Glencore’s 2024 Financials Hit by $611 Million Coal Impairments in South Africa

Global commodities giant Glencore has reported a $1.6 billion loss to equity holders for the full year ending December 2024, with its South African coal operations contributing significantly to the downturn. Impairments worth $611 million (R11.2 billion) were recorded in its South African assets due to lower forecasted coal prices and ongoing logistical challenges.

Glencore’s total impairments for the year amounted to $5.3 billion, which also included write-downs in its Koniambo nickel project, custom zinc and copper metallurgical operations, and other assets.

South African Coal Market Decline

The primary driver of the South African impairments was a 19% reduction in long-term price assumptions for coal exports, with Glencore lowering its price expectations from $118 per tonne to $95 per tonne.

“Lower price assumptions, together with ongoing export logistics challenges, have significantly impacted Coal SA’s expected overall returns,” Glencore stated.

The company has also been affected by export logistics challenges in South Africa, including inefficient rail networks and port constraints, which resulted in a 5% drop in coal exports from Richards Bay in 2024. While some improvement in rail performance was noted, it was not enough to offset the overall decline.

Additionally, foreign exchange losses of $179 million related to Glencore’s South African rand-denominated subsidiaries further weakened the company’s financials.

Declining Coal Production

Glencore’s total energy coal production fell by 6% in 2024 to 99.6 million tonnes, primarily due to:

• Mine closures and longwall moves in Australia
• Export rail capacity constraints in South Africa
• Community blockades and heavy rainfall affecting production at its Cerrejón operations

In South Africa, thermal coal production dropped by 7% to 16.6 million tonnes, reflecting the company’s strategic decision to reduce output due to ongoing rail transport challenges.

Despite these setbacks, Glencore hinted that production rates could increase if additional rail capacity is restored.

Astron Energy Commitments and Future Investments

Following its acquisition of Astron Energy, Glencore committed to investing R6 billion into the Cape Town oil refinery and related projects as part of an agreement with South Africa’s Competition Tribunal and Economic Development Department.

By September 2024, Astron Energy had already invested R3.5 billion, with the full expenditure expected to be completed by September 2027.

Financial Performance

For 2024, Glencore reported:

• Adjusted EBITDA of $14.4 billion, a decline from the previous year, mainly due to weaker coal prices.
• Funds from operations of $10.5 billion, reflecting an 11% year-on-year growth despite the impairments.

Outlook for Glencore in South Africa

While Glencore remains a key player in South Africa’s coal sector, its financial struggles highlight the growing risks associated with the country’s coal industry, including declining global demand, logistical inefficiencies, and regulatory pressures.

The company’s ability to navigate these challenges will depend on export logistics improvements, price stabilization, and strategic investments in its South African operations.

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