Mining giant Glencore has seen its shares jump by 3% after reinstating its dividend, despite recent heavy losses. Announcing his last financial results before stepping down from his 20-year stint as CEO, Ivan Glasenberg assured shareholders that Glencore had navigated “recessionary conditions in the first half to a strong price recovery for most commodities in the second”.
Commodity Prices
The surge in commodity prices was good news for many companies, especially Glencore, which was able to reduce some of its massive $20bn debt down to $15.8bn. Despite its statutory loss of $1.9bn last year, the surge meant that the company was able to report a sunnier financial report than expected, and the dividend, which had been suspended last summer, was reinstated.
The announcement also pledged that Glencore will achieve net-zero carbon emissions by 2050, using the economic recovery from Covid-19 and the pressure of meeting the targets of the Paris Agreement as a key part of the business strategy going forward.
Green Tech
Green technologies often require essential commodities that Glencore is able to provide, such as copper, zinc, vanadium, nickel, and cobalt. The company argues that it has an important part to play in a low-carbon future.
Glasenberg said that it “is clear that meeting the goals of the Paris agreement has taken on even greater urgency” and that he leaves Glencore with a roadmap to ensure the company “is ready to support the transition to a low-carbon economy”.
As part of this strategy, Glencore will be reducing its coal business, focusing instead on copper. Glasenberg’s successor, Gary Nagle, inherits a company primed to supply a world ready to build a greener infrastructure, though he still faces long-term challenges such as corruption probes and the iron-ore shaped gap in Glencore’s portfolio.
Nevertheless, the parting gift of a $1.6bn dividend from Glasenberg suggests a bright future.