With the world burning more coal as Russia’s war in Ukraine plunged global energy markets into chaos, commodities giant Glencore Plc pulled in a record $34 billion in profit last year. Gary Nagle, its boss, makes no apologies for more than half of that windfall coming from coal. At the same time, he also wants investors to focus on the minerals needed for a battery-powered future: copper, cobalt and nickel. “We must transition,” Nagle says. “It’s the responsibility of those involved in the business.”
Under Nagle, who took over in 2021, the shift away from coal won’t be fast. When the world committed to the Paris climate targets and investors started urging corporate leaders to embrace environmental causes, Glencore proposed a gradual exit from coal mining, while its chief rivals— BHP Group Ltd. and Anglo-American Plc—promised a quick departure. “Coal is a necessary fuel for today,” says Nagle in a boardroom at Glencore’s headquarters near the lakeside Swiss town of Zug. “It provides stable base load power, particularly for the developing world.”
Coal has traditionally vied with copper as Glencore’s biggest driver of earnings. Last year high coal prices meant it contributed $17.9 billion, compared with $5.7 billion for copper. Glencore’s strategy to stick with coal while also pursuing the commodities of the future has drawn criticism, and as the impacts of climate change mount, its coal profits will continue to be condemned by environmentalists and investors alike. “It’s a tricky situation,” says RBC Capital Markets mining analyst Tyler Broda. “There’s going to be a sort of persistent pressure on the company, whether to divest or just continue with the strategy.”
Nagle, 48, a two-decade veteran of Glencore’s coal business, follows in the footsteps of some of the most successful commodity traders, including his predecessor, Ivan Glasenberg, who also ran the coal business before becoming chief executive officer in 2002. After the company went public in 2011—making Glasenberg and his partners billionaires—Glencore bought miner Xstrata Plc and entered the industry’s top tier.
Nagle got a degree in accounting from Witwatersrand University in Johannesburg—the same course Glasenberg had completed decades earlier. In 1999, Glasenberg interviewed Nagle for a position at Glencore. The meeting lasted all of seven minutes. Nagle got the job, and he decided to move to Switzerland to join a company he hadn’t heard of before Glasenberg’s invitation.
After various jobs in the coal division, Nagle moved to Colombia in the mid-2000s, where he developed Prodeco, a vast open-pit mine in the country’s north. He later ran the ferro-alloys business in Johannesburg before moving to Sydney to become the global head of coal mining. Then in 2020, Glasenberg called to say he wanted Nagle to be the next CEO.
When Nagle took over, Glencore was mired in corruption probes that shadowed Glasenberg’s final years at the company. Led by the US Department of Justice, investigations focused on bribery allegations in multiple countries, including Venezuela and Nigeria. Last year the company pleaded guilty and set aside $1.5 billion to cover the fines. “It’s behind the company, but not forgotten,” Nagle says, referring to lessons learned from the saga and new policies Glencore has enacted to avoid running into trouble again.
Glencore, which faces similar probes in Switzerland and the Netherlands, will spend the next five years on probation in the US and has legal monitors appointed to ensure the company’s practices are appropriate. Glencore has all but eliminated the use of outside agents to broker deals and overhauled its compliance and training procedures. And given the problems caused by its notorious “cash desk,” where traders could ask for wads of $100 bills, the company has “eliminated cash,” Nagle says. “Even if you want to go on a trip and you need cash to pay taxis and you need $200, you just can’t get it. You just use your own money.”
Nagle says he expects profits to keep rolling in as there will be little respite from the high energy prices that have helped drive inflation. “The world remains in an energy crisis,” he says.
To facilitate the energy transition, the biggest miners are looking to copper, an essential component in decarbonizing technologies such as electric motors and grid connections for offshore wind farms. Glencore predicts copper production will need to almost triple by 2040 if the world is to hit targets for net-zero carbon emissions. That explosion in demand will push copper prices up by some 15%, to more than $10,000 a ton, and they’ll stay there, Nagle says.
Glencore, he says, can double its copper output to 2 million tons a year by expanding mines and building new ones. That’s somewhat of a departure from Glencore’s long-standing policy to acquire or expand existing sites instead of pursuing new projects, under the belief that the latter was too costly and added supplies that could lower prices.
Some analysts caution that Glencore’s fat profit margins are at risk as its mining business faces rising costs from inflation and operational challenges that have curbed production, including flooding and geotechnical issues. “They could be better at running those operations,” says George Cheveley, a portfolio manager at Ninety One UK Ltd. in London who owns Glencore stock. Nagle has done a good job taking over from Glasenberg, a big personality, and transitioning Glencore away from being run like a “quasi private family company,” Cheveley says. Still, Glencore needs to do better at balancing how much attention it gives its trading business, which is based on short-term market conditions, and the long-term business of running mines as efficiently as possible, he says. “I sometimes feel they haven’t got that quite right, the balance between operations and trading.”
Glencore is slowly evolving under Nagle’s leadership. There’s a Seattle-style coffee shop at the Zug offices where employees can work while sipping a latte, and a gym that’s used throughout normal working hours—activities that would have been frowned upon when Glasenberg was at the helm. “I do run things differently to Ivan,” Nagle says. “I am my own individual, my own person.”
Read more: How a Lack of Copper Could Slow the Energy Transition
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