Glencore defends coal mining strategy that is right for the world

Glencore’s new chief executive defended the company’s plan to cut coal mines but said he would be willing to shut down the business if it became a problem for the company’s largest shareholders.

Gary Nagle, who took the helm this summer, on Thursday said Glencore’s plan to close all of Glencore’s coal mines over the next 30 years is “a responsible strategy for both our business and for world”.

The comments come after Bluebell Capital Partners, a London-based activist fund, this week called on Glencore to divest its coal unit, saying plans to continue producing polluting fossil fuels for many years decade as “morally unacceptable and financially flawed”.

Speaking at the company’s annual strategy update, Nagle said the plan received 94% shareholder approval at the annual meeting. However, he added, “if they change their mind. . . and told us they have a different view and they think a coal split is the right way to go, then we need to look at it – it’s their capital that we’re using used in this business. “

Many large investors now think that fossil fuel asset turnover is the wrong thing to do because new owners can find ways to increase production and therefore carbon emissions.

Speaking at an industry conference in London this week, Evy Hambro, head of natural resources at fund manager BlackRock, said the responsible commissioning of fossil fuel assets is “completely reasonable” for some large companies.

Glencore’s largest shareholders are Qatar sovereign wealth fund, former executives Ivan Glasenberg and BlackRock. Along with former executives, they own more than 30% of the company’s shares.

“We don’t have any of our major investors asking for coal,” Nagle told journalists late on Thursday. “Actually, they did. . . that perhaps the spin-off is the wrong scenario. “

Nagle said only one major investor – Norway’s sovereign wealth fund – was unable to buy its shares because of the “binary threshold for coal”. “We don’t believe we are undervalued compared to our peers,” he added.

Based on current prices, Glencore expects its coal business to generate more than $6 billion in income next year as production is set to grow 14% to 121 million tonnes following a recent agreement to buy back his partners in a Colombian Coal Mine.

“Seeing them increase coal production. . . That’s not really an indication that someone is committed to fighting climate change, says Giuseppe Bivona, partner and co-founder of Bluebell. “If anything, it confirms the urgency to turn away from coal.”

Shares in Glencore, also a leading producer of industrial metals such as copper and zinc, fell 4% to 354p after the update as earnings guidance for 2022 fell short of consensus forecasts.

“Some investors may have been expecting a more positive message on earnings,” said Christopher LaFemina, analyst at Jefferies. Glencore is expected to generate adjusted earnings, interest, taxes, depreciation and amortization of $21.7 billion next year.

Addressing other Bluebell complaints, Nagle said Glencore has disposed of seven non-core properties this year, started the process of selling another 10 properties, and brought 15 properties under review, including nearly The company’s 50% stake in the Canadian agribusiness company Viterra.

Nagle said Glencore is working “very closely” with its partners in Viterra to “unlock” value. “There are several options for doing that.”

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