Glencore has announced plans to cut its coal production in response to declining global coal prices. The commodity giant intends to reduce output at its Cerrejon mine in Colombia by 5 to 10 million tons, adjusting production to between 11 and 16 million tons for the year. This move aims to stabilise the market after coal prices hit their lowest levels since mid-2021.
The sharp price drop has been attributed to record production in India and China, which has led to significant stockpiling in both countries. As a result, Australia’s Newcastle coal futures have fallen to around $100 a ton, marking a 20% decline since the beginning of the year. This downturn follows the 2022 price surge that saw coal prices soar above $450 a ton due to Russia’s invasion of Ukraine, prompting increased mining activity.
While Glencore previously benefited from record profits during the energy crisis, the recent slump has significantly impacted earnings. The company, which initially projected producing between 92 and 100 million tons of coal this year, is now scaling back to manage the challenging market conditions and stabilise coal prices.