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Glencore’s 800% earnings surge

August 23, 2022

Glencore’s recent announcement of its half-yearly financial results featured the headline-grabbing figure of a more than 800% increase in earnings per share. A total net income for the 6-month period of US$12.1 billion was reported, more than eight times the US$1.3 billion net income achieved in the first half of 2021.

These extraordinary results came off the back of record high coal prices, with coal earnings 877% higher than the first-half of 2021, despite Glencore’s global coal production increased by only 14%. Significantly stronger than average commodity prices are responsible for effectively all of Glencore’s US$8.4 billion improvement in overall industrial earnings (EBITDA) compared to 2021. US$8 billion of this is being directly attributed to coal, helped by the year-on-year increase in Newcastle thermal coal prices of 224%.

Glencore’s shady business practices continue to attract the attention of courts and governments internationally, with the UK’s Serious Fraud Office obtaining a guilty plea from Glencore in June after it paid more than US$28 million in bribes across its oil operations in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, South Sudan.

In May, Glencore announced the resolution of investigations by US, UK, and Brazilian authorities, resulting in fines of more than US$1 billion to US authorities, and almost US$40 million to Brazilian authorities investigating the Glencore Group for bribery. Corruption-related investigations by Swiss and Dutch authorities remain afoot. And despite Glencore’s professed commitment to prioritising safety, two fatalities have been recorded at Glencore operations this year, after it reported four workplace fatalities in 2021.

Across Glencore’s Australian coal business, a drop in coking coal production was more than offset by increases in thermal coal production, with 27.6 million tons of export thermal coal produced in the six-month period, representing a 10% increase on 2021 figures for the same timeframe. Australian thermal coal earned over US$5 billion for Glencore, a margin of 66%. Meanwhile, reported earnings from Australian coking coal were US$923 million, at a similar margin of 64%. Glencore predicts global coal production for the rest of 2022 to remain steady to achieve production of around 121 million tons for the full year.

However, it expects recent flooding in New South Wales and a resurgence of Covid-19 in Australia to impact production volumes for the year’s second half.

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