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Glencore to announce next week whether it will spin off coal

A coal stacker-reclaimer. (Bloomberg) (Brendon Thorne/Bloomberg)

(Bloomberg) -- Glencore Plc will announce whether it plans to spin off its coal business at its results next week, after completing the purchase of Teck Resources Ltd. mines earlier this month.

Coal is one of Glencore’s most profitable divisions, driving record returns in recent years. Yet the company made a major strategic pivot last year, with boss Gary Nagle unveiling a proposal to split off the unit and list it in New York.

Glencore had long resisted pressure to follow rivals in jettisoning the commodity, arguing that the world still needed the dirtiest fossil fuel and that it was more responsible to run the mines itself than sell them. Pushback to the spinoff plan from several top investors has now thrown the proposal into doubt.

“We are now in the process of consulting with shareholders to assess their views,” Glencore said Tuesday. “We expect to be able to announce the outcome of such engagement and the decision of the board regarding the potential demerger alongside our interim results.”

Glencore also reported second-quarter production numbers Tuesday and kept full-year output guidance overall, but forecast extra steelmaking-coal volumes in the second half following its acquisition of Teck’s mines.

The company gave no update on the profit outlook for its trading business, which it said in April would be US$3 billion to $3.5 billion this year.

The shares slid 2.3 per cent as of 11 a.m. in London amid a wider selloff in the sector.

©2024 Bloomberg L.P.