Glencore digs deep to cut debt by $5bn

Up debt creek without a paddle, the commodities giant is throwing assets and production overboard, but will it be enough?

by Adam Gale

Glencore chief executive Ivan Glasenberg clearly doesn’t want to be accused of doing too little, too late in response to the commodities crash. In September, he announced a series of drastic measures to cut net debt by a staggering $10.2bn (£6.6bn) by the end of 2016. Today, he revealed Glencore will be half way there - by the end of December.

The firm’s new net debt target for the end of the year is a trifling $25bn, down from the $29.6bn on its books in June. It’s already raised $2.5bn through an equity issue and is on track to save another $2.4bn by suspending the full year and interim dividends.

Glencore has added to that with the first of two ‘streaming’ agreements, a selling future precious metal output in exchange for a lump sum. It’s a smart idea for a debt ridden firm with too much capacity. The deal it announced today with Canadian firm Silver Wheaton (guess which precious metal it’s after) will bring in a cool $900m.

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