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Glencore, Australia’s largest coal exporter, has abandoned plans to divest its coal mines amid a sharp shift in shareholder attitudes over whether the global resources giant should sell or keep assets that produce the dirtiest fossil fuel.
Switzerland-based Glencore, which operates 15 coal mines in New South Wales and Queensland, has been in talks with its investors to seek advice on the potential impact of the coronavirus pandemic. The future of the company’s polluting but lucrative coal division.
Glencore said it had consulted shareholders on the future of its coal business.
The company said on Wednesday it had consulted more than two-thirds of its shareholders and found that the vast majority of shareholders “clearly preferred to retain coal.” Glencore said the main reason was that retaining coal would improve the company’s cash generation, fund its shift to metals such as copper that are critical to the green energy transition, and increase shareholder returns.
“The board believes that staying in office is the lowest-risk path to creating value for Glencore shareholders at this time,” said Kalidas Madhavpeddi, Glencore’s chairman.
“The expected cash generative potential of the coal and carbon steel materials businesses significantly enhances the quality of our commodity and geographic portfolio and expands our ability to fund a strong portfolio of copper growth options and accelerate shareholder returns.”
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Other top miners, Including Australia’s BHP Billiton and Rio TintoMajor companies such as GE and GS have divested or announced the closure of coal assets, while a growing number of banks, insurers and shareholders have pledged not to make new investments in the industry, citing concerns about future demand and global warming.
Glencore, for its part, has sought to position itself as a responsible owner of coal mines, pledging to manage the decline of its assets rather than “let them become someone else’s problem” or sell them to new buyers who might choose to expand output and emissions.
Coal mining is one of the most profitable units in Glencore’s diverse, broad global resources business, and recently brought in record dividends. However, the company faces increasing scrutiny from shareholders who are increasingly concerned about the financial and moral risks they face by fueling climate change.
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