Mon, Jan. 5, 4:46 AM
- Glencore (OTCPK:GLNCY) will restart coal mining operations in Australia, following a three-week suspension aimed at combating a global supply glut, which did little to turn around depressed prices.
- Thermal coal spot prices declined steadily during 2014 in response to surplus supply and protectionist trade measures implemented by China to support its domestic coal industry.
- Related ETF: KOL
Dec. 15, 2014, 5:57 PM
- BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are amassing vast copper holdings in a push to capture a greater chunk of the $140B world market, apparently aiming to squeeze out high-cost producers just as they did in the global iron ore business, Reuters reports.
- Separately and in joint ventures, Rio and BHP intend to mine millions of additional tons of copper, despite seeing an oversupplied market for the next few years.
- While Rio and BHP likely would not hold the same degree of dominance over copper that they do in iron ore - Codelco, Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Freeport McMoran (NYSE:FCX) will remain bigger producers for the foreseeable future - their influence on global supply would be enhanced.
- The drive in copper also could give BHP and Rio an advantage over rival Vale (NYSE:VALE), whose exposure to copper is less than half that of BHP and Rio.
Dec. 15, 2014, 11:42 AM
- Unionized workers at the Antamina copper and zinc mine in Peru end a strike that began last Wednesday over demands for better labor conditions and a greater profit share, and will restart work today, according to the mine owners.
- The mine is controlled by BHP Billiton (NYSE:BHP) and Glencore Xstrata (OTCPK:GLCNF, OTCPK:GLNCY), which each own 33.75% stakes, while Teck Resources (NYSE:TCK) has a 22.5% interest and Mitsubishi owns 10%.
- Antamina produced about one-third of Peru’s copper production in 2013; the country is the world’s third-biggest producer of copper.
Dec. 10, 2014, 11:33 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) is weighing the possibility of continuing buying back its shares next year against other potential opportunities, the miner said today at an investor presentation.
- Glencore said it is retaining its focus on returning excess cash to investors amid declining prices for its two of its key sources of profit, coal and copper.
- Glencore also said it would continue to take a disciplined approach to expanding its production capacity, and CEO Ivan Glasenberg again criticized the mining industry for its over-investment in certain commodities.
Dec. 5, 2014, 3:45 PM
- Bernstein analysts found some positives to take away from yesterday’s investor presentation from Rio Tinto's (RIO -1.5%) Sam Walsh, including the CEO's insistence that a potential mega-merger with Glencore (OTCPK:GLCNF, OTCPK:GLNCY) would prove "a poor strategic match" and that Rio was not planning any major acquisition to protect itself from a potential takeover.
- Walsh reiterated a number of times that the miner would materially increase shareholder returns, "leaving little doubt about Rio Tinto’s intention"; the analysts also say Rio's balance sheet could surprise on the upside, with a one-time gain potentially boosting free cash flow without borrowing.
- One reason Rio may be undervalued: Rio’s stake in the Pilbara arguably is the best mining business in the world, but the market does not yet agree with only a 5x EV/Ebitda multiple on the stock.
Dec. 1, 2014, 7:57 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Merafe Resources (OTCPK:MRAFY) reached an agreement with South Africa's metalworkers union to end a strike at the world’s largest ferrochrome operation.
- The operations are near the platinum belt in South Africa, where a five-month strike shut the world’s biggest producers of the precious metal this year.
- Glencore owns 79.5% of the venture with Merafe holding 20.5%.
Nov. 25, 2014, 7:57 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Peabody Energy (NYSE:BTU) form a joint venture to develop an open-cut coal mine between existing operations run by the two companies in Australia's New South Wales state.
- The 50-50 JV will dig the pit between Glencore's United coal mine in the Hunter Valley and BTU's Wambo operations nearby; the project is expected to start in mid-2017 and could produce 6M metric tons/year of thermal coal used in power stations.
- The plan, expected to take effect in mid-2017, would improve recovery of coal from the combined operations and sharply cut capital and operating costs.
Nov. 24, 2014, 6:28 PM
- Various hedge funds were told this month by a prominent London mining banker to prepare for an all-but-inevitable takeover of Rio Tinto (NYSE:RIO) by Glencore (OTCPK:GLCNF, OTCPK:GLNCY), Bloomberg reports.
- Former JPMorgan Chase dealmaker Ian Hannam, who now runs a boutique advisory firm, reportedly convened reps of more than 20 investors to share his views on the potential deal, perhaps intended in part to help position his firm to win a role in the transaction.
- Glencore said last month it had abandoned a bid for Rio after a July proposal worth ~$160B was rebuffed.
Nov. 20, 2014, 6:28 PM
- Nevsun Resouces (NYSEMKT:NSU) has emerged as a potential takeover target, and Financial Post's Peter Koven sees many positive factors to explain the interest and one big negative: Eritrea.
- NSU’s Bisha mine is extremely rich, with high-grade copper output that will transition into high-grade zinc output in coming years when many analysts expect shortages in the zinc market.
- But the downside is that Bisha is in Eritrea, which is ruled by one of the world’s most repressive governments and has caused major problems for the company.
