MIDAS SHARE TIPS: Looking to unearth a copper-bottomed investment? Try the 'Millionaire Factory' Glencore

By JAMIE NIMMO FOR THE FINANCIAL MAIL ON SUNDAY

Updated: 05:26 EDT, 19 November 2018

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It was dubbed the 'Millionaire Factory' when it floated on the stock exchange in 2011 for making hundreds of commodities traders wealthy beyond their wildest dreams.

But Glencore, the FTSE 100 mining and trading giant which deals in everything from metals to grain and wheat, has struggled to deliver the same riches for shareholders.

The Switzerland-based firm, run by chief executive Ivan Glasenberg, has never lived up to the hype surrounding its stock market listing – at the time London's biggest ever – that turned the mercurial South African into a billionaire overnight.

Liquid asset: Copper is mining and trading giant Glencore’s biggest earner

Glencore might not be a household name, but the copper, coal, zinc, cobalt, and nickel it digs out of the ground and sells around the world feeds us, keeps us warm, and is used in the electronic devices we are glued to. And its shares could be about to power up, too.

It floated at £5.30 back in 2011, and a year later made the huge takeover of Xstrata, the mining firm run by Sir Mick Davis, the chief executive and co-treasurer of the Conservative Party.

However, the shares collapsed to well below £1 in 2015 when China, the world's fastest growing superpower which was hoovering up metals to fuel its splurge on skyscrapers and roads, showed signs of slowing growth.

The dramatic fall in metals prices, particularly copper, Glencore's biggest earner, hit the company hard. The company was forced to go cap in hand to shareholders to raise £6.7 billion to ease the burden of its huge debts.

Reassured by its healthier balance sheet and rising metals prices, the shares have recovered to £2.97½, but that is still nearly half the float price. That said, the company is one of Britain's biggest dividend payers so the share price is not everything.

With a dividend yield of over 5 per cent, comfortably covered by its profits, it is a staple of pension funds across the country. That payout is also a nice little earner for Glasenberg, who has pocketed around £180 million this year in dividends.

Mining giant: Glencore is not a household name, but the copper, coal, zinc, cobalt and nickel it digs up feeds us, keeps us warm, and is used in electronic devices we are glued to

Now, Glasenberg appears to be eyeing the exit after more than 30 years at the firm. He has reportedly been telling shareholders he will step down in three to five years' time.

He'll be 62 in January and it's a relentless job flying around to world to visit the company's mines, meet trading partners and court shareholders – albeit in a corporate jet.

The word in the City is that Glasenberg wants to get the share price back up to where it was in 2011 before heading off into the sunset. If he succeeds, that would be a more than decent return for shareholders from here – a near-80 per cent rise, in fact.

The other rumour in the Square Mile is that Glasenberg is fed up with the company's share price performance and would like to take Glencore private.

A quarter of the company is already owned by Glasenberg and other senior managers and the Qataris. If he did take that route, he would be forced to offer investors more than the market price for the shares.

One thing that might hold back the share price is the spectre of an investigation by the US Department of Justice into bribery and corruption allegations.

Analysts at investment firm Jefferies say the probe into its activities in the Democratic Republic of Congo, Nigeria and Venezuela could take as long as five years. It could lead to hefty fines.

MIDAS VERDICT: Glencore was in a hole three years ago, but Glasenberg has listened to shareholders by cutting its enormous debt pile and whipping the company into shape. The shadow of a US investigation could hinder the shares, but with Brexit uncertainty hitting UK-focused stocks, it’s a good time to buy shares in a company with no exposure to the UK economy. The canny Glasenberg might have his critics, but don’t bet against him turning things around. With metals prices slowly recovering, the shares are worth a buy.

Traded on: Main market Ticker: GLEN Contact: 020 7629 3800