure at Katanga Mining Limited – Update 4 (March 17, 2016)

www.glencore.com

Baar, Switzerland – Glencore notes the update made by Katanga Mining Limited (KML) earlier today. The search for the seven colleagues missing since the geotechnical failure has been underway for 10 days. All available resources have been allocated to the search and rescue effort. To date, three bodies have been located, one of which is still to be positively identified.

It is with deep sadness that Glencore must now assume that any individual who was in KOV open pit at the time of the incident will not have survived. The activities in KOV open pit will now be focused on the recovery phase of the operation as weather and ground conditions allow.

Both Glencore and KML express their sincere condolences to the family, colleagues and friends of the individuals who have died as a result of this tragic incident. All appropriate support will be provided.

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Glencore, partners in Australian port face heavy cost of boom era bet – by Sonali Paul (Reuters U.S. – March 17, 2016)

http://www.reuters.com/

MELBOURNE – Glencore and five other miners backing the world’s most expensive coal port in Australia face extra annual charges of A$150 million after the restructuring of one of their partners this month, the latest to buckle under slumping commodity prices.

The additional charge will deal a blow to the remaining backers of the A$2.6 billion ($2 billion) Wiggins Island Coal Export Terminal (WICET) in east Australia at a time when they are grappling with floundering coal markets.

Mining and trading giant Glencore and seven partners began negotiations to build WICET in 2008 near the height of a coal boom, but prices have plunged 75 percent since then on global oversupply, China’s slowing economy and competition from natural gas.

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Glencore to Vale Showing Interest in Argentina, Minister Says (Bloomberg News – March 9, 2016)

http://www.bloomberg.com/

(Bloomberg) — Deregulation in Argentina is piquing the interest of global miners including Glencore Plc and Vale SA that had suspended or slowed projects in the country, according to the government.

While contact is only at a sounding-out stage, the new government of President Mauricio Macri has had talks with Baar, Switzerland-based Glencore about its Pachon copper project and with Rio de Janeiro-based Vale about its mothballed Rio Colorado potash project, Mining Secretary Daniel Meilan said.

“We are speaking about these projects,” he said in an interview from a mining conference in Toronto. “We are speaking about the future — what we think, what they think. They have shown interest.”

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‘Just do it,’ Sudbury’s female leaders say – by Carol Mulligan (Sudbury Star – March 9, 2016)

http://www.thesudburystar.com/

When Jody Kuzenko left a law firm in 2004 to become in-house lawyer for what was then Inco Ltd., her employer asked her why she was returning to Sudbury.

“Inco isn’t a woman’s company,” the male employer told her. She replied: “Not now it isn’t, but I’m on my way.”

Kozenko, who moved from serving as legal counsel to director of refining at Vale, was one of three women who spoke about their non-traditional career paths at a breakfast Tuesday sponsored by the Greater Sudbury Chamber of Commerce. The event was held to mark International Women’s Day.

Gender has been a “differentiator” in her career, Kozenko told an audience of about 200 people, mostly women, at the breakfast.

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China riddle still puzzles big miners – by Amanda Saunders (Australian Financial Review – March 4, 2016)

http://www.afr.com/

Ivan, we’re sorry we laughed at you. When Ivan Glasenberg, head of the world’s biggest commodities trader, Glencore, said last August that he couldn’t read China – and nor could anyone else – it wasn’t the most comforting look.

Some of Ivan’s rivals were quick to disagree. “We don’t find China impossible to read,” BHP Billiton chief executive Andrew Mackenzie said a few days later. But seven months on, it’s clear that understanding China, at least in the short term, has become extremely difficult.

Indeed, when asked about long-term demand for iron ore at the company’s results last month Rio Tinto chief Sam Walsh pointed to recent comments by President Xi Jinping, and had to admit that “nobody quite understands what the new normal means”.

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Glencore joins the mining world’s gruppetto – by Matthew Stevens (Australian Financial Review – March 2, 2016)

http://www.afr.com/

Glencore boss Ivan Glasenberg is said to be pretty passionate about cycling and its Grand Tours. So he would be well aware of the term “gruppetto”. It is the pack of riders that sits at the back of mountain stages with that aim of just finishing the day inside the time limit. They are sprinters looking just to survive until conditions better suit their skills.

