Jefferies has reiterated its 'buy' rating on Glencore PLC (LSE:GLEN), arguing that even after absorbing its Elk Valley Resources (EVR) acquisition, the group’s shares do not fully reflect the underlying value of its coal and base-metals businesses.
Despite a softer met-coal price environment since July 2024, Jefferies’ site visit to EVR’s Canadian mines and port confirmed that integration has proceeded smoothly and that EVR sits at the top of the global met-coal margin curve on quality, costs and reserve life.
Over the next six to twelve months, the US bank expects met-coal prices to remain under pressure amid weak Chinese steel demand and returning supply from major mines.
However, with the forward curve pricing premium high-quality coal at around $210–215/tonne versus the current spot of $179/t, Glencore’s coal division should generate annual consolidated EBITDA of roughly $5 billion (including thermal), of which EVR contributes about $2.7 billion.
On this basis, the analyst house pegs the attributable value of the coal business at $15.9 billion-$19.9 billion (98p-122p per share).
If you compare Glencore’s copper, zinc and nickel businesses using long-term price estimates, investors are paying about five to six times their yearly earnings, whereas other big miners trade at around eight to nine times earnings.
Even allowing for geopolitical and regulatory risks, Jefferies believes this discount is unduly wide.
The report suggests that a potential listing or full demerger of the coal arm in Australia could crystallise value, though any such move is unlikely before coal markets recover in 2026–27.
Glencore's shares were down around 1% in afternoon trading along with the wider sector, which has been wobbled by trade uncertainty in the wake of Donald Trump's latest tariff proclamations.