Glencore ramps battery-building resources as it caps coal

At Glencore’s presentation of Preliminary Results 2018 in London yesterday, global CEO Ivan Glasenberg announced that the company would further its “commitment to the transition to a low-carbon economy” and as part of that decision had agreed with shareholders to cap coal production at the company’s current capacity of 150 million tonnes.

Glasenberg, who has until recently presided over Glencore’s expansion of investments in coal mining, including last year’s purchase of Rio Tinto coal assets for US$1.7 billion, made it clear that the new cap will stick, saying “we have agreed that we will limit it to that amount of tonnage going forward”, and “we will not increase the tonnages of thermal coal produced by the group on a future basis”.

Rather he emphasised that the Anglo-Swiss commodity trader was “well placed” to take advantage of the transition to renewables. He told shareholders and media: “We have the right commodities, as you are aware — cobalt, zinc, nickel, copper — which is a complement for battery supply, and we continue hopefully to grow in those areas.

“We aim to capitalise on that as we move the energy and mobility transition into electric vehicles. We will be at the forefront producing the commodities in that area.”

Glencore’s extensive coal interests and infrastructure in Australia, which include 16 operational open-cut and underground mines that produced more than 88 million tonnes of thermal and coking coal in 2017, are not reduced by yesterday’s announcement.

The 150-million-tonne cap is in fact an increase on the company’s 2018 global production of 130 million tonnes, but it nonetheless represents a change in direction for Glencore which acknowledged investor pressure and that its turnaround on coal expansion had been made “Following engagement with investor signatories of the Climate Action 100+.”

The Wall Street Journal reported yesterday on the Glencore announcement in an article titled ‘Glencore, the King of Coal, Bows to Investor Pressure Over Climate’, saying “Glencore is the latest company to agree to investor demands, but many more are likely to follow as companies prepare for their annual meetings of shareholders in the coming months.”

WSJ journalists and commentators, Scott Patterson and Oliver Griffin go on to mention Royal Dutch Shell and its agreement in December to set targets that will reduce emissions from the use of its products — “the first giant energy company to agree to such a step”.

Batteries are the buzzword

Shell has also been seen to diversify its interests into “New Energy” with investment in and has indicated its intention to acquire the German residential battery maker sonnen.

In late 2018, sonnen began assembling batteries at a production line in the former Holden manufacturing site in Elizabeth in South Australia, with the aim of turning out 10,000 batteries per annum over the coming five years, to supply both Australian households, and the Asia-Pacific region.

Earlier this month, Shell Australia Chair Zoe Yujnovich told Melbourne Mining Club gathering that sonnen had already supplied 3,000 battery systems to Australian households and that Shell has “plans for growing” the sonnen business here.

Like Glencore, more corporations are either seeing the climate-change red light, succumbing to investor leverage, or simply moving to take advantage of the lucre in renewable-energy industries.

Glencore’s official press release on its Preliminary Results 2018 announcement states: “Glencore recognises the importance of disclosing to investors how the company ensures that material capital expenditure and investments are in line with the Paris Goals [for limiting emissions]. This includes each material investment in the exploration, acquisition or development of fossil fuel (including thermal and coking coal) production, resources and reserves, as well as in resources, reserves and technologies associated with the transition to a low-carbon economy.”

From 2020, Glencore has undertaken to make public its progress in these areas, in its annual reports.