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Glencore JSE:GLN] is updating investors Monday as the world’s biggest commodities trader nears the end of a tough year.
The company’s faced challenges spanning the Democratic Republic of Congo to Russia and a US Department of Justice probe that have weighed on its shares.
Here are the latest developments, to be updated throughout the day. The company gave a presentation to investors and spoke to reporters at 16:00.
Highlights so far:
Glencore announced the retirement of copper-marketing head Aristotelis Mistakidis as part of a management shakeup.
The company narrowed its forecast for trading profit this year, saying performance was affected by alumina and cobalt contracts. Glencore will maintain its focus on share buybacks and deleveraging.
CEO succession
Chief executive officer Ivan Glasenberg told investors he would stay in his position for three to five more years. The executive, who turns 62 in January, said he hoped to find a successor by the time he reached 65.
Asked what Glencore’s next CEO should like, he said: "I hope he looks like me."
His successor, he said, should come from Glencore’s younger generation - in the process ruling out Peter Freyberg, the newly appointed head of industrial mining assets, as being "a bit long in the tooth".
"When I go, I hope it’ll be a 45-year-old who’ll take over," Glasenberg said. He pointed to likely succession across the company as longstanding division heads step aside. "There comes a time where the younger generation needs to take over," he said.
Nickel costs
It looks like Glencore will continue to enjoy bumper margins at its copper, coal and zinc mines, but the cost of production at its nickel operations is set to jump next year as it starts accounting for the troubled Koniambo deposit in New Caledonia as a commercial operation.
The operation is "grinding forward," said chief financial officer Steve Kalmin, adding that he believes "there’s light at the end of the tunnel."
Buybacks, deleveraging
Glencore will maintain its focus on returning cash to shareholders through buybacks and reducing debt, Glasenberg said. Kalmin said he’d favour returning 100% of free cash flow to shareholders and that buybacks could reach $1bn per quarter based on current spot commodity prices.
Copper deficit
The copper market has been in a small deficit this year, Glasenberg said. If demand growth continues at 3.1%, the industry will be "digging deep" into copper inventories, he said. Today’s stock would feed demand for just 12 days, a record low, according to Glencore estimates. Zinc and nickel stocks-to-use ratios are also at record lows, Glasenberg said.
Copper king retires
Glencore announced a management shakeup including the retirement of Aristotelis Mistakidis, the company’s head of copper marketing and one of its biggest individual shareholders.
Spot price pain
Glencore’s industrial operations are still churning out cash, but lower spot prices for the company’s main commodities appear to be taking a toll. Illustrative annualised spot free cashflows across the group are at $7.5bn, down from $8.2bn in the half-year results.
Trading forecast
Glencore narrowed its forecast for core trading profit to $2.7bn, give or take $100m. Trading profits were affected by non-performance on some cobalt contracts in the second half amid weaker pricing, as well as adverse price moves in some alumina contracts.
Cobalt exports
The company plans to work with Congo state miner Gecamines "to find alternative interim solutions" after a Glencore unit suspended cobalt shipments because of excessive uranium levels. It’s also lowered cobalt production guidance for next year.
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