Glasenberg clobbered by Glencore fall as he suffers one of the biggest ever paper losses

Published: 16:57 EST, 29 January 2015 | Updated: 17:12 EST, 29 January 2015

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Commodities billionaire Ivan Glasenberg is nursing one of the biggest ever personal paper losses following Glencore shares hitting an all-time low this month.

The value of his stake in the mining-to trading behemoth has halved and he is facing a personal paper loss of more than £3billion after the prices of commodities – including copper and iron ore – have tumbled.

Glasenberg, which led the float of the sprawling Swiss-based commodity trader in 2011, is the second largest investor in the £32.8billion giant with an 8.4 per cent stake, after Qatar’s sovereign wealth fund which owns 9 per cent, and the largest individual investor.

Huge losses: Ivan Glasenberg, Glencore's second biggest investor, has suffered losses of more than £3billion

His holding was valued at more than £6billion when the company floated at 530p a share in 2011 and is now worth around £2.8billion.

Like other mining stocks, Glencore has been hammered by the tumbling price of iron ore which is close to a six-year low while the price of copper – in which Glencore has a high exposure - reached a five-year low.

Glencore, which merged with miner Xstrata in 2012 in a mega-deal that catapulted Glasenberg into the limelight, has underperformed rival diversified miners Rio Tinto and BHP Billiton but has also been savaged by the unpopularity of the sector as a whole – mining stocks have underperformed the FTSE All-Share by more than 80 per cent in the past five years. Glencore’s shares are now around 52 per cent below the float price, having hit an all-time low earlier this month.

South African-born Glasenberg, known for his competitiveness and appetite for doing deals, might have helped grow Glencore to become a major force in commodities trading, but the company’s investment calls in mining could be questioned.

It was forced to write down $7.7billion (£5.12billion) on Xstrata in the same year it completed the purchase in 2013. It sold the Las Bambas Peruvian copper project – as part of the agreement of merging with Xstrata – last year for $7billion (£4.6billion) but its shares have failed to recover and it embarked on a $1billion (£660million) share buy-back programme of which it has since completed around $800million (£529million).

But the appetite for deals has not gone away.

Appetite for destruction: Glencore's recent track record on mining deals has been called into question

Last year Glencore approached Rio Tinto to create the world’s largest mining group. The talks are off for now but experts reckon it is only a matter of time. The buy-back programme, which has so far failed to prop up its share price, will make paying dividends for the company less expensive as the buy backs reduce the number of shares in issue that receive the dividend.

Glasenberg has received around £380million in dividends since the company floated and Glencore says it has returned to investors more than it raised at the float and is the only firm in the sector to have made these returns.

Glasenberg has the third-lowest salary for a FTSE 100 chief executive and he doesn’t take a bonus and he insists he will not sell his shares while he is involved with the company and is locked in until May 2016.

Some directors will be able to sell this May – after a four-year lock-in agreement designed to ensure its 485 key people did not cut and run when it floated.

Around 4.5 per cent of the shares will be released from the lock-in period but currently 34 per cent of the stock is owned by management and employees.

Glasenberg, who has been chief executive of Glencore since 2002 and joined the firm in 1984, isn’t the only high-profile investor who has been faced with mounting paper losses.

Warren Buffett, known as the Sage of Omaha for his wise investments, has suffered paper losses on investments from Tesco to IBM while Joe Lewis lost a packet on his investment in failed bank Bear Stearns.