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Notes to the financial statements
1. Accounting policies
Corporate information
Glencore plc (the \u2018Company\u2019, \u2018Parent\u2019, the \u2018Group\u2019 or \u2018Glencore\u2019), is a leading integrated producer and marketer of natural resources, with worldwide activities in the production, refinement, processing, storage, transport and marketing of metals and minerals and energy products. Glencore operates on a global scale, marketing and distributing physical commodities sourced from third party producers and own production to industrial consumers, such as those in the battery, electronic, construction, automotive, steel, energy and oil industries. Glencore also provides financing, logistics and other services to producers and consumers of commodities. In this regard, Glencore seeks to capture value throughout the commodity supply chain. Glencore\u2019s long experience as a commodity producer and merchant has allowed it to develop and build upon its expertise in the commodities which it markets and cultivate long-term relationships with a broad supplier and customer base across diverse industries and in multiple geographic regions.
Glencore is a publicly traded limited company incorporated in Jersey and domiciled in Switzerland, at Baarermattstrasse 3, 6340 Baar. Its ordinary shares are traded on the London and Johannesburg stock exchanges.
These consolidated financial statements were authorised for issue in accordance with a Directors\u2019 resolution on 22 March 2023.
Statement of compliance
The consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of:
  • International Financial Reporting Standards (IFRS) adopted by the United Kingdom; and
  • IFRS as issued by the International Accounting Standards Board (IASB).
Climate change related considerations
The Group remains committed to emissions (Scope 1, 2 and 3) reduction targets, relative to a 2019 baseline, of 15% by 2026 and 50% by 2035 and has an ambition to achieve, with a supportive policy environment, net zero industrial asset emissions by 2050. The Group is committed to reaching the 2026 and 2035 targets without reliance on coordinated changes in government policies. We recognise that to achieve our long-term ambition there is a need for significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. Our long term ambition is therefore subject to such a supportive policy environment and, for that reason, we have expressed it as an ambition rather than a target, which is more appropriate for activities and actions deemed within our direct control.
The accounting-related measurement and disclosure items that are most impacted by our commitments, and climate change risk more generally, relate to those areas of the financial statements that are prepared under the historical cost convention and are subject to estimation uncertainties in the medium to long term. Climate change impacts can also introduce more volatility in assets and liabilities carried at fair value. Future changes to the Group\u2019s climate change strategy or realisation of global decarbonisation ambitions quicker than currently anticipated may impact some of the Group\u2019s significant judgements and key estimates and result in material changes to financial results and the carrying values of certain assets and liabilities in future reporting periods. The Group\u2019s current climate change strategy is reflected in the Group\u2019s significant judgements and key estimates, and therefore the Financial Statements, as follows:
(i) Property, plant and equipment and Intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with our climate change commitments and ambition. Property, plant and equipment and intangible assets policies are further covered below and within impairment and impairment reversal estimation uncertainties, together with key estimates and sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions, which could also change the useful economic lives of the related assets. Sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions on the rate of depreciation / amortisation of our fossil fuel related property, plant and equipment and intangible assets are outlined below in the key estimation uncertainty \u2013 impairments and impairment reversals.
Notes to the financial statements continued
1. Accounting policies continued
(ii) Restoration, rehabilitation and decommissioning provisions \u2013 estimation of the timing of closure and rehabilitation activities
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Many of these rehabilitation and decommissioning events are expected to take place when the underlying commercial reserves are extracted and the operations move into closure mode. Our current estimates of the timing of these closure activities align with the trajectory of our climate change emissions reduction commitments and ambition. Sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions (i.e. the timing of the restoration, rehabilitation and decommissioning costs) of our fossil fuel related obligations are outlined below in the key estimation uncertainty - restoration, rehabilitation and decommissioning costs.
(iii) Property, plant and equipment and Intangible assets (including the carrying value of goodwill in our coal marketing CGU) \u2013 estimation of the valuation of assets and potential impairment charges or reversals
The Group acknowledges that there is a wide range of possible energy transition scenarios, including those aligned with the Paris Agreement goals, that would indicate different outcomes for individual commodities. The decarbonisation transition could result in increasing or decreasing demand for the Group\u2019s various commodities, due to policy, regulatory (including carbon pricing mechanisms), legal, technological, market or societal responses to climate change, which, on the negative side, may result in some or all of a cash-generating unit\u2019s reserves becoming uneconomic to extract and / or our coal marketing CGU no-longer being able to generate returns and realise the benefits of its associated goodwill balance.
We use carbon price scenarios to assess the potential impacts on commodity specific operating cost curves and related supply / demand outcomes, arising from existing and future potential carbon pricing regulation. A key component of this analysis is to understand the potential development of a range of underlying cost curve structures over time and to consider, identify and make reasonable judgments, on the extent to which costs are likely to be passed onto the end-consumer. Our analysis shows that under the IEA\u2019s NZE2050 scenario, marginal supply costs would increase by 10% to over 60%, for the range of our most relevant and material commodities. We expect the rising cost of carbon will increase operating costs, increasing the cost of production, which, in turn, would ordinarily be passed on to consumers. In fact, first and second quartile (below average) emission intensity producers, where we see the weighted average of our portfolio residing, are likely to see margin expansion.
Notwithstanding the above, for coal and other fossil fuels, should global decarbonisation ambitions materialise along an Announced Pledges scenario or other more ambitious net zero scenario, essentially an accelerated displacement of coal and other fossil fuels as an energy source, the potential impact on the current carrying value of these cash generating units is outlined below in the key estimation uncertainty \u2013 impairments and impairment reversals (Sensitivity to demand for fossil fuels). It should be noted that, under accelerated emission reduction scenarios, we would expect to see positive valuation developments within our industrial production portfolio exposed to the metals currently required to deliver such rapid decarbonisation scenarios, including copper, nickel and cobalt.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of\u00a0the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and relevant under the circumstances, independent estimates, quoted market prices and common industry standard modelling techniques. Actual outcomes could result in a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Glencore has identified the following areas as being critical to understanding Glencore\u2019s financial position as they require management to make complex and/or subjective judgements, estimates and assumptions about matters that are inherently uncertain:
Critical accounting judgements
In the process of applying Glencore\u2019s accounting policies, management has made the following judgements based on\u00a0the relevant facts and circumstances including macro-economic circumstances and, where applicable, interpretation of underlying agreements, which have the most significant effect on the amounts recognised in the consolidated financial\u00a0statements.
Notes to the financial statements continued
1. Accounting policies continued
(i) Determination of control of subsidiaries and joint arrangements
Judgement is required to determine when Glencore has control of subsidiaries or joint control of joint or other unincorporated arrangements. This requires an assessment of the relevant activities (those relating to the operating and capital decisions of the arrangement, such as: the approval of the capital expenditure programme for each year, and appointing, remunerating and\u00a0terminating the key management personnel or service providers of the operations) and when the decisions in relation to those activities are under the control of Glencore or require unanimous consent. See note 26 for a summary of the acquisitions of subsidiaries completed during 2022 and 2021 and the key judgements made in determining control thereof.
Judgement is also required in determining the classification of a\u00a0joint arrangement between a joint venture or a joint operation through an evaluation of the rights and obligations arising from the arrangement and in particular, if the joint arrangement has been structured through a separate vehicle, further consideration is required of whether:
(1)the legal form of the separate vehicle gives the parties rights to the assets and obligations for the liabilities;
(2)the contractual terms and conditions give the parties rights to the assets and obligations for the liabilities; and
(3)other facts and circumstances give the parties rights to the assets and obligations for the liabilities.
Joint arrangements in which the primary activity is the provision of output to the shareholders, typically convey substantially all the economic benefits of the assets to the parties and judgement is required in assessing whether the terms of the offtake agreements and any other obligations for\u00a0liabilities of the arrangement result in the parties being substantially the only source of cash flows contributing to the\u00a0continuity of the operations of the arrangement.
Certain joint arrangements that are structured through separate vehicles including Collahuasi and Viterra are accounted for as joint ventures. The Collahuasi arrangement is primarily designed for the provision of output to the shareholders sharing joint control, the offtake terms of which are at prevailing market prices and the parties are not obligated to cover any potential funding shortfalls. In management\u2019s judgement, Glencore is not the only possible source of funding and does not have a direct or indirect obligation to the liabilities of the arrangement, but rather shares in its net assets and, therefore, such arrangements have been accounted for as joint ventures.
Differing conclusions around these judgements may materially impact how these businesses are presented in the consolidated financial statements \u2013 under the full consolidation method, equity method or recognition of Glencore\u2019s share of assets, liabilities, revenue and expenses, including any assets or liabilities held jointly. See note 11 for a summary of these joint arrangements and the key judgements made in determining the applicable accounting treatment for any material joint arrangements entered during the year.
(ii) Classification of transactions which contain a financing element (notes 21, 22 and 25)
Transactions for the purchase of commodities may contain a financing element such as extended payment terms. Under such an arrangement, a financial institution may issue a letter of credit on behalf of Glencore and act as the paying party upon delivery of product by the supplier and Glencore will subsequently settle the liability directly with the financial institution, generally from 30 up to 90 days after physical supply. Judgement is required to determine the most appropriate classification and presentation of these transactions within the statements of cash flows and financial position. In determining the appropriate classification, management considers the underlying economic substance of the transaction and the significance of the financing element to the transaction. Typically, the economic substance of the transaction is determined to be operating in nature as the financing element is insignificant and the time frame in which the original arrangement is extended by, is consistent and within supply terms commonly provided in the market. As a result, the entire cash flow is presented as operating in the statement of cash flows with a corresponding trade payable in the statement of financial position. As at 31 December 2022, trade payables include $7,504 million (2021: $8,565 million) of such liabilities arising from supplier financing arrangements, the weighted average of which extended settlement of the original payable to 67 days (2021: 77 days) after physical supply and are due for settlement 35 days (2021: 33 days) after year end. There was no significant exposure to any individual financial institution under these arrangements. These payables are not included within net funding and net debt as defined in the APMs section.
(iii) Classification of physical liquefied natural gas (LNG) purchase and sale contracts at amortised cost or fair value through profit and loss (notes 28 and 29)
Judgement is required to determine the appropriate IFRS 9 classification of physical LNG purchase and sale contracts as being measured within the scope of IFRS 9 at fair value through profit and loss or as executory contracts. This requires an assessment of whether the contracts to buy or sell LNG (a non-financial item) can be settled net in cash or with another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, and whether there is a past practise of net settling similar contracts. Those physical LNG contracts that can be net settled are considered to be derivatives, measured at fair value through profit or loss (see notes 28 and 29). Contracts that do not meet the definition of derivatives are considered own use contacts and are to be accounted for as executory contracts.
Notes to the financial statements continued
1. Accounting policies continued
Differing conclusions around classification of these contracts, may materially impact their presentation as financial assets or liabilities and any fair value adjustments recognised through profit and loss. As at 31 December 2022, the net fair value of physical LNG contracts on the statement of financial position is $2,533 million (2021: $912 million) comprising a $2,552 million forward physical asset and a $19 million forward physical liability (2021: $1,786 million forward physical asset and $874 million forward physical liability).
(iv) Investigations by regulatory and enforcement authorities and claims against the company in connection with the investigations \u2013 Critical judgement in relation to whether a present obligation exists (note 32).
(v) Impact of carbon pricing \u2013 refer to climate change related considerations above. No material change to the Group\u2019s related accounting estimates is expected within the next financial year as a result of this judgement.
(vi) Valuation of investments in EN+ and Rosneft (note 11). No material change to the Group\u2019s related accounting estimates is expected within the next financial year as a result of this judgement.
Key sources of estimation uncertainty
In the process of applying Glencore\u2019s accounting policies, management has made key estimates and assumptions concerning the future and other key sources of estimation uncertainty. The key assumptions and estimates at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future\u00a0periods.
(i) Recognition of deferred tax assets and uncertain tax positions (note 8)
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether there will be sufficient taxable income available to offset the tax assets when they do reverse. These judgements and estimates are subject to risk and uncertainty and therefore, to the extent assumptions regarding future profitability change, there can be a material increase or decrease in the amounts recognised in the consolidated statement of income in the period in which the change occurs, notably the deferred tax asset and uncertain tax position of the Group\u2019s DRC operations as outlined in note 8. The recoverability of the Group\u2019s deferred tax assets and the completeness and accuracy of its uncertain tax positions, including the estimates and assumptions contained therein are reviewed regularly by management.
(ii) Impairments and impairment reversals (note 7)
Investments in associates and joint ventures, advances and loans, property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an individual asset or a cash-generating unit (CGU) may not be fully recoverable, or at least annually for CGUs to which goodwill and other indefinite life intangible assets have been allocated. Indicators of impairment may include changes in the Group\u2019s operating and economic assumptions, including those arising from changes in reserves or mine planning, updates to the Group\u2019s commodity supply, demand and price forecasts, or the possible impacts from emerging risks such as those related to climate change and the transition to a low carbon economy. If an asset or CGU\u2019s recoverable amount is less than its carrying amount, an impairment loss is recognised in the consolidated statement of income. For those assets or CGUs which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, an impairment reversal is recorded in the consolidated statement of income. Future cash flow estimates which are used to calculate the asset\u2019s or CGU\u2019s recoverable amount are discounted using asset or CGU specific discount rates and are based on expectations about future operations (including their alignment with our emissions reduction commitments and long-term ambition), using a combination of internal sources and those inputs available to a market participant, which primarily comprise estimates about production and sales volumes, commodity prices (considering current and future prices and price trends including factors such as the current global trajectory of climate change), legally enacted carbon taxes, reserves and resources, operating costs and capital expenditures. Estimates are reviewed regularly by management. Changes in such estimates and in particular, deterioration in the commodity pricing outlook, could impact the recoverable amounts of these assets or CGUs, whereby some or all of the carrying amount may be impaired or the impairment charge reversed (if pricing outlook improves significantly or the service potential of the asset or CGU has otherwise increased from the time of the previous impairment) with the impact recorded in the statement of income.
Notes to the financial statements continued
1. Accounting policies continued
As referred to above and further described below in the \u2018impairment or impairment reversals\u2019 accounting policy, the Group carries out, at least annually, an impairment assessment. Following this review, indicators of impairment or impairment reversal were identified for various CGUs, including those due to changes in the underlying commodity price environment most influencing the respective operation. The Group assessed the recoverable amounts of these CGUs and as at 31 December 2022, except for those CGUs disclosed in note 7, the estimated recoverable amounts exceeded the carrying values. For certain CGUs where no impairment was recognised, should there be a significant deterioration or improvement in the key assumptions, a material impairment or reversal could result within the next financial year. A summary of the carrying values, the key / most sensitive assumptions and a sensitivity impact of potential movements in these assumptions for each such CGU with limited headroom (relative to its estimated recoverable amount) is shown below. In providing sensitivity analysis (and particularly on commodity price assumptions), a 10% change, representing a typical deviation parameter common in the industry, has generally been provided. Where a higher or lower percentage is reasonably possible on an operational assumption, this has been clearly identified.
Katanga
Katanga\u2019s non-current capital employed is carried at approximately $3,800 million. The valuation is sensitive to price and a deterioration in this key assumption could result in an impairment. The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve could result in a $440 million impairment. A 10% reduction in the cobalt price assumption across the curve is not expected to result in an impairment.
Mutanda
Mutanda\u2019s non-current capital employed is carried at approximately $2,300 million, inclusive of a $109 million intangible asset recognised during the year and net of an accumulated impairment of $955 million. Following care and maintenance status since 2019, a limited restart of operations commenced in 2021, utilising stockpiles of oxide ore. The valuation includes value attributable to the long-term copper / cobalt sulphide mining and processing development potential. The valuation is sensitive to price and eventual commercialisation and ramp-up of the sulphide project, and deteriorations or improvements in these key assumptions may result in additional impairments or reversals.
The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve is not expected to result in a further impairment, whereas a 10% reduction in the realised cobalt price assumption (across the curve) could result in a further $150 million impairment. Should the copper and cobalt assumptions rise by 10% (across the curve), the previously recognised impairment could be reversed in its entirety.
Kazzinc Smelting
Management has assessed that the Kazzinc business comprises three CGUs: the core Kazzinc Smelting (integrated mining and smelting operations); the Zhairem zinc/lead mine; and the Vasilkovsky gold mine.
Kazzinc Smelting has not been impaired in the past or in the current year. However, industry cost pressures, including energy inputs and additional taxes, are such that there is no appreciable difference between carrying value and recoverable value. Should zinc prices move higher in line with the industry cost curve and/or stronger demand, the recoverable value could increase. Conversely, in a recessionary scenario the recoverable value could be lower than the carrying value.
Kazzinc Smelting\u2019s non-current capital employed is carried at approximately $1,300 million. The valuation is sensitive to price and the realisation of certain operational efficiencies, and deteriorations in these key assumptions may result in an impairment.
The short to long-term zinc price assumption was $3,250 - $2,450/t and the discount rate was 11%. A 10% reduction in the zinc price assumption (across the curve) could result in a $200 million impairment. A 1% increase in the discount rate could result in a
$130 million impairment. Equivalent upside sensitivities are materially symmetrical with the downsides illustrated.
Zhairem has been impaired in 2022 (refer note 7).
Management does not expect that any reasonably possible changes in assumptions could lead to an impairment of Vasilkovsky within the next financial year.
Climate change (additional illustrative disclosures)
Based on the current pricing environment, we do not consider there to be a reasonably possible change in the next financial year in key assumptions that would result in a material change in carrying values of any of our coal CGUs. With respect to our oil CGUs, a change in oil refining margin assumptions (across the curve) of $1/bbl is reasonably possible and could result in a $220 million change (increase or decrease) to the carrying value of the Astron Energy CGU.
All other sensitivities below are reasonably possible changes in assumptions beyond the next financial year.
Notes to the financial statements continued
1. Accounting policies continued
Energy fossil fuels industrial operations
Our base case price assessment takes into account the short-, medium- and longer-term seaborne coal demand outlook. Achieving our net zero ambition by 2050 assumes significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. In particular, economic and regulatory incentivisation of such shift, whether through carbon pricing and / or incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, could result in different financial results on the same tonnage profile.
Our assessment applies a value in use methodology. Glencore is not progressing thermal coal greenfield investments. However, we plan to continue to progress various brownfield coal extensions or expansions at existing mines as included in the life of mine plans, while continuing to be a responsible steward of these assets, as we progress the phase down of our global coal portfolio. We assume that, beyond the next 3 years when shorter term pricing assumptions have been used, through the remaining life of mine, there will continue to be a market for thermal coal at a real Newcastle FOB export price of $90/tonne (6,000 NAR), South African FOB export price of $90/tonne and Colombian FOB price of $88/tonne, which represents our best current estimate of long term pricing based on our view of projected likely supply and demand fundamentals and the industry cost structure. The increase over the equivalent prices presented in our 2021 analysis largely reflects inflation in the intervening year.
Notwithstanding these assumptions, we present illustrative impairments arising under alternate price scenarios. Glencore\u2019s scenarios were developed in 2020, drawing principally, though not exclusively, on the IEA scenarios available at the time. The next update will be in 2023 as part of our climate strategic review. For these 2022 price sensitivities, we have drawn from the IEA\u2019s latest World Energy Outlook 2022 (WEO 2022) climate scenarios, described below:
  • IEA\u2019s Stated Policies Scenario (STEPS) (WEO 2022 prices) \u2013 the impact of existing policy frameworks and announced policy intentions, subject to the IEA\u2019s assessment of the likelihood of such ambitions being implemented (reflecting an updated outlook consistent with our \u2018Current Pathway\u2019 scenario);
  • IEA\u2019s Announced Pledges Scenario (APS) (WEO 2022 prices) \u2013 the impact of all major national announcements of 2030 targets and longer term net zero and other pledges, regardless of whether these have been anchored in legislation or nationally determined contributions;
  • IEA\u2019s Net Zero Emissions by 2050 Scenario (NZE) (WEO 2022 prices) \u2013 a pathway for the global energy sector to achieve net zero emissions by 2050 (reflecting an updated outlook consistent with our \u2018Radical Transformation\u2019 scenario).
The IEA no longer publishes assumptions relating to the Sustainable Development Scenario (SDS).
In addition, for illustrative purposes, we have shown a Complete Displacement Scenario (CDS) \u2013 reflecting the impact of fossil fuels being immediately displaced as an energy source and the resulting immediate fall in commodity prices to zero.
Our life of mine planning reflects operating cash flows which are consistent with achieving our emissions reduction targets and 2050 net zero emissions ambition. Overall our portfolio\u2019s production is heavily weighted towards the earlier part of these time frames. Based on the life of mine plan and remaining production as at 31 December 2022, we have illustrated this by showing the year in which 50% and 80% of saleable coal would be expected to be extracted under our current plans, being 2029 and 2036, respectively. If and while there is demand for coal, and it is economic to do so, we plan to continue to operate our mines to the end of their economic life and in accordance with our climate commitments, while not exceeding our 150 million tonnes per annum consolidated production cap.
The sensitivities are presented on price alone and assume no mitigating actions; therefore the impairments in each scenario are likely higher than would transpire. In practice, in a sustained low price environment, management would alter mine plans to cut operating and capital costs, potentially at the expense of future volumes, in order to reduce the overall NPV impact.
The STEPS, APS and NZE sensitivity prices adopted are those included in the documentation to WEO 2022, except that IEA thermal coal prices are on a delivered basis. These have been adjusted to FOB pricing on the basis of forward freight costs. Furthermore, in determining the Colombian FOB price, we have used a weighting of the IEA Japan and IEA European prices to take into account that Colombian coal sold from Cerrej\u00f3n is likely to be delivered to a combination of different markets in the future as coal demand in Europe declines.
The IEA assumes, in each scenario, additional decarbonisation measures leading to declining fossil fuel prices by the years 2030 and 2050, anchored in each case in a 2021 baseline. For the purpose of our climate change sensitivities below, we have assumed linear progression of prices between these points. Our base case reflects higher longer-term prices than in each of the IEA\u2019s climate scenarios reflecting our assessment of the supply and demand outlook and the industry cost structure.
Notes to the financial statements continued
1. Accounting policies continued
Cash-generating unit
US$ million
Thermal Australia
South Africa
Cerrej\u00f3n
Total thermal coal
Oil E&P
Base case assumptions in life of mine plan:
\u2013 LOM saleable tonnes (Glencore consolidated) (million tonnes)/ (million bbls)
960
320
200
15
\u2013 projected year when 50% LOM tonnage / reserves depleted
2030
2030
2026
2029
2024
\u2013 projected year when 80% LOM tonnage / reserves depleted
2037
2035
2029
2036
2026
\u2013 long-term price (Newcastle FOB / API4 FOB / Col FOB) ($/t) / (Brent oil price) ($/bbl) (real terms)
90
90
88
75
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
11.7%
10.5%
11.6%
Benchmark prices over LOM in selected scenarios ($/t, $/bbl):
2021-'30-'50
2021-'30-'50
2021-'30-'50
2021-'30
\u2013 IEA STEPS
156 - 86 - 66
146 - 79 - 62
131 - 68 - 63
78 - 93
\u2013 IEA APS
156 - 67 -51
146 - 61 - 48
131 - 70 - 50
78 - 72
\u2013 IEA NZE
156 - 50 - 36
146 - 44 - 32
131 - 59 - 38
78 - 40
\u2013 CDS
n.a.
n.a.
n.a.
n.a.
Carrying value of non-current capital employed as at
31 December 2022
7,238
1,986
956
10,180
200
Impairment arising in selected scenarios:
\u2013 IEA STEPS
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013 IEA APS
\u2013
740
\u2013
740
26
\u2013 IEA NZE
840
1,600
\u2013
2,400
110
\u2013 CDS1
8,613
2,318
2,093
13,024
285
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
9,210
2,976
2,349
14,535
312
Investments in associates and other investments
555
32
\u2013
587
\u2013
Deferred tax liabilities
(1,152)
(690)
(256)
(2,098)
(27)
Non-current provisions
(1,123)
(394)
(1,134)
(2,651)
(85)
Other non-current net assets/(liabilities)
(252)
62
(3)
(193)
\u2013
1In this scenario, we assume the impairment of non-current assets (net of deferred tax) while non-current liabilities, including rehabilitation, would be retained on balance sheet.
The prior year disclosure illustrated impairments under each of the IEA\u2019s scenarios, whereas the above table reflects impairments only in the NZE scenario (for Australia and South Africa) and the APS (for South Africa only). This mainly reflects materially higher shorter term prices in the various scenarios.
No impairment is projected for Cerrej\u00f3n using any of the IEA\u2019s scenarios, given that the current mine plan reflects expiry of mining leases by 2034, meaning the mine would not be exposed to the lower prices at the longer end of the price curves.
Following the disposal of Glencore\u2019s upstream Chad oil operations in 2022, the remaining portfolio (non-operated) is weighted towards natural gas, with the currently approved production profile expected to reach 80% extraction by 2026.
Notes to the financial statements continued
1. Accounting policies continued
Other fossil fuel related capital employed NPV sensitivities
Cash-generating unit
US$ million
Coking coal
Astron Energy
Coal
marketing goodwill
Base case assumptions in life of asset plan:
\u2013 LOA saleable tonnes (millions) / Refinery steady-state capacity ('000 bbls)
100
100k bopd
n.a.
\u2013 projected year when 50% LOA reserves depleted
2027
n.a.
n.a.
\u2013 projected year when 80% LOA reserves depleted
2032
n.a.
n.a.
\u2013 long-term price (hard coking coal) ($/t) (real terms)
175
n.a.
n.a.
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
9.6%
n.a.
\u2013 price to earnings multiple
12x
Percentage decrease to long-term pricing/PE multiples:
\u2013 25% price / $1/bbl refining margin1 / 2x PE (17%) decrease
131
n.a.
10x
\u2013 30% price / $2/bbl refining margin / 4x PE (33%) decrease
123
n.a.
8x
Carrying value of non-current capital employed as at 31 December 2022
1,654
876
1,674
Impairment arising in selected scenarios:
\u2013 25% price decrease across the curve / $1/bbl refining margin1 / 2x PE (17%) decrease
100
220
\u2013
\u2013 30% price decrease across the curve / $2/bbl refining margin / 4x PE (33%) decrease
390
450
400
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
1,950
835
1,674
Investments in associates and other investments
4
2
Deferred tax liabilities
(87)
\u2013
Non-current provisions
(213)
(4)
Other non-current net assets
\u2013
43
1The change in refining margin by $1/bbl is considered to be a reasonably possible change in our assumptions for Astron Energy within the next financial year.
Climate change sensitivities \u2013 property, plant and equipment and intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with, and reflects, our emissions reduction commitments and ambition. The current carrying value of our property, plant and equipment and intangible assets related to our fossil fuels operations is $17,633 million, and the depreciation / amortisation related to these balances recognised in 2022 was $2,740 million, implying an average accounting determined useful life of 6.5 years.
Notes to the financial statements continued
1. Accounting policies continued
(iii) Restoration, rehabilitation and decommissioning costs (note 23)
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to\u00a0be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Most of these rehabilitation and decommissioning events are expected to take place many years in the future and the currently estimated requirements and costs that will have to be met when the restoration events occur are inherently uncertain and could materially change over time.
In calculating the appropriate provision for the expected restoration, rehabilitation or decommissioning obligations, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof, are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability and the currency in which they are denominated.
Any changes in the expected future costs or risk-free rate are initially reflected in both the provision and the asset and subsequently in the consolidated statement of income over the remaining economic life of the asset. As the actual future costs can differ from the estimates due to changes in laws, regulations, technology, costs and timing, the provisions including the estimates and assumptions contained therein are reviewed regularly by management. A material change in the provision within the next financial year could arise from changes in risk-free rates. The aggregate effect of changes within the next financial year as a result of revisions to cost and timing assumptions is not expected to be material.
Climate change sensitivities
As noted above, while it is not a reasonably possible change we expect over the next financial year, global ambitions seeking to drive quicker decarbonisation, could result in the timing of restoration, rehabilitation and decommissioning costs related to our coal and oil closure obligations being accelerated. The non-current closure and monitoring provision related to the coal and oil operations is $3,717 million (undiscounted) and $2,708 million (current carrying value). The weighted average maturity is 13 years. To illustrate the effect of quicker decarbonisation, a three-year and five-year weighted average acceleration, with no changes to the total undiscounted cash flows, would result in an increase to the provision of $140 million and $224 million, respectively.
(iv) Valuation of Level 3 derivatives related to LNG contracts (note 29)
Adoption of new and revised standards
The following clarification revisions to existing accounting pronouncements became effective as of 1 January 2022 and have been adopted by the Group.
(i) Onerous Contracts \u2013 Cost of Fulfilling a Contract (Amendments to IAS 37) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments specify that the \u2018cost of fulfilling\u2019 a contract comprises the \u2018costs that relate directly to the contract\u2019. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. The Group has applied the amendments to contracts for which the Group has not yet fulfilled all its obligations as at 1 January 2022.
(ii) Property, Plant and Equipment \u2013 Proceeds before intended use (Amendments to IAS 16) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment, any proceeds received from selling items produced while preparing the assets for its intended use. Instead, any entity recognises the proceeds from selling such items, and the costs of producing those items, in the statement of income.
(iii) Reference to the Conceptual Framework (Amendments to IFRS 3) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments update the references to the Conceptual Framework for Financial Reporting and add an exception for the recognition of liabilities and contingent liabilities within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRIC 21 Levies. The amendments also confirm that contingent assets should not be recognised at the acquisition date.
These amendments did not have a material impact on the Group.
Notes to the financial statements continued
1. Accounting policies continued
Revised standards not yet effective
At the date of the authorisation of these consolidated financial statements, the following revised IFRS standards, which are applicable to Glencore, were issued but not yet effective:
(i) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations, and clarify that the initial recognition exception does not apply to transactions where both an asset and a liability are recognised in a single transaction. Accordingly, deferred tax is required to be recognised on such transactions.
(i) Definition of Accounting Estimates (Amendments to IAS 8) \u2013 effective for year ends beginning on or after
1 January 2023
The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies.
(iii) Materiality of Accounting Policy Disclosure (Amendments to IAS 1) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments require companies to disclose their material accounting policy information rather than their significant accounting policies.
(iv) Classification of Liabilities as current or non-current (Amendments to IAS 1) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of \u2018settlement\u2019 to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
No significant changes to presentation or disclosures within these financial statements are expected following the adoption of these amendments.
Basis of preparation
The consolidated financial statements are prepared under the historical cost convention except for certain financial assets, liabilities, marketing inventories and pension obligations that are measured at revalued amounts or fair values at the end of each reporting period as explained in the accounting policies below. Historical cost is defined as the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. The principal accounting policies adopted are set out below.
The Directors have assessed that they have, at the time of approving these consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the 12 months from the expected date of approval of the 2022 Annual Report and Accounts. Therefore, they continue to adopt the going concern basis of\u00a0accounting in preparing these financial statements. The Directors have made this assessment after consideration of the Group\u2019s budgeted cash flows and related assumptions including appropriate stress testing of the identified uncertainties (being primarily commodity prices and currency exchange rates) and access to undrawn credit facilities and monitoring of debt maturities. Further information on Glencore\u2019s objectives, policies and processes for managing its capital and financial risks is detailed in note 27.
All amounts are expressed in millions of United States dollars, the presentation currency of the Group, unless otherwise stated.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries.
Control is achieved when Glencore is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, Glencore controls an investee if, and only if, Glencore has all of the following:
  • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
  • Exposure, or rights, to variable returns from its involvement with the investee; and
  • The ability to use its power over the investee to affect its returns.
Notes to the financial statements continued
1. Accounting policies continued
When Glencore has less than a majority of the voting rights of an investee or similar rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over the investee including:
  • The size of Glencore\u2019s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
  • Potential voting rights held by Glencore, other vote holders or other parties;
  • Rights arising from other contractual arrangements; and
  • Any additional facts and circumstances that indicate that Glencore has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be\u00a0made, including voting patterns at previous shareholders\u2019 meetings.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or\u00a0more of the three elements of control listed above. Consolidation of a subsidiary begins when Glencore obtains control over the subsidiary and ceases when Glencore loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of income and other comprehensive income from the date Glencore gains control until the date when Glencore ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to\u00a0the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the\u00a0Group\u2019s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in Glencore\u2019s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions with any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or\u00a0received being recognised directly in equity and attributed to equity holders of Glencore.
When Glencore loses control of a subsidiary, a gain or loss is recognised in the consolidated statement of income and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if Glencore had directly disposed of the related assets or liabilities of the subsidiary (i.e.\u00a0reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, or\u00a0the cost on the initial recognition of an investment in an associate or a joint\u00a0venture.
Investments in associates and joint ventures
Associates and joint ventures (together \u2018Associates\u2019) in which Glencore exercises significant influence or joint control are accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Significant influence is presumed if Glencore holds between 20% and 50% of the voting rights, unless evidence exists to the contrary. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant strategic and/or key operating decisions require unanimous consent of the parties sharing\u00a0control.
Equity accounting involves Glencore recording its share of the Associate\u2019s net income and equity. Glencore\u2019s interest in an Associate is initially recorded at cost and is subsequently adjusted for Glencore\u2019s share of changes in net assets of the Associate, less any impairment in the value of individual investments. Where Glencore transacts with an Associate, unrealised profits and losses are eliminated to the extent of Glencore\u2019s interest in that\u00a0Associate.
Changes in Glencore\u2019s interests in Associates are accounted for as\u00a0a gain or loss on disposal with any difference between the amount by which the carrying value of the Associate is adjusted and the fair value of the consideration received being recognised directly in the consolidated statement of\u00a0income.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement, have rights to the assets and obligations for the liabilities relating to the arrangement.
Notes to the financial statements continued
1. Accounting policies continued
When Glencore undertakes its activities under joint operations, Glencore recognises in relation to its interest in a\u00a0joint operation:
  • Its assets, including its share of any assets held jointly;
  • Its liabilities, including its share of any liabilities incurred jointly;
  • Its revenue from the sale of its share of the output arising from the joint operation;
  • Its share of the revenue from the sale of the output by the joint operation; and
  • Its expenses, including its share of any expenses incurred\u00a0jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.
Where Glencore transacts with a joint operation, unrealised profits and losses are eliminated to the extent of Glencore\u2019s interest in\u00a0that joint operation.
Other unincorporated arrangements
In some cases, Glencore participates in unincorporated arrangements where it has the rights to its share of the assets and obligations for its share of the liabilities of the arrangement, rather than a right to the net returns of the arrangement, but does not share joint control. In such cases, Glencore accounts for its share of the assets, liabilities, revenues and expenses in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses and obligations for the liabilities relating to the arrangement, similar to a joint operation noted above.
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method of accounting. The cost of the acquisition is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquiree and the equity interests issued in exchange for control of the acquiree.
The identifiable assets, liabilities and contingent liabilities (\u2018identifiable net assets\u2019) are recognised at their fair value at the date of acquisition. Acquisition-related costs are recognised in the consolidated statement of income as incurred.
Where a business combination is achieved in stages, Glencore\u2019s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date Glencore attains control) and the resulting gain or loss, if any, is recognised in the consolidated statement of income.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the CGUs that are expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods.
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on\u00a0disposal.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, Glencore reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted for additional information obtained during the \u2018measurement period\u2019 (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that\u00a0date.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity\u2019s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests\u2019 proportionate share of the recognised amounts of the acquiree\u2019s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.
Notes to the financial statements continued
1. Accounting policies continued
Similar procedures are applied in accounting for the purchases of interests in Associates and joint operations. Any goodwill arising from such purchases is included within the carrying amount of the investment in Associates, but not amortised thereafter. Any excess of Glencore\u2019s share of the net fair value of the Associate\u2019s identifiable net assets over the cost of the investment is included in\u00a0the consolidated statement of income in the period of the\u00a0purchase.
Non-current assets held for sale and disposal groups
Non-current assets, liabilities and those included in disposal groups are classified as held for sale if their carrying amount will be\u00a0recovered principally through a sale transaction rather than through continuing use, they are available for immediate disposal and the sale is highly probable. Non-current assets, liabilities and those included in disposal groups held for sale are measured at the lower of their carrying amount or fair value less costs to sell.
Revenue recognition
Revenue is derived principally from the sale of goods (sale of commodities) and in some instances the goods are sold on Cost and Freight (CFR) or Cost, Insurance and Freight (CIF) Incoterms. When goods are sold on a CFR or CIF basis, the Group is responsible for providing these services (shipping and insurance) to the customer, sometimes after the date at which Glencore has lost control of the goods. Revenue is recognised when the performance obligations have been satisfied, which is once control of the goods and/or services has transferred from Glencore to the buyer. Revenue is measured based on consideration specified in the contract with a customer and excludes amounts collected on behalf of third parties. The same recognition and presentation principles apply to revenues arising from physical settlement of forward sale contracts that do not meet the own use exemption.
Revenue related to the sale of goods is recognised when the product is delivered to the destination specified by the customer, which is typically the vessel on\u00a0which it is shipped, the destination port or the customer\u2019s\u00a0premises and the buyer has gained control through their ability to direct the use of and obtain substantially all the benefits from the asset. Where the sale of goods is connected with an agreement to repurchase goods at a later date, revenue is recognised when the repurchase terms are at prevailing market prices, the goods repurchased are readily available in the market, and the buyer gained control of the goods originally sold to them. Should it be determined that control has not transferred or the buyer does not have the ability to benefit substantially from ownership of the asset, revenue is not recognised and any proceeds received are accounted for as a financing arrangement.
For certain commodities, the sales price is determined on a provisional basis at the date of sale as the final selling price is subject to\u00a0movements in market prices up to the date of final pricing, normally ranging from 30 to 90 days after initial booking (provisionally priced sales). Revenue on\u00a0provisionally priced sales is recognised based on the estimated fair value of the total consideration receivable. The revenue adjustment mechanism embedded within provisionally priced sales arrangements has the character of a commodity derivative.
Accordingly, the fair value of the final sales price adjustment is re-estimated continuously and changes in fair value are recognised as an adjustment to revenue. In all cases, fair value is estimated by reference to forward market prices.
Revenue from the sale of material by-products are included within revenue. Where a by-product is not regarded as significant, revenue may be credited against cost of goods sold.
Revenue related to the provision of shipping and insurance related activities is recognised over time as the service is rendered.
Payments received for future metal (primarily gold and silver) deliveries (prepayments) are accounted for as executory contracts whereby the prepayment is initially recorded as deferred revenue in the consolidated statement of financial position. The initial deferred revenue amount is unwound and revenue is recognised in the consolidated statement of income as and when Glencore physically delivers the metal and loses control of it. Where these prepayments are in excess of one year and contain a significant financing component, the amount of the deferred revenue is adjusted for the effects of the time value of money. Glencore applies the practical expedient to not adjust the promised amount of consideration for the effects of time value of money if the period between delivery and the respective payment is one year or less.
Royalty, interest and dividend income is recognised when the right to receive payment has been established, it is probable that the economic benefits will flow to Glencore and the amount of income can be measured reliably. Royalty revenue is recognised on an accruals basis in accordance with the substance of the relevant agreement. Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate.
Foreign currency translation
Glencore\u2019s reporting currency and the functional currency of\u00a0the majority of its operations is the US dollar as this is assessed to be the principal currency of the economic environment in which it\u00a0operates.
Notes to the financial statements continued
1. Accounting policies continued
(i) Foreign currency transactions
Transactions in foreign currencies are converted into the functional currency of each entity using the exchange rate prevailing at the transaction date. Monetary assets and liabilities outstanding at year-end are converted at year-end rates. Non-monetary items measured in terms of historical cost are translated using the exchange rate at the date of the transaction. The resulting exchange differences are recorded in the consolidated statement of income.
(ii) Translation of financial statements
For the purposes of consolidation, assets and liabilities of group companies whose functional currency is in a currency other than the US dollar are translated into US dollars using year-end exchange rates, while their statements of income are translated using average rates of exchange for the year. Translation adjustments are included as a separate component of shareholders\u2019 equity and have no consolidated statement of income impact to the extent that no disposal of the foreign operation has occurred.
Where an intragroup balance is, in substance, part of the Group\u2019s net investment in an entity, exchange gains and losses on that balance are taken to the currency translation reserve. Cumulative translation differences are recycled from equity and recognised as income or expense on partial disposal of the net investment in an entity, which includes repayments of capital and loans. On such partial disposals, when the Group\u2019s percentage of equity ownerships do not change, the \u2018absolute\u2019 approach is applied. Under this approach, the amounts held in the foreign currency translation reserve are reclassified to income or expense based on the proportionate share of total cumulative translation differences recognised in the net investment.
Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate.
Borrowing costs
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.
Employee and retirement benefits
Wages, salaries, bonuses, social security contributions, paid annual and sick leave are accrued in the period in which the associated services are rendered by the employees of the Group.
Glencore operates various pension schemes in accordance with local requirements and practices of the respective countries. The annual costs for defined contribution plans that are funded by payments to separate trustee administered funds or insurance companies equal the contributions that are required under the plans and accounted for as an expense.
For defined benefit retirement plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurements comprising actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognised immediately in the statement of financial position with a charge or credit to other comprehensive income in the period in which they occur. Remeasurements recognised in other comprehensive income are not reclassified. Past service cost is recognised in profit or loss when the plan amendment or curtailment occurs, or when the Group recognises related restructuring costs or termination benefits, if earlier. Gains or losses on settlement of a defined benefit plan are recognised when the settlement occurs. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset.
Defined benefit costs are split into three categories:
  • service costs, which includes current service cost, past service cost and gains and losses on curtailments and\u00a0settlements;
  • net interest expense or income; and
  • remeasurements.
The Group recognises service costs within the consolidated statement of income.
Net interest expense or income is recognised within interest expense or income within the consolidated statement of income.
Any past service cost (or the gain or loss on settlement) is calculated by measuring the defined benefit liability (asset) using updated assumptions and comparing benefits offered and plan assets before and after the plan amendment (or curtailment or settlement) but ignoring the effect of the asset ceiling (that may arise when the defined benefit plan is in a surplus position). The Group uses the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan. In the case of the net interest for the period post-plan amendment, the net interest is calculated by multiplying the net defined benefit liability (asset) as remeasured with the discount rate used in the remeasurement (also taking into account the effect of contributions and benefit payments on the net defined benefit liability (asset)).
Notes to the financial statements continued
1. Accounting policies continued
The retirement benefit obligation recognised in the consolidated statement of financial position represents the deficit or surplus in the Group\u2019s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Glencore also provides post-retirement healthcare benefits to certain employees in Canada, South Africa and the United States. These are accounted for in a similar manner to the defined benefit pension plans, however are unfunded.
Share-based payments
(i) Equity-settled share-based payments
Equity-settled share-based payments are measured at the fair value of the awards based on the market value of the shares at the grant date. Fair value excludes the effect of non-market-based vesting conditions. The fair value is charged to the consolidated statement of income and credited to retained earnings on a straight-line basis over the period the estimated awards are expected to\u00a0vest.
At each balance sheet date, the Company revises its estimate of\u00a0the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the consolidated statement of income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.
(ii) Cash-settled share-based payments
For cash-settled share-based payments, a liability is initially recognised at fair value based on the estimated number of awards that are expected to vest, adjusting for market and non-market-based performance conditions. Subsequently, at\u00a0each reporting period until the liability is settled, it is remeasured to fair value with any changes in fair value recognised in the consolidated statement of\u00a0income.
Income taxes
Income taxes consist of current and deferred income taxes. Current taxes represent income taxes expected to be payable based on enacted or substantively enacted tax rates at the period end on expected current taxable income, and any adjustment to tax payable in respect of previous years. Deferred taxes are recognised for temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable income, using enacted or\u00a0substantively enacted income tax rates which are expected to be effective at\u00a0the time of reversal of the underlying temporary difference. Deferred tax assets and unused tax\u00a0losses are only recognised to\u00a0the extent that their recoverability is probable. Deferred tax assets are reviewed at reporting period end and amended to the extent that it is no longer probable that the related benefit will be realised. To the extent that a deferred tax asset not previously recognised subsequently fulfils the criteria for recognition, an asset is then recognised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same authority and Glencore has both the right and the intention to settle its current tax assets and liabilities on a net or simultaneous basis. The tax effect of certain temporary differences is not recognised principally with respect to the initial recognition of an asset or liability (other than those arising in a\u00a0business combination or in a manner that initially impacted accounting or taxable profit) and temporary differences relating to\u00a0investments in subsidiaries and Associates to the extent that Glencore can control the timing of the reversal of the temporary difference and it is probable the temporary difference will not reverse in the foreseeable future. Deferred tax is provided in respect of\u00a0fair value adjustments on acquisitions. These adjustments may relate to assets such as extraction rights that, in general, are not eligible for income tax allowances.
Current and deferred tax are recognised as an expense or income in the consolidated statement of income, except when they relate to items that are recognised outside the consolidated statement of income (whether in other comprehensive income or directly in equity) or where they arise from the initial accounting for a business combination.
Royalties, extraction taxes and other levies/taxes are treated as taxation arrangements when they have the characteristics of an income tax, including being imposed and determined in accordance with regulations established by the respective government\u2019s taxation authority and the amount payable is based on taxable income \u2013 rather than physical quantities produced or as a percentage of revenues \u2013 after adjustment for temporary differences. For such arrangements, current and deferred tax is provided on the same basis as described above for\u00a0other forms of taxation. Obligations arising from royalty arrangements that do not satisfy these criteria are recognised as\u00a0current provisions and included in cost of goods sold.
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its best estimate of these tax liabilities, including related interest charges, taking into account the range of possible outcomes.
Notes to the financial statements continued
1. Accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at cost, being the fair value of the consideration given to acquire or construct the asset, including directly attributable costs required to bring the asset to\u00a0the location or to a condition necessary for operation and the\u00a0direct cost of dismantling and removing the asset, less accumulated depreciation and any accumulated impairment\u00a0losses.
Property, plant and equipment are depreciated to their estimated residual value over the estimated useful life of the specific asset concerned, or the estimated remaining life of the associated mine (LOM), field or lease.
Depreciation commences when the asset is available for use. The major categories of property, plant and equipment are depreciated/amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Buildings
10 \u2013 45 years
Freehold land
not depreciated
Plant and equipment
3 \u2013 30 years/UOP
Right-of-use assets
2 \u2013 20 years
Mineral and petroleum rights
UOP
Deferred mining costs
UOP
(i) Mineral and petroleum rights
Mineral and petroleum reserves, resources and rights (together \u2018Mineral and petroleum rights\u2019) which can be reasonably valued,
are recognised in the assessment of fair values on acquisition. Mineral and petroleum rights for which values cannot be reasonably determined are not recognised. Exploitable Mineral and petroleum rights are amortised using the UOP basis over the commercially recoverable reserves and, in certain circumstances, other mineral resources. Mineral resources are included in amortisation calculations where there is a high degree of confidence that they will be extracted in an economic\u00a0manner.
(ii) Exploration and evaluation expenditure
Exploration and evaluation expenditure relates to costs incurred in the exploration and evaluation of potential mineral and petroleum resources and includes costs such as exploration and production licences, researching and analysing historical exploration data, exploratory drilling, trenching, sampling and the costs of pre-feasibility studies. Exploration and evaluation expenditure for each area of interest, other than that acquired from another entity, is charged to the consolidated statement of income as incurred except when the expenditure is expected to be recouped from future exploitation or sale of the area of interest and it is planned to continue with active and significant operations in relation to the area, or at the reporting period end, the activity has not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves, in which case the expenditure is capitalised. As the intangible component (i.e. licences) represents an insignificant and indistinguishable portion of the overall expected tangible amount to be incurred and recouped from future exploitation, these costs along with other capitalised exploration and evaluation expenditure are recorded as a component of property, plant and equipment. Purchased exploration and evaluation assets are recognised at their fair value at acquisition.
As the capitalised exploration and evaluation expenditure asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where a potential impairment is\u00a0indicated, an assessment is performed for each area of interest or at the CGU level. To the extent that capitalised expenditure is not expected to be recovered it is charged to the consolidated statement of income.
Administration costs that are not directly attributable to a specific exploration area are charged to the consolidated statement of income. Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit.
Development expenditure
When commercially recoverable reserves are determined and such proposed development receives the appropriate approvals, capitalised exploration and evaluation expenditure is transferred to construction in progress, a component within the plant and equipment asset sub-category. All subsequent development expenditure is similarly capitalised, provided commercial viability conditions continue to be satisfied. Proceeds from the sale of product extracted during the development phase are recognised in the statement of income. Upon completion of development and commencement of production, capitalised development costs are further transferred, as required, to the appropriate plant and equipment asset category and depreciated using the unit of production method (UOP) or straight-line basis.
