Glencore buys stake in Atlas Iron

Glencore buys stake in Atlas Iron

Glencore (LON:GLEN) is now the top shareholder of Australia’s junior miner Atlas Iron (ASX:AGO) after acquiring 8.4 per cent of the company.

The deal announced yesterday is valued at around US$15.8 million, allowing Glencore direct exposure to production of iron ore.

The Swiss company has functioned as an intermediary in buying and selling iron ore for third parties since 2008. The firm has avoided the production side of sector, which is controlled by BHP Billiton (ASX:BHP), Rio Tinto (LON:RIO) and VALE (NYSE:VALE).

Glencore’s subsidiary Maru Sky has obtained a piece of Atlas Iron’s debt previously this year. Maru Sky informed the Australia Securities Exchange it had converted its debt for 8.4 per cent in equity.

The Commonwealth Bank of Australia is the next largest with 6.36 per cent.

Atlas Iron started postponing most of its projects last year due to the cost of extraction being higher than the global market price.

The miner aims to reduce its total loan debt from $267 mill to $135 million by April 2021.