Gary Nagle | Swiss Economic Forum 2023

The short answer is no, we don't. That's bad news. The metals are there. We are trying to develop our mines and grow our mines to be able to bring these metals on to help the decarbonization of the world. It's our responsibility. It's critical we do that. But unfortunately, many of these metals are in difficult jurisdictions. They're very deep. It takes a lot of time to get permitting, a lot of time to get licensing, studies that need to be done. And to bring these metals into the world that we need to help decarbonize the world takes a long time and unfortunately it's taking slower than it should and we probably don't have enough metal.

Look, it's very important we recycle. It's our responsibility to recycle as humanity. We should be doing that. Circularity is important and recycling the metals we use. Unfortunately, we are so far behind and we will never have enough metal in our lifetimes to be able to feed the demand through recycling. As Glencore, we spend significant capital and significant time building a recycling business to be able to help feed both primary metal and recycled metal into the supply chain. Even countries and geographies like Europe are starting to legislate that recycled material must be used in electric vehicles or whatever it may be going forward. However, the ramp-up of recycling material and the ability to collect the recycled material, process it and put it back into the supply chain is very constrained and it's unlikely that in our lifetimes we will see enough recycled material to feed the world's demand and the world will continue to need primary metal from around the world.

As Glencore, we have no interest in mining deep sea mining. I was surprised to see that article too, especially Norway which is quite left-leaning in terms of environmental management despite the fact it comes from a fossil fuel background. So I was very surprised to see that. At the end of the day, the point you make is right. There is not enough material in the world. Even if we ramp up recycling exponentially, we will still need to produce primary metal. Our focus is primary metal in a responsible way in the countries where we operate, and that's what we're focused on. We have no interest in deep sea mining and as you rightly point out, it needs to be done responsibly.

Look, I think some of that criticism is unfair. There have been incidents and allegations of human rights issues. But when we go out to these operations and we bring world's best standards and world's best practices, that's what we bring to these geographies. These are developing nations with very low standards and legislation which doesn't promote responsible mining. We as a multinational, we go there and we bring better standards. We bring world's best practice in how we operate, how we develop our mines, how we interact with the communities, how we interact with government. It's our responsibility to help uplift those countries where we operate. So, it's a net benefit for these countries and it's very important that multinationals like Glencore and other mining companies do develop these mines in these countries where we can responsibly bring these metals into the world.

There have been incidents in the past where allegations have been made. In many cases, some of those allegations are untrue. Of course, the media, as you know, likes to jump on things and make things bigger than they are. But yes, like the media likes to report on facts, right? Well, the media takes facts and they like to embellish things. To be fair, everybody makes mistakes. Mistakes happen. We make mistakes. And I'm sure the media make mistakes too. So mistakes do happen and when we make a mistake, we're very quick and ready to fess up to any errors that we've made and fix those. Any company in the world should have the same approach to being a responsible operator.

Look, we certainly are very misunderstood. Largely, Switzerland is not a traditional mining geography. We don't do any mining here in Switzerland and as a result, when you produce the commodities we produce, they don't have a brand. That's the interesting thing. So when I go to Migros and I go to Coop and I see Nestlé or I go to the pharmacy and I see Roche, these are great Swiss companies and each and every one of you see those as well and you're proud that they're Swiss companies. But nobody goes to the pharmacy or Coop and sees anything with Glencore's name on. But I would imagine you and everybody in this audience have one of these and everybody who's watching this on television has a television because they're watching on television. And in each and every one of those mobile phones and in those televisions are the critical minerals and metals that Glencore brings to the world. That's copper, that's cobalt, that's aluminium, that's zinc. I would bet that of every single mobile phone in this room today, more than half of it contains cobalt from a Glencore mine. And we as people living in Switzerland and Swiss nationals should be proud that Glencore is providing the transition to a decarbonized world. Glencore is providing economic development through the products and the metals and the minerals that we produce and we process and we sell. And that's what I think unfortunately is where it's a little misunderstood because we don't have that brand. When you buy this mobile phone, you buy a Samsung or you buy an Apple. You don't buy a Glencore Cobalt or a Glencore Copper. And that's the challenge we have as a mining company and a marketing company is we don't have that brand recognition.

Look, we have a coal business which is a very high quality coal business. It produces very high quality used to power generally in developing nations. Now, as much as we are very pro-decarbonization, we want the world to decarbonize. It's the right thing to do. We should be doing that. We have to be doing that and we are doing that. We can't escape the reality that the world still needs power today as a growing economy and particularly developing nations who are very reliant on fossil fuels. So our high quality coal feeds into those nations to allow them to grow their economies, take people out of poverty and decarbonize over time. Decarbonization doesn't happen overnight. So we have a coal business. We have committed to run down our coal business. We will have reduced our coal production off our 2019 base year by 50% by 2035. That's more than 12 mines of ours closing across the world. And we have a net zero ambition by 2050. So we are doing our part in running down our coal business, taking these fossil fuels out of the market. But at the same time in the short term while the world needs power, needs reliable base load energy, we are supplying this very high quality coal to the world as we decarbonize.

