Glencore Plc, the most prominent coal miner in Australia and the world’s largest coal exporter, has bowed to the global anti-coal lobby. Due to the investors’ pressure for action on climate change, the coal giant has decided to cap its international coal output at 2019 levels.

Australia’s coal industry is the country’s biggest export earner. Glencore occupies the first position as a contributor to the coal industry by volume and the second position by value.

Glencore invested $US2.7 billion over the last two years, adding significant mass to its Australians thermal coal business. Pressurized by the anti-coal lobby, the famous Swiss-based miner and communities trader has now decided to wave the white flag on growth.

Climate Action 100+ corralled Glencore into the climate concession predominantly. Climate Action 100+ is an investor initiative that is responsible for ensuring the world’s largest corporate greenhouse gas emitters take essential action on climate change. The organization represents 300 of the most influential powerhouse investors in the world who collectively have over $US32 trillion under management.

Glencore’s Plans

Under the plan, Glencore Plc will set out proposals to limit the production of metallurgical and thermal coal at around 145 million metric tons annually. The minor’s concession will likely to cause a steady decline in production from 2022-23 as Glencore has to retire some of its more mature Australian operations. Also, Glencore won’t carry out major acquisitions where doing so would add materially to total production.

To adapt to the low carbon economy, Glencor plans significant capital investment to grow production of commodities required for the energy and mobility transition, and to limit its coal production capacity broadly to current levels.

Glencore’s Statement of Intent

With this commitment, Glencore will be able to get new partners in its coal joint ventures and acquire coal assets to improve its business, but only if the capacity is reduced to at least 2019 level.

Glencore will also expand its carbon emissions disclosure to include internal projections carried in its annual sustainability report and to review memberships of organizations whose public positions can undermine support for the Paris agreement on climate change.

Producers of fossil fuel are under the investors’ pressure to make efforts to reduce greenhouse gas emissions. These producers include a number of oil majors and mining firms. BP Plc, a British multinational oil and gas company, commented that it would prefer aligning its business plans more closely with Paris climate targets, amid demands from investors at Climate Action 100+. BP Plc also lists Glencore among a list of 100 focus companies.

Last year, Glencore spent $US2.7 billion to purchase major coal assets, including mines in Australia from Rio Tinto Group. The company also invested $US845 million on its pre-existing local coal assets. Glencore’s cap on production will also be imposed on its mines in South Africa and Colombia.

The statement of intent released by Glencor suggests that the new prejudice against coal will shape future investment decisions of the company. Glencore chief executive Ivan Glasenberg says it will focus on investments in its minerals business over all future coal options.