Close your coal mines, investor tells Glencore: FTSE 100 mining giant urged to ditch fossil fuels even if £18bn nosedive on rival fails
- Glencore urged by activist investor Bluebell Capital to abandon its coal interests
- Coal has been very lucrative for Glencore
- Miner made billions of dollars from rising prices after the war in Ukraine
Commodity giant Glencore has been told by an influential investor to stop its environmentally unfriendly mining activities without delay.
The FTSE 100 company was planning to sell its controversial coal division as part of an £18bn takeover bid for Canadian rival, Teck Resources.
Under the proposed deal, Glencore wanted to merge its coal business with Teck’s, spin off the combined operation into a separate company, and then float it on the New York Stock Exchange.
That idea was thwarted when Teck rejected Glencore’s overtures. Canadian mining tycoon Norman Keevil, the controlling investor in Teck, says he will not sell to Glencore at any price.
But Glencore is now being urged by activist investor Bluebell Capital Partners to abandon its coal holdings as soon as possible – even if the Teck deal falls apart.
Lucrative: Glencore made billions of dollars last year thanks to rising prices after the war in Ukraine
Coal has been very lucrative for Glencore, which made billions of dollars last year on rising prices after the war in Ukraine.
However, Giuseppe Bivona, a partner at Bluebell, said Glencore could get a higher valuation if it got rid of coal and focused on its holdings in copper, which is in high demand for renewable energy technology as the world moves away from fossil fuels.
Glencore’s current market value is approximately £58 billion.
“The Teck deal is management’s first time acknowledging that it needs to spin off coal,” Bivona said. “The share price is low because of the coal trade. Many investors would love to own Glencore, but the coal business is holding them back,” he added. “Glencore should spin it off and focus instead on becoming a leading player in copper.”
Bluebell believes Glencore has let the cat out of the bag on coal and needs to sell the division quickly. Previously, the strategy was to gradually phase out the coal activities. Gary Nagle, CEO of Glencore, said last week that he does not want to sell the coal business if the Teck acquisition falls through. He has not yet conceded defeat and analysts expect Nagle to make a higher bid.
Thermal coal, which is burned in power stations to generate electricity, is the world’s most polluting fossil fuel – and is shunned by investors who increasingly claim to embrace green views.
Glencore mines a variety of metals and minerals – including cobalt, copper, nickel and iron ore – as well as being one of the world’s largest commodities trading houses.
It produces thermal coal in Australia, South Africa and South America.
London-based Bluebell has never disclosed the size of its investment in Glencore, despite it being one of its biggest bets. It first spoke out against the company’s coal strategy in 2021.
The activist has an influential voice despite managing just £160m in assets, making it a minnow in City terms. It previously campaigned against drug giant GlaxoSmithKline, French media group Vivendi and luxury goods group Richemont.