Glencore Faces Investor Pressure Amidst Operational Struggles and Takeover Speculation
Glencore Plc, the Swiss-based multinational commodity trading and mining company, is facing mounting pressure from investors due to its underperformance in mining operations and repeated missed production targets. The company's shares have plummeted by 30% over the past three years, and it has not reported a net profit since the first half of 2023. Recent takeover inquiries from Norges Bank Investment Management and Qatar Investment Authority have further fueled speculation about Glencore's future.
Glencore's focus on investing in massive copper projects in Argentina has raised questions about its ability to grow copper production. The company's copper production is expected to drop for a fourth consecutive year, and it is considering shutting or selling struggling smelters. Glencore's rivals have also faced setbacks, but Glencore's copper mines are projected to produce roughly 40% less copper this year than they did in 2018 if they meet their targets.
Investors have grown frustrated with Glencore's operational performance across nearly every part of its business. The company's trading business, once considered its strength, has seen senior figures quit or defect to rivals. Its smelting business is also under pressure, with Glencore considering shutting or selling struggling smelters. Glencore's shares have lagged its closest peers due to a plunge in coal prices. The company has flirted with several potential moves to revive its share price, including mega deals, spin-offs, and relistings, but these efforts have not yet borne fruit.
Glencore's future depends on meeting its annual production forecasts and reassuring investors about its strategic plan. The company must address the concerns surrounding its operational performance and mine and smelter operations. With takeover inquiries on the table, Glencore must act swiftly to regain investor confidence and turn its fortunes around.
