Glencore scorns green agenda while maintaining its polluting (but highly profitable) coal division

Glencore has scrapped plans to spin off its coal business, calling the move “common sense”.

The decision comes after an overwhelming majority of its shareholders voted in favour of maintaining the highly profitable but highly polluting division.

Glencore first announced plans to spin off the unit last November, bowing to pressure from green investors.

The move would have involved merging the unit with the steel and coal manufacturing division of recent acquisition Canada’s Teck Resources.

That combined group would then have been listed on the New York Stock Exchange as a separate business, which executives say would boost returns for shareholders.

But in a dramatic about-face, the Swiss mining giant will now abandon plans that 95 percent of investors had called for it to keep the coal unit, saying that would increase “cash-generating capacity” and “accelerate and optimise the return of excess cash flows to shareholders”.

Chief executive Gary Nagle said: “Common sense has prevailed. Shareholders recognise that cash is king.”

Nagle said the industry was now a “dynamic space” in which views on environmental, social and governance (ESG) issues had changed.

He said: “The pendulum has swung back in the last nine to 12 months. The world has recognised the need for coal as we decarbonise.”

Glencore’s board said it still retains the option of considering a divestiture, but the move is likely to anger environmental groups that have been lobbying against coal as a highly polluting fossil fuel.

Fossil fuel companies are feeling the pressure to reduce their emissions, but also to keep their profits high.

Matt Britzman, an analyst at Hargreaves Lansdown, said that while green investors may be disappointed, the decision “makes sense”.

“The coal portfolio is a gold mine, and it is not just thermal coal; steelmaking coal also represents a significant part,” he said.

Glencore’s coal business has benefited from the crisis following Russia’s invasion of Ukraine.

It is also one of the world’s largest copper, nickel and cobalt miners and traders. Glencore said first-half profits fell 33 percent year-on-year to £5 billion. Revenue rose 9 percent to £92 billion.

Glencore shares rose 2.8 percent, or 11.05 pence, to 404.2 pence.

But it is not just Glencore that is abandoning a green agenda. Last week, BP said it will drill a new oil field in the Gulf of Mexico with the aim of returning money to investors.