NORWAY’S $1Tr oil fund is to sell its shares in Anglo American and Glencore owing to the companies’ exposure to thermal coal – a development the Financial Times said could presage similar divestments by other investors.
The fund owned 1.2% of Glencore and 2.4% of Anglo American as well as 0.5% of Brazil’s Vale. It normally divests of its entire shares when it decides to exclude a company, but on this occasion it had taken account of the disruption visited on world markets by the COVID-19 pandemic, said the Financial Times.
The fund imposed new criteria that stopped it from investing in companies that extract more than 20 million tons (Mt) of thermal coal or use more than 10,000MW of power from coal. South African petrochemical company, Sasol, was also excluded on this basis.
The fund also placed BHP on an observation list for possible sale later over its use of coal, but it had not excluded it because the Australian miner was seeking a buyer for its stake in Cerrejón, a coal mining complex in Colombia.
Anglo said on May 7 that it planned to exit its South African coal business in three years by spinning off the assets. “We believe that the long term prospects of our thermal coal operations in South Africa may be best served under different ownership,” Anglo said in response to shareholder questions during its digital annual general meeting.
Anglo said that its coal unit could be listed on the Johannesburg Stock Exchange within the next two to three years, but it was also considering other options, such as a trade sale. Anglo produced 17.8Mt of coal from South Africa in its 2019 financial year all of which was exported.
In 2018, Anglo completed the sale of its South African domestic thermal coal assets, which supplied at the time about 25Mt a year, to Seriti Resources, an unlisted investment company.