Notes to the financial statements continued
1. Accounting policies continued
Deferred mining costs
Mainly comprises certain capitalised costs related to underground mining as well as pre-production and in-production stripping activities as outlined below. Deferred mining costs are amortised using the UOP basis over the life of the ore body to which those costs relate.
Deferred stripping costs
Stripping costs incurred in the development of a mine (or pit) before production commences are capitalised as part of the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a UOP basis.
In-production stripping costs related to accessing an identifiable component of the ore body to realise benefits in the form of improved access to ore to be mined in the future (stripping activity asset), are capitalised within deferred mining costs provided all the following conditions are met:
(a)it is probable that the future economic benefit associated with the stripping activity will be realised;
(b)the component of the ore body for which access has been improved can be identified; and
(c)the costs relating to the stripping activity associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are charged to the consolidated statement of income as they are incurred.
The stripping activity asset is subsequently depreciated on a UOP basis over the life of the identified component of the ore body that became more accessible as a result of the stripping activity and is then stated at cost less accumulated depreciation and any accumulated impairment losses.
Leases
As lessee, the Group assesses whether a contract contains a lease at inception of the contract. The Group recognises a right-of-use asset and corresponding lease liability in the statement of financial position for all lease arrangements where it is the lessee, except for short-term leases with a term of twelve months or less and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The lease liability is initially measured at the present value of the future lease payments from the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, the asset and company specific incremental borrowing rates. Lease liabilities are recognised within borrowings on the statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability, with a corresponding adjustment to the related right-of-use assets, whenever:
  • The lease term changes or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;
  • The lease payments change due to the changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate; or
  • A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of modification.
The right-of-use assets are initially recognised on the balance sheet at cost, which comprises the amount of the initial measurement of the corresponding lease liability, adjusted for any lease payments made at or prior to the commencement date of the lease, any lease incentive received and any initial direct costs incurred, and expected costs for obligations to dismantle and remove right-of-use assets when they are no longer used. Right-of-use assets are recognised within property, plant and equipment on the statement of financial position. Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease over the shorter of the useful life of the right-of-use asset or the end of the lease term.
The Group enters into lease arrangements as a lessor with respect to some of its time charter vessels. Leases for which the Group is an intermediate lessor are classified as finance or operating leases by reference to the right-of-use asset arising from the head lease. Income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group\u2019s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group\u2019s net investment outstanding in respect of these leases.
Notes to the financial statements continued
1. Accounting policies continued
Restoration, rehabilitation and decommissioning
Restoration, rehabilitation and decommissioning costs arising from the installation of plant and other site preparation work, discounted using a risk-free rate specific to the liability and the currency in which they are denominated to their net present value, are provided for and capitalised at the time such an obligation arises. The costs are charged to the consolidated statement of income over the life of the operation through depreciation of the asset and the unwinding of the discount on the provision.
Costs for restoration of subsequent site disturbance, which is created on an ongoing basis during production, are provided for at their net present values and charged to the consolidated statement of income as extraction progresses.
Changes in the estimated timing of the rehabilitation or changes to the estimated future costs are accounted for prospectively by recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, provided a\u00a0reduction, if any, in the provision is not greater than the depreciated capitalised cost of the related asset, in which case the capitalised cost is reduced to Nil and the remaining adjustment recognised in the consolidated statement of income. In the case of closed sites, changes to estimated costs are recognised immediately in the consolidated statement of income.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation (calculated on a straight-line basis over their useful lives) and accumulated impairment losses, if any.
Internally generated intangibles are not capitalised. Instead, the related expenditure is recognised in the consolidated statement of income in the period in which the expenditure is incurred.
Identifiable intangible assets with a finite life are amortised on a straight-line basis over their expected useful life. The amortisation method and period are reviewed annually and impairment testing is undertaken when circumstances indicate the carrying amount may not be recoverable. Other than goodwill which is not amortised, Glencore has no identifiable intangible assets with an indefinite life.
The major categories of intangibles are amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Port allocation rights
UOP
Licences, trademarks and software
3 \u2013 20 years
Customer relationships
5 \u2013 9 years
Goodwill impairment testing
For the purpose of impairment testing, goodwill has been allocated to the CGUs, or groups of CGUs, that are expected to\u00a0benefit from the synergies of the business combination and which represent the level at which management monitors and manages the goodwill. In assessing whether an impairment is required, the carrying value of the CGU is compared with its recoverable amount. The recoverable amount is the higher of its\u00a0fair value less costs of disposal (FVLCD) and its value in use (VIU). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill can not be reversed in subsequent periods.
Other investments
Equity investments, other than investments in Associates, are recorded at fair value. Glencore designated investments that are not held for trading as at fair value through other comprehensive income (FVTOCI). As a result, changes in fair value are recorded in the consolidated statement of other comprehensive income. Dividends from these investments are recognised in the consolidated statement of income, unless the dividend represents a recovery of part of the cost of the equity investment. Investments that are held for trading are subsequently measured at fair value through profit or loss (FVTPL).
Impairment or impairment reversals
Glencore conducts, at least annually, an internal review of asset values which is used as a source of information to assess for any indications of impairment or impairment reversal. Formal impairment tests are carried out, at least annually, for cash-generating units containing goodwill and for all other non-current assets, when events or changes in circumstances indicate the carrying value may not be recoverable.
Notes to the financial statements continued
1. Accounting policies continued
A formal impairment or reversal test involves determining whether the carrying amounts are in excess (or below, as the case may be) of their recoverable amounts. An asset\u2019s recoverable amount is determined as the higher of its FVLCD and its VIU. Such reviews are undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken at the CGU level.
If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the consolidated statement of income to reflect the asset at the lower amount.
For those assets which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, and the change in their recoverable amount is not solely due to the passage of time, an impairment reversal is recorded in the consolidated statement of income to reflect the asset at the higher amount to the extent the increased carrying amount does not exceed the carrying value of the asset that would have been determined had no impairment previously been\u00a0recognised. Goodwill impairments cannot be subsequently reversed.
Provisions
Provisions are recognised when Glencore has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources embodying economic benefits that can be reliably estimated will be required to settle the liability.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation, including interpretation of specific laws and likelihood of settlement. Where a provision is measured using the cash flow estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Onerous contracts
An onerous contract is considered to exist where Glencore has a\u00a0contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Present obligations arising under onerous contracts are recognised and measured as provisions.
Unfavourable contracts
An unfavourable contract is considered to exist when Glencore, in a business combination, acquires a contract under which the terms of the contract require Glencore to sell or purchase products or services on terms which are economically unfavourable compared to current market terms at the time of the business combination. Unfavourable contracts are recognised at the present value of the economic loss and amortised into the statement of income over the term of\u00a0the contract.
Inventories
The vast majority of inventories attributable to the marketing activities are valued at fair value less costs of disposal with the remainder valued at the lower of cost or net realisable value, with costs allocated using the first-in-first-out (FIFO) method. Unrealised gains and losses from changes in fair value are reported in cost of goods sold.
Inventories held by the industrial activities are valued at the lower of cost or net realisable value. Cost is determined using FIFO or the weighted average method and comprises material costs, labour costs and allocated production related overhead costs. Typically raw materials and consumables are measured using the FIFO method and work in progress inventories using the weighted average method. Where the production process results in more than one product being produced (joint products), cost is allocated between the various products according to the ratio of contribution of these metals to gross sales revenue. Financing and storage costs related to inventory are expensed as incurred.
Non-current inventories primarily relate to stockpiles which are not expected to be utlised within the normal operating cycle.
Non-financial instruments (physical advances or prepayments)
The Group enters into physical advances and prepayment agreements with certain suppliers and customers. When such advances and prepayments are primarily settled in cash or another financial asset, they are classified as financial assets or financial liabilities (see below). Where such advances and prepayments are settled through physical delivery or receipt of an underlying product they are classified as non-financial assets or non-financial liabilities. Such advances and prepayments are initially recorded at the amount of the cash paid or received and are subsequently reduced by the relevant contractual volumes of physical deliveries made. Certain physically-settled advances and prepayments which relate to contracts to buy or sell commodities that can be settled on a net basis are accounted for under IFRS 9 as if they were financial instruments.
Financial instruments
Financial assets and financial liabilities are recognised in the Group\u2019s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Contractual maturities of such financial assets and financial liabilities may be longer than one year. However, in the normal course of trading activities, derivative financial instruments are often settled before their maturity date, and therefore classified as current assets or current liabilities.
Notes to the financial statements continued
1. Accounting policies continued
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. Financial assets are initially recognised at fair value on the trade date, including, in the case of instruments not subsequently measured at fair value through profit or loss, directly attributable transaction costs. Trade receivables with no provisional price features and where there is no significant financing component, are initially recognised at their transaction price.
Subsequently, other investments, provisionally priced trade receivables and derivatives are carried at fair value and trade receivables that do not contain provisional price features, loans and other receivables are carried at amortised cost.
Financial liabilities, other than derivatives and those containing provisional price features, are initially recognised at fair value of consideration received net of transaction costs as appropriate and subsequently carried at amortised cost. Financial liabilities that contain provisional pricing features (accounted for as embedded derivatives) were designated in their entirety as at FVTPL. Derivatives are carried at FVTPL.
Where financial assets and financial liabilities recognised at fair value are managed and reported to key management personnel on the basis of its net exposure to either market risks or credit risk, fair value of that group of financial assets and financial liabilities is measured on the basis of the net price that would be received to sell the long position and to transfer the short position for a particular risk exposure of the specific financial asset or liability being measured. When the group of financial assets and/or financial liabilities are not presented on a net basis in the statement of financial position, any portfolio level adjustments are allocated to the individual instruments that make up the group on an appropriate basis.
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for all financial assets (as well as for issued loan commitments and financial guarantee contracts), other than those at FVTPL and investments in equity instruments measured at FVTOCI, at the end of each reporting period. The expected credit loss recognised represents a probability-weighted estimate of credit losses over the expected life of the financial instrument.
The Group applies the simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit losses on these financial assets are estimated using a provision matrix by reference to past default experience and an equivalent credit rating, adjusted as appropriate for current observable data and forward-looking information.
For all other financial assets at amortised cost, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition, which is determined by:
  • A review of overdue amounts;
  • Comparing the risk of default at the reporting date and at the date of initial recognition; and
  • An assessment of relevant historical and forward-looking quantitative and qualitative information.
For those balances that are beyond 30 days overdue, such is presumed to be an indicator of a significant increase in credit risk.
If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit loss, which comprises the expected lifetime loss from the instrument were a default to occur within 12 months of the reporting date.
The Group considers an event of default has materialised and the financial asset is credit impaired when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay the Group without taking into account any collateral held by the Group or if the financial asset is more than 90 days past due, unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
(ii) Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a\u00a0collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when the Group\u2019s obligations are discharged, cancelled or have expired.
Notes to the financial statements continued
1. Accounting policies continued
On derecognition of a financial asset/financial liability in its entirety, the difference between the carrying amount of the financial asset/financial liability and the sum of the consideration received and receivable/paid and payable is recognised in profit and loss. On derecognition of equity investments designated and measured at FVTOCI, the cumulative gain or loss recognised in other comprehensive income is reclassified directly to retained earnings.
Own shares
The cost of purchases of own shares is deducted from equity. Where they are purchased, issued to employees or sold, no gain or loss is recognised in the consolidated statement of income. Such gains and losses are recognised directly in equity. Any proceeds received on disposal of the shares or transfers to employees are recognised in equity.
Derivatives and hedging activities
Derivative instruments, which include physical contracts to sell or purchase commodities that do not meet the own use exemption, are initially recognised at fair value when Glencore becomes a party to the contractual provisions of the instrument and are subsequently remeasured to fair value at the end of each reporting period. Fair values are determined using quoted market prices, dealer price quotations or using models and other valuation techniques, the key inputs for which include current market and contractual prices for the underlying instrument, time to expiry, yield curves, volatility of\u00a0the underlying instrument and counterparty\u00a0risk.
Gains and losses on derivative instruments for which hedge accounting is not applied, other than the revenue adjustment mechanism embedded within provisionally priced sales and mark-to-market movements on physical forward sales contracts, are recognised in cost of goods sold.
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a\u00a0recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable\u00a0transaction.
At the inception of the hedge and on an ongoing basis, Glencore documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Glencore discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met.
A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of\u00a0income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised in the consolidated statement of comprehensive income and accumulated in the cash flow hedge reserve in shareholders\u2019 equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it\u00a0occurs.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in shareholders\u2019 equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative \u2018host contract\u2019 such as provisionally priced sales and purchases. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.
Financial guarantee contracts
Financial guarantee contracts are accounted for in accordance with IFRS 9 as financial liabilities. After initial recognition, any such contracts are subsequently measured at the higher of the amount of the provision for expected credit losses and the amount initially recognised less any income recognised in accordance with the principles of IFRS 15.
Notes to the financial statements continued
2. Segment information
Glencore is organised and operates on a worldwide basis in two core business segments \u2013 Marketing activities and Industrial activities, reflecting the reporting lines and structure used by Glencore\u2019s Management to allocate resources and assess the performance of Glencore.
The business segments\u2019 contributions to the Group are primarily derived from a) the net margin or premium earned from physical Marketing activities (net sale and purchase of physical commodities) and the provision of marketing and related value-add services and b) the net margin earned from Industrial asset activities (resulting from the sale of physical commodities over the cost of production and/or cost of sales). The marketing-related operating segments have been aggregated under the Marketing reportable segment as their economic characteristics (historic and expected long-term Adjusted EBITDA margins and the nature of the marketing services provided) are similar. The industrial-related operating segments have been aggregated under the Industrial reportable segment as the core activities (extracting raw material and / or processing it further into saleable product, as required, and then selling it at prevailing market prices), the exposure to long-term economic risks (price movements, technology, sovereign and production substitution) and the longer-term average Adjusted EBITDA margins are similar. The economic and operational characteristics of our coal operating and commercial units are not expected to change in the foreseeable future and continue to be included within the industrial assets and marketing reporting segments, respectively.
Corporate and other: consolidated statement of income amounts represent Group related income and expenses (including share of Viterra earnings and certain variable bonus charges). Statement of financial position amounts represent Group related balances.
The financial performance of the operating segments is principally evaluated by management with reference to Adjusted EBIT/EBITDA. Adjusted EBIT is the net result of segmental revenue (revenue including Proportionate adjustments as defined in the Alternative performance measure section) less cost of goods sold and selling and administrative expenses plus share of income from associates and joint ventures, dividend income and the attributable share of Adjusted EBIT of relevant material associates and joint ventures, which are accounted for internally by means of proportionate consolidation, excluding significant items. Adjusted EBITDA consists of Adjusted EBIT plus depreciation and amortisation, including the related Proportionate adjustments. In addition, Volcan, while a subsidiary of the Group, is accounted for under the equity method for internal reporting and analysis due to the relatively low economic ownership held by the Group.
The accounting policies of the operating segments are the same as those described in note 2 with the exception of the Antamina copper/zinc mine, the Collahuasi joint venture and Volcan. Under IAS 28 and IFRS 11, Glencore\u2019s investment in the Antamina copper/zinc mine (34% owned) is considered to be an associate as it is not subject to joint control and the Collahuasi copper mine (44% owned) is considered to be a joint venture. Associates and joint ventures are required to be accounted for in Glencore\u2019s financial statements under the equity method. For internal reporting and analysis, Glencore evaluates the performance of these investments under the proportionate consolidation method, reflecting Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investments. For internal reporting and analysis, management evaluates the performance of Volcan under the equity method, reflecting the Group\u2019s relatively low 23.3% economic ownership in this fully ring-fenced listed entity, with its stand-alone, independent and separate capital structure. The balances as presented for internal reporting purposes are reconciled to Glencore\u2019s statutory disclosures in the following tables and/or in the Alternative performance measures section.
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (coal), that it did not previously own (see note 26), increasing Glencore\u2019s ownership to 100% and providing it with the ability to exercise control and fully consolidate Cerrej\u00f3n. Prior to the transaction, Glencore evaluated the performance of its 33.33% interest in Cerrej\u00f3n under the proportionate consolidation method, such that 2021 segment comparatives reflect Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investment.
In Q4 2022, Glencore commenced a process exploring the possible disposal of its 23.3% economic interest in Volcan. As a result, the carrying amounts of Volcan assets and liabilities as at 31 December 2022 are classified as held for sale (see note 16). For segmental reporting purposes, Volcan continues to be accounted for as an equity accounted associate.
Glencore accounts for intra-segment sales and transfers where applicable as if the sales or transfers were to third parties, i.e. at arm\u2019s length commercial terms.
2022
Marketing
activities
Industrial
activities
Inter-segment
eliminations
US$ million
Total
Revenue
Metals and minerals
77,382
38,993
(25,499)
90,876
Energy products
137,720
39,333
(9,256)
167,797
Corporate and other
\u2013
6
\u2013
6
Revenue \u2013 segmental
215,102
78,332
(34,755)
258,679
Proportionate adjustment \u2013 revenue1
\u2013
(2,695)
\u2013
(2,695)
Revenue \u2013 reported measure
215,102
75,637
(34,755)
255,984
Metals and minerals
Adjusted EBITDA
1,694
9,274
\u2013
10,968
Depreciation and amortisation
(54)
(3,776)
\u2013
(3,830)
Proportionate adjustment \u2013 depreciation1
\u2013
(416)
\u2013
(416)
Adjusted EBIT
1,640
5,082
\u2013
6,722
Energy products
Adjusted EBITDA
5,558
18,590
\u2013
24,148
Depreciation and amortisation
(359)
(2,740)
\u2013
(3,099)
Adjusted EBIT
5,199
15,850
\u2013
21,049
Corporate and other
Adjusted EBITDA2
(457)
(599)
\u2013
(1,056)
Depreciation and amortisation
\u2013
(58)
\u2013
(58)
Adjusted EBIT
(457)
(657)
\u2013
(1,114)
Total Adjusted EBITDA
6,795
27,265
\u2013
34,060
Total depreciation and amortisation
(413)
(6,574)
\u2013
(6,987)
Total depreciation proportionate adjustment
\u2013
(416)
\u2013
(416)
Total Adjusted EBIT
6,382
20,275
\u2013
26,657
Share of associates' significant items1,3
(9)
Movement in unrealised inter-segment profit elimination adjustments4
1,176
Gain on acquisitions and disposals of non-current assets
1,287
Other expense \u2013 net
(911)
Impairments
(3,337)
Interest expense \u2013 net
(1,336)
Income tax expense
(6,368)
Proportionate adjustment \u2013 net finance, impairment and income tax expense1
(648)
Income for the year
16,511
1Refer to segment information on previous page and APMs section for definition.
2Marketing activities include $494 million of Glencore\u2019s equity accounted share of Viterra.
3Share of associates\u2019 significant items comprise Glencore\u2019s share of significant charges relating to impairments and other items booked directly by various associates.
4Represents the required adjustment to eliminate unrealised profit or losses arising on inter-segment transactions, i.e. before ultimate sale to a third party. For Glencore, such adjustments arise on the sale of product, in the ordinary course of business, from its Industrial to Marketing operations. Management assesses segment performance prior to any such adjustments, as if the sales were to third parties.
2021
Marketing
activities
Industrial
activities
Inter-segment
eliminations
US$ million
Total
Revenue
Metals and minerals1
71,318
41,535
(26,506)
86,347
Energy products1
106,265
19,269
(3,955)
121,579
Corporate and other
\u2013
6
\u2013
6
Revenue \u2013 segmental
177,583
60,810
(30,461)
207,932
Proportionate adjustment \u2013 revenue2
\u2013
(4,181)
\u2013
(4,181)
Revenue \u2013 reported measure
177,583
56,629
(30,461)
203,751
Metals and minerals
Adjusted EBITDA
2,588
12,017
\u2013
14,605
Depreciation and amortisation
(94)
(3,485)
\u2013
(3,579)
Proportionate adjustment \u2013 depreciation2
\u2013
(404)
\u2013
(404)
Adjusted EBIT
2,494
8,128
\u2013
10,622
Energy products
Adjusted EBITDA
1,829
5,603
\u2013
7,432
Depreciation and amortisation
(434)
(2,262)
\u2013
(2,696)
Proportionate adjustment \u2013 depreciation2
\u2013
(89)
\u2013
(89)
Adjusted EBIT
1,395
3,252
\u2013
4,647
Corporate and other
Adjusted EBITDA3
(194)
(520)
\u2013
(714)
Depreciation and amortisation
\u2013
(60)
\u2013
(60)
Adjusted EBIT
(194)
(580)
\u2013
(774)
Total Adjusted EBITDA
4,223
17,100
\u2013
21,323
Total depreciation and amortisation
(528)
(5,807)
\u2013
(6,335)
Total depreciation proportionate adjustment
\u2013
(493)
\u2013
(493)
Total Adjusted EBIT
3,695
10,800
\u2013
14,495
Share of associates' significant items2,4
(11)
Movement in unrealised inter-segment profit elimination adjustments5
(549)
Loss on acquisitions and disposals of non-current assets
(607)
Other expense \u2013 net
(1,947)
Impairments
(1,838)
Interest expense \u2013 net
(1,140)
Income tax expense
(3,026)
Proportionate adjustment \u2013 net finance, impairment and income tax expense2
(1,028)
Income for the year
4,349
1Certain prior year balances have been restated to conform with current year presentation of inter-segment eliminations.
2Refer to segment information above and APMs section for definition.
3Marketing activities include $473 million of Glencore\u2019s equity accounted share of Viterra.
4Share of associates\u2019 significant items comprise Glencore\u2019s share of significant charges relating to impairments and other items booked directly by various associates.
5Represents the required adjustment to eliminate unrealised profit or losses arising on inter-segment transactions, i.e. before ultimate sale to a third party. For Glencore, such adjustments arise on the sale of product, in the ordinary course of business, from its Industrial to Marketing operations. Management assesses segment performance prior to any such adjustments, as if the sales were to third parties.
2022
Marketing
activities
Industrial
activities
Corporate
and other
US$ million
Total
Current assets
47,534
17,326
\u2013
64,860
Current liabilities
(32,495)
(9,258)
\u2013
(41,753)
Allocatable current capital employed
15,039
8,068
\u2013
23,107
Property, plant and equipment
920
38,644
\u2013
39,564
Intangible assets
5,142
1,018
\u2013
6,160
Investments in associates and other investments
4,509
7,825
\u2013
12,334
Non-current advances and loans
1,666
988
\u2013
2,654
Inventories
\u2013
605
\u2013
605
Allocatable non-current capital employed
12,237
49,080
\u2013
61,317
Other assets1
6,406
6,406
Other liabilities2
(45,611)
(45,611)
Total net assets
27,276
57,148
(39,205)
45,219
Capital expenditure
Metals and minerals
60
3,597
\u2013
3,657
Energy products
239
1,172
\u2013
1,411
Corporate and other
\u2013
38
\u2013
38
Capital expenditure \u2013 segmental
299
4,807
\u2013
5,106
Proportionate adjustment \u2013 capital expenditure3
\u2013
(461)
\u2013
(461)
Capital expenditure \u2013 reported measure4
299
4,346
\u2013
4,645
2021
Marketing
activities
Industrial
activities
Corporate
and other
US$ million
Total
Current assets
38,080
15,134
\u2013
53,214
Current liabilities
(33,553)
(7,288)
\u2013
(40,841)
Allocatable current capital employed
4,527
7,846
\u2013
12,373
Property, plant and equipment
961
42,198
\u2013
43,159
Intangible assets
5,149
1,086
\u2013
6,235
Investments in associates and other investments
5,565
8,349
\u2013
13,914
Non-current advances and loans
1,943
1,584
\u2013
3,527
Inventories
5
657
\u2013
662
Allocatable non-current capital employed
13,623
53,874
\u2013
67,497
Other assets1
6,799
6,799
Other liabilities2
(49,752)
(49,752)
Total net assets
18,150
61,720
(42,953)
36,917
Capital expenditure
Metals and minerals
145
3,573
\u2013
3,718
Energy products
656
819
\u2013
1,475
Corporate and other
\u2013
31
\u2013
31
Capital expenditure \u2013 segmental
801
4,423
\u2013
5,224
Proportionate adjustment \u2013 capital expenditure3
\u2013
(516)
\u2013
(516)
Capital expenditure \u2013 reported measure4
801
3,907
\u2013
4,708
1Other assets include non-current financial assets, deferred tax assets, cash and cash equivalents and assets held for sale.
2Other liabilities include borrowings, non-current deferred income, deferred tax liabilities, non-current provisions, non-current post-retirement and other employee benefits, non-current financial liabilities and liabilities held for sale.
3Refer to APMs section for definition.
4Includes $425 million (2021: $1,006 million), comprising $219 million (2021: $648 million) in Marketing activities and $206 million (2021: $358 million) in Industrial activities, of \u2018right-of-use assets\u2019 capitalised in accordance with IFRS 16 \u2013 Leases.
Geographical information
US$ million
2022
2021
Revenue from third parties1
The Americas
44,354
37,930
Europe
87,662
64,284
Asia
104,861
86,576
Africa
13,238
9,991
Oceania
5,869
4,970
255,984
203,751
Non-current assets2
The Americas
17,183
16,963
Europe
11,297
11,152
Asia
3,966
4,683
Africa
11,300
12,389
Oceania
14,461
17,163
58,207
62,350
1Revenue by geographical destination is based on the country of incorporation of the sales counterparty, however this may not necessarily be the country of the counterparty\u2019s ultimate parent and/or final destination of product.
2Non-current assets are non-current assets excluding other investments, advances and loans, other financial assets and deferred tax assets. Non-current assets comprise assets in Australia of $14,164 million (2021: $16,714 million), in Peru of $5,519 million (2021: $7,243 million) and the DRC of $6,074 million (2021: $6,555 million).
3. Revenue
US$ million
2022
2021
Sale of commodities
252,356
201,113
Freight, storage and other services
3,628
2,638
Total
255,984
203,751
Revenue is derived principally from the sale of commodities, recognised once control of the goods has transferred from Glencore to the buyer. Revenue from sale of commodities includes $78\u00a0million (2021: $710\u00a0million) of mark-to-market related adjustments on provisionally priced sales arrangements. Revenue derived from freight, storage and other services is recognised over time as the service is rendered. Revenue is measured based on consideration specified in the contract with the customer and is presented net of amounts prepaid as incentives and/or rebates paid to customers, and excludes amounts collected on behalf of third parties. This is consistent with the revenue information disclosed for each reportable segment (see note 2).
Notes to the financial statements continued
4. Gain/(loss) on acquisitions and disposals of non-current assets
US$ million
Notes
2022
2021
Gain on bargain purchase of Cerrej\u00f3n
26
1,029
\u2013
Gain on sale of Ernest Henry
26
512
\u2013
Loss on sale of Bolivia Zinc
26
(104)
\u2013
Loss on sale of E&P Chad
26
(34)
\u2013
Gain on sale of BaseCore
11
131
\u2013
Loss on sale of Los Quenuales
26
(180)
\u2013
Loss on sale of Access World
26
(23)
\u2013
Derecognition of non-controlling interest on disposal of Mopani
26
\u2013
(1,022)
Gain on sale of Chemoil Terminals
26
\u2013
110
Net gain on sale of other investments/operations
71
98
(Loss)/gain on disposal of property, plant and equipment
(115)
207
Total
1,287
(607)
Acquisition of Cerrej\u00f3n
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, resulting in a bargain purchase gain of $1,029 million (see note 26).
Disposal of Ernest Henry
In January 2022, Glencore completed the disposal of its interest in Ernest Henry Mining Pty Ltd, a copper-gold mine in Queensland, Australia, resulting in a gain on sale of $512 million (see note 26).
Disposal of Bolivia Zinc
In March 2022, Glencore completed the disposal of its interest in the Bolivia zinc assets (Sinchi Wayra and Illapa), resulting in a loss on sale of $104 million (see note 26).
Disposal of E&P Chad
In June 2022, Glencore completed the disposal of its Chad upstream oil operations, resulting in a loss on sale of $34 million (see note 26).
Disposal of BaseCore
In July 2022, BaseCore Metals (a Glencore joint venture) completed the disposal of a royalty package to Sandstrom Gold Ltd, resulting in an overall gain on sale to Glencore of $131 million (see note 11).
Disposal of Los quenuales
In December 2022, Glencore completed the disposal of its Los Quenuales zinc, lead, silver operations in Peru, facilitated by the earlier settlement of an underlying silver streaming arrangement, resulting in a loss on sale of $180 million (see note 26).
Disposal of Access World
In December 2022, Glencore completed the disposal of its interest in the Access World Group, a global commodities storage and logistics group, resulting in a loss on sale of $23 million (see note 26).
Disposal of Mopani
In March 2021, Glencore completed the disposal of its interest in Mopani to ZCCM Investments Holdings plc. The net loss on disposal reflects the derecognition to the statement of income of the previously recognised book value of the non-controlling interest equity balance, which largely related to the non-controlling interest\u2019s share of historical impairments and losses, and net liabilities in Mopani (see note 26).
Disposal of Chemoil Terminals
In December 2021, Glencore completed the disposal of its 100% interest in Chemoil Terminals LLC, which owns the Long Beach and Carson oil products storage terminals in California, resulting in a gain of $110 million (see note 26).
Notes to the financial statements continued
5. Other income/(expense) \u2013 net
US$ million
Notes
2022
2021
Net changes in mark-to-market valuations
\u2013
64
Release of unfavourable contract provision
22
\u2013
122
Gain on energy contracts
264
\u2013
Other income \u2013 net
101
\u2013
Total other income
365
186
Net changes in mark-to-market valuations
(106)
\u2013
Net foreign exchange losses
(349)
(187)
Legal and regulatory proceedings
(302)
(1,640)
Closed sites rehabilitation provisioning
(370)
(177)
Other expenses \u2013 net
(149)
(129)
Total other expenses
(1,276)
(2,133)
Total other expense \u2013 net
(911)
(1,947)
Together with foreign exchange movements and mark-to-market valuations, other net income / (expense) includes other items that, due to their nature and variable financial impact or infrequency of the events giving rise to these items, are reported separately from operating segment results.
Gain on energy contracts
Following the significant appreciation in European traded power prices in the summer of 2022, the Group recognised a $264 million gain over a number of its physically settled electricity contracts within its European metallurgical operations.
Net changes in mark-to-market valuations
Primarily relates to movements on interests in investments and loans (see notes 11 and 14), the ARM Coal non-discretionary dividend obligation (see note 29) and deferred consideration related to Mototolo stake sale in 2018 (see notes 12 and 14), all carried at fair value.
Net foreign exchange losses
2022 net foreign exchange losses include realised foreign currency losses of $431 million (see page 158) recognised on the restructuring and partial repayment of ZAR-denominated intragroup debt and return of capital that were part of the Group\u2019s net investment in its South African operations. These repayments are considered a partial disposal of a net investment in a subsidiary, and thus a proportionate share of the total accumulated foreign exchange losses recognised in the net investment were recycled to the statement of income upon these repayments.
Legal and regulatory proceedings
Comprises various investigations (legal, expert and compliance) related costs and other costs for ongoing legal matters of
$122 million (2021: $1,584 million) and a settlement with the DRC authorities of $180 million (see notes 23 and 32).
Closed sites rehabilitation provisioning
Comprises movements in restoration, rehabilitation and decommissioning estimates related to sites that are no longer operational (see note 23).
Notes to the financial statements continued
6. Interest income/(expense)
US$ million
Notes
2022
2021
Bank deposits and other financial assets
290
110
Interest income and accretion on certain advances repayable with product
12
133
90
Loans to associates
12
8
Interest income
435
208
Interest expense for financial liabilities not classified at FVTPL
Capital market notes
(869)
(733)
Revolving credit facilities
(118)
(55)
Lease liabilities
9
(88)
(98)
Other bank loans
(225)
(93)
Less: capitalised interest
9
31
33
Other interest
(178)
(65)
(1,447)
(1,011)
Other interest expense
Post-retirement employee benefits
24
(19)
(23)
Deferred income
22
(97)
(115)
Restoration and rehabilitation
23
(155)
(153)
Other provisions
23
(36)
(33)
Other interest
(17)
(13)
(324)
(337)
Interest expense
(1,771)
(1,348)
Notes to the financial statements continued
7. Impairments
US$\u00a0million
Notes
2022
2021
(Impairments)/reversal of impairments of non-current assets
Property, plant and equipment and intangible assets
9/10
(1,984)
(1,452)
Investments
11
(167)
(333)
Advances and loans \u2013 current and non-current
12/14
(389)
31
VAT receivable \u2013 non-current
12
(632)
(151)
Inventory and other
(113)
\u2013
(3,285)
(1,905)
(Impairments)/reversal of impairments of financial assets
Advances and loans \u2013 current and non-current
12/14
(52)
67
(52)
67
Total impairments1
(3,337)
(1,838)
1Impairments recognised during the year are allocated to Glencore\u2019s operating segments as follows: Marketing activities $515 million (2021: $270 million) and Industrial activities $2,822 million (2021: $1,568 million).
As part of a regular portfolio review, Glencore carries out an assessment of whether there are indicators of cash-generating unit (CGU) or asset impairments or whether a previously recorded impairment may no longer be required.
The recoverable amounts of the property, plant and equipment and intangible assets were measured based on fair value less costs of disposal (FVLCD). The FVLCD of all CGUs are determined by discounted cash flow techniques based on the most recent approved financial budgets, underpinned and supported by the life of asset plans of the respective operations. The valuation models use a combination of internal sources and those inputs available to a market participant, which comprise the most recent reserve and resource estimates, relevant cost assumptions and where possible, market forecasts of commodity price and foreign exchange rate assumptions, discounted using operation specific post-tax real discount rates (unless otherwise indicated) ranging from 7.4% \u2013 14.9% (2021: 6.7% \u2013 15.5%). The valuations generally remain most sensitive to price and a deterioration / improvement in the pricing outlook may result in additional impairments/reversals. The determination of FVLCD used Level 3 valuation techniques for both years. In providing sensitivity analysis (and particularly on commodity price assumptions), a 10% change, representing a typical deviation parameter common in the industry, has been provided. Where a higher percentage is reasonably possible on an operational assumption, that has been clearly identified.
As a result of the regular impairment assessment, the following significant impairment charges were recognised:
2022
Property, plant and equipment and intangible assets
During 2022, significant changes to key macro estimates ensued, exacerbated by the Russian/Ukrainian war, which contributed to significant supply/demand imbalances, extreme commodity price volatility, higher energy prices and, in some cases, which are generally linked, emboldening governments to raise royalties and taxes. 2022 saw broad based cost increases, reflecting:
  • direct and indirect inflationary pressures on goods and services (particularly energy related flow-through impacts on electricity costs, coal, diesel, steel, explosives, chemicals, reagents and Original Equipment Manufacturer spare parts);
  • competition for skilled employees and contractors; and
  • supply chain pressures, including their secondary effects on shipping and handling costs, as trade flows adjusted in response to the war.
The weighting of the above macro factors on certain CGUs, combined with various operational challenges, resulted in a number of impairments in our Industrial activities segment, almost exclusively related to metals and minerals\u2019 CGUs. The valuations are most sensitive to price and discount rate assumptions and a deterioration/improvement in these assumptions could result in additional impairments/reversal of impairments. See below.
2022 impairment/
(reversal of impairment)
Impairments/(reversal of impairments) resulting from changes in key assumptions
US$ million
pre tax
post tax
Capital employed1
Discount
rate
Short to Long-term
price assumption
Decrease/(increase)
in price of 10%2
Increase/(decrease)
in discount rate of 1%
Cash-generating unit
Mt. Isa copper3
656
460
\u2013
9.7%
Cu: 8,157 - 7,400
\u2013
\u2013
\u2013
\u2013
Mt. Isa zinc
455
318
630
9.7%
Zn: 3,250 - 2,450
504
(318)
50
(58)
McArthur River zinc
172
96
869
8.7%
Zn: 3,250 - 2,450
396
(96)
63
(71)
Zhairem zinc
185
148
565
11.0%
Zn: 3,250 - 2,450
161
(148)
21
(22)
Portovesme zinc3
143
105
72
9.9%
Zn: 3,250 - 2,450
\u2013
\u2013
\u2013
\u2013
Volcan zinc
164
116
1,243
9.4%
Zn: 3,250 - 2,450
303
(242)
69
(96)
Koniambo nickel3
227
227
\u2013
10.7%
Ni: 19,500 - 18,400
\u2013
\u2013
\u2013
\u2013
Various other
(18)
(18)
\u2013
1,984
1,452
3,379
1,364
(804)
203
(247)
1Estimated recoverable non-current capital employed, post impairment. Non-current capital employed includes property, plant and equipment, non-current inventory, less rehabilitation provisions and net deferred tax liabilities.
2Across the curve.
3The estimated recoverable value of non-current capital employed of these CGUs is estimated to be de minimis. No reasonably possible change in assumptions would materially impact this value, hence no sensitivity analysis is presented.
Notes to the financial statements continued
7. Impairments continued
  • $656 million, Mt. Isa Copper CGU. During the year, various options for copper mining activities were considered in the context of higher costs due to the above macro factors. These factors outweighed the significant efforts made over the past few years to make the operation more competitive, such that the entire carrying value of this CGU was impaired.
  • $455 million, Mt. Isa Zinc CGU and $172 million, McArthur River Zinc CGU. Resulting primarily from the above noted macro impacts, during 2022, the zinc market and its related treatment and refinery cost / revenue / profit drivers were significantly impacted, particularly in relation to ex-China smelting, where updated Group assumptions have significantly impacted Australia Zinc\u2019s long-term through-the-cycle expected mining returns.
  • $185 million, Zhairem zinc/lead CGU. In addition to the above noted macro impacts, the Zhairem CGU, located in Kazakhstan, was significantly impacted by additional logistical impositions, as traditional supply chains were re-routed and the Kazakhstan government increased mineral extraction tax by some 50% (e.g. the rate applicable to zinc increased from 7% to 10.5%).
  • $143 million, Portovesme zinc/lead CGU. As a result of the above noted macro impacts, particularly relating to increases in European energy costs, Portovesme curtailed its primary zinc and lead smelting operations, with its remaining focus then being the treatment / recycling of waelz oxides. These macro factors outweighed the significant efforts made over the past few years to make the primary operations more competitive, such that the entire carrying value of these CGUs, other than the waelz-oxide line, was impaired.
  • $164 million, Volcan zinc CGU. Resulting primarily from the above noted macro impacts, during 2022, the zinc market and its related treatment and refinery cost / revenue / profit drivers were significantly impacted, particularly in relation to ex-China smelting, whereby updated assumptions, including in relation to Peru\u2019s increasing political challenges, have impacted the long-term through-the-cycle expected returns of Volcan\u2019s southern cluster CGU.
  • $227 million, Koniambo nickel CGU. As a result of persistent operational challenges, high ferro-nickel price discounts, and the above noted macro impacts, which have produced significantly higher energy and other costs, a strategic review of the long-term viability of Koniambo was initiated with one of the options being the potential cessation of operations. These factors outweigh the significant efforts made over the past few years to make the operation more competitive, such that the entire carrying value of this CGU was impaired.
  • Net $18 million reversal of impairments. The balance of the impairment charges of $70 million on property, plant and equipment (none of which were individually material) relate to specific assets (Industrial activities segment) where utilisation is no longer required or to projects no longer progressed due to changes in production and development plans, net of reversals of impairment of $88 million on property, plant and equipment (none of which were individually material) as a result of improved market conditions in the oil and gas market (Industrial activities segment).
Investments
Primarily comprises impairment charges of $55 million in respect of our 26.3% interest in Trevali Mining Corporation (Industrial activities segment), reflecting the Company obtaining creditor protection, following a serious mining incident at its Perkoa Mine in Burkina Faso in April 2022, and $54 million in respect of our 2.1% interest in Britishvolt (Marketing activities segment), owing to its financial difficulties and recent entering into administration. As a result, the entire carrying values of these investments were impaired.
Advances and loans \u2013 current and non-current
During 2022, the originally expected production rate at Mopani was not achieved, in part due to a lack of funding. The new shareholder has conducted operational and strategic reviews, resulting in Mopani seeking additional funding and to restructure
and extend repayment of the transaction debt (see note 12). As a result, the advance was impaired by $422 million to a value of
$596 million. The valuation assumes a long-term copper price of $7,400/t and an asset specific discount rate of 19%, which is reflective of an increase in emerging market risk premiums and underlying interest rates. The valuation remains most sensitive to price, receipt of physical copper and discount rate assumptions, and a deterioration in these assumptions could result in additional impairments. Should the price assumptions fall by 10% (across the curve), a further $43 million of impairment would be recognised. Should the discount rate increase by 1%, a further $36 million of impairment would be recognised, while a 10% decrease in physical copper estimates could result in an additional impairment of $19 million. Conversely, a 10% increase in price assumptions (across the curve) would result in an impairment reversal of $44 million or a 10% increase in physical copper receipts would result in an impairment reversal of $18 million.
VAT receivable \u2013 non-current
As a result of the continued delay and non-performance by the DRC government in settling long outstanding Value Added Tax (\u2018VAT\u2019) claims, impairment charges of $632 million were recognised in respect of balances outstanding at our Mutanda and Katanga CGUs (Industrial activities segment).
Inventories \u2013 non-current
As a result of geotechnical and other operational challenges, the Katanga CGU undertook an extensive technical review and operational optimisation exercise, resulting in a significant reduction in its shorter term production forecasts over the next 3-4 years, such that $113 million of inventory stockpile value has been impaired, consistent with its latest life of mine model.
Notes to the financial statements continued
7. Impairments continued
2021
Property, plant and equipment and intangible assets
  • In H1 2021, Koniambo incurred failures at its power plant and suffered a slag leak in line 2 of its metallurgical plant, resulting in a suspension of production. Extensive investigation into the cause of the leak ensued, following which it was determined to target lower throughput, revise certain grade and process recovery assumptions and increase the frequency of major maintenance shut-downs, with the intention of delivering more sustainable long-term operations. These revised changes in volume and cost assumptions and the emergence of higher discounts on non-battery application nickel relative to the LME nickel benchmark price, resulted in a reduction of Koniambo\u2019s estimated recoverable value (Industrial activities segment) to $550 million and an impairment of $1,170 million. The valuation assumed a long-term realised nickel price of approximately $13,700/t and an operation specific discount rate of 9.8%. Further revisions to the operating plans are possible. As at 31 December 2021, a 10% reduction in either the long-term realised nickel price or life of mine production could have resulted in the remaining carrying value being fully impaired. A 10% increase in variable operating costs could have resulted in an additional impairment of $170 million. Conversely, a 10% increase in the long-term realised nickel price could have resulted in an impairment reversal of $450 million.
  • The balance of the impairment charges on property, plant and equipment (none of which were individually material) relate to specific assets where utilisation is no longer required or to projects no longer progressed due to changes in production and development plans. As a result, the full carrying amount of these assets/projects was impaired, with $282 million recognised in our Industrial activities segment.
Investments
Primarily comprises an impairment charge of $331 million in respect of our 49% investment in HG Storage (Marketing activities segment), to an estimated recoverable value of $189 million following a review of the carrying value against valuation benchmarks. As at 31 December 2021, the valuation of this investment is not considered to be a significant source of estimation uncertainty as no change in assumptions reasonably possible within the next 12 months would materially affect the carrying value.
Advances and loans \u2013 current and non-current
In 2021, impairment reversals on advances and loans of $98 million (none of which were individually material) were recognised following an improvement in the underlying financial condition of various counterparties, with $63 million recognised in our Marketing activities segment and $35 million recognised in our Industrial activities segment. Of the total $98 million of impairment reversals, $67 million relate to financial assets and $31 million relate to non-financial assets.
VAT receivable \u2013 non-current
As a result of continued challenge and non-performance by certain government authorities in settling long outstanding VAT claims, an impairment charge of $151 million was recognised in our Industrial activities segment.
Notes to the financial statements continued
8. Income taxes
Income taxes consist of the following:
US$ million
2022
2021
Current income tax expense
(7,165)
(2,923)
Adjustments in respect of prior year current income tax
(274)
158
Deferred income tax credit/(expense)
998
(92)
Adjustments in respect of prior year deferred income tax
73
(169)
Total tax expense reported in the statement of income
(6,368)
(3,026)
Deferred income tax expense recognised directly in other comprehensive income
(65)
(67)
Total tax expense recognised directly in other comprehensive income
(65)
(67)
The effective Group tax rate is different from the statutory Swiss income tax rate applicable to the Company for the following reasons:
US$ million
2022
2021
Income before income taxes
22,879
7,375
Less: Share of income from associates and joint ventures
(2,300)
(2,618)
Parent Company\u2019s and subsidiaries\u2019 income before income tax and attribution
20,579
4,757
Income tax expense calculated at the Swiss income tax rate of 12% (2021: 12%)
(2,469)
(571)
Tax effects of:
Different tax rates from the standard Swiss income tax rate
(3,057)
(1,486)
Tax-exempt income ($360 million (2021: $207 million) from recurring items
538
232
and $178 million (2021: $25\u00a0million) from non-recurring items)
Items not tax deductible ($670 million (2021: $987\u00a0million) from recurring items
(1,252)
(1,365)
and $582\u00a0million (2021:\u00a0$378\u00a0million) from non-recurring items)
Foreign exchange fluctuations
(187)
52
Changes in tax rates
(47)
15
Utilisation and changes in recognition of tax losses and temporary differences
385
101
Tax losses not recognised
(98)
15
Adjustments in respect of prior years
(201)
(11)
Other
20
(8)
Income tax expense
(6,368)
(3,026)
The non-tax deductible items of $1,252\u00a0million (2021: $1,365\u00a0million) primarily relate to financing costs, impairments and various other expenses.
The impact of tax-exempt income of $538\u00a0million (2021: $232\u00a0million) primarily relates to non-taxable dividends, income that is not effectively connected to the taxable jurisdiction, and various other\u00a0items.
The tax impact of foreign exchange fluctuations relates to the foreign currency movements on deferred tax balances where the underlying tax balances are denominated in a currency different to the functional currency determined for accounting purposes.
Deferred taxes
Deferred taxes as at 31\u00a0December\u00a02022 and 2021 are attributable to the items in the table below:
US$ million
2022
Recognised in the statement of income
Recognised in other comprehensive income
Business combination and disposal of subsidiaries
Foreign currency exchange movements
Other
2021
Deferred tax assets1
Tax losses carried forward
1,515
116
\u2013
(4)
1
(16)
1,418
Other
322
(18)
(2)
(17)
(2)
\u2013
361
Total
1,837
98
(2)
(21)
(1)
(16)
1,779
Deferred tax liabilities1
Depreciation and amortisation
(3,299)
1,254
\u2013
(625)
60
168
(4,156)
Mark-to-market valuations
(125)
(1)
(2)
5
\u2013
\u2013
(127)
Other
(227)
(280)
(61)
295
5
\u2013
(186)
Total
(3,651)
973
(63)
(325)
65
168
(4,469)
Total Deferred tax - net
(1,814)
1,071
(65)
(346)
64
152
(2,690)
US$ million
2021
Recognised in the statement of income
Recognised in other comprehensive income
Business combination and disposal of subsidiaries
Foreign currency exchange movements
Other
2020
Deferred tax assets1
Tax losses carried forward
1,418
(532)
\u2013
\u2013
\u2013
(1)
1,951
Other
361
115
(10)
\u2013
(2)
(43)
301
Total
1,779
(417)
(10)
\u2013
(2)
(44)
2,252
Deferred tax liabilities1
Depreciation and amortisation
(4,156)
(150)
\u2013
19
98
\u2013
(4,123)
Mark-to-market valuations
(127)
7
(6)
\u2013
\u2013
\u2013
(128)
Other
(186)
299
(51)
\u2013
(3)
39
(470)
Total
(4,469)
156
(57)
19
95
39
(4,721)
Total Deferred tax - net
(2,690)
(261)
(67)
19
93
(5)
(2,469)
1Asset and liability positions in the same category reflect the impact of tax assets and liabilities arising in local tax jurisdictions that cannot be offset against tax assets and liabilities arising in other tax jurisdictions.
Deferred tax assets are net of $311 million (2021: $287 million) of uncertain tax liabilities related to tax estimation and judgement uncertainties with respect to various open tax disputes discussed below.
Deferred tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable. As at 31 December 2022, $1,915 million (2021: $2,016 million) of deferred tax assets related to available loss carry forwards have been brought to account, of which $1,515\u00a0million (2021: $1,418\u00a0million) are disclosed as deferred tax assets with the remaining balance being offset against deferred tax liabilities arising in the same tax entity. This balance is primarily comprised of:
  • $652 million (2021: $629 million) in entities domiciled in the DRC;
  • $493 million (2021: $482 million) in entities domiciled in Switzerland; and
  • $277 million (2021: $238 million) in entities domiciled in the US.
