Canary in the coal mine

Welcome back to The Strawman, the daily climate newsletter that's more refreshing than a morning ice bath.

Today, we're diving into the rocky terrain of Glencore's climate plans - things are a-movin, and we’re here to get to the bottom of it.

Let’s get started.

Setting fire to a cash cow

Glencore makes the big bucks - in 2022 alone, they netted over $17Bn in profit - that’s a whole lotta moolah.

Now? They’re getting grilled, and not just because it's barbecue season.

See, despite the fact Glencore gets up to a bunch of different stuff, their coal-mining operations have become the hot potato no one wants to hold.

For a while they’ve been talking the talk of bringing down their emissions, but now investors want them to walk the walk.

At the upcoming AGM, investors are demanding explanations about how Glencore's position as the world's biggest thermal coal producer outside China and India aligns with its climate goals.

The heat is on, and Glencore will have to find a way to make their coal business look less like an inconvenient truth and more like a sustainable strategy.

Divorce as a business strategy

Caught between a rock (a profitable coal mine) and a hard place (increasing climate change awareness), Glencore is mulling over an intriguing strategy.

The proposition is to buy Teck Resources and split the merged business into two - one focusing on coal, and the other on metals.

It’s a straightforward idea - there are investors that won’t invest in Glencore because of the coal mining which depresses the value of the company. If you split that part of the business off, the investors that have a conscience are free to invest in Glencore’s non-coal operations.

The result? Increased share prices (and more transparency on the climate action taken by the resulting entities!)

Everyone wins (maybe?)

Will this deal happen? Whether they opt for a messy break or a conscious uncoupling, any potential split will mark a major shift in strategy for the mining company.

A Shareholder Standoff

Not all of Glencore's shareholders are singing the same song. While some have been calling for a spinoff of the coal unit since 2021, CEO Gary Nagle has stated that many still want the coal business to stay within the company.

The stage is set for a dramatic annual general meeting this Friday, with a resolution on coal disclosure ready to shake things up like a tectonic shift. How this unfolds might just dictate the path Glencore takes towards its climate goals.

See ya tomorrow,

The Strawman