Subscribe & Follow

Advertise your job vacancies

Glencore shareholders pump brakes on coal spin off

7 Aug 2024

Glencore announced its decision to retain its coal and carbon steel materials business after extensive consultation with shareholders, who overwhelmingly supported the move. The decision reverses an earlier announcement made in November 2023, where Glencore had intended to demerge the business after acquiring a 77% interest in Canadian steelmaking coal producer Elk Valley Resources (EVR) from Teck Resources.

When Glencore bought Elk Valley Resources from Teck, it also inherited an environmental crisis.

“Following extensive consultation with our shareholders, whose views were very clear, and our own analysis, the board believes retention offers the lowest risk pathway to create value for Glencore shareholders today," explained Glencore chair Kalidas Madhavpeddi.

He also justified the about turn, saying that it would enhance the company's cash generating capacity, allowing it to fund growth opportunities in its transition metals portfolio and accelerate shareholder returns.

Climate Change Act: Improve reporting or face the consequences

29 Jul 2024

The company conducted a formal consultation process, finding that over 95% of shareholders who expressed a preference favoured retaining the coal and steel business.

The main reason cited was the potential to enhance Glencore's cash flow and fund its transition towards a more diversified portfolio.

Liability claim

Glencore's decision to retain its coal and steel business raises questions about the environmental liabilities associated with the mines.

The mines have caused severe selenium poisoning in the Elk Valley and the Kootenay watershed, affecting both Canada and the US.

Remediation costs for the mines are estimated to be CA$6.4bn, far exceeding the current financial guarantees provided by Teck and Glencore.

Some critics wonder if Glencore is trying to avoid paying for the cleanup by keeping the business, and whether British Columbia taxpayers will have to bear the burden in the future.

Climate action

The miner acknowledged the importance of responsible climate action.

The company affirmed its commitment to oversee the responsible decline of its thermal coal operations over time, aligning with its 2024-2026 Climate Action Transition Plan.

Glencore also committed to integrating EVR assets into its climate transition strategy, recognising the slower transition away from steelmaking coal compared to thermal coal.

While the decision has been made to retain the business for now, Glencore's board maintains the option to reconsider a demerger in the future if circumstances change.