Glencore to take $7bn hit on Xstrata assets LONDON: Glencore Xstrata is expected to write down the value of assets inherited from Xstrata by as much as $7bn when it reports first-half earnings on Tuesday – the first full set of results since the takeover that created the mining giant in May. Glencore’s management, no strangers to Xstrata given the trader’s 34 per cent stake in the miner, have been reviewing Xstrata’s assets as owners over the past three months and they had been expected to book a hit alongside maiden results, according to Reuters. Analysts and an industry source said on Sunday the group writedown, mostly on the value of former Xstrata assets, would likely amount to $5bn to $7bn. Nickel assets – including Xstrata’s $5bn Koniambo operation in New Caledonia – are likely to take the brunt of the pain as nickel prices languish at less than a third of their 2007 highs and supply continues to exceed demand. But the value of other assets including copper projects, which accounted for a large slice of Xstrata’s pipeline of future mines and expansions, could also be cut back. The mining industry has been pummeled by billions of dollars in writedowns since the start of the year, paying the price for boom-year deals and big-ticket projects that soured as prices fell. Rio Tinto announced in January $14bn of impairments tied to underperforming Mozambican coal and Canadian aluminum operations – a cut that resulted in the abrupt exit of its chief executive.
Posted on: Mon, 19 Aug 2013 16:40:41 +0000
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