Hedge fund activists take aim at former Santos chairman Peter Coates

The activist European hedge fund agitating for Glencore to carve off its thermal coal assets has a new target: former Santos and Minerals Council chairman Peter Coates.

Former Santos chairman Peter Coates. Picture: AAP

The activist European hedge fund agitating for Glencore to carve off its thermal coal assets – largely located in Australia – has a new target: former Santos and Minerals Council chairman Peter Coates.

Mr Coates, a prominent businessman who sits on the board of hotels and cinema operator Event Hospitality, is a Glencore director and chairman of its health and environmental committee.

London-based Bluebell Capital Partners has been campaigning for Glencore to spin off its coal business, and says doing so would result in a share price increase of up to 45 per cent.

Despite it managing around €200m ($295m), Bluebell has run other successful campaigns including one against Danone, the French food products conglomerate which replaced its chief executive and chairman last year.

In a statement on Friday, Bluebell said it would vote against approving Glencore’s 2021 climate progress report and the re-election of Mr Coates at the annual general meeting on April 28.

Bluebell said that despite overwhelming shareholder support for prioritising the reduction of coal production “in line with the electrification and decarbonisation of global energy systems”, Glencore had instead “embarked on several initiatives to increase coal production capacity”.

The fund said the company’s emissions reduction targets – a 100 per cent cut by 2050 – were “so backloaded and vague that the existing board of directors could not be held accountable for any failure to meet those long-dated targets, which would almost definitely exceed their tenure”.

“Peter Coates joined the board in April 2011 and is its longest-serving member,” it said.

“Mr Coates does not qualify as independent and nevertheless accepted to chair the health, safety, environmental and communities committee, from which we deem that he has failed to address any of the environmental issues previously highlighted.”

Glencore in December dismissed Bluebell’s suggestions and said it was “confident that our business model is uniquely placed to produce, recycle and market the materials needed to decarbonise energy while reducing our own emissions and delivering value for stakeholders”. Its head of investor relations, Martin Fewing, separately disputed Bluebell’s claims that coal production increases were at odds with the decarbonisation targets.

“Specifically, our existing coal production base declined significantly over the next 13 years. The additional projects referenced in your letter offset part of this decline, while the overall portfolio remains in compliance with our Paris-aligned reduction targets,” Mr Fewing wrote in February in response to correspondence from Bluebell chief investment officer Giussepe Bivona.

Bluebell and Mr Bivona, a former Goldman Sachs banker, have questioned whether Glencore has increased coal mining capacity despite claiming to be phasing out the sector. They point to the purchase of the Cerrejon mine, an announcement that the company was exploring a greenfield coal mine in central Queensland and the February decision to extend the life of Glendell mine in the NSW Hunter region.

In a lengthy presentation also released at the weekend, Bluebell said the separation of the coal business would make Glencore “a pure-play clean energy transition equity story and would expand the potential investor base”.

“We believe Glencore’s equity story is somewhat muddled by a significant exposure to coal and excessive complexity with too many under-scale and non-core assets,” it said.

Bluebell is also pointing to the publicly announced intentions of major investors including BlackRock, Prudential, Credit Agricole and Allianz to divest from coal.

Of 102 asset managers surveyed, Bluebell said 44 already had no tolerance to coal exposure, 12 were targeting a full exit from coal before 2027, and 50 would exit companies for which coal represented between 5 and 30 per cent of revenues.

Glencore’s coal exports from Australia surged last year to the highest level since 2019 – before the Covid-19 pandemic and Chinese restrictions on Australian imports.

Glencore is one of Australia’s largest exporters of coal, and operates 17 mines across NSW and Queensland. The company says the mines employ 9900 workers.

Its Viterra grains subsidiary, which Bluebell is also advocating be sold off, is one of the largest local agricultural businesses.