Glencore shares plunge 6.7% in HK trading

Contractors in a Glencore mine in Quebec, Canada. The debt-laden firm has faced wild fluctuations in its share price in recent months, with investors fearing that sinking commodity prices will affect its ability to meet outstanding debt obligations.
Contractors in a Glencore mine in Quebec, Canada. The debt-laden firm has faced wild fluctuations in its share price in recent months, with investors fearing that sinking commodity prices will affect its ability to meet outstanding debt obligations.PHOTO: BLOOMBERG

HONG KONG • Shares in troubled mining giant Glencore plunged in Hong Kong yesterday, following a rout in London as a sell-off in metals shows no sign of abating.

The losses come as the Switzerland-based company struggles under the weight of tens of billions of dollars in debt with a global rout in commodities hitting its bottom line. Shares in the firm closed 6.7 per cent lower at HK$11.78 (S$2.16).

That came after its London-listed stock plunged 7.6 per cent on Thursday, a sixth straight loss. The company has lost more than three-quarters of its value since listing with much fanfare in London and Hong Kong in May 2011.

The price drop came as copper fell to a six-year low on Thursday, with fears that decreasing demand is a sign that the slowdown in China's economy could be sharper than feared.

The debt-laden firm has faced wild fluctuations in its share price in recent months, with investors fearing that sinking commodity prices will affect its ability to meet outstanding debt obligations. At the beginning of September, it announced a series of drastic moves aimed at cutting its US$30 billion (S$42.5 billion) debt by a third.

Glencore is selling a share of its future silver output to help reduce its towering debt, as its copper production takes a hit. One of the world's largest miners and producers of copper, Glencore said in a statement this month that its copper output had slumped 2 per cent over the past nine months.

The company explained the dip with dwindling production at its Alumbrera mine in Argentina, which is reaching the end of its mining life, as well as its suspension of activities at the Katanga mine in the Democratic Republic of Congo.

Most resources-linked firms have taken a hit in recent months as the prices of copper, aluminium, iron ore and oil have tumbled.

But Glencore has been particularly badly affected because of its huge debt load, even after it raised US$2.5 billion in September via a share sale as part of a vast plan to rejig its finances.

AGENCE FRANCE-PRESSE, BLOOMBERG NEWS

A version of this article appeared in the print edition of The Straits Times on November 14, 2015, with the headline 'Glencore shares plunge 6.7% in HK trading'. Print Edition | Subscribe