Glencore says world has to adapt to shift in commodity trade flows

Global commodity trade flows will have to adapt to some, or all, of Russia and Ukraine’s supply being unavailable, whether owing to infrastructure damage, sanctions or ethical concerns, says global diversified miner Glencore.

Unpacking the main risks to its business in its 2021 annual report, Glencore listed the Ukraine war and persistent Covid-19 impacts as the foremost events posing risks to its operations.

The company explains that many countries, including the US, the European Union, Switzerland and the UK, alongside companies and individuals, have imposed sanctions against Russia.

Glencore says it complies with all sanctions applicable to its business activities.

Given the importance of Russian and Ukrainian supply to a number of key commodities, such as oil, natural gas, coal, grain, aluminium and nickel, volatilities in all of these have spiked, the company notes.

Glencore adds that applicable sanctions have also significantly impacted traditional commodity trade flows and will continue to do so.

Although Glencore has no operational footprint in Russia and its trading exposure is not significant, it is reviewing all its business activities in the country, including equity stakes in green energy and metals company En+ Group and integrated energy company Rosneft.

NET ZERO TARGETS

Meanwhile, since climate change also poses a significant, longer-term risk to the company, Glencore in 2020 published its Pathway to Net Zero Strategy and an update thereto in 2021.

Glencore has set itself the short-term target of a 15% reduction in total emissions by 2026 and a medium-term target of a 50% reduction by 2035, based on a 2019 baseline.

In 2021, Glencore emitted 15-million tonnes of carbon dioxide emissions (Scope 1) from consumed fuel, including emissions from reductants used in metallurgical smelters and methane emissions from coal and oil operations.

Scope 2, or indirect, emissions totalled 10.8-million tonnes.

So far, Scope 1 and 2 emissions have decreased by 13% relative to the baseline year of 2019.

Scope 3 emissions, or indirect greenhouse-gas emissions across the value chain, including from upstream supply chains, amounted to 254-million tonnes in 2021.

The company aims to achieve net zero emissions by 2050, assuming a supportive policy environment, with help from an appointed Climate Change Taskforce (CCT).

The CCT has established, in turn, four working groups to drive the delivery of Glencore’s targets, including through industrial activities, marketing activities and climate-related data and disclosures.

The company acknowledges it has a key role to play in enabling the global transition to a low-carbon economy.