Last week, Glencore announced that it had raked in more than $18 billion in profits during the first half of this year. This figure, the mining and commodities trading company stated, could be attributed to its thriving thermal coal business and was more than double its 2021 profit for the same period.
Glencore CEO Gary Nagle stated that higher rates of interest, a global economic slowdown and inflation would likely decrease its earnings in the second half of 2022. He noted, however, that Glencore’s long-term commodity outlook remained positive. The company predicts that its adjusted earnings for the year will stand at no less than $32 billion.
Glencore has continued to mine coal, unlike other players such as BHP, Rio Tinto and Anglo American, which gave in to pressure from investors to exit fossil fuels. The price of coal has reached record highs after the war brought about by Russia’s invasion of Ukraine caused an energy crunch in the global energy market.
Glencore’s records show that its coal division generated almost $9 billion in earnings the first half of 2022. This is a high figure in comparison to earnings from the zinc and copper divisions, which stand at $1.3 billion and $3.3 billion respectively. Glencore’s report also shows that the half-year adjusted operating profit for its trading division stands at $3.7 billion. The company’s strong results will allow it to return roughly $4.4 billion to its stakeholders in share buybacks and dividends. This will bring its total returns to shareholders for 2022 to more than $8 billion.
Currently, Glencore produces more than a hundred million tons of coal annually at its mines in South Africa, Australia and Colombia. However, plans are underway to close down its mines by the mid-2040s. Figures show that the company is the largest producer of coal in Australia, with 25 mines in Queensland, New South Wales and other regions in the nation.
Earlier in May, the company revealed that it had paid bribes in a number of countries in Latin America and Africa between 2007 and 2018. It also admitted to agreeing to pay more than $1 billion to regulators in Brazil, the United Kingdom and the United States. In addition to this, Glencore is still facing investigations from Swiss and Dutch regulators. In 2016, the company began phasing out the use of intermediaries, as dealmakers and agents play a big role in the facilitation of corruption and bribery.
The booming global market for coal has most likely benefited other actors in this space, such as Alliance Resource Partners L.P. (NASDAQ: ARLP).
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