GLENCORE boss Gary Nagle laid into companies that sold their coal assets in an effort to comply with environmental, sustainability and governance standards, saying this did not benefit global decarbonisation.
Defending the group’s strategy of running down its coal production, Nagle said during media questions at its capital markets presentation today that his shareholders did not want the group to follow the example of Anglo American or South32.
In July, Anglo American demerged its South African thermal coal export assets listing it as Thungela Resources on the Johannesburg Stock Exchange. Several weeks earlier, South32 completed the sale of its 94% stake in South African Energy Coal, a domestic and export coal business in South Africa. It was sold to Seriti Resources.
“Investors looking at Thungela Resources say they think that is the wrong approach,” said Nagle. “The overwhelming feedback [from Glencore shareholders] is that wasn’t the correct one. … The first thing that came out of the [Thungela Resources’] CEO’s mouth was that they wanted to grow the company,” said Nagle.
Of Seriti, Nagle said: “It’s a private company so we don’t know what their plans are. But speaking to management, they want to grow. Mike Teke [CEO of Seriti Resources] is a great guy and a good operator, but he wants to make money.”
Glencore recently fell under criticism by a shareholder for deciding to retain coal. According to a report by Bloomberg News, activist investor Bluebell Capital Markets said in a letter to the miner that its strategy of retaining and running down thermal coal production made Glencore “… not an investible company for investors who place sustainability at the heart of their investment process”.
“We believe our business model is robust and the right one,” said Nagle in response. “The run-down [of coal] strategy is the responsible strategy for our business and the world,” said Nagle. “We put it to our shareholders at the AGM and got a 94% approval.”
Glencore said it would produce 15% less coal by 2026 and have halved production by 2035. “That’s written in stone,” said Nagle.
Regarding the outlook for the 2022 financial year, Glencore forecast earnings before interest, tax, depreciation and amortisation (EBITDA) of $21.7bn. Of this estimated amount, $6.3bn was earned from its coal assets, mostly in the second half of the financial year. While thermal coal was the second largest contributor to EBITDA, the largest contribution was from copper which generated $7.9bn.