Tag Archives: Glencore International

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China OKs Glencore-Xstrata Merger

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By 24/7 Wall St.

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Swiss-based commodities trading house and mining company Glencore International announced last night that it has received approval from China’s Ministry of Commerce for its merger with Xstrata. The Chinese government did, however, insist on a few changes.

Glencore must sell a Peruvian copper project being developed by Xstrata by September 2014. But a more central condition is that the combined company must “offer to supply” its current Chinese customers an average copper concentrate volume of 900,000 metric tons under long-term contracts annually for eight years, beginning on January 1 of this year. There is also an eight-year requirement for sales of zinc and lead concentrates under both long-term and spot contracts.

Glencore has been directed to hire an “independent monitoring trustee,” whose job it will be to see that the company lives up to these agreements.

The Chinese also set some price controls:

The price for a minimum of 200,000 dry metric tonnes of copper concentrate will be offered in accordance with the applicable annual benchmark price agreed between major miners and major smelters during annual supply negotiations and the price for the remaining 700,000 dry metric tonnes of copper concentrate will be offered with reference to the applicable annual benchmark price.

In other merger-related news, Xstrata CEO Mick Davis has declined the offer to assume the role of chief executive and executive director of the merged company. Essentially he would have been paid for six months and then shown the door. Davis has some pride. Glencore’s CEO, Ivan Glasenberg, will become the CEO of the merged company as soon as the merger is completed.

Glencore now expects the effective date of the merger to be May 2, and the issuance and trading of new Glencore shares will begin on the London Stock Exchange on May 3.

Glencore made its offer for Xstrata, of which it already owned about 40%, in February of 2012. It just seems longer ago than that.

Glencore’s statement is available here.

Filed under: 24/7 Wall St. Wire, Commodities & Metals, International Markets, Mergers & Acquisitions, Mergers and Buy Outs

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From: http://www.dailyfinance.com/2013/04/17/china-gives-ok-to-glencore-xstrata-merger/

Business, Finance, Occupation & Industry

Did These 3 Stocks Deserve Their Gains?

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By Rich Duprey, The Motley Fool

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The Dow Jones Industrial Average closed out its winning streak at 10 days, closing down 25 points on Friday. But it’s still up a remarkable 11% in 2013 already and was ready for a breather.

The following three stocks, however, continued to party on, though you should resist the urge to high-five everyone in the cubicles next to you. Smart investors won’t celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.

Company

% Gain

Gluu Mobile

14.8%

Mechel

10.1%

Quantum  

8.3%

Going all-in
There was no company-specific news to send shares of mobile gaming-cum-gambling entrepreneur Glu Mobile higher on Friday, but the launch of its first real-money gambling product the other day is probably helping to keep the momentum going.

It also didn’t hurt that NPD Group released data showing that sales of video-game hardware, software, and accessories slid 27% last month, but much of that was being made up in sales of digital games and apps, putting Glu at the forefront of where the gaming action is: online and with real money.

That strategy hasn’t paid off for Zynga , though, despite following a similar path. It secured a license to run online gambling in Nevada, but perhaps because Glu is already on the market with a product in conjunction with its tie-in with Probability, Zynga’s shares fell more than 2% on Friday. Still its shares are up 75% from the lows they hit back in November, and Glu’s shares are 67% higher.

As doubtful as I’ve been about this transition to online gambling, investors don’t seem to think it’s a simple roll of the dice when it comes to these two players.

Canary in a coal mine
Russia‘s largest steelmaking coal producer, Mechel, is still riding higher from reports that Glencore International is interested in purchasing its Kazakhstan ferroalloy assets, which analysts estimate could be worth some $250 million to $300 million.

Mechel is intent on selling off assets in an effort to pay down more than $9 billion in debt, as declining coal prices have crushed profits and it would prefer to sell the entire division, worth approximately $550 million, rather than break it up piecemeal. There are other interested parties for the business, which could help boost the final selling price, as Eurasian Natural Resources was mentioned as one potential bidder, according to a Bloomberg report.

The coal producer’s shares have lost about half their value from their 52-week highs hit almost exactly one year ago.

