Glencore should keep its coal mines, investor says

14th March 2024 By: Bloomberg

Glencore should keep its coal mines, investor says

Glencore should keep its coal business even after it completes a deal to buy Teck Resources’s coal-mining unit, according to shareholder Tribeca Investment Partners.

Coal mine ownership has long been a controversial subject in the industry. Most of Glencore’s peers have exited the dirtiest fuel amid investor pressure, while the company long argued it would be the best custodian of its assets.

But Glencore’s position changed last year when it agreed to buy Teck’s steelmaking coal business in November, ending a months-long saga that started as a bitter takeover bid by the commodity trader. Once Glencore completes the deal, it plans to spin off the newly combined coal unit if shareholders approve.

“We firmly oppose such divestiture and call on the board to retain these world class assets,” Tribeca said in a letter Monday to Glencore and seen by Bloomberg News. “Not only does retention align with the company’s long-held commitment to industry leading policy, but also strategically supports its earnings profile and the delivery of value to shareholders.”

When asked about its coal plans, Glencore referred to comments made by Chief Executive Officer Gary Nagle last month.

“When we announced the transaction, we said our intention was to spin out, and that is our intention,” Nagle told investors when reporting earnings in February. “But it’s always subject to what our shareholders want, and we will consult with our shareholders, and it’s the decision of the shareholders ultimately to do that.”

Tribeca also said Glencore should move its primary listing from London to Australia, focus more on dividends rather than buybacks, and consider selling a stake in its trading business.