Our opinion on the current state of GLENCORE(GLN)Glencore (GLN) describes itself as, "...one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities." The group's operations comprise around 150 mining and metallurgical sites, oil production assets, and agricultural facilities. With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.
This is a massive, diversified mining house that markets its products worldwide and is involved in almost every mineable commodity that exists. This means that it is far less volatile and risky than other less diverse mining houses. Since the commodity cycle turned at the start of 2016, one of the greatest beneficiaries has been Glencore, particularly because it owned the world's richest source of cobalt in the Democratic Republic of Congo (DRC). Cobalt is the metal used in the batteries required for the world's shift to electric motor vehicles.
The problem is that the government in the DRC is in the process of declaring cobalt a "strategic mineral," which means much higher tax. The company is in the process of aggressively buying back GETTEX:2BN worth of its own shares. Glencore announced on 28th June 2021 that it had bought Anglo's 33% stake in Correjon Colliery in Columbia for $294m. Glencore clearly benefited from the war in Ukraine and the increase in coal prices, particularly.
In a production update on the year to 31st December 2024, the company reported copper production down 6%, cobalt down 8%, zinc down 1%, nickel down 16%, and energy coal down 6%, while lead was up 2% and steel-making coal was up 165%. The company said, "2024 production volumes were delivered within our guidance ranges (unchanged from the beginning of the year), reflecting stronger second half (H2) performances across our key commodities. Copper production was 26kt higher in H2 (+6% vs H1), supported by Antapaccay's recovery from H1 geotechnical issues."
Business Day (20-2-25) reported that Glencore had made a R30bn loss in the year to 31st December 2024, mainly because of lower prices for thermal coal. The price of nickel was down 22%, and cobalt fell 27%. The company has impaired its zinc and copper operations by almost R1,5bn. Earnings per share (EPS) fell to a loss of 13c (US) from a profit of 34c.
The share made a convincing "descending double top," with the second top being slightly lower than the first in April 2024. Technically, this is a bad sign. The fact that the share could not rise above its January 2023 top at R120 was a major disappointment to the bulls. Commodities are in a downward trend, which has a direct impact on Glencore.
