Mining and trading company Glencore today acknowledged the severity of the global commodity market slump as it suspended dividends.

The London-listed company also said it would sell assets and new shares to cut heavy debts built up through years of rapid expansion. 

Glencore has been under pressure to cut the debt, which stood at $29.6 billion net at the end of June as prices for its key products, copper and coal, sank to more than six-year lows. 

Facing a global rout in commodity prices, Glencore had said only last month that its cashflow was "comfortable" to service its debt, return cash to shareholders and support growth. 

The market did not share this view, especially after Swiss-based Glencore lowered its earnings forecast for its trading division, an unusual step given the company's reputation for winning most of its bets on market trends. 

Its shares tumbled last week, leaving them down almost 60% this year and putting pressure on the team around CEO Ivan Glasenberg.

Glencore said today it would cut debt by a third to $20 billion by the end of 2016. It will sell assets and raise $2.5 billion in a new share issue. 

Some analysts had said the sharp fall in Glencore's shares was partly driven by erosion of market confidence after poor calls by management on commodities and trading profits - though others said it has been a difficult time for their rivals too. 

Formerly just a commodities trader, Glencore merged with mining company Xstrata in 2013 and the trading business was seen as a plus in diversifying earnings of the combined company as its success was not so closely tied to commodity prices. 

But as it grappled with the severe market downturn, cash generated from Glencore's operating activities before working capital changes fell to $4 billion in the first half of 2015 from $5.6 billion a year earlier.

It managed to generate more money from squeezing working capital and cut capital spending. 

Glencore has already disposed of some non-core mining assets it inherited through its Xstrata takeover and has trimmed capital spending plans for this year and 2016. 

But analysts had expected more cost savings for the firm to protect its credit ratings. 

Glencore also said it would not pay a final dividend for 2015, which would save about $1.6 billion, while around $800m would be saved from the suspension of the 2016 interim dividend. 

The company said it expected to raise about $2 billion from the sale of assets - including minority stakes in its agriculture business - and to save some $500m to $1 billion from further cuts in capital spending by the end of 2016.

It expects to reduce working capital by an additional $1.5 billion by the end of next June.

Glencore will also suspend some African copper production operations at its Katanga Mining unit in Democratic Republic of Congo and Mopani Copper Mines in Zambia for 18 months, removing 400,000 tonnes of cathode product from the market. 

Last month Glencore reported a slump in first-half earnings and said tough market conditions were hurting the business, even though it had previously said the trading division would meet earnings targets whatever happened to commodity prices. 

The company said today it was sticking to its forecast for the trading division to make an operating profit (EBIT) this year of $2.5 billion to $2.6 billion "and remain confident of our long-term guidance range of $2.7 billion to $3.7 billion."