Glencore delays decision over dividend in light of Covid-19 uncertainty

Glencore is to delay a decision over a potential $2.6bn dividend payout because of the current “exceptional” economic uncertainty.

The London-listed miner and commodity trader, which has operations in 35 countries, said it was committed to maintaining its Baa/BBB investment grade credit ratings during the coronavirus outbreak. To support that, it therefore believed it was prudent to defer a decision over whether to proceed with a proposed cash distribution of $0.20 per share, a combined total of around $2.6bn.

It said delaying the decision would “strengthen the group‘s overall financial position, adding that although none had occurred thus far, there exists the risk of material production disruption due to Covid-19”.

The decision will be reviewed at the time of the blue chip's interim results in August, when it would be in a “better position to consider Covid-19’s updated impacts, the economic outlook and the company’s prospects”.

Glencore also updated investors on its credit facilities, which it said had been refinanced and extended, effective 22 May 2020, on the same commercial terms as the 2019 facilities. The new facilities comprise of a $9.975bn 12-month revolving credit facility and a $4.65 five-year revolving credit facility with a 12-month extension option.

Tony Hayward, chairman, said: “We are taking a cautious approach to protect our capital structure amid the current period of extreme uncertainty.

“We will review the opportunity for a distribution at our August results, when we will have an improved understanding of Covid-19’s impact on our business and its prospects.”

Last week, Glencore said operations at a number of smaller mines had been halted because of government restrictions, but that larger mines had so far not been materially impacted.