While these companies are buckling to pressure from climate change warriors and activist investors, Glencore CEO and master arbitrageur Ivan Glasenberg has been quietly picking off premium thermal coal assets at fire sale prices.
This week we learnt Glencore had reached agreement with BHP and Anglo American on substantially the same terms to acquire their respective 33.3% interests in the coal mine in Colombia for a total of US$588 million.
Anglo American CEO Mark Cutifani said the agreement marked the final stage of the company's transition from thermal coal operations.
BHP said selling its financial interest to a current Cerrejón shareholder who understood the operation represented a strong outcome for Cerrejón and the stakeholders it supported.
Based on expected operating performance and forward coal prices, assuming a closing during H1 2022, Glencore anticipates the cash generated by the operation to reduce the effective aggregate cash consideration to approximately $230 million, making the estimated investment payback period less than two years from closing.
A two-year return on investment is a very good deal in anyone's language. Once again Glasenberg played his cards right - just as he did in forging a deal with Yancoal to get a share of the Hunter Valley Operation in New South Wales after Rio Tinto offloaded it.
Glencore also made the right statements to ensure it covered off on the environmental, social and governance crowd.
The company said it had reviewed the impact of owning 100% of Cerrejón and was confident its climate commitments would 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," it said.
Glencore is the largest thermal coal producer in Australia and a major player in the thermal coal seaborne trade.
It has reached a size where it can effectively move markets by controlling the majority of supply.
In the first quarter of 2021 alone, the company produced 12 million tonnes of thermal coal in Australia for export and 1.4Mt for domestic use.
The other big thermal coal asset that is to be auctioned off is BHP's Mt Arthur open cut mine in NSW.
BHP has declared it will be offloading it along with its share of the BHP Mitsui coal mines in Queensland.
Ironically, it is an activist investor, US hedge fund Elliott Management Corporation, that is considered to be in the box seat to buy Mt Arthur.
Elliott has been a thorn in BHP's side for some time, urging it to calve off its shale gas assets while at the same time eagerly searching for deals where it can get good energy assets at knock-down prices.
Elliott has acquired debt in Western Australia's coal-fired Bluewaters Power Station and bought a half share of contractor Thiess from CIMIC. It is also a major shareholder of Peabody Energy and BHP.
If it succeeds in acquiring Mt Arthur, Elliott will get a tier one asset with a track record of reliability of supply and proximity to infrastructure.
Hogsback reckons after all the environmental protests and statements are finished, Glencore and those who stick with thermal coal will be the winners and they will stand to reap the rewards.