In evaluating whether it is probable that taxable profits will be earned in future accounting periods prior to any tax loss expiry as may be the case, all available evidence was considered, including approved budgets, forecasts and business plans and, in certain cases, analysis of historical operating results. These forecasts are consistent with those prepared and used internally for business planning and impairment testing purposes. Following this evaluation, it was determined there would be sufficient taxable income generated to realise the benefit of the deferred tax assets. With the exception of the deferred tax assets raised in respect of the Group\u2019s DRC operations (see below), no reasonably possible change in any of the key assumptions would result in a material reduction in forecast headroom of tax profits so that the recognised deferred tax asset would not be realised.
The recognised losses carried forward in the DRC primarily relate to historical development, ramp-up and financing related costs at KCC. The losses carried forward have an unlimited carry forward period, but are subject to annual utilisation limitation. Deferred taxation assets have been recognised for the full estimated available tax losses at 31 December 2022 as sufficient future taxable profits are expected to fully utilise the recognised carry forward tax losses. In recognising these deferred tax assets, consideration was given to the range of possible outcomes to determine the expected value of the tax losses available for future offset, including to what extent previously incurred tax losses would be available to offset future taxable profits. Any adverse challenge by the DRC tax authorities could materially impact the currently recognised tax losses and could result in a reversal of part or all of the recognised deferred tax assets.
The recognised losses carried forward in Switzerland primarily relate to non-recurring events. Based on the core business activities conducted in Switzerland and taxable income forecasts going forward, sufficient taxable profits are expected to fully utilise the recognised tax losses prior to expiration.
The recognised losses carried forward in the US primarily relate to non-recurring events in 2011 and have a carry forward period of 20 years. The US entities comprise our core US marketing activities and based on taxable income forecasts going forward, sufficient taxable profits are expected to fully utilise the recognised tax losses prior to expiration.
Income tax receivable / payable
US$ million
2022
2021
Income tax receivable
401
364
Income tax payable
(4,660)
(1,785)
Net income tax payable
(4,259)
(1,421)
Income tax judgements and uncertain tax liabilities
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its reasoned estimate of these tax liabilities, including related interest charges. These current open tax matters are spread across numerous jurisdictions and consist primarily of legacy transfer pricing matters that have been open for a number of years and may take several more years to resolve. In recognising a provision for these taxation exposures, consideration was given to the range of possible outcomes to determine the Group\u2019s best estimate of the amount to provide. As at 31 December 2022, the Group has recognised $1,486 million (2021: $880 million) of uncertain tax liabilities related to possible adverse outcomes of these open matters, of which, $311 million (2021: $287 million) has been recognised net of deferred tax assets, with the balance of $1,175 million (2021: $593 million) recognised as an income tax payable. The change in the total uncertain tax position during the year reflects the issuance of various new assessments and the outcome of certain settlements and court rulings.
UK Tax Audit
In previous periods, HMRC have issued formal transfer pricing, unallowable purposes and diverted profits tax assessments for the 2008-2018 tax years, amounting to $746 million. The Group has appealed against, and continues to vigorously contest, these assessments, following, over the years, various legal opinions received and detailed analysis conducted, supporting its positions and policies applied. Therefore, the Group has not fully provided for the amount assessed. The matter is now proceeding through the Mutual Agreement Process, pursuant to article 24 of the Switzerland \u2013 United Kingdom Income Tax Treaty 1977. Management does not anticipate a significant risk of material changes in estimates in this matter within the next financial year.
DRC Tax Audit
As a matter of course, various tax authorities in the DRC issue draft assessments adjusting revenue and denying costs and other items, along with customs-related claims for alleged non-compliance or incorrect coding on certain filings. Upon receipt of such draft assessments, the Group engages with the tax authorities to defend its filing positions. As at 31 December 2022, there are various ongoing technical discussions and challenges, the ultimate outcome of which remains uncertain, and therefore there remains a risk that the outcome could materially impact the recognised balances within the next financial year. It is impractical to provide further sensitivity estimates of potential downside variances.
Available gross tax losses
Available gross tax losses carried forward and deductible temporary differences, for which no deferred tax assets have been recognised in the consolidated financial statements, are detailed below and will expire as follows:
US$ million
2022
2021
1 year
115
1,024
2 years
48
425
3 years
44
41
Thereafter
9,642
11,095
Unlimited
13,806
10,335
Total
23,655
22,920
As at 31\u00a0December\u00a02022, unremitted earnings of $62,829 million (2021: $50,116\u00a0million) have been retained by subsidiaries for reinvestment. No provision is made for income taxes.
9. Property, plant and equipment
2022
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration
and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2022
6,854
44,580
3,048
30,019
665
15,552
100,718
Business combination
26
542
1,009
20
961
\u2013
271
2,803
Disposal of subsidiaries
26
(169)
(256)
(37)
(163)
(255)
(382)
(1,262)
Additions
67
3,179
425
84
\u2013
876
4,631
Disposals
(59)
(1,127)
(169)
(94)
(4)
(186)
(1,639)
Effect of foreign currency exchange movements
(8)
(171)
(1)
(145)
2
(30)
(353)
Reclassification to held for sale
16
(897)
(953)
(86)
(3,824)
\u2013
(1,199)
(6,959)
Other movements1
174
(411)
(2)
417
5
192
375
31 December 2022
6,504
45,850
3,198
27,255
413
15,094
98,314
Accumulated depreciation and impairment:
1 January 2022
2,940
27,361
1,343
15,777
577
9,561
57,559
Disposal of subsidiaries
26
(137)
(199)
(33)
(113)
(210)
(323)
(1,015)
Disposals
(53)
(1,003)
(134)
(50)
(2)
(185)
(1,427)
Depreciation
383
2,610
573
1,993
\u2013
1,269
6,828
Impairment
7
91
910
\u2013
323
(2)
660
1,982
Effect of foreign currency exchange movements
(3)
(89)
(2)
(54)
(1)
(7)
(156)
Reclassification to held for sale
16
(447)
(474)
(21)
(3,490)
\u2013
(609)
(5,041)
Other movements1
33
26
\u2013
(39)
\u2013
\u2013
20
31 December 2022
2,807
29,142
1,726
14,347
362
10,366
58,750
Net book value 31 December 2022
3,697
16,708
1,472
12,908
51
4,728
39,564
1Primarily consists of increases in rehabilitation costs of $399 million and reclassifications within the various property, plant and equipment headings.
Plant and equipment includes expenditure for construction in progress of $3,731\u00a0million (2021: $3,387\u00a0million). Mineral and petroleum rights include biological assets of $25\u00a0million (2021: $24\u00a0million).Depreciation expenses included in cost of goods sold are $6,782\u00a0million (2021: $6,129\u00a0million) and in selling and administrative expenses, $46\u00a0million (2021: $52\u00a0million).
During 2022, $31\u00a0million (2021: $33\u00a0million) of interest was capitalised. With the exception of project specific borrowings, the rate used to determine the amount of borrowing costs eligible for capitalisation was 3.5% (2021: 3%).
As at 31 December 2022, with the exception of leases, no property, plant or equipment was pledged as security for borrowings (2021: $Nil).
2021
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2021
6,576
44,514
2,576
30,495
1,974
17,462
103,597
Disposal of subsidiaries
26
(100)
(352)
(12)
(132)
\u2013
(101)
(697)
Additions
114
2,936
1,006
75
\u2013
566
4,697
Disposals
(73)
(668)
(301)
(50)
\u2013
(171)
(1,263)
Effect of foreign currency exchange movements
(18)
(250)
(17)
(211)
\u2013
(47)
(543)
Reclassification to held for sale
16
(86)
(760)
(207)
(783)
(1,320)
(2,576)
(5,732)
Other movements1
441
(840)
3
625
11
419
659
31 December 2021
6,854
44,580
3,048
30,019
665
15,552
100,718
Accumulated depreciation and impairment:
1 January 2021
2,626
25,438
1,004
14,838
1,884
10,697
56,487
Disposal of subsidiaries
26
(36)
(260)
(5)
(126)
\u2013
(92)
(519)
Disposals
(9)
(600)
(213)
(48)
\u2013
(171)
(1,041)
Depreciation
341
2,553
639
1,354
\u2013
1,293
6,180
Impairment
7
16
902
3
495
\u2013
36
1,452
Effect of foreign currency exchange movements
(5)
(118)
(6)
(74)
\u2013
(13)
(216)
Reclassification to held for sale
16
(31)
(524)
(80)
(651)
(1,317)
(2,246)
(4,849)
Other movements1
38
(30)
1
(11)
10
57
65
31 December 2021
2,940
27,361
1,343
15,777
577
9,561
57,559
Net book value 31 December 2021
3,914
17,219
1,705
14,242
88
5,991
43,159
1Primarily consists of increases in rehabilitation costs of $634 million and reclassifications within the various property, plant and equipment headings.
Leases
The Group leases various assets including land and buildings and plant and equipment. As at 31 December 2022, the net book value of recognised right-of use assets relating to land and buildings was $418\u00a0million (2021: $450\u00a0million) and plant and equipment $1,054\u00a0million (2021: $1,255\u00a0million). The depreciation charge for the period relating to those assets was $58\u00a0million (2021: $89\u00a0million) and $515\u00a0million (2021: $550\u00a0million), respectively.
Disclosure of amounts recognised as lease liabilities in the statement of financial position and cash outflows for leases in the year are included within note 21 and their maturity analysis within note 27.
Amounts recognised in the statement of income are detailed below:
US$ million
2022
2021
Depreciation on right-of-use assets
(573)
(639)
Interest expense on lease liabilities
(88)
(98)
Expense relating to short-term leases
(781)
(493)
Expense relating to low-value leases
(16)
(3)
Expense relating to variable lease payments not included in the
measurement of the lease liability
(7)
(5)
Income from subleasing right-of-use assets
153
304
Total
(1,312)
(934)
At 31 December 2022, the Group is committed to $229\u00a0million of short-term lease payments (2021: $209 million) and $Nil (2021: $56 million) related to capitalised leases not yet commenced.
Notes to the financial statements continued
10. Intangible assets
2022
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2022
13,293
1,203
561
669
15,726
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Additions
\u2013
1
6
7
14
Disposals
\u2013
(1)
(25)
(2)
(28)
Effect of foreign currency exchange movements
\u2013
(73)
3
2
(68)
Reclassification to held for sale
16
\u2013
\u2013
(1)
(10)
(11)
Other movements1
\u2013
(2)
14
111
123
31 December 2022
13,134
1,128
554
753
15,569
Accumulated amortisation and impairment:
1 January 2022
8,293
308
341
549
9,491
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Disposals
\u2013
\u2013
(24)
(3)
(27)
Amortisation expense2
\u2013
97
34
28
159
Impairment
7
\u2013
\u2013
2
\u2013
2
Effect of foreign currency exchange movements
\u2013
(24)
\u2013
2
(22)
Reclassification to held for sale
16
\u2013
\u2013
\u2013
(6)
(6)
Other movements
\u2013
\u2013
(1)
\u2013
(1)
31 December 2022
8,134
381
348
546
9,409
Net book value 31 December 2022
5,000
747
206
207
6,160
1Includes $109 million for Mutanda mining license renewal, which is being amortised over 15 years (see note 34).
2Recognised in cost of goods sold.
2021
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2021
13,293
1,312
585
693
15,883
Additions
\u2013
\u2013
4
7
11
Disposals
\u2013
\u2013
(33)
(3)
(36)
Effect of foreign currency exchange movements
\u2013
(109)
(6)
(12)
(127)
Reclassification to held for sale
16
\u2013
\u2013
(19)
(5)
(24)
Other movements
\u2013
\u2013
30
(11)
19
31 December 2021
13,293
1,203
561
669
15,726
Accumulated amortisation and impairment:
1 January 2021
8,293
247
342
534
9,416
Disposals
26
\u2013
\u2013
(22)
(3)
(25)
Amortisation expense1
\u2013
89
37
29
155
Effect of foreign currency exchange movements
\u2013
(28)
(2)
(5)
(35)
Reclassification to held for sale
16
\u2013
\u2013
(16)
(4)
(20)
Other movements
\u2013
\u2013
2
(2)
\u2013
31 December 2021
8,293
308
341
549
9,491
Net book value 31 December 2021
5,000
895
220
120
6,235
1Recognised in cost of goods sold.
Goodwill
The carrying amount of goodwill has been allocated to cash-generating units (CGUs), or groups of CGUs as follows:
US$\u00a0million
2022
2021
Metals and minerals marketing business
3,326
3,326
Coal marketing business
1,674
1,674
Total
5,000
5,000
Metals and minerals and coal marketing businesses
Goodwill of $3,326\u00a0million and $1,674\u00a0million was recognised in connection with previous business combinations and was allocated to the metals and minerals marketing and coal marketing CGUs, respectively, based on the annual synergies expected to accrue to the respective marketing departments as a result of increased volumes, blending opportunities and freight and logistics arbitrage opportunities.
Port allocation rights
Port allocation rights represent contractual entitlements to export certain amounts of coal on an annual basis from Richards Bay Coal Terminal in South Africa recognised as part of previous business combinations. The rights are amortised on a units of production basis.
Licences, trademarks and software
Intangibles related to internally developed technology and patents were recognised in previous business combinations and are amortised over the estimated economic life of the technology which ranges between 3 \u2013 20 years.
Customer relationships
Customer relationships mainly represent intangible assets related to long-standing customer relationships recognised in previous business combinations. These intangible assets are being amortised on a straight-line basis over their estimated economic life which ranges between 5 \u2013 9 years.
Goodwill impairment testing
Given the nature of each CGU\u2019s activities, information on its fair value is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently:
  • The recoverable amount for each of the marketing CGUs is determined by reference to the FVLCD which utilises a price to earnings multiple approach based on the 2023 approved financial budget which includes factors such as marketing volumes handled and operating, interest and income tax charges, generally based on past experience. The price to earnings multiple of 12 times (2021: 12 times) is derived from observable market data for broadly comparable businesses; and
  • Glencore believes that no reasonably possible changes in any of the above key assumptions would cause the recoverable amount to fall below the carrying value of the CGU over the next 12 months. The determination of FVLCD for each of the marketing CGUs used Level 3 valuation techniques in\u00a0both years.
Notes to the financial statements continued
11. Investments in associates, joint ventures and other investments
Investments in associates and joint ventures
US$\u00a0million
Notes
2022
2021
1 January
12,294
12,400
Additions
157
53
Disposals
(232)
(2)
Share of income from associates and joint ventures
2,300
2,618
Share of other comprehensive loss from associates and joint ventures
(100)
(58)
Transfer of previously held equity accounted investment to subsidiary
26
(598)
\u2013
Impairments
7
(113)
(333)
Dividends received
(1,691)
(2,375)
Reclassification to held for sale
16
(148)
(11)
Other movements
9
2
31 December
11,878
12,294
Of which:
Investments in associates
4,806
5,567
Investments in joint ventures
7,072
6,727
As at 31 December 2022, the carrying value of our listed associates is $430 million (2021: $406 million), mainly comprising Century Aluminum and PT CITA, which have carrying values of $232\u00a0million (2021: $165\u00a0million) and $181\u00a0million (2021: $177 million), respectively. The fair value of our listed associates, using published price quotations (a Level 1 fair value measurement) is $652 million (2021: $967 million). As at 31 December 2021, Glencore\u2019s investment in Century Aluminum was pledged under a loan facility, with proceeds received and recognised in current borrowings of $120\u00a0million (see note 21).
Transfer of previously held equity accounted investment to subsidiary
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, that it did not own. Prior to the acquisition, Glencore owned a 33.33% interest in Cerrej\u00f3n which was accounted for as an associate (see note 26).
Disposals
On 12 July 2022, Glencore effected the sale of a royalty package by BaseCore Metals LP (\u2018BaseCore\u2019) to Sandstorm Gold Ltd. (\u2018Sandstorm\u2019). Glencore received, in aggregate, $300 million in cash and Sandstorm shares for its 50% interest in BaseCore. The disposal resulted in a gain on disposal of non-current assets of $131 million (see note 4).
2022 Details of material associates and joint ventures
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
5,137
5,137
5,540
7,207
12,747
17,884
Current assets
2,105
2,105
2,405
16,480
18,885
20,990
Non-current liabilities
(2,129)
(2,129)
(2,602)
(7,496)
(10,098)
(12,227)
Current liabilities
(681)
(681)
(436)
(10,958)
(11,394)
(12,075)
The above assets and liabilities include the following:
Cash and cash equivalents
87
87
446
637
1,083
1,170
Current financial liabilities1
(50)
(50)
(21)
(4,007)
(4,028)
(4,078)
Non-current financial liabilities1
(1,089)
(1,089)
(1,084)
(6,759)
(7,843)
(8,932)
Net assets 31 December 2022
4,432
4,432
4,907
5,233
10,140
14,572
Glencore's ownership interest
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
1,694
1,694
1,046
1,256
2,302
3,996
Carrying value
3,192
3,192
3,205
3,867
7,072
10,264
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31 December 2022 including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
4,668
4,668
4,817
53,854
58,671
63,339
Income for the year
1,601
1,601
1,807
995
2,802
4,403
Other comprehensive loss
\u2013
\u2013
(13)
(155)
(168)
(168)
Total comprehensive income
1,601
1,601
1,794
840
2,634
4,235
Glencore's share of dividends paid
472
472
660
200
860
1,332
The above income for the year includes the following:
Depreciation and amortisation
(1,039)
(1,039)
(658)
(936)
(1,594)
(2,633)
Interest income1
86
86
9
131
140
226
Interest expense2
(5)
(5)
(120)
(397)
(517)
(522)
Income tax expense
(952)
(952)
(832)
(463)
(1,295)
(2,247)
1Includes foreign exchange gains and other income of $186 million.
2Includes foreign exchange losses and other expenses of $62 million.
2021 Details of material associates and joint ventures
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
2,033
5,288
7,321
5,398
6,118
11,516
18,837
Current assets
1,030
1,607
2,637
1,913
13,399
15,312
17,949
Non-current liabilities
(690)
(1,875)
(2,565)
(1,758)
(5,031)
(6,789)
(9,354)
Current liabilities
(509)
(973)
(1,482)
(994)
(9,682)
(10,676)
(12,158)
The above assets and liabilities include the following:
Cash and cash equivalents
511
134
645
354
472
826
1,471
Current financial liabilities1
(27)
(45)
(72)
(21)
(4,516)
(4,537)
(4,609)
Non-current financial liabilities1
(14)
(847)
(861)
(402)
(4,409)
(4,811)
(5,672)
Net assets 31 December 2021
1,864
4,047
5,911
4,559
4,804
9,363
15,274
Glencore's ownership interest
33.3%
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
(54)
1,756
1,702
1,059
1,265
2,324
4,026
Carrying value
567
3,124
3,691
3,065
3,662
6,727
10,418
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31\u00a0December\u00a02021, including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
2,317
5,307
7,624
5,906
39,704
45,610
53,234
Income for the year
636
1,992
2,628
2,777
947
3,724
6,352
Other comprehensive loss
\u2013
\u2013
\u2013
(13)
(94)
(107)
(107)
Total comprehensive (loss)/income
636
1,992
2,628
2,764
853
3,617
6,245
Glencore's share of dividends paid
240
749
989
1,144
150
1,294
2,283
The above (loss)/income for the year includes the following:
Depreciation and amortisation
(267)
(919)
(1,186)
(653)
(776)
(1,429)
(2,615)
Interest income1
\u2013
\u2013
\u2013
66
55
121
121
Interest expense2
(18)
(38)
(56)
(13)
(229)
(242)
(298)
Income tax credit/(expense)
(435)
(1,241)
(1,676)
(1,470)
(282)
(1,752)
(3,428)
1Includes foreign exchange gains and other income of $114 million.
2Includes foreign exchange losses and other expenses of $58 million.
Investments in EN+ and Rosneft
In February 2022, the Russian government commenced a war against the people of Ukraine, resulting in a humanitarian crisis and significant disruption to financial and commodity markets. A number of countries including, the United States of America, European Union, Switzerland and United Kingdom imposed a series of sanctions against the Russian government, various companies, and certain individuals. In response to these sanctions, Russia implemented a number of counter-sanctions including restrictions on the divestment from Russian assets by foreign investors.
Glencore owns equity stakes in EN+ (10.6%) and Rosneft (0.57%), listed on the London Stock Exchange and Moscow Stock Exchange. On 3 March 2022, EN+ was suspended from trading on the London Stock Exchange and Rosneft stopped trading on the Moscow exchange. On 24 March, Rosneft resumed trading, however, Glencore is not able to sell its Rosneft shares on the Moscow Stock Exchange and is unable to ascribe probabilities to possible outcomes of any potential exit process.
IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Further, an entity should take into account the characteristics of the asset or liability if market participants would take those into account when pricing the asset or liability, where such characteristics would include restrictions on the sale or use of the asset. Under current market conditions, given the restrictions noted above, the quoted share prices for both investments are not deemed to be reliable evidence of fair value and thus it was determined that it is no longer appropriate to classify these investments as Level 1 financial instruments in accordance with IFRS, but rather as Level 3 financial instruments. In valuing these investments as a Level 3 investment, Glencore concluded that there is no realistic way to exit these stakes in the current environment and considered that the measure of fair value is subject to high measurement uncertainty. Both equity interests were written down to $Nil on the basis that their fair value is not materially different to $Nil given the valuation a market participant would ascribe to a hypothetical transfer reflecting their inability to access the market. The corresponding negative mark-to-market adjustments was recognised in other comprehensive income.
Notes to the financial statements continued
12. Advances and loans
US$ million
Notes
2022
2021
Financial assets at amortised cost
Loans to associates
130
128
Other non-current receivables and loans
309
519
Deferred consideration
26
142
\u2013
Rehabilitation trust fund1
148
148
729
795
Financial assets at fair value through profit and loss
Other non-current receivables and loans
28
22
28
Convertible loan
28
168
\u2013
Contingent consideration
28
103
135
293
163
Non-financial assets
Pension surpluses
24
148
125
Advances repayable with product2
1,254
1,673
Land rights prepayment
150
150
Other tax and related non-current receivables3
80
621
1,632
2,569
Total
2,654
3,527
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
Financial assets at amortised cost
Loans to associates
Loans to associates generally bear interest at applicable floating market rates plus a premium.
Other non-current receivables and loans
Other non-current receivables and loans comprise the following:
US$\u00a0million
2022
2021
Secured financing arrangements
306
511
Other
3
8
Total
309
519
Various financing facilities, generally marketing related and secured against certain assets and/or payable from the future sale of production of the counterparty. The non-current receivables and loans are interest-bearing and on average are to be repaid over a three-year period.
Rehabilitation trust fund
Glencore makes contributions to controlled funds established to meet the costs of its restoration and rehabilitation liabilities, primarily in South Africa. These funds are not available for the general purposes of the Group, and there is no present obligation to make any further contributions.
Loss allowances of financial assets at amortised cost
The Group determines the expected credit loss of loans to associates, other non-current receivables and loans (at amortised cost) and deferred consideration based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. Expected credit losses for these assets are measured as either 12-month expected credit losses, taking into account prior experience regarding probability of default adjusted for forward looking information, or as lifetime expected credit losses (when there is significant increase in credit risk or the asset is credit-impaired). The movement in loss allowance for financial assets classified at amortised cost is detailed below:
2022
Loans to associates
Other non-current receivables and loans and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 20223
15
191
206
365
431
796
1,002
Allowance for credit loss
1 January 2022
\u2013
62
62
14
240
254
316
Released during the period4
\u2013
\u2013
\u2013
\u2013
(9)
(9)
(9)
Charged during the period4
\u2013
14
14
\u2013
91
91
105
Effect of foreign currency exchange movements
\u2013
\u2013
\u2013
(5)
\u2013
(5)
(5)
Reclassifications from current accounts receivable
\u2013
\u2013
\u2013
\u2013
14
14
14
31 December 2022
\u2013
76
76
9
336
345
421
Net carrying value 31 December 2022
15
115
130
356
95
451
581
1Comprises stage 3 credit losses of $76 million.
2Comprises stage 2 credit losses of $51 million and stage 3 credit losses of $285 million.
3Increases in lifetime ECL gross carrying values during the year result primarily from reclassifications from 12 months ECL.
4$37 million recognised as impairment (see note 7) and the balancing charge of $59 million recognised in cost of goods sold.
2021
Loans to associates
Other non-current receivables and loans and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2021
31
159
190
529
244
773
963
Allowance for credit loss
1 January 2021
\u2013
62
62
37
303
340
402
Released during the period3
\u2013
\u2013
\u2013
(23)
(5)
(28)
(28)
Charged during the period3
\u2013
\u2013
\u2013
15
\u2013
15
15
Utilised during the period
\u2013
\u2013
\u2013
(13)
(35)
(48)
(48)
Reclassifications to current accounts receivable
\u2013
\u2013
\u2013
(2)
(23)
(25)
(25)
31 December 2021
\u2013
62
62
14
240
254
316
Net carrying value 31 December 2021
31
97
128
515
4
519
647
1Comprises stage 3 credit losses of $62 million.
2Comprises stage 3 credit losses of $240 million.
3$22 million recognised as impairment (see note 7) and the balancing charge of $9 million recognised in cost of goods sold.
Financial assets at fair value through profit and loss
Other non-current receivables and loans
During 2022, no fair value movements were recognised (2021: positive $35\u00a0million)(see note 7).
Convertible loan
In May 2022, Glencore subscribed for $200 million of convertible debt in Li-Cycle Holdings Corp. (\u2018Li-Cycle\u2019), a lithium-ion battery recycler in North America, listed on the New York Stock Exchange. The convertible loan is repayable by 2027 at an effective interest rate of SOFR plus 5% per annum. If Glencore elects to convert during the conversion option period, Glencore would hold an approximate 10% equity stake in Li-Cycle. The loan is classified as financial asset at fair value through profit and loss in accordance with IFRS (see notes 28 and 29). During 2022, fair value movements of negative $40 million were recognised (see note 5).
Contingent consideration
In 2022, fair value movements of positive $117\u00a0million (2021: $39\u00a0million) were recognised (see note 5).
Notes to the financial statements continued
12. Advances and loans continued
Non-financial assets
Advances repayable with product
US$\u00a0million
2022
2021
Counterparty
Mopani transaction debt
579
881
Soci\u00e9t\u00e9 Nationale d'Electricit\u00e9 (SNEL) power advances
338
304
Chad State National Oil Company
199
293
Soci\u00e9t\u00e9 Nationale des P\u00e9troles du Congo
86
129
Other1
52
66
Total
1,254
1,673
1Comprises no individually material items.
Mopani
On 31 March 2021, Glencore completed the disposal of its 90% interest in Mopani to ZCCM Investments Holdings plc, the holder of the remaining 10% interest in Mopani, in exchange for $1 and the rights to offtake copper and other metals from Mopani until
$1.5 billion of existing intercompany debt (the \u2018transaction debt\u2019) has been repaid to Glencore. The transaction debt attracts interest at a floating benchmark rate plus 3%. The repayment of the transaction debt is in substance based on Glencore receiving physical product deliveries from Mopani through its offtake rights and retaining defined percentages of Mopani\u2019s annual gross revenues until the transaction debt is fully repaid. On the date of completion, the fair value of the transaction debt was determined to be
$838 million (see note 26). During 2022, the originally expected production rate at Mopani was not achieved, in part due to a lack of funding. The new shareholder has conducted operational and strategic reviews, resulting in Mopani seeking additional funding and to restructure and extend repayment of the transaction debt. As a result, an impairment of $422 million was recognised (see note 7). As at 31 December 2022, $596 million (2021: $904 million) of debt is outstanding, of which $579 million (2021: $881 million) is due after 12 months and is presented above and $17 million (2021: $23 million) is due within 12 months and is included in Accounts receivable.
SNEL power advances
In early 2012, a joint agreement with Soci\u00e9t\u00e9 Nationale d\u2019\u00c9lectricit\u00e9 (SNEL), the Democratic Republic of the Congo\u2019s (DRC) national electricity utility, was signed whereby Glencore\u2019s operations would contribute $375 million to a major electricity infrastructure refurbishment programme, including transmission and distribution systems. This facilitated a progressive increase in power availability to 450 megawatts by the end of Q1 2020. Funding commenced in the second quarter of 2012 and completed in Q4 2021. The loans are being repaid via discounts on electricity purchases.
Chad State National Oil Company
The net outstanding amount of advances to the Chad State National Oil Company (SHT) is $232\u00a0million (2021: $321\u00a0million). These amounts are to be settled through future oil deliveries over ten years. As at 31 December 2022, the advance is net of $393\u00a0million (2021: $604\u00a0million) provided by a syndicate of lenders, the repayment terms of which are contingent upon and connected to the receipt of oil due from SHT under the prepayment. Of the net amount advanced, $199\u00a0million (2021: $293\u00a0million) is receivable after
12 months and is presented within Other non-current receivables and loans and $33\u00a0million (2021: $31\u00a0million) is due within 12 months and included within Accounts receivable.
Soci\u00e9t\u00e9 Nationale des P\u00e9troles du Congo (SNPC)
The net outstanding amount of advances to SNPC is $131\u00a0million (2021: $156\u00a0million). These amounts are to be settled through future oil deliveries over five years. As at 31 December 2022, the advance is net of $385\u00a0million (2021: $498\u00a0million) provided by the lenders, the repayment terms of which are contingent upon and connected to the future receipt of oil contractually due from SNPC. Of the net amount advanced, $86\u00a0million (2021: $129\u00a0million) is due after 12 months and is presented within Other long-term receivables and loans and $45\u00a0million (2021: $27\u00a0million) is due within 12 months and included within Accounts receivable.
Land rights prepayment
In 2019, Kamoto Copper Company (\u2018KCC\u2019) entered into an agreement with La G\u00e9n\u00e9rale des Carri\u00e8res et des Mines (\u2018G\u00e9camines\u2019), Glencore\u2019s 25% joint venture partner in KCC, to acquire from G\u00e9camines a comprehensive land package covering areas adjacent to KCC\u2019s existing mining concessions for $250 million. The package includes multiple blocks for construction of a new long-term tailings facility and the possible exploitation of additional resources that will enhance KCC\u2019s ability to more efficiently operate its mines, facilities and other key infrastructure requirements.
Notes to the financial statements continued
12. Advances and loans continued
In addition to the above consideration, the agreement includes the following key additional undertakings:
  • obligations on KCC to remove tailings (estimated at circa 15m dmt), currently in a sub-section of these areas, to another suitable location;
  • contingent obligations to pay \u2018Pas de Porte\u2019 payments to G\u00e9camines if KCC declares a JORC compliant reserve or otherwise elects to mine any resources in the Resource Areas; and
  • a new royalty to G\u00e9camines of 2.5% of net sales from the acquired land areas if KCC elects to mine any resources in such areas.
In August 2020, KCC advanced $150 million to G\u00e9camines as an agreed prepayment of the consideration due. If the closing conditions as prescribed in the agreement are not fulfilled, Glencore has the right to accrue interest on the prepaid amount, terminate the agreement and, if funds are not returned, offset against future amounts owing to G\u00e9camines. The balance of the consideration is due 5 days after the respective closing conditions of each area to be transferred are satisfied. During 2022, activities to progress the transfer of these land packages (e.g. removal of tailings and drilling activities to confirm resource availability) continued.
13. Inventories
US$ million
2022
2021
Inventory at fair value less costs of disposal
19,157
16,073
Raw materials and consumables
5,970
5,077
Semi finished products
5,527
4,901
Finished goods
2,806
2,383
Inventory at the lower of cost or net realisable value
14,303
12,361
Total current inventory
33,460
28,434
Raw materials and consumables
605
662
Inventory at the lower of cost or net realisable value
605
662
Total non-current inventory
605
662
Current inventory
The amount of inventories and related ancillary costs recognised as an expense during the period was $211,666\u00a0million (2021: $177,704\u00a0million).
Fair value of inventories are predominantly a Level 2 fair value measurement (see note 29) using observable market prices obtained from exchanges, traded reference indices or market survey services adjusted for relevant location and quality differentials. There are no significant unobservable inputs in the fair value measurement of such inventories.
Glencore has a number of dedicated financing facilities, which finance a portion of its inventories. In each case, the inventory has not been derecognised as the Group has not transferred control. The proceeds received are recognised as current borrowings (see note 21). As at 31 December 2022, the total amount of inventory pledged under such facilities was $3,455\u00a0million (2021: $17\u00a0million). The proceeds received and recognised as current borrowings were $3,092\u00a0million (2021: $2\u00a0million) and $80\u00a0million (2021: $80\u00a0million) as non-current borrowings.
Non-current inventory
Non-current inventories valued at lower of cost or net realisable value are not expected to be utilised or sold within the normal operating cycle and are therefore classified as non-current inventory.
Notes to the financial statements continued
14. Accounts receivable
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
2Includes advances, net of $487\u00a0million (2021: $409\u00a0million) provided by banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production over the next 12 months.
3Comprises sales and other tax receivables of $1,351\u00a0million (2021: $1,253\u00a0million) and other receivables of $152\u00a0million (2021: $169\u00a0million).
The average credit period on sales of goods is 17 days (2021: 16 days). The carrying value of trade receivables approximates fair value.
The Group applies a simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit loss on trade receivables is estimated using a provision matrix by reference to past default experience and credit rating, adjusted as appropriate for current observable data. Expected credit loss provisions are recognised in cost of goods sold and during the period, $148\u00a0million (2021: $11 million) of such losses were recognised. Current year provision is up over prior year due primarily to higher over-all gross receivable balances on-hand at period-end as a result of higher commodity prices and a specific slow-moving exposure which is expected to be settled during 2023. The following table details the risk profile of trade receivables based on the Group\u2019s provision matrix.
US$ million
Trade receivables \u2013 days past due
As at 31 December 2022
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
5,014
444
158
85
1,673
7,374
Weighted average expected credit loss rate
0.45%
0.67%
0.98%
1.17%
7.34%
Lifetime expected credit loss
(23)
(3)
(2)
(1)
(143)
(172)
Total
4,991
441
156
84
1,530
7,202
US$ million
Trade receivables \u2013 days past due
As at 31 December 2021
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
4,034
287
157
152
337
4,967
Weighted average expected credit loss rate
0.27%
0.55%
0.82%
1.10%
2.33%
Lifetime expected credit loss
(11)
(2)
(1)
(2)
(8)
(24)
Total
4,023
285
156
150
329
4,943
The Group determines the expected credit loss of receivables from associates, deferred consideration and other receivables (at amortised cost) based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. Expected credit losses for these assets are measured as either 12-month expected credit losses, taking into account prior experience regarding probability of default adjusted for forward looking information, or as lifetime expected credit losses (when there is significant increase in credit risk or the asset is credit-impaired). The movement in allowance for credit loss relating to receivables from associates and other receivables is detailed below:
2022
Receivables from associates
Other receivables and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2022
432
136
568
896
108
1,004
1,572
Allowance for credit loss
1 January 2022
\u2013
116
116
23
106
129
245
Released during the period3
\u2013
(2)
(2)
(5)
\u2013
(5)
(7)
Charged during the period3
\u2013
21
21
34
16
50
71
Utilised during the period
\u2013
\u2013
\u2013
(3)
(4)
(7)
(7)
Effect of foreign currency exchange movements
\u2013
(8)
(8)
\u2013
(4)
(4)
(12)
Reclassification to held for sale
\u2013
\u2013
\u2013
\u2013
(6)
(6)
(6)
Reclassifications to non-current receivables and loans
\u2013
\u2013
\u2013
(10)
(4)
(14)
(14)
31 December 2022
\u2013
127
127
39
104
143
270
Net carrying value 31 December 2022
432
9
441
857
4
861
1,302
1Comprises stage 2 credit losses of $2 million and stage 3 credit losses of $125 million.
2Comprises stage 2 credit losses of $29 million and stage 3 credit losses of $75 million.
3$15 million recognised as impairment (see note 7) and the balancing $49 million net charge recognised in cost of goods sold.
2021
Receivables from associates
Other receivables and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2021
391
138
529
387
144
531
1,060
Allowance for credit loss
1 January 2021
\u2013
122
122
51
81
132
254
Released during the period3
\u2013
\u2013
\u2013
(10)
\u2013
(10)
(10)
Charged during the period3
\u2013
3
3
15
15
30
33
Utilised during the period
\u2013
\u2013
\u2013
(29)
(19)
(48)
(48)
Effect of foreign currency exchange movements
\u2013
(9)
(9)
\u2013
\u2013
\u2013
(9)
Reclassifications from non-current receivables and loans
\u2013
\u2013
\u2013
(4)
29
25
25
31 December 2021
\u2013
116
116
23
106
129
245
Net carrying value 31 December 2021
391
22
413
364
38
402
815
1Comprises stage 2 credit losses of $2 million and stage 3 credit losses of $114 million.
2Comprises stage 2 credit losses of $33 million and stage 3 credit losses of $73 million.
3$7 million recognised as a reversal of impairment (see note 7) and the balancing $30 million net charge recognised in cost of goods sold.
Glencore has a number of dedicated financing facilities, which finance a portion of its receivables. The receivables have not been derecognised, as the Group retains the principal risks and rewards of ownership. The proceeds received are recognised as current borrowings (see note 21). As at 31 December 2022, the total amount of trade receivables pledged was $278\u00a0million (2021: $Nil) and proceeds received and classified as current borrowings amounted to $200\u00a0million (2021: $Nil).
15. Cash and cash equivalents
US$\u00a0million
2022
2021
Bank and cash on hand
1,445
2,403
Deposits and treasury bills
478
838
Total
1,923
3,241
Cash and cash equivalents comprise cash held at bank, cash in hand and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
As at 31 December 2022, $78\u00a0million (2021: $547\u00a0million) was restricted, including $Nil (2021: $477\u00a0million) held in on-shore accounts in our DRC operations, available to effect payment to on-shore counterparts only.
16. Assets and liabilities held for sale
Net assets held for sale are measured at their carrying amount, being the lower of carrying amount and fair value less costs to sell. As of 31 December 2022, the carrying amounts of assets and liabilities held for sale were lower than their fair value less costs to sell, hence no gains or losses were recognised in the statement of income for the period.
The carrying value of the assets and liabilities classified as held for sale are detailed below:
2022
US$ million
Cobar
Volcan
Total
Non-current assets
Property, plant and equipment
451
1,467
1,918
Intangible assets
1
4
5
Investments in associates and joint ventures
\u2013
148
148
Advances and loans
\u2013
71
71
Deferred tax assets
\u2013
32
32
452
1,722
2,174
Current assets
Inventories
25
57
82
Accounts receivable
4
68
72
Income tax receivable
\u2013
29
29
Prepaid expenses
3
5
8
Cash and cash equivalents
1
74
75
33
233
266
Total assets held for sale
485
1,955
2,440
Non-current liabilities
Borrowings
\u2013
(777)
(777)
Deferred tax liabilities
(25)
(151)
(176)
Provisions
(20)
(322)
(342)
Deferred income
\u2013
(6)
(6)
Post-retirement and other employee benefits
(1)
\u2013
(1)
(46)
(1,256)
(1,302)
Current liabilities
Borrowings
(1)
(22)
(23)
Accounts payable
(42)
(315)
(357)
Provisions
\u2013
(31)
(31)
Income tax payable
\u2013
(28)
(28)
(43)
(396)
(439)
Total liabilities held for sale
(89)
(1,652)
(1,741)
Total net assets held for sale
396
303
699
Non-controlling interest
\u2013
201
201
Cobar
In March 2022, Glencore entered into an agreement with Metals Acquisition Corp (MAC) for the disposal of its 100% interest in Cobar, a copper mine in New South Wales, Australia for $775 million in cash and an additional up to $100 million cash or equity stake in MAC, plus $75 million dependent on a future equity raise with an equity back-stop provision for Glencore\u2019s benefit, plus $75 million contingent payment when copper averages exceed $4.25/lb for 18 continuous months over the life of mine and a $75 million contingent payment when copper averages exceed US$4.50/lb for 24 continuous months over the life of mine. Completion of the sale is conditional on approval of MAC\u2019s shareholders and receipt of certain regulatory approvals and is expected to occur in H1 2023.
Volcan
In Q4 2022, Glencore commenced a process exploring the possible disposal of its 23.3% economic interest in Volcan.
2021
US$ million
Ernest Henry
Bolivia
Access World
E&P Chad
Total
Non-current assets
Property, plant and equipment
311
161
171
240
883
Intangible assets
\u2013
2
2
\u2013
4
Investments
\u2013
\u2013
11
\u2013
11
Advances and loans
\u2013
\u2013
10
\u2013
10
Deferred tax assets
30
10
4
\u2013
44
341
173
198
240
952
Current assets
Inventories
16
36
\u2013
22
74
Accounts receivable
26
82
93
14
215
Income tax receivable
\u2013
\u2013
1
\u2013
1
Prepaid expenses
2
\u2013
10
\u2013
12
Cash and cash equivalents
1
21
45
\u2013
67
45
139
149
36
369
Total assets held for sale
386
312
347
276
1,321
Non-current liabilities
Borrowings
\u2013
(3)
(111)
\u2013
(114)
Deferred income
(138)
\u2013
\u2013
\u2013
(138)
Deferred tax liabilities
\u2013
(4)
(1)
(4)
(9)
Provisions
(74)
(29)
(1)
(85)
(189)
Post-retirement and other employees benefits
(1)
(17)
(1)
\u2013
(19)
(213)
(53)
(114)
(89)
(469)
Current liabilities
Borrowings
\u2013
(7)
(17)
\u2013
(24)
Accounts payable
(32)
(55)
(97)
(6)
(190)
Deferred income
(53)
\u2013
\u2013
\u2013
(53)
Provisions
(1)
(35)
(3)
\u2013
(39)
Income tax payable
\u2013
(14)
(1)
\u2013
(15)
(86)
(111)
(118)
(6)
(321)
Total liabilities held for sale
(299)
(164)
(232)
(95)
(790)
Total net assets held for sale
87
148
115
181
531
Non-controlling interest
\u2013
\u2013
(2)
\u2013
(2)
Ernest Henry
In November 2021, Glencore agreed to dispose of its 100% interest in Ernest Henry Mining Pty Ltd, a copper-gold mine in Queensland, Australia for AUD $1 billion (c.US$720 million), comprising AUD $800 million on closing and the balance (AUD $200 million) due 12 months post closing. The transaction closed in January 2022 (see note 26).
Bolivia
In October 2021, Glencore agreed to sell its Bolivian zinc assets (Sinchi Wayra and Illapa), to Santacruz Silver Mining Ltd, for approximately $110 million and a 1.5% NSR royalty over the life of the mines. $20 million was due on completion with the balance
(c.$90 million) due over the following four years. The transaction closed in March 2022 (see note 26).
Access World
At 31 December 2021, Glencore was in advanced negotiations with a prospective buyer to dispose of its 100% interest in the Access World Group, a global storage and logistics group, for $180 million. The share purchase agreement was subsequently signed on
31 January 2022 and the transaction closed in December 2022 (see note 26).
E&P Chad
In August 2021, Glencore agreed to dispose 100% of its Chad upstream oil operations to Perenco S.A.. The transaction closed in June 2022 (see note 26).
Notes to the financial statements continued
17. Share capital and reserves
Number
of ordinary shares (thousand)
Share capital (US$\u00a0million)
Share
premium
(US$\u00a0million)
Authorised:
31 December 2022 and 2021 Ordinary shares with a par value of $0.01 each
50,000,000
Issued and fully paid up:
1 January 2021 and 31 December 2021 \u2013 Ordinary shares
14,586,200
146
43,679
Own shares cancelled during the year
(500,000)
(5)
(2,130)
Distributions paid (see note 19)
\u2013
\u2013
(4,832)
31 December 2022 \u2013 Ordinary shares
14,086,200
141
36,717
Treasury Shares
Trust Shares
Total
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Own shares:
1 January 2021
1,261,887
(4,801)
103,001
(503)
1,364,888
(5,304)
Own shares purchased during the year
128,501
(616)
32,000
(130)
160,501
(746)
Own shares disposed during the year
\u2013
\u2013
(35,788)
173
(35,788)
173
31 December 2021
1,390,388
(5,417)
99,213
(460)
1,489,601
(5,877)
1 January 2022
1,390,388
(5,417)
99,213
(460)
1,489,601
(5,877)
Own shares purchased during the year
425,309
(2,503)
\u2013
\u2013
425,309
(2,503)
Own shares transferred to satisfy employee share awards
(50,000)
225
50,000
(271)
\u2013
(46)
Own shares disposed during the year
\u2013
\u2013
(93,567)
430
(93,567)
430
Own shares cancelled during the year
(500,000)
2,135
\u2013
\u2013
(500,000)
2,135
31 December 2022
1,265,697
(5,560)
55,646
(301)
1,321,343
(5,861)
Own shares
Own shares comprise shares acquired under the Company\u2019s share buyback programmes (\u2018Treasury Shares\u2019) and shares of Glencore plc held by Group employee benefit trusts (\u2018the Trusts\u2019) to satisfy the potential future settlement of the Group\u2019s employee stock plans (\u2018Trust Shares\u2019).
The Trusts also coordinate the funding and manage the delivery of Trust Shares and free share awards under certain of Glencore\u2019s share plans. The Trust Shares have been acquired by either stock market purchases or share issues from the Company. The Trusts may hold an aggregate of Trust Shares up to 5% of the issued share capital of the Company at any one time and are permitted to sell them. The Trusts have waived the right to receive distributions from the Trust Shares that they hold. Costs relating to the administration of the Trusts are expensed in the period in which they are incurred.
In July 2022, Glencore announced a $3 billion share buyback programme to be completed by February 2023, effected in accordance with the terms of the authority granted by shareholders at the 2022 Annual General Meeting. As at 31 December 2022, $1,920 million of shares have been purchased. No liability has been recognised in respect of this share buyback programme as the terms of the arrangement do not result in a contractual obligation.
During the year, Glencore also purchased the remaining $33 million of shares under the $650 million share buyback programme announced in August 2021 and $550 million shares under the share buyback programme announced in February 2022.
In October 2022, Glencore cancelled 500 million of treasury shares, adopting a policy to reduce and maintain from time to time treasury shares below 10% of total issued share capital.
As at 31 December\u00a02022: 1,321,342,547 shares (2021: 1,489,601,292 shares), including 1,265,696,812 Treasury Shares (2021: 1,390,388,731 shares), equivalent to 9.38% (2021: 9.36%) of the issued share capital were held at a cost of $5,861\u00a0million (2021: $5,877\u00a0million) and market value of $8,809 million (2021: $7,559 million).
Other reserves
US$\u00a0million
Foreign currency translation reserve
Cash flow
hedge reserve
Net
unrealised
gain/(loss)
Net ownership
changes in
subsidiaries
Total
1 January 2022
(2,898)
(124)
(300)
(2,609)
(5,931)
Exchange loss on translation of foreign operations
(290)
\u2013
\u2013
\u2013
(290)
Items recycled to the statement of income on restructuring of intragroup debt (see note 5)
431
\u2013
\u2013
\u2013
431
Items recycled to the statement of income upon disposal of subsidiaries (see note 26)
84
\u2013
\u2013
(34)
50
Gain on cash flow hedges, net of tax
\u2013
27
\u2013
\u2013
27
Loss on equity investments accounted for at fair value through other comprehensive income, net of tax
\u2013
\u2013
(1,122)
\u2013
(1,122)
Change in ownership interest in subsidiaries (see note 34)
\u2013
\u2013
\u2013
(3)
(3)
Gain due to changes in credit risk on financial liabilities accounted for at fair value through profit and loss
\u2013
\u2013
2
\u2013
2
Reclassifications
\u2013
\u2013
3
\u2013
3
31 December 2022
(2,673)
(97)
(1,417)
(2,646)
(6,833)
1 January 2021
(2,832)
(147)
(266)
(2,603)
(5,848)
Exchange loss on translation of foreign operations
(66)
\u2013
\u2013
\u2013
(66)
Gain on cash flow hedges, net of tax
\u2013
23
\u2013
\u2013
23
Loss on equity investments accounted for at fair value through other comprehensive income, net of tax
\u2013
\u2013
(52)
\u2013
(52)
Change in ownership interest in subsidiaries (see note 34)
\u2013
\u2013
\u2013
(6)
(6)
Loss due to changes in credit risk on financial liabilities accounted for at fair value through profit and loss
\u2013
\u2013
(7)
\u2013
(7)
Reclassifications
\u2013
\u2013
25
\u2013
25
31 December 2021
(2,898)
(124)
(300)
(2,609)
(5,931)
The translation adjustment reserve is used to capture the cumulative impact of foreign currency translation adjustments arising from the Group\u2019s non-USD denominated functional currency subsidiaries.
