Glencore takes $790m hit in Africa as oil slumps

Falling oil prices have forced the commodities giant Glencore to take a $790m (£505m) writedown on the value of a Chad-focused exploration company it bought last year.

The Anglo-Swiss group snapped up Caracal Energy for around $1.6bn but said lower prices had hit its value.

“Following the sharp decline in oil prices in late 2014 and continuing into 2015, significant amendments were made to Chad’s work programme, with the objective of preserving value for the long term while reducing cash outlays in the near term,” Glencore said.

“This included changes to the fields’ capital expenditure and production profiles, and significantly reducing the number of drilling rigs in operation.”

Glencore said it had also capped its expenditure at $6bn – lower than previous forecasts of $6.5bn to $6.8bn – because of tough market conditions.

Commodity prices have tumbled as Chinese economic growth slows.

The news came as the World Gold Council revealed that second-quarter demand for the precious metal had fallen by 12 per cent to 915 metric tonnes due to lower demand from Indian and Chinese consumers. But the WGC added: “There are signs the recent drop in the gold price has sparked a revival in demand since the end of June.”

Glencore floated at 530p in 2011; its shares were down 3.4p at 176.8p.