Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Glencore shareholders get $4.5 billion windfall as coal prices soar

Stock Markets Aug 04, 2022 11:41AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The edge of Glencore's Mount Owen coal mine and adjacent rehabilitated land are pictured in Ravensworth, Australia, June 21, 2022. Picture taken June 21, 2022. Picture taken with a drone. REUTERS/Loren Elliott

By Clara Denina and Muhammed Husain

LONDON (Reuters) - Shareholders in Glencore (OTC:GLNCY) reaped a multi-billion dollar windfall on Thursday, as the company's adherence to thermal coal mining at a time of soaring prices of the material generated record profits for the mining and commodity trading group.

Unlike rivals which bowed to investor pressure to exit fossil fuels, Glencore mines millions of tonnes of thermal coal, whose prices have reached record highs reflecting shortages during protracted COVID-related lockdowns and the war in Ukraine, and trades millions of barrels of crude oil a year.

The company said it would pay out an additional $4.5 billion, including a $1.45 billion special dividend worth 11 cents per share, and a $3 billion share buyback which it said was worth around 23 cents a share, taking 2022 payouts to $8.5 billion in total.

The company had in February announced a $4 billion payout including a dividend and a $550 million share buyback.

The London-listed company bucked the trend of the likes of Rio Tinto (NYSE:RIO) and Anglo American (LON:AAL) that have slashed payouts after last year's bonanza, but warned about future returns on fears that slower growth or recession in key markets could dent commodity demand in the next few months.

Glencore, which plans to run down its thermal coal mines by the mid-2040s, produces more than 100 million tonnes a year at mines in Colombia, Australia and South Africa. It is Australia's biggest coal producer with 25 mines in New South Wales, Queensland and other parts of the country.

Glencore chief Gary Nagle told reporters that very strong coal prices had significantly boosted the group's earnings from its industrial operations, though he also noted it continued to see inflationary pressures which were a "consistent headwind".

"There are obviously headwinds: higher interest rates, higher inflation, economy slowdown, but mining and commodities is a long-term game and we look at where the world is going. We believe that China's recovery will come and there will be more stimulus," Nagle said.

SURGING PRICES

The group's adjusted core earnings or EBITDA more than doubled to $18.92 billion in the six months through June, compared with $8.7 billion a year earlier and above analysts' expectations of $18.4 billion.

Its trading division's half-year adjusted operating profit reached $3.7 billion, far exceeding the top end of its long-term annual outlook range of $3.2 billion. It expects "normal market conditions to prevail in the second half of the year."

Surging prices for fuel and other materials needed in mine processing, coupled with tightening labour markets partly caused by COVID-19 absenteeism, drove Glencore's costs up and disrupted supply chains.

"Cost revisions are likely to partially offset some of the earnings upside for 2022," Citi analysts said. "That said, potential reversal of working capital in 2H and continuation of strong earnings should support expectations of cash return."

Glencore's net debt fell to $2.3 billion in the first half from $6 billion at the end of 2021.

The company in May agreed to pay around $1.5 billion to authorities in the United States, Brazil and Britain to resolve charges of price manipulation and bribery.

It still faces investigations from Dutch and Swiss regulators.

Glencore's share price rose around 2% by 0916 GMT in London, outperforming the sector index.

($1 = 0.8235 pounds)

(This story refiles to add missing word in first paragraph)

Glencore shareholders get $4.5 billion windfall as coal prices soar
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Robert Copeland
Robert Copeland Aug 04, 2022 6:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I would be willing to bet these guys will be needing there windfall. CFTC was just a small taste.
Phil Ht
Phil Ht Aug 04, 2022 6:59AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Somebody tell the climate loons. Germany is putting coal mines back on the grid too.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email