Glencore, the world’s largest publicly-traded coal producer, rebuked Environmental, Social, and Governance (ESG) investing after a majority of its shareholders voted against “spinning off” coal. They cited profitability as a reason to retain the power source and carbon steel materials.
“Over 95% of shareholders that specifically expressed a preference for retention or demerger supported the retention of the coal and carbon steel materials business, primarily on the basis that retention should enhance Glencore’s cash generating capacity to fund opportunities in our transition metals portfolio, such as our copper growth project pipeline, as well as accelerate and optimise the return of excess cash flows to shareholders,” their press release announced on August 7th, 2024.
Following this development, Glencore’s shares rose 2.4%—after seeing a $233 million loss of profits for the first half of 2024.
The company CEO’s, Gary Nagle, attributed this to the ESG pendulum swinging against the controversial investing strategy “over the last nine or 12 months” and cited Republican pushback to ESG as the reason behind this negative trend.
Nagle also noted shareholders believe the aims of ESG, especially deviating from a goal of maximizing profits, are not profitable because they “do still recognize that cash is king…and the fact that these businesses generate huge amounts of cash.”
That’s true of Glencore, as it raked in $10 billion from coal-mining activities in the first half of 2024.
While frequently vilified as an energy source here and abroad, coal is still heavily consumed. In 2022, global coal consumption reached record highs following Russia’s invasion of Ukraine. Domestically, coal still accounts for 19.5% of total U.S. electricity generation (as of 2022 figures).
As I noted in November 2022, it’ll be impossible and impractical to fully phase out coal:
Much to the chagrin of clean energy proponents, phasing out coal has downstream negative effects on electricity generation and consumption of common products.
Coal is the most abundant domestic-energy source, unlike solar and wind which heavily rely on questionably-sourced imported minerals. Even CNBC concedes that when so-called clean energy fails to power the grid, traditional fuels would be used as “backup when renewables fail to carry through.” And for electric vehicles to charge, they require coal-powered electricity.
Much to the net-zero movement’s chagrin, coal plants—like natural gas plants—supply 60% of the U.S.’ reliable baseload power. Since our nation is witnessing a period of increased electricity demand, we need to further harness sources like coal, where appropriate—not abandon it.
To learn more about coal, go HERE.