No justice, no peace
Looks like hedge funds are increasingly interested in data-storage specialist Quantum, which saw Starboard Value increase its holdings from 15.9% to 16.7%, including the convertible debt it holds,  according to documents filed with the SEC on Friday.

When Starboard first made its presence known back in November, it …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Commodity Alchemy: Turning Gold into Lead

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By 24/7 Wall St.

close-up of red hot iron beams

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When the commodity traders at Goldman Sachs Group Inc. (NYSE: GS) say that commodities may be oversold right now they exclude gold from the rest of the asset class. In the near term, the Goldman analysts think that commodities will rise 2% to 6% although the firm remains neutral on commodities’ 12-month outlook, expecting a return of 3%.

We’ve already gone over some of the issues with investing in gold, either in mining companies like Barrick Gold Corp. (NYSE: ABX) and Kinross Gold Corp. (NYSE: KGC) or in ETFs like the SPDR Gold Trust (NYSEMKT: GLD). Goldman thinks that petroleum and copper are the short-term winners. Petroleum due to the lack of spare capacity and increased demand from emerging markets, and copper because the pull back in pricing last year was driven by concerns about China that no longer apply.

To which we say, “Maybe.” Petroleum, at least in the form of crude oil, costs more on the spot market now than it does on the futures market. That backwardation could be a buying opportunity if the global economy is in fact accelerating and will continue to do so in the second half of this year. The suggestion is that a “buy and hold” strategy will pay off because crude oil supplies will come under pressure.

That’s what happened (to some extent) in 2008 when crude went to $147 a barrel. How well do the conditions from 2008 fit the conditions of the crude market in 2013? Perhaps not all that well.

As for copper, the Chinese government has recently said it will soak up some of the liquidity in the country’s banks in an effort to keep inflation under control. New rules related to real estate and housing could cool some of the exuberance in the construction sector in China, too. On one hand, we could be in for a repeat of 2008 when commodity prices went on an upward tear. On the other hand, commodity producers will continue to overproduce, keeping prices low.

Where does this leave the big banks like Goldman, J.P. Morgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS), all of which reported double-digit declines in their commodities business last year? Lower market volatility plus restrictions imposed on trading by the Dodd-Frank Act have hit the banks’ trading operations hard. The banks could try to divest their commodity arms or spin them off into separate companies, but none has said much at all about its plans.

And that lead into gold bit? Last year Glencore International plc and Trafigura, two of the world’s largest commodities trading houses, kept large supplies of lead in storage and off the market in an effort to raise the price, which had fallen to a 52-week low of around $0.72 a pound. Today lead sells for about $1.00 a pound. Gold is up about 3% in the same period.

Filed under: 24/7 Wall St. Wire, China, Commodities & Metals Tagged: ABX, GLD, GS, JPM, KGC, MS<p style="clear: both;padding: …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should I Buy Xstrata?

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By Harvey Jones, The Motley Fool

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LONDON — Like a betrothed couple spending their last night apart, mining giants Xstrata  and Glencore International  have just reported separate full-year results for 2012, presumably for the final time. We wish them the best of luck on their 22 billion-pound union, even if the nuptials have been slightly delayed. Elsewhere, I’m asking the question “Should I Buy Glencore International?” Right here, right now, I’m wondering if I should buy Xstrata.

Xstrata-rated results
These are tough times for miners, thanks to falling commodity prices and mixed messages from China, but Xstrata exceeded the market‘s (lowered) expectations. Revenue fell 7% in 2012, from $33.9 billion to $31.6 billion, thanks in part to a 25% drop in coking coal prices and 23% drop in the average LME nickel price. Adjusted earnings before interest and tax fell 43% to $4.79 billion, while net debt increased by $6.5 billion to $14.7 billion. Net profits were down 80% to $1.2 billion following a series of writedowns, as Xstrata clears the decks ahead of the Glencore merger. Yet the market was happy. It had expected worse. The share price rose 6%.

