One of the world’s largest mining companies just warned that it’s going to suffer a significant hit on its upcoming quarterly earnings report. Glencore (LON: GLEN)(OTC: GLCNF) ended up warning investors on Wednesday that it would take a $350 million loss when it reports it’s first-half earnings this week due to it’s failing African copper business that has been hampered by constant problems.
The Swiss-based, London-listed company said that setbacks in its mines located in the Democratic Republic of Congo and Zambia resulted in its copper-producing falling by 5%, down to 663,000 tonnes for the first half of the year. Their Zambia assets ended up getting closed down to be refurbished, while a major landslide at their copper and cobalt mine in Congo resulted in the death of 40 miners.
“Our African copper assets retain significant potential and will play a key role in the transition to a low-carbon economy,” said CEO Ivan Glasenberg said in a statement. “We have developed detailed turnaround plans and I look forward to taking you through these plans along with our financial performance on August 7.”
This setback comes at a bad time for the mining giant as it has been under performing against its major rivals this year. Several legal challenges have been hurting the company as well, such as an investigation from the US Department of Justice, FBI, and Brazilian authorities in the Car Wash scandal, where bribes were given to employees of Brazilian oil company Petrobras in exchange for better terms on trading contracts.
At the same time, Glencore has been subpoenaed by the U.S. Department of Justice for documents concerning possible money laundering schemes going on in Nigeria, the Democratic Republic of Congo, and Venezuela. To make things worse, the U.S. Commodity Futures Trading Commission is also investigating the company for a number of corrupt practices domestically.
As bad as this sounds, the list goes on even further, as even back in December, Glencore subsidiary Katanga Mining (TSX: KAT) was fined by Canadian regulators for producing misleading financial statements. When one combines Glencore’s history of questionable activity with these recent poor financial results, it’s hard for analysts to recommend the company over some of its other rivals.
Shares of the mining giant fell by 2.4 percent in response to the news. While Q1 2019 saw the stock gain around 20 percent, shares fell drastically in late April, giving up almost one-third of their total value in a one-month time period. Since then, Glencore hasn’t recovered from the fall, trading between the $270 and $280 price range since.
Glencore Company Profile
Glencore is one of the world’s largest commodities traders, active in markets for metals and minerals, energy products, and agricultural goods. The firm’s marketing business provides sourcing, logistics, transportation, storage, and financing services to commodity producers and consumers around the globe.
After the 2013 merger with diversified miner Xstrata, the company now ranks as one of the world’s largest commodity producers in its own right. Core exposures are in the production of thermal coal, coking coal, copper, zinc, nickel and ferroalloys. – Warrior Trading News
