Glencore Decision on Coal Spinoff Expected Next Week — Update

By Pierre Bertrand and Dominic Chopping

Glencore could make a decision on the future of its coal business as early as next week as it mulls a spinoff of the unit.

Earlier this month, the Anglo-Swiss commodity miner acquired a majority stake in Teck Resources' steelmaking coal assets in a $9 billion deal, and has since been consulting shareholders over a potential demerger of the combined coal and carbon-steel materials business.

"We expect to be able to announce the outcome of such engagement and the decision of the board regarding the potential demerger alongside our interim results next week," Glencore Chief Executive Gary Nagle said.

However, analysts at Jefferies said in a note that they expect the London-listed company to keep hold of the business.

"We believe a coal demerger is highly unlikely, and we believe the acquisition... will prove to be a significant positive for Glencore as this is the world's highest quality metallurgical coal business by a fairly wide margin," analysts Christopher LaFemina and Patricia Hove said.

As a result of the deal, Glencore on Tuesday upgraded its steelmaking coal production guidance for the year to between 19 million and 21 million tons, from between 7 million to 9 million tons previously.

The company maintained full-year production guidance elsewhere, expecting an uptick in volumes during the second half.

"2024 is expected to be a year of two halves, whereby the tracking of our year-to-date production versus guidance is expected to be caught up during the second half of the year," Nagle said.

The company produced 462,600 metric tons of copper in the first half, down 5.2% from the same period a year ago.

Zinc production fell 4% year, while steelmaking and energy coal production declined 8% and 7% respectively. Only lead posted a production increase in the period, while gold production remained flat on year.

Write to Pierre Bertrand at pierre.bertrand@wsj.com and dominic.chopping@wsj.com

(END) Dow Jones Newswires

July 30, 2024 04:42 ET (08:42 GMT)

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