Glencore Moves to Slash $10Bn in Debt, DRC & Zambia Shocked

Economy
10/09/2015 17:00

Mining and commodities giant Glencore, which recently became the face of struggling commodity companies hit by a major sell-off in raw materials, unveiled a $10 billion package of debt-reduction measures. This includes plans to suspend production at its copper mines in the Democratic Republic of Congo and Zambia in a move that it says will take 400,000 tonnes out of the market and potentially provide a boost to metals prices. While investors reacted positively to the news, sending the company’s shares up about 12%, it is a shock to DRC and Zambia, as Glencore's decision to suspend production at units in the two countries will halt about a quarter of the their copper output and confront their governments with the potential of job losses a year before elections - potentially dealing a "major blow" to the Kabila government, said one analyst.

Concerning Zambia, Oliver Saasa, chief executive officer of Premier Consult Ltd., said that Glencore's move “is a shocker,” and that “It may just be the beginning” as other mining companies consider following suit following a slump in commodities prices. Zambia relies on copper for 70% of its foreign exchange earnings and 25-30% of government revenue, while DRC's mining industry is more diversified.