Ivan Glasenberg is Mr. Coal. The most successful commodities trader of his generation built his career around quenching the global thirst for cheap energy with myriad shiploads of fossil fuels, a deal that made him both the boss and the largest shareholder in Glencore.
Now Glasenberg is on his way out and is stepping down this week after nearly two decades as CEO of the resource giant. As the world makes the transition to a low-carbon energy system, many expect coal to go down the same path and be replaced by huge investments in solar and wind power. But in his last working days, Glasenberg made one final coal deal, spending $ 588 million ($ 782 million) buying up the partners at the Cerrejon mine in Colombia. His farewell act shows why expectations of a quick demise of coal are likely to be disappointed and how mining the black stuff could remain extremely profitable for years to come.
The departure from Glencore boss Ivan Glasenberg shows why expectations of a quick demise of coal are likely to be disappointed and how mining the black stuff could remain extremely profitable for years to come.Recognition:Bloomberg
For world leaders working to strengthen climate-friendly politics at this year’s COP26 summit in Glasgow, an unpleasant truth is emerging: the coal industry is booming. Prices are at a thirteen-year high as the recovery from the pandemic revives electricity consumption around the world. China, which burns half the world’s coal, has been forced to cool the market. In the US, where coal has been on the decline for the past decade, consumption is expected to pick up 16 percent this year.
Even in Europe, coal consumption is increasing as demand expands power grids. The question for both investors tracking the progress of the energy transition and the health of the planet is how long it will last. Even Glencore doesn’t believe coal will be around forever – under pressure from fund managers, they have set goals to reduce consumption and promised to close their mines within the next 30 years. The number of planned coal-fired power plants worldwide is falling as banks refuse to finance their construction and renewable projects can more than keep up with costs. But Glasenberg and his successor Gary Nagle clearly believe that it will take a long time to see lucrative dawn.
“The world has said that we want to reduce the amount of thermal coal production, mining companies are definitely not investing in more power plants,” Glasenberg said at the Qatar Economic Forum last week. “What you have is that the offer is interrupted and no new offer comes on the market. However, the demand is still there. “
Asia remains the main driver of demand. Despite President Xi Jinping’s promise to bring the economy to net zero by 2060, power plants are burning at full capacity this year as demand from factories weighs on the power system. A peak value is not expected until 2026 and the International Energy Agency is now forecasting a further increase in demand of around 0.5 percent per year. In India, consumption is expected to rise even more, an average of 3.1 percent per year.
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Combined with strong growth in Southeast Asia, that is more than enough to offset falling incineration rates in Europe and the US The IEA assumes that the world will consume slightly more coal in 2025 than this year.
Reference prices in Australia have soared about 66 percent this year to over $ 136 per ton, their highest level since 2008.
source https://dailyhealthynews.ca/mr-coals-final-deal-sends-a-message-to-the-world/
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