Glencore (LON:GLEN) reported a 5% increase in South African energy coal production during the first quarter of 2025, with output rising to 4.2 million tonnes. The company credited the increase to improved fleet performance and the initiation of new stockpile reclamation activities.

Despite this regional boost, Glencore’s overall energy coal production dropped by 7% to 23.4 million tonnes. The global decline reflected the planned closure of two mines in Australia — Glendell and Integra. Energy coal volumes at Cerrejón in Colombia also fell by 5%, a reduction that the company described as a market rebalancing measure. Glencore stated that despite these declines, full-year production guidance remains unchanged.

In ferrochrome, the company’s South African operations produced 277,000 tonnes in the first quarter, down 7% from the same period last year. The company attributed the drop to ongoing pressure on smelting conversion margins. As part of a broader review of smelting sustainability, Glencore will indefinitely suspend the Boshoek smelter in North West from May and the Wonderkop smelter, also in North West, from June. The more energy-efficient Lion smelter in Mpumalanga will continue operations.

Glencore’s copper production fell sharply. First-quarter own-sourced copper output came in at 167,900 tonnes, a 30% decline year-on-year. In contrast, cobalt production jumped by 44% to 9,500 tonnes. CEO Gary Nagle said that copper production had a slow start but predicted stronger performance in the remaining quarters of 2025. He pointed to improvements at several sites. In Chile, the Collahuasi operation is expected to meet targets following pit reorientation, an expanded truck fleet, and better water availability. At Peru’s Antapaccay mine, the initially high strip ratio is expected to drop throughout the year, potentially increasing output in the second half. In the Democratic Republic of Congo, the Kamoto Copper Company is transitioning from ore stock feed to run-of-mine feed, a shift anticipated to improve throughput and production.

In steelmaking coal, the company reported solid numbers. Canadian operations under Elk Valley Resources produced 6.6 million tonnes in the first quarter. Total steelmaking coal production across all assets stood at 8.3 million tonnes. Nagle described volumes in both steelmaking and energy coal segments as “tracking well.”

Zinc production reached 213,600 tonnes in the first quarter, up 4% from the previous year. The increase was largely driven by stronger performance at the Antamina joint venture in Peru and Australian assets.

On the marketing side, Glencore reported a slower first quarter but maintained its full-year earnings forecast. The company expects its Marketing segment to finish the year within the previously set $2.2 billion to $3.2 billion range, likely near the midpoint.

Looking ahead, Nagle warned that commodity markets have become more volatile since the end of the quarter. He attributed the instability to global financial market movements and uncertainty surrounding new U.S. tariffs. He emphasized that Glencore has prioritized risk management in response to these developments, particularly given its exposure to complex supply chains across the U.S., China, Europe, and Canada.

Although no major disruptions to commodity trade routes have occurred so far, Glencore expects potential shifts in physical trade flows in the coming months due to evolving tariff structures. Nagle suggested that these changes could create new opportunities for the company’s Marketing division.

 

 

 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

Astron Energy, a subsidiary of global commodity trader Glencore (LON:GLEN), has committed up to six billion rand ($328 million) to upgrade its South African crude oil refinery in order to comply with the country’s upcoming cleaner fuel regulations. The investment aims to bring the facility in line with South Africa’s Clean Fuels II standards, which mandate lower sulphur content in both petrol and diesel.

The 100,000-barrels-per-day (bpd) refinery, located near Cape Town, is one of only two operational crude oil refineries in the country. With domestic refining capacity having halved in recent years, the move is seen as a significant step toward reducing South Africa’s heavy reliance on fuel imports.

Investment in Cleaner Fuel Technology

Astron Energy officials confirmed that construction work is already underway, with foundations laid for a Gasoline Hydrotreating Process that will reduce petrol’s sulphur levels to Euro 5 specifications. This will bring the fuel’s sulphur content down to 10 parts per million (ppm), in line with Clean Fuels II regulations.

These regulations were initially set to come into effect in 2017 but were delayed due to concerns over the cost of upgrading existing refining infrastructure. The new deadline is July 1, 2027, and Astron Energy’s chief executive officer, Thabiet Booley, assured lawmakers during a site visit on Wednesday that the company would meet the deadline.

South Africa’s Refining Challenges and Import Dependence

South Africa’s refining sector has faced significant challenges over the past decade. The country, which once had several operational crude oil refineries, has seen its domestic refining capacity shrink to around 358,000 bpd. This is largely due to the closure and mothballing of the two largest crude refineries in Durban.

With fewer refineries in operation, Africa’s most industrialized economy now relies on imports for approximately 75% of its liquid fuel needs. The Fuel Industry Association of South Africa (FIASA) estimated that in 2023 alone, South Africa imported just over 19 billion litres of fuel to meet domestic demand.

