Encouraging outlook for Glencore, but there are threats

Global natural resources group Glencore has a solid outlook for the next few years, because, among others things, of its diversified portfolio and conservative financial policy, as well as likely rising prices for the main metals and coal that it produces.

But there are clouds on the horizon in the form of major legal investigations into its activities and transactions being undertaken by authorities in the US, Brazil and India. There is also the risk that trade wars and possible recession could drive commodity prices down.

These opinions are found in Fitch Solutions Macro Research’s recently released report ‘Global Company Strategy – Glencore: Challenges Ahead From Weak Copper Prices’. (Fitch Solutions Macro Research should not be confused with Fitch Ratings; the two entities are affiliated but separate.)

“Alongside years of capital discipline aimed at reducing debt, the firm was able to amass a diverse portfolio of copper, zinc, lead, cobalt, nickel and coal mines that will benefit the firm for years to come,” states the report.

During the first semester of this year, while Glencore’s copper production declined by 5% and its nickel production fell by 11%, its zinc production rose 8% and its cobalt production jumped 28%. However, in August, the group reported that it was going to put its Mutanda cobalt mine into temporary care and maintenance at the end of this year…Full Story