Glencore rollercoaster continues as shares lurch again

Glencore's headquarters in Baar, Switzerland (Getty)

The rollercoaster ride continued for Glencore’s shareholders yesterday, as takeover speculation drove the mining and trading giant’s stock back above £1.

The latest twist came after its Hong Kong-listed shares jumped 71 per cent overnight, forcing Glencore to issue a statement that it “is not aware of any reasons for these price and volume movements”.

The comments did not prevent the shares from soaring in London despite a subdued start as they closed 20p or 21 per cent higher at 115p.

It followed weekend reports which suggested that Ivan Glasenberg, the chief executive, is open to a bid at the right price, but believes that there are no suitors prepared to stump up enough in the current depressed commodity markets.

Experts suggest Glencore is far more likely to be taken private by its current owners – including Mr Glasenberg, who has an 8.4 per cent stake – than be swallowed up by another company in an outright sale. The report said Glencore is in talks to sell a stake in its agricultural commodities business.

The initial reaction from investors in London was more muted as traders suggested the report was highly speculative and said the Hong Kong-listed shares are more thinly traded than in London, leaving them more open to sharp price swings. The Hong Kong-listed shares finished 18 per cent higher yesterday.

It has been a dramatic week for Glencore’s shares, which plummeted by a staggering 29 per cent last Monday when analysts at Investec suggested they could be worthless. They have since recovered some of their lost ground as senior bosses, including chairman Tony Hayward, bought shares out of their own pockets.

Shore Capital’s mining specialist Yuen Low said it was a good time to buy Glencore “if you believe in the future”, adding: “But you have to believe that the upturn is near and we’re near the bottom of the [commodity] cycle.”

Glencore was the UK’s biggest ever float when it hit the market at 530p in 2011. Four years on, Mr Glasenberg has been forced to suspend the dividend and put a raft of its operating divisions up for sale to cut debt. Analysts view the assets inherited from its 2013 mega-merger with Mick Davis’s Xstrata, one of the biggest tie-ups in corporate history, as the source of its problems.

At the time of the deal, Glencore said it wanted to “capture value at every stage of the supply chain, from sourcing raw materials deep underground to delivering products”. While management insisted Glencore’s trading arm was immune to the commodities downturn, the company is struggling to ride out the storm after increasing its exposure to metals and lower prices which have followed amid high debt levels.

The Xstrata deal gave Glencore heavy exposure to copper, which accounts for a third of profits and has suffered as China’s economic slowdown snowballs.

Alongside the takeover chatter, Glencore was also buoyed by predictions from Japan’s biggest copper smelter that the industrial metal – which hit a six-year low below $5,000 a tonne in late August – could return to $6,000 a tonne within 18 months.

Yesterday, Mr Glasenberg said the closure of two of Glencore’s African copper mines announced in September – removing 400,000 tonnes from the market – should boost the copper price.