Glencore Emerging A Big Winner From Coal Consolidation – Tim Treadgold (Forbes Magazine – October 12, 2018)

Tim Treadgold has been writing about the mining and oil industries for more than 40 years.

The inconvenient truth of coal prices which refuse to fall as demanded by environmental activists and some investors and governments is proving to be a rather convenient fact for one of the world’s biggest mining and commodity trading companies, Glencore.

While other big miners have been selling coal assets Glencore has been buying and if recent indications are correct it now controls enough of the seaborne coal market to have a noticeable effect on price.

An example cited in a research report published this week was how Glencore was able to delay settlement in annual coal-price negotiations with Japanese buyers in order to win a higher price.

Macquarie, an Australian investment bank, said Glencore’s greatest influence was in top-grade thermal coal used to generate electricity rather than metallurgical, or coking coal used to make steel.

“Glencore’s increasing seaborne thermal coal-market control focuses on the trade’s top grade,” Macquarie said. “The fact that Glencore was able to delay the annual settlement with the Japanese power utilities for four months this year, until spot (short-term) prices recovered, was a remarkable demonstration of market power”.

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