Tony Hayward's interim chairman role at Glencore could become permanent

Former BP boss revealed as surprise candidate for chairman as company announces $7.7bn writedown

Tony Hayward, the former boss of BP best remembered for being forced to resign from the oil group over his handling of the Gulf of Mexico disaster, has been revealed as a surprise candidate for the next permanent chairman of mining-cum-trading group GlencoreXstrata.

Hayward is currently interim chairman of the group formed in May's $44bn (£28bn) takeover of miner Xstrata by commodity trader Glencore, but had been thought to be merely holding the role temporarily as the combined group searched for a permanent replacement.

However, as GlencoreXstrata announced its first results as a combined company – which included an expected writedown of the value of Xstrata's mines by $7.7bn – chief executive Ivan Glasenberg surprised mining observers by saying that Hayward is being considered for the role. "Of course he's a candidate," Glasenberg said. "We'll have to see for the future."

Privately, Glasenberg's advisers later attempted to distance the company from the boss's comments. If Hayward did become chairman it would shock the City for a number of reasons. He is still widely associated with the string of gaffes that forced him out of BP, when his words and actions following the company's Deepwater Horizon oil spill were widely criticised. Second, he is serving as chief executive of the oil group Genel.

An appointment of Hayward could also serve as a reminder of how Glencore got embroiled in an embarrassing PR mess when allowing Hayward's predecessor at BP, Lord Browne, to be announced by broadcasters as its first public chairman when it floated in 2011. In fact, Glencore had chosen Simon Murray.

The continuing search for someone who can lead the board of GlencoreXstrata, which the stock market now values at £39bn, was one of the issues that emerged as the company said it now valued Xstrata's assets at $7bn less than it had acquired them for. Glencore paid in shares, rather than cash, when it completed its drawn-out takeover of Xstrata in May. The Glencore share price that day implied the $44bn price tag, although the shares have since lost 14% owing to a fall in commodity prices as the Chinese economy has slowed, and closed Tuesday down 4.8p at 297.15p.

Tony Hayward is still widely associated with the string of gaffes that forced him out of BP.Financial director Steven Kalmin said: "We just had to value the [Xstrata] business with a blank sheet of paper. There are clearly areas where we have taken a fairly conservative approach to value in the current environment, including the greenfield, early-stage projects in which Xstrata had committed spending."

Glencore did not explain the drop in value of the Xstrata side of the business in detail, although much of it is believed to relate to early-stage projects and greenfield operations, mines that Xstrata was building from scratch and which have long been unpopular with Glasenberg. They include a $5bn nickel operation, Koniambo in New Caledonia.

The company said that total revenues in the first half of 2013 fell 2% to $121.4bn, while the firm recorded an $8.9bn loss due to the writedowns.

Glasenberg signalled a new age of austerity for the company by stating that it was focusing on "the disciplined allocation of capital". However, the group added that its progress on integrating Xstrata into the enlarged business had "exceeded its expectations", and cost savings would be "materially in excess" of the previous guidance of $500m a year.

Glencore's takeover of Xstrata was one of the most drawn out in recent City memory. The deal had long been an ambition of Glasenberg's and was announced in February 2012, but a string of rows over the price – followed by Qatar's sovereign wealth fund taking a sizeable stake in Xstrata and then threatening to block the deal – forced the chief executive into increasing his bid by almost 9%.

Tuesday's write-down in Glencore's value is seen as the latest knock to its shareholders – of which Glasenberg is still the largest – and comes after the company floated at 530p.

Article Source : http://www.guardian.co.uk

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