- Write by:
-
Monday, June 28, 2021 - 02:30:53
-
715 Visit
-
Print
Mining News Pro - Miner and commodities trader Glencore is buying out partners Anglo American (LON:AAL) and BHP’s stakes in the Cerrejón thermal coal mine in Colombia, defying previous reports that said it was looking to walk away from the asset.
The Swiss company expects to pay $588 million in cash for the combined 66.6% stake owned by Anglo and BHP when the deal completes in the first half of 2022.
Based on expected operating performance, current coal prices and assuming the closing happens as planned, Glencore said it would likely pay only $230 million. This, the company said, would make the estimated investment payback period less than two years from closing.
“Glencore has been involved with Cerrejón for more than 20 years [and] we know the asset well,” outgoing chief executive Ivan Glasenberg said in the statement.
“Disposing of fossil fuel assets and making them someone else’s issue is not the solution and it won’t reduce absolute emissions,” he said, adding he was confident the company would manage the decline of its fossil fuel portfolio in a responsible manner and consistent with the Paris agreement goals.
The deal would replace coal output lost when Glencore decided in February to mothball production at Prodeco, another Colombian coal mine.
The sale of its 33.3% in Cerrejón marks Anglo American’s complete exit from thermal coal. Earlier in the year, the company had divested its South African operation, forming a new entity called Thungela Resources (JSE, LON: TGA).
BHP had announced its intention to sell off its thermal-coal operations by the end of 2022. The mining giant said in a separate statement it expects a further impairment charge of around $80 million post-tax will be recognized as an exceptional item in the second half of fiscal 2021.
Cerrejón is one of the world’s largest surface mining operations, extracting high-quality thermal coal for the export market. Glencore sees production volumes at the mine declining materially by 2030.
Decline has already begun. The mine produced 12.4 million tonnes of coal in 2020, down almost 52% from 2019, and its exports fell to their lowest level in the past 18 years amid coronavirus restrictions and weak global demand for the fossil fuel.
Despite the expected fall in output, the acquisition of Cerrejón will boost Glencore’s thermal coal production to about 125 million tonnes this year, from earlier guidance of 110 million tonnes.
Zero emissions by 2050
Instead of exiting coal, Glencore has committed to run down its assets by 2050, which will allow it to reach its net-zero emissions goal. That pledge includes so-called scope 3 emissions, produced when customers burn or process the materials the company mines.
The company has also set a short-term emissions reduction target of 15% by 2026 from 2019 levels.
Glasenberg, who retires on Wednesday, has long argued the company, the world’s biggest exporter of thermal coal, was better off running down its mines and using them as a source of cash to expand production of other raw materials such as cobalt, copper and nickel, which will be needed as the world shifts to cleaner forms of energy.
Should that approach fail to win over investors, Glasenberg has said he’ll support his successor, Gary Nagle, in spinning off its coal business.
Short Link:
https://www.miningnews.ir/En/News/614760
China’s state planner on Friday finalized a rule to set up a domestic coal production reserve system by 2027, aimed at ...
Chile’s SQM called another investors meeting at the request of its second-largest shareholder, Tianqi Lithium Corp., ...
The world’s coal-fired power capacity grew 2% last year, its highest annual increase since 2016, driven by new builds in ...
Peabody Energy Corp. shares sunk to the lowest in seven months after the biggest US coal miner warned that first-quarter ...
Polish government is abandoning plans to separate coal-fired power plants into a special company and is considering ...
BMO Bank quietly dropped its policy restricting lending to the coal industry in late 2023, helping it avoid being ...
Researchers at the University of Edinburgh discovered that bacteria found in areas polluted by acid mine drainage had ...
BMO Bank quietly dropped its policy restricting lending to the coal industry in late 2023, helping it avoid being ...
Iron ore reversed direction after dropping to its lowest level in 10 months as optimism that the country’s economic ...
No comments have been posted yet ...