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| Coal accounted for 35 per cent of Glencore's total emissions in 2016. (Rio Tinto.) |
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The Swiss-based resources giant said it would freeze coal production at current levels, and instead focus on commodities including copper, cobalt, nickel, vanadium and zinc, as part of its "global response to the increasing risks posed by climate change".
The company, headed by billionaire Ivan Glasenberg, acquired Rio Tinto's thermal coal business in 2017.
It said it would cap its global thermal and coking coal production at the current level of about 145 million tonnes after holding talks with the Climate Action 100+ initiative.
The group, whose global members collectively manage more than $US32 trillion in assets, includes a number of major Australian superannuation funds such as AMP Capital, AustralianSuper, Cbus, IFM Investors, QSuper and BT Financial Group.
"To deliver a strong investment case to our shareholders, we must invest in assets that will be resilient to regulatory, physical and operational risks related to climate change," the company said in a statement."To meet the growing needs of a lower carbon economy, Glencore aims to prioritise its capital investment to grow production of commodities essential to the energy and mobility transition and to limit its coal production capacity broadly to current levels."
Glencore to meet Paris Agreement targets
Glencore said it would implement recommendations that have been developed by the G20 Task Force on Climate-related Financial Disclosures (TCFD), which aim to help investors understand their financial exposure to climate risk and help companies better disclose this information.
"Glencore recognises the importance of disclosing to investors how the company ensures that material capital expenditure and investments are aligned with the Paris Goals," it said.
"Glencore will continue to disclose the metrics, targets and scenarios we use to assess and manage relevant climate-related risks and opportunities."
This included each material investment in the exploration, acquisition or development of fossil fuel, including thermal and coking coal production.
"In 2017, we announced our first target of reducing our greenhouse gas emissions intensity by 5 per cent by 2020 compared to a 2016 baseline," the company said. "We are currently on track to meet this target".Glencore is also developing new, longer-term targets based on policy and technological developments that support the Paris goals, and intends to make these public in its 2020 annual report.
Minerals Council of Australia membership under review
Glencore also said it would examine its membership of trade associations to ensure those groups aligned with the Paris climate agreement and Paris goals. These associations include the Minerals Council of Australia.
"This announcement demonstrates that Resources Minister Matt Canavan and his fellow coal cheerleaders are wildly out of touch with the investment sector, and it should send shockwaves throughout the Australian coal industry," he said.
Glencore is the largest coal-producing member of the Minerals Council.
"This announcement should bring to an end to the MCA's single-minded coal growth advocacy," he said.
"Australia can no longer budget on the infinite flow of revenues from coal exports, and must begin to plan for a life beyond coal, as the world transitions to a low-carbon economy."Minerals Council chief executive Tania Constable said the group welcomes any review and accepts that "the minerals industry needs to ensure its approach is attuned to community expectations as well as commercial imperatives".
"Any organisation which seeks to participate in public debate and policy should welcome transparency and vigorous scrutiny of its policy positions," she said.
"MCA has worked closely with its member companies to ensure our positions on a range of issues - including climate and energy policy - reflect contemporary views and global reality."
Climate change a major election issue
The Australia Institute said the announcement had major repercussions for Glencore's Australian operations. The miner has invested over $23 billion into Australia since 2008, including in a number of coal mines.
The Institute said coal accounted for 35 per cent of Glencore's total emissions in 2016, and its half-owned Hunter Valley operations produce 69 million tonnes of coal per annum.
"It is a major blow to fossil fuel interests in Australia to have a multinational like Glencore, that has been investing on average $6 million a day, every day for the past 10 years, to make this move," said the Australia Institute's climate and energy program director, Richie Merzian.
"One by one major investors are turning away from coal and it will soon become all but impossible for new mines to find funding, despite the Federal Government's local and international support and advocacy for the coal industry."He said this week Japanese giant Itochu also announced it was pulling out of coal in the interest of climate change, selling its stake in the Rolleston thermal coal mine in Queensland.
"On both sides of the world, companies are divesting and Australia may be stuck holding lumps of worthless coal," he said. "Come May, climate change will, without doubt, feature heavily in the federal election."
Australian Bureau of Statistics (ABS) data shows coal last year overtook iron ore as the nation's biggest export earner. Australia exported a record $66.2 billion worth of coal last year.
But greater investor and community concern about its environmental impacts has meant new mines often face tougher regulatory hurdles.
The NSW Land and Environment Court earlier this month upheld a decision by the NSW government to block the development of Gloucester Coal's proposed Rocky Hill coking coal mine, because of such concerns.
Links
- Why Glencore's Ivan Glasenberg buckled on coal
- What's good for the world, is good for Glencore and its coal profits
- Glencore’s cap on coal a 'modest' win, but more needed to combat climate change: Experts
- Matt Canavan pans Glencore's coal mining cap
- Glencore bows to climate lobby and caps coal production
- Australia's biggest companies ignore climate change risk: report
- Australia's coal future under threat as more changes hit fossil fuels globally
- Why Australian company directors have started caring about climate change
- Dire consequences': NSW court quashes plans for new coal mine