Glencore wants to keep coal business
Published: Wednesday, Aug 7th 2024, 08:50
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Glencore is not divesting the coal and carbon steel business under discussion. The commodities trading and mining group slipped into the red in the first half of 2024 due to one-off effects and lower commodity prices. However, turnover increased.
At the beginning of July, the Swiss commodities group received the green light in Canada for the billion-euro takeover of a majority stake in the Teck coal business. Following the takeover of the Teck subsidiary Elk Valley Resources (EVR) in Vancouver, Glencore was recently still in discussions with shareholders to obtain their opinion on the possible spin-off of the coal and carbon steel business.
The die is now cast: The business is to remain with Glencore. Glencore announced on Wednesday that a clear majority of shareholders had expressed a clear preference for retaining the business in question.
Long takeover battle
Accordingly, the Board of Directors decided against a spin-off. Taking into account the opportunities and risks, the Board of Directors also came to the conclusion that it made more sense to retain the company.
Glencore is known to be paying around USD 6.9 billion for a 77% stake in Teck's coal business. The deal is expected to be completed in the third quarter of 2024, according to earlier information. The deal was preceded by a long battle between Teck and Glencore: Glencore originally wanted to acquire the company outright and then spin off the combined coal business. However, Teck had resisted these plans.
Net loss due to one-off effects
In terms of earnings in the first half of the year, Glencore increased sales by 9 percent to 117.1 billion US dollars from January to June. However, operating profit (adjusted EBITDA) fell by around a third to USD 6.3 billion due to lower prices, particularly for coal. Glencore is referring to a normalization in the energy markets following the high volatility in 2022 and 2023.
The bottom line was a loss of 233 million US dollars, following a profit of 4.6 billion in the same period of the previous year. In addition to the lower operating result, profit was impacted by negative one-off effects amounting to 1.7 billion, of which 1 billion alone was due to a value adjustment.
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