Investor Insight Investor Bulletin: Monitoring Glencore’s climate commitments
As Australia’s largest coal producer, Glencore plc has been on notice for its lack of a credible plan to responsibly run down coal since its 2022 AGM, when nearly one quarter (24%) of shareholders voted against Glencore's climate plan. Throughout the year, ACCR has been closely monitoring Glencore’s climate commitments, including a detailed assessment of progress against its climate plan, and an analysis of its underreporting of methane emissions from coal mines in Australia.
As part of our ongoing monitoring of Glencore’s coal commitments, ACCR has prepared a brief update for investors:
Glencore 2022 Annual Investor Update, 6th December 2022
ACCR has reviewed the coal production details released in the Update, given coal is a significant driver of Glencore’s emissions. Our key take-aways are:
- In the Update, Glencore told investors that by 2035, “we'll have closed 12 coal mines within our portfolio”. Based on disclosures in Glencore’s 2021 Resources and Reserves report, ACCR has identified a list of up to 19 coal mines reported to have a remaining life that falls on or before 2035.* There is currently no evidence to demonstrate the company has accelerated mine closures.
- Based on information from the Update, there is no underlying improvement in climate outcomes. Further disclosures on the 12 coal mines closing by 2035 are required from Glencore to determine if there will be any emissions savings, for example, through expedited closures.
- ACCR also notes there is no improvement in emissions targets and no coal volume guidance provided beyond 2026. It is critical that investors are provided with sight beyond 2026.
Glencore’s acknowledgement that it has withdrawn assessment applications for a large new greenfield coal mine in Australia - the Valeria coal mine, 8th December 2022
- This is positive news. The Valeria mine was slated to produce 16 million tonnes of coal out to 2067. Withdrawing from this project prevents over 1 billion tonnes of carbon emissions that would have been released when this coal was burned.
- This coal mine went against investor expectations and should never have even been considered. Its withdrawal indicates Glencore is heeding investor pressure, and the medium to long term forecasts for thermal coal that show global energy demand is flipping rapidly towards renewables.
- Glencore’s review of the project’s future status should result in the mine being taken off the books. A new coal mine of this cost and scale is a stranded asset risk and investors should be watching developments closely to ensure shareholder value is protected.
- Alongside the Valeria announcement, Glencore reiterated it “will continue to progress various brownfield coal extensions at existing mines in Australia.” These coal extensions, if approved, represent an additional 400 million tonnes of predominantly thermal coal mined to 2050.
To date, Glencore investors have made significant progress to improve the company’s emission targets, cap coal production and improve climate engagement. However, Glencore’s planned coal expansion and growth in coal emissions is overshadowing the future facing minerals portfolio of Glencore’s business, which is expected to materially benefit from the global energy transition.
ACCR encourages investors considering forward carbon exposure risks to ask Glencore:
- Can you provide more information about when the 12 coal mines noted in the Annual Investor Update are closing? Will this decrease the remaining life of the coal mines? Can you confirm which coal mines are closing?
- Glencore has stated the greenfield Valeria coal mine is now “under review”. When will investors know the outcome of this review?
*According to Glencore’s 2021 Resources and Reserves report, from 2021, the below 19 coal mines were reported to have a remaining life that falls on or before 2035.
| Number | Location | Mine | Life of Mine End Year |
|---|---|---|---|
| 1 | NSW | Liddell | 2023 |
| 2 | NSW | Integra | 2023 |
| 3 | QLD | Newlands | 2022 |
| 4 | NSW | Ravensworth East [1] | 2023 |
| 5 | NSW | Ravensworth North | 2035 |
| 6 | NSW | United - Wambo | 2034 |
| 7 | NSW | Ulan West UG | 2032 |
| 8 | NSW | Ulan #3 UG | 2030 |
| 9 | NSW | Mangoola | 2030 |
| 10 | QLD | Oaky Creek | 2028 |
| 11 | QLD | Collinsville OC | 2035 |
| 12 | QLD | Clermont | 2027 |
| 13 | ZA | Impunzi North | 2031 |
| 14 | ZA | Impunzi East | 2031 |
| 15 | ZA | Tweefontein North | 2034 |
| 16 | ZA | Tweefontein South [1] | 2031 |
| 17 | ZA | Wonderfontein | 2030 |
| 18 | ZA | Middelburg Complex (MBO) [2] | 2025 |
| 19 | COL | Cerrejón | 2035 [3] |
[1]: No reserves depletion due to mining reported in 2021
[2]: Consists of a number of mines that have been grouped into the Middelburg Complex
[3]: Cerrejón mining rights expire in 2033
If you wish to discuss Glencore in more detail, please reach out to naomi.hogan@accr.org.au or gemma.yeates@accr.org.au.
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