Iron ore price weakens as Australia flags return to sub-$100 prices
Futures dropped for a fourth day in Singapore, to trade about 3% lower for the week.
Management of diversified commodities giant Glencore Xstrata will meet next Tuesday in London to explain the benefits of the $46 billion Xstrata purchase to investors.
Since Glencore’s $7.7 billion impairment charge last month, investors have turned up the pressure on the company to lay out a clear strategy, one that returns more capital rather than dumping money into new projects.
Despite the $7.7 billion hit, CEO Ivan Glasenberg remained content with the acquisition: “Do I believe and hope that we will get it back? Yes, I do believe and that’s why we did the transaction.”
Glasenberg, who has chastised his industry counterparts for too aggressively expanding production, helping to push commodities prices lower, will be expected to present significant cost-saving plans.
Tim Huff at RBC Capital Markets expects an announcement of up to $1.2 billion in annual cost cutting.
Two of the most likely targets for slashing are the over-$5 billion Wandoan coal project in Australia and Las Bambas copper project in Peru. The sale of the latter could bring in $3 billion in cash, onto which Glencore investors would love to get their hands.
Mount Isa, Queensland: Glencore Xstrata territory.
Comments
Walt
Or else what?