Glencore Profit Jumps on Trading Boom and Record Copper

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(Bloomberg) — Glencore Plc reported a steep jump in profits after a surge in the price of its most important commodities and its trading unit had one of its best ever periods as the Iran war sent energy prices soaring.

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Commodity-trading houses are reaping windfall profits as the conflict in the Middle East creates dislocations across energy markets. That’s also been a boon for coal, one of Glencore’s biggest earners, while copper hit a record in the period after being buoyed by everything from the artificial-intelligence boom to trade tariffs. 

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The company reported first-half core earnings of $10.1 billion, 86% higher than the previous year. Glencore said it’s returning an additional $1.5 billion to shareholders, including a top up distribution of $1 billion and a $500 million buyback. 

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The company also said it would apply for a secondary listing in Australia.

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“We’ve had a big push from investors to list in Australia,” said Chief Executive Officer Gary Nagle. “It’s a deep pool of capital with a deep knowledge of the industry.”

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The results — and decision to pursue an Australian listing — come six months after talks between Rio Tinto Group and Glencore failed, ending for now a deal that would have created the world’s biggest miner. The negotiations collapsed after the two sides could not find common ground on how big a premium Rio should pay.

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Glencore has been looking for new ways to attract more liquidity and raise its share price. Last year, it weighed a possible US listing, before ditching the plan. 

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Rivals Rio Tinto and Anglo American Plc have already posted strong results based on higher metal prices. Yet Glencore’s trading business and exposure to coal have given the company an additional windfall.

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The Iran war upended global energy markets when it effectively closed the vital Strait of Hormuz at the end of February, shutting vast quantities of crude and products inside the Persian Gulf. Attacks on smelters in the region have also rocked the aluminum market.

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Buyers had to stump up for replacement barrels from elsewhere, particularly the US, creating a raft of opportunities for traders to cash in. The squeeze on petroleum products has also been exacerbated in recent months by waves of Ukrainian attacks on fuel plants in Russia, driving refining margins to records.

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That saw Glencore post first-half trading profits of $3.3 billion. Earnings from coal jumped 35% to $2.4 billion.

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Glencore’s results come as the company tries to sell parts of its sprawling portfolio. The company is currently in talks to sell a stake in its African copper business to the US backed Orion Resource Partners, while it’s also held talks about selling its stake in Kazzinc Ltd. in Kazakhstan.

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