A BHP truck at one of its Australian mines
(Picture: BHP)Surging prices for iron, coal and oil have led to booming profits at Glencore and BHP.
The two commodity companies today announced over $10 billion in returns to investors as the restarting of the world’s economy leads to huge demand for raw materials and power.
London-listed commodity group Glencore announced a $4 billion payout to investors after returning to profit last year. The return will be split between a $3.4 billion dividend and a $550 million buyback, adding to the flurry of buybacks already announced this year on the London market.
Glencore made $5 billion in 2021 thanks to “multi-year or record high prices for many of our commodities,” CEO Gary Nagle said. Income from its energy division, which handles coal and oil, grew by a staggering 439% to $5.6 billion amid soaring prices worldwide. Oil recently hit a seven-year high and the price of coal reached an all-time in October.
The performance compared to a $1.9 billion loss in 2020, when lockdowns around the world crushed demand for fuel and building materials.
Glencore owns over 150 mines and oil wells around the world. As well as producing commodities, it also trades them.
Shares in the company initially jumped to the top of the FTSE 100 but faded to trade up around 1.8%.
In the same update, Glencore warned that a resolution to ongoing bribery probes spanning the UK, US and Brazil would likely cost $1.5 billion. The UK’s Serious Fraud Office opened an investigation in 2019.
Elsewhere, Australian miner BHP today declared a record half-year dividend worth $7.6 billion. It came as the company, which until last month was dual listed in London, announced a 50% jump in profits to $14.8 billion in the six months to 31 December.
CEO Mike Henry said: “Our record interim dividend was supported by our reliable operating performance and continued strong markets for a number of our products.”
Danni Hewson at AJ Bell said: “Mining heavyweights Glencore and BHP don’t seem too worried about inflation. Soaring commodity prices are helping them to rack up big profits and dole out rewards to shareholders like an indulgent grandparent handing out sweets to a favourite grandchild.”
