Glencore plans leadership shakeup this year, says CEO

Glencore (GLEN.L) will make more changes to its front bench this year, Chief Executive Ivan Glasenberg said on Tuesday, as the world’s largest commodities trader hastens a transition to a new generation of leaders.

The London-listed miner has faced mounting pressure to change its leadership after multiple corruption and bribery investigations. Falling commodity prices and a large exposure to out-of-favour coal have added to challenges facing the firm, whose shares lost a fifth of their value last year.

“We want a smooth generation change. There will be a few senior management changes coming,” Glasenberg told reporters. “Once the new generation is in place and ready to move on, then it will also be the time for me to move on.

“We have changed most of the divisional heads, we still have the zinc division and the coal division, so those are the last of the older crew left.”

Glasenberg, the company’s second-biggest shareholder with a 9% stake, said in 2018 he would step aside within 5 years. In recent years, the company appointed new division heads to cover marketing and assets for coal, ferroalloys, copper and oil.

Long-time head of copper Telis Mistakidis retired in 2018, while head of oil Alex Beard stepped down last June.

Asked if he could step down this year, Glasenberg said: “Don’t know. Let’s first get these other management changes in place and we’ll move from there.”

He spoke as Glencore posted its first annual net loss since 2015 after taking a $2.8 billion (£2.2 billion) impairment charge to reflect the closure of its Mutanda copper mine on lower prices, the expiry of licenses at its Chad oil operations and weak demand for coal from Europe.

Glencore’s coal operations in Colombia, where it has interests in three mines, ship mainly to Europe, where cheap gas prices have made it harder to compete. Colombia accounted for about 17% of Glencore’s coal production in 2019.

“The amount of coal being consumed in the Atlantic is decreasing,” said Glasenberg. “I don’t see a big recovery and it will continue to decrease.” He said reserves there would run out by 2035.

The company also said declining reserves in coal and oil would lead to a 30% reduction in carbon emissions from the use of its products, or Scope 3, by 2035.

Overall, the Anglo-Swiss miner reported a net loss of $404 million for 2019, compared with a profit of $3.41 billion a year earlier.

Its core earnings or adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $11.6 billion, while lower than a year earlier, beat analysts’ estimates of $11.25 billion.

Shares in Glencore, which fell 19% last year, were down 3.4% in London at 1324 GMT.

The company’s stock has underperformed its peers due to exposure to coal and multiple corruption probes linked to its operations in Nigeria, Venezuela and the Democratic Republic of Congo.

“While Glencore has its share of well-known idiosyncratic risks, it also offers investors leverage to commodities with attractive fundamentals and is trading at a depressed valuation,” said Christopher LaFemina, a metals and mining analyst at Jefferies.

The company completed $4.7 billion in distributions and buybacks in 2019, comprising a $0.20 per share ($2.7 billion) base distribution in respect of 2018 cash flows and $2 billion of share buy-backs. It said there was a chance to continue buybacks in 2020 depending on cash flow and the strength of its balance sheet.

Glencore cut the value of its oil business in Chad by $538 million last year. Since 2015, it has booked impairments of $2.4 billion on assets in Chad.

It is facing bribery investigations by authorities in the United States, the United Kingdom and Brazil. Legal costs jumped to $159 million in 2019 from $86 million a year earlier, largely due to the probes.