In a note on Wednesday, the investment bank said the blue-chip miner is “on the cusp of delivering a balance sheet turnaround” which could see it report a net cash balance for the first time in the next 18 to 24 months from net debt of US$30bn previously.
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“While the company cut its dividend last year, we see a potential for the company to ramp up its cash returns significantly in the next 2-3 years with share buybacks being a likely route given the stock has lagged its peers in the last three years”, the bank said.
Citi added that potential buybacks could reach as much as US$16bn, equal to one-quarter of the firm’s current market cap, and retained their ‘buy’ rating on the stock.
Glencore shares jumped 2.8% to 304.5p in late-morning trading.