Glencore Plc stated to be still in a process of generating free cash despite of commodity cost drop over at lowest rate since seventeen years. The miner confessed to continue in doing so if the costs drop of further.
Upon forecasts laid by skeptical analysts regarding the miner unable to generate enough revenue to service its debts, Chief Executive Officer, Glasenberg defended the assertions by stating that it could generate more than US$ 2 billion on an annual scale in free cash flow at current levels and is likely to be stable by remaining cash flow positive at materially lower price levels.
As for the shares, the company reported an elevation of 10% as per recent updates – a restoration of share price where it was, prior Anglo America roiled STOCK MARKETS on Tuesday with an announcement of wholesale production cuts, dividend suspension and disposals. However, they’re still lower at 17% rate scale where they were before Glasenberg’s last attempt to rally the troops in November – by putting a couple of copper mines and a minority stake in the group’s agricultural business up for sale.
Approx. US$ 8.7 billion have already been saved/raised by Glencore by dividend suspension, issuance of a new capital, vowing future output and selling assets in its campaign to bring its debt level down. It went to a wider scale again on Thursday, where debt reduction incremented from US$ 10 billion to US$ 13 billion, along with a target of net debt below at US$ 18 – US$ 19 billion. In the upcoming two years, half of it will be generated from cuts to the investment budget.
Glencore’s share price has moved largely in synchronization with copper cost despite the fact that it produces and trades a wealth of commodities – a very rough proxy for all industrial commodities, showingstable signs in the last three weeks. However, copper (US$ 2.07/pound) has still lost over 50% from its 2011 peak value, when China’s economy was thriving. In short, the miner is looking forward to an increased demands with 4% – 5%, in Chinese demand sect.