Glencore expects to fulfil expenditure obligations related to its acquisition of Astron by September 2027 after initial payments totalling $185m as at September last year. Picture: Supplied
About $611 million (11.2 billion( worth of impairments in Glencore’s South African operations significantly contributed to the company’s $1.6bn in losses to equity holders for the full year to December 2024.
It also expects to fulfil expenditure obligations related to its acquisition of Astron by September 2027 after initial payments totalling $185m as at September last year.
The impairments to its South African coal operations came after Glencore’s price assumptions for South African coal fell by 19%. All in all, Glencore accounted for a total of $5.3bn in impairments for the year under review.
“Our financial statements report a net loss to equity holders of $1.6bn, after accounting for $5.3bn of significant items, including impairments in our South African coal operations (lower forecast price assumptions), in Koniambo, which transitioned to care and maintenance, and across our custom zinc and copper metallurgical operations,” said Glencore on Wednesday.
The impairments in the South African coal operations were on account of “lower forecast price assumptions” and had the “largest” impact.
Apart from the lower thermal coal price assumptions, ongoing export logistics challenges in South Africa and exchange rate losses also weighed down the company’s financials from South Africa. Glencore suffered exchange losses on translation of foreign operations of $179m, mainly related to its South African rand-denominated subsidiaries.
The company’s long-term South African coal export price assumption reduced from $118 per tonne to $95 per tonne.
“These lower price assumptions, together with ongoing export logistics challenges, have significantly impacted Coal SA’s expected overall returns,” it said.
However, the group’s South African exports from Richards Bay were supported by improved rail performance, although overall exports from South Africa decreased by 5% in 2024, “primarily due to reduced trucked” volumes.
Glencore’s energy coal production of 99.6 million tonnes for 2024 was down by 6% on 2023, reflecting the impact of scheduled mine closures, longwall moves in Australia in 2024, export rail constraints in South Africa, and a combination of permit delays, community blockades, and unusually heavy rain at Cerrejón.
Its South African thermal production of 16.6 million tonnes was 1.2 million tonnes, or 7%, lower than 2023, mainly reflecting measures implemented in 2023-24 to reduce coal production due to export rail capacity constraints.
“Should additional rail capacity be restored, production rates could be increased,” said Glencore.
After acquiring Astron Energy, Glencore and Astron Energy entered into conditional commitments with the South Africa Competition Tribunal and the South African Economic Development Department, including the investment of R6bn in the Cape Town oil refinery and related projects.
Pursuant to this, Astron Energy has made several investments amounting to R3.5bn in qualifying expenditure as at September 30, 2024 and expects to fulfil the full expenditure by September 2027.
For the 2024 full year, Glencore’s adjusted Ebitda of $14.4bn was down on the prior year, mainly as a result of weaker energy coal prices, while funds from operations grew 11% to $10.5bn.
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