Glencore 'running down' coal to invest in new generation minerals: CEO

Miner and trader Glencore's CEO Ivan Glasenberg said Oct. 16 said the company is "running down its coal mines" to reduce Scope 3 carbon emissions and using the funds freed up to invest in minerals such as copper, cobalt and nickel needed for energy transition markets including electric vehicles.

However, simply divesting from coal didn't help reduce emissions or meet the terms of the Paris Agreement, he said during the virtual Financial Times Mining Investment Summit.

"We're running down the coal mines, for instance we've put Prodeco in Colombia on care and maintenance, we've reduced production in Australia, our joint venture with Anglo, Cerrejon, comes to the end of its life in 2031, and our South Africa operations will deplete. So, we can reduce our emissions by 30%," Glasenberg said.

"Some competitors are selling their coal mines...but how does this help the world to meet the Paris Accord? They're going to the hands of other players in the industry which may have no intention of reducing their Scope 3 emissions and may have a free hand to produce more," he said.

Glencore has agreed to limit its coal production to less than 150 million mt a year.

"We're starting to transfer funds out of coal to new materials: staying in our existing business which we understand but taking funds from coal to invest in the right commodities, the new generation minerals," he said.

The company is targeting a 30% reduction in its Scope 3 carbon emissions by 2035, to be reviewed at the company's investor day on Dec. 4, he said.

Glasenberg's words echoed sentiments expressed at last week's Natural Resources Forum, where major investors including the Church of England Pension Board said it is fundamental in the combat against climate change for investors to work together with companies involved in fossil fuels production on transitioning to a lower carbon pathway, rather than to simply divest from those companies.

Glencore currently produces 1.3 million mt/year of copper, is a major producer of nickel and is the world's largest producer of cobalt, with production of 46,000 mt/year in a market of around 145,000 mt/year.

Demand for these metals is growing fast. There were projections that there would be 11 million electric vehicles on the roads by 2025 which could require a further 75,000 mt/year of cobalt and another 350,00 mt/year of nickel by that date, stretching up to an extra 500,000 mt/year for the next 10 years if electric battery storage market were added too, Glasenberg said.

Demand for nickel could potentially double current total production of 2.4 million mt/year by 2040, Glasenberg indicated. "Where will they [companies such as Tesla] get this from?" he asked, noting that carmakers were increasingly seeking to strike long-term nickel sales arrangements with miners, including Glencore.

"The world needs us [miners] more now," he said.

Despite being useful to society, mining companies traded at much lower multiples than companies such as Tesla which use mined materials, the Glencore CEO said. "This is because we generally get the numbers wrong [underestimating investment size and suffering startup delays] so we've lost a lot of respect from investors."