Glencore’s board believes retention of the coal and carbon steel materials business offers the lowest risk pathway to create value for the company’s shareholders today.
As informed, the decision to retain the business is the result of an extensive consultation with the company’s shareholders.
Following completion of the acquisition of a 77% interest in Elk Valley Resources (EVR) on July 11, Glencore which is one of the world’s largest global diversified natural resource companies has undertaken a consultation process to assess shareholder views regarding retaining or demerging the coal and carbon steel materials business.
Shareholders representing an estimated two-thirds of eligible voting shares were consulted for their views.
The company had considered to demerge the coal and carbon steel materials business.
But Glencore said that after consulting its shareholders, most expressed a preference for retaining the business.
The company said over 95% of shareholders that specifically expressed a preference for retention or demerger supported the retention of the coal and carbon steel materials business, primarily on the basis that retention should enhance Glencore’s cash generating capacity to fund opportunities in its transition metals portfolio, such as its copper growth project pipeline.
They also concluded that it would “accelerate and optimise the return of excess cash flows to shareholders.”
“Following extensive consultation with our shareholders, whose views were very clear, and our own analysis, the board believes retention offers the lowest risk pathway to create value for Glencore shareholders today,” said Kalidas Madhavpeddi, chair of Glencore.
“The expected cash generative capacity of the coal and carbon steel materials business significantly enhances the quality of our portfolio, by commodity and geography, and broadens our ability to fund our strong portfolio of copper growth options as well as accelerate shareholder returns,” Madhavpeddi added in a statement.
While the decision has been taken to retain this business today, the company reports that the board preserves the option to consider a demerger of all or part of this business in the future if circumstances change.
