Glencore to take sole ownership of Cerrejón thermal coal mine from BHP, Anglo American in $US588m deal
The Columbian deal consolidates Glencore’s ownership of the mine, and will help accelerate the exit from thermal coal of both BHP and Anglo.
Glencore will take sole ownership of the giant Cerrejón thermal coal mine in Colombia, paying $US588m to buy out joint venture partners BHP and Anglo American.
The deal consolidates Glencore’s ownership of the mine, and will help accelerate the exit from thermal coal of both BHP and Anglo.
While outgoing Glencore boss Ivan Glasenberg had previously promised to progressively reduce the global mining major’s exposure to thermal coal, Glencore said on Monday it believed the decision to take full control of the mine was the “right decision”.
“The progressive expiry of the current mining concessions by 2034 is in line with our commitment to a responsible managed decline of our coal portfolio. Production volumes are expected to decline materially from 2030,” the company said.
Glencore said the selling its own share of the mine would not be in keeping with its promise to manage the decline of its thermal coal operations, and would not help reduce global greenhouse gas emissions.
“The alternative is one or more new JV partners acquiring these shares and compromising the sustainable operating philosophy of Cerrejón, and extending production beyond the current mining concessions,” the company said.
To calm investor jitters over the reversal of its previous position on acquiring more thermal coal assets, Glencore said it would up its existing medium term commitments to reducing its own carbon footprint, promising to cut its total emissions – including both its own and those of its customers through scope 3 emissions – by 50 per cent by 2035, up from a previous target of 40 per cent.
Glencore also said it would introduce a new short-term carbon reduction target of 15 per cent by 2026, from 2019 levels.
Mr Glasenberg said Glencore had been involved with the Cerrejón mine for more than 20 years, and believed it was the most responsible steward to manage the operation’s decline.
“Disposing of fossil fuel assets and making them someone else’s issue is not the solution and it won’t reduce absolute emissions,” he said in a statement.
“We are confident we can manage the decline of our fossil fuel portfolio in a responsible manner that is also consistent with meeting the goals of the Paris Agreement, as demonstrated by our strengthened total emission reduction targets.”
The sale of its share of Cerrejón takes BHP one step closer to achieving its exit of thermal coal, with the company still looking for a buyer for its Mt Arthur mine in NSW.
In a statement, BHP said it will take a $US80m impairment on the value of the asset in its annual financial results, due in August, and said it expects the transaction to close in the first half of 2022.
“Selling BHP’s financial interest to a current Cerrejón shareholder who understands the operation represents a strong outcome for Cerrejón and the stakeholders it supports,” the company said.
BHP shares closed up 50c to $48.40 on Monday.