NEWS RELEASE
Baar, 21 February 2024
Preliminary Results
2023
Highlights
Glencore's Chief Executive Officer, Gary Nagle,
commented:
"Against the
backdrop of a rebalancing and normalisation of international energy
trade flows, our Marketing and Industrial segments posted a lower,
albeit healthy, earnings performance in 2023, delivering Group
Adjusted EBITDA of $17.1 billion, cash generated by operating
activities of $15.1 billion and Net income attributable to equity
holders of $4.3 billion.
"Aided by healthy
operational cash generation, after funding $5.6 billion of net
capex and $10.1 billion of shareholder returns, the 2023 year-end
Net debt outturn was contained to $4.9 billion vs $0.1 billion in
2022. With a Net debt/Adjusted EBITDA of 0.29x, we continue to
enjoy significant financial headroom and strength.
"For 2024, basis
2023 cash flows, we are recommending to shareholders a $0.13 per
share (c.$1.6 billion) base cash distribution, comprising $1
billion from Marketing cash flows and 25% ($0.6 billion) of
Industrial attributable cash flows.
This distribution,
along our shareholder return journey, must be contextualised by the
significant announcement in November 2023 that we had entered into
a binding agreement with Teck Resources Limited (Teck) to acquire a
77% effective interest in its steelmaking coal business, Elk Valley
Resources (EVR) for $6.93 billion in cash. These are world-class
assets, expected to meaningfully complement our existing thermal
and steelmaking coal production in Australia, Colombia, and South
Africa. EVR also supports the transition as an input into steel
production needed for certain renewable energy infrastructure. The
transaction is subject to mandatory regulatory approvals and, while
closing could occur earlier, it is expected no later than Q3 2024.
The acquisition of EVR unlocks the potential, subject to
shareholder approval, for a value accretive demerger of our
combined coal and carbon steel materials business and, in support
thereof, we advised that Glencore could demerge the combined
company, only once Glencore had sufficiently delevered towards a
revised $5 billion Net debt cap, expected to occur within 24 months
from close.
Over the past few
years, our capital structure and credit profile has been managed
around a $10 billion Net debt cap, with sustainable deleveraging
(after base distribution) below the cap periodically returned to
shareholders via special distributions and buybacks. Under this
framework, we announced $20.3 billion of shareholder returns since
2020, comprising $10 billion of base distributions and $10.3
billion of "top-up" returns. Following the EVR announcement, we are
now managing the balance sheet around a revised $5 billion Net Debt
cap, alongside our continued commitment to minimum strong BBB/Baa
ratings.
Although there are
no "top-up" returns at this point, the business is expected to be
highly cash generative at current spot commodity prices (spot
illustrative annualised free cash flow generation of c.$5.2 billion
from Adjusted EBITDA of c.$15.0 billion), which augers well for
top-up returns to recommence in the future.
"As the world moves
towards a low-carbon economy, we remain focused on supporting the
energy needs of today whilst investing in our transition
commodities portfolio. During 2023, we acquired a 30% equity stake
in Alunorte alongside a 45% equity stake in Mineracao Rio do Norte
S.A., securing low carbon and cost alumina units for our Marketing
business. In copper, we acquired the remaining 56.25% interest in
the MARA brownfield copper project in Argentina that we did not
already own, as well as the balance of Polymet shares (c.18%).
Polymet formed a 50:50 JV with Teck, establishing the New Range
Copper Nickel venture in Minnesota. These additions, along with a
near doubling of El Pachon's resource, added more than 5 billion
tonnes of resource to our copper resource inventory in
2023.
"While we continue
to remain focused on operating safely, responsibly and ethically
and creating sustainable long-term value for all our stakeholders,
the strength of our diversified business model, across industrial
and marketing, focusing on metals and energy, has again in 2023
proved itself adept in a range of market conditions."
