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Glencore to cap coal production to reduce carbon footprint

22/02/2019
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One of the world’s biggest coal miners, Glencore Plc, is yielding to investor pressure on climate change with promises to cap coal production, not make any further coal acquisitions that would add to overall output, and to align its future business strategy with Paris climate targets.
Despite being one of its most profitable commodities Glencore is committing to placing a cap on the production of coal.
(Despite being one of its most profitable commodities Glencore is committing to placing a cap on the production of coal. Image via Glencore).

To meet the growing needs of a lower carbon economy, Glencore aims to prioritise its capital investment to grow production of commodities essential to the energy and mobility transition and to limit its coal production capacity broadly to current levels.

In addition to rebalancing its portfolio towards more climate-friendly commodities, Glencore will also regularly disclose to investors how its investments are aligned to the Paris Goals. Coupled to this, the company will also undertake stringent efforts to reduce carbon emissions from its mining activities. In 2017, Glencore committed to reducing its greenhouse gas emissions intensity by 5% by 2020- which it is currently on target to achieve.

For Glencore to place a cap on coal production is big news for the mining industry. To-date Glencore has often been the company that swoops in and purchases coal assets from companies that are wanting to retreat from coal production.

What will these coal caps look like?

Glencore has said it will limit output of thermal and metallurgical coal at around current guidance levels of 145 million metric tons a year. 

It’s a bold move given that coal made up the biggest slice of Glencore’s profits in its 2018 annual results, and that Glencore is the biggest supplier of coal to the international market.

Instead, Glencore is banking on the energy transition as being a major source of future profits. The miner is ramping up production of commodities such as cobalt, zinc, nickel, and copper (amongst others) which are key elements within batteries, wind turbines and other cornerstone technologies of low-carbon power generation, storage and transmission.

A statement from Glencore’s CEO, Ivan Glasenberg, makes it clear that the company is determined to make its shift away from coal a permanent one:

“Our commodity portfolio and its key role in enabling the energy and mobility transition for a low-carbon economy enables us to look ahead with confidence, remaining focussed on creating sustainable long-term value for all our shareholders”.

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Glencore to cap coal production to reduce carbon footprint - Time to read 3 min
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