Glencore’s CEO, Gary Nagle, is considering spinning off the company’s coal business, a move that would have been unthinkable when he took office two years ago. At the time, Glencore had just expanded its ownership of the Cerrejón thermal coal mine in Colombia, and coal prices were soaring due to geopolitical tensions. However, with growing concerns about climate change and shareholder pressure, Nagle sees the potential for a separate coal company. Glencore is currently in negotiations to acquire Teck Resources’ metallurgical coal business and merge it with its thermal coal business before spinning off the new entity on the New York Stock Exchange.
Nagle, who began his career in the coal industry, is willing to defend the role of coal in the energy transition, arguing that both thermal coal and metallurgical coal have a place in the world. He acknowledges the need for steam coal to meet current energy demands and highlights the importance of metallurgical coal in steelmaking until alternative technologies become more widely available. However, Glencore’s emissions are significant, with the company emitting 380 million tonnes of carbon dioxide equivalent in 2022, comparable to the emissions of countries like the UK and Spain.
The proposed spin-off plan has divided shareholders. Some, like Bluebell Capital, have called for Nagle’s resignation, claiming that the coal deal contradicts Glencore’s climate goals. Others support Nagle, believing he has the necessary experience to lead the spin-off successfully. Shareholders and analysts who view coal as a drag on Glencore’s valuation see the potential for increased value in the company’s base and transition metals businesses. Nagle has been expanding these areas, including investments in low-carbon alumina refining and growing the recycling business, which is expected to play a more significant role in the company’s future.
Glencore, the world’s fourth-largest copper producer, aims to increase its copper production. The company has pursued various deals, including attempts to acquire Teck Resources’ entire business. While those attempts were unsuccessful, analysts predict that Nagle’s focus on metals and recycling, combined with the spin-off of coal, will drive further deals. With a strong balance sheet and favorable market conditions for base metals, Glencore is well-positioned to pursue growth opportunities.
As Glencore navigates potential deals and discussions with Teck, the company’s future could take a vastly different shape. Nagle acknowledges the uncertainties and states that not everything is within their control. The long-term outlook for Glencore remains uncertain, but the company is actively adapting to changing market dynamics and seeking opportunities for growth while addressing climate concerns.