Glencore vows to keep focus on South Africa
CEO Ivan Glasenberg says former Reserve Bank head Gill Marcus will bring her knowledge of SA as well as finance to Glencore’s board
Glencore still regarded SA as "an interesting country", Ivan Glasenberg, CEO of the diversified miner and marketer, said on Tuesday. Glencore was investing in SA and would continue to do so if there were other opportunities, he said. But he was not looking at the thermal coal assets in SA that South32 has said it would sell, he said.
Glencore announced in October it would buy 75% of the Chevron SA assets, which include 820 service stations and a crude oil refinery, for $973m.
It followed a deal in August to enter Mexico’s fuel distribution business with a local partner.
Glasenberg said Glencore would continue to grow its downstream fuel business, which complemented its oil-trading activities, and it had looked in various African countries. It was too early to say whether it would consider listing the Chevron SA business but it would consider partnerships.
He said Glencore would look at upstream oil opportunities but it was more focused on the downstream sector.
Asked about the significance of appointing former Reserve Bank governor Gill Marcus to Glencore’s board, Glasenberg said she would bring expertise in her knowledge of SA as well as finance. Glencore would have at least twice as much to distribute to its shareholders in February at $2bn as it did in February 2017, chief financial officer Steven Kalmin said. In 2016, Glencore announced a new distribution policy of at least $1bn to shareholders from its marketing business and 25% of the free cash flow from its industrial assets.
Asked whether Glencore would consider matching the 40%-50% payout ratios of its peers, Kalmin said the group would not be hostage to what others were paying. If there were attractive opportunities for reinvesting spare cash, offering returns of 15% or more, shareholders would welcome it. But if there were no attractive investment opportunities, Glencore could pay out more than 25% of industrial free cash flow.
Glencore’s share price was down more than 1% at R63.19 in late trade but has gained 20% in 2017. Glasenberg said Glencore’s product mix of copper, cobalt, zinc, lead, nickel and thermal coal put it in the best position in its peer group to respond to the electric vehicle revolution. To realise 30-million electric vehicle sales by 2030, global cobalt supply would have to increase fourfold from 2016 levels, copper 18% and nickel 56%. Higher prices would be needed to incentivise the next generation of mine development.