Glencore – Page 37 – Republic of Mining

BHP’s Spinoff Offers Glencore an Alternative to Rio: Real M&A – by Brett Foley, David Stringer and Angus Whitley (Bloomberg News – January 21, 2015)

January 21, 2015

http://www.bloomberg.com/

Rebuffed by Rio Tinto Group (RIO) last year, Glencore Plc (GLEN) will soon have another acquisition target to consider for expanding its mining empire: the company formed from the biggest spinoff in the industry’s history.

BHP Billiton Ltd. (BHP) plans to split off assets including its silver, manganese and aluminum operations to focus on larger businesses such as iron ore. The newly formed company — Perth, Australia-based South32 Ltd. — may appeal to Glencore because it’s being spun off near the bottom of the commodity cycle and it produces many of the same metals as the Swiss giant, said Aviate Global LLP.

South32 could command a market value of about $15 billion when it lists in coming months and earnings are set to surge in the next five years with prices of its materials poised to rise, said Macquarie Group Ltd. As his biggest rivals such as Vale SA and Anglo American Plc hunker down to ride out plunging prices of bulk commodities, Glencore Chief Executive Officer Ivan Glasenberg is looking for undervalued acquisition targets.

“He’s got a free pass into these assets,” Paul Gait, a London-based mining analyst at Sanford C. Bernstein & Co., said by phone. “Looking at it from Ivan’s perspective, I’d be thinking the current downturn isn’t going to last. It never does.”

Representatives for Glencore and Melbourne-based BHP declined to comment.

Copper tumble risks hampering Glencore’s takeover ambitions – by Silvia Antonioli (Reuters U.S. – January 14, 2015)

January 14, 2015

http://www.reuters.com/

LONDON, Jan 14 (Reuters) – A sudden plunge in the price of copper pulled the shares of global miner Glencore to their lowest level on record on Wednesday and risks frustrating any intention to make a fresh move on larger rival Rio Tinto.

Copper prices slid to their lowest in 5-1/2 years after a downward revision to global growth forecasts by the World Bank and shares in Glencore lost as much as 12 percent to 236.20 pence on Wednesday. Glencore, among the large diversified miners, has the largest exposure to copper.

If sustained, the steeper fall in copper prices compared with that of iron ore so far this year, might derail any potential move by Glencore to take over Australian miner Rio Tinto , which is heavily exposed to iron ore.

After Glencore’s first takeover approach was rebuffed by Rio last summer, the market was widely expecting Swiss-based Glencore to make another attempt this year. The steeper fall last year in prices of iron compared with base metals made Rio a more affordable target for Glencore.

That has been partially reversed this year. Copper has lost almost 12 percent of its value, while iron ore has lost less than 5 percent.

SA-led titans display urge to merge – by Tina Weavind (Business Day Live – January 11, 2015)

January 12, 2015

http://www.bdlive.co.za/

HUNDREDS of billions of dollars will change hands this year if rumours of a spate of megamergers prove to be true. Some of the biggest predicted tie-ups are Glencore and Rio Tinto, SABMiller and its larger rival Anheuser-Busch InBev, and, further afield, oil giants Shell and BP.

The “GlenTinto” scenario has been around for a few years, but in October, Glencore announced it had finally made the call — and the idea had been rejected. The Swiss-based commodities conglomerate is run by South African Ivan Glasenberg, who owns 8.3% of its shares. Glencore took out a secondary listing on the JSE in 2013.

The company produces and trades about 90 products with a serious stake in agriculture and minerals. But its gaping hole is iron ore, which is Rio’s major cash cow. Glasenberg wants to fill the gap — and he is known for getting what he wants, as those who recall his relentless pursuit of Xstrata will attest.

Although he has been spurned at this point, speculation is that he has approached Rio Tinto’s biggest shareholder, Chinalco (the Aluminium Corporation of China), which has a 9.8% stake. The tie-up would create by far the biggest company in the industry, worth about $150-billion. To put that in context, consider that Anglo American’s market cap stands at about $26-billion.

One potential benefit of the deal would be the estimated cost-saving synergies of about $20-billion.

After conquering iron ore, BHP and Rio move to dominate in copper – by James Regan (Yahoo Finance/Reuters – December 14, 2014)

December 15, 2014

http://finance.yahoo.com/

SYDNEY, Dec 15 (Reuters) – Rio Tinto and BHP Billiton are amassing vast copper holdings in a push to capture a greater chunk of the $140 billion world market, apparently aiming to squeeze out high-cost producers just as they did in the global iron ore business.

