ZURICH: Swiss commodities giant Glencore has decided to retain its coal business after consulting shareholders who see the fossil fuel as a significant cash generator.
Glencore recently completed the acquisition of Teck Resources’ steelmaking coal unit, Elk Valley Resources, in July following a protracted negotiation with the Canadian company. The commodities trading and mining group had considered merging Elk Valley Resources with its coal operations and spinning off the combined entity.
However, after extensive shareholder consultations, Glencore found that most investors preferred to keep the coal and carbon steel materials business within the company.
“I certainly am convinced that it’s the right decision,” Glencore CEO Gary Nagle stated during a conference call.
The company argues that the cash flow from its coal mines is essential for investing in raw materials needed for the green transition, such as copper and cobalt.
“Following extensive consultation with our shareholders, whose views were very clear, and our own analysis, the Board believes retention offers the lowest risk pathway to create value for Glencore shareholders today,” said chairman Kalidas Madhavpeddi.
“The expected cash generative capacity of the coal and carbon steel materials business significantly enhances the quality of our portfolio,” Madhavpeddi added.
