Glencore to quit platinum mining
12 February 2015
Glencore has decided to quit platinum mining after finding it lacked the managerial edge to deal dealing in the precious metal.
The commodities giant's business model is based on the knowledge it gained with its involvement in all aspects of the mining industry extraction of metals and minerals from the earth to shipping, storage and trading.
Its platinum exposure came only from its 23.9 per cent stake in the South African Lonmin, which came to it as part of its 2013 takeover of Xstrata.
Ivan Glasenberg, the group's chief executive, said yesterday that as it did not trade platinum and had no special insight into the market, the company believed that it was better to leave to it to shareholders to decide as to how to manage the Lonmin shares.
Under the deal, shareholders would get Glencore's Lonmin shares in the first half of the year.
Glasenberg and his fellow top team had to retain their stakes in Lonmin for now.
With their control of a fifth of Glencore, they controlled a fifth of the Lonmin holding, which protected the platinum group from some of the inevitable share price fall yesterday. The shares though still tumbled 5 per cent.
Financial Times reported that Glencore would be quitting the South African platinum producer if Glencore's shareholders approved a plan for dividing up the group's 24-per cent Lonmin stake among themslves, which each investor could decide to hold or sell.
According to the report, in addition to the general difficulties of low commodity prices, there were particular problems with platinum. It was difficult to mechanise the old and narrow mines where the thin platinum veins are found, which made cost cutting difficult and puts a premium on good labour relations.