ZURICH: Swiss commodities giant Glencore announced on Wednesday that it had decided against spinning off its coal business for now after consulting shareholders who view the polluting fossil fuel as a cash-generating activity.

Glencore completed its takeover of the steelmaking coal unit of Teck Resources in July following a protracted battle over the business with the Canadian company.

The Swiss commodities trading and mining group had considered merging the newly acquired business, Elk Valley Resources, with its own coal activities and spinning it off.

But Glencore said that after consulting its shareholders, most expressed a preference for retaining the coal and carbon steel materials business.

“I certainly am convinced that it’s the right decision,” Glencore CEO Gary Nagle said in a telephone conference.

The company has argued it needs the cash flow from its coal mines to invest in raw materials useful for the green transition, such as copper and cobalt.

“Following extensive consultation with our shareholders, whose views were very clear, and our own analysis, the Board believes retention offers the lowest risk pathway to create value for Glencore shareholders today,” chairman Kalidas Madhavpeddi said.

“The expected cash generative capacity of the coal and carbon steel materials business significantly enhances the quality of our portfolio,” Madhavpeddi added in a statement.

Published in Dawn, August 8th, 2024