Glencore Cuts Cerrejon Coal Production As Prices Hit Three-Year Low

Glencore Plc (LON: GLEN) announced on Tuesday it will reduce coal production at its Cerrejon mine in Colombia by 5 to 10 million metric tonnes annually, citing “unsustainable prices for seaborne thermal coal.”

The production cut will bring Cerrejon’s annual output to 11 to 16 million tonnes, down from 19 million tonnes last year, as the world’s biggest coal shipper responds to a prolonged price collapse.

Coal prices have slumped to their lowest levels since mid-2021, with Australia’s Newcastle coal futures falling to around $100 per tonne, approximately 20% lower since January. The decline contrasts sharply with the record $450 per tonne reached in September 2022 following Russia’s invasion of Ukraine.

“We believe the decision to reduce production will contribute to guaranteeing the sustainability of operations,” Cerrejon said in a statement.

The price weakness stems from record production in India and China, which has caused stockpiles to accumulate in both countries.

Glencore had previously projected total coal production to be between 92 to 100 million tonnes for this year. The company has historically reduced output during weak market conditions to support prices.

The Anglo-Swiss commodities giant, which posted record profits during the 2022 global energy crisis, has since seen earnings decline. Cerrejon, one of Colombia’s major coal producers, also faces ongoing legal issues with local communities and regular rail line blockades.

The decision follows Glencore’s earlier indications this year that it was prepared to take action to support one of its most important commodities.


Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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