Glencore share price: Miner’s Australian bauxite project bid rejected

on Mar 12, 2014
Updated: Apr 9, 2020
Listen, Wednesday, March 12: The Queensland state government in Australia has turned down a proposal from Swiss mining giant Glencore Xstrata (LON:GLEN) to develop a major bauxite project, citing insufficient benefits for the local indigenous community and long timeframes for developing the deposit.

According to Glencore, the Aurukun deposit in north-east Australia could support production of 6.5 million tonnes of bauxite a year, nearly 10 percent of China’s 2013 imports of the ore used to make alumina, then refined into aluminium.
Bauxite prices have firmed since the recently-imposed ban on exports by Indonesia, China’s main supplier, but the Aurukun proposal was formulated when most miners, facing weaker commodity prices, had retreated from building mines from scratch.

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The Queensland state government opened the Aurukun deposit to bids in late 2012, attracting interest from five companies. Glencore and local rival Australian Indigenous Resources group were the two final bidders in the auction process, after competitors Rio Tinto (LON:RIO) and Chinese-owned Aluminium Corp of China (Chalco) pulled out earlier in the process.

“After carefully considering the proposals, the government is not satisfied that either bid could deliver what the government had hoped for in a timely manner,” Queensland deputy premier Jeff Seeney said in a statement today.
The government wants a project operator to “maximise the benefits and return to the native title holders and the Aurukun community, maximise the financial returns to the state and ensure the project is delivered at no cost and no risk to the state over the life of the project”. Plainly the Glencore proposal has been found wanting by those criteria.

Seeney said that Queensland remains open to proposals that would open a mine “in a timely fashion” and “for the benefit of the local community” but didn’t specify how quickly the state government wants the Aurukun bauxite deposit developed.
***Glencore stocks down***

Glencore’s share price has dipped more than two percent so far today. As of 13:20 UTC, the stock was 306.80p, off 2.04 percent intraday.
The FTSE 100-listed miner – which last week confirmed its interest in picking up Shell’s (LON:RDSA) troubled assets in Nigeria and BHP Billiton’s (LON:BLT) nickel business in Australia
(Glencore share price: Conglomerate interested in Shell’s troubled Nigerian assets) — had its ‘buy’ rating and 390p price target restated by research analysts at Citigroup yesterday.
According to AnalystRatingsNetwork data, five research analysts have a ‘sell’ rating on Glencore, five have it as a ‘hold’, 15 rate it as a ‘buy’ and one is calling it a ‘strong buy’. The consensus rating is ‘hold’ with an average price target of 368.78p.
**As of 13:19 UTC, buy Glencore shares at 306.90p.**
**As of 13:19 UTC, sell Glencore shares at 306.80p.**


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