The cash flow hedge reserve is used to accumulate the gains and losses from the effective portion of hedging instruments contained within hedge relationships until the hedged item impacts profit or loss. Cost of hedging is recorded within the cash flow hedge reserve due to its immaterial amount.
The net unrealised gain/loss reserve is used to accumulate the gains and losses associated with the remeasurement of the Group\u2019s investments carried at FVTOCI and changes in credit risk on financial liabilities measured at FVTPL.
The net ownership changes in subsidiaries reserve is used to capture equity movements arising from changes in the Group\u2019s ownership in its subsidiaries.
Notes to the financial statements continued
18. Earnings per share
US$ million
2022
2021
Income attributable to equity holders of the Parent for basic earnings per share
17,320
4,974
Weighted average number of shares for the purposes of basic earnings per share (thousand)
13,042,304
13,204,101
Effect of dilution:
Equity-settled share-based payments (thousand)
98,454
132,503
Weighted average number of shares for the purposes of diluted earnings per share (thousand)
13,140,758
13,336,604
Basic earnings per share (US$)
1.33
0.38
Diluted earnings per share (US$)
1.32
0.37
Headline earnings:
Headline earnings is a Johannesburg Stock Exchange (JSE) defined performance measure. The calculation of basic and diluted earnings per share, based on headline earnings as determined by the requirements of the Circular 1/2021 as issued by the South\u00a0African Institute of Chartered Accountants (SAICA), is reconciled using the following data:
US$ million
2022
2021
Income attributable to equity holders of the Parent for basic earnings per share
17,320
4,974
Net (gain)/loss on acquisitions and disposals1
(1,287)
652
Net (gain)/loss on acquisitions and disposals \u2013 non-controlling interest
(4)
\u2013
Net (gain)/loss on acquisitions and disposals \u2013 tax
86
75
Impairments2
3,181
1,906
Impairments \u2013 non-controlling interest
(404)
(689)
Impairments \u2013 tax
(585)
(34)
Headline and diluted earnings for the year
18,307
6,884
Headline earnings per share (US$)
1.40
0.52
Diluted headline earnings per share (US$)
1.39
0.52
1See note 4.
2Comprises impairments of property, plant and equipment and intangible assets, investments, advances and loans, VAT receivable (see note 7) and Glencore\u2019s share of impairments booked directly by associates (see note 2).
19. Distributions
US$ million
2022
2021
Paid during the year:
First tranche distribution \u2013 $0.13 per ordinary share (2021: $0.06)
1,707
794
Second tranche and additional distribution \u2013 $0.24 per ordinary share (2021: $0.10)
3,125
1,321
Total
4,832
2,115
The proposed distribution in respect of the year ended 31 December 2022 of $0.44per ordinary share amounting to some $5.6\u00a0billion is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. Such declared distributions are expected to be paid equally ($0.22 each) in June 2023 and September 2023.
A distribution of $0.37per ordinary share amounting to $4,832\u00a0million was paid in 2022.
Notes to the financial statements continued
20. Share-based payments
Number of
awards
granted
(thousands)
Fair value at
grant date
(US$ million)
Number
of awards
outstanding 2022
(thousands)
Number
of awards
outstanding 2021
(thousands)
Expense
recognised 2022
(US$ million)
Expense
recognised
2021
(US$ million)
Deferred awards
2018 Series
12,891
65
3,535
3,535
3
\u2013
2019 Series
10,791
37
667
667
\u2013
\u2013
2020 Series
45,798
85
\u2013
31,538
\u2013
(2)
2021 Series1
21,327
94
13,016
20,565
(1)
90
2022 Series
6,403
38
5,267
\u2013
30
\u2013
97,210
22,485
56,305
32
88
Performance share awards
2017 Series
19,750
95
344
400
\u2013
3
2018 Series
28,499
104
2,293
9,823
2
12
2019 Series
29,705
90
9,066
18,504
9
23
2020 Series
33,583
104
19,555
31,466
26
55
2021 Series1
26,803
129
24,918
16,005
69
8
2022 Series
20,928
135
19,793
\u2013
12
\u2013
159,268
75,969
76,198
118
101
Total
256,478
98,454
132,503
150
189
1During the current year, 762 thousand shares have been granted as part of the deferred awards 2021 series and 10,798 thousand shares have been granted as part of the performance share awards 2021 series, resulting in an increase of the fair value at grant date amount by $3 million for deferred share awards and $53 million for performance share awards.
Between 2011-2021 deferred awards were made under the Company\u2019s Deferred Bonus Plan and performance share awards were made under the Company\u2019s Performance Share Plan. In May 2021 the Company introduced a single Incentive Plan which replaced both of these plans and under which both deferred awards and performance share awards continue to be made.
Deferred awards
Under a deferred award the payment of a portion of a participant\u2019s annual bonus is deferred for a period of one to seven years as an award of either ordinary shares (a \u2018\u2018Bonus Share Award\u2019\u2019) or cash. Awards vest over a specified period, subject to continued employment and forfeiture for malus events. The Bonus Share Awards may be satisfied, at Glencore\u2019s option, in shares by the issue of new ordinary shares, by the transfer of ordinary shares held in treasury or by the transfer of ordinary shares purchased in the market or in cash, with a value equal to the market value of the award at settlement, including distributions paid between award and settling. Glencore currently intends to settle all Bonus Share Awards in shares. The associated expense is recorded in the statement of income/loss as part of the expense for performance bonuses. The fair value at grant date is determined as the monthly volume-weighted average share price (VWAP) of Glencore plc prior to the respective award date.
Performance Share awards
Performance share awards vest in tranches over a specified period, subject to continued employment and forfeiture for malus events. At grant date, each award is equivalent to one ordinary share of Glencore. Awards vest in one, two or three tranches on 31 January or 30 June of the years following the year of grant, as may be the case. The awards may be satisfied, at Glencore\u2019s option, in shares by the issue of new ordinary shares, by the transfer of ordinary shares held in treasury or by the transfer of ordinary shares purchased in the market or in cash, with a value equal to the market value of the award at vesting, including distributions paid between award and vesting. Glencore currently intends to settle these awards in shares. The fair value at grant date is determined as the monthly volume-weighted average share price (VWAP) of Glencore plc prior to the respective award date.
Share-based awards assumed in previous business combinations
Total options
outstanding
(thousands)
Weighted
average
exercise
price (GBP)
1 January 2022
44,537
3.91
Exercised
(44,537)
4.16
31 December 2022
\u2013
\u2013
1 January 2021
71,667
4.25
Lapsed
(27,130)
4.80
Exercised
\u2013
\u2013
31 December 2021
44,537
3.91
As at 31 December 2021, a total of 44,536,755 options were outstanding and exercisable, having an exercise price of GBP3.91 and a weighted average exercise price of GBP3.91. Since the share price leading up to the expiry date of 17 February 2022 was above the exercise price, all of these options were exercised. Glencore settled these awards by the transfer of ordinary shares held as Trust Shares.
US$ million
Notes
2022
2021
Non-current borrowings
Capital market notes
17,229
22,376
Amount drawn under syndicated revolving credit facilities
\u2013
2,543
Lease liabilities
934
1,093
Other bank loans
688
799
Total non-current borrowings
18,851
26,811
Current borrowings
Secured inventory/receivables/other facilities
11/13/14
3,292
122
US commercial paper
333
1,764
Capital market notes
2,977
2,884
Lease liabilities
445
525
Other bank loans1
2,879
2,535
Total current borrowings
9,926
7,830
Total borrowings
28,777
34,641
1Comprises various uncommitted bilateral bank credit facilities and other financings.
Changes in liabilities arising from financing activities
Liabilities arising from financing activities are those for which cash flows are classified in the Group's consolidated cash flow statement as cash flows from financing activities. The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes.
2022
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2022
33,023
1,618
34,641
23
34,664
Cash related movements2
Repayment of capital market notes
(2,850)
\u2013
(2,850)
\u2013
(2,850)
Repurchase of capital market notes
(103)
\u2013
(103)
\u2013
(103)
Repayment of revolving credit facilities
(2,563)
\u2013
(2,563)
\u2013
(2,563)
Proceeds from other non-current borrowings
430
\u2013
430
\u2013
430
Repayment of other non-current borrowings
(73)
\u2013
(73)
\u2013
(73)
Repayment of lease liabilities
\u2013
(577)
(577)
\u2013
(577)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(1,824)
(1,824)
Repayment of US commercial papers
(1,407)
\u2013
(1,407)
\u2013
(1,407)
Proceeds from current borrowings
3,306
\u2013
3,306
\u2013
3,306
(3,260)
(577)
(3,837)
(1,824)
(5,661)
Non-cash related movements
Borrowings acquired in business combinations3
52
30
82
\u2013
82
Borrowings reclassified to held for sale4
(762)
(38)
(800)
\u2013
(800)
Borrowings disposed of on disposal of subsidiaries
\u2013
(2)
(2)
\u2013
(2)
Fair value adjustment to fair value hedged borrowings
(1,250)
\u2013
(1,250)
\u2013
(1,250)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
1,647
1,647
Foreign exchange movements
(436)
(41)
(477)
\u2013
(477)
Change in lease liabilities
\u2013
389
389
\u2013
389
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
10
\u2013
10
\u2013
9
(2,365)
338
(2,027)
1,647
(381)
31 December 2022
27,398
1,379
28,777
(154)
28,623
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
2021
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2021
35,958
1,521
37,479
91
37,570
Cash related movements2
Proceeds from issuance of capital market notes
4,877
\u2013
4,877
\u2013
4,877
Repayment of capital market notes
(2,807)
\u2013
(2,807)
\u2013
(2,807)
Repurchase of capital market notes
(125)
\u2013
(125)
\u2013
(125)
Repayment of revolving credit facilities
(2,244)
\u2013
(2,244)
\u2013
(2,244)
Proceeds from other non-current borrowings
231
\u2013
231
\u2013
231
Repayment of other non-current borrowings
(493)
\u2013
(493)
\u2013
(493)
Repayment of lease liabilities
\u2013
(634)
(634)
\u2013
(634)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(970)
(970)
Proceeds from US commercial papers
675
\u2013
675
\u2013
675
Repayment of current borrowings
(2,016)
\u2013
(2,016)
\u2013
(2,016)
(1,902)
(634)
(2,536)
(970)
(3,506)
Non-cash related movements
Borrowings (disposed of)/acquired in business combinations3
(1)
(7)
(8)
\u2013
(8)
Borrowings reclassified to held for sale4
\u2013
(138)
(138)
\u2013
(138)
Fair value adjustment to fair value hedged borrowings
(499)
\u2013
(499)
\u2013
(499)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
902
902
Foreign exchange movements
(599)
(45)
(644)
\u2013
(644)
Change in lease liabilities
\u2013
922
922
\u2013
922
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
45
(1)
44
\u2013
44
(1,033)
731
(302)
902
600
31 December 2021
33,023
1,618
34,641
23
34,664
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
Capital Market Notes
US$\u00a0million
Maturity
2022
2021
Euro 1,000 million 1.875% coupon bonds
Sep 2023
\u2013
1,136
Euro 400 million 3.70% coupon bonds
Oct 2023
\u2013
467
Euro 600 million 0.625% coupon bonds
Sep 2024
644
682
Euro 750 million 1.75% coupon bonds
Mar 2025
749
862
Euro 500 million 3.75% coupon bonds
Apr 2026
499
598
Euro 500 million 1.50% coupon bonds
Oct 2026
470
566
Euro 950 million 1.125% coupon bonds
Mar 2028
1,014
1,079
Euro 600 million 0.75% coupon bonds
Mar 2029
510
653
Euro 500 million 1.25% coupon bonds
Mar 2033
367
526
Eurobonds
4,253
6,569
GBP 500 million 3.125% coupon bonds
Mar 2026
541
677
Sterling bonds
541
677
CHF 175 million 1.25% coupon bonds
Oct 2024
184
194
CHF 250 million 0.35% coupon bonds
Sep 2025
270
274
CHF 225 million 1.00% coupon bonds
Mar 2027
244
248
CHF 150 million 0.51% coupon bonds
Sep 2028
142
160
Swiss Franc bonds
840
876
US$ 1,500 million 4.125% coupon bonds
May 2023
\u2013
1,538
US$ 1,000 million 4.125% coupon bonds
Mar 2024
972
970
US$ 1,000 million 4.625% coupon bonds
Apr 2024
960
1,029
US$ 625 million non-dilutive convertible bonds
Mar 2025
574
552
US$ 500 million 4.00% coupon bonds
Apr 2025
470
510
US$ 1,000 million 1.625% coupon bonds
Sep 2025
995
994
US$ 365 million 4.375% coupon bonds1
Feb 2026
\u2013
469
US$ 600 million 1.625% coupon bonds
Apr 2026
503
587
US$ 1,000 million 4.00% coupon bonds
Mar 2027
926
1,043
US$ 50 million 4.00% coupon bonds
Mar 2027
50
50
US$ 500 million 3.875% coupon bonds
Oct 2027
460
522
US$ 750 million 4.875% coupon bonds
Mar 2029
697
811
US$ 1,000 million 2.50% coupon bonds
Sep 2030
993
992
US$ 600 million 2.85% coupon bonds
Apr 2031
535
598
US$ 750 million 2.65% coupon bonds
Sep 2031
621
745
US$ 250 million 6.20% coupon bonds
Jun 2035
269
269
US$ 500 million 6.90% coupon bonds
Nov 2037
580
582
US$ 497 million 6.00% coupon bonds
Nov 2041
535
536
US$ 468 million 5.55% coupon bonds
Oct 2042
473
473
US$ 500 million 3.875% coupon bonds
Apr 2051
496
496
US$ 500 million 3.375% coupon bonds
Sep 2051
486
488
US$ bonds
11,595
14,254
Total non-current bonds
17,229
22,376
Euro 1,000 million 1.875% coupon bonds
Sep 2023
1,070
\u2013
Euro 400 million 3.70% coupon bonds
Oct 2023
422
\u2013
GBP 500 million 6.00% coupon bonds
Apr 2022
\u2013
677
JPY 10 billion 1.075% coupon bonds
May 2022
\u2013
87
US$ 600 million 5.375% coupon bonds
Feb 2022
\u2013
410
US$ 250 million LIBOR plus 1.65% coupon bonds
May 2022
\u2013
250
US$ 996 million 4.25% coupon bonds
Oct 2022
\u2013
999
US$ 500 million 3.00% coupon bonds
Oct 2022
\u2013
461
US$ 1,500 million 4.125% coupon bonds
May 2023
1,485
\u2013
Total current bonds
2,977
2,884
1The book value of $361 million has been reclassified to liabilities held for sale (see note 16).
Notes to the financial statements continued
21. Borrowings continued
2022 Bond activities
There were no bond activities during the year.
2021 Bond activities
  • In February 2021, issued:
  • \u2013 5 year $475 million, 4.375% coupon bond (Volcan)
  • In March 2021, issued:
  • \u2013 8 year EUR600 million, 0.75% coupon bond
  • \u2013 12 year EUR500 million, 1.25% coupon bond
  • In April 2021, issued:
  • \u2013 5 year $600 million, 1.625% coupon bond
  • \u2013 10 year $600 million, 2.85% coupon bond
  • \u2013 30 year $500 million, 3.875% coupon bond
  • In September 2021, issued:
  • \u2013 7 year CHF150 million, 0.5% coupon bond
  • \u2013 10 year $750 million, 2.625% coupon bond
  • \u2013 30 year $500 million, 3.375% coupon bond
Committed syndicated revolving credit facilities
In March 2022 (effective May 2022), Glencore refinanced its short term revolving credit facilities. The borrowing rate of the short term facilities now aligns with the LIBOR reform protocols, and stands at SOFR compounded in arrears across the relevant borrowing period, plus a margin of 45bps. The borrowing rate of the medium term facility remains unchanged, at US$ LIBOR plus 27.5bps subject to a ratings grid, but will be updated during a planned 2023 refinancing exercise, into a SOFR-based rate.
As at 31 December 2022, the facilities comprise:
  • a $6,535 million one year revolving credit facility with a one-year borrower\u2019s term-out option (to May 2024);
  • a $450 million medium-term revolving credit facility (to May 2025); and
  • a $4,200 million medium-term revolving credit facility (to May 2026).
As in previous years, these committed unsecured facilities contain no financial covenants, no rating triggers, no material adverse change clauses and no external factor clauses.
Secured facilities
US$\u00a0million
Maturity1
Interest
2022
2021
Syndicated committed metals
inventory/receivables facilities2
Nov 2024
5.7%
101
82
Syndicated uncommitted metals and oil
inventory/receivables facilities2
Jul 2023
SOFR + 65 bps
610
\u2013
Other secured facilities2,3
Jan 2023
5.0%
2,661
120
Total
3,372
202
Current
3,292
122
Non-current
80
80
1Uncommitted facilities are re-drawn several times until actual expiry of the facility contract.
2Comprises various facilities. The maturity and interest detail represent the weighted average of the various debt balances outstanding at year end.
3Inventory related. Since year end, in the ordinary course of business, these maturities have been rolled/extended. The maturity and interest detail represent the weighted average of the various debt balances outstanding at year end.
Notes to the financial statements continued
22. Deferred income
US$\u00a0million
Notes
Unfavourable contracts
Prepayments
Total
1 January 2022
336
3,325
3,661
Additions
\u2013
562
562
Accretion in the year
\u2013
97
97
Revenue recognised in the year
(66)
(1,633)
(1,699)
Reclassification to held for sale
16
\u2013
(6)
(6)
Effect of foreign currency exchange difference
(5)
(3)
(8)
31 December 2022
265
2,342
2,607
Current
72
988
1,060
Non-current
193
1,354
1,547
1 January 2021
529
3,131
3,660
Additions
\u2013
1,336
1,336
Accretion in the year
\u2013
115
115
Revenue recognised in the year
(70)
(1,066)
(1,136)
Released in the year
5
(122)
\u2013
(122)
Reclassification to held for sale
16
\u2013
(191)
(191)
Effect of foreign currency exchange difference
(1)
\u2013
(1)
31 December 2021
336
3,325
3,661
Current
56
1,517
1,573
Non-current
280
1,808
2,088
Unfavourable contracts
In several business combinations, Glencore recognised liabilities related to various assumed contractual agreements to deliver tonnes of coal over various periods ending until 2032 at fixed prices lower than the prevailing market prices on the respective acquisition dates.
These amounts are released to revenue as the underlying commodities are delivered to the buyers over the life of the contracts at rates consistent with the extrapolated forward price curves at the time of the acquisitions.
In 2021, certain contractual terms were renegotiated and related unfavourable contract provisions in the amount of $122 million were released (see note 5).
Prepayments
Prepayments comprise various short- to long-term product supply agreements whereby an upfront prepayment is received in exchange for the future delivery of a specific product, such as gold, silver or cobalt. The arrangements are accounted for as executory contracts whereby the advance payment is recorded as deferred revenue. The revenue from the advance payment is recognised as the specific product identified in the contract is delivered consistent with the implied forward price curve at the time of the transaction and an accretion expense, representing the time value of the upfront deposit, is also recognised.
Prepayments mainly comprise:
  • Life of mine arrangements \u2013 long-term streaming agreements for the future delivery of gold and/or silver produced over the life of mine from our Antamina and Antapaccay operations. In addition to the upfront payment received Glencore receives an ongoing amount equal to 20% of the spot silver and gold price. Once certain delivery thresholds have been met at Antapaccay, the ongoing cash payment increases to 30% of the spot gold and silver prices. As at 31 December 2022, $1,025 million (2021: $1,068 million) of product delivery obligations remain, of which $42 million (2021: $35 million) are due within 12 months.
  • Silver supply arrangement \u2013 Various silver prepayment arrangements for the future delivery of an average of 13 million ounces of silver per annum, over a remaining three-year period. As at 31 December 2022, $507 million (2021: $784 million) of product delivery obligations remain, of which $277 million (2021: $408 million) are due within 12 months.
  • Palladium supply arrangements \u2013 Various palladium prepayment arrangements for the future delivery of an average of
    31 thousand ounces of palladium per annum, over a remaining three-year period. As at 31 December 2022, $85 million (2021: $141 million) of product delivery obligations remain, of which $41 million (2021: $58 million) are due within 12 months.
  • Gold supply arrangements \u2013 Various gold supply arrangements for the future delivery of 269 thousand ounces (2021: 518 thousand ounces) of gold over a six-month period. As at 31 December 2022, $391 million (2021: $765 million) of product delivery obligations remain, which are due within 12 months.
  • Cobalt supply arrangement \u2013 In March 2019, Glencore signed a six year cobalt prepayment arrangement in exchange for an upfront advance payment of $100 million. Under the terms of the arrangement Glencore is required to deliver an average of
    1,621 metric tons of cobalt per annum over a four-year period starting 2021. As at 31 December 2022, $58 million (2021: $94 million) of product delivery obligations remain, of which $47 million (2021: $26 million) are due within 12 months.
  • Iron ore supply arrangement \u2013 In November 2021, Glencore signed an 18-month iron ore prepayment arrangement in exchange for an upfront advance payment of $200 million. Under the terms of the arrangement, Glencore is required to deliver an average of 3,600,000 metric tons of iron ore per annum. As at 31 December 2022, $100 million (2021: $200 million) of product delivery obligations remain of which, $100 million (2021: $117 million) are due within 12 months.
23. Provisions
US$\u00a0million
Notes
Rehabilitation costs
Onerous contracts
Legal investigations
Other
provisions
Total
1 January 2022
5,731
455
1,500
524
8,210
Utilised
(238)
(143)
(883)
(152)
(1,416)
Released
(30)
(71)
(133)
(30)
(264)
Accretion
155
26
\u2013
10
191
Assumed in business combination
26
998
\u2013
\u2013
73
1,071
Disposal of subsidiaries
26
(158)
\u2013
\u2013
(9)
(167)
Additions
840
265
\u2013
285
1,390
Reclassification to held for sale
16
(290)
\u2013
\u2013
(83)
(373)
Effect of foreign currency exchange movements
(45)
(2)
\u2013
(7)
(54)
31 December 2022
6,963
530
484
611
8,588
Current
531
185
484
225
1,425
Non-current
6,432
345
\u2013
386
7,163
1 January 2021
5,182
535
\u2013
746
6,463
Utilised
(190)
(122)
\u2013
(276)
(588)
Released
(14)
(103)
\u2013
(31)
(148)
Accretion
153
31
\u2013
2
186
Disposal of subsidiaries
26
(67)
\u2013
\u2013
(10)
(77)
Additions
918
116
1,500
137
2,671
Reclassification to held for sale
16
(191)
\u2013
\u2013
(37)
(228)
Effect of foreign currency exchange movements
(60)
(2)
\u2013
(7)
(69)
31 December 2021
5,731
455
1,500
524
8,210
Current
337
109
1,500
147
2,093
Non-current
5,394
346
\u2013
377
6,117
Rehabilitation costs
Rehabilitation provision represents the accrued costs required to provide adequate restoration and rehabilitation upon the completion of production activities. These amounts will be settled when rehabilitation is undertaken, generally at the end of a project\u2019s life, which ranges from two to in excess of 50 years with an average for all sites, weighted by closure provision, of some
19 years (2021: 23 years). Discount rates were determined for each relevant jurisdiction by reference to the average annual real-terms return on a relevant government security with a tenor of 20 years.
As at 31 December 2022, the discount rate applied in calculating the restoration and rehabilitation provision is a pre-tax risk free rate specific to the liability and the currency in which they are denominated as follows: US dollar 1.25% (2021: 1.5%), South African rand 3.75% (2021: 3.75%), Australian dollar 2.0% (2021: 2.0%), Canadian dollar 1.25% (2021: 1.5%), and Chilean peso 2.5% (2021: 2.5%).
23. Provisions continued
The sensitivity of the rehabilitation costs provision to changes in the discount rate assumptions as at 31 December 2022, assuming that all other assumptions are held constant, is set out below:
Discount rate
US$\u00a0million
Increase 1%
Decrease 1%
Decrease/(increase) in overall rehabilitation provision
822
(1,096)
(Decrease)/increase in property, plant and equipment
(662)
878
Net increase/(decrease) in statement of income
160
(218)
Effect in the following year
Decrease/(increase) in depreciation expense
35
(46)
(Increase)/decrease in interest expense
(22)
36
Net increase/(decrease) in statement of income
13
(10)
Onerous contracts
Onerous contracts represent liabilities related to contractual take or pay commitments for securing coal logistics capacity at fixed prices and quantities higher than the acquisition date forecasted usage and prevailing market price. The provision is released to costs of goods sold as the underlying commitments are incurred.
Investigations by regulatory and enforcement authorities
The Board has appointed a committee, the Investigations Committee, to oversee the response to the investigations on behalf of the Board.
On 24 May 2022 the Group announced that it had resolved the previously disclosed investigations by authorities in the United States, the United Kingdom and Brazil.
Under the terms of the US resolutions, Glencore agreed to pay penalties of $701 million to resolve bribery investigations and
$486 million to resolve market manipulation investigations by the Department of Justice (\u2018DOJ\u2019) and the Commodity Futures Trading Commission (\u2018CFTC\u2019). Of this amount, up to $166 million would be credited against other parallel matters, including in the UK, so that the net amount payable to the US authorities is expected to be $1,020 million. Glencore further agreed to pay $40 million under a resolution signed with the Brazilian Federal Prosecutor\u2019s Office (\u2018MPF\u2019) in connection with its bribery investigation into the Group. On 3 November 2022, Glencore Energy UK Limited was sentenced to pay a financial penalty and costs of \u00a3281 million in the Serious Fraud Office (\u2018SFO\u2019) investigation.
The Group has settled the amounts due to the CFTC, the DOJ in respect of the market manipulation matter and the SFO and expects to settle the amounts due to the DOJ in respect of the bribery matter and the MPF during the first half of 2023.
Accordingly, the Group has retained a provision for the United States and Brazil resolutions which at 31 December 2022 amounts to $484 million.
The Group remains subject to the following ongoing investigations:
  • The Office of the Attorney General of Switzerland (\u2018OAG\u2019) is investigating Glencore International AG for failure to have the organisational measures in place to prevent alleged corruption.
  • The Dutch authorities are conducting a criminal investigation into Glencore International AG related to potential corruption pertaining to the DRC. The scope of the investigation is similar to that of the OAG investigation. The Dutch authorities are coordinating their investigation with the OAG and the Group expects any possible resolution to avoid duplicative penalties for the same conduct.
The timing and outcome of the OAG and Dutch investigations remains uncertain \u2013 see note 32.
Other provisions
Other comprises provisions for possible demurrage, mine concession and construction-related claims, a royalty indemnification related to the disposal of the Ernest Henry operations (see note 26) and various other individually immaterial legal matters. This balance comprises no individually material provisions.
Notes to the financial statements continued
24. Personnel costs and employee benefits
US$\u00a0million
Notes
Post-retirement employee benefits
Other employee entitlements
Total
1 January 2022
782
157
939
Utilised
(82)
(37)
(119)
Released
(1)
(1)
(2)
Accretion
19
\u2013
19
Additions
97
79
176
Actuarial gain
(298)
\u2013
(298)
Reclassification to held for sale
16
\u2013
(1)
(1)
Effect of foreign currency exchange movements
(29)
(8)
(37)
31 December 2022
488
189
677
1 January 2021
980
181
1,161
Utilised
(84)
(9)
(93)
Released
(1)
(7)
(8)
Accretion
23
\u2013
23
Additions
151
14
165
Actuarial gain
(284)
\u2013
(284)
Reclassification to held for sale
16
\u2013
(19)
(19)
Effect of foreign currency exchange movements
(3)
(3)
(6)
31 December 2021
782
157
939
The provision for post-retirement employee benefits includes pension plan liabilities of $178\u00a0million (2021: $352\u00a0million) and post-retirement medical plan liabilities of $310\u00a0million (2021: $430\u00a0million).
The other employee entitlements provision represents the value of governed employee entitlements due to employees upon their termination of employment. The associated expenditure will occur in a pattern consistent with when employees choose to exercise their entitlements.
Total personnel costs, which include salaries, wages, social security, other personnel costs and share-based payments, incurred for the years ended 31\u00a0December 2022 and 2021, were $6,319\u00a0million and $6,012\u00a0million, respectively. Personnel costs related to consolidated industrial subsidiaries of $4,284 million (2021: $4,188 million) are included in cost of goods sold. Other personnel costs, including deferred bonus and performance share plans, are included in selling and administrative expenses.
The Company and certain subsidiaries sponsor various pension schemes in accordance with local regulations and practices. Eligibility for participation in the various plans is either based on completion of a specified period of continuous service, or date of hire. Among these schemes are defined contribution plans as well as defined benefit plans.
Defined contribution plans
Glencore\u2019s contributions under these plans amounted to $171\u00a0million in 2022 (2021: $173\u00a0million).
Post-retirement medical plans
The Company participates in a number of post-retirement medical plans in Canada, USA and South Africa, which provide coverage for prescription drugs, medical, dental, hospital and life insurance to eligible retirees. Almost all of the post-retirement medical plans in the Group are unfunded.
Defined benefit pension plans
The Company operates defined benefit plans in various countries, the main locations being Canada, Switzerland, UK and the US. Approximately 63% of the present value of the pension obligations accrued relates to the defined benefit plans in Canada, which are pension plans that provide benefits to members in the form of a guaranteed level of pension payable for life. Contributions to the Canadian plans are made to meet or exceed minimum funding requirements based on provincial statutory requirements and associated federal taxation rules.
The majority of benefit payments are from trustee-administered funds; however, there are also a number of unfunded plans where Glencore meets the benefit payments as they fall due. Plan assets held in trusts are governed by local regulations and practices in each country. Responsibility for governance of the plans \u2013 overseeing all aspects of the plans including investment decisions and contribution schedules \u2013 lies with Glencore. Glencore has set up committees to assist in the management of the plans and has also appointed experienced, independent professional experts such as investment managers, actuaries, custodians, and trustees.
The movement in the defined benefit pension and post-retirement medical plans over the year is as follows:
Defined benefit pension plans
US$ million
Notes
Post-retirement
medical plans
Present value
of defined
benefit
obligation
Fair value
of plan
assets
Net liability
for defined
benefit
pension plans
1 January 2022
430
2,760
(2,533)
227
Current service cost
8
52
\u2013
52
Past service cost \u2013 plan amendments
1
3
\u2013
3
Settlement of pension plan disposal
\u2013
(115)
121
6
Interest expense/(income)
17
67
(65)
2
Total expense recognised in consolidated statement of income
26
7
56
63
Loss on plan assets, excluding amounts included
in interest expense \u2013 net
\u2013
\u2013
383
383
Gain from change in demographic assumptions
(7)
(26)
\u2013
(26)
Gain from change in financial assumptions
(91)
(576)
\u2013
(576)
(Gain)/loss from actuarial experience
(6)
25
\u2013
25
Actuarial (gains)/losses recognised in consolidated
statement of comprehensive income
(104)
(577)
383
(194)
Employer contributions
\u2013
\u2013
(64)
(64)
Benefits paid directly by the Company
(18)
(8)
8
\u2013
Benefits paid from plan assets
\u2013
(130)
130
\u2013
Net cash (outflow)/inflow
(18)
(138)
74
(64)
Exchange differences
(24)
(140)
138
(2)
31 December 2022
310
1,912
(1,882)
30
Of which:
Pension surpluses
12
\u2013
(148)
Pension deficits
310
178
The actual return on plan assets in respect of defined benefit pension plans amounted to a loss of $456\u00a0million (2021: gain of $107\u00a0million), comprising interest income and the re-measurement of plan assets, including exchange differences.
During the next financial year, the Group expects to make a contribution of $76 million in respect of the defined benefit pension and post-retirement medical plans across all countries, including current service costs and contributions required by pension legislation. Contributions over the next five years for the Canadian plans only, based on the most recently filed actuarial reports, approximate $115 million. Future funding requirements and contributions are reviewed and adjusted on an annual basis.
Defined benefit pension plans
US$ million
Notes
Post-retirement
medical plans
Present value
of defined
benefit
obligation
Fair value
of plan
assets
Net liability
for defined
benefit
pension plans
1 January 2021
476
3,138
(2,674)
464
Current service cost
7
62
\u2013
62
Past service cost \u2013 plan amendments
(6)
\u2013
\u2013
\u2013
Settlement of pension plan disposal
\u2013
(137)
138
1
Interest expense/(income)
18
64
(59)
5
Total expense/(income) recognised in consolidated statement of income
19
(11)
79
68
Gain on plan assets, excluding amounts included
in interest expense \u2013 net
\u2013
\u2013
(46)
(46)
Gain from change in demographic assumptions
\u2013
(12)
\u2013
(12)
Loss from change in financial assumptions
(37)
(188)
\u2013
(188)
Loss from actuarial experience
(4)
3
\u2013
3
Actuarial losses/(gains) recognised in consolidated
statement of comprehensive income
(41)
(197)
(46)
(243)
Employer contributions
\u2013
\u2013
(63)
(63)
Employee contributions
\u2013
1
(1)
\u2013
Benefits paid directly by the Company
(22)
(8)
8
\u2013
Benefits paid from plan assets
\u2013
(165)
166
1
Net cash (outflow)/inflow
(22)
(172)
110
(62)
Exchange differences
(2)
2
(2)
\u2013
31 December 2021
430
2,760
(2,533)
227
Of which:
Pension surpluses
12
\u2013
(125)
Pension deficits
430
352
The defined benefit obligation accrued in Canada represents the majority for the Company. The breakdown below provides details of the Canadian plans for both the statement of financial position and the weighted average duration of the defined benefit obligation as at 31\u00a0December 2022 and 2021. The net liability of any of the Group\u2019s defined benefit plans outside of Canada as at 31\u00a0December 2022 does not exceed $34 million (2021: $70 million).
2022
US$ million
Canada
Other
Total
Post-retirement medical plans
Present value of defined benefit obligation
264
46
310
of which: amounts owing to active members
74
8
82
of which: amounts owing to pensioners
190
38
228
Defined benefit pension plans
Present value of defined benefit obligation
1,203
709
1,912
of which: amounts owing to active members
261
364
625
of which: amounts owing to non-active members
14
91
105
of which: amounts owing to pensioners
928
254
1,182
Fair value of plan assets
(1,277)
(605)
(1,882)
Net defined benefit (asset)/liability at 31 December 2022
(74)
104
30
Of which:
Pension surpluses
(126)
(22)
(148)
Pension deficits
52
126
178
Weighted average duration of defined benefit obligation \u2013 years
10
12
11
2021
US$ million
Canada
Other
Total
Post-retirement medical plans
Present value of defined benefit obligation
379
51
430
of which: amounts owing to active members
123
11
134
of which: amounts owing to pensioners
256
40
296
Defined benefit pension plans
Present value of defined benefit obligation
1,753
1,007
2,760
of which: amounts owing to active members
434
484
918
of which: amounts owing to non-active members
25
167
192
of which: amounts owing to pensioners
1,294
356
1,650
Fair value of plan assets
(1,772)
(761)
(2,533)
Net defined benefit (asset)/liability at 31 December 2021
(19)
246
227
Of which:
Pension surpluses
(115)
(10)
(125)
Pension deficits
96
256
352
Weighted average duration of defined benefit obligation \u2013 years
13
15
13
Estimated future benefit payments of the Canadian plans, which reflect expected future services but exclude plan expenses, up until 2032 are as follows:
US$ million
Post-retirement
medical plans
Defined benefit
pension plans
Total
2023
18
83
101
2024
18
83
101
2025
18
82
100
2026
17
82
99
2027
17
82
99
2028-2032
85
402
487
Total
173
814
987
The plan assets consist of the following:
2022
2021
Active market
Non-active market
Active market
Non-active market
Cash and short-term investments
37
\u2013
40
\u2013
Fixed income
569
182
823
195
Equities
567
\u2013
851
\u2013
Other
329
198
416
208
Total
1,502
380
2,130
403
The fair value of plan assets includes none of Glencore\u2019s own financial instruments and no property occupied by or other assets used by Glencore. For many of the plans, representing a large portion of the global plan assets, asset-liability matching strategies are in place, where the fixed-income assets are invested broadly in alignment with the duration of the plan liabilities, and the proportion allocated to fixed-income assets is raised when the plan funding level increases. The asset mix for each plan reflects the nature, expected changes in, and size of the liabilities and the assessment of long-term economic conditions, market risk, expected investment returns as considered during a formal asset mix study, including sensitivity analysis and/or scenario analysis, conducted periodically for the plans.
Through its defined benefit plans, Glencore is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this will create a deficit. The funded plans hold a significant proportion of equities, which are expected to outperform bonds in the long term while contributing volatility and risk in the short term. Glencore believes that due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of Glencore\u2019s long-term strategy to manage the plans efficiently.
Change in bond yields: A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans\u2019 bond holdings.
Inflation risk: Some of the plans\u2019 benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities, although, in\u00a0most cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation.
Life expectancy: The majority of the plans\u2019 obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans\u2019 liability.
Salary increases: Some of the plans\u2019 benefit obligations related to active members are linked to their salaries. Higher salary increases will therefore tend to lead to higher plan liabilities.
The principal weighted-average actuarial assumptions used were as follows:
Post-retirement medical plans
Defined benefit pension plans
2022
2021
2022
2021
Discount rate
6.2%
4.1%
4.9%
2.7%
Future salary increases
\u2013
\u2013
2.7%
2.6%
Future pension increases
\u2013
\u2013
0.4%
0.5%
Ultimate medical cost trend rate
3.5%
4.6%
\u2013
\u2013
Mortality assumptions are based on the latest available standard mortality tables for the individual countries concerned. As at 31\u00a0December 2022, these tables imply expected future life expectancy, for employees aged 65, 16 to 24 years for males (2021: 16 to 23) and 20 to 25 years for females (2021: 20 to 25). The assumptions for each country are reviewed regularly and are adjusted where necessary to reflect changes in fund experience and actuarial recommendations.
The sensitivity of the defined benefit obligation to changes in principal assumptions as at 31\u00a0December\u00a02022 is set out below, assuming that all other assumptions are held constant and the effect of interrelationships is excluded.
Increase/(decrease) in pension obligation
US$ million
Post-retirement medical plans
Defined benefit pension plans
Total
Discount rate
Increase by 100 basis points
(34)
(168)
(202)
Decrease by 100 basis points
38
194
232
Rate of future salary increase
Increase by 100 basis points
\u2013
23
23
Decrease by 100 basis points
\u2013
(22)
(22)
Rate of future pension benefit increase
Increase by 100 basis points
\u2013
24
24
Decrease by 100 basis points
\u2013
(22)
(22)
Medical cost trend rate
Increase by 100 basis points
36
\u2013
36
Decrease by 100 basis points
(29)
\u2013
(29)
Life expectancy
Increase in longevity by one year
8
41
49
25. Accounts payable
US$ million
Notes
2022
2021
Financial liabilities at amortised cost
Trade payables
11,044
10,397
Margin calls received and other broker balances
112
729
Associated companies
903
1,124
Other payables and accrued liabilities
644
889
12,703
13,139
Financial liabilities at fair value through profit and loss
Trade payables containing provisional pricing features
28
14,079
13,806
Other payables
28
102
\u2013
14,181
13,806
Non-financial liabilities
Advances settled in product
676
459
Other payables and accrued liabilities1
1,839
1,460
Other tax and related payables
327
449
2,842
2,368
Total
29,726
29,313
1 Primarily comprised of employee benefits accruals.
Trade payables are obligations to pay for goods and services. Trade payables typically have maturities up to 90 days depending on the type of material and the geographic area in which the purchase transaction occurs and the agreed terms. The carrying value of trade payables approximates fair value.
Notes to the financial statements continued
26. Acquisition and disposal of subsidiaries and other entities
2022 Acquisitions
In 2022, Glencore acquired the remaining 66.67% interest in Cerrej\u00f3n that it did not already own, and various other businesses, none of which are individually material. The acquisition accounting for Cerrej\u00f3n has now been finalised, with no adjustments to the previously reported provisional fair values.
The net cash acquired/(used) in the acquisition of subsidiaries and the fair value of assets acquired and liabilities assumed on the acquisition date are detailed below:
US$ million
Cerrej\u00f3n
Other
Total
Non-current assets
Property, plant and equipment
2,470
333
2,803
2,470
333
2,803
Current assets
Inventories
315
51
366
Accounts receivable1
312
13
325
Cash and cash equivalents
511
5
516
1,138
69
1,207
Non-current liabilities
Non-current borrowings
(13)
\u2013
(13)
Deferred tax liabilities
(278)
(50)
(328)
Provisions
(1,033)
(8)
(1,041)
(1,324)
(58)
(1,382)
Current liabilities
Borrowings
(17)
(52)
(69)
Accounts payable
(232)
(70)
(302)
Provisions
(30)
\u2013
(30)
Income tax payable
(309)
\u2013
(309)
(588)
(122)
(710)
Total fair value of net assets acquired
1,696
222
1,918
Cash and cash equivalents paid
(100)
(95)
(195)
Less: amounts previously recognised as investments
(567)
(31)
(598)
Gain on bargain purchase of subsidiaries
1,029
96
1,125
Cash and cash equivalents paid
(100)
(95)
(195)
Cash and cash equivalents acquired
511
5
516
Net cash acquired/(used) in acquisition of subsidiaries
411
(90)
321
1There is no material difference between the gross contractual amounts for accounts receivable and their fair value.
Cerrej\u00f3n
On 11 January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, that it did not own. The purchase price consideration of $588 million was based on an economic effective date of 31 December 2020. After taking into account the dividends generated during 2021, together with certain other adjustments, the completion cash payment made by Glencore amounted to $100 million. As Glencore holds 100% of the voting shares, providing it the ability to control the key strategic, operating and capital decisions of the business, it is required to account for Cerrej\u00f3n using the full consolidation method in accordance with IFRS 10.
Prior to the acquisition, Glencore owned a 33.33% interest in Cerrej\u00f3n which was accounted for as an associate. In accordance with IFRS 3 Business Combinations, the equity interest is required to be revalued, at the date of acquisition, to its fair value with any resulting gain or loss recognised in the statement of income. On the date of acquisition, the fair value of 100% of the net assets acquired was determined to be $1,696 million, a value broadly consistent with the carrying value of the initial 33.33% equity interest and as a result, no gain or loss was recognised on the revaluation of the original equity interest.
The valuation was determined using a bottom-up approach to identify the fair value of the specific assets and liabilities within the Cerrej\u00f3n Group, with the mineral reserves being valued using a discounted cash-flow method that assumes life of mine saleable coal production of 223 million tonnes over the period 2022-2032, at a long-term CIF price of $67/t, adjusted as appropriate for coal quality, applying a discount rate of 8.56%.
As the assessed fair value of $1,696 million was in excess of the completion cash payment and the fair value of the previously held investment, a bargain purchase gain on acquisition of $1,029 million was recognised in the consolidated statement of income. Glencore assessed that all identifiable assets and liabilities had been included in the valuation prior to recognising the gain as noted above. The gain effectively represents the discount that the selling joint venture partners were willing to accept in order to achieve timely execution of their respective decarbonisation strategies. The immediate near-term valuation was also supported by the net $411 million of unencumbered cash assumed on completion, benefitting from the transaction effective date of 31 December 2020.
From the date of acquisition, the operation contributed $5,393 million of revenue and $2,909 million of attributable income (including the bargain purchase gain) for the period ended 31 December 2022.
Other
From the date of acquisition, the other operations contributed $223 million of revenue and $241 million of attributable income (including the bargain purchase gain) for the period ended 31 December 2022.
2021 Acquisitions
There were no material acquisitions.
2022 Disposals
The carrying value of the assets and liabilities over which control was lost and consideration receivable from the 2022 disposals are detailed below:
US$ million
Ernest Henry1
Bolivia Zinc1
E&P Chad1
Access World1
Los Quenuales
Other
Total
Non-current assets
Property, plant and equipment
311
163
247
206
126
121
1,174
Intangible assets
\u2013
2
\u2013
11
\u2013
\u2013
13
Investments in associates
\u2013
\u2013
\u2013
10
\u2013
\u2013
10
Advances and loans
\u2013
43
\u2013
9
2
\u2013
54
Deferred tax assets
16
13
\u2013
4
21
\u2013
54
327
221
247
240
149
121
1,305
Current assets
Inventories
16
97
21
\u2013
5
6
145
Accounts receivable
24
90
19
159
9
19
320
Prepaid expenses
\u2013
\u2013
\u2013
12
\u2013
1
13
Cash and cash equivalents
1
17
5
42
7
3
75
41
204
45
213
21
29
553
Non-controlling interest
\u2013
\u2013
\u2013
(2)
(2)
(24)
(28)
Non-current liabilities
Non-current borrowings
\u2013
(8)
\u2013
(110)
(1)
\u2013
(119)
Deferred income
(138)
\u2013
\u2013
\u2013
\u2013
\u2013
(138)
Deferred tax liabilities
\u2013
(4)
(3)
(1)
\u2013
(3)
(11)
Non-current provisions
(74)
(26)
(86)
(3)
(97)
(59)
(345)
Post-retirement and other employee benefits
(1)
(16)
\u2013
(1)
\u2013
\u2013
(18)
(213)
(54)
(89)
(115)
(98)
(62)
(631)
Current liabilities
Borrowings
\u2013
(2)
\u2013
(19)
(1)
\u2013
(22)
Accounts payable
(30)
(139)
(7)
(154)
(23)
(19)
(372)
Provisions
(38)
(44)
\u2013
(3)
(9)
(2)
(96)
Income tax payable
\u2013
(13)
\u2013
(4)
\u2013
\u2013
(17)
(68)
(198)
(7)
(180)
(33)
(21)
(507)
Carrying value of net assets disposed
87
173
196
156
37
43
692
Cash and cash equivalents (received)/paid
(585)
\u2013
(17)
(40)
10
(30)
(662)
Items recycled to the statement of income
\u2013
\u2013
\u2013
22
1
27
50
Reclassified to investment in associate
\u2013
\u2013
\u2013
\u2013
\u2013
(17)
(17)
Royalty indemnification2
125
\u2013
\u2013
\u2013
\u2013
\u2013
125
Streaming settlement
\u2013
\u2013
\u2013
\u2013
132
\u2013
132
Future consideration
(139)
(69)
(145)
(115)
\u2013
(3)
(471)
Net (gain)/loss on disposal
(512)
104
34
23
180
20
(151)
Cash and cash equivalents received/(paid)
585
\u2013
17
40
(142)
30
530
Less: cash and cash equivalents disposed
(1)
(17)
(5)
(42)
(7)
(3)
(75)
Net cash received/(used) in disposal
584
(17)
12
(2)
(149)
27
455
1 As at 31 December 2021, total assets and liabilities were presented as current assets and liabilities \u2018held for sale\u2019 (see note 16).
2See note 23.
Ernest Henry
In January 2022, Glencore disposed of its 70% interest in Ernest Henry Mining Pty Ltd, a copper-gold mine in Queensland, Australia. After closing adjustments, $585 million was received with $139 million receivable in January 2023. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost. A $125 million provision was recognised for the indemnification of future royalty payments under an existing agreement.
Bolivia Zinc
In March 2022, Glencore disposed of its 100% interest in the Bolivian zinc assets (Sinchi Wayra and Illapa), to Santacruz Silver Mining Ltd. After closing adjustments, $90 million is receivable over a four-year period and a 1.5% NSR royalty over the life of the mines. The fair value of the future consideration was determined to be $69 million using a discounted cash flow model of the projected amount and timing of receipts, discounted using an asset specific discount rate of 11%. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost.
E&P Chad
In June 2022, Glencore disposed of its Chad upstream oil operations to Perenco S.A. for $197 million, of which $17 million was due on closing and $180 million is due through a price and production participation arrangement payable annually. The fair value of the future consideration was determined to be $145 million using a discounted cash flow model of the projected amount and timing of receipts, discounted using an asset specific discount rate of 13%. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost.
Los Quenuales
In December 2022, Glencore disposed of its 100% interest in Los Quenuales, a zinc-lead-silver mine in Peru, to Alpayana S.A for
$10 million in cash. Conditional on completion of the transaction, Glencore earlier settled its silver streaming arrangement over one of Los Quenuales\u2019 mining properties with Wheaton Precious Metals for a payment of $132 million.
Access World
In December 2022, Glencore disposed of its 100% interest in the Access World Group, a global commodities storage and logistics group, for $180 million. $40 million was received in December and, after closing adjustments, $115 million is receivable over 2023. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost.