Separately and in joint ventures, Rio and BHP intend to mine millions of additional tonnes of copper, despite seeing an oversupplied market for the next few years.

“For both companies, this is about wielding the greatest influence possible over the global marketplace,” said Gavin Wendt, senior resources analyst for Sydney-based consultants MineLife.

“Having said that, unlike in the highly concentrated iron ore space where the focus is squarely on one market owned in large part by Rio and BHP – China, copper is sold much more widely, leaving room for smaller producers to stay in the game,” Wendt said.

Several smaller producers contacted by Reuters declined to comment, saying it was too early to gauge the impact of the expansions. There have been no suggestions that BHP and Rio are working in concert to seize overriding control of global copper supply.

A worldwide supply surplus of 300,000 tonnes is forecast in 2015 by Australia’s Bureau of Resource and Energy Economics, equivalent to half a year’s output by South Korea.

Mining’s ‘Cash Machine’ Promise Fades as Prices Crater – by Jesse Riseborough (Bloomberg News – December 8, 2014)

December 12, 2014

http://www.bloomberg.com/

BHP Billiton Ltd. (BHP) and Rio Tinto Group run the risk of taking on additional debt as a plunge in commodity prices threatens their ability to keep a promise of returning more cash to shareholders.

As the world’s two biggest mining companies reiterate pledges to bolster returns, a near five-year low in iron ore and coal prices raises the specter both will need to borrow to meet their dividend commitments. Along with rivals Glencore Plc (GLEN) and Vale SA (VALE5), the two companies are largely responsible for the supply glut that’s putting downward pressure on prices.

While investors demanded higher industry returns after $1 trillion was spent on acquisitions and new mines in the past decade, the prospect of companies “robbing Peter to pay Paul” doesn’t sit well with Clive Burstow, an investment manager at Baring Asset Management, which oversees $60.5 billion.

“If they start leveraging up the balance sheet just to give investors back some money, I’m not a great fan of that,” said Burstow, who has been reducing holdings of BHP and Rio this year. “That effectively means they are banking on there being higher commodity prices in the future.”

If current commodity prices prevail, BHP faces an estimated $5.4 billion shortfall to meet a forecast $6.6 billion dividend payout for the fiscal year ending June 30, according to Liberum Capital Ltd. mining analyst Richard Knights. That means the prospect of any additional return through a buyback is “very low,” he said. Rio’s estimated dividend shortfall is $1 billion next year, Knights said.

Take Glencore’s bullish metal forecasts with a grain of salt – by Kip Keen (Mineweb.com – December 12, 2014)

December 12, 2014

http://www.mineweb.com/

Glencore makes some worthwhile points on impending metal deficits – but they’re aggressive.

HALIFAX, NS (MINEWEB) – Glencore summarized its particularly bullish outlook on both copper and zinc – two important commodities it mines and trades – in a rather thorough presentation it gave at a recent investors day. All 193 pages here. At the very least, it makes for good reading if you want an overview of multiple metal and energy sectors in terms of supply and demand. Among its predictions two metals stand out: copper and zinc supply deficits.

Copper first.

Glencore gets very bullish and opposes the big research organizations about their views of a coming surplus. A major copper deficit is in the cards instead, Glencore says.

That should be readily apparent in an equation it puts out there on slide 72. It cuts down surplus forecasts for 2015 from a slew of global mining operations – ones relied upon by the likes of Wood Makcenzie, among others such as Brookhunt and the International Copper Study Group (ICSG) – to revise a 390kt surplus (by the ICSG and Brookhunt) – to a 1.4 million to 1.6 million tonne deficit.

Now Glencore’s a bit vague in its equation and numbers and it’s surely aspirational. It tallies 1.8 mt in certain/likely/maybe copper market revisions in terms of supply from mines around the world to deduct from that predicted 390kt surplus. It announces, “=Deficit of 1.4 – 1.6 Mt for 2015?”

Glencore boss slams iron ore sector (The Australian – December 11, 2014)

December 11, 2014

http://www.theaustralian.com.au/business

DOW JONES NEWSWIRES – The chief executive of mining giant Glencore, Ivan Glasenberg, again criticised the industry for its over-investment in certain commodities, telling investors that “fortunately we don’t produce iron ore.”

Mr Glasenberg’s apparent distaste for the key steelmaking ingredient comes despite Glencore’s approach earlier this year to Rio Tinto, one of the world’s largest iron ore producers, over a potential tie-up. The approach was rejected and under UK company rules Glencore can’t revive the talks until later next year.

