Back in May 2013, as we editorialized about the still-fresh merger of trading house Glencore and mining major Xstrata – a deal creating a US$70-billion company that still ranks as the largest M&A move in mining history – we pondered about “the inherent contradictions of this merger, which is attempting to fuse a trader’s short term, amoral, zero-sum game ethic with a mining company’s much longer time horizon and ever increasing requirements to be a good corporate citizen in its host countries.”
This month we know the inherent contradictions couldn't hold up even three years. Plummeting commodity markets over the past year – particularly for copper and thermal coal – have evaporated Glencore’s profits from its too often marginal asset base, and exposed for all to see the firm’s worryingly large debt levels.
The worst day for Glencore shareholders was the nadir of Sept. 28, when shares on the London Stock Exchange dropped 29% in a day to close at just 68.62 pence, compared to 298p on Dec. 31, 2014 (a 73% decline), and 530p at the firm’s initial public offering in 2011 (an 87% decline).
However, at press time on Oct. 6, Glencore shares …
Read the complete article at NorthernMiner.com/news/editorial-glencore