Mining firm Glencore’s shares plunge 30% on commodity price warning

29th September 2015


Shares in mining company Glencore plunged 30% yesterday after Investec warned that weak commodity prices could see “almost all equity value eliminated” in the business.

Citigroup, however, argued that the sell-off was an over-reaction and that there was still value in the company.

Speaking to the BBC, Investec’s Laura Lambie said: “Miners grew hugely to meet the demand from China and they borrowed heavily to find it and the cost of servicing that debt and the schedule of repayments are really putting companies such as Glencore under the spotlight.

“The risk is if commodities don’t recover then companies like Glencore will be in trouble trying to repay its debt.”

While Glencore shares have jumped somewhat in this morning’s trade, just under 10 per cent – they still have some way to go before the full losses from yesterday are recouped, according to FE Trustnet.

Overnight, the company’s Hong Kong-listed shares also plunged around 27%, following the company’s London-listed shares hitting a record low.

The share price plunge  followed concerns that the Anglo-Swiss mining company’s debt pile (around £20bn) is too large to withstand slumping commodity prices.

The concerns were underlined by Investec’s warning that earnings could collapse entirely as Glencore worked to purely pay of its significant debt – which would eliminate all shareholder value.

FE Trustnet’s Tahmina Mannan says: “The stock is down more than 76 per cent year-to-date – marking it the worst performer in the FTSE 100 this year.

“This news will affect not just Glencore – but the mining sector as a whole will feel the pain. Fears that China’s economic slowdown will continue to weigh heavily on metal prices going forward, and that the commodities super-cycle is very much dead in the water will leave those invested in the sector feeling the pain for quite some time.

“Investors in FTSE 100 trackers are likely to be affected the most from Glencore’s troubles – as the mining company continues to impact the UK benchmark.”

Funds from the IA with exposure to Glencore:


Citi Code


BlackRock – GF World Mining – Jan 05 (OS51)



Natixis – Harris Associates Concentrated US Equity – Mar 12(0Z2Q)



Baring – Global Mining – Feb 12(0YA6)



Old Mutual – JPM Natural Resources – Apr 13 (J9WB)



JPM – Natural Resources – Dec 71 (SA20)



First State – Global Resources – Oct 03 (QI39)



Standard Life Investments – UK Equity Recovery – Mar 09 (ELT1)



Dimensional – UK Value – Jan 04(DL83)




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