Swiss company Glencore plc is the biggest coal trader in the world and Australia’s largest coal producer. Since early 2022, the company has been? on notice for its lack of a credible plan to responsibly run down coal, following? nearly one quarter (24%) of shareholders voting? against its climate plan at the AGM. Throughout the year, we've been closely monitoring Glencore’s climate commitments, including a detailed assessment of progress against its climate plan, and an analysis of its underreporting of methane emissions from coal mines in Australia.
Glencore has made several recent announcements relating to its coal commitments, and we’ve put together a brief update and our key take-aways.?
Glencore’s Annual Investor Update, 6th December 2022
- In the Investor Update, Glencore said that by 2035, “we'll have closed 12 coal mines within our portfolio”. We checked? disclosures in Glencore’s 2021 Resources and Reserves report and identified a list of up to 19 coal mines already reported to have a remaining life that falls on or before 2035*. There is currently no evidence to demonstrate Glencore has accelerated mine closures.??
- The? Investor Update doesn’t show any underlying improvement in climate outcomes. Further disclosures on the 12 coal mines closing by 2035 are required from Glencore to determine if there will be any emissions savings, for example, through expedited closures.
- The Investor Update shows? no improvement in emissions targets and no coal volume guidance is provided beyond 2026. It is critical that investors are provided with sight beyond 2026.
Glencore scraps plans for the Valeria coal mine?
- This is positive news. The Valeria mine in Queensland’s Bowen Basin was slated to produce 16 million tonnes of coal out to 2067. Withdrawing from this project prevents over 1 billion tonnes of carbon emissions that would have been released when this coal was burned.
- This coal mine went against investor expectations and should never have even been considered. Its withdrawal indicates Glencore is heeding investor pressure, and the medium to long term forecasts for thermal coal that show global energy demand is flipping rapidly towards renewables.
- Glencore’s review of the project’s future status should result in the mine being taken off the books. A new coal mine of this cost and scale is a stranded asset risk and investors should be watching developments closely to ensure shareholder value is protected.
- Alongside the Valeria announcement, Glencore reiterated it “will continue to progress various brownfield coal extensions at existing mines in Australia.” These coal extensions, if approved, represent an additional 400 million tonnes of predominantly thermal coal mined to 2050.?
To date, Glencore investors have made significant progress to improve the company’s emission targets, cap coal production and improve climate engagement. However, Glencore’s? planned coal expansion and growth in coal emissions is overshadowing the future-facing minerals portfolio of its? business, which is expected to materially benefit from the global energy transition.?
* According to Glencore’s 2021 Resources and Reserves report, from 2021, the below 19 coal mines were reported to have a remaining life that falls on or before 2035.??
- No reserves depletion due to mining reported in 2021
- Consists of a number of mines that have been grouped into the Middelburg Complex
- Cerrejón mining rights expire in 2033
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