Activist investor Bluebell presses Glencore to spin off coal assets

The plan by London-based hedge fund, a signatory of the United Nations supported Principles for Responsible Investment (PRI), would see Glencore creating a separate coal company with A and B shares and a dowry to fund mine rehabilitation.

In a letter dated January 24, Bluebell partners Giuseppe Bivona and Marco Taricco said the Swiss miner and commodity trader’s significant exposure to coal makes it a less attractive partner. Coal, they wrote, is effectively a ‘poison pill’ in an industry where further consolidation is both needed and expected.

The proposed new structure would allow Glencore to keep full governance control, cuts its coal exposure to a minimum and reduce the discount its shares are trading at when compared to peers who have exited coal, Bluebell said.

Investors and the biggest mining companies have been grappling for years over who should own the world’s coal mines and some of Glencore’s rivals have already gotten out of the business because of pressure from shareholders. But more recently there has been a growing pushback from some climate activists and investors who are worried that the assets would actually produce more coal for longer under new owners.

Emissions in the equation
The world’s top miner, BHP (ASX: BHP), has also announced plans to exit thermal coal as part of its commitment to reduce emissions.

Rio Tinto (ASX, LON, NYSE: RIO), the world’s second-largest mining company, sold its last coal mine in 2018.

Anglo American has consistently been offloading coal operations since 2014. Last year, it spun out its South African thermal coal operations and sold its stake in a Colombian mine to Glencore after shareholder calls to ditch the polluting fossil fuel to meet emissions targets.

Unlike its peers, Anglo decided to hold on to its metallurgical coal assets, a key commodity in the making of steel.

Bluebell’s latest push move follows a previous letter, sent to Glencore in November, in which it asked recently appointed chair Kalidas Madhavpeddi and chief executive Gary Nagle to simplify the company’s asset base and tackle governance issues.

Nagle, who stepped into the top job in June 2021, reacted by defending the company’s sprawling coal business and added he would continue running down the mines over the next 30 years, as originally planned.

Despite managing only about $275 million of assets, Bluebell has gained a reputation as a waves-maker that triggered the ousting of Danone chief Emmanuel Faber last year and is now locked in a bitter dispute with Belgian chemicals company Solvay.

Glencore, the world’s biggest thermal-coal shipper, is expected to report bumper profits on Tuesday, partly fuelled by record coal prices.