2021 Disposals
The carrying value of the assets and liabilities over which control was lost and consideration receivable from the 2021 disposals are detailed below:
US$ million
Mopani
Chemoil Terminals
Others
Total
Non-current assets
Property, plant and equipment
748
158
20
926
Advances and loans
5
\u2013
\u2013
5
753
158
20
931
Current assets
Inventories
168
\u2013
\u2013
168
Accounts receivable
99
3
14
116
Prepaid expenses
3
\u2013
\u2013
3
Cash and cash equivalents
\u2013
10
10
20
270
13
24
307
Non-current liabilities
Non-current borrowings
\u2013
(6)
\u2013
(6)
Deferred tax liabilities
\u2013
(18)
(1)
(19)
Non-current provisions
(55)
\u2013
(61)
(116)
Post-retirement and other employee benefits
(9)
\u2013
\u2013
(9)
(64)
(24)
(62)
(150)
Current liabilities
Borrowings
\u2013
(1)
(1)
(2)
Accounts payable
(81)
(8)
\u2013
(89)
Provisions
(23)
\u2013
(16)
(39)
Income tax payable
(12)
\u2013
\u2013
(12)
(116)
(9)
(17)
(142)
Carrying value of net assets disposed
843
138
(35)
946
Cash and cash equivalents received
\u2013
(248)
(24)
(272)
Future consideration
(838)
\u2013
\u2013
(838)
Net loss/(gain) on disposal before non-controlling interest
5
(110)
(59)
(164)
Derecognition of non-controlling interest
1,017
\u2013
\u2013
1,017
Net loss/(gain) on disposal after non-controlling interest
1,022
(110)
(59)
853
Cash and cash equivalents received
\u2013
248
24
272
Less: cash and cash equivalents disposed
\u2013
(10)
(10)
(20)
Net cash received in disposal
\u2013
238
14
252
Mopani
On 31 March 2021, Glencore completed the disposal of its 90% interest in Mopani to ZCCM Investments Holdings plc, the holder of the remaining 10% interest in Mopani, in exchange for $1 and the rights to offtake copper and other metals from Mopani until
$1.5 billion of existing intercompany debt (the \u2018transaction debt\u2019) has been repaid to Glencore. The repayment of the transaction debt is based on Glencore receiving physical commodities from Mopani through its offtake rights and applying fixed percentages of annual gross revenues generated from the sale of such commodities against the transaction debt until it is fully repaid. As Glencore is no longer able to unilaterally direct the key strategic, operating and capital decisions of Mopani, it was deemed to have disposed of its controlling interest at the fair value of the transaction debt on the date of completion, being $838 million. Fair value was determined using a discounted cash flow model of the projected amount and timing of metal volumes received from Mopani under the offtake rights and market forecasts of commodity prices, discounted using an asset specific discount rate of 11.4%.
The net loss on disposal reflects the derecognition to the statement of income of the previously recognised book value of the non-controlling interest equity balance, which largely related to the non-controlling interests\u2019 share of historical impairments and losses, and resulting net liabilities in Mopani.
Chemoil Terminals
On 17 December 2021, Glencore completed the disposal of its 100% interest in Chemoil Terminals LLC, which owns the Long Beach and Carson oil products storage terminals in California, for a consideration of $248 million.
Notes to the financial statements continued
27. Financial and capital risk management
Financial risks arising in the normal course of business from Glencore\u2019s operations comprise market risk (including commodity price risk, interest rate risk and currency risk), credit risk (including performance risk) and liquidity risk. It is Glencore\u2019s policy and practice to identify and, where appropriate and practical, actively manage such risks (for management of \u2018margin\u2019 risk within Glencore\u2019s extensive and diversified industrial portfolio, refer net present value at risk below) to support its objectives in managing its capital and future financial security and flexibility. Glencore\u2019s overall risk management programme focuses on the unpredictability of financial markets and seeks to protect its financial security and flexibility by using derivative financial instruments where possible to substantially hedge these financial risks. Glencore\u2019s finance and risk professionals, working in coordination with the commodity departments, monitor, manage and report regularly to senior management and the Board of Directors on the approach and effectiveness in managing financial risks along with the financial exposures facing the Group.
Glencore\u2019s objectives in managing its \u2018capital attributable to equity holders\u2019 include preserving its overall financial health and strength for the benefit of all stakeholders, maintaining an optimal capital structure in order to provide a high degree of financial flexibility at an attractive cost of capital and safeguarding its ability to continue as a going concern, while generating sustainable long-term profitability. Central to meeting these objectives is maintaining an investment grade credit rating status. Glencore\u2019s current credit ratings are Baa1 (positive) from Moody\u2019s and BBB+ (positive) from S&P.
Distribution policy and other capital management initiatives
Glencore\u2019s base cash distribution policy comprises two components: (1) a fixed $1 billion component and (2) a variable element representing 25% of free cash flow generated by our industrial assets during the preceding year. Distributions are expected to be formally declared by the Board annually (with the preliminary full-year results). Distributions, when declared, will be settled equally in May/June and September of the year they are declared in. In addition, reflecting the Group\u2019s through the cycle Net debt objective of
c.$10 billion, and consideration of the cyclical nature of the industry and other relevant factors, the Board could declare additional distributions to be included with the distribution confirmed with respect to the prior year, consider top-up distributions during the year and/or initiate or continue share buyback programmes. Notwithstanding that the cash distribution is declared and paid in US dollars, shareholders will be able to elect to receive their distribution payments in Pounds Sterling, Euros or Swiss Francs based on the exchange rates in effect around the date of payment. Shareholders on the JSE will receive their distributions in South African Rand.
Commodity price risk
Glencore is exposed to price movements for the inventory it holds and the products it produces which are not held to meet priced forward contract obligations and forward priced purchase or sale contracts. Glencore manages a significant portion of this exposure through futures and options transactions on worldwide commodity exchanges or in over the counter (OTC) markets, to the extent available. Commodity price risk management activities are considered an integral part of Glencore\u2019s physical commodity marketing activities and the related assets and liabilities are included in other financial assets from and other financial liabilities to derivative counterparties, including clearing brokers and exchanges. Whilst it is Glencore\u2019s policy to substantially hedge its commodity price risks, there remains the possibility that the hedging instruments chosen may not always provide effective mitigation of the underlying price risk. The hedging instruments available to the marketing businesses may differ in specific characteristics to the risk exposure to be hedged, resulting in an ongoing and unavoidable basis risk exposure. Residual basis risk exposures represent a key focus point for Glencore\u2019s commodity department teams who actively engage in the management of such.
Value at risk
One of the tools used by Glencore to monitor and limit its primary market risk exposure, principally commodity price risk related to its physical marketing activities, is a value at risk (VaR) computation. VaR is a risk measurement technique which estimates a threshold for potential loss that could occur on risk positions as a result of movements in risk factors over a specified time horizon, given a specific level of confidence and based on a specific price history. The VaR methodology is a statistically defined, probability-based approach that takes into account market volatilities, as well as risk diversification by recognising offsetting positions and correlations between commodities and markets. In this way, risks can be measured consistently across markets and commodities and risk measures can be aggregated to derive a single risk value.
Glencore uses a VaR approach based on Monte Carlo simulations computed at a 95% confidence level and utilising a weighted data history for a one-day time horizon. Glencore\u2019s Board, as part of its annual review process in H2 2021, approved an increase in the Group\u2019s consolidated VaR limit (one day 95% confidence level) from $100 million to $150 million, with effect from 1 January 2022, which represents approximately 0.3% of total equity.
Prior to the Russia/Ukraine conflict, Glencore operated within the $150 million limit. Around the time of the invasion, the Group\u2019s VaR spiked due to the unprecedented levels of volatility in commodity markets (primarily energy but also certain metals), rather than due to any change in the Group\u2019s marketing positions or trading strategies. Given the market backdrop, prior to any likely breach, the Chief Risk Officer proactively consulted with the Board and received a temporary waiver from the application of a Group VaR limit. During the waiver period, the Chief Risk Officer reported regularly to the Board.
In mid-May, as some non-energy markets started to normalise, the temporary waiver was rescinded and replaced with a VaR limit of $200 million, to account for the statistically elevated energy market risk environment.
Similarly, prior to any breach, a temporary waiver was approved in mid-August due to increasing LNG volatilities as the European gas market was under significant pressure. In mid-September, following a comprehensive review, the Board determined it was appropriate to revert to the prior VaR limit of $150 million, but to exclude LNG from the Group VaR limit, while maintaining a separate multipronged LNG risk reporting and control structure, including the continued calculation and highlighting of VaR outcomes.\u00a0
Position sheets are regularly distributed and monitored and daily Monte Carlo simulations are applied to the various business groups\u2019 net marketing positions to determine potential losses.
Market risk VaR (one-day 95% confidence level) ranges and year-end positions were as follows:
US$ million (all including LNG)
2022
2021
Year-end position 1
88
72
Average during the year
158
54
High during the year
451
126
Low during the year
66
27
1The year-end VaR, excluding LNG, was $76 million, comfortably within the Group\u2019s $150 million limit. Average Group VaR, excluding LNG since its exclusion in mid-September, was $70 million.
VaR does not purport to represent actual gains or losses in fair value in earnings to be incurred by Glencore, nor does Glencore claim that these VaR results are indicative of future market movements or representative of any actual impact on its future results. VaR should always be viewed in the context of its limitations; notably, the use of historical data as a proxy for estimating future events, market illiquidity risks and tail risks. Glencore recognises these limitations, and thus complements and continuously refines its VaR analysis by analysing forward looking stress scenarios, benchmarking against an alternative VaR computation based on historical simulations and back testing calculated VaR against the hypothetical portfolio returns arising in the next business day.
Glencore\u2019s VaR computation currently covers its business in the key base metals (including aluminium, nickel, zinc, copper and lead), cobalt, coal, coal freight, iron ore and oil products and natural gas/LNG, and assesses the open priced positions which are subject to price risk, including inventories of these commodities. Due to the lack of a liquid terminal market, Glencore does not include a VaR calculation for products such as alumina, molybdenum and some risk associated with metals\u2019 concentrates as it does not consider the nature of these markets to be suited to this type of analysis. Alternative measures are used to monitor exposures related to these products.
Net present value at risk
Glencore\u2019s future cash flows related to its forecast Industrial production activities are also exposed to commodity price movements. Glencore manages this exposure through a combination of portfolio diversification, occasional shorter-term hedging via futures and options transactions, insurance products and continuous internal monitoring, reporting and quantification of the underlying operations\u2019 estimated cash flows and valuations.
Interest rate risk
Glencore is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its assets and liabilities and cash flows. Matching of assets and liabilities is utilised as the dominant method to hedge interest rate risks; other methods include the use of interest rate swaps and similar derivative instruments with the same critical terms as the underlying interest rate exposures. See details on swap instruments used below.
Floating rate debt which is predominantly used to fund fast turning working capital (interest is internally charged on the funding of this working capital) is now primarily based on SOFR plus an appropriate premium. Accordingly, prevailing market interest rates are continuously factored into transactional pricing and terms.
Assuming the amount of floating rate liabilities at the reporting period end were outstanding for the whole year, interest rates were 100 basis points higher/lower and all other variables held constant, Glencore\u2019s income for the year ended 31\u00a0December 2022 would decrease/increase by $188 million (2021: $197 million).
Interest rate benchmark reform
The Group established a multidisciplinary working group to assess the impact of LIBOR reform and prepare and implement a LIBOR transition plan. This transition plan included updating policies, systems and processes.
The Group is primarily exposed to the transition of USD LIBOR into an alternative reference rate. Exposures arise on derivatives and non-derivative financial assets and liabilities.
To cater for the transition of interest rate hedging arrangements, the Group has adhered to the ISDA Fallback Protocol. All USD LIBOR derivative contracts will transition to the Secured Overnight Funding Rate (SOFR) upon cessation date and in accordance with the terms of the Protocol. Starting from 1 January 2022, all newly executed interest rate hedging arrangements directly reference an alternative reference rate/SOFR.
To cater for the transition of interest rates within other financial and non-financial assets and liabilities, the Group has adopted a combination of Term SOFR, daily SOFR compounded in arrears, and the cost of funds quoted by the bank (if any) involved in such financing. The decision as to which one to adopt is made on a case-by-case basis and generally reflects the need to either have a fixed rate known in advance of the interest period (Term SOFR/cost of funds), or not (SOFR compounded in arrears). It may be that a particular agreement switches from one reference rate to another, with these decisions being made on a case-by-case basis.
As of 31 December 2022, only one financial debt facility had not transitioned to SOFR/cost of funds, being the medium term RCF.
Currency risk
The US dollar is the predominant functional currency of the Group. Currency risk is the risk of loss from movements in exchange rates related to transactions and balances in currencies other than the US dollar. Such transactions include operating expenditure, capital expenditure and to a lesser extent purchases and sales in currencies other than the functional currency. Purchases or sales of commodities concluded in currencies other than the functional currency, apart from certain limited domestic sales at industrial operations which act as a hedge against local operating costs, are ordinarily economically hedged through forward exchange contracts. Consequently, foreign exchange movements against the US dollar on recognised transactions would have an immaterial financial impact. Glencore enters into currency hedging transactions with leading financial\u00a0institutions.
Glencore\u2019s debt-related payments (both principal and interest) are primarily denominated in or swapped using hedging instruments into US dollars. Glencore\u2019s operating expenses, being a small portion of its revenue base, are incurred in a mix of currencies of which the US dollar, Swiss Franc, Pound Sterling, Canadian dollar, Australian dollar, Euro, Kazakhstan Tenge, Colombian Peso and South African Rand are the predominant currencies.
Glencore has issued Euro, Swiss Franc, Sterling and Yen denominated bonds (see note 21). Cross currency swaps were concluded to hedge the currency risk on the principal and related interest payments of these bonds. These contracts were designated as fair value or cash flow hedges of the associated foreign currency risks. The critical terms of these swap contracts and their corresponding hedged items are matched and the Group expects a highly effective hedging relationship with the swap contracts and the value of the corresponding hedged items to change systematically in opposite direction in response to movements in the underlying exchange rates. The corresponding fair value and notional amounts of these derivatives is as\u00a0follows:
Notional amounts
Average FX
rates
Carrying amount
Assets
(Note 29)
Carrying amount
Liabilities
(Note 29)
Average maturity1
US$ million
2022
2021
2022
2021
2022
2021
2022
2021
Cross currency swap agreements
Cash flow hedges \u2013 currency risk
Eurobonds
2,907
2,907
1.14
1.14
\u2013
3
203
42
2025
Sterling bonds
\u2013
798
\u2013
1.60
\u2013
\u2013
\u2013
129
2022
Swiss franc bonds
504
504
1.06
1.06
20
12
\u2013
\u2013
2026
Fair value hedges \u2013 currency and interest
rate risk
Eurobonds
3,947
3,947
1.22
1.22
3
67
903
285
2027
Yen bonds
\u2013
81
\u2013
0.01
\u2013
5
\u2013
\u2013
2022
Sterling bonds
663
663
1.33
1.33
1
33
106
\u2013
2026
Swiss franc bonds
347
347
1.07
1.07
\u2013
11
24
5
2026
8,368
9,247
24
131
1,236
461
Interest rate swap agreements
Fair value hedges \u2013 interest rate risk
US$ bonds
7,200
6,450
\u2013
\u2013
2
272
507
12
2026
15,568
15,697
26
403
1,743
473
1Refer to note 21 for details.
27. Financial and capital risk management continued
The carrying amounts of the fair value hedged items are as\u00a0follows:
Carrying amount of the
hedged item
(Note 21)
Of which,
accumulated fair value
hedge adjustments and FX
US$ million
2022
2021
2022
2021
Foreign exchange and interest rate risk
Eurobonds
3,017
3,672
(866)
(255)
Yen bonds
\u2013
87
\u2013
5
Swiss franc bonds
326
354
(20)
38
Sterling bonds
541
677
(122)
22
US$ bonds
6,657
6,638
(505)
226
10,541
11,428
(1,513)
36
Credit risk
Credit risk arises from the possibility that counterparties may not be able to settle obligations due to Glencore within their agreed payment terms. Financial assets which potentially expose Glencore to credit risk consist principally of cash and cash equivalents, receivables and advances, derivative instruments and non-current advances and loans. Glencore\u2019s credit management process includes the assessment, monitoring and reporting of counterparty exposure on a regular basis. Glencore\u2019s cash and cash equivalents are placed overnight with a diverse group of highly credit rated financial institutions. Margin calls paid are similarly held with credit rated financial institutions. Glencore determines these instruments to have low credit risk at the reporting date. Credit risk with respect to receivables and advances is mitigated by the large number of customers comprising Glencore\u2019s customer base, their diversity across various industries and geographical areas, as well as Glencore\u2019s policy to mitigate these risks through letters of credit, netting, collateral and insurance arrangements where appropriate. Additionally, it is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable offsetting of balances due to/from a common counterparty in the event of default by the counterparty. Glencore actively and continuously monitors the credit quality of its counterparties through internal reviews and a credit scoring process, which includes, where available, public credit ratings. Balances with counterparties not having a public investment grade or equivalent internal rating are typically enhanced to investment grade through the extensive use of credit enhancement products, such as letters of credit or insurance products. Glencore has a diverse customer base, with no customer representing more than 7.1% (2021: 4.7%) of its trade receivables (taking into account credit enhancements) or accounting for more than 3.2% of its revenues over the year ended 31\u00a0December 2022 (2021: 3.6%) (see notes 3 and 14).
The maximum exposure to credit risk (including performance risk \u2013 see below), without considering netting agreements or without taking account of any collateral held or other credit enhancements, is equal to the carrying amount of Glencore\u2019s financial assets (see\u00a0note 28) and physically settled advances (see notes 12 and 14).
Management information used to monitor credit risk indicates that the prima facie risk profile % categories of financial assets which are subject to review for impairment under IFRS 9, is as set out below. The total balance for those assets as at 31 December 2022 is $11,469\u00a0million (2021: $10,765\u00a0million)(see notes 12, 14 and 15).
in %
2022
2021
AAA to AA-
8
8
A+ to A-
55
59
BBB+ to BBB-
17
11
BB+ to BB-
6
3
B+ to B-
8
8
CCC+ and below
6
11
Movements in credit losses for accounts receivable and advances and loans are shown in notes 12 and 14.
27. Financial and capital risk management continued
Performance risk
Performance risk (part of the broader credit risk subject matter, discussed above) is inherent in contracts, with agreements in the future, to physically purchase or sell commodities with fixed price attributes, and arises from the possibility that counterparties may not be willing or able to meet their future contractual physical sale or purchase obligations to/from Glencore. Glencore undertakes the assessment, monitoring and reporting of performance risk within its overall credit management process. Glencore\u2019s market breadth, diversified supplier and customer base as well as the standard pricing mechanism in the vast majority of Glencore\u2019s commodity portfolio which does not fix the primary commodity price beyond three months, ensure that performance risk is adequately mitigated.
The commodity industry has trended towards shorter-term fixed price contract periods, in part to mitigate against such potential performance risk, but also due to the continuous development of transparent and liquid spot commodity markets, with their associated derivative products and indexes.
Liquidity risk
Liquidity risk is the risk that Glencore is unable to meet its payment obligations when due, or that it is unable, on an ongoing basis, to borrow funds in the market on an unsecured or secured basis at an acceptable price to fund actual or proposed commitments. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and availability of adequate committed funding facilities. Glencore has set itself an internal minimum liquidity target to maintain at all times, including via available committed undrawn credit facilities, of $3 billion (2021: $3 billion), which has purposely been substantially exceeded in recent years, accounting for the more volatile market backdrop. Glencore\u2019s credit profile, diversified funding sources and committed credit facilities, ensure that sufficient liquid funds are maintained to meet its liquidity requirements. As part of its liquidity management, Glencore closely monitors and plans for its future capital expenditure, working capital needs and proposed investments, as well as credit facility refinancing/extension requirements, well ahead of time (see notes 1, 12, 21, 22 and 25).
As at 31\u00a0December 2022, Glencore had available committed undrawn credit facilities and cash amounting to $13,000\u00a0million (2021: $10,296\u00a0million), refer to Other reconciliations section. The maturity profile of Glencore\u2019s financial liabilities based on the contractual terms is presented in the table below.
The liquidity risk related to physical forward purchase obligations represents the gross contractual cash outflows expected to be paid upon transfer of control of the underlying physical commodity. Gross cash inflows expected from physical forward sales are not presented in the below table, but would approximate the expected gross cash outflows related to forward purchase obligations plus an appropriate margin. Prior year balances have been restated to conform with current year presentation.
The gross liquidity risk relating to cross currency swaps entered into for the purposes of hedging foreign currency and interest rate risks arising from the Group\u2019s non-US dollar denominated bonds is presented below. The amounts reflect the expected gross settlement of the US dollar pay leg of these swaps. The inflows from the related foreign currency receive leg of these swaps are not presented in the below table, but would approximate the foreign currency equivalent of the US dollar pay leg. Counterparty settlement date risk related to these swaps is limited, as the Group has entered into margining arrangements for both the outflow and inflow legs of the swap.
27. Financial and capital risk management continued
2022
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
8,203
4,330
3,262
3,350
9,821
28,966
Expected future interest payments
2,876
722
456
553
720
5,327
Lease liabilities \u2013 undiscounted
637
196
167
328
526
1,854
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,884
26,884
Derivative financial liabilities
Physical forward purchases
13,078
25,750
26,884
32,321
58,919
156,952
Cross currency swaps
2,840
2,408
1,289
1,138
2,072
9,747
Other financial liabilities1
384
242
296
63
2,090
3,075
Total
28,018
33,648
32,354
37,753
101,032
232,805
2021
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
10,310
6,365
3,014
6,106
7,496
33,291
Expected future interest payments
3,219
861
547
716
830
6,173
Lease liabilities \u2013 undiscounted
730
257
209
345
596
2,137
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,945
26,945
Derivative financial liabilities
Physical forward purchases
7,920
16,260
15,023
27,121
54,595
120,919
Cross currency swaps
3,088
3,242
1,034
1,895
1,109
10,368
Other financial liabilities1
108
131
21
32
3,743
4,035
Total
25,375
27,116
19,848
36,215
95,314
203,868
1Other financial liabilities exclude physical forwards and cross currency swaps as separately disclosed.
Notes to the financial statements continued
28. Financial instruments
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore\u2019s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values. When market values are not available, fair values have been calculated by discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate the fair values with the exception of $27,398\u00a0million (2021: $33,023\u00a0million) of borrowings, the fair value of which at 31 December 2022 was $26,675 million (2021: $34,169 million). $6,918 million (2021: $10,132 million) represents the listed portion of the borrowing portfolio, based on quoted prices on active markets (a Level 1 fair value measurement), and $19,757 million (2021: $24,037 million) is based on observable market prices (a Level 2 fair value measurement).
2022
Amortised
cost
FVTPL1
FVTOCI2
US$ million
Total
Assets
Other investments
\u2013
37
419
456
Non-current other financial assets
\u2013
206
\u2013
206
Advances and loans
729
293
\u2013
1,022
Accounts receivable
16,019
5,627
\u2013
21,646
Other financial assets
\u2013
6,109
\u2013
6,109
Cash and cash equivalents
1,923
\u2013
\u2013
1,923
Total financial assets
18,671
12,272
419
31,362
Liabilities
Borrowings
28,777
\u2013
\u2013
28,777
Non-current other financial liabilities
14
2,041
\u2013
2,055
Accounts payable
12,703
14,181
\u2013
26,884
Other financial liabilities
\u2013
4,882
\u2013
4,882
Total financial liabilities
41,494
21,104
\u2013
62,598
2021
Amortised
cost
FVTPL1
FVTOCI2
Total
US$ million
Assets
Other investments
\u2013
\u2013
1,620
1,620
Non-current other financial assets
\u2013
458
\u2013
458
Advances and loans
795
163
\u2013
958
Accounts receivable
11,672
5,523
\u2013
17,195
Other financial assets
\u2013
4,636
\u2013
4,636
Cash and cash equivalents
3,241
\u2013
\u2013
3,241
Total financial assets
15,708
10,780
1,620
28,108
Liabilities
Borrowings
34,641
\u2013
\u2013
34,641
Non-current other financial liabilities
87
623
\u2013
710
Accounts payable
13,139
13,806
\u2013
26,945
Other financial liabilities
\u2013
6,077
\u2013
6,077
Total financial liabilities
47,867
20,506
\u2013
68,373
1FVTPL \u2013 Fair value through profit and loss.
2FVTOCI \u2013 Fair value through other comprehensive income.
Offsetting of financial assets and liabilities
In accordance with IAS 32 the Group reports financial assets and liabilities on a net basis in the consolidated statement of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The financial assets and liabilities subject to offsetting, enforceable master netting and similar agreements as at 31 December 2022 and 2021 were as follows:
Amounts not subject to netting agreements
Total as presented
in the consolidated
statement
of financial position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2022
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
3,422
(2,141)
1,281
(608)
(26)
647
5,034
6,315
Derivative liabilities1
(5,929)
2,141
(3,788)
608
2,638
(542)
(3,149)
(6,937)
Amounts
not subject
to netting
agreements
Total as
presented
in the
consolidated
statement
of financial
position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2021
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
19,327
(17,846)
1,481
(437)
(315)
729
3,613
5,094
Derivative liabilities1
(22,166)
17,846
(4,320)
437
3,522
(361)
(2,467)
(6,787)
1Presented within current and non-current other financial assets and other financial liabilities.
For the financial assets and liabilities subject to enforceable master netting or similar arrangements above, each agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities in the ordinary course of business. Where practical reasons may prevent net settlement, financial assets and liabilities may be settled on a gross basis, however, each party to the master netting or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party. Per the terms of each agreement, an event of default includes failure by a party to make payment when due, failure by a party to perform any obligation required by the agreement (other than payment) if such failure is not remedied within periods of 30 to 60\u00a0days after notice of such failure is given to the party or bankruptcy.
29. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can assess at the measurement date; or
Level 2
Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3
Unobservable inputs for the assets or liabilities, requiring Glencore to make market-based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded, whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options, swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair value predominantly from models that use broker quotes and applicable market-based estimates surrounding location, quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different valuation model could produce a materially different estimate of fair value.
It is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
The following tables show the fair values of the derivative financial instruments including trade-related financial and physical forward purchase and sale commitments by type of contract and non-current other financial assets and liabilities as at 31 December 2022 and 2021. Other assets and liabilities which are measured at fair value on a recurring basis are marketing inventories, other investments, cash and cash equivalents. There are no non-recurring fair value measurements.
Financial assets
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
\u2013
5,426
\u2013
5,426
Contingent consideration
\u2013
\u2013
128
128
Other receivables
\u2013
\u2013
73
73
Other non-current receivables and loans
\u2013
\u2013
22
22
Convertible loan
\u2013
\u2013
168
168
Non-current contingent consideration
\u2013
\u2013
103
103
Other investments
280
176
\u2013
456
Financial assets
280
5,602
494
6,376
Other financial assets
Commodity-related contracts
Futures
809
156
\u2013
965
Options
120
4
\u2013
124
Swaps
40
165
18
223
Physical forwards
\u2013
1,786
2,949
4,735
Financial contracts
Foreign currency and interest rate contracts
\u2013
62
\u2013
62
Current other financial assets
969
2,173
2,967
6,109
Non-current other financial assets
Cross currency swaps
\u2013
24
\u2013
24
Foreign currency and interest rate contracts
\u2013
1
\u2013
1
Purchased call options over Glencore shares1
\u2013
181
\u2013
181
Non-current other financial assets
\u2013
206
\u2013
206
Total
1,249
7,981
3,461
12,691
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables2
\u2013
5,269
\u2013
5,269
Contingent consideration2
\u2013
\u2013
175
175
Other receivables2
\u2013
\u2013
79
79
Other non-current receivables and loans2
\u2013
\u2013
28
28
Non-current contingent consideration
\u2013
\u2013
135
135
Other investments
1,536
84
\u2013
1,620
Financial assets
1,536
5,353
417
7,306
Other financial assets
Commodity-related contracts
Futures3
420
138
\u2013
558
Options
133
31
\u2013
164
Swaps3
5
245
40
290
Physical forwards
\u2013
2,878
646
3,524
Financial contracts
Cross currency swaps
\u2013
5
\u2013
5
Foreign currency and interest rate contracts
\u2013
95
\u2013
95
Current other financial assets
558
3,392
686
4,636
Non-current other financial assets
Cross currency swaps
\u2013
125
\u2013
125
Foreign currency and interest rate contracts
\u2013
272
\u2013
272
Purchased call options over Glencore shares1
\u2013
61
\u2013
61
Non-current other financial assets
\u2013
458
\u2013
458
Total
2,094
9,203
1,103
12,400
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
US$ million
Contingent consideration
Convertible loan
Physical
forwards
Swaps
Other1
Total
Level 3
1 January 2022
261
\u2013
411
40
(63)
649
Total gain recognised in revenue
\u2013
\u2013
231
67
\u2013
298
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
2,403
(70)
\u2013
2,333
Acquisition
(20)
200
\u2013
\u2013
\u2013
180
Fair value recognised in other income/(expense)
105
(32)
\u2013
\u2013
(173)
(100)
Realised
(189)
\u2013
(209)
(19)
(12)
(429)
31 December 2022
157
168
2,836
18
(248)
2,931
1 January 2021
376
\u2013
6
\u2013
(70)
312
Total gain recognised in revenue
\u2013
\u2013
117
337
\u2013
454
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
389
(297)
\u2013
92
Fair value recognised in other income/(expense)
26
\u2013
\u2013
\u2013
7
33
Realised
(141)
\u2013
(101)
\u2013
\u2013
(242)
31 December 2021
261
\u2013
411
40
(63)
649
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
During the year, no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Fair value of financial assets / financial liabilities
Some of the Group\u2019s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
Futures, options and swaps classified as Level 1 financial assets and liabilities are measured using quoted prices in an active market.
Accounts receivable and payables, and certain futures, options, swaps, physical forwards, cross currency swaps, foreign currency and interest rate contracts classified as Level 2 financial assets and liabilities are measured using discounted cash flow models. Key inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required.
Call options over Glencore shares classified as Level 2 financial assets and liabilities are measured using an option pricing model. Key inputs include the current price of Glencore shares, strike price, maturity date of the underlying convertible debt security, risk-free rate and volatility.
Given the extent to which the Group recognises financial instrument assets and liabilities at fair value, the preparation of the Group\u2019s consolidated financial statements requires management to consider on an on-going basis, the key valuation metrics and judgements involved in the determination of the fair value of financial instruments. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Management reviewed the key valuation metrics, assumptions and methodologies involved in the determination of the Level 3 fair value of financial instruments and determined that the valuations were materially reasonable.
The\u00a0following table provides information on the valuation techniques and inputs used to determine the fair value of Level 3 financial assets and financial liabilities.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
Notes to the financial statements continued
30. Auditor\u2019s remuneration
US$\u00a0million
2022
20211
Remuneration in respect of the audit of Glencore's consolidated financial statements
21
20
Other audit fees, primarily in respect of audits of accounts of subsidiaries
5
5
Audit-related assurance services2
2
3
Total audit and related assurance fees
28
28
Other assurance services3
1
1
Total non-audit fees
1
1
Total professional fees
29
29
12021 restated to better reflect the nature of audit services.
2Audit-related assurance services primarily related to interim reviews of the Group\u2019s half-year accounts as well as bond issuances and comfort letters.
3Other assurance services primarily comprises assurance in respect of certain aspects of the Group\u2019s sustainability reporting.
31. Future commitments
Capital expenditure for the acquisition of property, plant and equipment is generally funded through the cash flow generated by the respective industrial entities. As at 31 December\u00a02022, $1,295\u00a0million (2021: $1,111\u00a0million), of which 94% (2021: 86%) relates to expenditure to be incurred over the next year, was contractually committed for the acquisition of property, plant and\u00a0equipment.
Certain of Glencore\u2019s exploration tenements and licences require it to spend a minimum amount per year on development activities, a significant portion of which would have been incurred in the ordinary course of operations. As at 31 December 2022, $118\u00a0million (2021: $118\u00a0million) of such development expenditures are to be incurred, of which 20% (2021: 27%) are for commitments to be settled over the next year.
As part of Glencore\u2019s ordinary sourcing and procurement of physical commodities and other ordinary marketing obligations, the selling party may request that a financial institution act as either a) the paying party upon the delivery of product and qualifying documents through the issuance of a letter of credit or b) the guarantor by way of issuing a bank guarantee accepting responsibility for Glencore\u2019s contractual obligations. Similarly, Glencore is required to post rehabilitation and pension guarantees in respect of some of these future, primarily industrial, long-term obligations. As at 31 December 2022, $7,965\u00a0million (2021: $8,965\u00a0million) of procurement and $4,256\u00a0million (2021: $4,353\u00a0million) of rehabilitation and pension commitments have been issued on behalf of Glencore, which will generally be settled simultaneously with the payment for such commodity and rehabilitation and pension obligations.
Astron related commitments
As part of the regulatory approval process relating to the acquisition of a 75% shareholding in Astron Energy, Glencore and Astron Energy entered into certain commitments (subject to variation for good cause) with the South Africa Competition Tribunal and the South African Economic Development Department. These commitments include investment expenditure of up to ZAR 6.5 billion ($384 million) over the period to 2024 so as to debottleneck and improve the performance of the Cape Town oil refinery, contribute to the rebranding of certain retail sites and establish a development fund to support small and black-owned businesses in Astron Energy\u2019s value chain.
Notes to the financial statements continued
32. Contingent liabilities
There were no corporate guarantees in favour of third parties as at 31\u00a0December 2022 (2021: None), except those disclosed in note 11. The Group is subject to various legal and regulatory proceedings as detailed below. These contingent liabilities are reviewed on a regular basis and where appropriate an estimate is made of the potential financial impact on the Group. As at 31 December 2022 and 2021, it was not feasible to make such an assessment.
Legal and regulatory proceedings
Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, a provision is recognised when Glencore has a present obligation (legal or constructive), as a result of a past event, and it is probable that an outflow of resources embodying economic benefits, that can be reliably estimated, will be required to settle the liability. A contingent liability is a possible obligation that arises from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Glencore. If it is not clear whether there is a present obligation, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the end of the reporting period. When a present obligation arises but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability, a contingent liability is disclosed.
Investigations by regulatory and enforcement authorities
As described in note 23, the Group remains subject to investigations by the OAG and Dutch authorities. At 31 December 2022, taking account of all available evidence, the Investigations Committee concluded that, with respect to these investigations, it is not probable that a present obligation existed at the end of the reporting period. In addition, the timing and amount, if any, of the possible financial effects (such as fines, penalties or damages, which could be material) or other consequences, including external costs, from the OAG and Dutch investigations and any change in their scope are not currently possible to predict or estimate.
The Group notes that other authorities may commence investigations against the Group in connection with the resolved investigations or the matters under investigation. In respect of these investigations, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these potential investigations as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Claims against the Company in connection with investigations by regulatory and enforcement authorities
Claims have been issued against the Group in the United Kingdom in connection with the various Government investigations, constituting claims on behalf of approximately 400 current and former shareholders. The claims are, inter alia, made under s90 of the Financial Services and Markets Act 2000 (\u2018FSMA\u2019) relating to prospectus liability, while two currently include s90A FSMA claims relating to misstatements in other information by the Company. The bases for the claims are that the prospectuses issued in 2011 and 2013 and other published information by the Company were untrue, misleading or contained omissions. The claims are at a very early stage.
The Group may be the subject of further legal claims brought by other parties in connection with the Government investigations, including collective, group or representative actions.
In respect of these claims, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these claims or potential claims as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Other legal proceedings
Other claims and unresolved disputes are pending against Glencore. However, based on the Group\u2019s current assessment of these matters any future individually material financial obligations are considered to be remote.
Environmental contingencies
Glencore\u2019s operations are subject to various environmental laws and regulations. Glencore is not aware of any material non-compliance with those laws and regulations. Glencore accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At this time, Glencore is unaware of any material environmental incidents at its locations. Any potential liability arising from environmental incidents in the ordinary course of the Group\u2019s business would not usually be expected to have a material adverse effect on its consolidated income, financial position or cash flows.
Notes to the financial statements continued
33. Related party transactions
In the normal course of business, Glencore enters into various arm\u2019s length transactions with related parties, including fixed price commitments to sell and to purchase commodities, forward sale and purchase contracts, agency agreements and management service agreements. Outstanding balances at period end are unsecured and settlement occurs in cash (see notes 12, 14 and 25). There have been no guarantees provided or received for any related party receivables or payables.
All transactions between Glencore and its subsidiaries are eliminated on consolidation along with any unrealised profits and losses between its subsidiaries, associates and joint ventures. In 2022, sales and purchases with associates and joint ventures amounted to $3,941\u00a0million (2021: $3,877\u00a0million) and $8,091\u00a0million (2021: $8,021\u00a0million), respectively.
Remuneration of key management personnel
Glencore\u2019s key management personnel are the members of the Board of Directors, CEO, CFO, General Counsel and Head of the Industrial activities segment. The remuneration of Directors and other members of key management personnel recognised in the consolidated statement of income including salaries and other current employee benefits amounted to $29 million (2021: $27 million). Amounts expensed relating to long-term benefits or share-based payments to key management personnel amounted to $7 million (2021 restated: $4 million). Further details on remuneration of Directors are set out in the Directors\u2019 remuneration report on page 119.
34. Principal subsidiaries with material non-controlling interests
Non-controlling interest is comprised of the following:
US$ million
2022
2021
Kazzinc
1,156
1,368
Koniambo
(5,745)
(5,180)
Kamoto Copper Company (KCC)
88
474
Volcan
(201)
(106)
Other1
511
430
Total
(4,191)
(3,014)
1Other comprises various subsidiaries in which no individual balance attributable to non-controlling interests is material, including a balance of $98 million relating to Mutanda. See below.
Renewal of Mutanda\u2019s mining licence and 5% dilution
Three mining permits (\u2018permis d\u2019exploitation\u2019) (PE662, PE643 and PE662) were successfully renewed by Mutanda Mining in 2022 for an additional period of 15 years. The renewal of the mining titles triggered the transfer of 5% of the equity of Mutanda Mining to the DRC government in accordance with the DRC Mining Code, which resulted in a $109 million non-controlling interest and an intangible asset related to the right to mine over a 15-year period being recognised (see note 10).
Summarised financial information in respect of Glencore\u2019s subsidiaries that have material non-controlling interest as at 31\u00a0December\u00a02022 and 2021, reflecting 100% of the underlying subsidiary\u2019s relevant figures, is set out below.
US$\u00a0million
Kazzinc
Koniambo
KCC
Volcan
31 December 2022
Non-current assets
3,377
507
4,429
1,723
Current assets
1,613
519
1,351
241
Total assets
4,990
1,026
5,780
1,964
Non-current liabilities
494
15,019
9,602
1,256
Current liabilities
673
147
1,456
405
Total liabilities
1,167
15,166
11,058
1,661
Net assets
3,823
(14,140)
(5,278)
303
Equity attributable to owners of the Company
2,667
(8,395)
(5,366)
504
Non-controlling interest
1,156
(5,745)
88
(201)
Non-controlling interest %
30.3%
51.0%
25.0%
76.7%
2022
Revenue
3,564
713
2,545
1,000
Expenses
(3,615)
(1,823)
(3,127)
(1,124)
Net loss for the year
(51)
(1,110)
(582)
(124)
Loss attributable to owners of the Company
(35)
(544)
(407)
(29)
Loss attributable to non-controlling interests
(16)
(566)
(175)
(95)
Total comprehensive loss for the year
(51)
(1,110)
(582)
(124)
Dividends paid to non-controlling interests
(196)
\u2013
(211)
\u2013
Net cash inflow/(outflow) from operating activities
549
(78)
898
234
Net cash outflow from investing activities
(335)
(19)
(393)
(245)
Net cash (outflow)/inflow from financing activities
(309)
112
(632)
(146)
Total net cash (outflow)/inflow
(95)
15
(127)
(157)
US$\u00a0million
Kazzinc
Koniambo
KCC
Volcan
31 December 2021
Non-current assets
4,210
434
5,266
1,796
Current assets
1,515
461
1,135
400
Total assets
5,725
895
6,401
2,196
Non-current liabilities
721
13,822
9,313
980
Current liabilities
480
104
804
789
Total liabilities
1,201
13,926
10,117
1,769
Net assets
4,524
(13,031)
(3,716)
427
Equity attributable to owners of the Company
3,156
(7,851)
(4,190)
533
Non-controlling interest
1,368
(5,180)
474
(106)
Non-controlling interest %
30.3%
51.0%
25.0%
76.7%
2021
Revenue
3,502
242
3,899
981
Expenses
(2,940)
(2,364)
(2,820)
(941)
Net profit/(loss) for the year
562
(2,122)
1,079
40
Profit/(loss) attributable to owners of the Company
392
(1,040)
837
9
Profit/(loss) attributable to non-controlling interests
170
(1,082)
242
31
Total comprehensive income/(loss) for the year
562
(2,122)
1,079
40
Dividends paid to non-controlling interests
(150)
\u2013
\u2013
\u2013
Net cash inflow/(outflow) from operating activities
837
(165)
1,708
318
Net cash outflow from investing activities
(318)
(13)
(301)
(174)
Net cash (outflow)/inflow from financing activities
(394)
193
(1,294)
(28)
Total net cash inflow
125
15
113
116
Notes to the financial statements continued
35. Principal operating, finance and industrial subsidiaries and investments
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal subsidiaries
Industrial activities
Cobar Management Pty Limited
Australia
100.0
100.0
Copper production
Compania Minera Lomas Bayas
Chile
100.0
100.0
Copper production
Complejo Metalurgico Altonorte SA
Chile
100.0
100.0
Copper production
Compania Minera Antapaccay S.A.
Peru
100.0
100.0
Copper production
Pasar Group
Philippines
78.2
78.2
Copper production
Glencore Recycling LLC
USA
100.0
100.0
Copper production
Polymet Mining Corp.
Canada
71.0
71.5
Copper production
Kamoto Copper Company SA1
DRC
75.0
75.0
Copper/Cobalt production
Mutanda Group
DRC
95.0
100.0
Copper/Cobalt production
Mount Isa Mines Limited
Australia
100.0
100.0
Copper/Zinc/Lead production
Kazzinc Ltd
Kazakhstan
69.7
69.7
Copper/Zinc/Lead production
Zhayremsky Gorno-Obogatitelny Kombinat JSC
Kazakhstan
69.7
69.7
Copper/Zinc/Lead production
Altyntau Kokshetau JSC
Kazakhstan
69.7
69.7
Gold production
Britannia Refined Metals Limited
UK
100.0
100.0
Lead production
Access World Group
Switzerland
\u2013
100.0
Logistics services
Murrin Murrin Operations Pty Ltd
Australia
100.0
100.0
Nickel production
Koniambo Nickel S.A.S.2
New Caledonia
49.0
49.0
Nickel production
Glencore Nikkelverk AS
Norway
100.0
100.0
Nickel production
McArthur River Mining Pty Limited
Australia
100.0
100.0
Zinc production
Nordenhamer Zinkh\u00fctte GmbH
Germany
100.0
100.0
Zinc production
Asturiana de Zinc S.A.U.
Spain
100.0
100.0
Zinc production
Volcan Companja Minera S.A.A.3
Peru
23.3
23.3
Zinc production
Portovesme S.r.L.
Italy
100.0
100.0
Zinc/Lead production
Empresa Minera Los Quenuales S.A.
Peru
\u2013
97.6
Zinc/Lead production
Sinchi Wayra Group
Bolivia
\u2013
100.0
Zinc/Tin production
1Refer to note 34.
2The Group has control of Koniambo Nickel S.A.S. as a result of the ability to direct the key activities of the operation and to appoint key management personnel provided by the terms of the financing arrangements underlying the Koniambo project.
3The Group has control of Volcan Compania Minera S.A.A. as a result of the ability to control the entity through the voting of its 63.0% of the voting shares (Class A); the economic interest is diluted by the outstanding non-voting shares (Class B).
Country of incorporation
% interest 2022
% interest 2021
Main activity
Industrial activities
Oakbridge Pty Limited
Australia
98.2
98.2
Coal production
Cumnock No. 1 Colliery Pty Limited
Australia
100.0
100.0
Coal production
Rolleston Coal Holdings Pty Limited
Australia
100.0
100.0
Coal production
Mangoola Coal Operations Pty Limited
Australia
100.0
100.0
Coal production
Mt Owen Pty Limited
Australia
100.0
100.0
Coal production
NC Coal Company Pty Limited
Australia
100.0
100.0
Coal production
Ravensworth Operations Pty Limited
Australia
100.0
100.0
Coal production
Ulan Coal Mines Pty Limited
Australia
100.0
100.0
Coal production
Prodeco group
Colombia
100.0
100.0
Coal production
Umcebo Mining (Pty) Ltd4
South Africa
48.7
48.7
Coal production
ARM Coal (Proprietary) Limited4
South Africa
47.5
47.5
Coal production
Carbones del Cerrej\u00f3n Limited5
Anguilla
100.0
\u2013
Coal production
Glencore Exploration Cameroon Ltd.
Bermuda
100.0
100.0
Oil production
Glencore Exploration (EG) Limited
Bermuda
100.0
100.0
Oil production
Petrochad (Mangara) Limited
Bermuda
\u2013
100.0
Oil exploration/production
Astron Energy (Pty) Ltd
South Africa
72.0
72.0
Oil refining / distribution
Marketing activities and other operating and finance
Xstrata Limited
UK
100.0
100.0
Holding
Glencore Australia Investment Holdings Pty Ltd
Australia
100.0
100.0
Holding
Glencore Operations Australia Pty Limited
Australia
100.0
100.0
Holding
Glencore Queensland Limited
Australia
100.0
100.0
Holding
Glencore Investment Pty Limited
Australia
100.0
100.0
Holding
Glencore Australia Holdings Pty Limited
Australia
100.0
100.0
Finance
Glencore Finance (Bermuda) Ltd.
Bermuda
100.0
100.0
Finance
Alesat Combustiveis S.A.
Brazil
88.0
88.0
Oil distribution
Topley Corporation
B.V.I.
100.0
100.0
Ship owner
Glencore Finance (Canada) Limited
Canada
100.0
100.0
Finance
Glencore Finance (Europe) Limited
Jersey
100.0
100.0
Finance
Glencore Capital Finance Designated Activity Company
Ireland
100.0
100.0
Finance
Finges Investment B.V.
Netherlands
100.0
100.0
Finance
Glencore (Schweiz) AG
Switzerland
100.0
100.0
Finance
Glencore Group Funding Limited
UAE
100.0
100.0
Finance
Glencore Funding LLC
USA
100.0
100.0
Finance
Glencore Australia Oil Pty Limited
Australia
100.0
100.0
Operating
Glencore Canada Corporation
Canada
100.0
100.0
Operating
Glencore Chile SpA
Chile
100.0
100.0
Operating
Glencore China Ltd.
China
100.0
100.0
Operating
Glencore Singapore Pte. Ltd.
Singapore
100.0
100.0
Operating
ST Shipping and Transport Pte. Ltd.
Singapore
100.0
100.0
Operating
Glencore AG (Ltd/SA)
Switzerland
100.0
100.0
Operating
Glencore International AG (Ltd/SA)
Switzerland
100.0
100.0
Operating
Glencore Commodities Ltd
UK
100.0
100.0
Operating
Glencore Energy UK Ltd.
UK
100.0
100.0
Operating
Glencore UK Ltd.
UK
100.0
100.0
Operating
4Although Glencore holds less than 50% of the voting rights, it has the ability to exercise control over Umcebo as a result of shareholder agreements which provide Glencore the ability to control the Board of Directors.
5In 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (see note 26).

Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal joint ventures6
Viterra Group
Jersey
49.9
49.9
Agriculture business
Compania Minera Dona Ines de Collahuasi SCM
Chile
44.0
44.0
Copper production
Principal joint operation and other unincorporated arrangement7
Bulga Joint Venture
Australia
87.5
85.9
Coal production
Hail Creek Joint Venture
Australia
84.7
84.7
Coal production
Hunter Valley Operations Joint Venture
Australia
49.0
49.0
Coal production
Liddell and Foybrook Joint Ventures
Australia
67.5
67.5
Coal production
Oaky Creek Coal Joint Venture
Australia
55.0
55.0
Coal production
United Wambo Joint Venture
Australia
47.5
47.5
Coal production
Goedgevonden Joint Venture
South Africa
74.0
74.0
Coal production
Ernest Henry Mining Pty Ltd
Australia
\u2013
70.0
Copper production
Glencore Merafe Chrome Pooling and Share Joint Venture
South Africa
79.5
79.5
Ferroalloys production
Glencore Bakwena-Ba-Mogopa Rhovan Pooling and Sharing Joint Venture
South Africa
74.0
74.0
Vanadium production
6The principal joint arrangements are accounted for as joint ventures as the shareholder agreements do not provide the Group the ability to solely control the entities.
