28 Jun - 6 min read

Glencore agrees to acquire JV partners’ shares in the Cerrejón mine and strengthens climate commitments

Glencore agrees to acquire JV partners’ shares in the Cerrejón mine and strengthens climate commitments

Glencore plc
(Incorporated in Jersey under the Companies (Jersey) Law 1991)
JSE Share Code: GLN
LSE Share Code: GLEN
HKSE Share Code: 805HK
ISIN: JE00B4T3BW64

Baar, Switzerland
28 June 2021


    Glencore agrees to acquire JV partners’ shares in the Cerrejón mine and strengthens climate
                                           commitments


Following notices from our joint venture partners, BHP and Anglo American, offering to sell their entire
shares in the Cerrejón mine in Colombia, Glencore has reached agreement with each of them on
substantially the same terms to acquire their respective 33.3% interests.

The transaction has an economic effective date of 31 December 2020, with an aggregate purchase
consideration of c. US$588M then being subject to purchase price adjustments calculated at closing. Based
on expected operating performance and current forward coal prices, assuming a closing during H1 2022,
we anticipate the cash generated by the operation to reduce the effective aggregate cash consideration to
approximately US$230M, making the estimated investment payback period less than 2 years from closing.

The transactions are subject to various regulatory approvals and are inter-conditional on each other.

Glencore carefully considered how best to respond to the sale notices in a manner which reflects our
commitment to achieve the goals of the Paris Agreement and acknowledging our obligation to act as a
responsible steward of assets.

Based on our long-term relationship with Cerrejón and knowledge of the asset, we strongly believe that
acquiring full ownership is the right decision and the progressive expiry of the current mining concessions
by 2034 is in line with our commitment to a responsible managed decline of our coal portfolio. Production
volumes are expected to decline materially from 2030.

The alternative is one or more new JV partners acquiring these shares and compromising the sustainable
operating philosophy of Cerrejón, and extending production beyond the current mining concessions.

Equally, a disposal of Glencore’s current stake in the mine would not be consistent with our stated
commitment to a responsible managed decline of our coal portfolio, nor would it result in a genuine
reduction of absolute greenhouse gas emissions.

We have reviewed the impact of owning 100% of Cerrejón and are confident our climate commitments will
not be compromised by this partner buy-out. We have further reviewed our planned fossil fuel production
profile and are now able to commit to more aggressive total emission reduction targets as follows:
     •    we will increase our medium-term absolute total emissions reduction target (Scope 1+2+3) from
          40% to 50% by 2035 on 2019 levels (1); and
     •    we will introduce a new short-term reduction target of 15% by 2026 on 2019 levels.
Our focus remains on our total emissions footprint, including our scope 3 emissions, which is critical in
order to achieve the goals of the Paris Agreement.


(1)Base line restated to account for 100% ownership of Cerrejón from 2019, in line with Greenhouse Gas Protocol requirements. Due to the
decision by Prodeco to cease operations and relinquish its licenses and pending the outcome of the relinquishment process, the base line has
not been restated to exclude Prodeco.
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Glencore will continue to prioritise capital allocation towards commodities essential for the transition to a
low carbon economy.


Ivan Glasenberg, CEO of Glencore, said:
“Glencore has been involved with Cerrejón for more than 20 years. We know the asset well and believe
that we are the most responsible steward for Cerrejón at this stage of its lifecycle.
“Disposing of fossil fuel assets and making them someone else’s issue is not the solution and it won’t
reduce absolute emissions.
“We are confident we can manage the decline of our fossil fuel portfolio in a responsible manner that is
also consistent with meeting the goals of the Paris Agreement, as demonstrated by our strengthened total
emission reduction targets.”

For further information please contact:
Investors
Martin Fewings           t: +41 41 709 28 80     m: +41 79 737 56 42 martin.fewings@glencore.com

Media
Charles Watenphul        t: +41 41 709 24 62     m: +41 79 904 33 20 charles.watenphul@glencore.com

www.glencore.com
Glencore LEI: 2138002658CPO9NBH955
                                                                                                    Page 3
Notes for Editors


Background:
Cerrejón is an open-pit coal-export mining operation in Colombia. The company plays an important role in
the Colombian economy and in the region of La Guajira, where it operates a mine, railroad and port
facilities.
The gross assets of Cerrejón are US$2.968 billion. The loss attributable to Cerrejón in the year ended 31
December 2020 was US$226 million.


Cerrejón sustainable development
Cerrejón seeks to manage its social, human rights and environmental impacts in accordance with
international best practice.

    •   Social: Cerrejón has a Social Performance Strategy committed to the proper management of
        social impacts, including being dedicated to enhancing living conditions of neighbouring
        communities through voluntary and culturally appropriate programmes focusing on access to
        water, capacity-building and development of income generation projects.
    •   Human Rights: Cerrejón is committed to uphold respect for human rights in accordance with
        international best practice. This includes ongoing impact monitoring and close dialogue with
        communities. Cerrejón has successfully passed a number of third-party audits including
        BetterCoal.
    •   Environment: The operation has a robust Comprehensive Environmental Management Plan that
        both complies with Colombian legislation and aligns with international standards for environmental
        management.
For further information please refer to Cerrejón’s website here.
                                                                                                                                           Page 4
About Glencore
Glencore is one of the world’s largest global diversified natural resource companies and a major producer
and marketer of more than 60 responsibly sourced commodities that advance everyday life. The Group's
operations comprise around 150 mining and metallurgical sites and oil production assets.
With a strong footprint in over 35 countries in both established and emerging regions for natural resources,
Glencore's industrial activities are supported by a global network of more than 30 marketing offices.
Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation,
battery manufacturing and oil sectors. We also provide financing, logistics and other services to producers
and consumers of commodities. Glencore's companies employ around 135,000 people, including
contractors.
Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the
International Council on Mining and Metals. We are an active participant in the Extractive Industries
Transparency Initiative. Our ambition is to be a net zero total emissions company by 2050.


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Disclaimer
The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, “Glencore”,
“Glencore group” and “Group” are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These
collective expressions are used for ease of reference only and do not imply any other relationship between the companies. Likewise, the words
“we”, “us” and “our” are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used
where no useful purpose is served by identifying the particular company or companies.

Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking Division)

Date: 28-06-2021 08:03:00
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