Glencore shelves coal, carbon steel demerger plan

The company indicated that feedback from shareholders and the potential financial benefits of keeping the coal and carbon steel assets within the group were key factors in the reversal.

Glencore had previously expressed its intention to spin off those units into a separate entity, after acquiring a substantial stake in Teck Resources’ metallurgical coal business, Elk Valley Resources (EVR), and envisioned combining this asset with its existing coal operations to create a standalone company.

The turnaround in decision was made after engaging shareholders, who expressed a preference for keeping the cash generated from coal production within the company, allowing for reinvestment in other areas of the business, such as copper and other transition metals.

This means Glencore will retain its ferro-alloys business, which is part of its steel business and includes chrome, vanadium and manganese assets.

“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,” Kalidas Madhavpeddi Glencore chairman said.

Glencore maintains that it remains committed to its broader sustainability goals.

The company has outlined plans to reduce emissions from its coal operations and invest in cleaner energy technologies, in addition to a gradual decline of its thermal coal business.

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