Coal Production
Glencore produced 59 million metric tons of coal in the first half from mines in Australia, Colombia and South Africa. The coal division is headed by veteran Tor Peterson, who has been with the company since 1992 and owned almost 3 percent of the company at the initial public offering five years ago.
The expense is an accounting “mismatch” between the fair value of coal derivative positions used as a hedge, Glencore said in a statement. The forward sales are expected to be settled before the end of June next year.
“Optically it’s not great, particularly now when there’s been a significant focus on the trading business,” said Paul Gait, an analyst a Sanford C. Bernstein Ltd. in London. “For those that want to see black box risk, this will be evidence of it. For those of us that are prepared to look beyond that, it seems like a rounding error.”
The company on Wednesday reported a 66 percent drop in first-half profit to $300 million from a year earlier. Net debt declined to $23.6 billion and the trader widened its target to cut borrowings to as low as $16.5 billion by year-end.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.