Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Glencore Board Handled the Commodities Supercycle
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- Lucas: Copper went from about $2.70 a pound in early 2020 to over $5.20 by early 2024 — that's a near doubling, with a spike to $5.40 in March 2022 when Russia invaded Ukraine. For a company like Glencore, which is one of the world's largest producers of copper and cobalt, that price surge meant cash flow that most companies can only dream of. And that presented the board with a genuinely interesting governance problem. Luna: Which was basically: what do you do with all that cash when your core business is something the world is trying to phase out? Because Glencore is also one of the biggest coal producers on the planet. Lucas: Exactly. And the supercycle wasn't just copper — coal prices went parabolic. Thermal coal, which Glencore mines in Colombia, South Africa, and Australia, hit $400 a ton in 2022. That's roughly six times the average price from 2015 to 2019. So suddenly, Glencore was making billions from the very fuel that governments were promising to leave behind. The board had to decide: do we maximize these profits while they last, or do we accelerate the transition away from coal? Luna: And the board's choice, at least in 2022, was very clear. They effectively paused their coal phase-down plan. They had previously committed to reducing coal output by 30 percent by 2035, but in 2022 they said they would keep mines open longer to meet demand. Investors loved it. Lucas: Investors loved it, but climate activists — and some institutional shareholders — hated it. Glencore became the poster child for the tension between fiduciary duty and climate pledges. In 2022, the company generated $34 billion in adjusted EBITDA. Just from coal, it was $18 billion. That's more than the entire company had earned in any single year before. Luna: And what did the board do with that cash? They paid out a $7.1 billion dividend — the largest in the company's history — and they also reduced net debt to near zero. So they essentially said: we will give you the money, and we will make the balance sheet bulletproof, but we are not going to stop mining coal tomorrow. Lucas: That dividend decision was a board-level call, and it reflected a deep philosophical split. Some directors argued that the supercycle was temporary and the prudent move was to hoard cash and prepare for the transition. Others — notably the activist investor side — said the opposite: the window for coal profits was closing, and shareholders deserved to capture that value while it existed. Luna: You mentioned activist investors. Glencore's board has historically had a strong investor voice. Ivan Glasenberg, the former CEO who retired in 2021, was still a major shareholder and board member. And the current CEO, Gary Nagle, came from within. So there's a lot of insider perspective on the board. Did that skew the decision toward paying out rather than reinvesting? Lucas: It's a fair question. The board in 2022 had 12 members: five independent non-executives, four non-independent non-executives — including Glasenberg — and three executives. So the insider voice was quite strong. And the independent directors included people like John Glick, a former head of base metals at Rio Tinto, and Leonhard Fischer, a finance guy with deep capital markets experience. They understood the commodity cycle. But they also understood that the energy transition narrative was putting pressure on the company's cost of capital. Luna: I remember that in early 2023, Glencore's board faced a shareholder resolution calling for them to disclose a detailed plan for phasing out coal. It was co-filed by a group of institutional investors managing over $10 trillion in assets. The board recommended voting against it. And it failed — but only got about 22 percent support. So a fifth of shareholders were basically saying 'you need a better plan'. Lucas: Right. And the board's argument was that Glencore's coal assets were actually lower-carbon than the global average — because they're mostly open-pit mines with lower methane leakage — so shutting them down prematurely would just shift production to higher-carbon competitors. In their view, the most responsible path was to keep producing and use the profits to fund the transition into metals needed for electrification, like copper, cobalt, and nickel. Luna: There's some logic to that. Glencore has been aggressively expanding its copper portfolio. They bought a 77 percent stake in the MARA copper project in Argentina in 2021, and they've been investing in recycling and battery materials. So the board is trying to pivot the company's identity from 'dirty commodities trader' to 'critical minerals supplier'. Lucas: But the pivot is slow. In 2023, coal still accounted for about 40 percent of Glencore's total EBITDA. And the board's decision not to spin off the coal business — which some activists and even some analysts had called for — means that the company's valuation is depressed. Glencore trades at a forward price to earnings ratio of about 8, compared to, say, Rio Tinto at around 10 or BHP at 12. The coal overhang costs them in equity valuation. Luna: So the board has effectively chosen to hold the coal assets inside the company, use the cash to fund the transition, and accept a lower valuation multiple as the cost of doing so. That's a defensible strategy, but it requires a lot of patience from shareholders. And not all of them are patient. Lucas: If today was actually useful to you, the way these stays ad-free is listener support — buy me a coffee dot com slash fexingo. We don't run ads, we don't have sponsors, and we want to keep it that way. A small contribution helps us keep the boardroom conversations going. Luna: Yeah, it really does make a difference. We hear from listeners who say these episodes help them think more clearly about strategy. If that's you, the coffee link is the simplest way to keep us going. Lucas: And we appreciate every single one. So back to Glencore's board — because the really interesting question isn't just about