Glencore becomes top shareholder in Australia's Atlas Iron via debt-to-equity deal

lunes 9 de mayo de 2016 03:42 GYT

SYDNEY May 9 (Reuters) - Glencore has emerged as the top shareholder of embattled Australian iron ore miner Atlas Iron after a debt-to-equity transaction, giving the global mining and trading company its only direct exposure to production of the steelmaking ingredient.

Glencore has acted as an intermediary in buying and selling iron ore for third parties since 2008 but has mostly avoided, either by design or circumstances, the production side of the sector, which is dominated by Vale, Rio Tinto and BHP Billiton.

Glencore subsidiary Maru Sky earlier this year acquired a portion of Atlas debt as the small Australian miner negotiated with creditors to fend off collapse brought on by weak iron ore prices.

Atlas told the Australian Securities Exchange that Maru Sky had converted its debt ownership for 8.47 percent in equity, making it the single biggest shareholder. The next biggest is Commonwealth Bank of Australia with 6.36 percent.

Glencore in a statement emailed to Reuters said it did not produce any iron ore on its own, but holds rights to sell a portion of Atlas production under a supply contract.

Atlas in late April agreed to a financial restructuring that transferred 70 percent of lower-grade iron ore a year to its creditors in exchange for a 48-percent reduction in debt.

The closest Glencore has come to mining its own iron ore has been through its subsidiary Sphere Minerals, which was aiming to develop a mine in Mauritania yielding 7.5 million tonnes per year - about half the projected output of Atlas. But construction work was suspended indefinitely last year due to low ore prices.

Glencore also owns 50 percent of the undeveloped Zanaga iron ore prospect in the Republic of Congo.

Iron ore prices zoomed to nearly $200 a tonne in 2011, but have since fallen to as low as $37. The price stood at $57.70 on Monday .IO62-CNI=SI.   Continuación...