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US$ million
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2023
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2022
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Change %
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Key statement of income and cash flows
highlights1:
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Revenue
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217,829
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255,984
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(15)
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Adjusted EBITDA◊
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17,102
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34,060
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(50)
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Adjusted EBIT◊
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10,392
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26,657
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(61)
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Net income for the year attributable to equity
holders
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4,280
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17,320
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(75)
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Earnings per share (Basic) (US$)
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0.34
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1.33
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(74)
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Funds from operations (FFO)2◊
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9,452
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28,938
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(67)
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Distributions to equity holders and purchase of own
shares
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10,130
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7,539
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34
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|
|
|
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1 Refer to basis of presentation on page 7.
2 Significantly impacted in 2023, having absorbed the
lag effect of settlement in H1 2023 of $2.7 billion of 2022 final
income tax payments in Australia and Colombia.
◊ Adjusted measures referred to as Alternative
performance measures (APMs) which are not defined or specified
under the requirements of International Financial Reporting
Standards; refer to APMs section on page 122 for definitions and
reconciliations and to note 2 of the financial statements for
reconciliation of Adjusted EBIT/EBITDA.
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US$ million
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31.12.2023
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31.12.2022
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Change %
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Key financial position highlights:
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|
|
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Total assets
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123,869
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132,583
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(7)
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Total equity
|
38,237
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45,219
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(15)
|
Net funding◊
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31,062
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27,500
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13
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Net debt◊
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4,917
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75
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n.m.
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Ratios:
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Net debt to Adjusted EBITDA◊
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0.29
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0.00
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n.m.
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|
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◊ Adjusted measures
referred to as Alternative performance measures (APMs) which are
not defined or specified under the requirements of International
Financial Reporting Standards; refer to APMs section on page 122
for definitions and reconciliations and to note 2 of the financial
statements for reconciliation of Adjusted EBIT/EBITDA.
Strong financial performance
- $17.1 billion
Adjusted EBITDA, down 50% year-on-year (y/y), primarily reflecting
the rebalancing and normalisation of international energy trade
flows, with coal and LNG, and to a lesser extent, oil prices
materially declining
- Net income,
pre-significant items (see page 9): $6.7 billion, down 65%
- Post significant
items, Net income attributable to equity holders was $4.3 billion,
down 75%. Significant items, mainly comprising impairments, reflect
lower cobalt price assumptions impacting Mutanda and macro
assumption revisions at several zinc assets
- Net cash purchase
and sale of PP&E: $5.6 billion, up 22%
- Proposed
$0.13/share base distribution ($1.6 billion), in respect of 2023
cash flows
industrial asset results
- Industrial Assets
Adjusted EBITDA $13.2 billion, down 52%, primarily reflecting lower
coal earnings with the significant reduction in energy prices in
2023
- Metals $5.4
billion, down 41%, reflecting lower realised cobalt, nickel and
zinc prices, and reduced volumes; Energy $8.5 billion, down 55%,
mainly due to significantly lower coal prices
- Unit cash costs:
Cu 163¢/lb (+83¢ y/y), with c.50c/lb of reduced by-product credits
(cobalt being the largest contributor) and a 10c/lb non-cash
inventory adjustment; Zn 49¢/lb (-11¢ y/y); Ni 871¢/lb (+240¢ y/y),
including 24c/lb of Koniambo expensed capex; coal $70.5/t
(-$12.1/t) at a $70.2/t margin. 2024 unit cash costs projected to
be lower across all of Cu, Zn, Ni, and coal
marketing RESULTS
- Marketing
Adjusted EBIT $3.5 billion, down 46% y/y
- Energy Adjusted
EBIT: $1.7 billion (-67%), in a return to a more stable market
environment, following the extreme market volatility levels,
dislocations and complexities exhibited during 2022
- Metals Adjusted
EBIT: $1.7 billion (+5%), reflecting broadly consistent physical
marketing conditions for many of our most important commodities
- Viterra EBITDA
was $2.1 billion (2022: $2.0 billion), while Glencore's equity
accounted share of Viterra declined to $321 million ($494 million
in 2022).
robust balance sheet
- Net debt to
Adjusted EBITDA of 0.29x
- Available
committed liquidity of $12.9 billion; executed additional $3
billion 1 year committed liquidity facility in February 2024. Bond
maturities capped at c.$3 billion in any given year
climate ambition
- Extensive
engagement with shareholders during the year on a range of climate
matters, including seeking investors' views on anticipated changes
in our updated Climate Action Transition Plan that will be put to
shareholders at the 2024 AGM.