7Classified as joint operations under IFRS 11, as these joint arrangements convey a direct right to a share of the underlying operations\u2019 assets, liabilities, revenues and expenses. The Hail Creek interest is an \u2018other unincorporated arrangement\u2019 accounted for similar to a joint operation.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal associates
Carbones del Cerrej\u00f3n LLC8
Anguilla
\u2013
33.3
Coal production
Newcastle Coal Shippers Pty Limited
Australia
50.2
50.2
Coal terminal
GS Coal Holdings Pty Ltd
Australia
50.0
50.0
Coal production
Richards Bay Coal Terminal Company Limited
South Africa
19.3
19.3
Coal terminal
Century Aluminum Company9
USA
46.1
46.4
Aluminium production
PT CITA Mineral Investindo Tbk
Indonesia
31.7
31.7
Alumina production
HG Storage International Limited
Jersey
49.0
49.0
Oil storage
Noranda Income Fund
Canada
25.0
25.0
Zinc production
Compania Minera Antamina S.A.
Peru
33.8
33.8
Zinc/Copper production
Minera Agua Rica Alumbrera Limited
Cayman Islands
43.7
25.0
Copper production
8In 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (see note 26).
9Represents the Group\u2019s economic interest in Century, comprising 42.9% (2021: 42.9%) voting interest and 3.2% non-voting interest (2021: 3.4%). Century is publicly traded on NASDAQ under the symbol CENX.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Other investments
Shenzhen Energy Gas Investment Holding Co., Ltd
China
7.8
\u2013
Energy distribution
EN+ GROUP IPJSC
Russia
10.6
10.6
Aluminium production
36. Subsequent events
  • On 1 February 2023, the Group cancelled 286,200,066 of treasury shares amounting to $1,115 million. Following the cancellation, the total number of issued ordinary shares is 13,800,000,000 and the number of ordinary shares in treasury is 1,079,521,793.
  • On 24 February 2023, the Group announced the commencement of a new $1.5 billion share buyback programme, with intended completion by the time of the Group\u2019s interim results announcement in August 2023.
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1. Accounting policies
Corporate information
Glencore plc (the \u2018Company\u2019, \u2018Parent\u2019, the \u2018Group\u2019 or \u2018Glencore\u2019), is a leading integrated producer and marketer of natural resources, with worldwide activities in the production, refinement, processing, storage, transport and marketing of metals and minerals and energy products. Glencore operates on a global scale, marketing and distributing physical commodities sourced from third party producers and own production to industrial consumers, such as those in the battery, electronic, construction, automotive, steel, energy and oil industries. Glencore also provides financing, logistics and other services to producers and consumers of commodities. In this regard, Glencore seeks to capture value throughout the commodity supply chain. Glencore\u2019s long experience as a commodity producer and merchant has allowed it to develop and build upon its expertise in the commodities which it markets and cultivate long-term relationships with a broad supplier and customer base across diverse industries and in multiple geographic regions.
Glencore is a publicly traded limited company incorporated in Jersey and domiciled in Switzerland, at Baarermattstrasse 3, 6340 Baar. Its ordinary shares are traded on the London and Johannesburg stock exchanges.
These consolidated financial statements were authorised for issue in accordance with a Directors\u2019 resolution on 22 March 2023.
Statement of compliance
The consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of:
  • International Financial Reporting Standards (IFRS) adopted by the United Kingdom; and
  • IFRS as issued by the International Accounting Standards Board (IASB).
Climate change related considerations
The Group remains committed to emissions (Scope 1, 2 and 3) reduction targets, relative to a 2019 baseline, of 15% by 2026 and 50% by 2035 and has an ambition to achieve, with a supportive policy environment, net zero industrial asset emissions by 2050. The Group is committed to reaching the 2026 and 2035 targets without reliance on coordinated changes in government policies. We recognise that to achieve our long-term ambition there is a need for significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. Our long term ambition is therefore subject to such a supportive policy environment and, for that reason, we have expressed it as an ambition rather than a target, which is more appropriate for activities and actions deemed within our direct control.
The accounting-related measurement and disclosure items that are most impacted by our commitments, and climate change risk more generally, relate to those areas of the financial statements that are prepared under the historical cost convention and are subject to estimation uncertainties in the medium to long term. Climate change impacts can also introduce more volatility in assets and liabilities carried at fair value. Future changes to the Group\u2019s climate change strategy or realisation of global decarbonisation ambitions quicker than currently anticipated may impact some of the Group\u2019s significant judgements and key estimates and result in material changes to financial results and the carrying values of certain assets and liabilities in future reporting periods. The Group\u2019s current climate change strategy is reflected in the Group\u2019s significant judgements and key estimates, and therefore the Financial Statements, as follows:
(i) Property, plant and equipment and Intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with our climate change commitments and ambition. Property, plant and equipment and intangible assets policies are further covered below and within impairment and impairment reversal estimation uncertainties, together with key estimates and sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions, which could also change the useful economic lives of the related assets. Sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions on the rate of depreciation / amortisation of our fossil fuel related property, plant and equipment and intangible assets are outlined below in the key estimation uncertainty \u2013 impairments and impairment reversals.
Notes to the financial statements continued
1. Accounting policies continued
(ii) Restoration, rehabilitation and decommissioning provisions \u2013 estimation of the timing of closure and rehabilitation activities
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Many of these rehabilitation and decommissioning events are expected to take place when the underlying commercial reserves are extracted and the operations move into closure mode. Our current estimates of the timing of these closure activities align with the trajectory of our climate change emissions reduction commitments and ambition. Sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions (i.e. the timing of the restoration, rehabilitation and decommissioning costs) of our fossil fuel related obligations are outlined below in the key estimation uncertainty - restoration, rehabilitation and decommissioning costs.
(iii) Property, plant and equipment and Intangible assets (including the carrying value of goodwill in our coal marketing CGU) \u2013 estimation of the valuation of assets and potential impairment charges or reversals
The Group acknowledges that there is a wide range of possible energy transition scenarios, including those aligned with the Paris Agreement goals, that would indicate different outcomes for individual commodities. The decarbonisation transition could result in increasing or decreasing demand for the Group\u2019s various commodities, due to policy, regulatory (including carbon pricing mechanisms), legal, technological, market or societal responses to climate change, which, on the negative side, may result in some or all of a cash-generating unit\u2019s reserves becoming uneconomic to extract and / or our coal marketing CGU no-longer being able to generate returns and realise the benefits of its associated goodwill balance.
We use carbon price scenarios to assess the potential impacts on commodity specific operating cost curves and related supply / demand outcomes, arising from existing and future potential carbon pricing regulation. A key component of this analysis is to understand the potential development of a range of underlying cost curve structures over time and to consider, identify and make reasonable judgments, on the extent to which costs are likely to be passed onto the end-consumer. Our analysis shows that under the IEA\u2019s NZE2050 scenario, marginal supply costs would increase by 10% to over 60%, for the range of our most relevant and material commodities. We expect the rising cost of carbon will increase operating costs, increasing the cost of production, which, in turn, would ordinarily be passed on to consumers. In fact, first and second quartile (below average) emission intensity producers, where we see the weighted average of our portfolio residing, are likely to see margin expansion.
Notwithstanding the above, for coal and other fossil fuels, should global decarbonisation ambitions materialise along an Announced Pledges scenario or other more ambitious net zero scenario, essentially an accelerated displacement of coal and other fossil fuels as an energy source, the potential impact on the current carrying value of these cash generating units is outlined below in the key estimation uncertainty \u2013 impairments and impairment reversals (Sensitivity to demand for fossil fuels). It should be noted that, under accelerated emission reduction scenarios, we would expect to see positive valuation developments within our industrial production portfolio exposed to the metals currently required to deliver such rapid decarbonisation scenarios, including copper, nickel and cobalt.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of\u00a0the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and relevant under the circumstances, independent estimates, quoted market prices and common industry standard modelling techniques. Actual outcomes could result in a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Glencore has identified the following areas as being critical to understanding Glencore\u2019s financial position as they require management to make complex and/or subjective judgements, estimates and assumptions about matters that are inherently uncertain:
Critical accounting judgements
In the process of applying Glencore\u2019s accounting policies, management has made the following judgements based on\u00a0the relevant facts and circumstances including macro-economic circumstances and, where applicable, interpretation of underlying agreements, which have the most significant effect on the amounts recognised in the consolidated financial\u00a0statements.
Notes to the financial statements continued
1. Accounting policies continued
(i) Determination of control of subsidiaries and joint arrangements
Judgement is required to determine when Glencore has control of subsidiaries or joint control of joint or other unincorporated arrangements. This requires an assessment of the relevant activities (those relating to the operating and capital decisions of the arrangement, such as: the approval of the capital expenditure programme for each year, and appointing, remunerating and\u00a0terminating the key management personnel or service providers of the operations) and when the decisions in relation to those activities are under the control of Glencore or require unanimous consent. See note 26 for a summary of the acquisitions of subsidiaries completed during 2022 and 2021 and the key judgements made in determining control thereof.
Judgement is also required in determining the classification of a\u00a0joint arrangement between a joint venture or a joint operation through an evaluation of the rights and obligations arising from the arrangement and in particular, if the joint arrangement has been structured through a separate vehicle, further consideration is required of whether:
(1)the legal form of the separate vehicle gives the parties rights to the assets and obligations for the liabilities;
(2)the contractual terms and conditions give the parties rights to the assets and obligations for the liabilities; and
(3)other facts and circumstances give the parties rights to the assets and obligations for the liabilities.
Joint arrangements in which the primary activity is the provision of output to the shareholders, typically convey substantially all the economic benefits of the assets to the parties and judgement is required in assessing whether the terms of the offtake agreements and any other obligations for\u00a0liabilities of the arrangement result in the parties being substantially the only source of cash flows contributing to the\u00a0continuity of the operations of the arrangement.
Certain joint arrangements that are structured through separate vehicles including Collahuasi and Viterra are accounted for as joint ventures. The Collahuasi arrangement is primarily designed for the provision of output to the shareholders sharing joint control, the offtake terms of which are at prevailing market prices and the parties are not obligated to cover any potential funding shortfalls. In management\u2019s judgement, Glencore is not the only possible source of funding and does not have a direct or indirect obligation to the liabilities of the arrangement, but rather shares in its net assets and, therefore, such arrangements have been accounted for as joint ventures.
Differing conclusions around these judgements may materially impact how these businesses are presented in the consolidated financial statements \u2013 under the full consolidation method, equity method or recognition of Glencore\u2019s share of assets, liabilities, revenue and expenses, including any assets or liabilities held jointly. See note 11 for a summary of these joint arrangements and the key judgements made in determining the applicable accounting treatment for any material joint arrangements entered during the year.
(ii) Classification of transactions which contain a financing element (notes 21, 22 and 25)
Transactions for the purchase of commodities may contain a financing element such as extended payment terms. Under such an arrangement, a financial institution may issue a letter of credit on behalf of Glencore and act as the paying party upon delivery of product by the supplier and Glencore will subsequently settle the liability directly with the financial institution, generally from 30 up to 90 days after physical supply. Judgement is required to determine the most appropriate classification and presentation of these transactions within the statements of cash flows and financial position. In determining the appropriate classification, management considers the underlying economic substance of the transaction and the significance of the financing element to the transaction. Typically, the economic substance of the transaction is determined to be operating in nature as the financing element is insignificant and the time frame in which the original arrangement is extended by, is consistent and within supply terms commonly provided in the market. As a result, the entire cash flow is presented as operating in the statement of cash flows with a corresponding trade payable in the statement of financial position. As at 31 December 2022, trade payables include $7,504 million (2021: $8,565 million) of such liabilities arising from supplier financing arrangements, the weighted average of which extended settlement of the original payable to 67 days (2021: 77 days) after physical supply and are due for settlement 35 days (2021: 33 days) after year end. There was no significant exposure to any individual financial institution under these arrangements. These payables are not included within net funding and net debt as defined in the APMs section.
(iii) Classification of physical liquefied natural gas (LNG) purchase and sale contracts at amortised cost or fair value through profit and loss (notes 28 and 29)
Judgement is required to determine the appropriate IFRS 9 classification of physical LNG purchase and sale contracts as being measured within the scope of IFRS 9 at fair value through profit and loss or as executory contracts. This requires an assessment of whether the contracts to buy or sell LNG (a non-financial item) can be settled net in cash or with another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, and whether there is a past practise of net settling similar contracts. Those physical LNG contracts that can be net settled are considered to be derivatives, measured at fair value through profit or loss (see notes 28 and 29). Contracts that do not meet the definition of derivatives are considered own use contacts and are to be accounted for as executory contracts.
Notes to the financial statements continued
1. Accounting policies continued
Differing conclusions around classification of these contracts, may materially impact their presentation as financial assets or liabilities and any fair value adjustments recognised through profit and loss. As at 31 December 2022, the net fair value of physical LNG contracts on the statement of financial position is $2,533 million (2021: $912 million) comprising a $2,552 million forward physical asset and a $19 million forward physical liability (2021: $1,786 million forward physical asset and $874 million forward physical liability).
(iv) Investigations by regulatory and enforcement authorities and claims against the company in connection with the investigations \u2013 Critical judgement in relation to whether a present obligation exists (note 32).
(v) Impact of carbon pricing \u2013 refer to climate change related considerations above. No material change to the Group\u2019s related accounting estimates is expected within the next financial year as a result of this judgement.
(vi) Valuation of investments in EN+ and Rosneft (note 11). No material change to the Group\u2019s related accounting estimates is expected within the next financial year as a result of this judgement.
Key sources of estimation uncertainty
In the process of applying Glencore\u2019s accounting policies, management has made key estimates and assumptions concerning the future and other key sources of estimation uncertainty. The key assumptions and estimates at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future\u00a0periods.
(i) Recognition of deferred tax assets and uncertain tax positions (note 8)
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether there will be sufficient taxable income available to offset the tax assets when they do reverse. These judgements and estimates are subject to risk and uncertainty and therefore, to the extent assumptions regarding future profitability change, there can be a material increase or decrease in the amounts recognised in the consolidated statement of income in the period in which the change occurs, notably the deferred tax asset and uncertain tax position of the Group\u2019s DRC operations as outlined in note 8. The recoverability of the Group\u2019s deferred tax assets and the completeness and accuracy of its uncertain tax positions, including the estimates and assumptions contained therein are reviewed regularly by management.
(ii) Impairments and impairment reversals (note 7)
Investments in associates and joint ventures, advances and loans, property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an individual asset or a cash-generating unit (CGU) may not be fully recoverable, or at least annually for CGUs to which goodwill and other indefinite life intangible assets have been allocated. Indicators of impairment may include changes in the Group\u2019s operating and economic assumptions, including those arising from changes in reserves or mine planning, updates to the Group\u2019s commodity supply, demand and price forecasts, or the possible impacts from emerging risks such as those related to climate change and the transition to a low carbon economy. If an asset or CGU\u2019s recoverable amount is less than its carrying amount, an impairment loss is recognised in the consolidated statement of income. For those assets or CGUs which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, an impairment reversal is recorded in the consolidated statement of income. Future cash flow estimates which are used to calculate the asset\u2019s or CGU\u2019s recoverable amount are discounted using asset or CGU specific discount rates and are based on expectations about future operations (including their alignment with our emissions reduction commitments and long-term ambition), using a combination of internal sources and those inputs available to a market participant, which primarily comprise estimates about production and sales volumes, commodity prices (considering current and future prices and price trends including factors such as the current global trajectory of climate change), legally enacted carbon taxes, reserves and resources, operating costs and capital expenditures. Estimates are reviewed regularly by management. Changes in such estimates and in particular, deterioration in the commodity pricing outlook, could impact the recoverable amounts of these assets or CGUs, whereby some or all of the carrying amount may be impaired or the impairment charge reversed (if pricing outlook improves significantly or the service potential of the asset or CGU has otherwise increased from the time of the previous impairment) with the impact recorded in the statement of income.
Notes to the financial statements continued
1. Accounting policies continued
As referred to above and further described below in the \u2018impairment or impairment reversals\u2019 accounting policy, the Group carries out, at least annually, an impairment assessment. Following this review, indicators of impairment or impairment reversal were identified for various CGUs, including those due to changes in the underlying commodity price environment most influencing the respective operation. The Group assessed the recoverable amounts of these CGUs and as at 31 December 2022, except for those CGUs disclosed in note 7, the estimated recoverable amounts exceeded the carrying values. For certain CGUs where no impairment was recognised, should there be a significant deterioration or improvement in the key assumptions, a material impairment or reversal could result within the next financial year. A summary of the carrying values, the key / most sensitive assumptions and a sensitivity impact of potential movements in these assumptions for each such CGU with limited headroom (relative to its estimated recoverable amount) is shown below. In providing sensitivity analysis (and particularly on commodity price assumptions), a 10% change, representing a typical deviation parameter common in the industry, has generally been provided. Where a higher or lower percentage is reasonably possible on an operational assumption, this has been clearly identified.
Katanga
Katanga\u2019s non-current capital employed is carried at approximately $3,800 million. The valuation is sensitive to price and a deterioration in this key assumption could result in an impairment. The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve could result in a $440 million impairment. A 10% reduction in the cobalt price assumption across the curve is not expected to result in an impairment.
Mutanda
Mutanda\u2019s non-current capital employed is carried at approximately $2,300 million, inclusive of a $109 million intangible asset recognised during the year and net of an accumulated impairment of $955 million. Following care and maintenance status since 2019, a limited restart of operations commenced in 2021, utilising stockpiles of oxide ore. The valuation includes value attributable to the long-term copper / cobalt sulphide mining and processing development potential. The valuation is sensitive to price and eventual commercialisation and ramp-up of the sulphide project, and deteriorations or improvements in these key assumptions may result in additional impairments or reversals.
The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve is not expected to result in a further impairment, whereas a 10% reduction in the realised cobalt price assumption (across the curve) could result in a further $150 million impairment. Should the copper and cobalt assumptions rise by 10% (across the curve), the previously recognised impairment could be reversed in its entirety.
Kazzinc Smelting
Management has assessed that the Kazzinc business comprises three CGUs: the core Kazzinc Smelting (integrated mining and smelting operations); the Zhairem zinc/lead mine; and the Vasilkovsky gold mine.
Kazzinc Smelting has not been impaired in the past or in the current year. However, industry cost pressures, including energy inputs and additional taxes, are such that there is no appreciable difference between carrying value and recoverable value. Should zinc prices move higher in line with the industry cost curve and/or stronger demand, the recoverable value could increase. Conversely, in a recessionary scenario the recoverable value could be lower than the carrying value.
Kazzinc Smelting\u2019s non-current capital employed is carried at approximately $1,300 million. The valuation is sensitive to price and the realisation of certain operational efficiencies, and deteriorations in these key assumptions may result in an impairment.
The short to long-term zinc price assumption was $3,250 - $2,450/t and the discount rate was 11%. A 10% reduction in the zinc price assumption (across the curve) could result in a $200 million impairment. A 1% increase in the discount rate could result in a
$130 million impairment. Equivalent upside sensitivities are materially symmetrical with the downsides illustrated.
Zhairem has been impaired in 2022 (refer note 7).
Management does not expect that any reasonably possible changes in assumptions could lead to an impairment of Vasilkovsky within the next financial year.
Climate change (additional illustrative disclosures)
Based on the current pricing environment, we do not consider there to be a reasonably possible change in the next financial year in key assumptions that would result in a material change in carrying values of any of our coal CGUs. With respect to our oil CGUs, a change in oil refining margin assumptions (across the curve) of $1/bbl is reasonably possible and could result in a $220 million change (increase or decrease) to the carrying value of the Astron Energy CGU.
All other sensitivities below are reasonably possible changes in assumptions beyond the next financial year.
Notes to the financial statements continued
1. Accounting policies continued
Energy fossil fuels industrial operations
Our base case price assessment takes into account the short-, medium- and longer-term seaborne coal demand outlook. Achieving our net zero ambition by 2050 assumes significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. In particular, economic and regulatory incentivisation of such shift, whether through carbon pricing and / or incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, could result in different financial results on the same tonnage profile.
Our assessment applies a value in use methodology. Glencore is not progressing thermal coal greenfield investments. However, we plan to continue to progress various brownfield coal extensions or expansions at existing mines as included in the life of mine plans, while continuing to be a responsible steward of these assets, as we progress the phase down of our global coal portfolio. We assume that, beyond the next 3 years when shorter term pricing assumptions have been used, through the remaining life of mine, there will continue to be a market for thermal coal at a real Newcastle FOB export price of $90/tonne (6,000 NAR), South African FOB export price of $90/tonne and Colombian FOB price of $88/tonne, which represents our best current estimate of long term pricing based on our view of projected likely supply and demand fundamentals and the industry cost structure. The increase over the equivalent prices presented in our 2021 analysis largely reflects inflation in the intervening year.
Notwithstanding these assumptions, we present illustrative impairments arising under alternate price scenarios. Glencore\u2019s scenarios were developed in 2020, drawing principally, though not exclusively, on the IEA scenarios available at the time. The next update will be in 2023 as part of our climate strategic review. For these 2022 price sensitivities, we have drawn from the IEA\u2019s latest World Energy Outlook 2022 (WEO 2022) climate scenarios, described below:
  • IEA\u2019s Stated Policies Scenario (STEPS) (WEO 2022 prices) \u2013 the impact of existing policy frameworks and announced policy intentions, subject to the IEA\u2019s assessment of the likelihood of such ambitions being implemented (reflecting an updated outlook consistent with our \u2018Current Pathway\u2019 scenario);
  • IEA\u2019s Announced Pledges Scenario (APS) (WEO 2022 prices) \u2013 the impact of all major national announcements of 2030 targets and longer term net zero and other pledges, regardless of whether these have been anchored in legislation or nationally determined contributions;
  • IEA\u2019s Net Zero Emissions by 2050 Scenario (NZE) (WEO 2022 prices) \u2013 a pathway for the global energy sector to achieve net zero emissions by 2050 (reflecting an updated outlook consistent with our \u2018Radical Transformation\u2019 scenario).
The IEA no longer publishes assumptions relating to the Sustainable Development Scenario (SDS).
In addition, for illustrative purposes, we have shown a Complete Displacement Scenario (CDS) \u2013 reflecting the impact of fossil fuels being immediately displaced as an energy source and the resulting immediate fall in commodity prices to zero.
Our life of mine planning reflects operating cash flows which are consistent with achieving our emissions reduction targets and 2050 net zero emissions ambition. Overall our portfolio\u2019s production is heavily weighted towards the earlier part of these time frames. Based on the life of mine plan and remaining production as at 31 December 2022, we have illustrated this by showing the year in which 50% and 80% of saleable coal would be expected to be extracted under our current plans, being 2029 and 2036, respectively. If and while there is demand for coal, and it is economic to do so, we plan to continue to operate our mines to the end of their economic life and in accordance with our climate commitments, while not exceeding our 150 million tonnes per annum consolidated production cap.
The sensitivities are presented on price alone and assume no mitigating actions; therefore the impairments in each scenario are likely higher than would transpire. In practice, in a sustained low price environment, management would alter mine plans to cut operating and capital costs, potentially at the expense of future volumes, in order to reduce the overall NPV impact.
The STEPS, APS and NZE sensitivity prices adopted are those included in the documentation to WEO 2022, except that IEA thermal coal prices are on a delivered basis. These have been adjusted to FOB pricing on the basis of forward freight costs. Furthermore, in determining the Colombian FOB price, we have used a weighting of the IEA Japan and IEA European prices to take into account that Colombian coal sold from Cerrej\u00f3n is likely to be delivered to a combination of different markets in the future as coal demand in Europe declines.
The IEA assumes, in each scenario, additional decarbonisation measures leading to declining fossil fuel prices by the years 2030 and 2050, anchored in each case in a 2021 baseline. For the purpose of our climate change sensitivities below, we have assumed linear progression of prices between these points. Our base case reflects higher longer-term prices than in each of the IEA\u2019s climate scenarios reflecting our assessment of the supply and demand outlook and the industry cost structure.
Notes to the financial statements continued
1. Accounting policies continued
Cash-generating unit
US$ million
Thermal Australia
South Africa
Cerrej\u00f3n
Total thermal coal
Oil E&P
Base case assumptions in life of mine plan:
\u2013 LOM saleable tonnes (Glencore consolidated) (million tonnes)/ (million bbls)
960
320
200
15
\u2013 projected year when 50% LOM tonnage / reserves depleted
2030
2030
2026
2029
2024
\u2013 projected year when 80% LOM tonnage / reserves depleted
2037
2035
2029
2036
2026
\u2013 long-term price (Newcastle FOB / API4 FOB / Col FOB) ($/t) / (Brent oil price) ($/bbl) (real terms)
90
90
88
75
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
11.7%
10.5%
11.6%
Benchmark prices over LOM in selected scenarios ($/t, $/bbl):
2021-'30-'50
2021-'30-'50
2021-'30-'50
2021-'30
\u2013 IEA STEPS
156 - 86 - 66
146 - 79 - 62
131 - 68 - 63
78 - 93
\u2013 IEA APS
156 - 67 -51
146 - 61 - 48
131 - 70 - 50
78 - 72
\u2013 IEA NZE
156 - 50 - 36
146 - 44 - 32
131 - 59 - 38
78 - 40
\u2013 CDS
n.a.
n.a.
n.a.
n.a.
Carrying value of non-current capital employed as at
31 December 2022
7,238
1,986
956
10,180
200
Impairment arising in selected scenarios:
\u2013 IEA STEPS
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013 IEA APS
\u2013
740
\u2013
740
26
\u2013 IEA NZE
840
1,600
\u2013
2,400
110
\u2013 CDS1
8,613
2,318
2,093
13,024
285
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
9,210
2,976
2,349
14,535
312
Investments in associates and other investments
555
32
\u2013
587
\u2013
Deferred tax liabilities
(1,152)
(690)
(256)
(2,098)
(27)
Non-current provisions
(1,123)
(394)
(1,134)
(2,651)
(85)
Other non-current net assets/(liabilities)
(252)
62
(3)
(193)
\u2013
1In this scenario, we assume the impairment of non-current assets (net of deferred tax) while non-current liabilities, including rehabilitation, would be retained on balance sheet.
The prior year disclosure illustrated impairments under each of the IEA\u2019s scenarios, whereas the above table reflects impairments only in the NZE scenario (for Australia and South Africa) and the APS (for South Africa only). This mainly reflects materially higher shorter term prices in the various scenarios.
No impairment is projected for Cerrej\u00f3n using any of the IEA\u2019s scenarios, given that the current mine plan reflects expiry of mining leases by 2034, meaning the mine would not be exposed to the lower prices at the longer end of the price curves.
Following the disposal of Glencore\u2019s upstream Chad oil operations in 2022, the remaining portfolio (non-operated) is weighted towards natural gas, with the currently approved production profile expected to reach 80% extraction by 2026.
Notes to the financial statements continued
1. Accounting policies continued
Other fossil fuel related capital employed NPV sensitivities
Cash-generating unit
US$ million
Coking coal
Astron Energy
Coal
marketing goodwill
Base case assumptions in life of asset plan:
\u2013 LOA saleable tonnes (millions) / Refinery steady-state capacity ('000 bbls)
100
100k bopd
n.a.
\u2013 projected year when 50% LOA reserves depleted
2027
n.a.
n.a.
\u2013 projected year when 80% LOA reserves depleted
2032
n.a.
n.a.
\u2013 long-term price (hard coking coal) ($/t) (real terms)
175
n.a.
n.a.
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
9.6%
n.a.
\u2013 price to earnings multiple
12x
Percentage decrease to long-term pricing/PE multiples:
\u2013 25% price / $1/bbl refining margin1 / 2x PE (17%) decrease
131
n.a.
10x
\u2013 30% price / $2/bbl refining margin / 4x PE (33%) decrease
123
n.a.
8x
Carrying value of non-current capital employed as at 31 December 2022
1,654
876
1,674
Impairment arising in selected scenarios:
\u2013 25% price decrease across the curve / $1/bbl refining margin1 / 2x PE (17%) decrease
100
220
\u2013
\u2013 30% price decrease across the curve / $2/bbl refining margin / 4x PE (33%) decrease
390
450
400
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
1,950
835
1,674
Investments in associates and other investments
4
2
Deferred tax liabilities
(87)
\u2013
Non-current provisions
(213)
(4)
Other non-current net assets
\u2013
43
1The change in refining margin by $1/bbl is considered to be a reasonably possible change in our assumptions for Astron Energy within the next financial year.
Climate change sensitivities \u2013 property, plant and equipment and intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with, and reflects, our emissions reduction commitments and ambition. The current carrying value of our property, plant and equipment and intangible assets related to our fossil fuels operations is $17,633 million, and the depreciation / amortisation related to these balances recognised in 2022 was $2,740 million, implying an average accounting determined useful life of 6.5 years.
Notes to the financial statements continued
1. Accounting policies continued
(iii) Restoration, rehabilitation and decommissioning costs (note 23)
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to\u00a0be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Most of these rehabilitation and decommissioning events are expected to take place many years in the future and the currently estimated requirements and costs that will have to be met when the restoration events occur are inherently uncertain and could materially change over time.
In calculating the appropriate provision for the expected restoration, rehabilitation or decommissioning obligations, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof, are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability and the currency in which they are denominated.
Any changes in the expected future costs or risk-free rate are initially reflected in both the provision and the asset and subsequently in the consolidated statement of income over the remaining economic life of the asset. As the actual future costs can differ from the estimates due to changes in laws, regulations, technology, costs and timing, the provisions including the estimates and assumptions contained therein are reviewed regularly by management. A material change in the provision within the next financial year could arise from changes in risk-free rates. The aggregate effect of changes within the next financial year as a result of revisions to cost and timing assumptions is not expected to be material.
Climate change sensitivities
As noted above, while it is not a reasonably possible change we expect over the next financial year, global ambitions seeking to drive quicker decarbonisation, could result in the timing of restoration, rehabilitation and decommissioning costs related to our coal and oil closure obligations being accelerated. The non-current closure and monitoring provision related to the coal and oil operations is $3,717 million (undiscounted) and $2,708 million (current carrying value). The weighted average maturity is 13 years. To illustrate the effect of quicker decarbonisation, a three-year and five-year weighted average acceleration, with no changes to the total undiscounted cash flows, would result in an increase to the provision of $140 million and $224 million, respectively.
(iv) Valuation of Level 3 derivatives related to LNG contracts (note 29)
Adoption of new and revised standards
The following clarification revisions to existing accounting pronouncements became effective as of 1 January 2022 and have been adopted by the Group.
(i) Onerous Contracts \u2013 Cost of Fulfilling a Contract (Amendments to IAS 37) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments specify that the \u2018cost of fulfilling\u2019 a contract comprises the \u2018costs that relate directly to the contract\u2019. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. The Group has applied the amendments to contracts for which the Group has not yet fulfilled all its obligations as at 1 January 2022.
(ii) Property, Plant and Equipment \u2013 Proceeds before intended use (Amendments to IAS 16) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment, any proceeds received from selling items produced while preparing the assets for its intended use. Instead, any entity recognises the proceeds from selling such items, and the costs of producing those items, in the statement of income.
(iii) Reference to the Conceptual Framework (Amendments to IFRS 3) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments update the references to the Conceptual Framework for Financial Reporting and add an exception for the recognition of liabilities and contingent liabilities within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRIC 21 Levies. The amendments also confirm that contingent assets should not be recognised at the acquisition date.
These amendments did not have a material impact on the Group.
Notes to the financial statements continued
1. Accounting policies continued
Revised standards not yet effective
At the date of the authorisation of these consolidated financial statements, the following revised IFRS standards, which are applicable to Glencore, were issued but not yet effective:
(i) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations, and clarify that the initial recognition exception does not apply to transactions where both an asset and a liability are recognised in a single transaction. Accordingly, deferred tax is required to be recognised on such transactions.
(i) Definition of Accounting Estimates (Amendments to IAS 8) \u2013 effective for year ends beginning on or after
1 January 2023
The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies.
(iii) Materiality of Accounting Policy Disclosure (Amendments to IAS 1) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments require companies to disclose their material accounting policy information rather than their significant accounting policies.
(iv) Classification of Liabilities as current or non-current (Amendments to IAS 1) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of \u2018settlement\u2019 to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
No significant changes to presentation or disclosures within these financial statements are expected following the adoption of these amendments.
Basis of preparation
The consolidated financial statements are prepared under the historical cost convention except for certain financial assets, liabilities, marketing inventories and pension obligations that are measured at revalued amounts or fair values at the end of each reporting period as explained in the accounting policies below. Historical cost is defined as the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. The principal accounting policies adopted are set out below.
The Directors have assessed that they have, at the time of approving these consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the 12 months from the expected date of approval of the 2022 Annual Report and Accounts. Therefore, they continue to adopt the going concern basis of\u00a0accounting in preparing these financial statements. The Directors have made this assessment after consideration of the Group\u2019s budgeted cash flows and related assumptions including appropriate stress testing of the identified uncertainties (being primarily commodity prices and currency exchange rates) and access to undrawn credit facilities and monitoring of debt maturities. Further information on Glencore\u2019s objectives, policies and processes for managing its capital and financial risks is detailed in note 27.
All amounts are expressed in millions of United States dollars, the presentation currency of the Group, unless otherwise stated.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries.
Control is achieved when Glencore is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, Glencore controls an investee if, and only if, Glencore has all of the following:
  • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
  • Exposure, or rights, to variable returns from its involvement with the investee; and
  • The ability to use its power over the investee to affect its returns.
Notes to the financial statements continued
1. Accounting policies continued
When Glencore has less than a majority of the voting rights of an investee or similar rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over the investee including:
  • The size of Glencore\u2019s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
  • Potential voting rights held by Glencore, other vote holders or other parties;
  • Rights arising from other contractual arrangements; and
  • Any additional facts and circumstances that indicate that Glencore has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be\u00a0made, including voting patterns at previous shareholders\u2019 meetings.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or\u00a0more of the three elements of control listed above. Consolidation of a subsidiary begins when Glencore obtains control over the subsidiary and ceases when Glencore loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of income and other comprehensive income from the date Glencore gains control until the date when Glencore ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to\u00a0the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the\u00a0Group\u2019s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in Glencore\u2019s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions with any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or\u00a0received being recognised directly in equity and attributed to equity holders of Glencore.
When Glencore loses control of a subsidiary, a gain or loss is recognised in the consolidated statement of income and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if Glencore had directly disposed of the related assets or liabilities of the subsidiary (i.e.\u00a0reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, or\u00a0the cost on the initial recognition of an investment in an associate or a joint\u00a0venture.
Investments in associates and joint ventures
Associates and joint ventures (together \u2018Associates\u2019) in which Glencore exercises significant influence or joint control are accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Significant influence is presumed if Glencore holds between 20% and 50% of the voting rights, unless evidence exists to the contrary. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant strategic and/or key operating decisions require unanimous consent of the parties sharing\u00a0control.
Equity accounting involves Glencore recording its share of the Associate\u2019s net income and equity. Glencore\u2019s interest in an Associate is initially recorded at cost and is subsequently adjusted for Glencore\u2019s share of changes in net assets of the Associate, less any impairment in the value of individual investments. Where Glencore transacts with an Associate, unrealised profits and losses are eliminated to the extent of Glencore\u2019s interest in that\u00a0Associate.
Changes in Glencore\u2019s interests in Associates are accounted for as\u00a0a gain or loss on disposal with any difference between the amount by which the carrying value of the Associate is adjusted and the fair value of the consideration received being recognised directly in the consolidated statement of\u00a0income.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement, have rights to the assets and obligations for the liabilities relating to the arrangement.
Notes to the financial statements continued
1. Accounting policies continued
When Glencore undertakes its activities under joint operations, Glencore recognises in relation to its interest in a\u00a0joint operation:
  • Its assets, including its share of any assets held jointly;
  • Its liabilities, including its share of any liabilities incurred jointly;
  • Its revenue from the sale of its share of the output arising from the joint operation;
  • Its share of the revenue from the sale of the output by the joint operation; and
  • Its expenses, including its share of any expenses incurred\u00a0jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.
Where Glencore transacts with a joint operation, unrealised profits and losses are eliminated to the extent of Glencore\u2019s interest in\u00a0that joint operation.
Other unincorporated arrangements
In some cases, Glencore participates in unincorporated arrangements where it has the rights to its share of the assets and obligations for its share of the liabilities of the arrangement, rather than a right to the net returns of the arrangement, but does not share joint control. In such cases, Glencore accounts for its share of the assets, liabilities, revenues and expenses in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses and obligations for the liabilities relating to the arrangement, similar to a joint operation noted above.
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method of accounting. The cost of the acquisition is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquiree and the equity interests issued in exchange for control of the acquiree.
The identifiable assets, liabilities and contingent liabilities (\u2018identifiable net assets\u2019) are recognised at their fair value at the date of acquisition. Acquisition-related costs are recognised in the consolidated statement of income as incurred.
Where a business combination is achieved in stages, Glencore\u2019s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date Glencore attains control) and the resulting gain or loss, if any, is recognised in the consolidated statement of income.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the CGUs that are expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods.
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on\u00a0disposal.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, Glencore reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted for additional information obtained during the \u2018measurement period\u2019 (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that\u00a0date.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity\u2019s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests\u2019 proportionate share of the recognised amounts of the acquiree\u2019s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.
Notes to the financial statements continued
1. Accounting policies continued
Similar procedures are applied in accounting for the purchases of interests in Associates and joint operations. Any goodwill arising from such purchases is included within the carrying amount of the investment in Associates, but not amortised thereafter. Any excess of Glencore\u2019s share of the net fair value of the Associate\u2019s identifiable net assets over the cost of the investment is included in\u00a0the consolidated statement of income in the period of the\u00a0purchase.
Non-current assets held for sale and disposal groups
Non-current assets, liabilities and those included in disposal groups are classified as held for sale if their carrying amount will be\u00a0recovered principally through a sale transaction rather than through continuing use, they are available for immediate disposal and the sale is highly probable. Non-current assets, liabilities and those included in disposal groups held for sale are measured at the lower of their carrying amount or fair value less costs to sell.
Revenue recognition
Revenue is derived principally from the sale of goods (sale of commodities) and in some instances the goods are sold on Cost and Freight (CFR) or Cost, Insurance and Freight (CIF) Incoterms. When goods are sold on a CFR or CIF basis, the Group is responsible for providing these services (shipping and insurance) to the customer, sometimes after the date at which Glencore has lost control of the goods. Revenue is recognised when the performance obligations have been satisfied, which is once control of the goods and/or services has transferred from Glencore to the buyer. Revenue is measured based on consideration specified in the contract with a customer and excludes amounts collected on behalf of third parties. The same recognition and presentation principles apply to revenues arising from physical settlement of forward sale contracts that do not meet the own use exemption.
Revenue related to the sale of goods is recognised when the product is delivered to the destination specified by the customer, which is typically the vessel on\u00a0which it is shipped, the destination port or the customer\u2019s\u00a0premises and the buyer has gained control through their ability to direct the use of and obtain substantially all the benefits from the asset. Where the sale of goods is connected with an agreement to repurchase goods at a later date, revenue is recognised when the repurchase terms are at prevailing market prices, the goods repurchased are readily available in the market, and the buyer gained control of the goods originally sold to them. Should it be determined that control has not transferred or the buyer does not have the ability to benefit substantially from ownership of the asset, revenue is not recognised and any proceeds received are accounted for as a financing arrangement.
For certain commodities, the sales price is determined on a provisional basis at the date of sale as the final selling price is subject to\u00a0movements in market prices up to the date of final pricing, normally ranging from 30 to 90 days after initial booking (provisionally priced sales). Revenue on\u00a0provisionally priced sales is recognised based on the estimated fair value of the total consideration receivable. The revenue adjustment mechanism embedded within provisionally priced sales arrangements has the character of a commodity derivative.
Accordingly, the fair value of the final sales price adjustment is re-estimated continuously and changes in fair value are recognised as an adjustment to revenue. In all cases, fair value is estimated by reference to forward market prices.
Revenue from the sale of material by-products are included within revenue. Where a by-product is not regarded as significant, revenue may be credited against cost of goods sold.
Revenue related to the provision of shipping and insurance related activities is recognised over time as the service is rendered.
Payments received for future metal (primarily gold and silver) deliveries (prepayments) are accounted for as executory contracts whereby the prepayment is initially recorded as deferred revenue in the consolidated statement of financial position. The initial deferred revenue amount is unwound and revenue is recognised in the consolidated statement of income as and when Glencore physically delivers the metal and loses control of it. Where these prepayments are in excess of one year and contain a significant financing component, the amount of the deferred revenue is adjusted for the effects of the time value of money. Glencore applies the practical expedient to not adjust the promised amount of consideration for the effects of time value of money if the period between delivery and the respective payment is one year or less.
Royalty, interest and dividend income is recognised when the right to receive payment has been established, it is probable that the economic benefits will flow to Glencore and the amount of income can be measured reliably. Royalty revenue is recognised on an accruals basis in accordance with the substance of the relevant agreement. Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate.
Foreign currency translation
Glencore\u2019s reporting currency and the functional currency of\u00a0the majority of its operations is the US dollar as this is assessed to be the principal currency of the economic environment in which it\u00a0operates.
Notes to the financial statements continued
1. Accounting policies continued
(i) Foreign currency transactions
Transactions in foreign currencies are converted into the functional currency of each entity using the exchange rate prevailing at the transaction date. Monetary assets and liabilities outstanding at year-end are converted at year-end rates. Non-monetary items measured in terms of historical cost are translated using the exchange rate at the date of the transaction. The resulting exchange differences are recorded in the consolidated statement of income.
(ii) Translation of financial statements
For the purposes of consolidation, assets and liabilities of group companies whose functional currency is in a currency other than the US dollar are translated into US dollars using year-end exchange rates, while their statements of income are translated using average rates of exchange for the year. Translation adjustments are included as a separate component of shareholders\u2019 equity and have no consolidated statement of income impact to the extent that no disposal of the foreign operation has occurred.
Where an intragroup balance is, in substance, part of the Group\u2019s net investment in an entity, exchange gains and losses on that balance are taken to the currency translation reserve. Cumulative translation differences are recycled from equity and recognised as income or expense on partial disposal of the net investment in an entity, which includes repayments of capital and loans. On such partial disposals, when the Group\u2019s percentage of equity ownerships do not change, the \u2018absolute\u2019 approach is applied. Under this approach, the amounts held in the foreign currency translation reserve are reclassified to income or expense based on the proportionate share of total cumulative translation differences recognised in the net investment.
Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate.
Borrowing costs
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.
Employee and retirement benefits
Wages, salaries, bonuses, social security contributions, paid annual and sick leave are accrued in the period in which the associated services are rendered by the employees of the Group.
Glencore operates various pension schemes in accordance with local requirements and practices of the respective countries. The annual costs for defined contribution plans that are funded by payments to separate trustee administered funds or insurance companies equal the contributions that are required under the plans and accounted for as an expense.
For defined benefit retirement plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurements comprising actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognised immediately in the statement of financial position with a charge or credit to other comprehensive income in the period in which they occur. Remeasurements recognised in other comprehensive income are not reclassified. Past service cost is recognised in profit or loss when the plan amendment or curtailment occurs, or when the Group recognises related restructuring costs or termination benefits, if earlier. Gains or losses on settlement of a defined benefit plan are recognised when the settlement occurs. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset.
Defined benefit costs are split into three categories:
  • service costs, which includes current service cost, past service cost and gains and losses on curtailments and\u00a0settlements;
  • net interest expense or income; and
  • remeasurements.
The Group recognises service costs within the consolidated statement of income.
Net interest expense or income is recognised within interest expense or income within the consolidated statement of income.
Any past service cost (or the gain or loss on settlement) is calculated by measuring the defined benefit liability (asset) using updated assumptions and comparing benefits offered and plan assets before and after the plan amendment (or curtailment or settlement) but ignoring the effect of the asset ceiling (that may arise when the defined benefit plan is in a surplus position). The Group uses the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan. In the case of the net interest for the period post-plan amendment, the net interest is calculated by multiplying the net defined benefit liability (asset) as remeasured with the discount rate used in the remeasurement (also taking into account the effect of contributions and benefit payments on the net defined benefit liability (asset)).
Notes to the financial statements continued
1. Accounting policies continued
The retirement benefit obligation recognised in the consolidated statement of financial position represents the deficit or surplus in the Group\u2019s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Glencore also provides post-retirement healthcare benefits to certain employees in Canada, South Africa and the United States. These are accounted for in a similar manner to the defined benefit pension plans, however are unfunded.
Share-based payments
(i) Equity-settled share-based payments
Equity-settled share-based payments are measured at the fair value of the awards based on the market value of the shares at the grant date. Fair value excludes the effect of non-market-based vesting conditions. The fair value is charged to the consolidated statement of income and credited to retained earnings on a straight-line basis over the period the estimated awards are expected to\u00a0vest.
At each balance sheet date, the Company revises its estimate of\u00a0the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the consolidated statement of income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.
(ii) Cash-settled share-based payments
For cash-settled share-based payments, a liability is initially recognised at fair value based on the estimated number of awards that are expected to vest, adjusting for market and non-market-based performance conditions. Subsequently, at\u00a0each reporting period until the liability is settled, it is remeasured to fair value with any changes in fair value recognised in the consolidated statement of\u00a0income.
Income taxes
Income taxes consist of current and deferred income taxes. Current taxes represent income taxes expected to be payable based on enacted or substantively enacted tax rates at the period end on expected current taxable income, and any adjustment to tax payable in respect of previous years. Deferred taxes are recognised for temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable income, using enacted or\u00a0substantively enacted income tax rates which are expected to be effective at\u00a0the time of reversal of the underlying temporary difference. Deferred tax assets and unused tax\u00a0losses are only recognised to\u00a0the extent that their recoverability is probable. Deferred tax assets are reviewed at reporting period end and amended to the extent that it is no longer probable that the related benefit will be realised. To the extent that a deferred tax asset not previously recognised subsequently fulfils the criteria for recognition, an asset is then recognised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same authority and Glencore has both the right and the intention to settle its current tax assets and liabilities on a net or simultaneous basis. The tax effect of certain temporary differences is not recognised principally with respect to the initial recognition of an asset or liability (other than those arising in a\u00a0business combination or in a manner that initially impacted accounting or taxable profit) and temporary differences relating to\u00a0investments in subsidiaries and Associates to the extent that Glencore can control the timing of the reversal of the temporary difference and it is probable the temporary difference will not reverse in the foreseeable future. Deferred tax is provided in respect of\u00a0fair value adjustments on acquisitions. These adjustments may relate to assets such as extraction rights that, in general, are not eligible for income tax allowances.
Current and deferred tax are recognised as an expense or income in the consolidated statement of income, except when they relate to items that are recognised outside the consolidated statement of income (whether in other comprehensive income or directly in equity) or where they arise from the initial accounting for a business combination.
Royalties, extraction taxes and other levies/taxes are treated as taxation arrangements when they have the characteristics of an income tax, including being imposed and determined in accordance with regulations established by the respective government\u2019s taxation authority and the amount payable is based on taxable income \u2013 rather than physical quantities produced or as a percentage of revenues \u2013 after adjustment for temporary differences. For such arrangements, current and deferred tax is provided on the same basis as described above for\u00a0other forms of taxation. Obligations arising from royalty arrangements that do not satisfy these criteria are recognised as\u00a0current provisions and included in cost of goods sold.
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its best estimate of these tax liabilities, including related interest charges, taking into account the range of possible outcomes.
Notes to the financial statements continued
1. Accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at cost, being the fair value of the consideration given to acquire or construct the asset, including directly attributable costs required to bring the asset to\u00a0the location or to a condition necessary for operation and the\u00a0direct cost of dismantling and removing the asset, less accumulated depreciation and any accumulated impairment\u00a0losses.
Property, plant and equipment are depreciated to their estimated residual value over the estimated useful life of the specific asset concerned, or the estimated remaining life of the associated mine (LOM), field or lease.
Depreciation commences when the asset is available for use. The major categories of property, plant and equipment are depreciated/amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Buildings
10 \u2013 45 years
Freehold land
not depreciated
Plant and equipment
3 \u2013 30 years/UOP
Right-of-use assets
2 \u2013 20 years
Mineral and petroleum rights
UOP
Deferred mining costs
UOP
(i) Mineral and petroleum rights
Mineral and petroleum reserves, resources and rights (together \u2018Mineral and petroleum rights\u2019) which can be reasonably valued,
are recognised in the assessment of fair values on acquisition. Mineral and petroleum rights for which values cannot be reasonably determined are not recognised. Exploitable Mineral and petroleum rights are amortised using the UOP basis over the commercially recoverable reserves and, in certain circumstances, other mineral resources. Mineral resources are included in amortisation calculations where there is a high degree of confidence that they will be extracted in an economic\u00a0manner.
