Glencore shareholders have voted for the major miner to retain its coal and carbon steel materials business, leading the major miner to walk away from its original demerger plans.
Glencore is Australia’s largest coal producer, with 15 mining operations across New South Wales and Queensland.
In November 2023, Glencore chief executive officer Gary Nagle announced the company would acquire a 77 per cent stake in Elk Valley Resources (EVR), Teck Resources’ steelmaking coal subsidiary that operates four steelmaking coal mines, for $US6.93 billion.
In the announcement, Nagle revealed plans to demerge the combined business.
“Glencore continues to believe that a standalone company containing its combined coal and carbon steel materials business, including Glencore’s stake in EVR, would be well positioned as a leading, highly cash-generative bulk commodity company, likely attracting strong investor demand given such yield potential,” Glencore said at the time.
“As before, Glencore therefore intends to demerge the combined business, once Glencore has sufficiently delivered, which is expected to occur within 24 months from close.”
Since Glencore finalised the acquisition in July 2024, the company’s directors have undertaken a consultation process to assess shareholder views on whether to retain or demerge the coal and carbon steel materials business.
Glencore consulted with two-thirds of its eligible shareholders, with over 95 per cent of the shareholders supporting the company in retaining the coal and carbon steel materials business.
The feedback Glencore received demonstrated that “shareholder preferences may have evolved”.
“Many shareholders were no longer supportive of a demerger, in many cases due to evolving views on ESG (environmental, social and governance), increased support for Glencore’s climate strategy of a responsible decline of its thermal coal business and the recognition, which also drove Glencore’s acquisition of EVR, of the difference between steelmaking coal and thermal coal,” Glencore said.
Glencore chair Kalidas Madhavpeddi said shareholder views were “very” clear.
“The board believes retention offers the lowest risk pathway to create value for Glencore shareholders today,” Madhavpeddi said.
“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.”
Glencore will now assess the best way to integrate the EVR assets into its climate transition strategy.
Subscribe to Australian Mining and receive the latest news on product announcements, industry developments, commodities and more.
