Glencore faces call from activist to sell coal assets


An activist investor has asked Glencore PLC to sell its thermal coal business, pressuring the commodities giant to join other big miners in abandoning fuel.

Glencore is the last of the world’s major miners to maintain a presence in thermal coal, a business that is currently lucrative but considered by some to be harmful to the environment. The company said it plans to scale back its thermal coal operations by 2050, but remains committed in the meantime for the fuel, which analysts at Bernstein expect to generate 17% of profit this year.

The activist, Bluebell Capital Partners, sent a letter to Swiss company Glencore earlier this month, asking the company to part with its coal business, get rid of non-core assets and improve its governance. The measures, which also include the sale of Viterra, Glencore’s farming business, could help boost the company’s stock price, Bluebell said.

“They clearly have a long tail of assets and we ask this company to fully focus on what they are good at” namely future metals such as cobalt and copper, Fund partner Giuseppe Bivona based in London, said in an interview on Tuesday.

The fund said Glencore’s exposure to coal means that many investors cannot buy in the company, causing its shares to value below levels of its peers. Mr Bivona said the valuation of Glencore’s coal-free mining business means it is trading at a discount of around 30% to its peers who have phased out fossil fuel.

Rio Tinto Ltd., Anglo American PLC and BHP Group Ltd. have all, in recent years, sold their thermal coal assets or promised to do so. The moves came as some large investors, including Norges Bank and BlackRock, said they would not invest in any companies with high exposure to fossil fuels.

While Bluebell has less firepower than some militant funds, the company has had success with some campaigns, most notably at Danone SA in France earlier this year. He currently manages 200 million euros (equivalent to $ 227 million) in 10 different companies, Mr Bivona said.

Glencore’s new chief executive, Gary Nagle, has already pledged to simplify the business and has started selling secondary assets, abandoning a number of smaller mines. The company also said it is also examining its options for its 50% stake in Viterra, a Canadian agricultural company.

Mr Bivona said this process needs to be more aggressive.

“Shutting down a few factories when you have 150 mining and production assets” is not enough, he said. Mr. Bivona added that Bluebell estimates that 14 of Glencore’s assets are responsible for 90% of the company’s profits before interest, taxes, depreciation, and depreciation.

In response to Bluebell’s demands, Glencore defended its strategy. “We are convinced that our business model is ideally placed to produce, recycle and market the materials necessary for decarbonizing energy, while reducing our own emissions and providing value to stakeholders,” said a spokesperson. word of Glencore.

Bluebell’s letter to Glencore had previously been reported by the Financial Times newspaper.

More recently, some fund managers have questioned the big miners’ policy to move out of coal for environmental reasons, given that their assets sometimes end up in the hands of companies that wish to increase production rather than reduce it.

Danielle Chigumira, analyst at Bernstein, doesn’t think Glencore should get rid of its coal assets.

“Coal is an important part of Glencore’s value; so the way out is important and I don’t see how they could achieve that without destroying some value, ”she said.

This story was posted from a feed with no text editing

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