More heads to roll at Glencore this year

Glencore CEO Ivan Glasenberg. (Image courtesy of ComLikes via YouTube.)

Mining and commodities trader Glencore (LON: GLEN) is planning more management changes this year as it makes the transition towards a new, younger generation of leaders.

The Swiss giant has faced growing investor concern about climate change due to its heavy presence in the thermal coal market (it’s the world’s largest supplier of the fossil fuel). That, together with multiple corruption and bribery investigations, as well as a steep decline in the kind of coal it produces, has prompted Glencore to speed up planned changes at the top.

Corruption and bribery probes, falling commodity prices and large exposure to coal are some of the issues forcing Glencore to look for new, younger generation of leaders

“There will be a few senior changes coming,” chief executive Ivan Glasenberg said in a conference call on Tuesday, after delivering annual results, without giving further details. “As I have said, once the new generation is in place and ready to move on, it will also be time for me to move on.”

In its nearly 50-year life as a company, Glencore has had just three chief executives, including its founder Marc Rich.

Glasenberg, the company’s second-biggest shareholder with a 9% stake, according to Refinitiv Eikon data, said in 2018 that he would step down in three to five years. At the time, he added the firm had begun training a small group of front runners to take over the post.

Since then, Glencore has appointed some new division heads to cover marketing and assets for coal, ferroalloys, copper and oil.

Glasenberg’s comments come as the company reported its first annual net loss since 2015 as it took a $2.8 billion impairment charge to reflect the closure of its African copper business. The company’s results were also hit by falling cobalt prices, the expiry of licenses at its Chad oil operations and low demand for coal from Europe.

Adjusted earnings before interest, tax, depreciation and amortization fell 26% to $11.6 billion in the year to December due to weak prices for Glencore’s key commodities including copper, thermal coal and zinc.

Results, however, still exceeded market forecasts by about $400 million. Revenue was $215 billion, down from $220 billion, while net debt increased to $17.6 billion, from $14.7 billion a year earlier.

Tackling Scope 3 emissions

Glencore also highlighted its progress towards reducing its so-called Scope 3 emissions, those generated by its products when consumed. It anticipates that they will drop by 30% in the next 15 years, mainly as a result of its Colombian and South African coal mines running out of ore.

The Baar, Switzerland-based firm cut the value of its Cerrejón unit in Colombia — which mostly sells to Europe — by almost $1 billion as it adjusts to a declining sector. It also plans to stop mining coal in the South American country by 2035.

The forecast, based on current mine plans rather than a fixed target, did not indicate how much coal output would be axed to meet the goal.