Glencore has come under investor pressure to boost its shareholder returns; it is also under pressure from U.S. regulators who have raised alleged corruption and bribery charges against the company.
On Tuesday, mining and commodities trading giant Glencore stated, it would repurchase its shares worth up to $1 billion; the move sees the Anglo-Swiss MNC increasing the size of its existing buyback program and comes in the wake of a subpoena from U.S. authorities.
In July 2018, Glencore had said it would buyback shares worth up to $1 billion in a share buyback program scheduled to run till the end of 2018. It has now extended this to the end of February 2019.
Following a U.S. government investigation into alleged corruption and bribery which sent its stock plummeting, Glencore, which has a market capitalization of $61 billion, announced its plans to repurchase its shares.
Companies across the mining industry have been handing over cash to shareholders following a recovery from the mining and commodity crash of 2015-16. Mining companies are also increasing shareholder’s returns following investor pressure not to spend cash buying assets which may never deliver returns.
Case in point: last week, global miner Rio Tinto stated, it will return $3.2 billion to shareholders from its sale of Australian coal assets in addition to existing buyback programs.
Glencore’s share price had already been hit by concerns about political risk in Democratic Republic of Congo, where it mines just over a quarter of the global output of cobalt, because of a mining code that was signed into law in June.
After publishing first-half results just below analyst forecasts in August, the company, which has aggressively slashed its debt since 2015, said it would favor share buybacks over deal-making.
Many mining stocks have pared gains over the past few months as metals markets weakened in response to global trade tensions and uncertainty about Chinese demand.