Industry Analysts Expect Glencore to Maintain Coal Operations After Teck Deal

Analysts Predict Glencore's Strategic Decision to Retain Coal Assets After Acquiring Teck Resources' Steelmaking Coal Business

Editorial Team (ET)July 1, 2025

In a significant move within the mining industry, Glencore has acquired the majority of Teck Resources' steelmaking coal business. This acquisition marks a strategic expansion of Glencore’s coal operations, positioning the company for continued strong revenue generation from its coal assets.

Background on Glencore

Glencore, a leading multinational commodity trading and mining company, has a well-established presence in the coal sector. Historically, the company has been one of the largest producers and exporters of thermal coal, contributing significantly to its revenue streams.

Teck Resources: A Brief Introduction

Teck Resources, a prominent player in the mining industry, is known for its substantial contributions to the steelmaking coal market. The steelmaking coal business is a critical component of Teck's portfolio, playing a vital role in the global steel production supply chain.

Details of the Acquisition

The acquisition deal between Glencore and Teck Resources involves Glencore taking over the majority of Teck’s steelmaking coal assets. This strategic move is expected to bolster Glencore's production capacity and enhance its market position in the coal industry.

Market Reaction

The market's initial response to the acquisition has been mixed. While some shareholders appreciate the potential for increased cash flow and capital returns, others have expressed concerns about the environmental implications of maintaining a strong coal portfolio.

Glencore’s Coal Business Post-Acquisition

Following the acquisition, Glencore’s coal production is projected to see a significant increase. The company expects its 2024 steelmaking coal output to rise to between 19 and 21 million tons, up from the previous range of 7 to 9 million tons.

Shareholder Consultation on Coal Assets

Glencore is currently consulting with its shareholders to gauge their views on whether the combined coal assets should remain part of Glencore or be spun off into a separate entity. The decision, which will be announced at the company’s interim financial results on August 7, is pivotal for the future direction of Glencore’s coal business.

Environmental Considerations

Coal's role in global warming is a significant concern for many investors. Despite the environmental controversies, Glencore remains committed to its coal operations, which are expected to continue contributing substantially to its revenue.

Analysts’ Perspectives

Analysts from Jefferies, UBS, and Bank of America have weighed in on the acquisition and potential demerger of Glencore’s coal assets. The consensus among these analysts is that a demerger is unlikely due to the strong cash flow generated by the coal business, which is attractive to investors focused on capital returns and buybacks.

The Potential Demerger

The idea of spinning off Glencore’s coal assets has been met with mixed reactions. While some believe it could lead to short-term price gains, others argue that it would not address the underlying environmental issues, especially if the assets become privately owned and less transparent.

Future of Glencore’s Coal Assets

Glencore has previously indicated plans to gradually phase out its thermal coal mines by the mid-2040s. However, with the new acquisition, the company’s short-term focus remains on maximizing output and revenue from its expanded coal portfolio.

Global Coal Market Dynamics

The global coal market is currently characterized by high demand and supply constraints, driving prices up. Glencore's strategic positioning and increased production capacity place it in a favorable position to capitalize on these market dynamics.

Comparison with Competitors

Glencore’s acquisition of Teck’s coal assets strengthens its competitive edge in the coal industry. Compared to other major players, Glencore’s comprehensive approach to managing its coal operations provides it with a unique advantage.

Financial Performance

Glencore’s first-half production results showed lower outputs in several key commodities, including copper, nickel, zinc, coal, and cobalt. However, the company’s 2024 guidance for copper production remains unchanged, indicating stability in its core operations.

Conclusion

Glencore’s acquisition of Teck’s steelmaking coal assets marks a strategic expansion that underscores the company’s commitment to its coal business. Despite environmental concerns and market fluctuations, Glencore remains focused on leveraging its coal operations to drive revenue and shareholder value.

CoalGlencore

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