Glencore Share Discussion Threads

[waldron] 01/2/2019 06:10

Glencore’s coal-stained black flag snags in investors’ ESG screens
Company valuation held back despite its huge interests in metals for electric cars
John Dizard


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John Dizard an hour ago
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Oh far better to live and die
Under the brave black flag I fly
Than play a sanctimonious part
With a pirate head and a pirate heart!
I am a Pirate King, Gilbert & Sullivan, 1879

Professional investors do not like to be reviled. Effective investment screens for environmental, social and governance criteria are now not just a nice-to-have but a must-have. Corporates that want to raise money from woke investors must follow their lead.

For example, the loudest Euro-energy investment debate has been over how, and how quickly, Germany replaces its power system’s dependence on lignite. How much coal generation can be substituted with more tide, wind, solar and conservation?

Yet at the same time, Glencore, a European company, is firming its position as the world’s leading coal-producing and marketing company.

Within Germany’s coal wind-down, from 2016 to 2040, Europe’s coal use will fall by 290m tonnes. The US’s coal use will also decline, mainly because of competition from US-sourced natural gas. Asian consumers, though, are set to use 1,400m tonnes more coal.

Glencore plans to be in Asia, ready to supply this market. It has bought coal operations from Rio Tinto and Yancoal and is spending to increase its mines’ efficiency. Even with those outgoings, coal is becoming Glencore’s strongest generator of free cash flow.

Despite the run-up in coal prices, due partly to Chinese imports, the rest of the industry has not chased the price with capital expenditure and new capacity. So while a depression would probably bring down coal prices, there would not be the need to shut overbuilt and overleveraged capacity — which has plagued the industry in the past.

Yet, even though Glencore’s relatively low-cost copper, cobalt, and nickel will be necessary to build electric vehicles on a large scale, the company has not been accorded a Tesla-like, or even lithium miner-like, valuation. Indeed, its London-listed stock is, at about 309p, around 100 points lower than a year ago. Its price has, however, perked up since the end of December.

This reflects more than an irrational green moralism on the part of investors. Glencore’s operations in the Democratic Republic of Congo have been the subject of legal action by the Congolese government and Gécamines, the state mining company. Also, Glencore’s historical relationship with Dan Gertler, an Israeli national who appears to have acted as an intermediary between Glencore and the DRC government, has attracted the adverse attention of the US justice department.

On the day in July when the DoJ subpoenaed Glencore, the stock lost $8bn in market value. The DoJ has acquired a reputation for aggressive enforcement of US extraterritorial charges of corruption. We do not know how the DoJ action will be resolved. It is, however, worth noting the recent settlement of US sanctions actions against Oleg Deripaska, the Russian aluminium king.

While I do not have direct knowledge of the DoJ’s intentions, the US government has so many existing and proposed sanctions that it may become more selective about enforcing them all.

The company does have some answers for investors put off by the black flag of coal flying over the Glencore ship. In a November presentation to sellside analysts, it says: “We support a reduction in global carbon emissions and acknowledge the COP21 climate goal of the less than 2C global leaders have pledged to achieve.”

The presentation points out the greater energy efficiency (and lower proportionate carbon emissions) of recently designed and built coal plants. Glencore work on carbon capture and storage (CCS) projects in Australia is described.

Coal emits carbon, though, and it will take large implementation of CCS to meet COP21 goals. Unlike some other emissions, such as mercury, or even particulates, sulphur dioxide and nitrogen oxides, CO2 spreads itself around the world.

So a shutdown of Germany’s 60m tonnes of coal and coal-equivalent lignite production, along with the end of its 55m tonnes of coal imports, would still be far less than Glencore’s planned production of 145m tonnes by 2021, never mind the 143m tonnes that the company says will be required by new coal plants in India alone.

The sad truth is that Glencore is unlikely to be awarded prizes by Greenpeace. It is likely to be caught in many institutional investors’ ESG screens.

The attraction is the free cash flows from the company’s strong positions in operating mines for metals that are well in demand now, and likely to be in short supply by the next recovery. The management has also committed to distributing as much of those free cash flows as possible to shareholders.

