Glencore Faces Hit From ‘Big Play’ on Coal

By SCOTT PATTERSON March 1, 2015 Days after Glencore PLC closed its 2013 purchase of Xstrata PLC in the largest mining deal ever, Chief Executive Ivan Glasenberg called it “a big play” on the commodity he arguably knew best: coal. “To really screw this up, the coal price has got to really tank,” he said in an interview. Since then, coal prices have fallen about 25%. Investors will get their first look on Tuesday at a full year of Glencore financial results since it acquired Xstrata and its ample reserves of coal. Perhaps more than any of the world’s largest mining companies, Glencore has put its money on coal, becoming one of biggest miners, shippers and traders of the substance, which is used for fuel and steelmaking. So far, the outlook for the Swiss company’s bet is mixed. “This year will be ugly [for coal], no question,” said Hans Daniels of Doyle Trading Consultants, a New York research group that specializes in coal. “The market is still oversupplied, and that really is the key.” Glencore’s market value has declined about 10% to $60 billion since its blockbuster deal, and it had to take a $7.5 billion write-down primarily tied to … continue reading

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