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Glencore PLC GLEN

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Thermal Coal Demand Almost Certain to Fall, but Supply Challenges See Value for Thermal Miners

Mathew Hodge, CFA Regional Director

Analyst Note

| Mathew Hodge, CFA |

We upgrade our fair value estimates for no-moat-rated thermal coal-exposed miners Glencore, Whitehaven Coal, and New Hope after considering the material uplift in near-term coal prices and the vastly higher futures curve. We now assume the benchmark thermal coal price averages USD 139 per tonne on average between 2021 and 2024, more than 40% higher than our prior assumption of USD 97 per tonne for the same period. Our long-term forecast is unchanged at USD 79 per tonne from 2025, based on the cost curve and long run marginal cost of production.

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Company Profile

Business Description

Glencore is one of the world's largest commodities traders, active in markets for metals and minerals, energy products, and agricultural goods. The firm's marketing business provides sourcing, logistics, transportation, storage, and financing services to commodity producers and consumers around the globe. The 2013 merger with diversified miner Xstrata propelled the company to become one of the world's largest commodity producers. Core exposures are in the production of thermal coal, coking coal, copper, zinc, nickel and ferroalloys.

Baarermattstrasse 3, P.O. Box 1363
Baar, CH-6340, Switzerland
T +41 417092000
Sector Basic Materials
Industry Other Industrial Metals & Mining
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type
Employees 144,122