Xstrata CEO Mick Davis described 2012 as “transformational,” with 10 major projects commissioned, as it pursued its organic growth strategy of boosting its capacity by 50% in copper equivalent terms by the end of 2014. Its expansionary capital expenditure program peaked at $7.6 billion. Challenges including rising labor and operating costs (an industrywide problem), stronger producer currencies against the U.S. dollar, and delayed regulatory clearance for the Glencore merger from China‘s Ministry of Commerce. Final date for the merger has been pushed back to April 16. If it goes through, as expected, the new company will be the world’s largest zinc miner, the third-biggest producer of mined copper, and largest exporter of coal burned by power stations. Combining Xstrata‘s copper, nickel, coal, and zinc mines with Glencore’s commodity trading expertise should bring diversification and cost savings. Who wouldn’t want a piece of that?

The joy of Xstrata
Xstrata won’t have made many investors rich lately. Its share price is down 50% over the past five years, 22% over two years, and 3% over one year, leaving it on a modest price-to-earnings ratio of around 13 times earnings. Income seekers may be disappointed by its 2.7% yield, but its policy is progressive, with its dividend up 14% on 2011. Xstrata’s management is upbeat, anticipating an upturn in emerging markets, and the West avoiding the worst. For me, Xstrata hits the spot.

Or could this company be a better growth bet? Motley Fool share analysts have found what they believe is the single best U.K. growth stock of this year. They are so impressed that they have named it “Motley Fool’s Top Growth Share for 2013.” To find out more, download our free report. It won’t cost you a penny, so click here now

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The article Should I Buy Xstrata? originally appeared on Fool.com.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should I Buy Glencore International?

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By Harvey Jones, The Motley Fool

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LONDON — These are heady days for mining and trading giant Glencore International , as it moves closer to completing its 22 billion-pound merger with fellow FTSE 100-listed miner Xstrata PLC. Both companies have just published their results, presumably as separate entities for the last time. Elsewhere, I’m asking the question “Should I Buy Xstrata?” Right now, I’m wondering if I should buy Glencore International?

Oil up, metals down
Glencore’s full-year results for 2012 was a mixed bag, but the market wasn’t complaining, driving the shares 5% higher. Group revenue rose 15% to 214 billion pounds, but underlying earnings fell 8%, largely due to falling commodity prices. The mining division’s 27% drop in adjusted earnings was offset by Glencore’s marketing operation, which posted an 11% increase, underlining the benefits of diversification. In total, adjusted earnings before interest and tax fell 17% to $4.5 billion. Unadjusted earnings per share fell 81%, while group net debt rose by 19% to $15.4 billion. Profits plunged 75% to $1 billion, largely due to that commodity price tumble and impairment charges, with Glencore taking a $1.2 billion hit on its reclassified stake in Russian aluminum producer Rusal. Net income fell to just over $3 billion, roughly as expected.

Xstrata marks the spot
Despite that profit plunge, Glencore announced a 5% increase in its dividend, which is good news for chief executive Ivan Glasenberg, who enjoyed a handy little dividend of 113 million pounds for this year. He hailed 2012 as “a year of significant achievement,” with healthy growth in its industrial and marketing operations, while its acquisition of Viterra has given Glencore a “truly global” agricultural business. At the top of the list, naturally, was its proposed merger with Xstrata.

Thinking big
Glasenberg is confident he will soon get the green light from China to seal the 22 billion-pound merger with Xstrata, which should bring even greater diversification, cost savings, and synergies. He was tightlipped about his plans for the new group, which will be larger than both BHP Billiton and Rio Tinto, although given the recent successes of Glencore’s marketing operations, we can expect that to be a key priority. He is banking on the new operation’s strength to ride out any market weakness, and maybe make acquisitions at favorable prices. Big could be beautiful.

Glencore holding
Glencore yields 2.7%, covered 4.8 times, with a progressive dividend policy. Trading on a price-to-earnings ratio of around 11 times earnings, it isn’t too pricey. Like all the major miners, Glencore is exposed to a further economic downturn, a Chinese hard landing, rising labor costs, and falling commodity prices. The merger brings added risk, as mergers do, but also plenty of opportunity. As recent results have shown, there is strength in diversity — and Glencore has a lot more diversity to come.

