JOHANNESBURG (miningweekly.com) – Diversified mining and marketing company Glencore has capped its coal capacity at 150-million tonnes of coal a year, a figure that it is close to and which it will not exceed.

The company has been working on the cap with its investors since 2016 in the interests of the transitioning to a low carbon global economy. This follows engagement with the investor signatories of the Climate Action 100+ initiative and Glencore’s recognition of climate change science as set out by the United Nations Intergovernmental Panel on Climate Change as well as its belief that the global response to climate change should pursue limiting temperatures in line with the goals of the Paris Agreement and support the United Nations Sustainable Development Goals, including universal access to affordable energy.

“We finally came to this agreement. This is where most sides are comfortable,” Glencore CEO Ivan Glasenberg said on Wednesday when the company reported 8% higher earnings before interest, taxes,  depreciation and amortisation of $15.8-billion and 5% higher net income before significant items of $5.8-billion.

On the impact of the coal cap on South Africa’s struggling State electricity utility Eskom, he said in response to Mining Weekly Online: “We’re supplying large amounts of coal to Eskom, which we’ll continue to help.”

At the same time, he made it clear that the company would not be building any new coal mines, but would be maintaining the current output of 150-million tonnes of coal a year.

“We do have to invest in capex anyway to maintain these tonnes, so I don’t think it will be affecting the world supply right now,” Glasenberg said in response to Mining Weekly Online.

It aims to limit coal production capacity broadly to current levels and to play a key role in enabling a transition to a low carbon economy.

On Eskom’s application for high electricity tariffs, the pending imposition of carbon tax in South Africa and the impact this could potentially have on Glencore’s ferrochrome businesses in South Africa, he said: “I don’t know exactly where that tax is going right now. We haven’t had the final outcome on it, so we’ve got to see. The ferrochrome business naturally does certainly get affected by higher power prices and it’s competing with ferrochrome production in China right now, with a large amount of chrome ore being exported from South Africa.”

Glencore has a 3 MW wind turbine installed at the Raglan nickel mine in the northern part of Quebec, renewable power and gas capture initiatives in Australia and hydropower in places.

Glencore’s 2018 earnings before interest tax depreciation and amortization (ebitda) increased 8% to $15.8-billion and net income before significant items rose 5% to $5.8-billion. Cash generation underpinned $5.2-billion of announced shareholder returns and buybacks.

Coal ebitda at $5.2-billion outdid copper zinc and nickel ebidta. Coal ebitda in 2019 is expected to be $5.4-billion.