London — Glencore will buy back as much as $1bn of its shares, a move that may soothe investors’ concerns after the world’s top commodity trader was hit by a US Department of Justice probe earlier this week.
The buyback programme will start on Thursday and last until the end of the year, the Swiss miner and trader said.
The announcement comes two days after US authorities demanded documents relating to possible corruption and money laundering regarding Glencore’s business in Nigeria, the Democratic Republic of Congo and Venezuela over the past decade.
The probe wiped about $5bn off Glencore’s market value on Tuesday, marking the latest twist in a tumultuous year for the company.
It has faced challenges linked to its business in the Congo, where it operates giant copper and cobalt mines. It is also facing the possibility of a bribery investigation by UK prosecutors over its work with Israeli billionaire Dan Gertler, a close friend of Congo President Joseph Kabila, people familiar with the matter have said.
Glencore said on Tuesday that it was reviewing the US subpoena and would provide further information as appropriate.
Analysts at Liberum Capital said on Wednesday that Glencore may use a share buyback programme to improve investor confidence. They said the 8.1% share slump on Tuesday was probably overdone.
The stock is down 18% this year, while other mining majors such as BHP Billiton, Rio Tinto and Anglo American have gained.
Glencore’s JSE-listed shares were trading 4.29% higher at R60.29 in midmorning trade on the JSE on Thursday, after news of the buyback.
Other mining giants have also announced share purchases to reward investors after higher commodity prices brought in bigger profits. Rio Tinto in February promised an additional $1 billion stock buyback.
The first part of Glencore’s buyback will total up to £350m ($463m) and end by August 7, and any ordinary shares purchased will be held in treasury, it said. Citigroup will conduct the programme.