Mr Glasenberg is understood to have pulled out of attending a dinner organised by the Singaporean bank DBS (SES: 2N8B.SI – news) on Monday following a precipitous fall in Glencore shares which saw its value fall by nearly one-third during the day’s trading in London. Glencore is not especially profitable.
Advertisement
Analysts at Citigroup, Glencore’s corporate broker, said in a note that “we believe the market’s response is overdone”.
Glencore said in a statement: “Glencore has taken proactive steps to position our company to withstand current commodity market conditions”.
Year to date, the fortune of the Glencore CEO has dwindled by more than 70%. But Rio’s shares were down “just” 5% this morning.
In March, Glasenberg predicted confidently that oil trading – the historic core of the company which began as Marc Rich in the 1970s and was renamed Glencore in the 1990s – could “blow out the lights in 2015”. The result is a plummeting share price and news waves of rumours that a few of Glencore’s long-only investors are now looking to “get out at any price”.
Glencore’s main problem is its high debt of about $30bn and to tackle this it has just raised $2.5bn through a share placement and is said to be looking to sell its agricultural division for as much as $12bn, although that amount looks optimistic in the light of events this week.
The shares gained a few respite from the battering today, rising 6.1p to 74.75p, but have still lost three quarters of their value this year.
Sky News also reported that the meeting was attended by a senior banker from Citi, one of Glencore’s financial advisers.
Anglo American, owner of the world’s biggest platinum and diamond producers, dropped 10 per cent to close at the lowest since at least 1999 in London. On Monday he lost 0 million (£329 million) in paper value alone. And that is disastrous for a miner and trader that has arrived as a concerted low point of the commodities cycle carrying too much debt. Since listing in 2011 at £5.30 ($8), Glencore’s share price has more or less been a straight slide downward.
Whoever ends up running the new Alcoa companies – initially Alcoa’s head Klaus Kleinfeld will serve as chairman and chief executive of the downstream component and chairman of upstream – may have fewer areas to focus on than their counterparts at South 32, whose businesses include aluminium, nickel, silver, manganese and coal.
It might make sense to take Glencore private then.
Advertisement
Glencore’s problem is the same today as it was when Glasenberg stunned the market in early September with a humiliating back-flip that involved an emergency $US2.5 billion equity raising and confirmation a $US10.2 billion savings program that started with immediate cutbacks in copper production.
