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Glencore has become the latest energy heavyweight to succumb to climate change pressure and has announced it will stop raising its coal production capacity, CNBC reports.
The Swiss company’s current thermal coal production capacity is 150 million tons annually, which makes it the biggest single exporter of the commodity. But as pressure mounts on the energy and manufacturing industries to put more effort into tackling climate change by reducing harmful emissions, companies are beginning to transform.
Glencore, for example, plans to use the capital that will be freed thanks to the capacity cap to increase its production of basic metals such as copper, cobalt, nickel, vanadium, and zinc, all of them used in EV batteries and other technology that enables the shift to cleaner energy generation.
The move is also aimed at avoiding shareholder concerns as this group of stakeholders, too, become increasingly environmentally conscious.
“To deliver a strong investment case to our shareholders, we must invest in assets that will be resilient to regulatory, physical and operational risks related to climate change," Glencore said in a statement. "As one of the world's largest diversified resource companies, Glencore has a key role to play in enabling transition to a low carbon economy," it also said.
The decision could not have been an easy one to make: last year, profits from coal amount to US$5.2 billion, versus US$4.7 billion from copper, Bloomberg reported, citing Glencore’s latest financial figures. This was the first time coal profits exceeded copper profits as demand for the fossil fuel used widely for power generation in emerging markets continued to be strong.
However, there is a bright silver lining. “Limiting ourselves with no further growth will tighten up supplies. It should bode well for prices,” chief executive Ivan Glasenberg said. “It’s one of the commodities in the world where there is no big increase in new supply.”
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.