- There was broad
support for our climate strategy, recognising the importance of
maintaining a strategy that remains resilient to the risks and
opportunities of the evolving energy transition, and encouragement
to continue making progress towards our ambition of achieving net
zero industrial emissions by 2050, subject to a supportive policy
environment.
- The principal
areas of shareholder interest included a comparison of our targets
and ambition to various relevant IEA scenarios, understanding
progress on industrial emissions reduction between our short-term
2026 target and medium-term 2035 target and integration of the
recently announced EVR acquisition into the climate strategy.
- We will, among
other actions, maintain our commitment to reducing our total
industrial emissions footprint and report on progress against our
targets and ambition, update our assessment of the resilience of
our portfolio and expand analysis of our targets and ambition
against a range of climate policy scenarios.
- We intend to
publish our updated Climate Action Transition Plan in March 2024
and report on progress against our industrial emission reduction
targets and ambition in our 2023 Annual Report.
To view the full report please click here:
https://www.glencore.com/.rest/api/v1/documents/static/7e55cef8-54b5-47c5-8a48-171d685e319d/GLEN-2023-Preliminary-Results.pdf
For further information please contact:
Investors
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Martin Fewings
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t: +41 41 709 2880
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m: +41 79 737 5642
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martin.fewings@glencore.com
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Media
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Charles Watenphul
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t: +41 41 709 2462
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m: +41 79 904 3320
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charles.watenphul@glencore.com
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www.glencore.com
Glencore LEI:
2138002658CPO9NBH955
This announcement contains inside information.
Notes for Editors
Glencore is one of the world's
largest global diversified natural resource companies and a major
producer and marketer of more than 60 commodities that advance
everyday life. Through a network of assets, customers and suppliers
that spans the globe, we produce, process, recycle, source, market
and distribute the commodities that support decarbonisation while
meeting the energy needs of today.
With around 140,000 employees and
contractors and a strong footprint in over 35 countries in both
established and emerging regions for natural resources, our
marketing and industrial activities are supported by a global
network of more than 40 offices.
Glencore's customers are industrial
consumers, such as those in the automotive, steel, power
generation, battery manufacturing and oil sectors. We also provide
financing, logistics and other services to producers and consumers
of commodities.
Glencore is proud to be a member of
the Voluntary Principles on Security and Human Rights and the
International Council on Mining and Metals. We are an active
participant in the Extractive Industries Transparency
Initiative.
We recognise our responsibility to
contribute to the global effort to achieve the goals of the Paris
Agreement by decarbonising our own operational footprint. We
believe that we should take a holistic approach and have considered
our commitment through the lens of our global industrial emissions.
Against a 2019 baseline, we are committed to reducing our Scope 1,
2 and 3 industrial emissions by 15% by the end of 2026, 50% by the
end of 2035 and we have an ambition to achieve net zero industrial
emissions by the end of 2050. For more detail see our 2022 Climate
Report on the publication page of our website at
glencore.com/publications.
Important notice
This document does not constitute or
form part of any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for any
securities.
Cautionary statement regarding
forward-looking information
Certain descriptions in this document
are oriented towards future events and therefore contains
statements that are, or may be deemed to be, "forward-looking
statements" which are prospective in nature. Such statements may
include, without limitation, statements in respect of trends
in commodity prices and currency exchange rates; demand for
commodities; reserves and resources and production forecasts;
expectations, plans, strategies and objectives of management;
expectations regarding financial performance, results of operations
and cash flows, climate scenarios; sustainability performance
(including, without limitation, environmental, social and
governance) related goals, ambitions, targets, intentions, visions,
milestones and aspirations; approval of certain projects and
consummation of certain transactions (including, without
limitation, acquisitions and disposals, in particular the proposed
acquisition of a majority stake of EVR from Teck Resources Limited
and potential subsequent demerger of the combined coal and carbon
steel materials business); closures or divestments of certain
assets, operations or facilities (including, without limitation,
associated costs); capital costs and scheduling; operating costs
and supply of materials and skilled employees; financings;
anticipated productive lives of projects, mines and facilities;
provisions and contingent liabilities; and tax, legal and
regulatory developments.