[waldron] 01/2/2019 06:06

Glencore embroiled in new DRC spat
© Bloomberg



FT

Neil Hume 21 minutes ago
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Glencore is embroiled in another spat in the Democratic Republic of Congo where it has some of its more important growth projects.

Overnight Katanga Mining, Glencore’s subsidiary in the DRC, said it had been told by the government to suspend a project to build a new system to remove uranium from its cobalt supplies.

"On January 30, 2019, the Company's 75 per cent operating subsidiary Kamoto Copper Company received a letter from the DRC Minister of Mines following the inspection conducted by the DRC Government in the fourth quarter of 2018,” Katanga said in a statement.

“The Minister of Mines raised certain concerns with the technical solutions identified by KCC and requested that KCC suspend the project to build an Ion exchange plant until further notice. KCC intends to engage with the Ministry of Mines to understand and address their concerns.”

Katanga’s Kamoto mine in the DRC is one of the world’s largest producers of cobalt, an important battery metal.

Glencore shocked the market in November when it revealed the the discovery of uranium meant it could no longer export cobalt from the country.

It said metal would be stockpiled until an Ion Exchange system was built to remove the uranium, which was expected to be completed by May next year.

While Katanga still expects to produce 26,000 tonnes of cobalt this year, the company said on Friday that it now expects to sell most of that metal in 2020, news that could help tighten the market.

Subject to obtaining the necessary authorisations it expects to commission the Ion System in the fourth quarter.

Glencore, which has been grappling with a string of problems in the DRC, is due to issue a production report later on Friday.

[waldron] 31/1/2019 16:59

Rio Tinto
4,187.5 +1.31%


Anglo American
1,942.8 +2.31%


Glencore
309.45 +1.38%

BHP GROUP PLC (BHP)
- 31/01 17:30:00
1692.6 GBp +1.22%

Gold COMEX 1,325.90 +0.79%
Silver COMEX 16.07 +0.90%
Copper COMEX 2.78 +0.56%
Brent Crude Oil NYMEX 62.22 +1.10%
Gasoline NYMEX 1.41 +0.33%
Natural Gas NYMEX 2.81 -1.40%


Our glen as yet just cannot build up sufficient steam to break into the 310 to 340p BOX

thus the month ends

[la forge] 31/1/2019 15:24

Royal Dutch Shell PLC doubled its 2018 profit as strong crude prices and belt tightening have kept Big Oil on track to deliver healthy returns.

The British-Dutch oil giant said Thursday that profit on a cost-of-supplies basis -- a number similar to the net income that U.S. companies report -- was $23.8 billion, its highest level since the crude price crash in 2014.

The results reflect a broader effort by the energy industry to be profitable with oil prices at $60 a barrel or lower following the downturn.

"We delivered on our promises for the year," said Chief Executive Ben van Beurden. "We will continue with a strong delivery focus in 2019, with a disciplined approach to capital investment."

Shell shares were trading 4% higher in London on Thursday.

Big oil companies' profits slumped amid a world-wide plunge in oil prices that began in 2014 and lasted several years, prompting them to throttle back spending.

Shell itself launched a $30 billion divestment program, which it completed last year, and slashed jobs and production. In the first quarter of this year, it expects its integrated gas output to fall by as much as 170,000 barrels of oil equivalent a day.

As prices recovered, the major oil companies' profits ballooned.

Free cash flow -- a closely watched measure in the energy industry -- increased 42% to $39.4 billion from $27.6 billion a year earlier, when Shell suffered losses on hedging for LNG shipments, as well as other currency-related losses.

Still, Shell's capital expenditure rose to $23 billion from $20.8 billion a year earlier due to investments in exploration and joint ventures.

"By streamlining their operation in the last few years Shell have given themselves flexibility and the slight increase in capital expenditure is one of the fallout," said Richard Hunter, the head of markets at the U.K.-based Interactive Investor. "Still, I'm not overly concerned. The negatives are few and far between."

