Outside, Glencore, one of the world’s biggest producers and traders of thermal coal, is circumspect about the future of the commodity, commonly known as the world’s dirtiest fuel.
A crushing energy crisis, Russia’s invasion of Ukraine and years of underinvestment in new coal supply have seen the commodity rise to record highs of around US$400/t.
Asked whether he would consider reversing his stance on reducing coal production alongside net-zero targets by 2050 on an earnings call yesterday, Chief Executive Gary Nagle said the company remained aligned with the governments’ positions global
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“We will not deviate from our plan to responsibly manage our coal business. We made a commitment to our stakeholders, we made a commitment to the world. It is right for the world and we will continue on that path.” he said.
“It is not negotiable. I mean, in an extreme event where all the governments of the world come together and say, we’re putting a pause on (responding to) climate change, and we need energy security, and please produce more coal… yes, yes we would
“I think it’s very unlikely to happen.”
Internally, Glencore’s traders are probably running through the corridors of their Swiss offices chanting “coal, coal, coal, coal” the way Vikings sing lovingly about spam in Monty Python’s world.
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The magic run of coal
For Glencore coal magic, 2022 has resulted in a staggering 800%+ increase in earnings per share from €0.10m to $0.92m in the first half of 2022, with coal sales as the backbone of a 119% jump in first half adjusted EBITDA. up to US$18.9 million.
Coal revenue rose like a phoenix from CO2-emitting ash, from $912 million in the first half of 2021 to $8.9 million in the first half of 2022.
Energy trading (+344%) was also the main contributor to a 104% increase in earnings in Glencore’s marketing division to $3.7 million.
Metals and mining fell 17% as hard commodity prices fell.
Margins at Glencore’s coal operations rose 760% last year to $160.8 million. At spot levels, it will generate revenues of US$20 billion by 2022 at a margin of US$165/t.
Glencore will return $4.5 billion to shareholders, including a $3 billion share buyback, bringing its return on equity for 2022 to about $8.5 billion.
Sheesh.
Glencore expects spot adjusted EBITDA to exceed US$32 billion in 2022, up from US$21.3 billion in 2021.
Rio man joins new lithium miner
Like many in the lithium game, Lithium Core (ASX:CXO) has grown from a small to a major mining stock in a short time, rising 301.56% over the past year to a market cap of $2.22 billion.
The company is poised to be the next hard rock miner to go into production with its Finniss mine in the NT due to open in December.
Core has been without a leader for some time since the surprise resignation of Dr. Stephen Biggins a few months ago.
Today it increased by 6.2%, but after rectifying it, with Rio Tinto (ASX:RIO) executive Gareth Manderson stepping into the void as CEO.
Manderson has been with Rio for 22 years, where he was most recently the managing director of sustainable capital, leading projects investing $1.6 a year in the Pilbara iron ore network.
“I have been impressed with what the Core team has accomplished to date and am thrilled to have the opportunity to lead Core at this vital time in the company’s growth,” said Manderson.
“With the construction of Phase 1 of the Finniss lithium project nearing completion and the pending export of lithium, I look forward to leading Core and working with my colleagues across the business to ensure we maintain a good operational, financial and safety performance”.
Core president Greg English said there were synergies with Core’s upcoming spodumene operations, which is 25km from Darwin’s CBD and port.
Spodumene prices are near record highs, reaching over USD 6,000/t on spot markets.
This content first appeared on stockhead.com.au
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Originally published as Ground Breakers: Coal offers Glencore impressive 800% lift