Copper Miner Glencore Withstands Challenges in Congo (For Now)

February 25th, 2018 by

Glencore PLC, the London-based multinational copper miner, is facing considerable new obstacles in the Democratic Republic of Congo (DRC).

The company must navigate changes to the country’s existing mining code that are slated to be enacted.

More details of these new challenges were covered by theĀ Financial Times.

Glencore Has Mostly Outperformed the Rest of the Mining Sector

By some measures, Glencore is the world’s biggest mining company in terms of annual revenue.

CEO Ivan Glasenberg remains at the helm after surviving a mutiny among shareholders about five years ago when base metal prices plunged at the same time as the precious metals.

Glasenberg has run the firm since 2002.

Glencore’s shares have since recovered to their 2014 levels around $400 per share. This is more than double their near-term low below $150 in early 2016.

Nonetheless, the current dividend yield these shares pay is not as high as some of the company’s peers, such as Rio Tinto and BHP Billiton.

Copper being smelted

According to research by Reuters that was reported by Mining.com, the mining sector as a whole has lagged behind the broader market even though prices for many industrial commodities, including copper and oil, have risen considerably over the past nine months.

It’s generally true that as goes the global economy, especially China, so goes mining stocks.

Interestingly, the economy of the DRC has been humming along: It’s growing by about 15%, but Glencore’s mines in the country have seen normal operations interrupted by local miners angry about the new regulations and, even by acts of violence.

The company’s business interest in Congo are extensive. It also operates mines around the world.

For now, most analysts believe this widespread portfolio will help Glencore stay insulated from any potential financial downturn of its assets in the DRC.

It also mines cobalt and coal. Cobalt is a key component of batteries for electric cars, suggesting room for future growth.

 

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.