Glencore has reported strong earnings for 2021, although in terms of energy it was largely driven by coal, rather than oil.
For the year, the trader said adjusted EBITDA had reached $21.3 billion, up 84%. Net income reached $5bn for the year, up from a loss of $1.9bn in 2020.
Glencore’s energy products arm reported adjusted EBITDA of $5.6bn, an increase of 439%. Coal was overwhelmingly responsible for this increase.
Newcastle thermal coal prices were up 125%, Glencore said, while Brent was up 65%.
In Glencore’s marketing unit, oil was responsible for a smaller contribution than in the previous year. In 2020, the trader had “capitalised on the exceptional price movements and dislocations across key markets”, it reported.
Managing down
Glencore is in a process of “managing down” its upstream investments, in coal and oil. It struck a deal to sell off its Chadian oilfields in August 2021, with the sale to Perenco expected to close in the first half of this year.
Glencore shutdown production in Chad in March 2020, in response to COVID-19 and the struggle of moving its workforce around. The assets remain offline.
The trader took a $673 million impairment in the second quarter of 2020, reducing their recoverable value to $145mn.
While the company may be talking managed decline, it increased production by 34% at its assets in Equatorial Guinea and Cameroon. Entitlement production reached 5.3 million barrels of oil equivalent for 2021, it said.
The Alen backfill project was the main driver of the increase, it said. Equatorial Guinea contributed 4.14 million boe, up 111%, while Cameroon reached 1.1 million boe, up 30%.
In 2020, Glencore also took a $480mn impairment on its Astron refinery, in South Africa, to $1.015bn. The trader warned that a change in refining margins could see a further impairment or a reversal of the charge. It has made a commitment to spend up to $410mn by 2024 in order to debottleneck the Cape Town refinery.
Lending
Glencore is also a lender to various states, with debts typically secured against products. In Congo Kinshasa, Glencore completed funding of $375mn to an infrastructure power programme. The company is being repaid by discounted power.
The trader has also extended debts to Chad’s Société des Hydrocarbures du Tchad (SHT) and Congo Brazzaville’s Société Nationale des Pétroles du Congo (SNPC).
SHT owes $321mn net to Glencore, down from $359mn in 2020. It is paying this debt down through oil deliveries. $31mn is due in the next 12 months.
SNPC owes $156mn to Glencore, unchanged from 2020. The trader said $27mn is due in the next 12 months.