Glencore will return more than $7 billion to shareholders in dividends and buybacks after the commodities giant reported another blockbuster profit driven by earnings from its coal and trading divisions.
Glencore has been one of the biggest beneficiaries of the chaos in commodity markets caused by Russia’s invasion of Ukraine.
The company’s decision to keep mining coal while rivals exited has paid off massively, as the dirtiest fuel surged to a record last year, while its sprawling trading business has benefited from sharp price swings and dislocations across the world.
Glencore’s core profit rose 60% to a record $34.1 billion, which included $18.6 billion from the energy business that includes coal, the company said in a statement on Wednesday.
The commodity trading unit earned $6.4 billion in core profit, also its highest ever.
“The unprecedented developments in global energy markets were material drivers for both our marketing and industrial businesses,” Chief Executive Officer Gary Nagle said in the statement.
With debt hovering around zero, Glencore said it will make a record payout to shareholders of a $5.1 billion dividend, a top-up payment of $500 million, and a buyback of $1.5 billion.
Glencore is the first of the big diversified miners to post 2022 earnings. While other producers are also making big profits, Glencore huge coal exposure sets it apart.
The company has typically lagged behind its rivals in recent years because it doesn’t produce any iron ore — a key profit driver for mega miners BHP Group and Rio Tinto Group.
Now, Glencore has the advantage. Coal prices spent much of last year at record levels as utilities curb imports from Russia due to the war in Ukraine, tightening the amount of available supply, while surging natural gas prices increase demand for other energy sources.
Glencore’s earnings from coal of $17.9 billion were closing in on the entire group’s profit of $21.3 billion a year earlier, and have put it on course to overtake Rio Tinto as the world’s second-most profitable miner.
The commodities giant’s traders also had a strong year, with core profit jumping 73%, as it benefited from wild swings in energy markets that followed the invasion of Ukraine.
Trading earnings were driven driven “primarily by our energy departments successfully navigating the extreme market imbalances, volatility, and dislocations across crude oil, LNG, refined products, coal, and logistics infrastructure,” Nagle said.
Glencore is continuing efforts to simplify its business — it’s already sold several smaller or less profitable assets in recent years, and has now started a sales process for its stake in Peru zinc miner Volcan Cia. Minera.