By Lehlohonolo Lehana.
Diversified mining and marketing company Glencore expects to be able to announce the decision of the board regarding the potential demerger of its coal and carbon steel materials business on the 7th of August – Wednesday.
Ahead of the announcement, Glencore released its half yearly production numbers. According to the results, Glencore’s coal production declined 7% compared to last year. Meanwhile Cobalt declined 27% and Ferrochrome 16%. Details can be found here.
“We expect to be able to announce the outcome of such engagement and the decision of the Board regarding the potential demerger alongside our interim results,” Glencore CEO Gary Nagle stated in its half-year production release.
Here are some of the main concerns from the IEEFA’s brief note:
– Although Glencore states it is committed to responsibly reducing its coal production and Scope 3 emissions, it will no longer have control over these factors if it proceeds with plans to spin off its coal business.
– Previous divestments of coal assets by diversified miners have put control in the hands of pure-play coal miners that have optimistically bullish outlooks with plans to increase production.
– Glencore’s spin-off plan arrives in the context of rising investor concerns about the responsibility of coal divestments and growing pressure on Scope 3 emissions.
– Although Glencore likes to highlight the brighter outlook for metallurgical coal, the spin-off would be predominantly a thermal coal miner.
Glencore also released its climate action plans at its AGM in May this year. ACCR noted several discrepancies that point towards a backslide on Glencore’s climate commitments. Some of the key points are listed below.
– Glencore’s 2024-26 CATP continues a trend of failing to provide transparency and higher quality disclosures on its forward thermal coal production volumes and emissions. This inhibits the ability of investors to better understand their financial exposure to transition risk.
– In response to Glencore’s lack of disclosure, ACCR has independently modelled the company’s forward coal production, including the acquisition of Teck’s EVR metallurgical coal mines. It finds Glencore’s coal production is estimated to increase by about 3% from 2023 to 2030, contrary to the latest science.
– Glencore attempts to portray itself as Paris-aligned by relying on an inflated baseline year which is not representative of its business, creating an impression of emissions already having dropped by 22% since 2019.
– From an inflated 2019 baseline year, Glencore reported a ~20% reduction in emissions by 2020. This allows Glencore’s coal emissions to stay broadly flat through the 2020s while meeting its 15% reduction by 2026 target. Glencore’s coal emissions significantly deviate from the NZE pathway for coal emissions.
Reactions on Glencore’s coal demerger announcement:
Juan Pablo Gutierrez, ONIC/Yukpa, Colombian social leader / Yukpa international delegate.
“Glencore’s investors only seek to maximise their profits, wanting to keep all coal assets under one roof. However, for the indigenous communities affected by Glencore’s coal mines, such as the Yukpa and Wayúu, the real solution is for Glencore to close its mines and immediately assume its social and environmental responsibilities. Transferring the assets to another company is not a solution, but a way to evade its responsibilities. Glencore and its investors have enriched themselves by exploiting the lands of indigenous peoples, so I expect Glencore’s investors to demand that the company act fairly and meet its obligations in a serious and effective manner.”
Professor. Aviva Chomsky, Professor of history and the Coordinator of Latin American, Latino and Caribbean Studies at Salem State University in Massachusetts.
“Speaking as part of the international community that has accompanied communities and workers impacted by the Cerrejón mine for decades, we insist that Glencore retain its coal assets.
Glencore has not taken responsibility for the grave injustices done to the people and natural places of La Guajira, Colombia. Over the last four decades, the Cerrejón coal mine has displaced thousands of Indigenous, Afro-Colombian, and Wayuu people. For example, our friends in the Afro-Colombian community of Tabaco have waited 23 years for justice since their violent expropriation in 2001, the same year Glencore became a shareholding company.
Cerrejón, now solely owned by Glencore, has damaged the streams, rivers, and underground water reserves, leaving this region more vulnerable to droughts and the resulting food insecurity. Many mineworkers retire early from injury and illness. So far, Cerrejón has not presented a closing plan for the mine that accounts for these harms or makes reparations to workers and communities. Glencore must take responsibility for these damages and present a mine closing plan that repairs the decades of harm done to the people and natural places of La Guajira. We insist that Glencore maintain its coal assets so that it can finally make amends to the thousands of people impacted by its operations in Colombia.”
Simon Wiebe, Wildsight’s Mining Policy and Impacts Researcher. [Wildsight is a Canadian conservation organisation that recently released an assessment on financial liability of Teck Resources’ Elk Valley coal mines acquired by Glencore].
“We need an owner who is committed to the decades it will take to turn the environmental disaster around. Having a revolving door of ownership as Glencore proposes is bad for the environment and bad for the people and communities of the Elk Valley. The continuous stream of pollution coming out of these mines has been building for decades, and will require an owner that is committed to both bearing the true cost of remediating this international water quality issue as well as providing stability for Elk Valley residents.”
Sebastian Rötters, Energy and coal campaigns.
“A decision against a coal demerger is a good decision. Glencore should keep its coal mines and wind them down in line with the IEA Net Zero scenario, providing just transition for coal workers and affected communities. This includes of course no more coal mine expansions and no new mines.”