Glencore (GLEN.L) announced a payout of $7.1 billion to its investors on Wednesday, including a $1.5 billion share buyback, as strong oil and coal prices helped it post a record annual profit.
In preliminary 2022 results, the miner and trader said it cut net debt to $75 million at the end of the year from $6 billion at the end of 2021.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 60% to a record $34.1 billion, smashing a previous best of $21.3 billion a year earlier, in line with analysts' estimates.
Glencore Chief Executive Gary Nagle said the high and volatile commodity price environment driven by factors including the pandemic, under-investment, supply chain vulnerabilities and conflict in Europe had enabled the record result.
The company is seen bucking a trend of lower returns among other miners, thanks to strong trading profits that cushioned it from higher costs and lower production.
Profit on metals and fossil fuels trading hit a record $6.4 billion in 2022, up 73%, though analysts see a repeat of that performance this year or next as unlikely.
"COVID, supply chain disruptions and the power crisis in Asia/Europe has created exceptional opportunities for Marketing," UBS analysts said of Glencore's trading division in a note.
"We see potential for Marketing EBIT to remain above long-term normal levels over the next 2 years but the extreme dislocations seen in 2020-22 seem unlikely."
The company's strategy is to deplete its coal mines in Colombia, Australia and South Africa producing 100 million tonnes a year by the mid-2040s rather than selling or spinning them off, as other diversified miners have done.
Mining companies are on the hunt for minerals to power the green energy boom, as their deposits get depleted.
Glencore mines battery metals copper, nickel, and cobalt and has said previously it was looking for acquisitions in what it terms "commodities of the future".
The company's close to zero net debt level does not mean it will go on a spending spree, Nagle told reporters on Wednesday.
"But on the other hand, even if we had higher net debt and the right opportunity came up, with the right returns for our shareholders, we would pursue that as well," he added.
Glencore also said that because net working capital jumped to $13.3 billion in 2022 from $5.1 billion a year earlier because of higher energy prices, it had room to deploy its strong balance sheet to generate returns.
"We can also use the balance sheet more shorter-term, in terms of working capital funding, trade finance within the business if it generates adequate returns for us," Chief Financial Officer Stephen Kalmin told reporters.