(ii) Exploration and evaluation expenditure
Exploration and evaluation expenditure relates to costs incurred in the exploration and evaluation of potential mineral and petroleum resources and includes costs such as exploration and production licences, researching and analysing historical exploration data, exploratory drilling, trenching, sampling and the costs of pre-feasibility studies. Exploration and evaluation expenditure for each area of interest, other than that acquired from another entity, is charged to the consolidated statement of income as incurred except when the expenditure is expected to be recouped from future exploitation or sale of the area of interest and it is planned to continue with active and significant operations in relation to the area, or at the reporting period end, the activity has not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves, in which case the expenditure is capitalised. As the intangible component (i.e. licences) represents an insignificant and indistinguishable portion of the overall expected tangible amount to be incurred and recouped from future exploitation, these costs along with other capitalised exploration and evaluation expenditure are recorded as a component of property, plant and equipment. Purchased exploration and evaluation assets are recognised at their fair value at acquisition.
As the capitalised exploration and evaluation expenditure asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where a potential impairment is\u00a0indicated, an assessment is performed for each area of interest or at the CGU level. To the extent that capitalised expenditure is not expected to be recovered it is charged to the consolidated statement of income.
Administration costs that are not directly attributable to a specific exploration area are charged to the consolidated statement of income. Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit.
Development expenditure
When commercially recoverable reserves are determined and such proposed development receives the appropriate approvals, capitalised exploration and evaluation expenditure is transferred to construction in progress, a component within the plant and equipment asset sub-category. All subsequent development expenditure is similarly capitalised, provided commercial viability conditions continue to be satisfied. Proceeds from the sale of product extracted during the development phase are recognised in the statement of income. Upon completion of development and commencement of production, capitalised development costs are further transferred, as required, to the appropriate plant and equipment asset category and depreciated using the unit of production method (UOP) or straight-line basis.
Notes to the financial statements continued
1. Accounting policies continued
Deferred mining costs
Mainly comprises certain capitalised costs related to underground mining as well as pre-production and in-production stripping activities as outlined below. Deferred mining costs are amortised using the UOP basis over the life of the ore body to which those costs relate.
Deferred stripping costs
Stripping costs incurred in the development of a mine (or pit) before production commences are capitalised as part of the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a UOP basis.
In-production stripping costs related to accessing an identifiable component of the ore body to realise benefits in the form of improved access to ore to be mined in the future (stripping activity asset), are capitalised within deferred mining costs provided all the following conditions are met:
(a)it is probable that the future economic benefit associated with the stripping activity will be realised;
(b)the component of the ore body for which access has been improved can be identified; and
(c)the costs relating to the stripping activity associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are charged to the consolidated statement of income as they are incurred.
The stripping activity asset is subsequently depreciated on a UOP basis over the life of the identified component of the ore body that became more accessible as a result of the stripping activity and is then stated at cost less accumulated depreciation and any accumulated impairment losses.
Leases
As lessee, the Group assesses whether a contract contains a lease at inception of the contract. The Group recognises a right-of-use asset and corresponding lease liability in the statement of financial position for all lease arrangements where it is the lessee, except for short-term leases with a term of twelve months or less and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The lease liability is initially measured at the present value of the future lease payments from the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, the asset and company specific incremental borrowing rates. Lease liabilities are recognised within borrowings on the statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability, with a corresponding adjustment to the related right-of-use assets, whenever:
  • The lease term changes or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;
  • The lease payments change due to the changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate; or
  • A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of modification.
The right-of-use assets are initially recognised on the balance sheet at cost, which comprises the amount of the initial measurement of the corresponding lease liability, adjusted for any lease payments made at or prior to the commencement date of the lease, any lease incentive received and any initial direct costs incurred, and expected costs for obligations to dismantle and remove right-of-use assets when they are no longer used. Right-of-use assets are recognised within property, plant and equipment on the statement of financial position. Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease over the shorter of the useful life of the right-of-use asset or the end of the lease term.
The Group enters into lease arrangements as a lessor with respect to some of its time charter vessels. Leases for which the Group is an intermediate lessor are classified as finance or operating leases by reference to the right-of-use asset arising from the head lease. Income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group\u2019s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group\u2019s net investment outstanding in respect of these leases.
Notes to the financial statements continued
1. Accounting policies continued
Restoration, rehabilitation and decommissioning
Restoration, rehabilitation and decommissioning costs arising from the installation of plant and other site preparation work, discounted using a risk-free rate specific to the liability and the currency in which they are denominated to their net present value, are provided for and capitalised at the time such an obligation arises. The costs are charged to the consolidated statement of income over the life of the operation through depreciation of the asset and the unwinding of the discount on the provision.
Costs for restoration of subsequent site disturbance, which is created on an ongoing basis during production, are provided for at their net present values and charged to the consolidated statement of income as extraction progresses.
Changes in the estimated timing of the rehabilitation or changes to the estimated future costs are accounted for prospectively by recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, provided a\u00a0reduction, if any, in the provision is not greater than the depreciated capitalised cost of the related asset, in which case the capitalised cost is reduced to Nil and the remaining adjustment recognised in the consolidated statement of income. In the case of closed sites, changes to estimated costs are recognised immediately in the consolidated statement of income.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation (calculated on a straight-line basis over their useful lives) and accumulated impairment losses, if any.
Internally generated intangibles are not capitalised. Instead, the related expenditure is recognised in the consolidated statement of income in the period in which the expenditure is incurred.
Identifiable intangible assets with a finite life are amortised on a straight-line basis over their expected useful life. The amortisation method and period are reviewed annually and impairment testing is undertaken when circumstances indicate the carrying amount may not be recoverable. Other than goodwill which is not amortised, Glencore has no identifiable intangible assets with an indefinite life.
The major categories of intangibles are amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Port allocation rights
UOP
Licences, trademarks and software
3 \u2013 20 years
Customer relationships
5 \u2013 9 years
Goodwill impairment testing
For the purpose of impairment testing, goodwill has been allocated to the CGUs, or groups of CGUs, that are expected to\u00a0benefit from the synergies of the business combination and which represent the level at which management monitors and manages the goodwill. In assessing whether an impairment is required, the carrying value of the CGU is compared with its recoverable amount. The recoverable amount is the higher of its\u00a0fair value less costs of disposal (FVLCD) and its value in use (VIU). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill can not be reversed in subsequent periods.
Other investments
Equity investments, other than investments in Associates, are recorded at fair value. Glencore designated investments that are not held for trading as at fair value through other comprehensive income (FVTOCI). As a result, changes in fair value are recorded in the consolidated statement of other comprehensive income. Dividends from these investments are recognised in the consolidated statement of income, unless the dividend represents a recovery of part of the cost of the equity investment. Investments that are held for trading are subsequently measured at fair value through profit or loss (FVTPL).
Impairment or impairment reversals
Glencore conducts, at least annually, an internal review of asset values which is used as a source of information to assess for any indications of impairment or impairment reversal. Formal impairment tests are carried out, at least annually, for cash-generating units containing goodwill and for all other non-current assets, when events or changes in circumstances indicate the carrying value may not be recoverable.
Notes to the financial statements continued
1. Accounting policies continued
A formal impairment or reversal test involves determining whether the carrying amounts are in excess (or below, as the case may be) of their recoverable amounts. An asset\u2019s recoverable amount is determined as the higher of its FVLCD and its VIU. Such reviews are undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken at the CGU level.
If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the consolidated statement of income to reflect the asset at the lower amount.
For those assets which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, and the change in their recoverable amount is not solely due to the passage of time, an impairment reversal is recorded in the consolidated statement of income to reflect the asset at the higher amount to the extent the increased carrying amount does not exceed the carrying value of the asset that would have been determined had no impairment previously been\u00a0recognised. Goodwill impairments cannot be subsequently reversed.
Provisions
Provisions are recognised when Glencore has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources embodying economic benefits that can be reliably estimated will be required to settle the liability.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation, including interpretation of specific laws and likelihood of settlement. Where a provision is measured using the cash flow estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Onerous contracts
An onerous contract is considered to exist where Glencore has a\u00a0contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Present obligations arising under onerous contracts are recognised and measured as provisions.
Unfavourable contracts
An unfavourable contract is considered to exist when Glencore, in a business combination, acquires a contract under which the terms of the contract require Glencore to sell or purchase products or services on terms which are economically unfavourable compared to current market terms at the time of the business combination. Unfavourable contracts are recognised at the present value of the economic loss and amortised into the statement of income over the term of\u00a0the contract.
Inventories
The vast majority of inventories attributable to the marketing activities are valued at fair value less costs of disposal with the remainder valued at the lower of cost or net realisable value, with costs allocated using the first-in-first-out (FIFO) method. Unrealised gains and losses from changes in fair value are reported in cost of goods sold.
Inventories held by the industrial activities are valued at the lower of cost or net realisable value. Cost is determined using FIFO or the weighted average method and comprises material costs, labour costs and allocated production related overhead costs. Typically raw materials and consumables are measured using the FIFO method and work in progress inventories using the weighted average method. Where the production process results in more than one product being produced (joint products), cost is allocated between the various products according to the ratio of contribution of these metals to gross sales revenue. Financing and storage costs related to inventory are expensed as incurred.
Non-current inventories primarily relate to stockpiles which are not expected to be utlised within the normal operating cycle.
Non-financial instruments (physical advances or prepayments)
The Group enters into physical advances and prepayment agreements with certain suppliers and customers. When such advances and prepayments are primarily settled in cash or another financial asset, they are classified as financial assets or financial liabilities (see below). Where such advances and prepayments are settled through physical delivery or receipt of an underlying product they are classified as non-financial assets or non-financial liabilities. Such advances and prepayments are initially recorded at the amount of the cash paid or received and are subsequently reduced by the relevant contractual volumes of physical deliveries made. Certain physically-settled advances and prepayments which relate to contracts to buy or sell commodities that can be settled on a net basis are accounted for under IFRS 9 as if they were financial instruments.
Financial instruments
Financial assets and financial liabilities are recognised in the Group\u2019s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Contractual maturities of such financial assets and financial liabilities may be longer than one year. However, in the normal course of trading activities, derivative financial instruments are often settled before their maturity date, and therefore classified as current assets or current liabilities.
Notes to the financial statements continued
1. Accounting policies continued
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. Financial assets are initially recognised at fair value on the trade date, including, in the case of instruments not subsequently measured at fair value through profit or loss, directly attributable transaction costs. Trade receivables with no provisional price features and where there is no significant financing component, are initially recognised at their transaction price.
Subsequently, other investments, provisionally priced trade receivables and derivatives are carried at fair value and trade receivables that do not contain provisional price features, loans and other receivables are carried at amortised cost.
Financial liabilities, other than derivatives and those containing provisional price features, are initially recognised at fair value of consideration received net of transaction costs as appropriate and subsequently carried at amortised cost. Financial liabilities that contain provisional pricing features (accounted for as embedded derivatives) were designated in their entirety as at FVTPL. Derivatives are carried at FVTPL.
Where financial assets and financial liabilities recognised at fair value are managed and reported to key management personnel on the basis of its net exposure to either market risks or credit risk, fair value of that group of financial assets and financial liabilities is measured on the basis of the net price that would be received to sell the long position and to transfer the short position for a particular risk exposure of the specific financial asset or liability being measured. When the group of financial assets and/or financial liabilities are not presented on a net basis in the statement of financial position, any portfolio level adjustments are allocated to the individual instruments that make up the group on an appropriate basis.
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for all financial assets (as well as for issued loan commitments and financial guarantee contracts), other than those at FVTPL and investments in equity instruments measured at FVTOCI, at the end of each reporting period. The expected credit loss recognised represents a probability-weighted estimate of credit losses over the expected life of the financial instrument.
The Group applies the simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit losses on these financial assets are estimated using a provision matrix by reference to past default experience and an equivalent credit rating, adjusted as appropriate for current observable data and forward-looking information.
For all other financial assets at amortised cost, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition, which is determined by:
  • A review of overdue amounts;
  • Comparing the risk of default at the reporting date and at the date of initial recognition; and
  • An assessment of relevant historical and forward-looking quantitative and qualitative information.
For those balances that are beyond 30 days overdue, such is presumed to be an indicator of a significant increase in credit risk.
If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit loss, which comprises the expected lifetime loss from the instrument were a default to occur within 12 months of the reporting date.
The Group considers an event of default has materialised and the financial asset is credit impaired when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay the Group without taking into account any collateral held by the Group or if the financial asset is more than 90 days past due, unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
(ii) Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a\u00a0collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when the Group\u2019s obligations are discharged, cancelled or have expired.
Notes to the financial statements continued
1. Accounting policies continued
On derecognition of a financial asset/financial liability in its entirety, the difference between the carrying amount of the financial asset/financial liability and the sum of the consideration received and receivable/paid and payable is recognised in profit and loss. On derecognition of equity investments designated and measured at FVTOCI, the cumulative gain or loss recognised in other comprehensive income is reclassified directly to retained earnings.
Own shares
The cost of purchases of own shares is deducted from equity. Where they are purchased, issued to employees or sold, no gain or loss is recognised in the consolidated statement of income. Such gains and losses are recognised directly in equity. Any proceeds received on disposal of the shares or transfers to employees are recognised in equity.
Derivatives and hedging activities
Derivative instruments, which include physical contracts to sell or purchase commodities that do not meet the own use exemption, are initially recognised at fair value when Glencore becomes a party to the contractual provisions of the instrument and are subsequently remeasured to fair value at the end of each reporting period. Fair values are determined using quoted market prices, dealer price quotations or using models and other valuation techniques, the key inputs for which include current market and contractual prices for the underlying instrument, time to expiry, yield curves, volatility of\u00a0the underlying instrument and counterparty\u00a0risk.
Gains and losses on derivative instruments for which hedge accounting is not applied, other than the revenue adjustment mechanism embedded within provisionally priced sales and mark-to-market movements on physical forward sales contracts, are recognised in cost of goods sold.
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a\u00a0recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable\u00a0transaction.
At the inception of the hedge and on an ongoing basis, Glencore documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Glencore discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met.
A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of\u00a0income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised in the consolidated statement of comprehensive income and accumulated in the cash flow hedge reserve in shareholders\u2019 equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it\u00a0occurs.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in shareholders\u2019 equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative \u2018host contract\u2019 such as provisionally priced sales and purchases. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.
Financial guarantee contracts
Financial guarantee contracts are accounted for in accordance with IFRS 9 as financial liabilities. After initial recognition, any such contracts are subsequently measured at the higher of the amount of the provision for expected credit losses and the amount initially recognised less any income recognised in accordance with the principles of IFRS 15.
Glencore is organised and operates on a worldwide basis in two core business segments \u2013 Marketing activities and Industrial activities, reflecting the reporting lines and structure used by Glencore\u2019s Management to allocate resources and assess the performance of Glencore.
The business segments\u2019 contributions to the Group are primarily derived from a) the net margin or premium earned from physical Marketing activities (net sale and purchase of physical commodities) and the provision of marketing and related value-add services and b) the net margin earned from Industrial asset activities (resulting from the sale of physical commodities over the cost of production and/or cost of sales). The marketing-related operating segments have been aggregated under the Marketing reportable segment as their economic characteristics (historic and expected long-term Adjusted EBITDA margins and the nature of the marketing services provided) are similar. The industrial-related operating segments have been aggregated under the Industrial reportable segment as the core activities (extracting raw material and / or processing it further into saleable product, as required, and then selling it at prevailing market prices), the exposure to long-term economic risks (price movements, technology, sovereign and production substitution) and the longer-term average Adjusted EBITDA margins are similar. The economic and operational characteristics of our coal operating and commercial units are not expected to change in the foreseeable future and continue to be included within the industrial assets and marketing reporting segments, respectively.
Corporate and other: consolidated statement of income amounts represent Group related income and expenses (including share of Viterra earnings and certain variable bonus charges). Statement of financial position amounts represent Group related balances.
The financial performance of the operating segments is principally evaluated by management with reference to Adjusted EBIT/EBITDA. Adjusted EBIT is the net result of segmental revenue (revenue including Proportionate adjustments as defined in the Alternative performance measure section) less cost of goods sold and selling and administrative expenses plus share of income from associates and joint ventures, dividend income and the attributable share of Adjusted EBIT of relevant material associates and joint ventures, which are accounted for internally by means of proportionate consolidation, excluding significant items. Adjusted EBITDA consists of Adjusted EBIT plus depreciation and amortisation, including the related Proportionate adjustments. In addition, Volcan, while a subsidiary of the Group, is accounted for under the equity method for internal reporting and analysis due to the relatively low economic ownership held by the Group.
The accounting policies of the operating segments are the same as those described in note 2 with the exception of the Antamina copper/zinc mine, the Collahuasi joint venture and Volcan. Under IAS 28 and IFRS 11, Glencore\u2019s investment in the Antamina copper/zinc mine (34% owned) is considered to be an associate as it is not subject to joint control and the Collahuasi copper mine (44% owned) is considered to be a joint venture. Associates and joint ventures are required to be accounted for in Glencore\u2019s financial statements under the equity method. For internal reporting and analysis, Glencore evaluates the performance of these investments under the proportionate consolidation method, reflecting Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investments. For internal reporting and analysis, management evaluates the performance of Volcan under the equity method, reflecting the Group\u2019s relatively low 23.3% economic ownership in this fully ring-fenced listed entity, with its stand-alone, independent and separate capital structure. The balances as presented for internal reporting purposes are reconciled to Glencore\u2019s statutory disclosures in the following tables and/or in the Alternative performance measures section.
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (coal), that it did not previously own (see note 26), increasing Glencore\u2019s ownership to 100% and providing it with the ability to exercise control and fully consolidate Cerrej\u00f3n. Prior to the transaction, Glencore evaluated the performance of its 33.33% interest in Cerrej\u00f3n under the proportionate consolidation method, such that 2021 segment comparatives reflect Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investment.
In Q4 2022, Glencore commenced a process exploring the possible disposal of its 23.3% economic interest in Volcan. As a result, the carrying amounts of Volcan assets and liabilities as at 31 December 2022 are classified as held for sale (see note 16). For segmental reporting purposes, Volcan continues to be accounted for as an equity accounted associate.
In accordance with IAS 32 the Group reports financial assets and liabilities on a net basis in the consolidated statement of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-6": { "value": "Glencore plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-7": { "value": "leading integrated producer and marketer of natural resources, with worldwide activities in the production, refinement, processing, storage, transport and marketing of metals and minerals and energy products. Glencore operates on a global scale, marketing and distributing physical commodities sourced from third party producers and own production to industrial consumers, such as those in the battery, electronic, construction, automotive, steel, energy and oil industries. Glencore also provides financing, logistics and other services to producers and consumers of commodities. In this regard, Glencore seeks to capture value throughout the commodity supply chain. Glencore\u2019s long experience as a commodity producer and merchant has allowed it to develop and build upon its expertise in the commodities which it markets and cultivate long-term relationships with a broad supplier and customer base across diverse industries and in multiple geographic regions.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-8": { "value": "publicly traded limited company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-9": { "value": "Jersey", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-11": { "value": "Switzerland", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-10": { "value": "Switzerland", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-12": { "value": "Baarermattstrasse 3, 6340 Baar", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-13": { "value": "
These consolidated financial statements were authorised for issue in accordance with a Directors\u2019 resolution on 22 March 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-14": { "value": "
Statement of compliance
The consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of:
  • International Financial Reporting Standards (IFRS) adopted by the United Kingdom; and
  • IFRS as issued by the International Accounting Standards Board (IASB).
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-15": { "value": "
Climate change related considerations
The Group remains committed to emissions (Scope 1, 2 and 3) reduction targets, relative to a 2019 baseline, of 15% by 2026 and 50% by 2035 and has an ambition to achieve, with a supportive policy environment, net zero industrial asset emissions by 2050. The Group is committed to reaching the 2026 and 2035 targets without reliance on coordinated changes in government policies. We recognise that to achieve our long-term ambition there is a need for significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. Our long term ambition is therefore subject to such a supportive policy environment and, for that reason, we have expressed it as an ambition rather than a target, which is more appropriate for activities and actions deemed within our direct control.
The accounting-related measurement and disclosure items that are most impacted by our commitments, and climate change risk more generally, relate to those areas of the financial statements that are prepared under the historical cost convention and are subject to estimation uncertainties in the medium to long term. Climate change impacts can also introduce more volatility in assets and liabilities carried at fair value. Future changes to the Group\u2019s climate change strategy or realisation of global decarbonisation ambitions quicker than currently anticipated may impact some of the Group\u2019s significant judgements and key estimates and result in material changes to financial results and the carrying values of certain assets and liabilities in future reporting periods. The Group\u2019s current climate change strategy is reflected in the Group\u2019s significant judgements and key estimates, and therefore the Financial Statements, as follows:
(i) Property, plant and equipment and Intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with our climate change commitments and ambition. Property, plant and equipment and intangible assets policies are further covered below and within impairment and impairment reversal estimation uncertainties, together with key estimates and sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions, which could also change the useful economic lives of the related assets. Sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions on the rate of depreciation / amortisation of our fossil fuel related property, plant and equipment and intangible assets are outlined below in the key estimation uncertainty \u2013 impairments and impairment reversals.
Notes to the financial statements continued
1. Accounting policies continued
(ii) Restoration, rehabilitation and decommissioning provisions \u2013 estimation of the timing of closure and rehabilitation activities
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Many of these rehabilitation and decommissioning events are expected to take place when the underlying commercial reserves are extracted and the operations move into closure mode. Our current estimates of the timing of these closure activities align with the trajectory of our climate change emissions reduction commitments and ambition. Sensitivities pertaining to a reasonably possible change in the realisation of global decarbonisation ambitions (i.e. the timing of the restoration, rehabilitation and decommissioning costs) of our fossil fuel related obligations are outlined below in the key estimation uncertainty - restoration, rehabilitation and decommissioning costs.
(iii) Property, plant and equipment and Intangible assets (including the carrying value of goodwill in our coal marketing CGU) \u2013 estimation of the valuation of assets and potential impairment charges or reversals
The Group acknowledges that there is a wide range of possible energy transition scenarios, including those aligned with the Paris Agreement goals, that would indicate different outcomes for individual commodities. The decarbonisation transition could result in increasing or decreasing demand for the Group\u2019s various commodities, due to policy, regulatory (including carbon pricing mechanisms), legal, technological, market or societal responses to climate change, which, on the negative side, may result in some or all of a cash-generating unit\u2019s reserves becoming uneconomic to extract and / or our coal marketing CGU no-longer being able to generate returns and realise the benefits of its associated goodwill balance.
We use carbon price scenarios to assess the potential impacts on commodity specific operating cost curves and related supply / demand outcomes, arising from existing and future potential carbon pricing regulation. A key component of this analysis is to understand the potential development of a range of underlying cost curve structures over time and to consider, identify and make reasonable judgments, on the extent to which costs are likely to be passed onto the end-consumer. Our analysis shows that under the IEA\u2019s NZE2050 scenario, marginal supply costs would increase by 10% to over 60%, for the range of our most relevant and material commodities. We expect the rising cost of carbon will increase operating costs, increasing the cost of production, which, in turn, would ordinarily be passed on to consumers. In fact, first and second quartile (below average) emission intensity producers, where we see the weighted average of our portfolio residing, are likely to see margin expansion.
Notwithstanding the above, for coal and other fossil fuels, should global decarbonisation ambitions materialise along an Announced Pledges scenario or other more ambitious net zero scenario, essentially an accelerated displacement of coal and other fossil fuels as an energy source, the potential impact on the current carrying value of these cash generating units is outlined below in the key estimation uncertainty \u2013 impairments and impairment reversals (Sensitivity to demand for fossil fuels). It should be noted that, under accelerated emission reduction scenarios, we would expect to see positive valuation developments within our industrial production portfolio exposed to the metals currently required to deliver such rapid decarbonisation scenarios, including copper, nickel and cobalt.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of\u00a0the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and relevant under the circumstances, independent estimates, quoted market prices and common industry standard modelling techniques. Actual outcomes could result in a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Glencore has identified the following areas as being critical to understanding Glencore\u2019s financial position as they require management to make complex and/or subjective judgements, estimates and assumptions about matters that are inherently uncertain:
Critical accounting judgements
In the process of applying Glencore\u2019s accounting policies, management has made the following judgements based on\u00a0the relevant facts and circumstances including macro-economic circumstances and, where applicable, interpretation of underlying agreements, which have the most significant effect on the amounts recognised in the consolidated financial\u00a0statements.
Notes to the financial statements continued
1. Accounting policies continued
(i) Determination of control of subsidiaries and joint arrangements
Judgement is required to determine when Glencore has control of subsidiaries or joint control of joint or other unincorporated arrangements. This requires an assessment of the relevant activities (those relating to the operating and capital decisions of the arrangement, such as: the approval of the capital expenditure programme for each year, and appointing, remunerating and\u00a0terminating the key management personnel or service providers of the operations) and when the decisions in relation to those activities are under the control of Glencore or require unanimous consent. See note 26 for a summary of the acquisitions of subsidiaries completed during 2022 and 2021 and the key judgements made in determining control thereof.
Judgement is also required in determining the classification of a\u00a0joint arrangement between a joint venture or a joint operation through an evaluation of the rights and obligations arising from the arrangement and in particular, if the joint arrangement has been structured through a separate vehicle, further consideration is required of whether:
(1)the legal form of the separate vehicle gives the parties rights to the assets and obligations for the liabilities;
(2)the contractual terms and conditions give the parties rights to the assets and obligations for the liabilities; and
(3)other facts and circumstances give the parties rights to the assets and obligations for the liabilities.
Joint arrangements in which the primary activity is the provision of output to the shareholders, typically convey substantially all the economic benefits of the assets to the parties and judgement is required in assessing whether the terms of the offtake agreements and any other obligations for\u00a0liabilities of the arrangement result in the parties being substantially the only source of cash flows contributing to the\u00a0continuity of the operations of the arrangement.
Certain joint arrangements that are structured through separate vehicles including Collahuasi and Viterra are accounted for as joint ventures. The Collahuasi arrangement is primarily designed for the provision of output to the shareholders sharing joint control, the offtake terms of which are at prevailing market prices and the parties are not obligated to cover any potential funding shortfalls. In management\u2019s judgement, Glencore is not the only possible source of funding and does not have a direct or indirect obligation to the liabilities of the arrangement, but rather shares in its net assets and, therefore, such arrangements have been accounted for as joint ventures.
Differing conclusions around these judgements may materially impact how these businesses are presented in the consolidated financial statements \u2013 under the full consolidation method, equity method or recognition of Glencore\u2019s share of assets, liabilities, revenue and expenses, including any assets or liabilities held jointly. See note 11 for a summary of these joint arrangements and the key judgements made in determining the applicable accounting treatment for any material joint arrangements entered during the year.
(ii) Classification of transactions which contain a financing element (notes 21, 22 and 25)
Transactions for the purchase of commodities may contain a financing element such as extended payment terms. Under such an arrangement, a financial institution may issue a letter of credit on behalf of Glencore and act as the paying party upon delivery of product by the supplier and Glencore will subsequently settle the liability directly with the financial institution, generally from 30 up to 90 days after physical supply. Judgement is required to determine the most appropriate classification and presentation of these transactions within the statements of cash flows and financial position. In determining the appropriate classification, management considers the underlying economic substance of the transaction and the significance of the financing element to the transaction. Typically, the economic substance of the transaction is determined to be operating in nature as the financing element is insignificant and the time frame in which the original arrangement is extended by, is consistent and within supply terms commonly provided in the market. As a result, the entire cash flow is presented as operating in the statement of cash flows with a corresponding trade payable in the statement of financial position. As at 31 December 2022, trade payables include $7,504 million (2021: $8,565 million) of such liabilities arising from supplier financing arrangements, the weighted average of which extended settlement of the original payable to 67 days (2021: 77 days) after physical supply and are due for settlement 35 days (2021: 33 days) after year end. There was no significant exposure to any individual financial institution under these arrangements. These payables are not included within net funding and net debt as defined in the APMs section.
(iii) Classification of physical liquefied natural gas (LNG) purchase and sale contracts at amortised cost or fair value through profit and loss (notes 28 and 29)
Judgement is required to determine the appropriate IFRS 9 classification of physical LNG purchase and sale contracts as being measured within the scope of IFRS 9 at fair value through profit and loss or as executory contracts. This requires an assessment of whether the contracts to buy or sell LNG (a non-financial item) can be settled net in cash or with another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, and whether there is a past practise of net settling similar contracts. Those physical LNG contracts that can be net settled are considered to be derivatives, measured at fair value through profit or loss (see notes 28 and 29). Contracts that do not meet the definition of derivatives are considered own use contacts and are to be accounted for as executory contracts.
Notes to the financial statements continued
1. Accounting policies continued
Differing conclusions around classification of these contracts, may materially impact their presentation as financial assets or liabilities and any fair value adjustments recognised through profit and loss. As at 31 December 2022, the net fair value of physical LNG contracts on the statement of financial position is $2,533 million (2021: $912 million) comprising a $2,552 million forward physical asset and a $19 million forward physical liability (2021: $1,786 million forward physical asset and $874 million forward physical liability).
(iv) Investigations by regulatory and enforcement authorities and claims against the company in connection with the investigations \u2013 Critical judgement in relation to whether a present obligation exists (note 32).
(v) Impact of carbon pricing \u2013 refer to climate change related considerations above. No material change to the Group\u2019s related accounting estimates is expected within the next financial year as a result of this judgement.
(vi) Valuation of investments in EN+ and Rosneft (note 11). No material change to the Group\u2019s related accounting estimates is expected within the next financial year as a result of this judgement.
Key sources of estimation uncertainty
In the process of applying Glencore\u2019s accounting policies, management has made key estimates and assumptions concerning the future and other key sources of estimation uncertainty. The key assumptions and estimates at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future\u00a0periods.
(i) Recognition of deferred tax assets and uncertain tax positions (note 8)
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether there will be sufficient taxable income available to offset the tax assets when they do reverse. These judgements and estimates are subject to risk and uncertainty and therefore, to the extent assumptions regarding future profitability change, there can be a material increase or decrease in the amounts recognised in the consolidated statement of income in the period in which the change occurs, notably the deferred tax asset and uncertain tax position of the Group\u2019s DRC operations as outlined in note 8. The recoverability of the Group\u2019s deferred tax assets and the completeness and accuracy of its uncertain tax positions, including the estimates and assumptions contained therein are reviewed regularly by management.
(ii) Impairments and impairment reversals (note 7)
Investments in associates and joint ventures, advances and loans, property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an individual asset or a cash-generating unit (CGU) may not be fully recoverable, or at least annually for CGUs to which goodwill and other indefinite life intangible assets have been allocated. Indicators of impairment may include changes in the Group\u2019s operating and economic assumptions, including those arising from changes in reserves or mine planning, updates to the Group\u2019s commodity supply, demand and price forecasts, or the possible impacts from emerging risks such as those related to climate change and the transition to a low carbon economy. If an asset or CGU\u2019s recoverable amount is less than its carrying amount, an impairment loss is recognised in the consolidated statement of income. For those assets or CGUs which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, an impairment reversal is recorded in the consolidated statement of income. Future cash flow estimates which are used to calculate the asset\u2019s or CGU\u2019s recoverable amount are discounted using asset or CGU specific discount rates and are based on expectations about future operations (including their alignment with our emissions reduction commitments and long-term ambition), using a combination of internal sources and those inputs available to a market participant, which primarily comprise estimates about production and sales volumes, commodity prices (considering current and future prices and price trends including factors such as the current global trajectory of climate change), legally enacted carbon taxes, reserves and resources, operating costs and capital expenditures. Estimates are reviewed regularly by management. Changes in such estimates and in particular, deterioration in the commodity pricing outlook, could impact the recoverable amounts of these assets or CGUs, whereby some or all of the carrying amount may be impaired or the impairment charge reversed (if pricing outlook improves significantly or the service potential of the asset or CGU has otherwise increased from the time of the previous impairment) with the impact recorded in the statement of income.
Notes to the financial statements continued
1. Accounting policies continued
As referred to above and further described below in the \u2018impairment or impairment reversals\u2019 accounting policy, the Group carries out, at least annually, an impairment assessment. Following this review, indicators of impairment or impairment reversal were identified for various CGUs, including those due to changes in the underlying commodity price environment most influencing the respective operation. The Group assessed the recoverable amounts of these CGUs and as at 31 December 2022, except for those CGUs disclosed in note 7, the estimated recoverable amounts exceeded the carrying values. For certain CGUs where no impairment was recognised, should there be a significant deterioration or improvement in the key assumptions, a material impairment or reversal could result within the next financial year. A summary of the carrying values, the key / most sensitive assumptions and a sensitivity impact of potential movements in these assumptions for each such CGU with limited headroom (relative to its estimated recoverable amount) is shown below. In providing sensitivity analysis (and particularly on commodity price assumptions), a 10% change, representing a typical deviation parameter common in the industry, has generally been provided. Where a higher or lower percentage is reasonably possible on an operational assumption, this has been clearly identified.
Katanga
Katanga\u2019s non-current capital employed is carried at approximately $3,800 million. The valuation is sensitive to price and a deterioration in this key assumption could result in an impairment. The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve could result in a $440 million impairment. A 10% reduction in the cobalt price assumption across the curve is not expected to result in an impairment.
Mutanda
Mutanda\u2019s non-current capital employed is carried at approximately $2,300 million, inclusive of a $109 million intangible asset recognised during the year and net of an accumulated impairment of $955 million. Following care and maintenance status since 2019, a limited restart of operations commenced in 2021, utilising stockpiles of oxide ore. The valuation includes value attributable to the long-term copper / cobalt sulphide mining and processing development potential. The valuation is sensitive to price and eventual commercialisation and ramp-up of the sulphide project, and deteriorations or improvements in these key assumptions may result in additional impairments or reversals.
The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve is not expected to result in a further impairment, whereas a 10% reduction in the realised cobalt price assumption (across the curve) could result in a further $150 million impairment. Should the copper and cobalt assumptions rise by 10% (across the curve), the previously recognised impairment could be reversed in its entirety.
Kazzinc Smelting
Management has assessed that the Kazzinc business comprises three CGUs: the core Kazzinc Smelting (integrated mining and smelting operations); the Zhairem zinc/lead mine; and the Vasilkovsky gold mine.
Kazzinc Smelting has not been impaired in the past or in the current year. However, industry cost pressures, including energy inputs and additional taxes, are such that there is no appreciable difference between carrying value and recoverable value. Should zinc prices move higher in line with the industry cost curve and/or stronger demand, the recoverable value could increase. Conversely, in a recessionary scenario the recoverable value could be lower than the carrying value.
Kazzinc Smelting\u2019s non-current capital employed is carried at approximately $1,300 million. The valuation is sensitive to price and the realisation of certain operational efficiencies, and deteriorations in these key assumptions may result in an impairment.
The short to long-term zinc price assumption was $3,250 - $2,450/t and the discount rate was 11%. A 10% reduction in the zinc price assumption (across the curve) could result in a $200 million impairment. A 1% increase in the discount rate could result in a
$130 million impairment. Equivalent upside sensitivities are materially symmetrical with the downsides illustrated.
Zhairem has been impaired in 2022 (refer note 7).
Management does not expect that any reasonably possible changes in assumptions could lead to an impairment of Vasilkovsky within the next financial year.
Climate change (additional illustrative disclosures)
Based on the current pricing environment, we do not consider there to be a reasonably possible change in the next financial year in key assumptions that would result in a material change in carrying values of any of our coal CGUs. With respect to our oil CGUs, a change in oil refining margin assumptions (across the curve) of $1/bbl is reasonably possible and could result in a $220 million change (increase or decrease) to the carrying value of the Astron Energy CGU.
All other sensitivities below are reasonably possible changes in assumptions beyond the next financial year.
Notes to the financial statements continued
1. Accounting policies continued
Energy fossil fuels industrial operations
Our base case price assessment takes into account the short-, medium- and longer-term seaborne coal demand outlook. Achieving our net zero ambition by 2050 assumes significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. In particular, economic and regulatory incentivisation of such shift, whether through carbon pricing and / or incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, could result in different financial results on the same tonnage profile.
Our assessment applies a value in use methodology. Glencore is not progressing thermal coal greenfield investments. However, we plan to continue to progress various brownfield coal extensions or expansions at existing mines as included in the life of mine plans, while continuing to be a responsible steward of these assets, as we progress the phase down of our global coal portfolio. We assume that, beyond the next 3 years when shorter term pricing assumptions have been used, through the remaining life of mine, there will continue to be a market for thermal coal at a real Newcastle FOB export price of $90/tonne (6,000 NAR), South African FOB export price of $90/tonne and Colombian FOB price of $88/tonne, which represents our best current estimate of long term pricing based on our view of projected likely supply and demand fundamentals and the industry cost structure. The increase over the equivalent prices presented in our 2021 analysis largely reflects inflation in the intervening year.
Notwithstanding these assumptions, we present illustrative impairments arising under alternate price scenarios. Glencore\u2019s scenarios were developed in 2020, drawing principally, though not exclusively, on the IEA scenarios available at the time. The next update will be in 2023 as part of our climate strategic review. For these 2022 price sensitivities, we have drawn from the IEA\u2019s latest World Energy Outlook 2022 (WEO 2022) climate scenarios, described below:
  • IEA\u2019s Stated Policies Scenario (STEPS) (WEO 2022 prices) \u2013 the impact of existing policy frameworks and announced policy intentions, subject to the IEA\u2019s assessment of the likelihood of such ambitions being implemented (reflecting an updated outlook consistent with our \u2018Current Pathway\u2019 scenario);
  • IEA\u2019s Announced Pledges Scenario (APS) (WEO 2022 prices) \u2013 the impact of all major national announcements of 2030 targets and longer term net zero and other pledges, regardless of whether these have been anchored in legislation or nationally determined contributions;
  • IEA\u2019s Net Zero Emissions by 2050 Scenario (NZE) (WEO 2022 prices) \u2013 a pathway for the global energy sector to achieve net zero emissions by 2050 (reflecting an updated outlook consistent with our \u2018Radical Transformation\u2019 scenario).
The IEA no longer publishes assumptions relating to the Sustainable Development Scenario (SDS).
In addition, for illustrative purposes, we have shown a Complete Displacement Scenario (CDS) \u2013 reflecting the impact of fossil fuels being immediately displaced as an energy source and the resulting immediate fall in commodity prices to zero.
Our life of mine planning reflects operating cash flows which are consistent with achieving our emissions reduction targets and 2050 net zero emissions ambition. Overall our portfolio\u2019s production is heavily weighted towards the earlier part of these time frames. Based on the life of mine plan and remaining production as at 31 December 2022, we have illustrated this by showing the year in which 50% and 80% of saleable coal would be expected to be extracted under our current plans, being 2029 and 2036, respectively. If and while there is demand for coal, and it is economic to do so, we plan to continue to operate our mines to the end of their economic life and in accordance with our climate commitments, while not exceeding our 150 million tonnes per annum consolidated production cap.
The sensitivities are presented on price alone and assume no mitigating actions; therefore the impairments in each scenario are likely higher than would transpire. In practice, in a sustained low price environment, management would alter mine plans to cut operating and capital costs, potentially at the expense of future volumes, in order to reduce the overall NPV impact.
The STEPS, APS and NZE sensitivity prices adopted are those included in the documentation to WEO 2022, except that IEA thermal coal prices are on a delivered basis. These have been adjusted to FOB pricing on the basis of forward freight costs. Furthermore, in determining the Colombian FOB price, we have used a weighting of the IEA Japan and IEA European prices to take into account that Colombian coal sold from Cerrej\u00f3n is likely to be delivered to a combination of different markets in the future as coal demand in Europe declines.
The IEA assumes, in each scenario, additional decarbonisation measures leading to declining fossil fuel prices by the years 2030 and 2050, anchored in each case in a 2021 baseline. For the purpose of our climate change sensitivities below, we have assumed linear progression of prices between these points. Our base case reflects higher longer-term prices than in each of the IEA\u2019s climate scenarios reflecting our assessment of the supply and demand outlook and the industry cost structure.
Notes to the financial statements continued
1. Accounting policies continued
Cash-generating unit
US$ million
Thermal Australia
South Africa
Cerrej\u00f3n
Total thermal coal
Oil E&P
Base case assumptions in life of mine plan:
\u2013 LOM saleable tonnes (Glencore consolidated) (million tonnes)/ (million bbls)
960
320
200
15
\u2013 projected year when 50% LOM tonnage / reserves depleted
2030
2030
2026
2029
2024
\u2013 projected year when 80% LOM tonnage / reserves depleted
2037
2035
2029
2036
2026
\u2013 long-term price (Newcastle FOB / API4 FOB / Col FOB) ($/t) / (Brent oil price) ($/bbl) (real terms)
90
90
88
75
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
11.7%
10.5%
11.6%
Benchmark prices over LOM in selected scenarios ($/t, $/bbl):
2021-'30-'50
2021-'30-'50
2021-'30-'50
2021-'30
\u2013 IEA STEPS
156 - 86 - 66
146 - 79 - 62
131 - 68 - 63
78 - 93
\u2013 IEA APS
156 - 67 -51
146 - 61 - 48
131 - 70 - 50
78 - 72
\u2013 IEA NZE
156 - 50 - 36
146 - 44 - 32
131 - 59 - 38
78 - 40
\u2013 CDS
n.a.
n.a.
n.a.
n.a.
Carrying value of non-current capital employed as at
31 December 2022
7,238
1,986
956
10,180
200
Impairment arising in selected scenarios:
\u2013 IEA STEPS
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013 IEA APS
\u2013
740
\u2013
740
26
\u2013 IEA NZE
840
1,600
\u2013
2,400
110
\u2013 CDS1
8,613
2,318
2,093
13,024
285
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
9,210
2,976
2,349
14,535
312
Investments in associates and other investments
555
32
\u2013
587
\u2013
Deferred tax liabilities
(1,152)
(690)
(256)
(2,098)
(27)
Non-current provisions
(1,123)
(394)
(1,134)
(2,651)
(85)
Other non-current net assets/(liabilities)
(252)
62
(3)
(193)
\u2013
1In this scenario, we assume the impairment of non-current assets (net of deferred tax) while non-current liabilities, including rehabilitation, would be retained on balance sheet.
The prior year disclosure illustrated impairments under each of the IEA\u2019s scenarios, whereas the above table reflects impairments only in the NZE scenario (for Australia and South Africa) and the APS (for South Africa only). This mainly reflects materially higher shorter term prices in the various scenarios.
No impairment is projected for Cerrej\u00f3n using any of the IEA\u2019s scenarios, given that the current mine plan reflects expiry of mining leases by 2034, meaning the mine would not be exposed to the lower prices at the longer end of the price curves.
Following the disposal of Glencore\u2019s upstream Chad oil operations in 2022, the remaining portfolio (non-operated) is weighted towards natural gas, with the currently approved production profile expected to reach 80% extraction by 2026.
Notes to the financial statements continued
1. Accounting policies continued
Other fossil fuel related capital employed NPV sensitivities
Cash-generating unit
US$ million
Coking coal
Astron Energy
Coal
marketing goodwill
Base case assumptions in life of asset plan:
\u2013 LOA saleable tonnes (millions) / Refinery steady-state capacity ('000 bbls)
100
100k bopd
n.a.
\u2013 projected year when 50% LOA reserves depleted
2027
n.a.
n.a.
\u2013 projected year when 80% LOA reserves depleted
2032
n.a.
n.a.
\u2013 long-term price (hard coking coal) ($/t) (real terms)
175
n.a.
n.a.
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
9.6%
n.a.
\u2013 price to earnings multiple
12x
Percentage decrease to long-term pricing/PE multiples:
\u2013 25% price / $1/bbl refining margin1 / 2x PE (17%) decrease
131
n.a.
10x
\u2013 30% price / $2/bbl refining margin / 4x PE (33%) decrease
123
n.a.
8x
Carrying value of non-current capital employed as at 31 December 2022
1,654
876
1,674
Impairment arising in selected scenarios:
\u2013 25% price decrease across the curve / $1/bbl refining margin1 / 2x PE (17%) decrease
100
220
\u2013
\u2013 30% price decrease across the curve / $2/bbl refining margin / 4x PE (33%) decrease
390
450
400
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
1,950
835
1,674
Investments in associates and other investments
4
2
Deferred tax liabilities
(87)
\u2013
Non-current provisions
(213)
(4)
Other non-current net assets
\u2013
43
1The change in refining margin by $1/bbl is considered to be a reasonably possible change in our assumptions for Astron Energy within the next financial year.
Climate change sensitivities \u2013 property, plant and equipment and intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with, and reflects, our emissions reduction commitments and ambition. The current carrying value of our property, plant and equipment and intangible assets related to our fossil fuels operations is $17,633 million, and the depreciation / amortisation related to these balances recognised in 2022 was $2,740 million, implying an average accounting determined useful life of 6.5 years.
Notes to the financial statements continued
1. Accounting policies continued
(iii) Restoration, rehabilitation and decommissioning costs (note 23)
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to\u00a0be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Most of these rehabilitation and decommissioning events are expected to take place many years in the future and the currently estimated requirements and costs that will have to be met when the restoration events occur are inherently uncertain and could materially change over time.
In calculating the appropriate provision for the expected restoration, rehabilitation or decommissioning obligations, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof, are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability and the currency in which they are denominated.
Any changes in the expected future costs or risk-free rate are initially reflected in both the provision and the asset and subsequently in the consolidated statement of income over the remaining economic life of the asset. As the actual future costs can differ from the estimates due to changes in laws, regulations, technology, costs and timing, the provisions including the estimates and assumptions contained therein are reviewed regularly by management. A material change in the provision within the next financial year could arise from changes in risk-free rates. The aggregate effect of changes within the next financial year as a result of revisions to cost and timing assumptions is not expected to be material.
Climate change sensitivities
As noted above, while it is not a reasonably possible change we expect over the next financial year, global ambitions seeking to drive quicker decarbonisation, could result in the timing of restoration, rehabilitation and decommissioning costs related to our coal and oil closure obligations being accelerated. The non-current closure and monitoring provision related to the coal and oil operations is $3,717 million (undiscounted) and $2,708 million (current carrying value). The weighted average maturity is 13 years. To illustrate the effect of quicker decarbonisation, a three-year and five-year weighted average acceleration, with no changes to the total undiscounted cash flows, would result in an increase to the provision of $140 million and $224 million, respectively.
(iv) Valuation of Level 3 derivatives related to LNG contracts (note 29)
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Key sources of estimation uncertainty
In the process of applying Glencore\u2019s accounting policies, management has made key estimates and assumptions concerning the future and other key sources of estimation uncertainty. The key assumptions and estimates at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future\u00a0periods.
(i) Recognition of deferred tax assets and uncertain tax positions (note 8)
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether there will be sufficient taxable income available to offset the tax assets when they do reverse. These judgements and estimates are subject to risk and uncertainty and therefore, to the extent assumptions regarding future profitability change, there can be a material increase or decrease in the amounts recognised in the consolidated statement of income in the period in which the change occurs, notably the deferred tax asset and uncertain tax position of the Group\u2019s DRC operations as outlined in note 8. The recoverability of the Group\u2019s deferred tax assets and the completeness and accuracy of its uncertain tax positions, including the estimates and assumptions contained therein are reviewed regularly by management.
(ii) Impairments and impairment reversals (note 7)
Investments in associates and joint ventures, advances and loans, property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an individual asset or a cash-generating unit (CGU) may not be fully recoverable, or at least annually for CGUs to which goodwill and other indefinite life intangible assets have been allocated. Indicators of impairment may include changes in the Group\u2019s operating and economic assumptions, including those arising from changes in reserves or mine planning, updates to the Group\u2019s commodity supply, demand and price forecasts, or the possible impacts from emerging risks such as those related to climate change and the transition to a low carbon economy. If an asset or CGU\u2019s recoverable amount is less than its carrying amount, an impairment loss is recognised in the consolidated statement of income. For those assets or CGUs which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, an impairment reversal is recorded in the consolidated statement of income. Future cash flow estimates which are used to calculate the asset\u2019s or CGU\u2019s recoverable amount are discounted using asset or CGU specific discount rates and are based on expectations about future operations (including their alignment with our emissions reduction commitments and long-term ambition), using a combination of internal sources and those inputs available to a market participant, which primarily comprise estimates about production and sales volumes, commodity prices (considering current and future prices and price trends including factors such as the current global trajectory of climate change), legally enacted carbon taxes, reserves and resources, operating costs and capital expenditures. Estimates are reviewed regularly by management. Changes in such estimates and in particular, deterioration in the commodity pricing outlook, could impact the recoverable amounts of these assets or CGUs, whereby some or all of the carrying amount may be impaired or the impairment charge reversed (if pricing outlook improves significantly or the service potential of the asset or CGU has otherwise increased from the time of the previous impairment) with the impact recorded in the statement of income.
