Reuters reports from London. Glencore told its investors on Wednesday that it would give them a total of $7.1 billion. This included a $1.5 billion buyback of shares, which was made possible by the high prices of oil and coal.
The miner and trader said that its net debt dropped from $6 billion at the end of 2021 to $75 million at the end of 2022.
EBITDA (adjusted earnings before interest, taxes, depreciation, and amortisation) went up 60% to a record $34.1 billion, beating the previous high of $21.3 billion from a year ago.
Gary Nagle, the CEO of Glencore (OTC: GLNCY), said that the record result was made possible by high and volatile commodity prices caused by things like the pandemic, underinvestment, weak supply chains, and conflict in Europe.
People think that the company is going against the trend of other miners, which have lower returns. This is because it has strong trading profits that have helped it deal with higher costs and lower production.
In 2022, trading in metals and fossil fuels brought in a record $6.4 billion in profit, which was a 73% increase from the year before. However, analysts don’t think that will happen again this year or next.
The prices of thermal coal, which is the most polluting fossil fuel, are about half of what they were last year, when they were at an all-time high. This is because the mild weather has lowered demand.
In a note about Glencore’s trading division, UBS analysts said that COVID, disruptions in the supply chain, and the power crisis in Asia and Europe have given marketing a lot of great opportunities.
“There’s a chance that marketing EBIT will stay above long-term averages for the next two years, but the big changes seen in 2020 and 2021 are unlikely to happen again.”
The price of Glencore’s shares, which went up 50% last year, was 1% lower at 8:54 GMT.
The company’s plan is to run out of coal from its mines in Colombia, Australia, and South Africa by the middle of the 2040s, instead of selling or spinning them off like other diversified miners have done.
As their deposits run out, mining companies are looking for new minerals to power the green energy boom.
Glencore mines copper, nickel, and cobalt, which are used in batteries. The company has said in the past that it was looking to buy “commodities of the future.”
Nagle told reporters on Wednesday that the fact that the company has almost no net debt does not mean it will go on a spending spree.
“But on the other hand, even if we had more net debt and the right opportunity came up with the right return for our shareholders, we would pursue that as well,” he said.
Glencore also said that because higher energy prices caused its net working capital to rise from $5.1 billion in 2021 to $13.3 billion in 2022, it could use its strong balance sheet to make money.
Chief Financial Officer Stephen Kalmin told reporters, “We can also use the balance sheet in a more short-term way, like for working capital funding or trade finance within the business, if it brings in enough money for us.”
“So, it’s a combination of how prices move more slowly and how we want to use the balance sheet to get the right returns.”
