Glencore expects another bumper year of commodity trading
MINING company Glencore, which is in the middle of a fight to buy Canadian rival Teck Resources, said it is on course for yet another bumper year of trading commodities.
Glencore is one of the world’s biggest mining companies; it also operates a sprawling trading business. The industry experienced a blowout year in 2022, as the disruptions caused by Russia’s invasion of Ukraine sent prices and volatility soaring. While some rivals have warned that the extreme records of last year are unlikely to be repeated, the company’s guidance on Friday (Apr 21) shows how conditions continue to favour traders.
Based on its first-quarter performance, trading profits this year will again beat its guidance range of US$2.2 billion to US$3.2 billion, it said. The company has exceeded its range for the last three straight years.
Glencore’s trading and production update for the first quarter was originally scheduled to be released next week, but was brought forward as the miner races to win support for its proposal to buy Teck.
The companies have spent the past few weeks in a bruising fight to win over Teck investors, after its board and controlling shareholder publicly rejected Glencore’s two proposals.
The Swiss commodities giant offered to buy Teck for US$23 billion and create two new companies combining their respective metals and coal businesses. Teck is instead moving ahead with a plan to split its business, with a shareholder vote scheduled for Apr 26. If approved, this would likely end Glencore’s pursuit.
Glencore has faced repeated questions from investors and analysts about whether it should increase its commodity profit range, which it is now on target to beat for the fourth straight year. However, chief financial officer Steve Kalmin has said he needs to see normalised commodity markets before making a change.
The company maintained all its production targets for the year. In trading, it highlighted energy products – which include oil and coal – as having performed particularly well. BLOOMBERG
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