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e-News - Mines and Minerals - March 2014
Published: 2014-03-09

'Expensive' managers exit Glencore amid cost savings

The Daily Telegraph
Wed Mar 5 2014
Page: 4
Section: Business
Byline: James Quinn

GLENCORE'S Ivan Glasenberg admitted that all but a handful of the senior managers whose pay demands almost derailed its merger with Xstrata have left the commodities giant in the year since he took over his FTSE rival.

Mr Glasenberg, chief executive of the merged Glencore Xstrata, made the comments as he underlined the importance of the cost savings found since the integration.

The commodities veteran said some $2.4bn (£1.4bn) of savings had now been identified, up $400m on the last guidance given late last year. The increase underlines the potential upside to Glencore of the deal, which finally completed in May 2013.

The initial "merger", launched in January 2012, was thrown off course after shareholders took umbrage at the need for 70 key Xstrata staff to be given pay deals worth a combined £140m as part of the deal.

The merger had to be reworked, as a takeover, which saw Mr Glasenberg seize control of the company and an early exit for Xstrata chief Mick Davis.

Unveiling results for the 12 months to December showing a net loss of $7.4bn - largely stemming from a $7.5bn writedown on the value of Xstrata's assets - Mr Glasenberg admitted that very few of Xstrata's upper tier of management remained.

Asked how many of the 70 were still with the company, Mr Glasenberg replied: "Not many. The mine managers, they were the Xstrata people we always wanted, and we've kept most of them," he said.

Glencore attempted to play down the strength of the Xstrata write-down, blaming it on the broader negative sentiment to the mining industry "and the heightened risks associated with greenfield and large-scale expansion projects". And he hinted that there could yet be further synergies to come from the Xstrata tie-up, saying: "That's a figure we will continue to work on."

Mr Glasenberg, who owns 8.3pc of the company's shares, said that the current problems in commodity pricing had never been about demand. "Demand has been there all the time. The miners went and oversupplied the market by building all these new sites."

He said that with greenfield expansion "in check" among his larger rivals, he hoped that by the end of the second quarter, the market should begin to tighten.

On the impact of the situation in Ukraine on the commodity markets, Mr Glasenberg said that it was too early to assess the likely outcome. "It's taken us by surprise," he admitted. "Ukraine is a large exporter of commodities but not ones we're involved in... It could create aberrations in the market, we don't know."

Glencore owns some soft commodities in Ukraine, and is in the process of assessing the potential of a near-$1bn deal to take an equity stake in Russneft, the Russian oil company. Mr Glasenberg said that a deal to convert $900m of debt owed by Russneft to Glencore was under consideration, but emphasised: "It's all about what is best for value."

On an adjusted basis, Glencore made earnings before interest, tax, depreciation and amortisation (Ebitda) of $13.1bn, above analysts' expectations of $12.3bn. Performance came from its trading arm - which sells and trades commodities to third parties - with adjusted Ebitda in that division up 17pc to $2.6bn.

Copper remained the group's strongest commodity in performance terms, thanks to lower costs and higher volumes.

Mr Glasenberg said that the board is in the final stages of finding a chairman - to replace Sir John Bond, who departed in the wake of the Xstrata takeover. A shortlist of four candidates is to be circulated to investors, with the aim of having a new chairman by its annual meeting on May 20.

Mr Glasenberg has been searching for a new chairman for several months, but is only prepared to bring in a heavyweight candidate with experience of running a major mining concern or oil company. He would not confirm whether acting chairman Tony Hayward is on the shortlist.

Similarly, he said the hunt for a female director - Glencore is one of only two FTSE 100 companies not to have a woman on its board - was progressing.

Glencore will pay a final dividend of 11.1 cents a share on May 30.

Edition: 01
Length: 689 words
Idnumber: 201403050045

More jobs coming to the Sifto Salt mine ; HURON COUNTY

Stratford Beacon-Herald
Sat Mar 1 2014
Page: A4
Section: News
Byline: PAUL CLUFF FOR THE BEACON HERALD

The Sifto Salt mine in Goderich plans to bump its staff by 43 this spring.

