Coal surge, Ernest Henry sale boost Glencore books

Coal has performed well for Glencore, with the company reporting a record half-yearly profit, while the $1 billion sale of Ernest Henry in North-West Queensland to Evolution Mining also helped fill the global miner's coffers. That’s been delivered in the company’s 2022 half-yearly scorecard. Glencore chief executive officer Gary Nagle. Global macroeconomic and geopolitical events during the half created extraordinary energy market dislocation, volatility, risk, and supply disruption, chief executive officer Gary Nagle. “This resulted in record pricing for many coal and gas benchmarks and physical premia, underpinning a $US10.3 billion increase (119 per cent) in Group Adjusted EBITDA to $US18.9 billion,” Mr Nagle said. Glencore is one of the largest coal producers in Australia. It’s a significant exporter of the thermal product, where it stayed the course while other multi-nationals opted out under shareholder pressure. The price of thermal coal has reached as high as $US419/tonne in the last two months on Newcastle Coal Futures. Energy demand in Europe had surged with restrictions imposed by the Ukraine War and its position as a global commodities trader has strengthened under the disruption, the report said. Clermont, Hail Creek and Collinsville Open Cut in the Bowen Basin and Liddell Coal, Integra underground and Bulga Coal in the Hunter Valley are included among 17 Glencore operations across Queensland and New South Wales. In general, the coal contribution accounted for a 35 per cent period-on-period increased return to the company, the report said. Boost for shareholder returns Reduced debt, including the sale of Ernest Henry near Cloncurry, had improved the company’s cash position resulting in $4.5 billion top up of shareholder returns, which included a $3 billion buyback program, Mr Nagle said. Diversification had contributed to the result but there were headwinds he said. “Looking ahead, tightening financial conditions and a deteriorating macroeconomic environment present some uncertainty for commodity markets through the second half of the year,” he said. “However, with few short-term solutions to rebalance global energy markets, coal and LNG prices look set to remain elevated during this period, particularly given the current challenge of securing sufficient and reliable energy supply for the Northern Hemisphere winter ahead.’ Mr Nagle pointed out reductions in copper and zinc production in the metals industrial business. “For metals, the outlook is more complex, balancing supply risks, amid labour, water and energy shortages, supply chain disruptions, growing sovereign risk uncertainty and rising costs, against likely weakening end-use markets ex-China. “There are some recent signs of China recovering from its Q2 trough, which could help to offset potentially weaker conditions in other key consuming markets.” In the metals business, the company saw period-over-period price rises in copper, cobalt and zinc. In the case of copper, it was 7 per cent, cobalt 76 percent and zinc saw a 58 per cent increase.

Coal surge, Ernest Henry sale boost Glencore books

Industry Queensland

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