Glencore shareholders to receive upbeat investor update

Glencore shareholders are set to be told of the company’s position as the “leading producer” of tier 1 commodities - that is, copper, cobalt, nickel, zinc and thermal coal - during an investor update set down for Tuesday afternoon.

The FTSE 100 firm’s board was set to say its ‘tier 1’ commodity outlooks were underpinned by persistent supply challenges and robust demand, adding that it was the “best placed” large cap resources company for the “electric vehicle revolution”.

Glencore’s board was highlighting what it called a cash generative and “unique” business model, describing its ‘tier 12’ industrial assets as sustainably low-cost and long-life, with marketing said to be “highly” cash generative across the cycle.

It gave its 2017 marketing EBIT guidance of $2.8bn, alongside 2018 illustrative EBITDA of $16.2bn at spot/forward prices.

The board said it was also “able and willing” to grow the business, defining growth as growth in cash flows.

Glencore said it would reactivate idled capacity when appropriate, along with looking at capital-efficient brownfield options and bolt-on acquisitions focused on existing commodities/geographies.

The board said it had a “strong” track record of investment.

Looking at the books, the Glencore board was also set to highlight its “conservative” financial policy, putting its optimal net debt range at between $10bn and $16bn, with a net debt-to-EBITDA of less than 2.0x through the cycle.

It said its 2018 distribution policy, in respect of 2017 cash flows, comprised a fixed $1bn base distribution from marketing as well as a minimum payout of 25% of industrial free cash flow.

The directors also promised the “prudent” reinvestment and recycling of capital

“Glencore provides diversified exposure to the most attractive commodities, produced by our long-life/low cost assets,” said CEO Ivan Glasenberg.

“We will continue to focus on creating value through capital efficient growth within a conservative balance sheet structure.”

Glasenberg said partnerships to grow the business would remain a “key element” of the board’s approach.

“We look to the future, confident in our ability to continue to create superior returns for our shareholders.”