Mr Glasenberg has criticised mining rivals such as Rio and BHP Billiton for continuing to invest in and ramp up iron ore production even though the commodity’s price slumped this year. Speaking at the company’s investor day, he said the reason prices had fallen was that “we’ve all invested too much, we’ve increased supply and unfortunately a big amount has gone in the iron ore market.”

The comments came as benchmark iron ore slid to $US68.90 a tonne overnight, just over 1% above its five-year low. Glencore said it would continue to take a disciplined approach to expanding its production capacity, amid the recent fall in commodity prices.

Mr Glasenberg said “capital misallocation, not a lack of demand, remains a key issue for the sector resulting in a clear need to differentiate by commodity.”

Mining’s ‘Cash Machine’ Promise Fades as Prices Crater – by Jesse Riseborough (Bloomberg News – December 8, 2014)

December 8, 2014

http://www.bloomberg.com/

BHP Billiton Ltd. (BHP) and Rio Tinto Group run the risk of taking on additional debt as a plunge in commodity prices threatens their ability to keep a promise of returning more cash to shareholders.

UPDATE 2-Rio Tinto not looking at acquisitions to raise defences against Glencore – by Silvia Antonioli (Reuters India – December 4, 2014)

December 4, 2014

http://in.reuters.com/

LONDON, Dec 4 (Reuters) – Global mining company Rio Tinto is not looking to make any major acquisition to protect itself from a potential Glencore takeover, Chief Executive Sam Walsh said at a meeting with investors on Thursday.

Since Rio Tinto rejected a tentative approach from smaller rival Glencore in July, speculation has mounted that it might rush to make an acquisition to raise its defences against another takeover attempt by the mining and trading giant.

But Rio Tinto’s boss said the focus remained on improving mining operations and delivering more cash to shareholders, rather than becoming involved in disruptive mergers and acquisitions.

“I see speculation that we are going to rush out and buy somebody. Let me reassure you that we are not looking at any major M&A. We are not looking at doing anything stupid,” Walsh said.

Glencore Chief Executive Ivan Glasenberg has criticized the strategy of rival miners BHP Billiton and Rio Tinto to flood the market with new iron supply to squeeze out smaller competitors. He says the move has backfired and led to a fall in the iron ore price, which is down 50 percent this year.

Rio keen to blend mining and marketing – by James Wilson and Neil Hume (Financial Times – December 1, 2014)

December 2, 2014

http://www.ft.com/home/us

Pilbara Blend. Robe Valley. Yandicoogina Fines. The names may sound as if they belong on a tea caddy or in a wine cellar – but Rio Tinto investors know better. These are the labels under which the company sells Australian iron ore, the prosaic yet hugely important commodity on which its fortunes depend.

The idea of branding a commodity that is shovelled into blast furnaces to make steel may seem strange. But iron ore has many variations in mineral content and purity.

Miners such as Rio say part of their skill lies in matching ores to the right buyers. Their marketing strategies are therefore crucial to their success – more so this year, when a flood of low-cost supply from Rio and its peers helped to drive the iron ore price down by almost 50 per cent.

Now investors have another important reason to consider Rio’s marketing skills: they are central to a possible tie-up with Glencore, the rival commodities group that this year approached Rio about a potential merger.

Glencore is one of the world’s most successful and entrepreneurial trading companies, spanning commodities such as coal, copper, oil and agricultural products. Its pursuit of a combination with Rio next year may hinge on whether Ivan Glasenberg, Glencore’s chief executive, judges he can extract value from Rio’s iron ore assets – the source of almost 90 per cent of its earnings – with better marketing and trading.

Glencore readies for Rio Tinto round two – by Amanda Saunders (Sydney Morning Herald – November 26, 2014)

November 27, 2014

http://www.smh.com.au/

Glencore chief executive Ivan Glasenberg’s second attempt to force a merger with Rio Tinto will involve an attack on Sam Walsh over dwindling hopes of substantial capital returns, as he tries to win the support of Rio’s biggest shareholder, Chinese giant Chinalco, by promising to sell key assets Oyu Tolgoi and Simandou.

That’s the view of Bernstein’s London-based senior analyst Paul Gait, who predicted Glencore would make a move on Rio in September, a month before Rio confirmed the approach.

That $190 billion merger approach was rebuffed, and under British law Glencore must wait until April to make another attempt. Mr Gait expects Mr Glasenberg will waste little time. “Is he coming back? In my view, yes,” Mr Gait said from London.

