Business

Glencore shares dive on money-laundering probe

Copper smelter Image copyright Getty Images

Shares in mining giant Glencore sunk as much as 12% after it was ordered by US authorities to hand over documents relating to a money laundering probe.

The subpoena from the US Department of Justice is in relation to compliance with the Foreign Corrupt Practices Act and money-laundering laws.

It is regarding business dealings in Nigeria, Democratic Republic of Congo and Venezuela from 2007 onwards.

Glencore confirmed it had received the subpoena, which it is now reviewing.

A subpoena is a court order which compels an organisation or person to produce physical evidence, or face punishment.

Follow Glencore's share price

"The market has reacted significantly," said investment bank Credit Suisse. "At this stage we would stress that this is a simple request for documents, rather than an announcement of a formal investigation.

"From our perspective, while it is clearly a risk factor, we stress that these types of requests are more common than perhaps the aggressive drop in the Glencore share price suggests."

Glencore mines and trades commodities and is one of the biggest firms in the industry.

In May, the company said it expected its full-year results to be between $2.2bn (£1.67bn) and $3.2bn after its first-quarter production had been in line with forecasts.

However, earlier this decade it, along with the rest of the mining industry, had a tough time.

In September 2015, its shares dived after a note from analysts at Investec said its equity value could be "eliminated", although Glencore responded that it was "operationally and financially robust".

When it listed on the London market in 2011, its shares were priced at 530p, but they are currently trading at 307p.

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