The heavy dependence on imports has raised energy security concerns, particularly in light of South Africa’s limited fuel reserves. According to the Strategic Fuel Fund, the government agency responsible for securing crude oil supplies, the country currently has less than 21 days’ worth of fuel reserves in the event of a major supply disruption.

Government Efforts to Strengthen Refining Capacity

In an effort to bolster local fuel production and reduce the risk of supply shortages, the South African government has purchased the Sapref refinery in Durban.

The 180,000-bpd facility, previously the country’s largest crude oil refinery, was mothballed in 2022 before suffering extensive damage during severe flooding. The government’s acquisition of the refinery is part of a broader strategy to revive the domestic refining sector and enhance South Africa’s fuel security.

Astron Energy’s investment in cleaner fuel technology is expected to play a critical role in ensuring South Africa meets its cleaner fuel obligations while also contributing to a more stable and resilient fuel supply system.

As the 2027 deadline approaches, industry analysts will be watching closely to see whether other refiners follow suit or if South Africa remains heavily reliant on imports. With ongoing concerns about fuel security and infrastructure readiness, the success of Astron Energy’s upgrade may set a precedent for the future of fuel refining in South Africa.

 

 

 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

 

Rio Tinto (ASX:RIO) and Glencore (LON:GLEN) , two of the world’s largest mining companies, have been in discussions about a potential merger, according to sources familiar with the matter. If successful, the deal would reshape the global mining sector, creating a powerful competitor to industry leader BHP. However, the discussions remain preliminary, and there is no certainty that a deal will be reached.

Rio Tinto is the world’s second most valuable mining company, with a market capitalization of $103 billion as of Thursday. It is one of only two miners, alongside its Melbourne-based counterpart BHP, to surpass the $100 billion valuation mark. Glencore, which is currently valued at $55 billion, has been active in mergers and acquisitions, notably making an unsuccessful bid for Canada’s Teck Resources in 2023.

A Rio Tinto-Glencore merger would create a mining giant with a combined market value exceeding $150 billion, surpassing BHP’s current valuation of $125 billion. This would make the new entity the largest mining company in the world, reshaping competition at the top of the industry.

The primary driver behind the talks is copper, a metal essential for the global transition to renewable energy. Copper demand is expected to rise due to its role in electric vehicles, power grids, and renewable energy infrastructure. If combined, Rio Tinto and Glencore’s copper production would rival BHP’s output. Glencore’s 2024 copper production guidance is around 1 million tonnes, while Rio Tinto is targeting up to 720 kilotonnes.

A History of Mergers and Missed Opportunities

This is not the first time Glencore has pursued a high-profile merger. In 2014, the company, under then-CEO Ivan Glasenberg, attempted to merge with Rio Tinto, but the proposal was swiftly rejected. That move came just two years after Glencore’s $90 billion acquisition of Xstrata, which transformed it from a trading-focused company into a mining powerhouse.

Glencore itself became a major player in mining after Xstrata had earlier failed in its attempt to merge with Anglo American in 2009. The Anglo-Xstrata merger never materialized after Anglo rejected the deal outright.

Rio Tinto, meanwhile, has had its own struggles with major acquisitions. In 2007, it bought Canadian aluminum giant Alcan for $38 billion, paying a steep 65% premium to outbid competitors. However, as commodity prices declined, the deal turned into a financial disaster, leading to $25 billion in write-downs.

BHP, the world’s largest miner, has also faced regulatory and economic obstacles in its M&A history. In 2008, it attempted a $116 billion takeover of Rio Tinto, but regulators blocked the deal. The onset of the global financial crisis further undermined the feasibility of the acquisition.

Challenges Facing the Mining Industry

The potential Rio Tinto-Glencore merger comes at a turbulent time for the mining industry. The five largest diversified mining companies—BHP, Rio Tinto, Glencore, Vale, and Anglo American—have seen significant declines in their market values. In 2024, they collectively lost $119.7 billion, or 25.3% of their combined value, according to the MINING.COM Top 50 ranking.

Much of this decline is due to falling prices for key commodities such as copper and iron ore. A strong U.S. dollar in the final months of 2024 exacerbated these losses, particularly for miners operating in currencies that weakened against the dollar.

Vale has been the hardest hit, losing 44.9% of its market value in 2024. The Brazilian mining giant, which was worth more than $100 billion in 2022, has seen its market capitalization shrink to $37.7 billion. Indonesian miner Amman Mineral has now surpassed Vale in the global ranking.

Anglo American, despite facing its own struggles, was the only one of the traditional “Big 5” miners to end 2024 in positive territory, gaining $5.5 billion, or 18.1%, in value. Some of that increase may have been driven by lingering effects from BHP’s previous interest in acquiring the company.

