Following its acquisition of a 77% interest in Elk Valley Resources (EVR) from Teck Resources in July, Glencore asked its shareholders whether they should retain its coal business or spin it off. A majority of the shareholders said they believed retaining the business was in the company’s best interest.
The prevailing view was that retaining the coal and carbon steel materials business should enhance Glencore’s cash generating capacity, which would allow it to fund opportunities in its transition metals portfolio.
“Following extensive consultation with our shareholders, whose views were very clear, and our own analysis, the board believes retention offers the lowest risk pathway to create value for Glencore shareholders today,” said Kalidas Madhavpeddi, chair, Glencore. “The expected cash generative capacity of the coal and carbon steel materials business significantly enhances the quality of our portfolio, by commodity and geography, and broadens our ability to fund our strong portfolio of copper growth options as well as accelerate shareholder returns.”
Numerous shareholders also expressed skepticism on the valuation uplift arising from a demerger and did not see separation as ESG positive given the wide support for the company’s latest Climate Action Transition Plan (CATP).
Under the company’s 2024-2026 CATP, recently approved by more than 90% of voting shareholders, Glencore will continue to oversee the responsible decline of its thermal coal operations over time. Glencore said it will also assess how best to integrate the EVR assets into its climate transition strategy.
