Investors going crazy for world no 1 commodity company

By Frik Els / December 10, 2015 / www.mining.com / Article Link

At the end of trading in London on Thursday shares in Glencore plc (LON:GLEN) was priced at 89p, up 7.4% in colossal volumes of more than 134 million shares traded.

In New York Glencore's (GLCNY) over the counter stock advanced by more than 10% in equally busy trade bringing the company's market value back to within shouting distance of $20 billion.

The reason behind the surge is the Swiss mining and commodities trading giant's announcement that it has increased its debt reduction target and cut spending plans. Again.

That these type of corporate initiatives (which are now a common feature of the industry) can inspire such a frenzy is a good indication of just how much turmoil and uncertainty there are in the mining sector.

The Baar-based company said it now aims to reduce its debt load by $13 billion from the previous target of just over $10 billion. Some $8.7 billion has been cut under the plan. By the end of next year Glencore wants the pile down to $18 billion to $19 billion.

Glencore CEO Ivan Glasenberg also announced its capital expenditure for 2015 will come in at $5.7 billion, $300 million below previous targets while next year's outlays will be cut to $3.8 billion from $5 billion.

Apart from idling copper mines in central Africa, cutting coal production in Australia, reduce lead and zinc production in central Asia and inking streaming deals for its precious metals byproducts in South America, Glencore is also putting up assets for sale to cut costs and raise money.

In October, Glencore said it began the sales process for its Australian copper mine New South Wales and its Lomas Bayas copper mine in the Atacama desert in Chile. The company expects initial bids by mid-December and completion some time during the first half of 2016. Glencore has the same timeline to sell a stake in its agriculture business.

Glencore was first floated in May 2011 and two years later the company acquired coal giant Xstrata, turning it into the world's fourth largest miner. Down 70% just this year despite today's bump, Glencore is now worth $15 billion less than before the Xstrata takeover.

Image supplied by Glencore show Anibal Contreras clearing slag at the company's Altonorte metallurgical facility, northern Chile.

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