Glencore Plc said its sprawling coal business should not be an impediment to any potential deal with one of its large rivals.
When Glencore and Rio Tinto Group discussed a potential deal last year — talks neither side has commented on — that coal division was seen as a major obstacle to overcome. The discussions with Rio included the potential to spin off the coal unit, one of the people said at the time.
Yet Glencore Chief Executive Officer Gary Nagle says coal should not be a barrier. Speaking after the company’s results on Wednesday, he said there was a large overlap between Glencore’s investors and the shareholders of its main rivals.
Last year, Glencore abandoned plans to spin off its coal unit after the majority of its investors said they wanted to keep the business. Its shareholders have also heavily supported its plans to manage its energy coal business to closure by 2050.
“Coal is not the four-letter word it was,” Nagle said on a call with investors.
“Who’s on our register? It’s the same shareholders as all our peers,” the CEO said, referencing Blackrock Inc., Capital Group and Vanguard Group. “If they’re happy for Glencore to keep coal, then surely if one of our peers wants to merge, buy, combine with us, if they’re happy with it in Glencore, they’d be happy with it in one of our competitors.”
Glencore is the world’s biggest shipper of energy coal and one of the top producers of steelmaking coal. While the company has kept faith with the dirtiest fossil fuel, nearly all its major rivals have either exited or announced plans to stop mining it.
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