Consolidation before and during the long mining boom crafted five diversified global miners: BHP Billiton, Rio Tinto, Vale, Glencore and Anglo American. By the end of a sectoral recession of rare severity, even in this most cyclical of industries, this group of five could be permanently trimmed to two giants and the rest.

The question right now is whether or not Glencore has the wherewithal or the will to join BHP and Rio Tinto in their break away from big mining’s rapidly withering peloton.

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Signs that metals prices have bottomed out buoys miners – by Ian McGugan and Brent Jang (Globe and Mail – March 2, 2016)

http://www.theglobeandmail.com/

Ivan Glasenberg is feeling better about the outlook for metals prices – and this time he may be right.

The chief executive officer of Glencore PLC, the giant miner and trader, indicated on Tuesday that he is growing more upbeat about commodities after a brutal 2015 in which his company lost 70 per cent of its market value as raw materials prices plummeted. “Have we bottomed? I think so,” he told reporters.

To be sure, that is pretty much the positive sentiment you would expect any mining chief to spout during one of the most brutal downturns in decades. But this time around, Mr. Glasenberg’s optimism may have the additional virtue of being true.

No one is calling for any immediate bounce-back in metals prices. However, it is at long last possible to detect early signs of a bottom.

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Glencore positive on coal turnaround – by Martin Creamer (Mining Weekly – March 1, 2016)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – Diversified mining and marketing company Glencore, which plays a leading role in the global seaborne steam coal market, including being the major exporter of the mineral out of South Africa’s Richards Bay Coal Terminal (RBCT), spoke positively on Tuesday on the outlook for a coal turnaround.

“Coal is looking interesting. Supply has been cut. There’s a tightness in Richards Bay at the moment and I see even in February there were certain vessels waiting to load coal. “A lot of changes. A lot of dynamics. A lot happening in the coal market,” Glencore CEO Ivan Glasenberg said in response to Creamer Media’s Mining Weekly Online during a media conference call.

Earlier, the head of the London-, Hong Kong- and Johannesburg-listed company had also made it clear in response to analysts that his company was giving consideration to acquiring the coal stake that Anglo American is selling in Cerrejon in Colombia, where Glencore is already a third shareholder.

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Glasenberg Forced to Trade Glencore Out of a Hole Amid Rout – by Jesse Riseborough and Agnieszka De Sousa (Bloomberg News – February 26, 2016)

http://www.bloomberg.com/

Glencore Plc’s billionaire chief executive officer, Ivan Glasenberg, is having to trade his way out of a hole.

With profits from his mining division evaporating, the debt-laden commodity company’s reliance on trading jumped to an unprecedented 76 percent of earnings in the first half of last year. Ongoing losses in mining mean that percentage is likely to increase when Glencore reports results next week.

Investors will be hoping Glasenberg’s 30 years of commodity-trading expertise will pay off as the company wrestles down its $30 billion debt load. While the 42 percent rebound in the stock so far this year indicates a debt-reduction plan announced in September is on track, the challenges presented by the rout in raw materials and China’s slowing growth are far from over.

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UPDATE 1-Glencore to refinance its short-term debt early, shares rise – by Alasdair Reilly and Mamidipudi Soumithri (Reuters U.S. – February 18, 2016)

http://www.reuters.com/

Feb 17 Miner and trade house Glencore Plc has raised $8.4 billion in commitments as part of an early refinancing of its short-term debt, sending its shares up more than 10 percent on Wednesday.

Glencore’s net debt of about $30 billion – one of the highest levels in the sector – has come under scrutiny as multi-year prices for commodities such as copper and coal pressure its finances.

Ratings agency Moody’s Investors Service downgraded Glencore’s credit rating to one notch above “junk” in December.

“The market’s taken it well, it’s demonstrated that they are able to secure debt in this challenged environment,” Investec analyst Marc Elliott said.

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