The company maintained its quarterly dividend at 47 cents a share and declared a final dividend for the year of $1.88 a share, unchanged from the previous year.

Shell also announced the third stage of its share buyback program for a total of $2.5 billion in the period until the end of April.

As the industry's fortunes improve, calls are increasing for the industry to shoulder its corporate responsibility in relation to the environment.

The next big challenge for the industry will be the market forces that are pushing for the major oil companies to get on board with the 2015 Paris climate accord and help lower global carbon emissions from fossil fuels, which have been linked to rising global temperatures and more extreme weather patterns.

A group of more than 4,500 shareholders working under the umbrella of the Netherlands-based group Follow This have been urging Shell, BP PLC, Exxon Mobil Corp., Chevron Corp. and Equinor ASA to set and publish targets that are aligned with the goals of the accord and limit the rise in global temperatures to below 2degC.

The shareholders started advocating for the major oil companies to publish their targets in 2016. Now a wider group of investors is asking Exxon and Chevron to publish their carbon footprint reduction targets.

On climate matters, Shell is "ahead if the curve...when it comes to enforcing discipline and good behavior in relation to Paris," said Mr. van Beurden. Last December, Shell said it would publish short-term emissions targets tied to executive pay. Other major oil companies are expected to follow suit, say industry experts.

But Shell's targets still fall short of the necessary reductions, said Follow This member Mark van Baal. "Shell is truly industry leading but is not aligned with Paris yet," he said.

Write to Neanda Salvaterra at [e-mail]



(END) Dow Jones Newswires

January 31, 2019 09:52 ET (14:52 GMT)

[la forge] 31/1/2019 15:22

Glencore tipped to increase its buyback scheme on a busy Friday in the City
11:55 31 Jan 2019
Fridays are normally a quiet affair in the City, but not this week: Glencore, TalkTalk and RPC, the packaging giant in the middle of a takeover war, are all due up
mining dump truck
Deutsche Bank thinks Glencore will add another US$3bn to its buyback programme this year

Miner and commodities trader Glencore PLC (LON:GLEN) has seen its shares tumble over the past year, largely due to a corruption investigation launched by the US Department of Justice over summer.

The political situation in the Democratic Republic of Congo has also hit the stock price. Allegations of huge fraud in last month’s general election have plagued the mineral-rich nation, where Glencore has two of the world’s largest cobalt mines.

Still, Deutsche Bank thinks there will be some good news just around the corner for the mining giant, possibly as soon as soon as Friday’s fourth-quarter update.

“At the upcoming results we expect an increase to the existing buyback and forecast a further US$3bn in 2019 on top of the already announced US$2bn,” the German bank said a note to clients.

As for the other issues, Deutsche reckons the DRC political situation is “a potential catalyst and risk in the near term”, while it expects the DoJ investigation to hang over shares for some time yet. “[Still], we believe the current discount (~30% vs peers) is too severe.”

[linton5] 31/1/2019 15:13

Gonna be good results tmmw

[linton5] 31/1/2019 08:22

Needs to break and stay above 310 for next challenge

[waldron] 30/1/2019 16:59

Rio Tinto
4,133.5 +1.37%


Anglo American
1,899 +2.57%

Glencore
305.25 +2.76%


BHP GROUP PLC (BHP)
- 30/01 17:30:00
1672.1 GBp +2.60%

perhaps glen has a chance to break out into the 310 to 340p BOX tomorrow


Gold COMEX 1,316.10 +0.07%
Silver COMEX 15.93 +0.57%
Copper COMEX 2.77 +1.50%
Brent Crude Oil NYMEX 62.39 +1.94%
Gasoline NYMEX 1.43 +3.94%
Natural Gas NYMEX 2.87 -1.07%

[linton5] 30/1/2019 16:32

There’s a beautiful chart on Glencore on stockcharts gold,I hope it eventually comes true

[linton5] 30/1/2019 16:15

Copper stocks haven’t made much progress in USA in last 7 years if you look at charts one almighty rally and they should at least 3 bag.i feel that rally is getting very near

[linton5] 30/1/2019 16:04

I wish this could move like Freeport mcmorran lol up nearly 7% already

[foxy22] 30/1/2019 12:55

Broke through 3.00 on its way to 3.20

[ken tennis] 30/1/2019 09:55

Waiting for 295 before I start again maybe end today or tomorrow

[a2584728] 30/1/2019 08:47

This is so under valued even at 50% higher.