Additional workers are needed to help the mine produce more rock salt to help customers replenish depleted stocks and build stronger stock piles in the coming years, said Tara hart, communications manager for compass minerals.

Hart said the majority of the new positions will be general labour. However, there will be a need for skilled-trades employees.

The positions are permanent and full time, she said.

"This is a first step toward its long-term plan to strengthen its production and presence in Goderich."

Goderich Mayor deb Shewfelt met with staff at the mine on Friday.

"This is a good news story for the Town of Goderich and will be a much-needed boost for the community," he said.

The harbour expansion starting this summer will allow the facility to accommodate more salt storage, help increase employment at the mine and bring spin-off jobs as well, Shewfelt added.

The Goderich mine is the largest salt mine in the world, employing about 500. Salt is shipped to hundreds of communities along the Great lakes and St. Lawrence Seaway. Manufacturers for plastics and detergents, amongst other products, also use it.

Edition: Final
Length: 198 words
Idnumber: 201403010013

In 'no hurry' for deal: Vale ; GLENCORE TALKS

The Sudbury Star
Wed Feb 26 2014
Page: A3
Section: News
Byline: STAR STAFF

It appears Vale and Glencore Xstrata are in no hurry to strike a deal to combine operations in the Sudbury basin, according to Bloomberg News.

"We are studying and we are talking but we are not in a hurry," Peter Poppinga, Vale's head for base metals, told the news agency last week.

Vale, the world's second largest produce of refined nickel, and Glencore, the world's third-largest, began talks in 2013 on jointly operating mines, mills and smelters in the Sudbury area.

Vale chief executive officer Murilo Ferreira told reporters Dec. 18 his Rio de Janeiro-based company expected to make a decision on a possible combination in the first quarter.

However, Poppinga said a deal may not come that soon. He told Bloomberg he didn't expect an agreement "early this year," and declined to comment further on the talks.

Glencore declined to comment on the state of talks with Vale in an e-mail statement to Bloomberg.

Poppinga make the comments after the opening ceremony Friday for Vale's $759 million Totten nickel and copper project in Sudbury, calling it the first new mine in the region in more than 40 years.

The deal is important in Sudbury, as Vale is the city's largest employer and Glencore Xstrata among the city's top 10. Between them, the companies employ more than 5,000 people.

Edition: Final
Length: 213 words
Idnumber: 201402260009

Cash is key as miners battle slump; Credit rating agencies warn that companies are at risk of downgrades in face of low commodity prices

The Globe and Mail
Thu Feb 20 2014
Page: B3
Section: Report on Business: Canadian
Byline: Rachelle Younglai

MINING REPORTER

Canadian mining companies must still find ways to conserve cash to deal with lower commodity prices or risk downgrades from credit rating agencies.

Despite efforts to improve their balance sheets last year, Toronto-based Kinross Gold Corp. and Iamgold Corp. have been warned they need to do more.

Moody's Investors Service revised its outlook on Kinross to negative from stable, saying the company's political risks and financial leverage could increase while its gold output declines.

And Standard & Poor's Ratings Services changed its outlook on Iamgold to negative from stable, citing concerns with the miner's profitability.

Although a negative outlook does not automatically lead to a downgrade, it signals that a company must put its business on a sounder footing.

In this lower commodity price environment, a downgrade would be deeply damaging and raise borrowing expenses at a time when miners are looking for further cost reductions.

Kinross' "business profile is weakening," said Darren Kirk, senior credit officer with Moody's.

The miner, whose debt is ranked the lowest investment grade rating, spent last year reworking operations and slashing costs.

The company defended its ranking and said its outlook remained unchanged at the other big rating agencies.

"Our balance sheet is one of the strongest among our peers," Kinross said.

Iamgold is in a more precarious position with its credit already in so- called junk, or non-investment grade, status.

The miner on Wednesday reported $772.8-million in impairment charges on its operations in Suriname, Quebec and West Africa mostly because of lower gold price assumptions.

Iamgold also spent last year reducing expenses and has been adamant that it would not have to raise funds or draw on its credit facilities.

