Glencore, one of the world’s leading miners, has become the first mining company to scrap its dividend amid the Covid-19 pandemic. The company’s fear over the current global economic situation and low first half earnings has compelled it to take such a step.
Ivan Glasenberg chief executive told the media, “The board has concluded that it would be inappropriate to make a distribution to shareholders in 2020, instead prioritising the acceleration of net debt reduction to within our target range.”
It is reported that the net debt of Glencore rose to12 percent in the first six months of the year to $19.7 billion. The company faced a debt worth $3.2 billion due to the pandemic. In the first quarter, Glencores’ trading unit made an operation profit worth $2 billion but ended up incurred a net loss of $2.6 billion due to debt.
In the first quarter of the year, the Switzerland –headquartered company mined 588,100 tonnes of copper, 11 percent less than during the same period of 2019. The company expects a downswing in the global mine supply due to the pandemic. Furthermore, new mining projects are also expected to be delayed.
According to the company, a rebound in demand, led by Chinese factories is likely continue, supported by significant economic stimulus measures being undertaken globally.
The mining industry is facing a grim situation amid the pandemic and companies like Glencore are hoping for a good economic revival. Therefore, global economies such as India, the US and China must support the mining industry.