Glencore Investors Push Against Coal Spin-Off, Citing Financial and Environmental Benefits
A growing number of Glencore investors are advocating for the company to retain its coal assets instead of spinning them off, citing financial prospects and environmental considerations.
Glencore, set to expand its coal operations with the acquisition of Teck’s assets, plans to list the combined coal unit separately in New York.
However, investors argue that coal remains a lucrative option for the foreseeable future, even amid a shift towards renewable energy.
The acquisition of Teck’s coal business is expected to significantly boost Glencore’s free cash flow, with analysts estimating $5-6 billion annually.
Despite growing climate concerns leading other companies to divest from coal, investors express skepticism about the effectiveness of such moves.
While Glencore initially resisted calls to divest from coal, it reconsidered after the Teck deal. However, ahead of any decision on spinning off coal assets, several top investors have voiced opposition, emphasizing the importance of a responsible wind-down rather than divestment.
These investors argue that a phased approach to coal retirement would support a smoother transition to a greener future, minimizing the impact on workers and communities.
Moreover, they believe that coal assets could continue to generate significant cash flow, particularly with potential demand from data centers for cheap electricity in the coming years.
Despite concerns about environmental impact, Glencore’s carbon emissions have declined from a 2019 baseline, albeit with a recent increase attributed partly to higher coal production.
Overall, investors urge Glencore to adopt strategies that align with long-term decarbonization goals while acknowledging the financial benefits of retaining coal assets in the near term.
