Commodities Equities Mining Soft Commodities

Glencore share price: Miner set to bet on soft commodities

Glencore (LON:GLEN) may be considering a bet on agriculture, with soft commodities offering a more tempting expansion opportunity for the company, according to people familiar with the miner’s plans. Michael Rawlinson, co-head of mining and metals investment banking at Barclays, said in an interview for Bloomberg yesterday: “It may well make sense for the next deal to be in agriculture. That’s how it works at Glencore, bolster your contribution to profitability and you’ll be provided with greater resources for growth.”

Glencore, which reported a stellar $800 million increase in profits from soft commodities last year, became a major agriculture player when it bought Canadian grain handler Viterra in 2012. However, the FTSE 100-listed group still has no presence in the US. Thus, insiders have revealed that while no move is imminent, Glencore’s chief executive Ivan Glasenberg is eyeing businesses including Scoular, Andersons and Lansing Trade Group, which would add physical assets like grain silos and rail terminals.
“Scoular is not seeking, and has no intention to entertain, proposals that would alter this independent ownership,” CEO Charles Elsea told Bloomberg, while Andersons and Lansing Trade did not respond to the news agency’s requests for comment.
Glencore made an approach to rival Rio Tinto (LON:RIO) last year about a possible merger. After being rejected, the group had to forgo a fresh approach for six months. Although that lock-up period expires next month, a second run isn’t considered likely because Glencore’s share price has fallen relative to Rio’s.
Glencore, which has made only one acquisition in the past 11 months, announced last month that it intended to cut capital expenditure this year in response to “the volatile market backdrop”. In December, the mining company laid out a $7.9 billion capital expenditure budget for 2015, which has now been revised down to between $6.5 billion and $6.8 billion. The plan was announced after the Switzerland-based commodities giant reported a seven percent decline in attributable net income for the 2014 financial year.
After dipping in early morning trading today, Glencore’s share price edged higher midday. By 14:45 GMT, the stock had gained 2.24 percent to 292.15p.
As of 15:08 GMT, Friday, 20 March, Glencore Xstrata PLC share price is 292.57p.

Avatar mary-morley
Rate this post
Total: 0 Average: 0

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.