The Role of Iron Ore in Mining’s Boom and Bust Cycle

Unlike its competitors, Glencore does not mine iron ore, which has historically been the primary driver of profits for the largest mining companies. China’s infrastructure boom has been the backbone of iron ore demand, with the country consuming around 80% of seaborne iron ore shipments.

During the peak of the commodity boom in 2011, iron ore generated record profits for the top miners. That year, BHP recorded a pre-tax profit of $24 billion from iron ore alone, while Vale earned $23 billion, Rio Tinto made $15 billion, and Anglo American secured $11 billion.

However, the iron ore market has cooled significantly. Prices have fallen back to double-digit levels, and a combination of increased supply and China’s prolonged construction slowdown has dampened hopes of a recovery.

If Rio Tinto and Glencore move forward with a merger, they will face regulatory scrutiny from multiple jurisdictions. Given the global significance of their operations, any deal would likely be reviewed by competition authorities in Australia, the UK, the European Union, and other key markets.

 

 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

Mining and commodity trading giant Glencore (LON:GLEN) has expressed its openness to mergers and acquisitions (M&A) that could create value for shareholders. This comes as the mining sector witnesses a wave of deal-making discussions driven by the need to secure critical materials like copper. Glencore, one of the world’s top three copper producers, remains a focal point in this shifting landscape.

Investor interest in M&A has been steadily increasing, with copper, a key metal for energy transition technologies,

driving much of the activity. Demand for copper is expected to soar as industries transition to greener energy solutions, including electric vehicles, solar panels, and artificial intelligence-driven data centers. However, while there is strong motivation to expand production, mining companies face challenges in executing large-scale transactions.

In May 2024, BHP’s $49 billion failed bid for Anglo American highlighted the difficulties of merging diversified mining companies. Investors are keen on potential synergies, but skepticism about pricing and cultural compatibility persists.

Glencore’s Approach

Glencore reportedly approached Rio Tinto late last year with a proposal to merge, according to sources close to the matter. While talks did not progress, the potential combination could have addressed Rio Tinto’s interest in expanding its copper production. Glencore produces over one million metric tons of copper annually, outpacing Rio’s output by up to 40%.

Sources familiar with the discussions highlighted cultural differences and valuation concerns as significant hurdles. Abel Martins Alexandre, a former Rio Tinto treasurer, emphasized that Glencore’s business model, which centers heavily on commodity trading, contrasts with Rio Tinto’s operations. He noted that Glencore’s approach could potentially extract more value from Rio’s portfolio through trading activities, though the integration process could face significant challenges.

Glencore’s valuation has been a topic of discussion, with analysts describing it as undervalued compared to peers. Its share price fell 25% in 2024, compared to 21% and 19% declines for diversified miners BHP and Rio Tinto, respectively. In contrast, Anglo American’s shares rose 20% during the same period.

Glencore’s coal operations remain a contentious issue for potential deals. While many Western miners have divested from coal assets, Glencore has expanded its presence in the carbon-intensive sector. This strategy is viewed by some shareholders as a “poison pill,” complicating merger prospects with companies seeking to align with climate-conscious investors.

Glencore has a history of acquisitive behavior, often relying on cash to finance deals. This strategy reflects management’s belief that its stock is undervalued. In 2023, Glencore made a $23 billion bid to acquire Teck Resources, which ultimately failed. Instead, Glencore secured 77% of Teck’s steelmaking coal assets during the company’s restructuring.

Reports also suggest that Glencore has explored combinations with Anglo American and remains hopeful for renewed discussions with Rio Tinto. However, both Glencore and Rio Tinto have declined to comment on the matter.

The mining industry faces a delicate balancing act in pursuing M&A. While some institutional shareholders welcome consolidation for its potential to reduce overheads and leverage shared infrastructure, others remain skeptical. The risk of overpaying and the challenge of integrating diverse portfolios make executives cautious.

“Big M&A deals are not likely to push boundaries,” one mining banker said, emphasizing that none of the portfolios are perfect, and some assets are more desirable than others.

Looking Ahead

As Glencore pursues its strategy, the broader mining sector continues to grapple with the dual pressures of expanding critical mineral production and maintaining shareholder confidence. With copper demand set to grow and the energy transition accelerating, the focus on M&A activity will likely remain intense. However, whether Glencore’s ambitions will materialize into significant deals remains uncertain.

For now, the company’s approach signals its readiness to explore opportunities while navigating the complexities of valuation, cultural alignment, and market dynamics. Investors and industry watchers will continue to monitor the evolving industry closely.