S&P said lower gold prices could erode Iamgold's financial flexibility.

Iamgold said S&P lowered their gold price assumption and said when the rating agency calculated its gross debt it did not take into account its cash or bullion, which stood at $380-million at the end of last year.

This comes as the country's senior gold companies, Barrick Gold Corp., Kinross and Goldcorp Inc. along with smaller producers Agnico Eagle Mines Ltd. and Yamana Gold Inc. collectively wrote down more than $17-billion in assets last year. Many have reduced their dividends amid the downturn in gold prices.

Don Marleau, analyst with Standard & Poor's, said the industry's renewed focus on returns, margins and free cash is supportive of credit.

But he said: "That is really in a situation where balance sheets, in some cases, are already stretched."

"It's very much a reaction to a lower than expected gold price at this point. So it's positive under the circumstances, but it's really just them fighting off what has been a negative trend," he said.

Although the price of gold is enjoying a rebound so far this year, in 2013 it lost nearly 30 per cent of its value and is currently trading around $1,330 (U.S.) an ounce.

Moody's is evaluating all gold companies using an $1,100 gold price assumption. The rating agency is currently evaluating Barrick's debt, which is ranked at the second lowest investment grade rating.

Over the past few days, Yamana as well as nickel and energy producer Sherritt International Corp. cut their dividends and recorded impairment charges.

Sherritt, which has operations in Cuba and Madagascar, is embroiled in a proxy battle with one of its major shareholders. Its stock fell 9 per cent on Wednesday after announcing a loss.

Length: 565 words
Idnumber: 201402200063

Iamgold reports US$840.3M Q4 net loss; revenue plummets to US$247.2M; Iamgold reports US$840.3M net loss in Q4

Canadian Press
Wed Feb 19 2014
Section: Business

TORONTO - Iamgold Corp. (TX:IMG) has become the latest gold producer to report a big net loss and, like the others, primarily as a result of a big writedown on assets in the wake of lower gold prices.

The Toronto-based miner with operations in Africa and the Americas says its net loss attributable to equity holders was US$840.3 million or $2.23 per share in the three months ended Dec. 31.

That compared with a fourth-quarter net profit of US$84.6 million or 22 cents per share in the same 2012 period as the company took a US$772.8- million after-tax impairment charge on goodwill and mining assets.

Total attributable proven and probable gold reserves were reduced 10.1 million ounces at the end of 2013, compared with 11.3 million ounces at the end of 2012.

The company also cited a higher cost of sales, a higher share of net losses from joint ventures, impairment of investments and lower gains on the sale of marketable securities for the loss.

Those were partially offset by lower income taxes and lower exploration expenses.

Revenue in the period plummeted 38 per cent to US$247.2 million from $398.6 million, due mainly to lower gold sales volume and a lower average realized gold price.

For the full year, the net loss attributable to equity holders was US$832.5 million or $2.21 per share compared with net earnings of $334.7 million or 89 cents per share in 2012.

Revenue fell to $1.147 billion from $1.453 billion.

President and CEO Steve Letwin said the company realized in early 2013 that the gold environment was deteriorating and took several "critically important" steps to lessen the effect on its business and - excluding writedowns - remained profitable.

Among other things, the company announced an immediate end to its dividend in December.

Ex-items, Iamgold showed a profit of US$19.7 million or five cents per share for the quarter, with adjusted earnings of $137.3 million or 36 cents per share for the year.

That compared with adjusted earnings of US$89.9 million or 24 cents per share in the same 2012 quarter and $$315.6 million or 84 cents for 2012 as a whole.

Length: 334 words
Idnumber: 201402191108

Le patron de Glencore Xstrata va empocher 182 M USD en dividendes (presse)

Agence France Presse (English)
Wed Mar 5 2014, 5:41am ET
Section: Economy, Business & Finance
Dateline: ZURICH

Le patron de Glencore Xstrata, Ivan Glasenberg, va empocher 182 millions de dollars (132 millions d'euros) en dividendes alors que le géant suisse des matières premières a accusé en 2013 des milliards de pertes, souligne mercredi le Tages-Anzeiger.