We've got a plan B, C, D, and E. But the base case and you know ultimately I work for our shareholders. And what do our shareholders say to us? Our shareholders are very comfortable keeping coal in Glencore and running it down responsibly how I explained it.

This is where I love how the media portray things. So when Erdogan won the election in Turkey, he won 52-48, he won, great. When a politician or one of our referendums we have in Switzerland and everybody goes to the urn and one of the referendums passes 60-40, it's a landslide. But when our climate change resolution gets 70-30, which is enormous, the media reports it as some sort of shareholder revolt or some sort of shareholder backlash. 70% of our shareholders, that's a huge majority, are very much in favor of our climate change policy. So I don't get where the concern is. Now of course under London Stock Exchange rules we need to consult with our shareholders as we do all the time and we will consult with our shareholders as we did last year as we continually do and we will consult again with our shareholders. But our most recent consultation with shareholders is that they are very comfortable with Glencore holding coal and running it down in a responsible ethical manner consistent with our commitments.

And ultimately we need to go with the majority.

Look, historically, our energy division, in particular coal, has been a much smaller contributor towards our earnings. And you would imagine as we run down our coal business down 50% by 2035, it will continue to decline or be a smaller portion of our profits. Of course, last year was an extraordinary year for coal. We had an energy crisis in the world. Gas was stopped through the Nord Stream pipeline. European utilities came to us and said, 'We have an energy crisis. We cannot take Russian gas. It's not available. Please can you supply us the fossil fuels we need for today to be able to keep the lights on, keep our factories running in Europe?' And that's what we did. So we were able to supply the customers with the energy needs that they needed in Europe, in Southeast Asia and across the world. Now of course because of the dynamics of the world and the energy crisis we were in, which we must remember that energy crisis was there before the war started, so it only continued once the war started, but we are in an energy crisis and we remain in an energy crisis today. So you have elevated energy prices across the board and we were therefore able to supply the energy needs of these factories and these countries around the world and create good margins for our shareholders.

China plays a long game. And it's a very smart game. They don't have to worry about elections every three or four years. They understand how they want to take their people and grow their economy. They have a very low GDP per capita. If you compare it to the Western world, GDP per capita in China is probably about $15,000 a person and the US is over 60,000. So, they're a long way away. And they have these strategies around securing critical minerals and metals for themselves around the world. And it's the smart thing to do. Every country should be doing what China's doing. Really? Absolutely. Going out buying mines, operating mines. The difference is we need to make sure that whether it's us or the Chinese or anybody else, they need to ensure that it's about the right way of operating in an ethical manner, in a responsible manner, taking into account all the stakeholders' needs and requirements. Do we have trust that China does that? Not necessarily. I think in many cases, do we? I mean, we've joint ventured with Chinese companies. We have a joint venture with a Chinese company in a mine in Australia. We mine nearby Chinese operated mines around the world and we see that the Chinese operate in a generally very responsible way.

At the end of the day, if we cannot get comfortable using world's best practice and standards and our best-in-class compliance program, we will not work in those countries. There are countries around the world that we've chosen not to invest in because we don't feel comfortable that we can keep to our high standards and our high ethical practice and therefore we won't operate in them. If we can get ourselves comfortable that joint venturing or operating in those countries and we are able to do it responsibly, we will continue to invest there.

We certainly won't be an automaker, that I can virtually assure you of. What are we today? We are the procurement arm of the electrification or the decarbonization industry. That's what we are. Without us, there is no Tesla. It's as simple as that. Without us, there's no Volkswagen. They need our commodities and we are the procurement arm of those businesses. So, where will we be in 10 or 20 years? I don't know. But certainly what we'll be doing is producing those critical minerals both through recycling or through recycling, through marketing and through our own production to be able to supply those critical minerals into the decarbonization industry. Now what I think because of what your first question was in terms of the lack of supply and the inability to supply the metals the world needs, that perhaps one of those companies do come and eventually want to buy Glencore to be able to secure their future because without those metals it's an existential threat to the Teslas, the Volkswagens, the BMWs of the world. And when they realize that perhaps there just isn't enough metal in the world, maybe one of them wants to come and buy Glencore.

You know, there's no crystal ball, but I'll give you one stat that'll make you think about it. I started in this industry 23, 24 years ago and in the entire world energy use in the world now, that's not just electricity, that's mobility, that's power, whatever you want to call it, fossil fuels provided 82% of the world's energy 23, 24 years ago. We now fast forward, we've spent trillions of dollars on renewables, we're all interested in renewables of course, the pie has grown, I don't think anybody would realize but today fossil fuels provides 81% of world's energy. So, we got a long way to go.

Absolutely. Thank you. Thank you. Thanks a lot.