JOHANNESBURG (miningweekly.com) – Diversified mining and marketing company Glencore sees itself as being best placed for the electric vehicle revolution through its ‘tier 1’ copper, cobalt, nickel, zinc and thermal coal assets.
The company said in an investor day update on Tuesday that sustainably low-cost and long-life first tier industrial assets are supported by its cash-generative marketing division across the cycle.
The London- and Johannesburg-listed company, headed by CEO Ivan Glasenberg, is guiding illustrative earnings before interest, taxes, depreciation and amortisation (Ebitda) of a substantial $16.2-billion at spot and forward prices, compared with this year’s guided Ebit of $2.8-billion.
Defining growth as being growth in cash flows, Glencore declared itself as being “always able and willing” to grow its business by reactivating idled capacity when appropriate, pursuing capital efficient brownfield options, seeking bolt-on acquisitions in existing commodities and geographies, and upholding its strong track record of investment.
The net debt of $10-billion to $16-billion positions the company conservatively as does the maintenance of a net debt to Ebitda ratio of less than two times.
Glasenberg’s view is that Glencore provides diversified exposure to the most attractive commodities produced by the company’s long-life and low-cost assets.
Under his leadership, the company’s focus will remain on creating value through capital efficient growth within a conservative balance sheet structure.
“Partnerships to grow the business will remain a key element of our approach,” said Glasenberg, who looks to the future, confident in Glencore’s ability to continue to create superior returns for shareholders.
In copper, demand is described as being robust and critical to electric vehicle adoption, while supply is constrained by underinvestment, grade declines and elevated strike risk.
Electric vehicle batteries, super alloys and consumer electronics are increasing demand for cobalt, with supply limited by geological scarcity and cobalt invariably being mined as a by-product of copper and nickel.
Increased galvanising rates in emerging markets are lifting demand for zinc, with underinvestment and environmental restrictions limiting supply.
Battery and energy storage dynamics are increasing demand for lead, with supply again held back by underinvestment and environmental restrictions.
Electric vehicle batteries, critical alloys and austenitic stainless steel are boosting demand for nickel, with supply again constrained by declining nickel sulphide deposits, the long lead time for the supply of additional nickel and scarce quality nickel.
Meanwhile, thermal coal continues to power Asian growth and urbanisation, while underinvestment and the declining energy content of coal is constraining supply.