Glencore was an operationally and financially robust company and demand for coal would increase for decades to come, Glencore executive Peter Freyberg said in Newcastle on Wednesday.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Mr Freyberg, Glencore’s head of global coal assets, was the guest speaker at a packed Hunter Business Chamber mining lunch at Newcastle City Hall.
Mr Freyberg’s appearance had been organised months ago, but interest in his speech was heightened by the global gloom surrounding the coal industry and the recent heavy falls in Glencore’s share price.
Glencore’s London-traded shares have lost two-thirds of their value since May, with the most recent falls triggered late last month by a negative investor advisory report.
While not denying the company’s Hunter mines were under pressure, Mr Freyberg said the company’s investments were long term.
“They need to be – as you know, mine lives are often measured in decades – and we operate in a cyclical industry,” Mr Freyberg said during his 3000-word address.
“We remain confident in the medium and long-term fundamentals for commodities, such as coal, copper and zinc.”
Later, in a 15-minute question-and-answer session with national journalists, Mr Freyberg said he absolutely believed that the decline in coal prices was cyclical rather than structural.
“Under all credible scenarios, coal remains a significant part of the growing global energy mix, and coal volumes grow,” Mr Freyberg said.
“It’s not about whether coal will be used, it’s about how coal will be used.”
Explaining the company’s decision to cut Australian coal exports by 15 million tonnes this year, Mr Freyberg said Glencore would not “push incremental volumes into markets that don’t need them”.
‘‘We continue to review our operations in the current market environment,’’ Mr Freyberg said.
‘‘Further, we won’t and can’t operate mines that don’t make a financial contribution. This approach secures the long-term viability of our portfolio and although tough, is the right way to run our business.’’
Answering journalists’ questions, Mr Freyberg played down the prospect of major job losses or mine closures in the Hunter, saying: ‘‘We’re not going to talk about cutbacks in the Hunter Valley.
‘‘What we’ve been driving with our teams is the fact we have to utilise our assets as efficiently as possible.’’
Mr Freyberg told his 300-strong audience that Glencore had mines in Australia, South Africa and Colombia, with the Hunter Valley ‘‘the single biggest part’’ of the operation.
Its Hunter mines employed 3800 people and produced 56million tonnes last year, most of it exported from the Port of Newcastle.
‘‘The ethos in Glencore’s coal business is very simple – we do what we say – and we aim to be responsible and safe operators in the Hunter that contribute positively to the community over the long-term,’’ Mr Freyberg said.
He highlighted rehabilitation projects at various open-cut mines as examples of mining co-existing with other land-uses.
Questioned later about Glencore’s environmental problems at the West Wallsend underground colliery, Mr Freyberg acknowledged the ‘‘problem’’ was ‘‘regrettable’’ but said the company had addressed the problem and cut short its mine plans to ensure more damage did not occur.
