Glencore deepens capital spend cuts

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Glencore has increased its debt reduction target and deepened its capital spending cuts, stepping up its response to lower commodity prices and boosting its battered shares by 12 per cent yesterday.

The mining and trading company said it was targeting net debt of between $18bn (£11.8bn) and $19bn by the end of 2016, against a previous target of $20bn.

Chief executive Ivan Glasenberg, a veteran of commodities trading who took the company public only four years ago, had to bow to shareholder pressure in September by agreeing to cut Glencore’s debts and protect its credit rating.

The London-listed company’s net debt peaked at around $30bn, one of the highest in the industry, and prices for its key products, copper and coal, have been languishing at multi-year lows.

After been spurred into action less than three months ago, Glasenberg said yesterday the company had accelerated its debt cutting after commodity prices tumbled further.

Glencore’s debt-reduction plan involves asset sales, reducing capital expenditure, suspending dividend payments and raising $2.5bn of new equity capital.

A source close to the company said the revised plan would help Glencore cope with copper at below $4,000 a tonne, even at $3,500 a tonne.