Mining giant Glencore pledged on Wednesday to limit its coal production and instead prioritise investment in other commodities needed as part of a transition towards cleaner energy and transportation.
“To meet the growing needs of a lower carbon economy, Glencore aims to prioritise its capital investment to grow production of commodities essential to the energy and mobility transition and to limit its coal production capacity broadly to current levels,” the firm said in a statement.
Switzerland-based Glencore, which also trades commodities, noted that it was well-positioned to support the transition to a lower-carbon economy with a portfolio that includes copper, cobalt, nickel, vanadium and zinc.
The metals are important in the production of batteries, the cost and performance of which will likely be key in determining whether electric vehicles displace petrol- and diesel-fuelled vehicles.
Glencore said it believes that energy and mobility transformation “is a key part of the global response to the increasing risks posed by climate change”.
Coal, a key fuel for electricity production, is a major producer of carbon dioxide (CO2) emissions, a major driver of global warming.
Globally, coal use accounts for 40% of CO2 emissions and is on the rise after declining slightly from 2014 to 2016.
Glencore said it agreed with international efforts to limit the rise in global temperatures while also ensuring universal access to affordable energy.
The firm also said it “must invest in assets that will be resilient to regulatory, physical and operational risks related to climate change … to deliver a strong investment case to our shareholders.”
Trade ties review
The pledge to limit its coal output to current levels comes after Glencore recently increased its footprint in the sector, buying stakes in a couple of coal mines sold by Rio Tinto in Australia.
The integration of the Hail Creek and Hunter Valley should take Glencore’s coal production to 145-million tonnes in 2019 from 129.4-million last year.
Glencore said it would begin in 2020 to publish long-term projections about reducing the intensity of emissions and mitigation efforts.
It added it was on track with its pledge to reduce greenhouse gas emissions intensity by 5% by 2020 compared to 2016 levels.
Glencore also said it would review its membership in trade associations in line with its climate change positions.
The coal announcement came as Glencore announced its 2018 net profits tumbled 41% to $3.4-billion.
However, the firm said its measure of operating profit — adjusted earnings before interest, tax, depreciation and amortisation costs — rose by 8% to a record $15.8-billion.
The firm’s commodity trading business saw its operating earnings fall by 17% to $2.4 billion, but mining rose 15% to $13.3-billion.
Glencore announced it would pay a dividend of 20 cents per share, the same as last year.
In addition to the $2.8-billion, it will return to shareholders through the dividend, Glencore also announced a new programme to buy back at least $2-billion in shares this year.
Shares in Glencore rose by 0.6% in morning trading in London, while the blue-chip FTSE 100 index was flat overall.
© Agence France-Presse