Glencore has decided to maintain its coal business after receiving strong support from a majority of its investors, who recognize the profitability of the fossil fuel sector. CEO Gary Nagle announced on Wednesday that the company is also considering the acquisition of additional steelmaking coal assets.
Despite reporting a first-half net loss of $233 million, primarily due to $1.7 billion in one-off items, including approximately $1 billion in impairment charges, Glencore remains optimistic about its coal operations. The company recently completed the acquisition of coking coal assets from Teck Resources and has seen overwhelming backing from European investors to retain its coal business.
Nagle emphasized that the lack of investment in new coal projects, combined with the expectation that coal will remain part of the energy mix for the foreseeable future, is likely to lead to tighter supplies and sustained high prices, which would bolster Glencore’s profits.
He noted that the coal business generates significant cash flow, which can be used for shareholder returns through buybacks and dividends. Additionally, he mentioned that investors’ environmental concerns have lessened over the past year.
While Nagle did not confirm specific plans regarding Anglo American’s Australian steelmaking coal assets, he stated that Glencore is open to acquiring more coal assets if the conditions are favorable—specifically, the right price, location, and quantity.