Shares in troubled mining giant Glencore PLC yesterday afternoon tumbled 7 percent in Hong Kong, after a rout in London as a sell-off in metals shows no signs of abating.
The losses come as the company, based in Switzerland, struggles under the weight of tens-of-billions-of-US dollars in debt with a global rout in commodities prices hitting its bottom line.
Shares in the firm were down by 6.5 percent to HK$11.80 in the morning. That came after its London-listed stock plunged 7.6 percent on Thursday.
Photo: EPA
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 the China 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 would affect its ability to meet outstanding debt obligations.
At the beginning of September it announced a series of drastic moves aimed at cutting its towering US$30 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 yesterday said in a statement that its copper output had slumped 2 percent over the past nine months.
The Switzerland-based 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 price of copper, aluminum, iron ore and oil have tumbled.
Alcoa Inc, the largest US aluminum producer, this month also said that it would reduce smelting capacity by 503,000 tonnes and alumina refining capacity by 1.2 million tonnes.
Meanwhile, shares in Noble Group Ltd yesterday tumbled in Singapore after the commodity trader reported a slump in quarterly profit and investors shunned equities linked to raw materials amid a rout in prices.
The shares lost as much as 9 percent to S$0.455, the lowest level since Oct. 9, and traded at S$0.46 at 9:04am.
The company’s stock is this year’s worst performer on the Straits Times Index, down as much as 60 percent.
“It has been a supply-driven bear market in most of the commodities that we’ve been involved in and it’s not obvious that anything has really changed besides the fact that prices are lower,” Noble Group CEO Yusuf Alireza said.
Goldman Sachs Group Inc said only a substantial rise in Chinese metals demand is likely to be sufficient to balance copper and aluminum markets, adding that recent output cut by miners are not large enough to rescue prices.
“While recent supply cuts in copper and aluminum might appear to bring the markets closer to balance, the cuts, in our view, are not sufficient to do so,” Goldman analysts including Max Layton yesterday said in a report.
“It is our view that the supply cuts confirm the bear case for these metals,” they said.
Additional reporting by Bloomberg
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