MARKET REPORT: Glencore suffers another setback in battle to take control of Canadian rival Teck Resources as mining stocks tumble into the red
Glencore suffered another setback in its battle to take control of Canadian coal and metals rival Teck Resources as mining stocks tumbled into the red.
As the takeover row rumbles on, Norway’s sovereign wealth fund said it would back Teck’s plan to spin off its metallurgical coal business and focus on copper and zinc.
By voting in favour of Teck’s proposed spin-off at a meeting next week, the Norwegian fund is effectively rejecting Glencore’s attempt to buy the group.
The Norwegian fund has a near 1.5 per cent stake in Teck and is one of the world’s largest investors.
Its intervention came after Glencore this week ramped up pressure on Teck by revealing it is willing to improve its second offer of £18billion.
Setback: By voting in favour of Teck’s proposed spin-off, the Norwegian fund is effectively rejecting Glencore’s attempt to buy the group
Glencore said it would have no qualms about bypassing Teck’s board and taking the increased bid straight to shareholders if it feels necessary.
Norway’s support for Teck came as Glencore – seemingly no closer to a breakthrough – reported a fall in first-quarter production across most of its mined metals, including copper and silver.
Glencore shares slid 2.2 per cent, 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 per ton.
And as a result, Rio Tinto, a major iron ore supplier, shed 5.7 per cent, or 311p, to 5131p. Rio wasn’t helped by whispers that China, which accounts for 70 per cent of the world’s iron imports, is likely to cut demand in the second half of 2023 as the government adopts a more conservative approach.
Copper miners Anglo American (down 6 per cent, or 161.5p, to 2552.5p) and Antofagasta (down 2.8 per cent, or 44p, to 1530p) suffered as Chile, the world’s largest producer of copper, looks to introduce sweeping tax reforms on the big players.
Fresnillo, predominately a gold miner, fell 3.2 per cent, or 25p, to 761p. Gold slipped below $2000 per ounce as investors anticipate another interest rate hike from the US Federal Reserve in May.
Across the broader market, the FTSE 100 edged up 0.2 per cent, or 11.52 points, to 7914.13. The FTSE 250 fared slightly better, adding 0.7 per cent, or 134.14 points, to 19270.01.
Dowlais, which listed in London on Thursday following its demerger from Melrose (down 2.2 per cent, or 9.1p, to 404.35p), bounced back after a positive note from Investec with shares gaining 4.3 per cent, or 5.02p, to 122.2p.
Analysts at the investment firm recommended clients buy the Dowlais stock and set a target price of 200p.
Investec said the firm has a ‘strong business model’ with ‘structural growth drivers’ that make it ‘a winner in the auto EV transition’. While Dowlais joined London in a rare listing for the City, the Alternative Investment Market (AIM) waved goodbye to one its constituents as Guernsey-based software company iEnergizer decided to pull shares.
The stock nosedived 78.06 per cent, or 242p, to 68p after an announcement that emphasised continuing its listing on AIM is ‘unlikely to provide the company with significantly wider access to capital’.
Shares in electronics company DiscoverIE surged 4.5 per cent, or 35p, to 821p after a bullish note from brokerage Liberum. The group’s target price was hiked to 965p from 950p after it said in a trading update that full-year results will be ahead of expectations.
Bicycle and motor specialists Halfords raced ahead as shares gained 6.1 per cent, or 11.9p, to 207.2p. Investors welcomed news it will be pushing ahead with its strategy to evolve into a garage and repair-focused business which has aided a 40 per cent increase in revenue since 2018.
