Glencore SWOT & PESTLE Analysis

Strength

1. Global presence with production facilities in 50 countries: Glencore is one of the world’s largest natural resource companies. Active at every stage of the commodity supply chain, it is uniquely diversified by geography, product and activity, maximizing the value it create for its business and its diverse stakeholders. Glencore has its units scattered all over the globe with a strong presence in all of the major continents. It has around 150 assets which mine a variety of minerals including Nickel, Copper, Zinc, Iron and Oil. Other assets include warehousing facilities at a number of places as well port access and storage which enables it to transport its products easily from one place to another.

2. Profitable investments in Africa: Glencore has major investments and a strong footprint across the African continent. The company is deeply invested in countries such as South Africa, Zambia, Congo and Rwanda among others. These investments are delivering consistent returns and also helping the company’s bottom-line. Further in October 2017, Glencore announced to take over 75pc ownership of Chevron’s refineries in South Africa and Botswana for $973 million.

3. Strong and consistent operational performance: Glencore has consistently outperformed all its UK-listed major diversified mining peers with a strong performance in 2017. Its balance sheet is robust, helped by earnings contribution from the highly cash generative Marketing and Industrial businesses. The marketing business is less correlated to commodity prices and helps the company to balance its financials in times of weak commodity market.

4. High-quality, low-cost assets in desirable commodities: Glencore has a portfolio of high quality assets acquired at low prices. Glencore has a strong footprint in commodities such as zinc, copper, nickel and thermal coal and there is an expected increase in demand in the same with positive price divergence over the next few years.

Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Environmental issues such as water pollution from operations: Globally, the mining sector is one of the worst offenders of violating local environmental laws in the areas where they operate. Glencore is no exception in this regard and the company has been accused of contaminating the area around Tintaya Antapaccay mine in Peru. The residents of the area have complained to the United Nations on the Water contamination and health problems caused by copper mining done by Glencore.

2. Focusing on greater environmental awareness and sustainability: Sustainable growth and operations is a critical parameter for global organizations and Glencore is taking steps in this regard. Glencore has stated its objective is to sustainably grow total shareholder return while maintaining a strong investment grade rating and acting as a responsible operator. Through the integration of sustainability throughout its business practices, the company aims to embody Glencore’s five values that define its purpose, priorities and the fundamental principles by which it conducts business. Glencore’s working group is overseeing the ongoing integration of carbon emissions and energy into its annual business planning process and the mapping to 2020 of its forward projected energy and carbon footprint. The company is investing in a number of low carbon energy projects that address direct and indirect emissions from our operations. They include treatment of fugitive emissions from coal processing and ventilation air methane and the large-scale CCS coal energy demonstration project.