Activist Fund Demands That Glencore Shed Coal Unit

An activist investor fund has urged Swiss commodities trader Glencore to shed its coal business because investors are drawn to cleaner energy sources, according to a letter seen Tuesday.

In the letter addressed to Glencore’s chairman and chief executive, the London-based Bluebell Capital fund warned that many investors were wary of putting money into the company because of its involvement in coal.

“Due to its coal business, Glencore is not an investible company for investors who place sustainability at the heart of their investment process,” the letter said.

Coal, it said, is “not a future-facing commodity.”

The fund highlighted that besides coal, Glencore’s commodities portfolio — made up of copper, zinc, nickel, cobalt and vanadium — was well placed in regard to the ongoing global transition to renewables.

But it warned that investor dislike of the coal unit posed “a huge barrier for wider investment” in Glencore’s non-coal related businesses.

The letter, dated November 8, estimated that Glencore was trading at around 30 percent below its peers who have exited coal, like Rio Tinto and Anglo American, or those who have said they plan to, like BHP.

In the letter, first reported by Bloomberg, Bluebell urged Glencore to transfer its coal holdings to a separate entity, to ensure distance while committing to “responsible ownership”, with a view to eventually spinning it off.

Bluebell Capital partner Giuseppe Bivona told AFP that pressure was building on financial institutions to extract themselves from coal.

“We are at a point where banks are cutting lending and investors do not want to be exposed to coal,” he said, warning companies’ valuations were affected, as well as their access to credit and financing.

Among other things, the letter highlighted that Glencore has been on the exclusion list of the Norwegian central bank, which manages the world’s largest sovereign wealth fund, since May 2020.

Contacted by AFP, Glencore said it “engages regularly with its investors.”

“We are confident that our business model is uniquely placed to produce, recycle, and market the materials needed to decarbonise energy whilst reducing our own emissions and delivering value for stakeholders,” it said. Bluebell Capital made a splash earlier this year after its activist investors helped force the ousting of the chief executive of French food and beverage giant Danone. It then sought to take on the head of the British pharmaceutical giant GSK.

The fund has not revealed its holdings in Glencore.

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