Glencore says inflation moderating, Australian coal dominates

afr.com:

Australia’s biggest coal miner Glencore has joined Coronado Global Resources in forecasting lower production costs in the six months ahead, as evidence mounts the coal sector’s inflation crisis may have peaked.

The Swiss miner’s belief that inflation was moderating came as it reported a 62 per cent slump in half-year profit to $US4.56 billion ($7 billion) on Tuesday. Glencore shares fell more than 4 per cent in London to £437.30.

The thermal coal mines of NSW contributed 62 per cent, or $US2.82 billion of Glencore’s net earnings, making the unfashionable division the biggest earner in Glencore’s global portfolio.

Australian coking coal mines, such as Queensland’s Hail Creek, delivered a further $US415 million of underlying earnings before interest and tax.

Glencore chief Gary Nagle’s previous job was running the Australian coal business from Sydney, and he said the Swiss miner remained committed to reducing emissions even though it was currently bankrolled by coal. Bloomberg

Coal earnings were 49 per cent lower than in the same period of last year, largely because of a 36 per cent slump in received prices, which Glencore described as a “normalisation” of commodity markets after the turbulence inflicted by Russia’s invasion of Ukraine in 2022.

The coal division’s dominant role in Glencore’s accounts comes at a time when the company is contemplating a coal demerger, so long as it can convince Canadian miner Teck Resources to merge its coal assets into the spun-off business.

Glencore said on Tuesday that the combined coal assets of Teck and Glencore could be demerged within 12 to 24 months of Teck agreeing to vend its assets into the deal.

While coal prices and earnings were lower over the past six months, Glencore said