Glencore plans listing of gold unit

Glencore plans to list its main gold business next year in a move that people close to the largest commodities trader expect will value the operation at least $5bn.

As the Swiss-based trader itself takes steps towards becoming a public company, Glencore said it also planned “a partial spin-off or initial public offer of Kazzinc’s gold unit during the course of 2011”.

Glencore owns 50.7 per cent of Kazzinc, which also mines zinc, lead and copper. The company was formed in 1997 through the merger of Kazakhstan’s three principal base metals miners.The business owns Kazakhstan’s largest gold mine, with production expected to reach 700,000 ounces in 2011.

With bullion trading near an all-time high of $1,264 an ounce, miners are seeking to extract value from their bullion operations by listing them.

Barrick, the world’s largest gold miner, this year listed part of its African business, which now has a market capitalisation of $3.6bn. Other gold miners with a similar production level to Kazzinc’s gold unit are valued at up to $8bn.

Glencore on Thursday reported that its first-half net income had surged 42 per cent from the same period in 2009 on the back stronger economic growth and higher commodities prices. Excluding exceptional items, net income rose to $1.53bn, up from $1.09bn.

The results came slightly below expectations as second-quarter net income fell to $677m, down from $886m between January and March.

The drop in quarterly income is the first since the last quarter of 2008.

“Interim profits from Glencore are strong, but the second-quarter performance is a little disappointing,” said Miriam Hehir, at RBC Capital Markets in London.

The company blamed lower base metals prices in May and June, and one-off events, such as strikes and production problems. But it said that since then base metals prices had improved and output was normal.

Glencore, led by South African Ivan Glasenberg, is undergoing a radical transformation, breaking with nearly four decades of private ownership.

The company issued $2.2bn in convertible bonds to strategic investors in the US, Singapore and China in December.

The company is mulling its next steep: either an IPO or a merger with Swiss-based miner Xstrata, in which it owns a 34.4 per cent stake.

As of December, 485 employees owned Glencore shares, with “key management” – 65 executives – controlling 57.5 per cent of them.

They are def.freeing uo some money here.

Inca.