MAC: Mines and Communities

Glencore: a behemoth under multiple attack

Published by MAC on 2019-08-20
Source: Evening Standard

The world's foremost commodities' trader - and one of its largest mining companies -  is, to quote a London newspaper, "under pressure."

To say the least...

Under-pressure commodities behemoth Glencore today admitted profits crashed by a third amid falling prices of metals including cobal.

Evening Standard (London)

7 August 2019

It took a huge bet on cobalt in the hopes of a boom in demand from the electric vehicles market.

The sharp plunge in profits in the first half of the year came as Glencore said it would be mothballing the world’s biggest cobalt mine in the Democratic Republic of Congo in the hope of addressing the rout in the global price of the metal used in lithium ion batteries.

The production halt at the Mutanda mine was seen as a major U-turn on chief executive Ivan Glasenberg’s bullish stance on the metal. In 2017, he hailed Glencore’s push into cobalt, securing new supply deals and holding out the prospect of the company doubling production and seizing a 40% share of the market by 2020.

However, prices have collapsed 60% this year due to oversupply, triggering a decision to shut Mutanda, which last year produced a fifth of the world’s cobalt.

Glencore reported pre-tax profits of $5.6 billion (£4.6 billion), down 32% on the first half of last year, including a $350 million hit from writing down the value of its cobalt assets.

Glasenberg hoped the oversupply would be temporary, declaring: “Looking ahead, we are confident that commodity fundamentals will move in our favour and that our diverse commodity portfolio will continue to play a key role in global growth and the transition to a low-carbon economy.”

Glencore also suffered from weak prices in copper and coal, with its African copper mines being particularly poor performers. However, he downplayed the impact of the China-US trade wars, declaring while “sentiment is not that great... demand is not bad”.

The firm is under pressure amid scrutiny of its links to controversial Israeli mining tycoon Dan Gertler in Africa and is being investigated by the US Department of Justice over its activities in the DRC. It also faced a higher tax bill in the country under new tax rules.

The share price fell 1.5% to 228p, its lowest in nearly three years.

Glasenberg admitted its safety record had “not been good” during the period, in which 11 workers died in eight incidents. This year, 43 miners working illegally at a Glencore-owned mine in the DRC were killed when two overhanging galleries caved in.

Glencore loses fight with Australian taxman

Joanna Bourke

Evening Standard (London)

15 August 2019

Under-pressure commodities giant Glencore on Wednesday suffered another headache when it lost a case to stop Australian authorities using information leaked in the Paradise Papers.

FTSE 100 firm Glencore had argued that information from the Paradise Papers — a 2017 leak that revealed information on clients of law firm Appleby — should not be available to tax authorities because the material had been stolen.

Some of the documents detailed Glencore’s offshore financial arrangements and links to controversial businessman Dan Gertler.

However, the Australian Taxation Office (ATO) today got approval from the High Court to use information obtained from data leaks.

The ATO’s Jeremy Hirschhorn said the decision means his department can continue to use the Paradise Papers and other similar data leaks: “Once we have information we can’t just ignore it- we are obliged to use all relevant information we have.”

He added: “It would be a perverse outcome if the ATO and the Courts were not allowed to take into account information that the public at large can access, or had to forget information that is known.”

Glencore said it “respects today’s High Court decision”.

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