 

 

 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

China Molybdenum Co. Ltd. (CMOC), a leading global mineral company headquartered in Beijing, produced 55,526 tons of cobalt in 2023, representing a 170% increase from 20,581 tons in 2022, according to a company filing on Thursday. This production level exceeds CMOC’s own guidance by over 20% and enables the company to surpass Glencore Plc (LON:GLEN) as the world’s largest cobalt producer.

Glencore, headquartered in Baar, Switzerland, had forecasted cobalt production of up to 42,000 tons in 2023. The company is scheduled to announce full 2023 production results next month. CMOC’s massive increase in output is largely attributed to the Kisanfu cobalt-copper mine in the Democratic Republic of Congo (DRC), which came online in the second quarter of 2022. The $1.8 billion Kisanfu mine is owned by CMOC’s Congolese subsidiary Tenke Fungurume Mining S.A. (TFM).

Along with rising production from Indonesia, CMOC’s increased cobalt supply has contributed to a substantial surplus in the cobalt market in 2023. This oversupply triggered a 30% drop in cobalt prices over the course of last year. By mid-2023, the mismatch between supply and demand had become so severe that Glencore began stockpiling surplus cobalt from its DRC operations in an effort to balance the market.

In addition to being the world’s top cobalt producer, CMOC is now one of the leading global copper producers. The company’s copper output jumped 51% to 419,539 tons in 2023. CMOC’s rising cobalt and copper production comes at a time when many miners are struggling to increase output to meet growing demand, especially for electric vehicle batteries.

Cobalt is a critical mineral used in lithium-ion batteries for electric vehicles, consumer electronics and energy storage systems. Approximately 70% of the world’s cobalt is mined in the DRC, a country plagued by political instability, human rights violations, child labour and other ethical concerns. Major multinational mining companies like Glencore and CMOC have faced scrutiny over their DRC operations.

Cobalt mining is dominated by large firms from China, Switzerland and Canada. Artisanal small-scale cobalt mining by hand is also common in the DRC, frequently under dangerous, unregulated conditions. The human rights watchdog Amnesty International has reported children as young as seven years old working in Congolese artisanal cobalt mines.

Technological advances and recycling may reduce future cobalt demand growth, but it remains an essential battery ingredient. As the electric vehicle market expands dramatically in the coming decades, ethical and sustainable cobalt sourcing from conflict-free mines will become increasingly important, as CMOC and other industry leaders continue to prove their operations are operating in a conflict-free manner.

Metals Acquisition Corp., a blank check firm has signed a $1.1 billion deal to acquire Glencore’s (LON:GLEN) (OTC:GLNCY) CSA copper mine in Australia. After Perth-based IGO Ltd announced it would drop out of contention, Metal Acquisition became the leading contender to acquire the asset. After a year-long race, the deal is now a reality for the firm. 

The purchase has given Metals Acquisition Corp 100% ownership and control of the mine’s operations, which will allow it to produce between 41,000 and 49,000 tons of copper per year. This gives the firm a good profit guarantee as copper is such an essential metal for the production of electric vehicles. 

In addition, the high demand for copper and the lack of supply has caused copper prices to soar by more than 25% over the past year. According to experts, this trend will continue as more and more companies join the fight against climate change, making copper a more and more sought-after metal.

Metals Acquisition Chief Executive Mick McMullen said: “Copper is expected to play a key role in the global energy transition ‘megatrend,’.

Separately, Glencore announced that it has purchased 657,264 of its ordinary shares of USD 0.01 each on the London Stock Exchange and the Multilateral Trading Facilities of Morgan Stanley & Co. International Plc. 

The purchase was completed on March 16, 2022. Glencore intends to hold the repurchased shares in treasury so the company now holds 1,408,178,868 of its ordinary shares in treasury and maintains 14,586,200,066 ordinary shares outstanding.

The purchase of the shares is part of the company’s share buyback program which is expected to be completed between February and August 2022.

Russian Review

Glencore recently announced that it will review business with Russia as the invasion of Ukraine has affected commodity markets.

Glencore has a 10.55% stake in En+Group, the Russian aluminum producer, as well as a 1% stake in Rosneft, the oil producer. This represents an investment value of $789 million and $485 million respectively by the end of 2021.

Increasingly, the list of companies cutting business ties and reviewing their operations with Russia is growing as foreign governments have lobbied for this to happen. 

Glencore’s review is expected to bring further turmoil to the aluminum market as shipping companies have also suspended ship operations to and from Russia, causing supply chain issues for the global aluminum supply chain.

“Over time, global commodity trade flows will need to adapt to some or all of Russian/Ukrainian supply being unavailable, whether due to infrastructure damage, sanctions or ethical concerns,” Glencore said.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.