Mr Gait told The Australian Financial Review Glencore’s shock announcement that it would shut down its Australian coal operations for three weeks was a strong indication Mr Glasenberg would try again for Rio. He said Mr Glasenberg would be able to point to Glencore’s willingness to pull tonnes out of an oversupplied market in a direct challenge to Rio over its expansion in iron ore.

“To me this coal announcement is clearly Ivan playing games,” Mr Gait said. “It had the language of someone trying to make his credentials on managing the market as a CEO. It’s a shot across the bows to Rio.”

Glencore-Rio Merger Will Happen, Hannam Tells Hedge Funds – by Matthew Campbell, Dinesh Nair and Jesse Riseborough (Bloomberg News – November 24, 2014)

November 25, 2014

http://www.bloomberg.com/

Hedge funds including GLG Partners, DE Shaw & Co, and Pentwater Capital Management were told this month by a prominent London mining banker to prepare for an all-but-inevitable takeover of Rio Tinto Group by Glencore Plc (GLEN), according to people familiar with the meeting.

Former JPMorgan Chase & Co. dealmaker Ian Hannam, who now runs a boutique advisory firm, convened representatives of more than 20 investors at Corrigan’s Mayfair restaurant in the British capital in mid-November to share his views on the potential deal, the people said, asking not to be identified discussing a private matter. The meeting was intended in part to help position Hannam’s firm, Hannam & Partners, to win a role in the transaction, the people said.

“If not today, this deal will happen sometime in the near future,” Hannam said in his presentation, according to a copy seen by Bloomberg. “Glencore is M&A savvy and times deals well. The combination will create a super-major with a diversified portfolio of world-class mining assets.”

Neil Passmore, chief executive officer of Hannam & Partners, said the firm is not working for Glencore or Rio Tinto (RIO), nor is it in discussions to do so. Spokesmen for Rio Tinto and Glencore declined to comment, as did representatives for Pentwater and DE Shaw. GLG couldn’t be immediately reached.

Roots run deep in Sudbury’s reclamation efforts – by Lindsay Kelly (Northern Ontario Business – November 21, 2014)

November 24, 2014

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

Still lots of work to be done, though

Forty years, $28 million and 9.5 million trees after reclamation efforts began, the moonscape that was once Sudbury is taking on a greener hue — but only half the job is done.

A total of 81,000 hectares have been impacted by the city’s industrial activity, which started with the logging industry in the early 1800s, and intensified in the early days of mining when open roasting beds sent high levels of sulphur dioxide into the air, raining down metal particulate across the landscape.

Since its inception in 1973, VETAC (the Vegetation Enhancement Technical Advisory Committee) has brought together volunteers from science, industry, academia, government and Sudbury’s citizenry to return the land to its original state, said Dr. Peter Becket, a reclamation, restoration and wetland ecologist with Laurentian University who’s dedicated his life’s work to the task. But it hasn’t been easy.

“The estimate is that we have about 7,000 hectares to do,” said Beckett, who gave the keynote address during the Nov. 20 gathering of the Sudbury chapter of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).

NEWS RELEASE: French President Hollande inaugurates Koniambo Nickel

November 17, 2014

Baar, Switzerland / Kone, New Caledonia

17 November, 2014 – Glencore is pleased to announce that today French President, François Hollande officially inaugurated the Koniambo Nickel Project (Koniambo) in New Caledonia, a joint venture between Société Minière du Sud Pacifique (SMSP) and Glencore.

President Hollande was joined by Paul Néaoutyine, President of the North Province, Ivan Glasenberg, CEO of Glencore, André Dang, President of SMSP, Peter Hancock, President of Koniambo Nickel, and Vincent Bouvier, French High Commissioner in New Caledonia.

The construction of Koniambo Nickel commenced in 2007 and represents a $7 billion investment in New Caledonia, majority financed by Glencore. Its state-of-the-art infrastructure and proven nickel smelting technology, along with a world-class ore body, makes Koniambo a leading player in the global nickel market and is transformative for New Caledonia’s nickel industry. At peak production, the mine will provide steady employment for approximately 950 workers, with a focus on local employment, and indirect employment for thousands of others.

Ivan Glasenberg, CEO of Glencore, commented:

“We are honoured that the French President has recognized Glencore’s ongoing commitment to and investment in New Caledonia by officially opening Koniambo Nickel. This inauguration marks a milestone for our New Caledonian operations and for the country’s nickel industry. We look forward to continuing our well established collaborations with the local community, government and our joint venture partners as we continue the ramp up period to nameplate capacity of 60ktpa.”