Mining Technology

Daily Newsletter

10 August 2023

Daily Newsletter

Glencore H1 2023 profits decline on lower commodity prices

The company's adjusted EBITDA stood at $9.39bn and its total revenues were $107.41bn.

Glencore has reported net income attributable to equity holders of $4.56bn (€4.15bn) in the first six months of 2023, a 62% plunge from $12.08bn in the same period last year, which gained from rising prices in the fallout from the Ukraine conflict.

The decrease in H1 2023 was driven by reduced commodity prices amid an easing of market volatility compared with a year earlier.

The Anglo-Swiss commodity mining and trading company posted adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $9.39bn in H1 2023, compared with $18.91bn a year earlier.

Glencore CEO Gary Nagle said: “Against the backdrop of a normalisation of commodity market imbalances and volatility, primarily across the energy spectrum, our marketing and industrial segments posted a healthy earnings performance, delivering group-adjusted EBITDA of $9.4bn, cash generated by operating activities of $8.4bn and net income attributable to equity holders of $4.6bn.”

Revenues dropped 20% from $134.43bn to $107.41bn.

Net debt at the end of June 2023 stood at $1.54bn vs $75m at the end of 2022.

“Reflecting these solid headline earnings, together with a $3.7bn release of net working capital, including $1.4bn of readily marketable inventories, net funding remained static over the period, after disbursing $5.2bn of shareholder returns, $2.5bn of net capital expenditure and $2.7bn of final 2022 tax payments in Australia and Colombia. Net debt finished the period at $1.5bn,” Nagle added.

Glencore also said it has increased the total shareholder returns for 2023 to around $9.3bn through a special cash distribution of around $1bn, and a buyback programme of $1.2bn.

This is less than the amount earmarked in the previous year, as the company looks to set aside more cash for the complete or partial acquisition of Canada’s Teck Resources.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.