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Glencore to accelerate coal mine closures

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Glencore expects to shut down 12 coal mines over the next 12 years even as the world’s largest mining company enjoys bumper profits because of high coal prices.

The Switzerland-based mining and trading house, which is among the world’s most profitable coal miners, said on Tuesday it would accelerate the closure of several mines by 2035 in order to meet its emissions targets.

Glencore’s coal business is expected to generate about $16.7bn in earnings before interest, tax, depreciation and amortisation next year, more than half the company’s total.

However, its coal production is expected to be flat between 2022 and 2025, with guidance of roughly 110mn tonnes a year, down from Glencore’s previous estimate, according to an investor update published on Tuesday.

Glencore’s production guidance for copper and coal came in lower than analysts’ expectations, causing the share price to drop more than 3 per cent on its release before recovering at the end of the day.

Chief executive Gary Nagle said the company anticipated a global structural shortage of copper in the coming years, as demand from grid infrastructure outstrips production from copper mines.

To meet this demand Glencore was considering developing the $5.6bn El Pachón copper mine in Argentina, he added.

“When the price is there, when the world is screaming for the copper that it needs . . . that is when we will bring on the new supply,” Nagle said.

The El Pachón mine will be developed “as the last cab on the rank, if the world needs the copper”, after Glencore’s other brownfield copper mines have been fully expanded, he said.

The company said it had the capacity to double its total copper production to as much as 2mn tonnes a year.

During the next three years, Glencore expects about $5.6bn in capital expenditure, more than half of which will be spent on sustaining production in its metals division.

The company will cut its total emissions, including those in its supply chain, by 15 per cent by 2026 and by 50 per cent by 2035 compared with its 2019 baseline. But Glencore stopped short of disclosing how much it was preparing to spend on reaching its emissions reductions goals.

The Newlands and Liddell coal mines in Australia are both expected to close next year, while the Integra mine will operate for a year longer than planned, closing in 2024. “These will be responsibly shut, with a proper just transition,” Nagle said.

Costs for zinc and nickel production are forecast to increase slightly next year, largely because of higher energy costs. Costs for coal and copper production are expected to decline slightly.

This year Glencore has also faced multiple corruption investigations, and paid associated fines totalling more than $1.6bn to authorities in the US, UK, Brazil and Congo. Other investigations are still ongoing in Switzerland and the Netherlands.

Glencore set aside $1.5bn this year to help cover settlement costs for the global investigations, and the company said on Tuesday it had not made any further provisions for other settlements.

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