Glencore PLC has completed the acquisition of a 77% interest in Elk Valley Resources (EVR) and conducted a consultation process to assess shareholder views on retaining or demerging the coal and carbon steel materials business. Over 95% of shareholders expressing a preference supported the retention of the business, citing its potential to enhance cash generating capacity and fund opportunities in the transition metals portfolio, such as the copper growth project pipeline. Shareholders also expressed skepticism about the potential valuation uplift from a demerger and emphasized the importance of steelmaking coal in supporting the energy transition infrastructure.
The Board concluded that, considering both risk and opportunity scenarios, retention of the coal and carbon steel materials business currently provides the optimal pathway for value creation for Glencore shareholders. The decision to retain the business resets the previous net debt cap shaping the shareholder returns framework at around $10 billion, with the option to consider a demerger in the future if circumstances change.
Kalidas Madhavpeddi, Chair of Glencore, stated, "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."
The company will continue to oversee the responsible decline of its thermal coal operations over time and assess how to integrate the EVR assets into its climate transition strategy. Glencore also maintains the option to consider a demerger of all or part of the business in the future if circumstances change.
The decision to retain the coal and carbon steel materials business follows feedback that shareholder preferences may have evolved, with many no longer supportive of a demerger due to evolving views on ESG, increased support for Glencore's climate strategy, and the recognition of the difference between steelmaking coal and thermal coal.
Glencore is one of the world's largest global diversified natural resource companies, producing, processing, recycling, sourcing, marketing, and distributing commodities that support decarbonization while meeting today's energy needs.