These forward-looking statements may
be identified by the use of forward-looking terminology, or the
negative thereof including, without limitation, "outlook",
"guidance", "trend", "plans", "expects", "continues", "assumes",
"is subject to", "budget", "scheduled", "estimates", "aims",
"forecasts", "risks", "intends", "positioned", "predicts",
"projects", "anticipates", "believes", or variations of such words
or comparable terminology and phrases or statements that certain
actions, events or results "may", "could", "should", "shall",
"would", "might" or "will" be taken, occur or be achieved. The
information in this document provides an insight into how we
currently intend to direct the management of our businesses and
assets and to deploy our capital to help us implement our strategy.
The matters disclosed in this document are a 'point in time'
disclosure only. Forward-looking statements are not based on
historical facts, but rather on current predictions, expectations,
beliefs, opinions, plans, objectives, goals, intentions and
projections about future events, results of operations, prospects,
financial conditions and discussions of strategy, and reflect
judgments, assumptions, estimates and other information available
as at the date of this document or the date of the corresponding
planning or scenario analysis process.
By their nature, forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements
to differ materially from any future event, results, performance,
achievements or other outcomes expressed or implied by such
forward-looking statements. Important factors that could impact
these uncertainties include (without limitation) those disclosed in
the risk management section of our latest Annual Report and
Half-Year Report (which can each be found on our website). These
risks and uncertainties may materially affect the timing and
feasibility of particular developments. Other factors which impact
risks and uncertainties include, without limitation: the ability to
produce and transport products profitably; demand for our products
and commodity prices; development, efficacy and adoption of new or
competing technologies; changing or divergent preferences of our
stakeholders; changes to the assumptions regarding the recoverable
value of our tangible and intangible assets; changes in
environmental scenarios and related regulations, including, without
limitation, transition risks and the evolution and development of
the global transition to a low carbon economy; recovery rates and
other operational capabilities; timing, quantum and nature of
certain acquisitions and divestments; health, safety, environmental
or social performance incidents; labor shortages or workforce
disruptions; natural catastrophes or adverse geological conditions,
including, without limitation, the physical risks associated with
climate change; effects of global pandemics and outbreaks of
infectious disease; the outcome of litigation or enforcement or
regulatory proceedings; the effect of foreign currency exchange
rates on market prices and operating costs; actions by governmental
authorities, such as changes in taxation or regulation or changes
in the decarbonisation policies and plans of other countries;
changes in economic and financial market conditions generally or in
various counties or regions; political or geopolitical uncertainty;
and wars, political or civil unrest, acts of terrorism, cyber
attacks or sabotage.
Readers, including, without
limitation, investors and prospective investors, should review and
consider these risks and uncertainties (as well as the other risks
identified in this document) when considering the information
contained in this document. Readers should also note that the high
degree of uncertainty around the nature, timing and magnitude of
climate-related risks, and the uncertainty as to how the energy
transition will evolve, makes it difficult to determine all
potential risks and opportunities and disclose these and any
potential impacts with precision. Neither Glencore nor any of its
affiliates, associates, employees, directors, officers or advisers,
provides any representation, warranty, assurance or guarantee as to
the accuracy, completeness or correctness, likelihood of
achievement or reasonableness of any forward-looking information
contained in this document or that the events, results,
performance, achievements or other outcomes expressed or implied in
any forward-looking statements in this document will actually
occur. Glencore cautions readers against reliance on any
forward-looking statements contained in this document, particularly
in light of the long-term time horizon which this document
discusses in certain instances and the inherent uncertainty in
possible policy, market and technological developments in the
future.
No statement in this document is
intended as any kind of forecast (including, without limitation, a
profit forecast or a profit estimate), guarantee or prediction of
future events or performance and past performance cannot be relied
on as a guide to future performance.
