Glencore to cut coal output in attempt to halt price slump

Glencore Plc said it’s cutting planned coal production as the world’s biggest shipper of the dirtiest fuel looks to halt a prolonged collapse in prices.

The giant commodity trader will produce between 5 to 10 million tons less coal than previously expected at its Cerrejon mine in Colombia. The mine will produce between 11 to 16 million tons this year.

“The rationale for the cut is primarily driven by the unsustainable prices for seaborne thermal coal,” Glencore said in a statement on Tuesday.

Glencore has a long history of pulling back production when prices are weak and said earlier this year it was prepared to act to support one of its most important commodities.

The move comes as coal prices remain in the doldrums. The slump to the lowest levels since mid-2021 has been driven by record production in India and China. That’s seen stockpiles swell in these countries.

Australia’s Newcastle coal futures have fallen to around $100 a ton, down about 20% since the start of the year. They hit a record of over $450 a ton in September 2022, following Russia’s invasion of Ukraine. Mining has boomed since then on the back of spiking prices and energy security fears.

The company, which posted record profits just two years ago, cashing in on the global energy crisis, has since seen earnings decline. Glencore previously said it will produce between 92 million and 100 million tons of coal this year.

(By Thomas Biesheuvel)

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