JOHANNESBURG (miningweekly.com) – Diversified mining and marketing company Glencore is ready to support the transition to a low-carbon economy, CEO Ivan Glasenberg said on Tuesday when the company reported finishing 2020 with earnings before interest, taxes, depreciation and amortisation (Ebitda) of $11.6-billion, Covid-19 notwithstanding.

“The Covid-19 pandemic is an extraordinary challenge that continues to impact many aspects of day-to-day life. Against this backdrop, the strength of our 2020 underlying performance is a credit to our highly skilled and dedicated employees, and also reflects our unique business model and ability to quickly adapt to changing market conditions and customer needs,” Glasenberg said.

"Navigating from recessionary conditions in the first half to a strong price recovery for most commodities in the second, an outstanding marketing performance lifted earnings before interest and tax by 41% to $3.3-billion, while Industrial adjusted Ebitda fell 13% to $7.8-billion, primarily reflecting weaker coal prices.

"A notable improvement was seen at our Katanga operation in the Democratic Republic of Congo, where its successful ramp-up lifted Africa copper Ebitda to $712-million from a loss of $349-million in 2019.

"Strong second half cash flows repositioned net debt of $15.8-billion within our target range, allowing for the resumption of distributions. A distribution of $0.12 per share is recommended to shareholders.

“As the world focuses on the pathway to recovery from Covid-19, it is clear that meeting the goals of the Paris Agreement has taken on even greater urgency.

“While innovation and technological advances have transformed how we live and work, the commodities needed to enable this have not. Our commodities are essential in developing all facets of infrastructure needed to deliver the goals of energy and mobility transition.

“We are focused on playing our part in supporting the Paris goals and have set out a clear strategy to address our total emissions footprint – being Scope 1, 2 and 3 emissions.

“Glencore has been transforming the global commodities industry for nearly half a century, growing from a trader of ferrous and non-ferrous metals, minerals and crude oil, into one of the world’s largest natural resource companies.

“Today, the business and its portfolio of commodities is uniquely positioned for the needs of the future. It is ready to support the transition to a low-carbon economy and realise its ambition of net zero by 2050. We remain focussed on creating sustainable long-term value for all stakeholders while operating in a responsible manner across all aspects of our business,” Glasenberg stated in a release to Mining Weekly.

PATHWAY TO NET ZERO

The company stated that a clear emerging force was the growing global momentum and increasing consensus around achieving the goals of the Paris agreement and targeting net zero global carbon emissions.

It added that Europe and more than 110 countries had announced ambitions to achieve carbon neutrality by 2050, supported more recently by China’s plans to target net zero emissions by 2060.

"We recognise our responsibility in contributing to the global effort to achieve the goals of the Paris Agreement through decarbonisation of our own operational emissions footprint. However, we believe our contribution should take a holistic approach and consider our commitments and ambition through the lens of our total emissions footprint. In line with the 1.5 ºC more ambitious scenarios set out by the Intergovernmental Panel on Climate Change, we target a 40% reduction of our total (Scope 1, 2 and 3) emissions by 2035 on 2019 levels.

“Post 2035, our ambition is to achieve, with a supportive policy environment, net zero total emissions by 2050. Meeting everyday needs for affordable and reliable energy while decarbonising the economy is a key global challenge.

“Our industry will need to significantly increase the supply of various raw materials required to meet the projected acceleration in demand for such transition commodities in order to electrify and/or decarbonise existing fossil-fuel based energy demand.

“Our modelling indicates that annual average mine supply growth in several key metals will need to double (in units of supply growth) over the coming decades under a Rapid Transition pathway scenario. The majority of our earnings comes from the metals and minerals that enable the transition to a low-carbon economy. We are one of the largest global producers of copper, nickel, zinc, vanadium and cobalt and will continue to prioritise investment into these commodities. In addition, our recycling centres and metallurgical assets play a fundamental role in the circular economy by reducing new metal consumption and waste generation,” Glencore added.

MEETING ENERGY NEEDS AS SOCIETY MOVES THROUGH TRANSITION

“The world currently depends on fossil fuels (coal, natural gas and oil) for around 80% of its primary energy demand. Coal currently accounts for about 25% of global energy use, and while this will decline over time, it continues to make some contribution in all plausible climate change scenarios to 2050,” the company said.

“For many countries, an affordable, secure energy source is key to their socio-economic and industrial development, being the primary pathway for populations to develop key infrastructure and achieve economic growth and higher standards of living.

“Our thermal coal business represents less than 5% of our revenues and is envisaged to be in the region of 10% to 15% of our Ebitda in the medium term (was 8% in 2020) and decline towards zero over the longer term.

“Future demand for coal through the transition underway will be a key determinant in the continued operation of our mines. Selling our coal mines does not remove their associated emissions. While there is demand for coal, and it is economic to do so, we will continue to operate our mines until they reach the end of their lives.

“Through responsible stewardship of these assets and a commitment to a managed decline of our coal portfolio, including maintaining a focus on our high-quality coal assets in Australia, we will deliver on our ambition to reduce our total emissions in line with the goals of the Paris Agreement.

“An example of our actions is the recent announcement to commence the process to relinquish Prodeco’s mining licences in Colombia. Glencore’s carbon dioxide equivalent (CO₂e) emissions reduction commitments make us unique amongst our peers with a medium-term Paris-aligned total CO₂e emissions reduction target of 40% and a 2050 net zero ambition for Scope 1+2+3. All decarbonisation scenarios that we have modelled are net positive for Glencore and our climate commitments confirm our intention to be part of the solution,” the company reiterated.