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(Updates with CEO comments in fourth paragraph.)

Aug. 20 (Bloomberg) -- Glencore Plc, the global commodity trader and metals producer run by billionaire Ivan Glasenberg, will start a $1 billion share buyback after first-half profit gained 8 percent on higher production of copper, coal and oil.

Adjusted net income rose to $2.01 billion from a restated $1.9 billion a year earlier, Baar, Switzerland-based Glencore said today in a statement. That compares with the $1.93 billion average estimate of 7 analysts compiled by Bloomberg.

The world’s biggest mining investors have been demanding greater returns following a period marked by failed acquisitions and spending on mine expansions that flooded metals markets. After a decade of explosive price gains fueled by Chinese demand, often defined as the “commodities supercycle,” mining companies are contending with slower growth by spurning mergers and cutting costs.

“The supercycle ain’t over, China is still buying, demand for commodities hasn’t tapered off, it’s even higher than it’s ever been,” Glasenberg said today in an interview. “The demand is pretty good. We’ll grow. We may do acquisitions where you’re not creating more supply in the market.”

The stock gained as much as 1.7 percent to 365 pence in London today and traded at 361.9 at 8:09 a.m. London time.

Glencore, about 25 percent owned by management, reported a dividend of 6 cents a share. Glasenberg reaped a $173 million dividend for 2012 and a $182 million payout for last year.

Generating Cash

“The mining companies should start generating cash and using the cash to give back to shareholders,” Glasenberg said. “We really think like shareholders because we are shareholders.”

The announcement of a share buyback, to be completed by the end of March, is part of an ongoing program to purchase shares and comes after the completion of the sale of a copper mine in Peru this month.

“Although it is relatively small in the context of” it’s market value, the buyback “underlines the group’s confidence that it can keep improving cash flows even in the current, lower commodity price, environment,” Morgan Stanley analyst Menno Sanderse wrote in a report today.

Glencore completed the $29 billion takeover of Xstrata in May last year to add coal, copper, zinc and nickel mines to its trading empire. The transaction is expected to generate cost savings of as much as $2.4 billion this year, Glencore said in March.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director of Glencore.

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 Indranil Ghosh

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