[stewart64] 30/1/2019 08:26

In at 303.7. First time, no stamp !!lovely jubbly. Brexit's a mess. Azn, Rdsb, Unilever and Glencore in over the last few days. Regional Reit, Taylor Wimpey, Legal and General and SLA out.

[losses] 30/1/2019 08:13

Peeps will start buying in for results and divi in the coming months...

[linton5] 30/1/2019 08:11

Come on glen do yer stuff

[losses] 30/1/2019 08:10

US/China trade talks looking promising... re-rating coming here soon.

[waldron] 30/1/2019 05:21

01/02/19


Year 2018 Publication activity evolution - Production Report





20/02/19


Year 2018 Publication of results

[waldron] 30/1/2019 05:16

BUYBACKS COMING ALONG SLOWLY BUT SURELY

USD 1.84 BILLION APPROX OF 2

2018/19 share buy-back programme

On 5 July 2018, Glencore plc commenced a share repurchase or buy-back programme of up to USD1 billion (the “Programme”) in the period to 31 December 2018. On 25 September 2018, Glencore plc further announced an increase in the size of the Programme by an additional amount of up to USD1 billion and the extension of the duration of the programme until the close of dealings on 20 February 2019.

[waldron] 29/1/2019 16:54

Rio Tinto
4,077.5 +3.37%


Anglo American
1,851.4 -0.69%


Glencore
297.05 +1.92%

BHP GROUP PLC (BHP)
- 29/01 17:30:00
1631.2 GBp +0.74%

Gold COMEX 1,309.00 +0.45%
Silver COMEX 15.87 +0.63%
Copper COMEX 2.72 +1.44%
Brent Crude Oil NYMEX 61.34 +2.56%
Gasoline NYMEX 1.39 +2.65%
Natural Gas NYMEX 2.85 -0.66%

[la forge] 29/1/2019 12:39

Shipping 29 Jan 2019 | 11:21 UTC Singapore

Glencore's shipping arm takes LR2 on time charter for up to nine months

Author Sameer C. Mohindru; Editor James Burgess Commodity Shipping

Singapore — ST Shipping, Glencore's shipping arm, has taken the LR2 Pro Alliance on time charter for up to nine months, market participants said Tuesday.
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LR2s have been in considerable demand for the last few weeks, as traders seek tankers to ship the large volumes of gasoil available in Asia Pacific and the Middle East, they said. Such tankers typically carry up to 90,000 mt.

But eastbound freight rates from Asia Pacific for LR2s have come under downward pressure from availability of newbuilds.

Availability of new ships, including both LR2s, and larger dirty tankers such as VLCCs with discounted rates for their maiden voyage, is capping LR2 rates.

At least six VLCCs have recently been chartered to move gasoil, a chartering source said. VLCCs usually carry crude or fuel oil, but often take a clean product cargo on their maiden voyage.

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The global LNG fleet grew at its fastest rate ever in 2018, with newer and better technologies. But was this enough to absorb the vast amount of new LNG supply coming 2019, mainly from the US, and still keep freight rates at affordable levels?
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"A couple of owners are trying to corner the charterers but the fundamentals are just not [strong]," the source said.

A Glencore executive declined to comment.

-- Sameer C. Mohindru; [e-mail]

-- Edited by James Burgess, [e-mail]

[waldron] 28/1/2019 16:56

Gold COMEX 1,301.80 +1.72%
Silver COMEX 15.75 +2.91%
Copper COMEX 2.69 +1.61%
Brent Crude Oil NYMEX 59.53 -3.42%
Gasoline NYMEX 1.35 -4.04%
Natural Gas NYMEX 2.91 -5.40%


Eni
14.432 -0.96%