Glencore no longer plans to demerge its coal business after an “overwhelming majority” of shareholders told the mining giant to retain the division.
The FTSE 100 constituent had planned to spin off its coal business after it completed the $7bn (£5.51bn) acquisition of Teck Resources’ steelmaking coal business in November last year. However, on Wednesday, it rowed back on those plans.
The group said its shareholders had “endorsed retention… of the coal and carbon steel business… as providing the optimal pathway.”
Gary Nagle, Glencore’s chief executive, said: “Following the completion of EVR [Teck’s coal business] in early July, we undertook an extensive consultation with shareholders and based on the outcome of that process and the group’s own analysis, Glencore’s board, considering both risk and opportunity scenarios, endorsed the retention rather than demerger of the coal and carbon steel materials business.”
The FTSE 100 mining giant also published its half-year results today. Glencore posted a nine per cent jump in revenue from $107bn (£84bn) to $117bn (£92bn).
But it also slid to a net loss and suffered a 33 per cent fall in earnings before interest, tax, debt and amortisation (EBITDA).
It said the slide in performance was largely due to lower average prices for many of Glencore’s key commodities, most notably thermal coal, which has plummeted in value in recent months due to oversupply and weak demand.
It reported a net loss attributable to shareholders of $233m (£183m) and a loss attributable to marketing-related liabilities of $1bn (£787m). Its net debt to adjusted EBITDA ratio fell 10 per cent to 0.26.
But it added that the loss notwithstanding, its free cash flow generation of $6.1bn (£4.8bn) “augers well” for its full results set to report in February next year.
Nagle added: “”Against the backdrop of lower average prices for many of our key commodities during the period, particularly thermal coal, our overall group Adjusted EBITDA of $6.3 billion (£5bn) was 33 per cent below the comparable prior year period, however funds from operations were up nine per cent, due to the timing of income tax payments .
“The strength of our diversified business model across marketing and industrial has proven itself adept in a range of market conditions, giving us a solid foundation to successfully navigate the near-term macroeconomic uncertainty.”