Despite heavy fines Glencore saw its net profit soar by 248% in 2022 to $17.3 billion (€16.1 billion). The commodities brokerage division saw its operating profit jump 73% to $6.4 billion.
Rising raw material prices
The rise in raw material prices caused the gross operating surplus of its production activities to increase by 59%, reaching 27.3 billion. Coal and energy products saw a surge in prices despite a decline in metals. This surge in net profit enabled the Swiss group to significantly reduce its debt to $75 million from $6 billion the previous year.
China’s reopening and the U.S. Inflation Reduction Act
Executive Director Gary Nagle noted that “high inflation rates and associated tighter monetary conditions pose a risk to the economic outlook in 2023.” However, he noted that “China’s reopening, as well as the focus on energy security and de-carbonization/electrification, means that demand for many of our commodities is likely to remain healthy. In addition, the U.S. IRA plan is expected to stimulate green investment and thus increase demand for certain commodities.
Fines imposed on Glencore in 2022
In 2022, the Glencore Group was implicated in a corruption scandal in Africa and South America, as well as in the manipulation of oil markets. As a result of these accusations, the United States imposed penalties of $1.02 billion, Brazil $40 million and the United Kingdom 280 million pounds (317 million euros). The Democratic Republic of the Congo was also ordered to pay 180 million. However, Glencore had anticipated the possibility of such fines by financially protecting itself with provisions for litigation amounting to 1.5 billion.
