Mining giant Glencore increased its commitment to achieving net-zero emissions objectives while remaining firmly rooted in the coal industry, a move criticized by environmentalists as terrible news for the planet’s future.
Mining giant Glencore is one of the world’s biggest firms, featuring coal mines in its sprawling portfolio. Anglo American and BHP Group sold their holdings in one of Colombia’s largest coal mines, the Cerrejón, after deciding to reduce carbon emissions by exiting the coal business. It bought the mine outright in June. Despite its declared objective of attaining net-zero carbon emissions by 2050, Glencore plans to keep its coal industry for decades.
Investors overwhelmingly approved these plans at Glencore’s annual meeting in April, believing the company is best positioned to wind down these projects and that coal would be necessary for the near future to satisfy global energy needs. Glencore has said that it intends to mine less coal beginning in 2030 rather than selling that portion of its company when it comes to cutting emissions.
In a letter to Glencore CEO Gary Nagle sent earlier this week, activist investor Bluebell Capital Partners pleaded with the company to responsibly spin off its coal operations to attract new investors. Bluebell’s plea was denied by the company’s CEO this morning. “The responsible plan for both our company and the world,” Nagle said at a gathering for investors.
The CEO then cited Glencore’s general meeting vote earlier this year, in which 94% of shareholders voted in support of the climate policy. What’s the point?
The coal industry has seen a significant transformation in the last year.
The coal business was a no-go area for investors only a year ago. The coronavirus epidemic devastated electricity consumption and slowed down steel mills in several nations, causing the demand for thermal coal and metallurgical coal. Essential elements in the production of steel plummeted as well.
Years of environmental legislation and an increasing number of investors and banks refusing to fund coal mining had already crippled the global coal sector when the epidemic struck it.
However, coal prices have risen with the end of the epidemic lockdowns. Demand for steel and electricity has increased, but coal production has not kept pace. At least for the time being, this has made coal a commodity that is hard on the heels of an energy crisis.
They are aware of this. Glencore provided E&E News with an investor note from Barclays to respond to Bluebell’s letter, which poured cold water on the letter and said that the existing strategy was “already enhancing investability.”
The Nov. 30 letter claimed that “we see little value in unlocking the possibility for a coal spin-off in today’s market.”
The CEO of Glencore indicated that the company’s shareholders would decide if it made a change in direction.
However, environmentalists are concerned that the current advantageous market circumstances may discourage coal mining businesses from reducing their emissions as quickly as is necessary to make a difference to the climate.
According to Sunrise Project head of global climate strategy Justin Guay, the current high prices are “noise,” and investors are aware that the coal business may decline in the long run, he said in an interview.
But he conceded that a lower coal price “doesn’t make it any simpler” to persuade businesses to switch to other fuels. Some on Wall Street do not take climate change as seriously as Glencore shareholders.
For a firm like Glencore, the demand from investors to change is one of the most potent forces. “It’s a concern if investors are saying it’s OK to extract coal,” Guay remarked.