MARKET REPORT: Glencore suffers another setback in battle for control of Canadian rival Teck Resources as mining stocks plunge into the red
Glencore suffered another setback in its battle to take control of Canadian coal and metals rival Teck Resources as mining stocks plunged into the red.
As the takeover spat continues, Norway’s sovereign wealth fund said it would support Teck’s plan to spin off its metallurgical coal business and focus on copper and zinc.
By voting in favor of Teck’s proposed spin-off at a meeting next week, the Norwegian fund is effectively rejecting Glencore’s bid to buy the group.
The Norwegian fund has a stake of almost 1.5 percent in Teck and is one of the world’s largest investors.
The move came after Glencore turned up the pressure on Teck this week by revealing it is willing to improve on its £18bn second bid. Glencore said it would have no qualms about bypassing Teck’s board and taking the increased offer directly to shareholders if deemed necessary.
Setback: By voting in favor of Teck’s proposed spin-off, the Norwegian fund is effectively rejecting Glencore’s attempt to buy the group
Norway’s backing for Teck came as Glencore — seemingly no closer to a breakthrough — reported first-quarter production declines for most of its mined metals, including copper and silver.
Glencore shares fell 2.2 percent, or 11p, to 490.9p.
Glencore’s blue-chip London competitors also endured a tough session amid low commodity prices and global political decisions. Iron ore is hovering close to four-month lows at $120 a ton.
And as a result, Rio Tinto, a major supplier of iron ore, lost 5.7 percent, or 311 pence, to 5131 pence. Rio was not helped by rumors that China, which accounts for 70 percent of the world’s iron imports, is likely to cut demand in the second half of 2023 as the government takes a more conservative approach.
Copper miners Anglo American (6 percent, or 161.5 pence, to 2552.5 pence) and Antofagasta (2.8 percent, or 44 pence, to 1530 pence) struggled as Chile, the world’s largest producer of copper, experienced major tax reform seems to be taking effect on the big players.
Fresnillo, primarily a prospector, fell 3.2 percent, or 25 pence, to 761 pence. Gold fell below $2,000 an ounce as investors expect another rate hike from the US Federal Reserve in May.
Across the broader market, the FTSE 100 rose 0.2 percent, or 11.52 points, to 7914.13. The FTSE 250 fared slightly better, adding 0.7 percent or 134.14 points to 19270.01.
Dowlais, which listed in London on Thursday after its split from Melrose (2.2 percent, or 9.1 pence, to 404.35 pence), bounced back on a positive note from Investec with shares up 4.3 percent, or 5.02 pence. pence won to 122.2 pence.
Analysts from the investment firm advised clients to buy the Dowlais shares and set a target price of 200 pence.
Investec said the company has a “strong business model” with “structural growth engines” that make it “a winner in the automotive EV transition.” As Dowlais joined London in a rare listing for the City, the Alternative Investment Market (AIM) waved goodbye to one of its constituents when Guernsey-based software company iEnergizer decided to withdraw shares.
Shares fell 78.06 percent, or 242 pence, to 68 pence following an announcement highlighting that continuing to list on AIM “is unlikely to give the company significantly wider access to capital.”
Shares in electronics company DiscoverIE rose 4.5 percent, or 35 pence, to 821 pence after a bullish note from brokerage Liberum. The group’s price target was raised from 950 pence to 965 pence after it said in a trading update that full-year results will be above expectations.
Bicycle and motorcycle specialist Halfords raced ahead as shares rose 6.1 percent, or 11.9p, to 207.2p. Investors welcomed the news that it will continue its strategy of evolving into a garage and repair company that has contributed to a 40 percent increase in sales since 2018.