Glencore plans leadership shakeup this year

Falling commodity prices, multiple corruption and bribery investigations and a large exposure to coal as the global economy grapples with climate change have weighed on Glencore in recent years, adding to pressure for changes at the top.

“We want a smooth generation change. There will be a few senior management changes coming this year. Once the new generation is in place and ready to move on, then it will also be the time for me to move on,” Glasenberg told reporters.

Glasenberg, the company’s second-biggest shareholder with a 9% stake, said in 2018 that he would step aside in 3-5 years. In recent years, the company appointed some new division heads to cover marketing and assets for coal, ferroalloys, copper and oil.

Long-time head of copper Telis Mistakidis retired in 2018 and head of oil Alex Beard most recently in June.

When asked by reporters if he could step down this year, Glasenberg said “Don’t know. Let’s first get these other management changes in place and we’ll move from there.”

Glencore reported its first annual net loss since 2015 on Tuesday after taking a $2.8 billion impairment charge to reflect the closure of its African copper business, which suffered from low cobalt prices, the expiry of licenses at its Chad oil operations and weak demand for coal from Europe.

Glencore’s coal operations in Colombia, where it runs the Prodeco and Cerrejon mines, ship mainly to Europe, where cheap gas prices have made it harder to compete.

Colombia accounted for about 17% of Glencore’s coal production in 2019.

“The amount of coal being consumed in the Atlantic is decreasing... I don’t see a big recovery and it will continue to decrease,” said Glasenberg.

“The reserves are depleting in Colombia, by 2035, we won’t have any production in Colombia.”

Overall, the Anglo-Swiss miner reported a net loss of $404 million for 2019, compared to a profit of $3.41 billion a year earlier.

Its core earnings or adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $11.6 billion beat analysts’ estimates of $11.25 billion.

Shares in Glencore, which fell 19% last year, were down 3.5% in London at 1045 GMT. Its stock has underperformed its peers due to exposure to coal and multiple corruption probes linked to its operations in Nigeria, Venezuela and the Democratic Republic of Congo. Glencore is cooperating with the investigations.

“Glencore has reported 2019 EBITDA of $11.6bn ahead of consensus of $11.25bn. This is a strong beat we think with clear improvements across all the difficult business areas in H1 2019,” Credit Suisse said in a note.

The company completed $4.7 billion in distributions and buybacks in 2019, comprising a $0.20 per share ($2.7 billion) base distribution in respect of 2018 cash flows and $2 billion of share buy-backs.

Glencore said there was a chance to continue buybacks in 2020 depending on cash flow and the strength of its balance sheet.

The company cut the value of its oil business in Chad by $538 million last year. Since 2015, it has booked impairments of $2.4 billion on assets in Chad.

Glencore is facing bribery investigations by authorities in the United States, the United Kingdom and Brazil. The company said its legal costs jumped to $159 million from $86 million in 2018, largely due to the probes.

The company said it expected carbon emissions from the use of its products, or Scope 3, to fall by around 30% by 2035, largely due to falling coal output, becoming the first of the major mining companies to make such a projection.