Jesse Riseborough London

GLENCORE’S billionaire chief executive, Ivan Glasenberg, has underscored his belief in the longevity of the global commodities boom by beating his biggest rivals in handing out surplus cash to investors.

Glencore, the third-largest mining house by market value, announced a $1 billion (R11bn) share buy-back yesterday after first-half profit gained 8 percent on higher production.

Investors in BHP Billiton sent the stock down the most in more than three years in London on Tuesday after the biggest mining company chose to retain cash because of weaker commodity prices.

Global mining investors have been demanding greater returns following a period marked by failed acquisitions and spending on mine expansions that flooded metals markets. After a decade of price gains fuelled by Chinese demand, often defined as the commodities supercycle, mining companies are contending with slower growth by spurning mergers and cutting costs.

“The supercycle ain’t over, China is still buying, demand for commodities hasn’t tapered off, it’s even higher than it’s ever been,” Glasenberg said yesterday. “The demand is pretty good. We’ll grow. We may do acquisitions where you’re not creating more supply in the market.”

The stock gained as much as 1.7 percent in London yesterday. It is up 18 percent this year for a market value to £48bn.

Glencore, about 25 percent owned by management, reported an 11 percent rise in its dividend to 6 US cents a share. Glasenberg reaped a $173 million dividend for 2012 and a $182m payout for last year.

Adjusted net income rose to $2.01bn in the first half from a restated $1.9bn a year earlier, Switzerland-based Glencore said yesterday in a statement. That compares with the $1.93bn average estimate of seven analysts surveyed.

“The mining companies should start generating cash and using the cash to give back to shareholders,” Glasenberg said. “We really think like shareholders because we are shareholders.” – Bloomberg