"Alors que la société de matières premières et minière a comptabilisé une perte de 7,4 milliards de dollars pour l'exercice écoulé, (M. Glasenberg) va pouvoir se réjouir d'un dividende plantureux", écrit le quotidien suisse alémanique.

Mardi, le groupe a annoncé que le conseil d'administration allait proposer un dividende final de 11,1 cents par action, ce qui porte le coupon à 16,5 cents pour l'ensemble de l'année, soit une augmentation de 4,8% par rapport à l'année précédente.

Le groupe a expliqué cette augmentation de la part des bénéfices redistribués aux actionnaires par sa confiance à long terme dans ses perspectives: il attend une croissance de sa production, la baisse de ses dépenses d'investissement et des économies de coûts issues de la fusion l'an passé avec le groupe minier Xstrata.

Selon le magazine Forbes, Ivan Glasenberg est à la tête d'une fortune estimée à 6,3 milliards de dollars, sa participation dans le groupe se montant à 8,3%.

"Pour lui cela veut dire qu'il va probablement recevoir un paiement de 182 millions de dollars. Et cela libre d'impôt", relève le Tages-Anzeiger.

Les rémunérations des grands patrons ont suscité une vive polémique en Suisse, en particulier en 2013 lors du vote sur les rémunérations abusives visant à limiter les bonus et les parachutes dorés.

A l'époque, Ivan Glasenberg avait fait valoir qu'il ne touchait pas de bonus et que sa rémunération était, selon lui, alignée avec celles de ses actionnaires puisqu'il est rétribué essentiellement par le biais de dividendes.

Lors de la présentation de ses comptes, le groupe n'a pas exclu de verser un dividende exceptionnel selon le prix qu'il obtiendra pour la cession de sa mine de cuivre de Las Bambas.

La cession de cette mine au Pérou était une des conditions posées par les autorités chinoises pour donner leur feu vert à la fusion.

Length: 335 words
Idnumber: 201403050134

Le syndicat de l'usine d'Arvida tente de gagner du temps ; Cuves précuites

Le Journal de Québec
Thu Feb 27 2014
Page: S2
Section: Nouvelles
Byline: AGENCE QMI

AGENCE QMI -- Le Syndicat national des employés de l'aluminium d'Arvida (SNEAA) ne demande rien de moins que le prolongement du permis d'utilisation des cuves précuites jusqu'à l'aboutissement de l'usine AP-60, de Rio Tinto Alcan.

Son président Alain Gagnon tente de sauver les 900 emplois rattachés à l'usine. Le permis d'utilisation arrivera à échéance le 31 décembre 2016.

Contexte économique défavorable de l'aluminium oblige, le SNEAA a besoin de temps. Du temps pour traverser la crise et pour compléter la transition entre les cuves précuites et la technologie AP-60 sans perte d'emplois. Dans le meilleur des cas, il y aurait une période durant laquelle les travailleurs se retrouveraient sans emploi, selon M. Gagnon.

Le président du SNEAA espère convaincre le ministère de l'Environnement d'accorder une extension de permis pour l'usine au moins jusqu'en avril 2018. Malgré la technologie désuète et polluante des cuves, le président jouera une carte importante: dans les 18 derniers mois, ses collègues ont réussi à réduire de plus de moitié la quantité de poussière polluante émise dans la production d'aluminium.

DÉCISION DE QUÉBEC

Au sujet de la décision de Québec d'abaisser son tarif L d'électricité pour permettre à Alcoa de traverser la crise, Alain Gagnon applaudit l'idée. Il croit que le gouvernement devrait réserver le même traitement à Rio Tinto Alcan, propriétaire de l'usine d'Arvida, mais en imposant d'importantes garanties.

D'ici là, il espère que les phases II et III de l'usine AP-60 arriveront plus tôt que tard, même si aucun investissement n'est prévu avant janvier 2015.

Edition: Saguenay-Lac-Saint-Jean
Length: 245 words
Idnumber: 201402270088

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