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Glencore rewards investors with £2bn in dividends after ‘strongest’ year

Jon Yeomans
Something to smile about: Glencore chief Ivan Glasenberg - Bloomberg

Mining group and commodity trader Glencore signalled a growing appetite to do deals after reporting its “strongest” year on record and declaring $2.9bn (£2.07bn) in shareholder dividends.

Ivan Glasenberg, the FTSE 100 giant’s billionaire chief executive and second largest shareholder, said it would continue its “opportunistic” approach to mergers and acquisitions, though he was agnostic on which type of commodity he would like more of.

“We will go anywhere within the commodities we have, providing it gives us the right returns,” he said. “We’re open to any opportunities.”

Glencore is one of the world’s biggest producers of copper and cobalt, both of which are expected to be in high demand for electric vehicles. Its sprawling operations encompass the trading and mining of more than 90 commodities across 50 countries – a spread that Mr Glasenberg said gave it an advantage when it came to assessing M&A.

Most of Glencore’s recent deals have been partnerships, however, as it fights shy of making major acquisitions. Last year it revealed an interest in buying US grains trader Bunge but was rebuffed. Mr Glasenberg revealed a six-month “standstill agreement” on resuming talks with Bunge had now expired, but insisted that no deal was imminent.

Glencore said today it would pay out $0.20 a share in two equal payments in 2018 after reporting that pre-tax profits in 2017 surged to $6.9bn from a loss of $549m the year before. Revenue jumped 25pc to $205bn on the back of higher commodity prices.

Glencore

Glencore’s earnings before interest, tax, depreciation and amortisation – a figure closely watched by the City – jumped 44pc to $14.7bn.

It was helped by a strong performance in its “marketing” arm, which ships commodities around the globe. Earnings in this division hit $3bn, ahead of guidance, its best performance since 2008.

The miner’s debt pile fell by almost a third in 2017 to $10.67bn, the bottom end of its guidance, as it stuck religiously to a commitment to lower its borrowings. Net debt had stood as high as $37bn in 2014 after its merger with Xstrata, and threatened to collapse on top of it in 2015, when investors took fright at Glencore’s balance sheet and the share price plunged.

Mr Glasenberg said he hoped to avoid international arbitration with the Democratic Republic of Congo over a new mining charter, which could impose steep new royalties on the industry. Glencore, which mines copper and cobalt in the DRC, has argued the charter could stifle future investment in the central African country.

The chief executive expressed his hope that the DRC would follow the path of South Africa, which has recently indicated it will return to the negotiating table over its own mining charter.

Mr Glasenberg also revealed Glencore had paid no mining royalties to controversial Israeli businessman Dan Gertler since he was placed on a sanctions list by the US in December. Mr Gertler was a minority investor in one of Glencore’s mines in the DRC until the company bought him out last year. Under the terms of the deal, he was still entitled to royalties. The mining magnate has been a linked with a string of bribery allegations in the DRC, although he has always denied any wrongdoing.

Mr Glasenberg said the matter was “sitting with our compliance team” while it worked out whether it was still obliged to pay Mr Gertler.