Glencore slashes spending, debt to ride out pandemic

Global miner Glencore said that it is well placed to ‘navigate the current challenges.’ (AFP)
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Updated 01 May 2020

Glencore slashes spending, debt to ride out pandemic

LONDON: Glencore cut its 2020 capital expenditure and output targets on Thursday to reflect the impact of the coronavirus on its operations, saying the belt-tightening left it well placed to weather the pandemic.

The miner and trader, reporting first-quarter production data, said spending for the year would fall by $1 billion-$1.5 billion from an original expectation of $5.5 billion.

Government restrictions to curb the spread of COVID-19 forced miners including Glencore to shut some operations while the industry also lowered spending.

Glencore and its peers have strengthened their balance sheets since the commodities crash of 2015-16 by paying down debt, cutting costs and holding back on expensive transactions.

“Given our strong liquidity position and resilient business model, we are well positioned to navigate the current challenges,” CEO Ivan Glasenberg said.

Glencore closed some operations in Chad, Peru, Colombia, South Africa and Canada, but most of its larger operations have been unscathed by the disruptions. It said it was re-opening some mines in Canada and South Africa.

Other miners including Antofagasta, Anglo American and Freeport-McMoRan have also cut capital expenditure due to the new coronavirus, while Rio Tinto cut its forecast for annual copper output.

Glencore said copper production in its first quarter to March 31 fell 9 percent to 293,000 tons year on year, while cobalt output slid by 44 percent to 6,100 tons as it shut its Mutanda mine in Congo and its Zambia mine was closed.

The reduction in spending reflects lower production, deferrals and lower costs due to weaker local currencies, a slump in oil prices and higher prices for gold.

Costs are expected to be down across the business, with copper lowered by 12 percent, zinc by
39 percent and coal by 6 percent.

In March, it deferred a decision on paying its $2.6 billion dividend, citing worsening economic conditions brought on by the coronavirus.

Analysts at UBS said Glencore’s lower cost, production and capital expenditure targets implied a higher free cash flow yield, and the miner’s “robust” balance sheet positioned it well for recovery.


Thailand finance minister: economy to recover next year with 4% growth

Updated 23 November 2020

Thailand finance minister: economy to recover next year with 4% growth

  • Economy had bottomed but recovery was not fast as the battered tourism sector hurt supply chains
  • Budget for the next fiscal year will still focus on boosting domestic activity

BANGKOK: Thailand’s economy is expected to grow 4 percent in 2021 after a slump this year and fiscal policy will support a tourism-reliant economy struggling from the impacts of the coronavirus pandemic, the finance minister said on Monday.
Southeast Asia’s second-largest economy shrank a less than expected 6.4 percent in the third quarter from a year earlier after falling 12.1 percent in the previous three months.
The economy had bottomed but recovery was not fast as the battered tourism sector, which accounts for about 12 percent of gross domestic product (GDP), has also hurt supply chains, Finance minister Arkhom Termpittayapaisith said.
“Without the COVID, our economy could have expanded 3 percent this year, he said. “As we expect a 6 percent contraction this year, there is the output gap of 9 percent,” he told a business forum.
“Next year, we expect 4 percent growth, which is still not 100 percent yet,” Arkhom said, adding it could take until 2022 to return to pre-pandemic levels.
There is still fiscal policy room to help growth from this year’s fiscal budget and some from rehabilitation spending, he said.
The budget for the next fiscal year will still focus on boosting domestic activity, Arkhom said, and the current public debt of 49 percent of GDP was manageable.
Of the government’s 1 trillion baht ($33 billion) borrowing plan, 400 billion would be for economic revival, of which about 120 billion-130 billion has been approved, Arkhom said.
He wants the Bank of Thailand to take more action short term on the baht, which continued to rise on Monday, despite central bank measures announced on Friday to rein in the currency strength.
“They have done that and they have their measures... which should be introduced gradually and more intensely,” Arkhom said.