Except as required by applicable
regulations or by law, Glencore is not under any obligation, and
Glencore and its affiliates expressly disclaim any intention,
obligation or undertaking, to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. This document shall not, under any circumstances,
create any implication that there has been no change in the
business or affairs of Glencore since the date of this document or
that the information contained herein is correct as at any time
subsequent to its date.
Cautionary statement regarding
climate strategy
Glencore operates in a dynamic and
uncertain market and external environment. Plans and strategies can
and must adapt in response to dynamic market conditions, changing
preference of our stakeholders, joint venture decisions, changing
weather and climate patterns, new opportunities that might arise or
other changing circumstances. Investors should not assume that our
climate strategy will not evolve and be updated as time passes.
Additionally, a number of aspects of our strategy involve
developments or workstreams that are complex and may be delayed,
more costly than anticipated or unsuccessful for many reasons,
including, without limitation, reasons that are outside of
Glencore's control. Our strategy will also necessarily be impacted
by changes in our business, such as the proposed acquisition of EVR
and potential demerger of the combined coal and carbon steel
materials business.
There are inherent limitations to
scenario analysis and it is difficult to predict which, if any, of
the scenarios might eventuate. Scenario analysis relies on
assumptions that may or may not be, or prove to be, correct and
that may or may not eventuate and scenarios may also be impacted by
additional factors to the assumptions disclosed. Given these
limitations we treat these scenarios as one of several inputs that
we consider in our climate strategy.
Due to the inherent uncertainty and
limitations in measuring greenhouse gas (GHG) emissions and
operational energy consumption under the calculation methodologies
used in the preparation of such data, all CO2e emissions
and operational energy consumption data or volume references
(including, without limitation, ratios and/or percentages) in this
document are estimates. GHG emissions calculation and reporting
methodologies may change or be progressively refined over time
resulting in the need to restate previously reported data. There
may also be differences in the manner that third parties calculate
or report such data compared to Glencore, which means that
third-party data may not be comparable to Glencore's data. For
information on how we calculate our emissions and operational
energy consumption data, see our latest Basis of Reporting, Climate
Report and Extended ESG Data, which is available on our
website.
Sources
Certain statistical and other
information included in this document is sourced from publicly
available third-party sources. This information has not been
independently verified and presents the view of those third
parties, and may not necessarily correspond to the views held by
Glencore and Glencore expressly disclaims any responsibility for,
or liability in respect of, and makes no representation or
guarantee in relation to, such information (including, without
limitation, as to its accuracy, completeness or whether it is
current). Glencore cautions readers against reliance on any of the
industry, market or other third-party data or information contained
in this document.
Information preparation
In preparing this document, Glencore
has made certain estimates and assumptions that may affect the
information presented. Certain information is derived from
management accounts, is unaudited and based on information Glencore
has available to it at the time. Figures throughout this document
are subject to rounding adjustments. The information presented is
subject to change at any time without notice and we do not intend
to update this information except as required.
This document contains alternative
performance measures which reflect how Glencore's management
assesses the performance of the Group, including results that
exclude certain items included in our reported results. Further
details and information needed to reconcile such information to our
reported results can be found in the section of this report
entitled "Alternative Performance Measures". For further
information on how we calculate certain non-financial metrics such
as fatalities at our industrial operations, please refer to our
latest Basis of Reporting, which is available on our
website.
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which cannot be excluded, Glencore accepts no responsibility for
any loss, damage, cost or expense (whether direct or indirect)
incurred by any person as a result of any error, omission or
misrepresentation in information in this document.
Other information
The companies in which Glencore plc
directly and indirectly has an interest are separate and distinct
legal entities. In this document, "Glencore", "Glencore group" and
"Group" are used for convenience only where references are made to
Glencore plc and its subsidiaries in general. These collective
expressions are used for ease of reference only and do not imply
any other relationship between the companies. Likewise, the words
"we", "us" and "our" are also used to refer collectively to members
of the Group or to those who work for them. These expressions are
also used where no useful purpose is served by identifying the
particular company or companies.