Monday, November 25, 2024

Mining giant abandons plan to ditch coal as boss admits ‘cash is king’

Must read

At present, Glencore has pledged to halve its carbon emissions by 2035 by closing 12 coal mines. It has already shut five of them, with seven to go.

The company has long argued that steelmaking coal will have a much longer shelf-life than thermal coal, which is burned for power. 

Yet experts warned that jettisoning these assets would by no means take them out of circulation. In fact, they suggested the opposite could happen. 

For example, Anglo American spun off its thermal coal business, Thungela Resources, in 2021 – only for the newly-independent company to massively ramp up production. 

A report by the Ohio-based Institute for Energy Economics and Financial Analysis said in May: “Investors have increasing concerns about how responsible it is to divest coal mine operations given the lack of any emissions impact such a move would have. 

“Indeed, emissions may actually rise if the new owners seek to increase output.”

This may also be the current thinking at BlackRock, a top five Glencore shareholder which vowed to put climate change at the centre of its investment strategy in 2020 by swearing off thermal coal companies. 

Naomi Hogan, company strategy lead at the Australasian Centre for Corporate Responsibility, says: “As a general rule, a responsible wind down of coal production is a better way to manage emissions than to spin off of coal assets.

“Good corporate governance requires Glencore to take responsibility for the emissions from its coal portfolio, and that will be part of the focus for many investors.”

Even so, Glencore may still find itself on a collision course with climate activists who dispute Mr Nagle’s claim that its coal business is no longer a problem.

Along with other claimants, British charity ClientEarth is currently taking the company to court in Australia over alleged “greenwashing”. They argue Glencore has not made a serious plan to cut its carbon emissions. 

Catriona Glascott, a lawyer at ClientEarth, said: “For several years now, Glencore has been making net zero claims to the market, which we argue misuse an emissions pathway that is not applicable to its coal-dominated business.

“Now it seems the company is claiming to speak on behalf of investors when it says the ESG pendulum has ‘swung back’, while also continuing with its net zero statements.

“Glencore can have an expanding coal business, or it can be aligned with the decarbonisation goals of the Paris Agreement and a liveable atmosphere. It can’t have both.”

Latest article