Glencore should keep its coal mines, says shareholder

A "stop" sign stands covered with coal dust at the Richard's Bay coal terminal, in Richard's Bay, South Africa. Photographer: Nadine Hutton/Bloomberg via Getty Images

ONE of Glencore’s investors have asked the miner to retain its coal mines rather than spin them out as they were “world class assets”, according to a report by Bloomberg News.

Tribeca Investment Partners said in a letter to Glencore seen by Bloomberg that the mines should be retained even after buying Teck Resources’ coal mining unit.

Glencore unveiled its proposed $6.93bn takeover of Teck’s Elk Valley Resources in November in which it would take time to absorb the unit before spinning it out on the New York Stock Exchange in a company containing its own coal mines if shareholders approve.

The deal is intended to comply with growing investor tastes after a number of Glencore’s rivals sold their coal mines lowering their carbon footprint.

In the letter Tribeca Investment Partners said: “We firmly oppose such divestiture and call on the board to retain these world class assets. Not only does retention align with the company’s long-held commitment to industry leading policy, but also strategically supports its earnings profile and the delivery of value to shareholders”.

Blooomberg said that in response Glencore referred to comments made by CEO Gary Nagle last month. “When we announced the transaction, we said our intention was to spin out, and that is our intention,” Nagle told investors when reporting earnings in February.

“But it’s always subject to what our shareholders want, and we will consult with our shareholders, and it’s the decision of the shareholders ultimately to do that.”

Tribeca also said Glencore should move its primary listing from London to Australia, focus more on dividends rather than buybacks, and consider selling a stake in its trading business.