- If a contested takeover battle is going to happen, analysts say offers would have to come from companies - perhaps Glencore (OTCPK:GLCNF, OTCPK:GLNCY) or Lundin Mining (OTCPK:LUNMF, LUNCF]]) - that are very comfortable in high-risk jurisdictions.
Nov. 14, 2014, 2:39 PM
- Thermal coal and coal stocks are rallying after Glencore (OTCPK:GLCNF, OTCPK:GLNCY) said it would halt production at its Australian mines for three weeks to try to tackle a global supply glut.
- Deutsche Bank says the move is an important signal from the world’s largest producer of seaborne thermal coal: “Taking 5M tonnes out of the 1.1B [a year] seaborne market is a relatively small starting point, but may mark the start of more to come."
- But other analysts say it is no sure thing that Glencore’s move would be copied by others or lead to permanent mine closures; unlike some rivals, Glencore has less exposure to "take or pay” contacts which oblige miners to pay charges of up to $25/metric ton to use rail and port.
- ACI +10.7%, ANR +10.1%, WLT +5.2%, BTU +4.3%, CLF +3.2%, CLD +2%, CNX +1.9%.
- ETF: KOL
Nov. 13, 2014, 4:58 PM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) says it will shut down its Australian coal mines for three weeks, resulting in a 5M metric ton reduction in thermal coal production.
- “This is a considered management decision given the current oversupply situation and reduces the need to push incremental sales into an already weak pricing environment,” the company says.
- The world’s largest exporter of thermal coal owns 13 coal mines across Australia, which produced more than 80M metric tons of thermal and coking coal last year.
- ETF: KOL
Oct. 13, 2014, 10:37 AM
- Zambia plans to more than triple royalties on open-pit mines, underscoring a growing trend across Africa where governments are changing tax regimes and adjusting ownership structures to get a bigger share of natural resources.
- The finance ministry says in a budget report that starting in Jan. 2015 royalties will increase to 20% from 6% for open-pit copper mines and to 8% from 6% for underground mines.
- Mining companies with open-pit mines in Zambia include Barrick Gold (NYSE:ABX) and First Quantum Minerals (OTCPK:FQVLF), while Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Vedanta Resources (OTCPK:VDNRF) operate underground mines.
- Zambia has withheld $600M of tax refunds from miners since last year, already straining the relationship between the government and mining companies.
Oct. 12, 2014, 3:37 AM
- JSW Steel has reportedly offered to take control of London Mining (OTC:LIIGF) by buying up its loans at a sharp discount.
- Frank Timis, chairman of African Minerals (OTCPK:AMLZF), is also reportedly bidding for London Mining through his family company.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) has decided not to bid after considering entering the fray.
- On Friday London Mining said talks with relevant strategic partners had ended, and it was expected to enter receivership on Monday.
- Related: London Mining warns shares could have "no value" (Oct. 8)
Oct. 10, 2014, 6:11 PM
- Rio Tinto (NYSE:RIO) may decide that its best defense against another takeover approach from Glencore (OTCPK:GLCNF, OTCPK:GLNCY) is buying the likes of Freeport McMoRan (NYSE:FCX) in a "classic kind of defensive move," Bernstein analyst Paul Gait speculates.
- While Rio is saying it’s better off going it alone, a deal for FCX could help it ward off any further advances from Glencore as well as provide a way to lessen its dependence on iron ore at a time when the metal is slumping, Gait says.
- FCX "fits all the criteria of an attractive takeout candidate and would make sense for... anyone looking to increase their copper exposure and getting some very high-margin energy assets at the same time,” BB&T's Garrett Nelson adds.
- FCX shares are now at their cheapest in more than 15 months relative to EBITDA.
Oct. 10, 2014, 3:36 PM
- Cliffs Natural Resources (CLF -1.2%) shares briefly popped higher, then returned to the red, following a report that Glencore (OTCPK:GLCNF, OTCPK:GLNCY) had talks with the company about its Australian iron ore assets last month.
- While the talks were considered very preliminary, the call from Glencore shows CEO Ivan Glasenberg is not placing all his iron ore bets on another attempt at Rio Tinto (RIO -2.8%).
- Glencore is not a major iron ore producer but trades the product for other miners; buying up active miners, or combining with Rio, would allow it to trade the commodity and potentially boost prices by closing mines or delaying expansion.
Oct. 8, 2014, 10:30 AM
- With any hope of Glencore (OTCPK:GLCNF, OTCPK:GLNCY) buying Rio Tinto (NYSE:RIO) on hold for six months, Glencore could turn to other targets such as Fortescue Metals (OTCPK:FSUMF) or Rio could pursue a defensive deal with a company such as Anglo American (OTCPK:AAUKF, OTCPK:AAUKY), Sanford Bernstein analyst Paul Gait speculates.
- In the past, “we have had that kind of one action precipitate a whole cascade of events that puts a number of other guys in play," Gait tells Bloomberg.
- On the other hand, Glencore's pursuit of Rio may not be over, Gait says, adding "the industrial logic and the strategic logic are compelling to the point of being overwhelming."
GLCNF vs. ETF Alternatives
Glencore Xstrata is one of the worlds largest global diversified natural resource companies and is one of the ten biggest companies within the FTSE 100 Index. The Groups industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.
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