Glencore cuts 2015 capex budget, plans to offload Lonmin stake

11th Feb 2015 07:02

Commodities trader and mining giant Glencore has scaled back its planned capital expenditure (capex) budget for 2015 by as much as 18% and announced plans to sell off its 23.9% stake in South African platinum miner Lonmin.The group said that in a response to the "volatile market backdrop", it has reviewed its planned level of sustaining and expansionary capex in 2015."Originally guided to $7.9bn at our investor day on 10 December 2014, we now expect 2015 total industrial capex to be in the $6.5 to $6.8bn range, with reduced spend from across the broad portfolio," Glencore said.In a separate statement, the company said it is looking to divest its "non-core" interest in Lonmin which was inherited through its merger with Xstrata in 2013.The sale would be implemented by way of a distribution in specie, as a straightforward market disposal of the stake at this time "would not be in the best interest of its shareholders", Glencore said."The distribution in specie will enable shareholders to manage the investment for their own account," the company explained.Shareholders will need to vote on the deal at Glencore's annual general meeting on 7 May.Chief executive Ivan Glasenberg said: "Glencore's investment philosophy is to hold investments in production assets in the commodities in which we trade and so we have always regarded the stake in Lonmin as non-core. As we do not trade platinum and have no special insight into the market, we believe that it is better to leave to our shareholders the decision as to how to manage the Lonmin shares."In other news, Glencore also announced that production of copper, nickel, ferrochrome, coal and oil increased in 2014, while zinc output was flat.