Glencore to hand $4bn to investors on back of record profits

Glencore has announced plans to return $4billion to shareholders following an ‘extraordinary year’, which was buoyed by booming commodity prices.

The Anglo-Swiss mining giant said it would purchase $550million of its own shares and administer $3.4billion in dividends thanks to its net debt plunging by over 60 per cent to $6billion last year.

It also achieved record annual underlying earnings and revenue of over $200billion on the back of commodities that it mines, such as coal, oil and copper, soaring in value as the world economy reopened in 2021.

Records: Glencore achieved its highest-ever annual underlying earnings ever on the back of commodities that it mines, soaring in value as the world economy reopened in 2021

Metals contributed the majority of underlying earnings of $12billion, a rise of about two-thirds on the previous year, but income at its energy division grew by an astounding 439 per cent to $5.6billion.

Chief executive Gary Nagle said: ‘In spite of the ongoing challenges of Covid-19, 2021 was an extraordinary year for Glencore, reflecting rising demand for our metals and energy products, record Adjusted EBITDA and the transition to new leadership.’ 

However, the company revealed that it was setting aside $1.5billion in potential costs and fines arising from investigations into suspected fraud and bribery across multiple countries, which it expects to be finalised this year.

Since 2018, the US Department of Justice has been formally examining whether the business breached money-laundering rules and bribed government officials in its dealings with Venezuela, Nigeria and the Democratic Republic of Congo.

That year also saw Brazilian authorities launch a probe into the firm as part of Operation Car Wash, the largest corruption inquiry in Brazil’s history that concerns suspected illicit payments made to employees of Petrobras.

In the subsequent year, the UK’s Serious Fraud Office and the US commodities market regulator began separate corruption investigations into Glencore.

Environmental goals: Glencore plans to run down coal production over the next three decades, all the while reducing its emissions by half by 2035 and becoming net-zero by 2050

The company, one of the world’s largest commodity traders, said it ‘has been cooperating extensively with the various authorities in order to resolve these investigations as expeditiously as possible’. 

At the same time, Glencore has faced increasing pressure to reduce its reliance on coal for environmental reasons, notably from London-based hedge fund Bluebell Capital Partners.

The Financial Times reported yesterday that it had seen a letter from the investment giant stating that it wants the firm to demerge its coal division and adopt a dual-share structure.

Glencore plans to run down coal production over the next three decades, all the while reducing its emissions by half by 2035 and becoming net-zero by 2050.  

CEO Gary Nagle said: ‘Looking forward, we remain focused on our strategy to enable and deliver decarbonisation and meet the increasing demand for everyday metals, while responsibly meeting the energy needs of today.

‘We look to the future confident that we have the right pathway to succeed in a net zero economy and create sustainable long-term value for all stakeholders, while operating in a responsible manner across all aspects of our business.’  

Mining giant BHP Group also published very strong results today that included profit from operations surging by half to $14.8billion and its highest ever half-year dividend payout of $7.6billion.

It attributed its huge profit growth to record production at its iron ore operations in Western Australia, higher prices of its major commodities, greater concentrate sales at its Spence copper mine in Chile, and more beneficial exchange rate movements.

Commenting on both BHP and Glencore’s results, AJ Bell financial analyst Danni Hewson said: ‘Soaring commodity prices are helping them to rack up big profits and dole out rewards to shareholders like an indulgent grandparent handing out sweets to a favourite grandchild.

‘The record first-half dividend declared by BHP and the $4billion capital return unveiled by Glencore reflects their confidence in the future direction of metals and minerals markets.’