Investors push Glencore to scrap spin-off of heavily polluting coal division

Glencore has scrapped plans to spin off its coal business after shareholders urged the commodities company to hold on to the highly profitable but heavily polluting division.

The FTSE 100 company said that an overwhelming majority of its shareholders favoured retaining the coal business over its plan to list the division as a separate company on the New York stock exchange.

More than 95% of Glencore’s investors favoured keeping the business primarily on the basis that the fossil fuel would enhance the company’s “cash-generating capacity”, which would “accelerate and optimise the return of excess cashflows to shareholders”, the company said.

“They recognise that cash is king,” said Gary Nagle, the company’s chief executive.

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Nagle drew up the now defunct restructuring plan last year, saying it would help create more shareholder value for both companies by listing them in separate markets.

Under the plans, Glencore was expected to merge its own coal business with the steelmaking coal division of its recent acquisition, Canada’s Teck Resources, and list the new company in New York.

Glencore emerged as one of many fossil fuel companies expecting to tap the US markets, where investors tend to take a more lenient view on polluting companies than many European investors.

Tribeca Investment Partners, an Australian hedge fund, wrote to Glencore earlier this year to urge the company to keep hold of its coal division and move its primary market listing from the UK to Australia, where it employs more than 17,000 staff at a string of coalmines across the country.

The hedge fund said the London Stock Exchange was “no longer the home of mining” due to the “low appetite for mining investment” among climate-conscious European investors.

However, Nagle said the industry was now a “dynamic space” in which views on environmental, social and governance (ESG) issues had “moved materially”.

He said: “The ESG pendulum has swung back over the last nine to 12 months. The world has recognised the need for coal as we decarbonise.”

The comments are likely to anger green groups that have campaigned against coal on the grounds it is one of the most polluting fossil fuels, and a leading contributor to the rise in global emissions, which has hastened the climate crisis.

Glencore confirmed the board would heed the calls of its shareholders to retain the coal division, despite its heavy carbon footprint, alongside a 33% slump in its underlying profits for the first half of the year to $6.3bn (£5bn) compared with $9.4bn in the same months last year.

The company’s former executives, including its billionaire former head of oil trading, have recently been charged with conspiring to make corrupt payments to benefit the firm’s oil operations in West Africa between 2007 and 2014.

Alex Beard, who ran Glencore’s oil division from 2007 until his retirement in 2019, will face charges alongside the former Glencore executives Andrew Gibson, Paul Hopkirk, Ramon Labiaga and Martin Wakefield after a long-running Serious Fraud Office investigation into allegations of bribery at the company.

Nagle said Glencore now has a “best in class, gold-standard compliance programme” that has created a “responsible and ethical” business. “It’s something we work on every day,” he said.