Glencore Sees Share Price Surge As Dividend Reinstated

Mining giant Glencore have seen their shares leap 3%, following the reinstating of its dividend last week, despite recent heavy losses.

Announcing his last financial results before he steps down from his 20-year stint as CEO, Ivan Glasenberg assured shareholders that Glencore had navigated “recessionary conditions in the first half to a strong price recovery for most commodities in the second”.

Commodity Prices

The surge in commodity prices was good news for many companies, especially Glencore who were able to fix some of their massive $20bn debt down to $15.8bn.

Despite their statutory loss of $1.9bn last year, the surge meant they were able to report a sunnier financial report than previously expected, so the dividend, which had been suspended last summer, was able to be reinstated.

The announcement also took the time to pledge that Glencore will achieve net-zero carbon emissions by 2050, using the economic recovery from Covid-19 and the pressure of meeting the targets of the Paris Agreement as a key part of the business strategy going forward.

Green Tech

Green technologies often require essential commodities that Glencore is able to provide, such as copper, zinc, vanadium, nickel and cobalt.

The company, therefore, argues that it has an important part to play in a low carbon future.

Glasenberg said that it “is clear that meeting the goals of the Paris agreement has taken on even greater urgency” and that he leaves Glencore with a road map to ensure the company “is ready to support the transition to a low-carbon economy”.

As part of this strategy, Glencore will be reducing its coal business, as the weak coal price reflects reduced demand, instead focusing on copper.

Glasenberg’s successor, Gary Nagle, is now able to inherit a company primed to supply a world ready to build a greener infrastructure, though he does still face long-term challenges, such as corruption probes and the iron-ore shaped gap in Glencore’s portfolio.

Nevertheless, the parting gift of a $1.6bn dividend from Glasenberg certainly suggests a bright future.