BUSINESS MAVERICK

Glencore acquires Anglo, BHP stakes in Colombian coal asset

By Ed Stoddard 28 June 2021

(Image: Adobe Stock)

Anglo American has made its final exit from thermal coal with the sale to Glencore for $294-million of its 33.3% interest in the Cerrejón joint venture in Colombia. Glencore has also agreed to buy BHP’s 33.3% stake in the huge coal mine for the same price, giving the Swiss-based miner and commodities trader 100% control of the asset.

Ed Stoddard

Coal is losing its lustre as an asset in the portfolio of mining companies because of the fossil fuel’s links to the climate crisis and pollution. 

Financing for coal projects is increasingly difficult and costly to raise as shareholders shun a commodity that fired up the industrial revolution while heating up the planet in the process. Companies are embracing so-called ESGs — environmental, social and governance issues — and that means coal is getting frozen out. 

Anglo recently spun off its thermal coal operations in South Africa into a new JSE-listed entity, Thungela Resources. With the Cerrejón sale, it has now completed its exit from thermal coal — an exit driven by shareholders, including the pension board for the Church of England. Anglo is committed to making all its operations carbon neutral by 2040. 

Glencore said in a statement that it has “reviewed the impact of owning 100% of Cerrejón” and is “confident our climate commitments will not be compromised by this partner buy-out”. Its emission reduction targets include one of 15% by 2026, on 2019 levels.

“Based on our long-term relationship with Cerrejón and knowledge of the asset, we strongly believe that acquiring full ownership is the right decision and the progressive expiry of the current mining concessions by 2034 is in line with our commitment to a responsible managed decline of our coal portfolio. 

“Production volumes are expected to decline materially from 2030,” Glencore said. 

Many greens would like to see the plug completely and immediately pulled on coal. Realistically, that is not going to happen overnight — such a move would have significant social and economic consequences — but the transition from coal and other fossil fuels to green alternatives is fast picking up pace. 

Ivan Glasenberg, the South African CEO of Glencore who is stepping down later this year, said: “Disposing of fossil fuel assets and making them someone else’s issue is not the solution and it won’t reduce absolute emissions.”

This is certainly true to an extent. But the challenge on that front is that it is now Glencore’s issue and not, say, Anglo American’s. DM/BM

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