Glencore scraps US$1.3B Australian coal project

Miner and commodities giant Glencore (LSE: GLEN) has shelved plans for a giant A$2 billion (US$1.3 billion) coal mine in Australia’s Queensland state, which would have become one of the country’s largest.

The Swiss company said the decision to abandon the Valeria project was based on global uncertainties and an increase in state royalties, which have damaged investor confidence. 

The move also fits with Glencore’s strategy to phase out emissions, which includes keeping its thermal coal mines until depletion by the mid-2040s. The company’s goal is to halve its scope 1, 2 and 3 emissions by 2035 and hit net-zero carbon emissions by 2050.

Peers including BHP (NYSE: BHP; LSE: BHP; ASX: BHP) and Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) are in the midst of a transformation away from carbon-emitting fossil fuels in favour of minerals necessary in the low-carbon energy transition, such as copper, nickel, lithium and cobalt. 

Construction at the Valeria open pit metallurgical and thermal coal mine, which Glencore bought from Rio Tinto in 2018 as part of a deal that included the Hail Creek project, was planned to begin in 2024.

It would have created 1,400 construction jobs, 1,250 operational posts and produced 20 million tonnes of coal a year over the mine’s 37-year life.

“We will continue to progress various brownfield coal extensions at existing mines in Australia, but note that within the next four years our Liddell, Newlands and Integra mines will close and undergo appropriate rehabilitation,” a Glencore spokesperson said.

Chief executive officer Gary Nagle had said earlier this week the firm was advancing plans to close 12 of its coal mines from 2019 to 2035.

The company operates 26 coal mines, most of which are in Australia, according to its website.  

Queensland, home to coal mines owned by BHP, Anglo American and Peabody Energy, ended in June a 10-year freeze on royalty rates and raised them to capture windfall profit.