Our opinion on the current state of GLN

Glencore (GLN) describes itself as, "...one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities". The group's operations comprise around 150 mining and metallurgical sites, oil production assets and agricultural facilities. With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries." So, this is a massive, diversified mining house which markets its products all over the world and is involved in almost every mineable commodity that exists. This means that it is far less volatile and risky than other less diverse mining houses. Since the commodity cycle turned at the start of 2016, one of the greatest beneficiaries has been Glencore, particularly because of the fact that it owned the world's richest source of cobalt in the Democratic Republic of Congo (DRC). Cobalt is the metal used in the batteries which will be needed by the world's shift to electric motor vehicles. The problem is that the government in the DRC is in the process of declaring cobalt to be a "strategic mineral" - which means much higher tax. The company is in the process of aggressively buying back 2BN worth of its own shares. Glencore announced on 28th June 2021 that it had bought Anglo's 33% stake in Correjon colliery in Columbia for $294m. Glencore clearly benefited from the war in Ukraine and the increase in coal prices particularly. In an investor update on 6th December 2022 the company announced that it was planning to close 12 of its 26 coal mines in Australia, South Africa, and Columbia to reduce its carbon footprint. In its results for the six months to 30th June 2023 the company reported revenue down 20% and earnings per share (EPS) down 61%. The company said, "Against the backdrop of a normalisation of commodity market imbalances and volatility, primarily across the energy spectrum, our Marketing and Industrial segments posted a healthy earnings performance, delivering Group Adjusted EBITDA of $9.4 billion, cash generated by operating activities of $8.4 billion and Net income attributable to equity holders of $4.6 billion". The Business Day on 30th October 2023 said that Glencore had cut its guidance for nickel production in 2023 but retained its prediction of between $3,5bn to $4bn in trading profits from its trading division. Copper, zinc, coal and cobalt guidance remained unchanged. The share price went into a major bull trend in 2016 and for most of 2017, rising from 1750c to over 7000c. Since then it has made a convincing "descending double top", with the second top being slightly lower than the first. Technically, this is a bad sign. The fact that the share could not rise above its top at R70 was a major disappointment to the bulls. We recommended applying a long-term downward trendline starting from the second top in June 2018 and waiting for an upside break. That break occurred at 4719c on 3rd December 2020. Since then the share has risen to 9850c. We still see this share having further upside potential.