Glencore Adjusts Energy Coal Output Amid Market Headwinds, Maintains Momentum in Strategic Metals

Glencore, one of the world’s largest diversified mining giants, has recalibrated its production strategy for fiscal year 2025 (FY25), trimming its energy coal output targets while maintaining ambitious goals for key commodities like copper, cobalt, and nickel. This shift reflects the company’s adaptive approach to volatile markets and its focus on high-margin, demand-driven metals critical to the global energy transition.

Energy Coal: Strategic Retreat Amid Slumping Prices

Glencore announced a 5–10 million-tonne reduction in its 2025 energy coal production, narrowing its target to 11–16 million tonnes from its previous expectations. The move is a direct response to unsustainable prices for seaborne thermal coal, which have plummeted to around $100 per ton—down 20% since early 2025—due to oversupply from India and China.

The Cerrejón mine in Colombia, a major contributor to Glencore’s energy coal output, will bear the brunt of the cuts. Operational challenges, including permit delays, community blockades, and logistical hurdles, further pressured production in 2024, leading to a 6% annual decline to 99.6 million tonnes.

While energy coal faces headwinds, Glencore’s decision aligns with its historical strategy of curtailing supply to stabilize prices. The company’s unit cash costs for energy coal dropped slightly to $68.1 per ton in 2024, but falling prices have eroded margins. Investors should note that this reduction is not merely defensive: it reflects a strategic pivot toward commodities with stronger long-term fundamentals.

Copper, Cobalt, and Nickel: Anchoring Growth in Green Metals

Despite trimming energy coal, Glencore remains steadfast in its FY25 targets for copper (950–1,010 kt), cobalt (35–40 kt), and nickel (80–90 kt). These metals are central to the global shift toward renewable energy, electric vehicles (EVs), and battery storage—a trend that continues to drive demand.

Copper: Critical for Green Infrastructure

Copper production rose +9% sequentially in Q3 2024, with output rebounding to 242,600 tonnes amid improved grades at mines like Antapaccay (Peru) and Kamoto Copper Company (DRC). Glencore’s CEO, Gary Nagle, emphasized that grade erosion at existing mines could amplify supply shortages, potentially underpinning higher prices. With EVs and solar/wind projects requiring massive copper inputs, this commodity remains a growth engine.

Cobalt: Navigating Volatile Markets

Cobalt production declined 7.5% in 2024 due to lower grades and strategic cuts at Mutanda (DRC), but Glencore’s guidance of 35–40 kt remains achievable. While cobalt prices remain under pressure, its role in lithium-ion batteries ensures long-term relevance.

Nickel: Recovery in Key Operations

Nickel output rebounded +27% sequentially in Q3 2024, driven by Zhairem (Kazakhstan) and Murrin Murrin (Australia). Excluding the shuttered Koniambo mine, nickel production rose +18% year-on-year, underscoring operational resilience.

Strategic Shifts and Investment Implications

Glencore’s FY25 adjustments highlight two key themes:
1. Market Discipline: The energy coal cut demonstrates its commitment to prioritizing profitability over volume.
2. Strategic Focus: Metals like copper and cobalt are positioned to benefit from rising demand for EVs and renewables, aligning with Glencore’s long-term vision.

Risks to Watch:

• Coal Demerger: Shareholder pressure may push Glencore to spin off its coal assets, though this decision remains pending.
• Operational Hurdles: Logistical challenges, labor disputes, or regulatory delays at mines like Cerrejón or Mutanda could disrupt targets.
• Commodity Volatility: Copper and cobalt prices remain tied to macroeconomic factors like China’s growth and global EV adoption rates.

Conclusion: A Prudent Play for the Transition Economy

Glencore’s FY25 outlook underscores its evolution from a traditional mining giant into a strategic supplier of critical green metals. While energy coal’s decline poses near-term risks, the company’s maintained targets for copper, cobalt, and nickel—backed by operational improvements and strong demand drivers—position it well for the energy transition.

Investors should weigh the short-term pain of coal cuts against the long-term upside of Glencore’s diversified portfolio. With FY2024 copper production within guidance and Q3 recoveries in nickel, the company is on track to deliver results that could outperform broader commodity indices.

As the world shifts toward renewables, Glencore’s strategic adjustments—backed by robust fundamentals in its core metals—suggest it remains a compelling play for investors seeking exposure to the metals that will power the future.