Glencore May Cut Oil and Coal Spending, HSBC Says
(Corrects to show $3 billion is estimate for spending on coal and oil expansions in headline and first paragraph.)
(Bloomberg) — Glencore Plc, the mining and commodities trading company headed by billionaire Ivan Glasenberg, may reduce planned spending of $3 billion on coal and oil projects after prices slumped, according to HSBC Holdings Plc analysts.
The largest publicly traded commodities supplier has estimated spending on oil projects for this year and next of $2 billion and $1 billion on coal expansions, HSBC analyst Ash Lazenby wrote today in a note. The company’s current estimate on expansions at all operations for the two years is $6 billion, he said.
Glencore is the world’s biggest exporter of power station coal with more than 35 mines in Australia, Colombia and South Africa. It owns oil assets in Chad, Cameroon and Equatorial Guinea. A spokesman for the Baar, Switzerland-based company declined to comment.
Oil is down more than 50 percent since June amid a supply glut, forcing producers to reassess new wells and expansion projects. Energy coal will have a “another tough year” in 2015, according to Macquarie Group Ltd., after the fuel slumped about 25 percent last year.
Prices for oil and coal prices have been falling amid a broader collapse in raw-material costs and concern slowing world growth will sap demand. The Bloomberg Commodity Index of 22 raw materials last year slid 18 percent, the fourth straight annual decline and the longest slump since at least 1991.
Glencore advanced 3.5 percent to 256.35 pence by 2:37 p.m. in London. It’s down 14 percent this year, giving it a market value of about $51 billion.
To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
