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Glencore reflects incidental coal plans amid shifting investor sentiment on ESG
(MENAFN) In 2021, as enthusiasm for Environmental, Social, and Governance (ESG) investing peaked, Anglo American made a significant move by spinning off its South African thermal coal mines into a separate entity. This decision, championed by then-CEO Mark Cutifani, was framed as a responsible action in line with the growing trend toward green assets. However, in the years that followed, the energy market was dramatically impacted by the Russia-Ukraine crisis, leading to a surge in coal prices. Glencore, the world’s largest publicly listed coal producer, capitalized on this market shift, generating USD51 billion in core profits and returning a record USD17.4 billion to its shareholders.
As coal prices began to decline last year, Glencore initially committed to following Anglo American’s strategy by spinning off its coal operations and merging with a New York-listed coal producer and metals company as part of its bid to acquire Canada’s Teck Resources. Teck was similarly planning a spin-off. However, in a surprising turn, Glencore, a key member of the FTSE 100 index, has now reversed this decision. The company has abandoned its plans to separate coal production, marking the most significant strategic shift for the commodities giant in over a decade. This decision was influenced by a notable change in investor sentiment towards fossil fuels, which has evolved over the past year.
Glencore’s CEO, Gary Nagle, pointed out that investor attitudes towards ESG have softened in recent months, with a growing recognition of the ongoing need for fossil fuels during the transition to a low-carbon future. Nagle emphasized that while investors still value cash generation, there is a broader understanding that energy needs cannot be entirely met without fossil fuels in the near term. This reversal by Glencore underscores the complex challenges faced by mining companies and investors worldwide, as they grapple with the reality of balancing substantial returns from coal with the imperative to invest in clean-tech metals like copper and cobalt, which are critical to a sustainable future.
As coal prices began to decline last year, Glencore initially committed to following Anglo American’s strategy by spinning off its coal operations and merging with a New York-listed coal producer and metals company as part of its bid to acquire Canada’s Teck Resources. Teck was similarly planning a spin-off. However, in a surprising turn, Glencore, a key member of the FTSE 100 index, has now reversed this decision. The company has abandoned its plans to separate coal production, marking the most significant strategic shift for the commodities giant in over a decade. This decision was influenced by a notable change in investor sentiment towards fossil fuels, which has evolved over the past year.
Glencore’s CEO, Gary Nagle, pointed out that investor attitudes towards ESG have softened in recent months, with a growing recognition of the ongoing need for fossil fuels during the transition to a low-carbon future. Nagle emphasized that while investors still value cash generation, there is a broader understanding that energy needs cannot be entirely met without fossil fuels in the near term. This reversal by Glencore underscores the complex challenges faced by mining companies and investors worldwide, as they grapple with the reality of balancing substantial returns from coal with the imperative to invest in clean-tech metals like copper and cobalt, which are critical to a sustainable future.
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