Glencore credit rating cut to near-junk status

Rating agency Moody's on Friday said it cut its credit rating for Swiss mining giant Glencore to a notch above junk status as low commodities prices would continue to cut into earnings.

Glencore credit rating cut to near-junk status
Photo: AFP

Moody's Glencore rating went to Baa3 from its previous Baa2 notation.
“The pricing environment in mining will remain unfavourable in 2016-17, making a return to the previous level of earnings unlikely,” said Moody's Glencore lead analyst Elena Nadtotchi in a statement.
Weak metal prices had “significantly reduced the earnings capability” of Glencore's industrial division, she said.
Moody's, however, added that Glencore's ratings outlook was now stable, reflecting confidence that Glencore would adjust its balance sheet and avoid sinking to junk status.
Many institutional investors are barred from holding speculative bonds, also known as “junk” in their portfolios, which is why a downgrade to junk often leads to sharp selloffs in a company's bonds.
Glencore, the world's largest mining company, based in the canton of Zug, widened its debt-trimming plan this month with deep cuts in investment and more asset sales in an effort to cope with a dramatic commodities downturn.
Elsewhere in the sector, mining giant Anglo American has announced a reduction of its workforce by almost two-thirds and Rio Tinto, another major mining player, has announced slashing capital spending.

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At least 19 illegal miners killed at subsidiary of Swiss-based Glencore

At least 19 illegal miners were killed on Thursday after part of a copper mine collapsed in southeastern DR Congo, Swiss-based mining giant Glencore said.

At least 19 illegal miners killed at subsidiary of Swiss-based Glencore
Photo: AFP

The incident happened when two galleries caved in at a mine in the Kolwezi area operated by Kamoto Copper Company (KCC), a subsidiary of Glencore.

“Tragically there were 19 fatalities today, with possible further unconfirmed fatalities,” Glencore said in a statement, which said there had been recurrent problems with illicit mining on its concessions.

Other reports suggest the death toll could be higher. 

The Congolese site Actualite.CD reported at least 36 deaths.

“The illegal artisanal miners were working two galleries in benches overlooking the extraction area. Two of these galleries caved in,” the company said.

Glencore said KCC had observed a “growing presence” of illegal miners, with on average 2,000 people a day intruding on its operating sites.

“KCC urges all illegal miners to cease from putting their lives at risk by trespassing on a major industrial site,” Glencore said.

Illegal mining is common and frequently deadly in Democratic Republic of Congo, where safety is often poor and risk-taking high.

Figures indicating the scale of the problem are sketchy, given that many mines are illegal and remote.