If you think Glencore is getting too big for its boots, you might find this a better growth bet. Motley Fool share analysts have found what they believe is <a target=_blank …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Mega-Miner Merger Delayed as Profits Slump at Glencore International and Xstrata

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By Maynard Paton, The Motley Fool

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LONDON — Shares of Glencore International  gained 5 pence to 375 pence and the shares of Xstrata  gained 20 pence to 1,120 pence during early London trading this morning despite both companies reporting reduced profits for 2012.

The FTSE 100 members, which agreed to merge last year, both suffered from declining commodity prices. Glencore recorded adjusted operating profits down 17% to $4.5 billion while Xstrata revealed adjusted operating profits down 43% to $4.8 billion. However, both firms managed to lift their dividends. Glencore raised its payout by 5% to $0.16 per share while Xstrata hoisted its payout by 14% to $0.40 per share.

Glencore also confirmed the completion of its merger with Xstrata would be delayed by another month. The merger had been expected to complete by the end of 2012, but protracted regulatory processes in South Africa and China have since pushed back the date to April 16. The merger was unveiled in February last year.

Ivan Glasenberg, Glencore’s chief executive, said:

2012 was a year of significant achievement for Glencore. Despite the challenging environment faced by the mining industry, Glencore delivered organic growth in its industrial businesses which complemented a robust performance in its marketing operations.

Mick Davies, chief executive of Xstrata, said:

Our businesses faced difficult operating conditions during the year, as the combined impact of falling commodity prices, ongoing inflationary pressure on operating costs and continued strong producer currencies relative to the U.S. dollar put pressure on our margins.

Based on today’s figures, both Glencore and Xstrata currently trade at about 13 or 14 times profits.

Of course, whether those P/E ratings, this morning’s results, the protracted merger process, and the general outlook for the mining sector all combine to make either Glencore or Xstrata a “buy” remains up to you. However, if you already own Glencore or Xstrata shares and are looking to diversify, this free special report covers a tip-top growth opportunity with operations far removed from the mining sector.

Indeed, the blue chip in question has lifted its earnings per share by 44% since 2009, owns subsidiaries that might carry considerable hidden value, and has just been declared “The Motley Fool’s Top Growth Stock for 2013.”

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The article Mega-Miner Merger Delayed as Profits Slump at Glencore International and Xstrata originally appeared on Fool.com.


Maynard Paton has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Business, Finance, Occupation & Industry

Glencore Follows Other Big Miners to Lower Profits

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By 24/7 Wall St.

mining

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London-traded Glencore International has been making news for more than a year now for its takeover of Xstrata, a mining company of which Glencore already owns about 40%. The company is awaiting approval from Chinese regulators and now expects the deal to be done by mid-April.

In the meantime, Glencore reported preliminary results this morning for its 2012 fiscal year. Like BHP Billiton Ltd. (NYSE: BHP), Rio Tinto PLC (NYSE: RIO), Anglo American, Barrick Gold Corp. (NYSE: ABX), Kinross Gold Corp. (NYSE: KGC) and Newmont Mining Corp. (NYSE: NEM), Glencore took a big write-down on a mining property: a $1.2 billion impairment charge on a reclassification of an earlier charge for the company’s investment in Russian aluminum giant Rusal. All told, Glencore wrote down $1.65 billion in impairment charges last year.

The company’s commodity trading business helped offset the weakness in commodity prices, and Glencore managed to post an adjusted profit that was 25% lower than profit in 2011, but that exceeded an analysts’ forecast for a drop of 37%. Operating profit in the company’s trading division rose 11% and fell 27% in its industrial division.

For Glencore, only gold showed a positive commodity price change in 2012, up 6%. The largest negative changes were visited on nickel and iron ore, both down 23%. And Glencore nearly doubled its production of iron ore, while gold production fell by 1%.

Glencore’s report is available here.

Shares in London are trading up about 3.1% this morning, at 381.45 pence.

Filed under: 24/7 Wall St. Wire, Commodities & Metals, Earnings, International Markets Tagged: ABX, BHP, KGC, NEM, RIO

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