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Diversified miner Glencore has struck an agreement with majors BHP and Anglo American to acquire their respective 33.3% interest in the Cerrejón coal mine, in Colombia, for a combined $588-million in cash.

Glencore, which holds the remaining 33.3% interest in the project, on Monday said that based on its long-term relationship with Cerrejón and knowledge of the asset, the company strongly believe that acquiring full ownership is the right decision and the progressive expiry of the current mining concessions by 2034 is in line with its commitment to a responsible managed decline of its coal portfolio.

Production volumes are expected to decline materially from 2030.

“Glencore has been involved with Cerrejón for more than 20 years. We know the asset well and believe that we are the most responsible steward for Cerrejón at this stage of its lifecycle.

“Disposing of fossil fuel assets and making them someone else’s issue is not the solution and it won’t reduce absolute emissions,” said Glencore CEO Ivan Glasenberg.

“We are confident we can manage the decline of our fossil fuel portfolio in a responsible manner that is also consistent with meeting the goals of the Paris Agreement, as demonstrated by our strengthened total emission reduction targets.”

He said that the alternative was one or more new joint venture partners acquiring these shares and compromising the sustainable operating philosophy of Cerrejón, and extending production beyond the current mining concessions.

Equally, a disposal of Glencore’s current stake in the mine would not be consistent with the company’s stated commitment to a responsible managed decline of its coal portfolio, nor would it result in a genuine reduction of absolute greenhouse gas emissions, said Glasenberg.

“We have reviewed the impact of owning 100% of Cerrejón and are confident our climate commitments will not be compromised by this partner buy-out,” he added.

Based on expected operating performance and current forward coal prices, Glencore anticipated the cash generated by the operation to reduce the effective aggregate cash consideration to approximately $230-million, making the estimated investment payback period less than two years from closing.

BHP said on Monday that selling its financial interest to a current Cerrejón shareholder who understands the operation represented a strong outcome for Cerrejón and the stakeholders it supports.

BHP noted that further impairment charge of approximately $80-million post-tax would be recognised as an exceptional item in the financial results for the second half of the 2021 financial year.

Meanwhile, Anglo American CEO Mark Curifani said the divestment of the company’s interest in Cerrejón marked the final stage of Anglo American’s previously announced transition away from thermal coal operations.

“Today’s agreement marks the last stage of our transition from thermal coal operations. During that transition, we have sought to balance the expectations of our wide range of different stakeholders as we have divested our portfolio of thermal coal operations, in each case choosing the exit option most appropriate for the asset and its distinct local and broader circumstances,” Cutifani said.

The transaction is subject to a number of competition authority and other regulatory approvals and is expected to complete in the first half of 2022.

Meanwhile, Glencore has also reviewed its planned fossil fuel production profile and has committed to a more aggressive total emission reduction targets as follows: targeting Scope 1, 2 and 3 emissions reduction of 50% by 2035 on 2019 levels, and the introduction of a new short-term reduction target of 15% by 2026 on 2019 levels.

“Our focus remains on our total emissions footprint, including our Scope 3 emissions, which is critical in order to achieve the goals of the Paris Agreement.

Glencore will continue to prioritise capital allocation towards commodities essential for the transition to a low carbon economy,” the company said.