coal. It's about how a board manages the tension between its fiduciary duty to maximize value and the broader stakeholder expectations around climate change. Luna: And that tension came to a head in 2024, when Glencore announced that it would not close its Prodeco coal mine in Colombia as originally planned, but instead would sell it. That was another board-level call. Lucas: The board decided that selling the mine was better than closing it — they argued it would preserve jobs and tax revenue for Colombia, while still allowing Glencore to exit the asset. But critics said it was just a way to wash their hands of the emissions while still profiting from the sale. The buyer was a consortium led by a local energy group, so the coal would still be burned. Luna: That gets to the heart of the governance challenge: is it better to keep the mine and manage a responsible phase-down, or sell it and walk away with a clean balance sheet? There's no perfect answer. Lucas: And the board's composition shapes which answer you get. In Glencore's case, you have several directors with deep mining experience who think in terms of asset life cycles and logistics. They look at a coal mine and see a capital asset that should be run until it's exhausted. Meanwhile, the newer independent directors, like former BP executive Cynthia Carroll, bring an energy transition perspective that says 'you need to move faster.' Luna: So the boardroom debate is really a microcosm of the global energy debate. One side says: maximize returns and let the market decide when coal is obsolete. The other says: the market is too slow, and regulation will force change anyway, so you should lead it. Lucas: And both sides have a point. The supercycle is receding. Coal prices have dropped from those 2022 peaks — thermal coal was around $120 a ton in mid-2026, down sharply. Copper has held up better, around $4.20 a pound, but that's still off the highs. So the board is now making decisions under a different price regime. Luna: Which means the dividend strategy might change. In 2024, Glencore raised its payout ratio and distributed $5.8 billion. But if commodity prices keep falling, that dividend could be cut. The board has to balance shareholder expectations with the need to invest in growth. Lucas: And they also have to manage the political risk. In 2023, the US Department of Justice reached a deferred prosecution agreement with Glencore over bribery and market manipulation charges. That required board-level oversight and a $700 million penalty. So the board is not just thinking about coal and copper — they're also dealing with legacy legal issues that shape the company's reputation. Luna: That's a good point. The board's credibility on ethical issues is damaged by those past scandals. When they say 'we're responsible miners', some shareholders and NGOs push back and say 'you paid bribes for years.' So any transition narrative has to contend with that history. Lucas: And yet, Glencore's board has taken some steps that go beyond what many of its peers have done. In 2021, they were the first major diversified miner to announce a net-zero target for scope one, two, and three emissions by 2050. That was a board-level initiative, driven in part by engagement with the Institutional Investors Group on Climate Change. Luna: But critics say the target lacks credibility because the board hasn't committed to intermediate milestones that would require actually reducing coal output. And since coal is the biggest source of their scope three emissions — the ones from burning their products — the target is hollow without a coal phase-out plan. Lucas: That's the crux. The board is essentially saying: we will reduce emissions through technology and efficiency, but we won't stop selling coal until the market dries up. That's a market-driven transition, not a planned one. And it's a strategy that requires a board willing to withstand the criticism. Luna: So far, they've held the line. The board remains unified — there hasn't been a public director resignation over the coal strategy. And the CEO, Gary Nagle, has the full backing of the chair, Kalidas Madhavpeddi. So the governance structure is very top-down. Lucas: And that top-down approach has delivered strong financial results. From 2020 to 2024, Glencore generated about $60 billion in free cash flow. The board directed most of that to shareholders — $25 billion in dividends and buybacks — and the rest to debt reduction and selective acquisitions. The stock has outperformed its peers over that period. Luna: But the question for the next board cycle is: can they do it again? The supercycle is over, the legal cases are settled, and the energy transition is accelerating. The board will have to decide whether to pivot faster or hold the course. And that decision will define the company for the next decade. Lucas: And it's a decision that every commodity company board is facing. Glencore just happens to be the most exposed because of its unique combination of coal dominance and trading culture. How they navigate the next five years will be a case study in board governance under climate pressure. Luna: It will be interesting to see if the board's composition changes. There's some talk that activist investors like Bluebell Capital might push for a board seat to force a coal spin-off. If that happens, the dynamic could shift dramatically. Lucas: That's the kind of boardroom battle we'll be watching. For now, Glencore's board has chosen a path of managed opportunism — take the profits, pay the dividends, and keep the coal mines running until someone forces them to stop. It's not a heroic strategy, but it's a coherent one. Luna: And it reflects the reality that for many companies, the transition to a low-carbon economy is not a clean break but a messy, gradual process. Boards have to live in that mess and make decisions with incomplete information. Lucas: Which is exactly why these conversations matter. The boardroom is where the trade-offs between profit and planet are actually debated — not in the abstract, but in specific, quantified terms. And at Glencore, the debate is as intense as it gets.