Swiss mining and trading giant Glencore reported a significant drop in profits as the surge in commodity prices – caused by the Russia-Ukraine conflict since February 2022 – has eased, according to a report by Financial Times.
The company announced on August 8 that its earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 50% to $9.4 billion, with revenues of $107 billion for the first six months of the year. This decline was partly driven by decreasing coal prices after their previous highs.
The rebound in coal prices, due to a series of Western countries' sanctions on Russia's energy commodities, which messed up the global supply chain, had led to record profits for Glencore in the previous year.
Glencore's profit decline followed similar trends seen in other mining groups, like Rio Tinto and Anglo American.
The decline in coal prices, which have fallen from $277/t last year to $129/t for South African products, mirrors drops in oil, gas, and other industrial metals as global economic pressures take hold.
Glencore also faced challenges due to the easing of commodity market volatility, which its trading teams traditionally thrive on, coupled with cost inflation impacting its mining operations.
Nevertheless, these results still mark one of Glencore's strongest performances in the first half of the year, and CEO Gary Nagle expressed optimism about demand in the coming months, citing moderating inflation and supportive government policies in China.
(Writing by Alex Guo Editing by Emma Yang)
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