Glencore proves strong player in tough market

A RISE in profits from trading helped Glencore offset lower prices in 2012, with net income down by a quarter as the Jersey-based commodities group prepares to seal a $34bn (£22bn) takeover of miner Xstrata.

The drop, modest relative to a bruised sector, was in line with market expectations and a vindication for Glencore boss Ivan Glasenberg, who said he is optimistic on the imminent closure of the sector’s largest deal and ready to take advantage of the misfortunes of larger rivals.

A new generation of bosses at the helm of the world’s largest diversified players is preaching unrelenting austerity, under scrutiny from shareholders and as boom-time acquisitions sour, costing the industry billions.

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This is expected to increase an already significant number of assets on the block, just as big players retreat from deals.

“Those opportunities will be there, that is something new in the industry,” Mr Glasenberg said.

“Competition will be less fierce than before. A lot of the mining companies are reassessing their portfolios, they are hanging back, there are new CEOs and, like all of us, they are under pressure from investors.”

The market has been keenly awaiting a roadmap for the combined Glencore-Xstrata – set to be the world’s fourth-largest diversified mining company – and had hoped that Glencore would expand on its post-takeover strategy. But the company, still waiting for Chinese regulatory approval, largely left investors guessing.

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