By Clara Denina and Helen Reid
LONDON (Reuters) -Glencore will set aside $1.5 billion for probes into bribery and market manipulation, which it expects to resolve in 2022, while announcing a $4 billion dividend payout as the prices of the materials it mines and trades continue to boom.
The company, one of the world’s biggest miners and commodity traders, is facing probes in the United States, Britain and Brazil linked to allegations of corruption relating to some of its operations in the Democratic Republic of Congo, Venezuela and Nigeria since 2018.
“We recognise there has been misconduct in this company historically, we’ve worked hard to correct that,” CEO Gary Nagle told reporters.Glencore still faces corruption and bribery investigations by other entities, including Swiss and Dutch ones.
“Although the Swiss and Dutch investigations are expected to remain outstanding, we believe that with the main investigations quantified this will likely de-risk the company from this ‘unknown known’ which has been an overhang for the company since 2018,” Tyler Broda at RBC Capital Markets said.
In its preliminary 2021 results, Glencore said it cut net debt to $6 billion at the end of 2021 from $15.8 billion a year earlier. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 83% to a record $21.3 billion, compared with $11.6 billion a year earlier, in line with a consensus estimate of 15 analysts.
The results surpass a previous high in 2018, when Glencore was again buoyed by a commodity rally.
The company, which owns more than 150 operating sites, is reviewing some 27 assets, 13 of which were being sold, Nagle said, as it moves to refocus its portfolio on what it termed “commodities of the future”.
Glencore mines battery metals copper, nickel, and cobalt, which are needed to power the transition to clean energy. Its strategy of depleting its coal mines by the mid-2040s rather than selling them or spinning them off reflects a different path from other diversified miners such as BHP and Anglo American.
Activist investor Bluebell Capital Partners, which last year urged the miner to separate its thermal coal business has, in a letter dated Jan. 24 and made public on Monday, proposed a new structure for Glencore that would allow the company to still maintain control of the spun-off unit.
Nagle on Tuesday said shareholders support the company’s strategy to instead run down its coal mines by the mid-2040s.
“Coal does play an important part in this business. In the discussions I’ve had with shareholders, they’re very supportive of our strategy, they’re very supportive of coal in this business,” he said.
Glencore’s biggest shareholders are Qatar Holding, a unit of the Gulf Arab state’s sovereign wealth fund, and ex-CEO Ivan Glasenberg with a combined 18.5%.
Prices of thermal coal, the most polluting fossil fuel, are close to all-time highs reached last year on expectations of a continued shortage.
(Reporting by Clara Denina, Helen Reid, Shanima A in Bengaluru; editing by Sriraj Kalluvila, Jason Neely and Michael Urquhart)
