Glencore buys partners in Colombian coal mine

Glencore is buying its partners’ stakes in one of the world’s largest open-pit thermal coal mines, the latest deal in an industry reshaped under pressure from banks and investors.

Under the deal, the London-based miner and commodities trader agreed to acquire the 66.6 percent of Cerrejón in Colombia it does not already own from Anglo American and BHP for $294 million each in cash. Glencore expects to recover its investment less than two years after the acquisition is completed.

The agreement was marked by Most recent change of ownership In the thermal coal industry, the price of fossil fuels has reached an all-time high Within a decade On strong demand from Asia and lack of investment in the new supply.

Glencore also said Monday that it aims to cut its total emissions by 50 percent by 2035 from 2019 levels, up from the previous target of 40 percent, and is targeting a 15 percent reduction by 2026, which was restated to reflect Sirigon’s full ownership.

Big miners are coming under increasing pressure of investors and banks to dispose of their coal mines and align their businesses with the goals of the Paris climate agreement Thermal coal is burned in power plants to generate electricity, a process responsible for about 30 percent of global carbon dioxide emissions.

Anglo American has separated its South African coal assets into a company listed in Johannesburg and London. The Serigon agreement will complete its exit from coal. BHP is Check offers Australian Thermal Coal Works.

However, longtime Glencore CEO Evan Glasenberg has Refused to withdraw coal investment as pointless, saying there are no environmental benefits from investors pressuring miners to sell or separate coal mines.

He argued that the company, the world’s largest exporter of thermal coal, would have been better off operating its mines and using them as a cash source to expand production of raw materials such as nickel, copper and The cobalt that will be needed As the world turns to cleaner forms of energy.

As such, Glencore decided to buy Anglo and BHP interests when it gave notice of its intention to liquidate this year. By the time the deal closes in the second half of next year, the cash generated in the meantime could lower the purchase price to $230 million, according to Glencore.

“Getting rid of fossil fuel assets and making them someone else’s issue is not the answer and it will not reduce absolute emissions,” Glasenberg said. “We are confident in our ability to manage the decline of our fossil fuel portfolio in a responsible manner that is also consistent with achieving the goals of the Paris Agreement, as evidenced by our enhanced targets to reduce total emissions.”

The deal effectively replaces the tonnage lost when Glencore decided to abandon production at Prodeco, another Colombian coal mine.

Glencore I pledged in 2019 To limit coal production at around 150 million tons per year in the face of pressure from major investors. Further expansion of the coal business has been largely ruled out, although Glencore said it would buy partners in the joint venture where it has a right of first refusal over their stakes.

The Cerrejón agreement will see Glencore’s thermal coal production increase to about 125 million tons this year, from the previous guidance of 110 million.

Glencore plans to meet its emissions reduction goals by depleting its coal assets over time and moving to renewable energy and clean fuels at its mines.

The acquisition also comes as Glasenberg prepares to resign at the end of the month. he’s running Behind him is Gary Nagel, former head of the coal business of Glencore.

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