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JOHANNESBURG/LONDON - Glencore will keep its coal business after securing backing from a majority of its investors who see lucrative earnings from the fossil fuel, its CEO said on Wednesday, adding the company could acquire more steelmaking coal assets.
Glencore also reported a net loss of $233 million for the first half of the year, after recognising $1.7 billion in one-time items, including about $1 billion of impairment charges.
The London-listed miner recently concluded the purchase of Teck Resources' coking coal assets.
Lack of investment in new coal assets and the prospect of the fuel remaining part of the energy mix for years to come is likely to underpin tight supplies and high prices, which will continue to boost Glencore's profits.
The coal businesses generates "huge amounts of cash and we can use that cash both to pay back shareholders through buybacks and through dividends as well as," Glencore CEO Gary Nagle said.
Investors' environmental concerns have moderated over the past nine-to-12 months, Nagle added.
Glencore could also add more steelmaking coal capacity, Nagle said, but declined to say whether it would consider Anglo American's Australian steelmaking coal assets, which are up for sale.
"At the right price, in the right geography, in the right quantity, there's no reason why we wouldn't consider additional acquisitions of steelmaking coal."
Glencore shares were up 0.6% at 0842 GMT.
The company had been canvassing investors on whether to keep its combined coal assets or spin them off after it completed a deal to buy the majority of Teck's steelmaking coal business last month.
Retaining the coal assets "offers the lowest risk pathway to create value for Glencore shareholders today," Glencore Chairman Kalidas Madhavpeddi said.
Glencore is "comfortable" maintaining a primary listing in London but would consider other options if there were fundamental changes and a reason to move to another exchange, said Nagle, adding that support from the company's European investors for its plan to retain coal had been overwhelming.
First-half core earnings, or EBITDA, slumped 33% to $6.3 billion, hit by a decline in prices for key commodities.
Adjusted EBIT for Glencore's marketing division at $1.5 billion was down 16% from a year earlier and is tracking an annualised $3 billion, Glencore said, adding that the number reflected a lower contribution from energy.
The Swiss-based company is guiding marketing EBIT at between $3.0 and $3.5 billion this year.
(Reporting by Felix Njini and Pratima Desai; Editing by Sharon Singleton and Mark Potter )