Notes to the financial statements continued
1. Accounting policies continued
As referred to above and further described below in the \u2018impairment or impairment reversals\u2019 accounting policy, the Group carries out, at least annually, an impairment assessment. Following this review, indicators of impairment or impairment reversal were identified for various CGUs, including those due to changes in the underlying commodity price environment most influencing the respective operation. The Group assessed the recoverable amounts of these CGUs and as at 31 December 2022, except for those CGUs disclosed in note 7, the estimated recoverable amounts exceeded the carrying values. For certain CGUs where no impairment was recognised, should there be a significant deterioration or improvement in the key assumptions, a material impairment or reversal could result within the next financial year. A summary of the carrying values, the key / most sensitive assumptions and a sensitivity impact of potential movements in these assumptions for each such CGU with limited headroom (relative to its estimated recoverable amount) is shown below. In providing sensitivity analysis (and particularly on commodity price assumptions), a 10% change, representing a typical deviation parameter common in the industry, has generally been provided. Where a higher or lower percentage is reasonably possible on an operational assumption, this has been clearly identified.
Katanga
Katanga\u2019s non-current capital employed is carried at approximately $3,800 million. The valuation is sensitive to price and a deterioration in this key assumption could result in an impairment. The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve could result in a $440 million impairment. A 10% reduction in the cobalt price assumption across the curve is not expected to result in an impairment.
Mutanda
Mutanda\u2019s non-current capital employed is carried at approximately $2,300 million, inclusive of a $109 million intangible asset recognised during the year and net of an accumulated impairment of $955 million. Following care and maintenance status since 2019, a limited restart of operations commenced in 2021, utilising stockpiles of oxide ore. The valuation includes value attributable to the long-term copper / cobalt sulphide mining and processing development potential. The valuation is sensitive to price and eventual commercialisation and ramp-up of the sulphide project, and deteriorations or improvements in these key assumptions may result in additional impairments or reversals.
The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve is not expected to result in a further impairment, whereas a 10% reduction in the realised cobalt price assumption (across the curve) could result in a further $150 million impairment. Should the copper and cobalt assumptions rise by 10% (across the curve), the previously recognised impairment could be reversed in its entirety.
Kazzinc Smelting
Management has assessed that the Kazzinc business comprises three CGUs: the core Kazzinc Smelting (integrated mining and smelting operations); the Zhairem zinc/lead mine; and the Vasilkovsky gold mine.
Kazzinc Smelting has not been impaired in the past or in the current year. However, industry cost pressures, including energy inputs and additional taxes, are such that there is no appreciable difference between carrying value and recoverable value. Should zinc prices move higher in line with the industry cost curve and/or stronger demand, the recoverable value could increase. Conversely, in a recessionary scenario the recoverable value could be lower than the carrying value.
Kazzinc Smelting\u2019s non-current capital employed is carried at approximately $1,300 million. The valuation is sensitive to price and the realisation of certain operational efficiencies, and deteriorations in these key assumptions may result in an impairment.
The short to long-term zinc price assumption was $3,250 - $2,450/t and the discount rate was 11%. A 10% reduction in the zinc price assumption (across the curve) could result in a $200 million impairment. A 1% increase in the discount rate could result in a
$130 million impairment. Equivalent upside sensitivities are materially symmetrical with the downsides illustrated.
Zhairem has been impaired in 2022 (refer note 7).
Management does not expect that any reasonably possible changes in assumptions could lead to an impairment of Vasilkovsky within the next financial year.
Climate change (additional illustrative disclosures)
Based on the current pricing environment, we do not consider there to be a reasonably possible change in the next financial year in key assumptions that would result in a material change in carrying values of any of our coal CGUs. With respect to our oil CGUs, a change in oil refining margin assumptions (across the curve) of $1/bbl is reasonably possible and could result in a $220 million change (increase or decrease) to the carrying value of the Astron Energy CGU.
All other sensitivities below are reasonably possible changes in assumptions beyond the next financial year.
Notes to the financial statements continued
1. Accounting policies continued
Energy fossil fuels industrial operations
Our base case price assessment takes into account the short-, medium- and longer-term seaborne coal demand outlook. Achieving our net zero ambition by 2050 assumes significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. In particular, economic and regulatory incentivisation of such shift, whether through carbon pricing and / or incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, could result in different financial results on the same tonnage profile.
Our assessment applies a value in use methodology. Glencore is not progressing thermal coal greenfield investments. However, we plan to continue to progress various brownfield coal extensions or expansions at existing mines as included in the life of mine plans, while continuing to be a responsible steward of these assets, as we progress the phase down of our global coal portfolio. We assume that, beyond the next 3 years when shorter term pricing assumptions have been used, through the remaining life of mine, there will continue to be a market for thermal coal at a real Newcastle FOB export price of $90/tonne (6,000 NAR), South African FOB export price of $90/tonne and Colombian FOB price of $88/tonne, which represents our best current estimate of long term pricing based on our view of projected likely supply and demand fundamentals and the industry cost structure. The increase over the equivalent prices presented in our 2021 analysis largely reflects inflation in the intervening year.
Notwithstanding these assumptions, we present illustrative impairments arising under alternate price scenarios. Glencore\u2019s scenarios were developed in 2020, drawing principally, though not exclusively, on the IEA scenarios available at the time. The next update will be in 2023 as part of our climate strategic review. For these 2022 price sensitivities, we have drawn from the IEA\u2019s latest World Energy Outlook 2022 (WEO 2022) climate scenarios, described below:
  • IEA\u2019s Stated Policies Scenario (STEPS) (WEO 2022 prices) \u2013 the impact of existing policy frameworks and announced policy intentions, subject to the IEA\u2019s assessment of the likelihood of such ambitions being implemented (reflecting an updated outlook consistent with our \u2018Current Pathway\u2019 scenario);
  • IEA\u2019s Announced Pledges Scenario (APS) (WEO 2022 prices) \u2013 the impact of all major national announcements of 2030 targets and longer term net zero and other pledges, regardless of whether these have been anchored in legislation or nationally determined contributions;
  • IEA\u2019s Net Zero Emissions by 2050 Scenario (NZE) (WEO 2022 prices) \u2013 a pathway for the global energy sector to achieve net zero emissions by 2050 (reflecting an updated outlook consistent with our \u2018Radical Transformation\u2019 scenario).
The IEA no longer publishes assumptions relating to the Sustainable Development Scenario (SDS).
In addition, for illustrative purposes, we have shown a Complete Displacement Scenario (CDS) \u2013 reflecting the impact of fossil fuels being immediately displaced as an energy source and the resulting immediate fall in commodity prices to zero.
Our life of mine planning reflects operating cash flows which are consistent with achieving our emissions reduction targets and 2050 net zero emissions ambition. Overall our portfolio\u2019s production is heavily weighted towards the earlier part of these time frames. Based on the life of mine plan and remaining production as at 31 December 2022, we have illustrated this by showing the year in which 50% and 80% of saleable coal would be expected to be extracted under our current plans, being 2029 and 2036, respectively. If and while there is demand for coal, and it is economic to do so, we plan to continue to operate our mines to the end of their economic life and in accordance with our climate commitments, while not exceeding our 150 million tonnes per annum consolidated production cap.
The sensitivities are presented on price alone and assume no mitigating actions; therefore the impairments in each scenario are likely higher than would transpire. In practice, in a sustained low price environment, management would alter mine plans to cut operating and capital costs, potentially at the expense of future volumes, in order to reduce the overall NPV impact.
The STEPS, APS and NZE sensitivity prices adopted are those included in the documentation to WEO 2022, except that IEA thermal coal prices are on a delivered basis. These have been adjusted to FOB pricing on the basis of forward freight costs. Furthermore, in determining the Colombian FOB price, we have used a weighting of the IEA Japan and IEA European prices to take into account that Colombian coal sold from Cerrej\u00f3n is likely to be delivered to a combination of different markets in the future as coal demand in Europe declines.
The IEA assumes, in each scenario, additional decarbonisation measures leading to declining fossil fuel prices by the years 2030 and 2050, anchored in each case in a 2021 baseline. For the purpose of our climate change sensitivities below, we have assumed linear progression of prices between these points. Our base case reflects higher longer-term prices than in each of the IEA\u2019s climate scenarios reflecting our assessment of the supply and demand outlook and the industry cost structure.
Notes to the financial statements continued
1. Accounting policies continued
Cash-generating unit
US$ million
Thermal Australia
South Africa
Cerrej\u00f3n
Total thermal coal
Oil E&P
Base case assumptions in life of mine plan:
\u2013 LOM saleable tonnes (Glencore consolidated) (million tonnes)/ (million bbls)
960
320
200
15
\u2013 projected year when 50% LOM tonnage / reserves depleted
2030
2030
2026
2029
2024
\u2013 projected year when 80% LOM tonnage / reserves depleted
2037
2035
2029
2036
2026
\u2013 long-term price (Newcastle FOB / API4 FOB / Col FOB) ($/t) / (Brent oil price) ($/bbl) (real terms)
90
90
88
75
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
11.7%
10.5%
11.6%
Benchmark prices over LOM in selected scenarios ($/t, $/bbl):
2021-'30-'50
2021-'30-'50
2021-'30-'50
2021-'30
\u2013 IEA STEPS
156 - 86 - 66
146 - 79 - 62
131 - 68 - 63
78 - 93
\u2013 IEA APS
156 - 67 -51
146 - 61 - 48
131 - 70 - 50
78 - 72
\u2013 IEA NZE
156 - 50 - 36
146 - 44 - 32
131 - 59 - 38
78 - 40
\u2013 CDS
n.a.
n.a.
n.a.
n.a.
Carrying value of non-current capital employed as at
31 December 2022
7,238
1,986
956
10,180
200
Impairment arising in selected scenarios:
\u2013 IEA STEPS
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013 IEA APS
\u2013
740
\u2013
740
26
\u2013 IEA NZE
840
1,600
\u2013
2,400
110
\u2013 CDS1
8,613
2,318
2,093
13,024
285
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
9,210
2,976
2,349
14,535
312
Investments in associates and other investments
555
32
\u2013
587
\u2013
Deferred tax liabilities
(1,152)
(690)
(256)
(2,098)
(27)
Non-current provisions
(1,123)
(394)
(1,134)
(2,651)
(85)
Other non-current net assets/(liabilities)
(252)
62
(3)
(193)
\u2013
1In this scenario, we assume the impairment of non-current assets (net of deferred tax) while non-current liabilities, including rehabilitation, would be retained on balance sheet.
The prior year disclosure illustrated impairments under each of the IEA\u2019s scenarios, whereas the above table reflects impairments only in the NZE scenario (for Australia and South Africa) and the APS (for South Africa only). This mainly reflects materially higher shorter term prices in the various scenarios.
No impairment is projected for Cerrej\u00f3n using any of the IEA\u2019s scenarios, given that the current mine plan reflects expiry of mining leases by 2034, meaning the mine would not be exposed to the lower prices at the longer end of the price curves.
Following the disposal of Glencore\u2019s upstream Chad oil operations in 2022, the remaining portfolio (non-operated) is weighted towards natural gas, with the currently approved production profile expected to reach 80% extraction by 2026.
Notes to the financial statements continued
1. Accounting policies continued
Other fossil fuel related capital employed NPV sensitivities
Cash-generating unit
US$ million
Coking coal
Astron Energy
Coal
marketing goodwill
Base case assumptions in life of asset plan:
\u2013 LOA saleable tonnes (millions) / Refinery steady-state capacity ('000 bbls)
100
100k bopd
n.a.
\u2013 projected year when 50% LOA reserves depleted
2027
n.a.
n.a.
\u2013 projected year when 80% LOA reserves depleted
2032
n.a.
n.a.
\u2013 long-term price (hard coking coal) ($/t) (real terms)
175
n.a.
n.a.
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
9.6%
n.a.
\u2013 price to earnings multiple
12x
Percentage decrease to long-term pricing/PE multiples:
\u2013 25% price / $1/bbl refining margin1 / 2x PE (17%) decrease
131
n.a.
10x
\u2013 30% price / $2/bbl refining margin / 4x PE (33%) decrease
123
n.a.
8x
Carrying value of non-current capital employed as at 31 December 2022
1,654
876
1,674
Impairment arising in selected scenarios:
\u2013 25% price decrease across the curve / $1/bbl refining margin1 / 2x PE (17%) decrease
100
220
\u2013
\u2013 30% price decrease across the curve / $2/bbl refining margin / 4x PE (33%) decrease
390
450
400
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
1,950
835
1,674
Investments in associates and other investments
4
2
Deferred tax liabilities
(87)
\u2013
Non-current provisions
(213)
(4)
Other non-current net assets
\u2013
43
1The change in refining margin by $1/bbl is considered to be a reasonably possible change in our assumptions for Astron Energy within the next financial year.
Climate change sensitivities \u2013 property, plant and equipment and intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with, and reflects, our emissions reduction commitments and ambition. The current carrying value of our property, plant and equipment and intangible assets related to our fossil fuels operations is $17,633 million, and the depreciation / amortisation related to these balances recognised in 2022 was $2,740 million, implying an average accounting determined useful life of 6.5 years.
Notes to the financial statements continued
1. Accounting policies continued
(iii) Restoration, rehabilitation and decommissioning costs (note 23)
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to\u00a0be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Most of these rehabilitation and decommissioning events are expected to take place many years in the future and the currently estimated requirements and costs that will have to be met when the restoration events occur are inherently uncertain and could materially change over time.
In calculating the appropriate provision for the expected restoration, rehabilitation or decommissioning obligations, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof, are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability and the currency in which they are denominated.
Any changes in the expected future costs or risk-free rate are initially reflected in both the provision and the asset and subsequently in the consolidated statement of income over the remaining economic life of the asset. As the actual future costs can differ from the estimates due to changes in laws, regulations, technology, costs and timing, the provisions including the estimates and assumptions contained therein are reviewed regularly by management. A material change in the provision within the next financial year could arise from changes in risk-free rates. The aggregate effect of changes within the next financial year as a result of revisions to cost and timing assumptions is not expected to be material.
Climate change sensitivities
As noted above, while it is not a reasonably possible change we expect over the next financial year, global ambitions seeking to drive quicker decarbonisation, could result in the timing of restoration, rehabilitation and decommissioning costs related to our coal and oil closure obligations being accelerated. The non-current closure and monitoring provision related to the coal and oil operations is $3,717 million (undiscounted) and $2,708 million (current carrying value). The weighted average maturity is 13 years. To illustrate the effect of quicker decarbonisation, a three-year and five-year weighted average acceleration, with no changes to the total undiscounted cash flows, would result in an increase to the provision of $140 million and $224 million, respectively.
(iv) Valuation of Level 3 derivatives related to LNG contracts (note 29)
The sensitivity of the rehabilitation costs provision to changes in the discount rate assumptions as at 31 December 2022, assuming that all other assumptions are held constant, is set out below:
Discount rate
US$\u00a0million
Increase 1%
Decrease 1%
Decrease/(increase) in overall rehabilitation provision
822
(1,096)
(Decrease)/increase in property, plant and equipment
(662)
878
Net increase/(decrease) in statement of income
160
(218)
Effect in the following year
Decrease/(increase) in depreciation expense
35
(46)
(Increase)/decrease in interest expense
(22)
36
Net increase/(decrease) in statement of income
13
(10)
Onerous contracts
Onerous contracts represent liabilities related to contractual take or pay commitments for securing coal logistics capacity at fixed prices and quantities higher than the acquisition date forecasted usage and prevailing market price. The provision is released to costs of goods sold as the underlying commitments are incurred.
Investigations by regulatory and enforcement authorities
The Board has appointed a committee, the Investigations Committee, to oversee the response to the investigations on behalf of the Board.
On 24 May 2022 the Group announced that it had resolved the previously disclosed investigations by authorities in the United States, the United Kingdom and Brazil.
Under the terms of the US resolutions, Glencore agreed to pay penalties of $701 million to resolve bribery investigations and
$486 million to resolve market manipulation investigations by the Department of Justice (\u2018DOJ\u2019) and the Commodity Futures Trading Commission (\u2018CFTC\u2019). Of this amount, up to $166 million would be credited against other parallel matters, including in the UK, so that the net amount payable to the US authorities is expected to be $1,020 million. Glencore further agreed to pay $40 million under a resolution signed with the Brazilian Federal Prosecutor\u2019s Office (\u2018MPF\u2019) in connection with its bribery investigation into the Group. On 3 November 2022, Glencore Energy UK Limited was sentenced to pay a financial penalty and costs of \u00a3281 million in the Serious Fraud Office (\u2018SFO\u2019) investigation.
The Group has settled the amounts due to the CFTC, the DOJ in respect of the market manipulation matter and the SFO and expects to settle the amounts due to the DOJ in respect of the bribery matter and the MPF during the first half of 2023.
Accordingly, the Group has retained a provision for the United States and Brazil resolutions which at 31 December 2022 amounts to $484 million.
The Group remains subject to the following ongoing investigations:
  • The Office of the Attorney General of Switzerland (\u2018OAG\u2019) is investigating Glencore International AG for failure to have the organisational measures in place to prevent alleged corruption.
  • The Dutch authorities are conducting a criminal investigation into Glencore International AG related to potential corruption pertaining to the DRC. The scope of the investigation is similar to that of the OAG investigation. The Dutch authorities are coordinating their investigation with the OAG and the Group expects any possible resolution to avoid duplicative penalties for the same conduct.
The timing and outcome of the OAG and Dutch investigations remains uncertain \u2013 see note 32.
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Key sources of estimation uncertainty
In the process of applying Glencore\u2019s accounting policies, management has made key estimates and assumptions concerning the future and other key sources of estimation uncertainty. The key assumptions and estimates at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future\u00a0periods.
(i) Recognition of deferred tax assets and uncertain tax positions (note 8)
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether there will be sufficient taxable income available to offset the tax assets when they do reverse. These judgements and estimates are subject to risk and uncertainty and therefore, to the extent assumptions regarding future profitability change, there can be a material increase or decrease in the amounts recognised in the consolidated statement of income in the period in which the change occurs, notably the deferred tax asset and uncertain tax position of the Group\u2019s DRC operations as outlined in note 8. The recoverability of the Group\u2019s deferred tax assets and the completeness and accuracy of its uncertain tax positions, including the estimates and assumptions contained therein are reviewed regularly by management.
(ii) Impairments and impairment reversals (note 7)
Investments in associates and joint ventures, advances and loans, property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an individual asset or a cash-generating unit (CGU) may not be fully recoverable, or at least annually for CGUs to which goodwill and other indefinite life intangible assets have been allocated. Indicators of impairment may include changes in the Group\u2019s operating and economic assumptions, including those arising from changes in reserves or mine planning, updates to the Group\u2019s commodity supply, demand and price forecasts, or the possible impacts from emerging risks such as those related to climate change and the transition to a low carbon economy. If an asset or CGU\u2019s recoverable amount is less than its carrying amount, an impairment loss is recognised in the consolidated statement of income. For those assets or CGUs which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, an impairment reversal is recorded in the consolidated statement of income. Future cash flow estimates which are used to calculate the asset\u2019s or CGU\u2019s recoverable amount are discounted using asset or CGU specific discount rates and are based on expectations about future operations (including their alignment with our emissions reduction commitments and long-term ambition), using a combination of internal sources and those inputs available to a market participant, which primarily comprise estimates about production and sales volumes, commodity prices (considering current and future prices and price trends including factors such as the current global trajectory of climate change), legally enacted carbon taxes, reserves and resources, operating costs and capital expenditures. Estimates are reviewed regularly by management. Changes in such estimates and in particular, deterioration in the commodity pricing outlook, could impact the recoverable amounts of these assets or CGUs, whereby some or all of the carrying amount may be impaired or the impairment charge reversed (if pricing outlook improves significantly or the service potential of the asset or CGU has otherwise increased from the time of the previous impairment) with the impact recorded in the statement of income.
Notes to the financial statements continued
1. Accounting policies continued
As referred to above and further described below in the \u2018impairment or impairment reversals\u2019 accounting policy, the Group carries out, at least annually, an impairment assessment. Following this review, indicators of impairment or impairment reversal were identified for various CGUs, including those due to changes in the underlying commodity price environment most influencing the respective operation. The Group assessed the recoverable amounts of these CGUs and as at 31 December 2022, except for those CGUs disclosed in note 7, the estimated recoverable amounts exceeded the carrying values. For certain CGUs where no impairment was recognised, should there be a significant deterioration or improvement in the key assumptions, a material impairment or reversal could result within the next financial year. A summary of the carrying values, the key / most sensitive assumptions and a sensitivity impact of potential movements in these assumptions for each such CGU with limited headroom (relative to its estimated recoverable amount) is shown below. In providing sensitivity analysis (and particularly on commodity price assumptions), a 10% change, representing a typical deviation parameter common in the industry, has generally been provided. Where a higher or lower percentage is reasonably possible on an operational assumption, this has been clearly identified.
Katanga
Katanga\u2019s non-current capital employed is carried at approximately $3,800 million. The valuation is sensitive to price and a deterioration in this key assumption could result in an impairment. The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve could result in a $440 million impairment. A 10% reduction in the cobalt price assumption across the curve is not expected to result in an impairment.
Mutanda
Mutanda\u2019s non-current capital employed is carried at approximately $2,300 million, inclusive of a $109 million intangible asset recognised during the year and net of an accumulated impairment of $955 million. Following care and maintenance status since 2019, a limited restart of operations commenced in 2021, utilising stockpiles of oxide ore. The valuation includes value attributable to the long-term copper / cobalt sulphide mining and processing development potential. The valuation is sensitive to price and eventual commercialisation and ramp-up of the sulphide project, and deteriorations or improvements in these key assumptions may result in additional impairments or reversals.
The short to long-term copper and cobalt price assumptions were $8,200-$7,400/t and $24.50-$22.50/lb, respectively. A 10% reduction in the copper price assumption across the curve is not expected to result in a further impairment, whereas a 10% reduction in the realised cobalt price assumption (across the curve) could result in a further $150 million impairment. Should the copper and cobalt assumptions rise by 10% (across the curve), the previously recognised impairment could be reversed in its entirety.
Kazzinc Smelting
Management has assessed that the Kazzinc business comprises three CGUs: the core Kazzinc Smelting (integrated mining and smelting operations); the Zhairem zinc/lead mine; and the Vasilkovsky gold mine.
Kazzinc Smelting has not been impaired in the past or in the current year. However, industry cost pressures, including energy inputs and additional taxes, are such that there is no appreciable difference between carrying value and recoverable value. Should zinc prices move higher in line with the industry cost curve and/or stronger demand, the recoverable value could increase. Conversely, in a recessionary scenario the recoverable value could be lower than the carrying value.
Kazzinc Smelting\u2019s non-current capital employed is carried at approximately $1,300 million. The valuation is sensitive to price and the realisation of certain operational efficiencies, and deteriorations in these key assumptions may result in an impairment.
The short to long-term zinc price assumption was $3,250 - $2,450/t and the discount rate was 11%. A 10% reduction in the zinc price assumption (across the curve) could result in a $200 million impairment. A 1% increase in the discount rate could result in a
$130 million impairment. Equivalent upside sensitivities are materially symmetrical with the downsides illustrated.
Zhairem has been impaired in 2022 (refer note 7).
Management does not expect that any reasonably possible changes in assumptions could lead to an impairment of Vasilkovsky within the next financial year.
Climate change (additional illustrative disclosures)
Based on the current pricing environment, we do not consider there to be a reasonably possible change in the next financial year in key assumptions that would result in a material change in carrying values of any of our coal CGUs. With respect to our oil CGUs, a change in oil refining margin assumptions (across the curve) of $1/bbl is reasonably possible and could result in a $220 million change (increase or decrease) to the carrying value of the Astron Energy CGU.
All other sensitivities below are reasonably possible changes in assumptions beyond the next financial year.
Notes to the financial statements continued
1. Accounting policies continued
Energy fossil fuels industrial operations
Our base case price assessment takes into account the short-, medium- and longer-term seaborne coal demand outlook. Achieving our net zero ambition by 2050 assumes significant global technological evolution and advancement, and coordinated and supportive government policies, including incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, and market-based regulations governing industrial practices that drive a competitive, least-cost emissions reduction approach, most of which are not within our direct control or ability to materially influence. In particular, economic and regulatory incentivisation of such shift, whether through carbon pricing and / or incentives to drive accelerated uptake of lower carbon and decarbonisation technologies, could result in different financial results on the same tonnage profile.
Our assessment applies a value in use methodology. Glencore is not progressing thermal coal greenfield investments. However, we plan to continue to progress various brownfield coal extensions or expansions at existing mines as included in the life of mine plans, while continuing to be a responsible steward of these assets, as we progress the phase down of our global coal portfolio. We assume that, beyond the next 3 years when shorter term pricing assumptions have been used, through the remaining life of mine, there will continue to be a market for thermal coal at a real Newcastle FOB export price of $90/tonne (6,000 NAR), South African FOB export price of $90/tonne and Colombian FOB price of $88/tonne, which represents our best current estimate of long term pricing based on our view of projected likely supply and demand fundamentals and the industry cost structure. The increase over the equivalent prices presented in our 2021 analysis largely reflects inflation in the intervening year.
Notwithstanding these assumptions, we present illustrative impairments arising under alternate price scenarios. Glencore\u2019s scenarios were developed in 2020, drawing principally, though not exclusively, on the IEA scenarios available at the time. The next update will be in 2023 as part of our climate strategic review. For these 2022 price sensitivities, we have drawn from the IEA\u2019s latest World Energy Outlook 2022 (WEO 2022) climate scenarios, described below:
  • IEA\u2019s Stated Policies Scenario (STEPS) (WEO 2022 prices) \u2013 the impact of existing policy frameworks and announced policy intentions, subject to the IEA\u2019s assessment of the likelihood of such ambitions being implemented (reflecting an updated outlook consistent with our \u2018Current Pathway\u2019 scenario);
  • IEA\u2019s Announced Pledges Scenario (APS) (WEO 2022 prices) \u2013 the impact of all major national announcements of 2030 targets and longer term net zero and other pledges, regardless of whether these have been anchored in legislation or nationally determined contributions;
  • IEA\u2019s Net Zero Emissions by 2050 Scenario (NZE) (WEO 2022 prices) \u2013 a pathway for the global energy sector to achieve net zero emissions by 2050 (reflecting an updated outlook consistent with our \u2018Radical Transformation\u2019 scenario).
The IEA no longer publishes assumptions relating to the Sustainable Development Scenario (SDS).
In addition, for illustrative purposes, we have shown a Complete Displacement Scenario (CDS) \u2013 reflecting the impact of fossil fuels being immediately displaced as an energy source and the resulting immediate fall in commodity prices to zero.
Our life of mine planning reflects operating cash flows which are consistent with achieving our emissions reduction targets and 2050 net zero emissions ambition. Overall our portfolio\u2019s production is heavily weighted towards the earlier part of these time frames. Based on the life of mine plan and remaining production as at 31 December 2022, we have illustrated this by showing the year in which 50% and 80% of saleable coal would be expected to be extracted under our current plans, being 2029 and 2036, respectively. If and while there is demand for coal, and it is economic to do so, we plan to continue to operate our mines to the end of their economic life and in accordance with our climate commitments, while not exceeding our 150 million tonnes per annum consolidated production cap.
The sensitivities are presented on price alone and assume no mitigating actions; therefore the impairments in each scenario are likely higher than would transpire. In practice, in a sustained low price environment, management would alter mine plans to cut operating and capital costs, potentially at the expense of future volumes, in order to reduce the overall NPV impact.
The STEPS, APS and NZE sensitivity prices adopted are those included in the documentation to WEO 2022, except that IEA thermal coal prices are on a delivered basis. These have been adjusted to FOB pricing on the basis of forward freight costs. Furthermore, in determining the Colombian FOB price, we have used a weighting of the IEA Japan and IEA European prices to take into account that Colombian coal sold from Cerrej\u00f3n is likely to be delivered to a combination of different markets in the future as coal demand in Europe declines.
The IEA assumes, in each scenario, additional decarbonisation measures leading to declining fossil fuel prices by the years 2030 and 2050, anchored in each case in a 2021 baseline. For the purpose of our climate change sensitivities below, we have assumed linear progression of prices between these points. Our base case reflects higher longer-term prices than in each of the IEA\u2019s climate scenarios reflecting our assessment of the supply and demand outlook and the industry cost structure.
Notes to the financial statements continued
1. Accounting policies continued
Cash-generating unit
US$ million
Thermal Australia
South Africa
Cerrej\u00f3n
Total thermal coal
Oil E&P
Base case assumptions in life of mine plan:
\u2013 LOM saleable tonnes (Glencore consolidated) (million tonnes)/ (million bbls)
960
320
200
15
\u2013 projected year when 50% LOM tonnage / reserves depleted
2030
2030
2026
2029
2024
\u2013 projected year when 80% LOM tonnage / reserves depleted
2037
2035
2029
2036
2026
\u2013 long-term price (Newcastle FOB / API4 FOB / Col FOB) ($/t) / (Brent oil price) ($/bbl) (real terms)
90
90
88
75
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
11.7%
10.5%
11.6%
Benchmark prices over LOM in selected scenarios ($/t, $/bbl):
2021-'30-'50
2021-'30-'50
2021-'30-'50
2021-'30
\u2013 IEA STEPS
156 - 86 - 66
146 - 79 - 62
131 - 68 - 63
78 - 93
\u2013 IEA APS
156 - 67 -51
146 - 61 - 48
131 - 70 - 50
78 - 72
\u2013 IEA NZE
156 - 50 - 36
146 - 44 - 32
131 - 59 - 38
78 - 40
\u2013 CDS
n.a.
n.a.
n.a.
n.a.
Carrying value of non-current capital employed as at
31 December 2022
7,238
1,986
956
10,180
200
Impairment arising in selected scenarios:
\u2013 IEA STEPS
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013 IEA APS
\u2013
740
\u2013
740
26
\u2013 IEA NZE
840
1,600
\u2013
2,400
110
\u2013 CDS1
8,613
2,318
2,093
13,024
285
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
9,210
2,976
2,349
14,535
312
Investments in associates and other investments
555
32
\u2013
587
\u2013
Deferred tax liabilities
(1,152)
(690)
(256)
(2,098)
(27)
Non-current provisions
(1,123)
(394)
(1,134)
(2,651)
(85)
Other non-current net assets/(liabilities)
(252)
62
(3)
(193)
\u2013
1In this scenario, we assume the impairment of non-current assets (net of deferred tax) while non-current liabilities, including rehabilitation, would be retained on balance sheet.
The prior year disclosure illustrated impairments under each of the IEA\u2019s scenarios, whereas the above table reflects impairments only in the NZE scenario (for Australia and South Africa) and the APS (for South Africa only). This mainly reflects materially higher shorter term prices in the various scenarios.
No impairment is projected for Cerrej\u00f3n using any of the IEA\u2019s scenarios, given that the current mine plan reflects expiry of mining leases by 2034, meaning the mine would not be exposed to the lower prices at the longer end of the price curves.
Following the disposal of Glencore\u2019s upstream Chad oil operations in 2022, the remaining portfolio (non-operated) is weighted towards natural gas, with the currently approved production profile expected to reach 80% extraction by 2026.
Notes to the financial statements continued
1. Accounting policies continued
Other fossil fuel related capital employed NPV sensitivities
Cash-generating unit
US$ million
Coking coal
Astron Energy
Coal
marketing goodwill
Base case assumptions in life of asset plan:
\u2013 LOA saleable tonnes (millions) / Refinery steady-state capacity ('000 bbls)
100
100k bopd
n.a.
\u2013 projected year when 50% LOA reserves depleted
2027
n.a.
n.a.
\u2013 projected year when 80% LOA reserves depleted
2032
n.a.
n.a.
\u2013 long-term price (hard coking coal) ($/t) (real terms)
175
n.a.
n.a.
\u2013 discount rate applied (ranges represent opencut / underground)
8.7-9.3%
9.6%
n.a.
\u2013 price to earnings multiple
12x
Percentage decrease to long-term pricing/PE multiples:
\u2013 25% price / $1/bbl refining margin1 / 2x PE (17%) decrease
131
n.a.
10x
\u2013 30% price / $2/bbl refining margin / 4x PE (33%) decrease
123
n.a.
8x
Carrying value of non-current capital employed as at 31 December 2022
1,654
876
1,674
Impairment arising in selected scenarios:
\u2013 25% price decrease across the curve / $1/bbl refining margin1 / 2x PE (17%) decrease
100
220
\u2013
\u2013 30% price decrease across the curve / $2/bbl refining margin / 4x PE (33%) decrease
390
450
400
Breakdown of non-current capital employed as at 31 December 2022:
Property, plant and equipment and intangible assets
1,950
835
1,674
Investments in associates and other investments
4
2
Deferred tax liabilities
(87)
\u2013
Non-current provisions
(213)
(4)
Other non-current net assets
\u2013
43
1The change in refining margin by $1/bbl is considered to be a reasonably possible change in our assumptions for Astron Energy within the next financial year.
Climate change sensitivities \u2013 property, plant and equipment and intangible assets \u2013 estimation of the remaining useful economic life of assets for depreciation and amortisation purposes
Property, plant and equipment and intangible assets are depreciated / amortised to estimated residual values over the estimated useful lives of the specific assets concerned, or the estimated remaining life of the associated mine, field or lease, using a straight-line or a units of production over recoverable reserves method. The estimated useful lives of our specific assets and / or operations (and therefore the rate of depreciation / amortisation) aligns with, and reflects, our emissions reduction commitments and ambition. The current carrying value of our property, plant and equipment and intangible assets related to our fossil fuels operations is $17,633 million, and the depreciation / amortisation related to these balances recognised in 2022 was $2,740 million, implying an average accounting determined useful life of 6.5 years.
Notes to the financial statements continued
1. Accounting policies continued
(iii) Restoration, rehabilitation and decommissioning costs (note 23)
A provision for future restoration, rehabilitation and decommissioning costs requires estimates and assumptions to\u00a0be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. Most of these rehabilitation and decommissioning events are expected to take place many years in the future and the currently estimated requirements and costs that will have to be met when the restoration events occur are inherently uncertain and could materially change over time.
In calculating the appropriate provision for the expected restoration, rehabilitation or decommissioning obligations, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof, are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability and the currency in which they are denominated.
Any changes in the expected future costs or risk-free rate are initially reflected in both the provision and the asset and subsequently in the consolidated statement of income over the remaining economic life of the asset. As the actual future costs can differ from the estimates due to changes in laws, regulations, technology, costs and timing, the provisions including the estimates and assumptions contained therein are reviewed regularly by management. A material change in the provision within the next financial year could arise from changes in risk-free rates. The aggregate effect of changes within the next financial year as a result of revisions to cost and timing assumptions is not expected to be material.
Climate change sensitivities
As noted above, while it is not a reasonably possible change we expect over the next financial year, global ambitions seeking to drive quicker decarbonisation, could result in the timing of restoration, rehabilitation and decommissioning costs related to our coal and oil closure obligations being accelerated. The non-current closure and monitoring provision related to the coal and oil operations is $3,717 million (undiscounted) and $2,708 million (current carrying value). The weighted average maturity is 13 years. To illustrate the effect of quicker decarbonisation, a three-year and five-year weighted average acceleration, with no changes to the total undiscounted cash flows, would result in an increase to the provision of $140 million and $224 million, respectively.
(iv) Valuation of Level 3 derivatives related to LNG contracts (note 29)
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Adoption of new and revised standards
The following clarification revisions to existing accounting pronouncements became effective as of 1 January 2022 and have been adopted by the Group.
(i) Onerous Contracts \u2013 Cost of Fulfilling a Contract (Amendments to IAS 37) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments specify that the \u2018cost of fulfilling\u2019 a contract comprises the \u2018costs that relate directly to the contract\u2019. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. The Group has applied the amendments to contracts for which the Group has not yet fulfilled all its obligations as at 1 January 2022.
(ii) Property, Plant and Equipment \u2013 Proceeds before intended use (Amendments to IAS 16) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment, any proceeds received from selling items produced while preparing the assets for its intended use. Instead, any entity recognises the proceeds from selling such items, and the costs of producing those items, in the statement of income.
(iii) Reference to the Conceptual Framework (Amendments to IFRS 3) \u2013 effective for year ends beginning on or after 1 January 2022
The amendments update the references to the Conceptual Framework for Financial Reporting and add an exception for the recognition of liabilities and contingent liabilities within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRIC 21 Levies. The amendments also confirm that contingent assets should not be recognised at the acquisition date.
These amendments did not have a material impact on the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-19": { "value": "
Notes to the financial statements continued
1. Accounting policies continued
Revised standards not yet effective
At the date of the authorisation of these consolidated financial statements, the following revised IFRS standards, which are applicable to Glencore, were issued but not yet effective:
(i) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations, and clarify that the initial recognition exception does not apply to transactions where both an asset and a liability are recognised in a single transaction. Accordingly, deferred tax is required to be recognised on such transactions.
(i) Definition of Accounting Estimates (Amendments to IAS 8) \u2013 effective for year ends beginning on or after
1 January 2023
The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies.
(iii) Materiality of Accounting Policy Disclosure (Amendments to IAS 1) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments require companies to disclose their material accounting policy information rather than their significant accounting policies.
(iv) Classification of Liabilities as current or non-current (Amendments to IAS 1) \u2013 effective for year ends beginning on or after 1 January 2023
The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of \u2018settlement\u2019 to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
No significant changes to presentation or disclosures within these financial statements are expected following the adoption of these amendments.
", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-20": { "value": "
Basis of preparation
The consolidated financial statements are prepared under the historical cost convention except for certain financial assets, liabilities, marketing inventories and pension obligations that are measured at revalued amounts or fair values at the end of each reporting period as explained in the accounting policies below. Historical cost is defined as the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition. The principal accounting policies adopted are set out below.
The Directors have assessed that they have, at the time of approving these consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the 12 months from the expected date of approval of the 2022 Annual Report and Accounts. Therefore, they continue to adopt the going concern basis of\u00a0accounting in preparing these financial statements. The Directors have made this assessment after consideration of the Group\u2019s budgeted cash flows and related assumptions including appropriate stress testing of the identified uncertainties (being primarily commodity prices and currency exchange rates) and access to undrawn credit facilities and monitoring of debt maturities. Further information on Glencore\u2019s objectives, policies and processes for managing its capital and financial risks is detailed in note 27.
All amounts are expressed in millions of United States dollars, the presentation currency of the Group, unless otherwise stated.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-21": { "value": "
The Directors have assessed that they have, at the time of approving these consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the 12 months from the expected date of approval of the 2022 Annual Report and Accounts. Therefore, they continue to adopt the going concern basis of\u00a0accounting in preparing these financial statements. The Directors have made this assessment after consideration of the Group\u2019s budgeted cash flows and related assumptions including appropriate stress testing of the identified uncertainties (being primarily commodity prices and currency exchange rates) and access to undrawn credit facilities and monitoring of debt maturities. Further information on Glencore\u2019s objectives, policies and processes for managing its capital and financial risks is detailed in note 27.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-22": { "value": "
All amounts are expressed in millions of United States dollars, the presentation currency of the Group, unless otherwise stated.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-23": { "value": "
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries.
Control is achieved when Glencore is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, Glencore controls an investee if, and only if, Glencore has all of the following:
  • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
  • Exposure, or rights, to variable returns from its involvement with the investee; and
  • The ability to use its power over the investee to affect its returns.
Notes to the financial statements continued
1. Accounting policies continued
When Glencore has less than a majority of the voting rights of an investee or similar rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over the investee including:
  • The size of Glencore\u2019s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
  • Potential voting rights held by Glencore, other vote holders or other parties;
  • Rights arising from other contractual arrangements; and
  • Any additional facts and circumstances that indicate that Glencore has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be\u00a0made, including voting patterns at previous shareholders\u2019 meetings.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or\u00a0more of the three elements of control listed above. Consolidation of a subsidiary begins when Glencore obtains control over the subsidiary and ceases when Glencore loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of income and other comprehensive income from the date Glencore gains control until the date when Glencore ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to\u00a0the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the\u00a0Group\u2019s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in Glencore\u2019s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions with any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or\u00a0received being recognised directly in equity and attributed to equity holders of Glencore.
When Glencore loses control of a subsidiary, a gain or loss is recognised in the consolidated statement of income and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if Glencore had directly disposed of the related assets or liabilities of the subsidiary (i.e.\u00a0reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, or\u00a0the cost on the initial recognition of an investment in an associate or a joint\u00a0venture.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-24": { "value": "
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries.
Control is achieved when Glencore is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, Glencore controls an investee if, and only if, Glencore has all of the following:
  • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
  • Exposure, or rights, to variable returns from its involvement with the investee; and
  • The ability to use its power over the investee to affect its returns.
Notes to the financial statements continued
1. Accounting policies continued
When Glencore has less than a majority of the voting rights of an investee or similar rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over the investee including:
  • The size of Glencore\u2019s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
  • Potential voting rights held by Glencore, other vote holders or other parties;
  • Rights arising from other contractual arrangements; and
  • Any additional facts and circumstances that indicate that Glencore has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be\u00a0made, including voting patterns at previous shareholders\u2019 meetings.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or\u00a0more of the three elements of control listed above. Consolidation of a subsidiary begins when Glencore obtains control over the subsidiary and ceases when Glencore loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of income and other comprehensive income from the date Glencore gains control until the date when Glencore ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to\u00a0the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the\u00a0Group\u2019s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in Glencore\u2019s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions with any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or\u00a0received being recognised directly in equity and attributed to equity holders of Glencore.
When Glencore loses control of a subsidiary, a gain or loss is recognised in the consolidated statement of income and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if Glencore had directly disposed of the related assets or liabilities of the subsidiary (i.e.\u00a0reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, or\u00a0the cost on the initial recognition of an investment in an associate or a joint\u00a0venture.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-25": { "value": "
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to\u00a0the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the\u00a0Group\u2019s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in Glencore\u2019s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions with any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or\u00a0received being recognised directly in equity and attributed to equity holders of Glencore.
When Glencore loses control of a subsidiary, a gain or loss is recognised in the consolidated statement of income and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if Glencore had directly disposed of the related assets or liabilities of the subsidiary (i.e.\u00a0reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, or\u00a0the cost on the initial recognition of an investment in an associate or a joint\u00a0venture.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-26": { "value": "
Investments in associates and joint ventures
Associates and joint ventures (together \u2018Associates\u2019) in which Glencore exercises significant influence or joint control are accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Significant influence is presumed if Glencore holds between 20% and 50% of the voting rights, unless evidence exists to the contrary. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant strategic and/or key operating decisions require unanimous consent of the parties sharing\u00a0control.
Equity accounting involves Glencore recording its share of the Associate\u2019s net income and equity. Glencore\u2019s interest in an Associate is initially recorded at cost and is subsequently adjusted for Glencore\u2019s share of changes in net assets of the Associate, less any impairment in the value of individual investments. Where Glencore transacts with an Associate, unrealised profits and losses are eliminated to the extent of Glencore\u2019s interest in that\u00a0Associate.
Changes in Glencore\u2019s interests in Associates are accounted for as\u00a0a gain or loss on disposal with any difference between the amount by which the carrying value of the Associate is adjusted and the fair value of the consideration received being recognised directly in the consolidated statement of\u00a0income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-27": { "value": "
Investments in associates and joint ventures
Associates and joint ventures (together \u2018Associates\u2019) in which Glencore exercises significant influence or joint control are accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Significant influence is presumed if Glencore holds between 20% and 50% of the voting rights, unless evidence exists to the contrary. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant strategic and/or key operating decisions require unanimous consent of the parties sharing\u00a0control.
Equity accounting involves Glencore recording its share of the Associate\u2019s net income and equity. Glencore\u2019s interest in an Associate is initially recorded at cost and is subsequently adjusted for Glencore\u2019s share of changes in net assets of the Associate, less any impairment in the value of individual investments. Where Glencore transacts with an Associate, unrealised profits and losses are eliminated to the extent of Glencore\u2019s interest in that\u00a0Associate.
Changes in Glencore\u2019s interests in Associates are accounted for as\u00a0a gain or loss on disposal with any difference between the amount by which the carrying value of the Associate is adjusted and the fair value of the consideration received being recognised directly in the consolidated statement of\u00a0income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-28": { "value": "
Investments in associates and joint ventures
Associates and joint ventures (together \u2018Associates\u2019) in which Glencore exercises significant influence or joint control are accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Significant influence is presumed if Glencore holds between 20% and 50% of the voting rights, unless evidence exists to the contrary. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant strategic and/or key operating decisions require unanimous consent of the parties sharing\u00a0control.
Equity accounting involves Glencore recording its share of the Associate\u2019s net income and equity. Glencore\u2019s interest in an Associate is initially recorded at cost and is subsequently adjusted for Glencore\u2019s share of changes in net assets of the Associate, less any impairment in the value of individual investments. Where Glencore transacts with an Associate, unrealised profits and losses are eliminated to the extent of Glencore\u2019s interest in that\u00a0Associate.
Changes in Glencore\u2019s interests in Associates are accounted for as\u00a0a gain or loss on disposal with any difference between the amount by which the carrying value of the Associate is adjusted and the fair value of the consideration received being recognised directly in the consolidated statement of\u00a0income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-29": { "value": "
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method of accounting. The cost of the acquisition is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquiree and the equity interests issued in exchange for control of the acquiree.
The identifiable assets, liabilities and contingent liabilities (\u2018identifiable net assets\u2019) are recognised at their fair value at the date of acquisition. Acquisition-related costs are recognised in the consolidated statement of income as incurred.
Where a business combination is achieved in stages, Glencore\u2019s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date Glencore attains control) and the resulting gain or loss, if any, is recognised in the consolidated statement of income.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the CGUs that are expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods.
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on\u00a0disposal.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, Glencore reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted for additional information obtained during the \u2018measurement period\u2019 (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that\u00a0date.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity\u2019s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests\u2019 proportionate share of the recognised amounts of the acquiree\u2019s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.
Notes to the financial statements continued
1. Accounting policies continued
Similar procedures are applied in accounting for the purchases of interests in Associates and joint operations. Any goodwill arising from such purchases is included within the carrying amount of the investment in Associates, but not amortised thereafter. Any excess of Glencore\u2019s share of the net fair value of the Associate\u2019s identifiable net assets over the cost of the investment is included in\u00a0the consolidated statement of income in the period of the\u00a0purchase.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-30": { "value": "
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method of accounting. The cost of the acquisition is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquiree and the equity interests issued in exchange for control of the acquiree.
The identifiable assets, liabilities and contingent liabilities (\u2018identifiable net assets\u2019) are recognised at their fair value at the date of acquisition. Acquisition-related costs are recognised in the consolidated statement of income as incurred.
Where a business combination is achieved in stages, Glencore\u2019s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date Glencore attains control) and the resulting gain or loss, if any, is recognised in the consolidated statement of income.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the CGUs that are expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods.
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on\u00a0disposal.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, Glencore reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted for additional information obtained during the \u2018measurement period\u2019 (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that\u00a0date.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity\u2019s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests\u2019 proportionate share of the recognised amounts of the acquiree\u2019s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.
Notes to the financial statements continued
1. Accounting policies continued
Similar procedures are applied in accounting for the purchases of interests in Associates and joint operations. Any goodwill arising from such purchases is included within the carrying amount of the investment in Associates, but not amortised thereafter. Any excess of Glencore\u2019s share of the net fair value of the Associate\u2019s identifiable net assets over the cost of the investment is included in\u00a0the consolidated statement of income in the period of the\u00a0purchase.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-31": { "value": "
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the CGUs that are expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation (calculated on a straight-line basis over their useful lives) and accumulated impairment losses, if any.
Internally generated intangibles are not capitalised. Instead, the related expenditure is recognised in the consolidated statement of income in the period in which the expenditure is incurred.
Identifiable intangible assets with a finite life are amortised on a straight-line basis over their expected useful life. The amortisation method and period are reviewed annually and impairment testing is undertaken when circumstances indicate the carrying amount may not be recoverable. Other than goodwill which is not amortised, Glencore has no identifiable intangible assets with an indefinite life.
The major categories of intangibles are amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Port allocation rights
UOP
Licences, trademarks and software
3 \u2013 20 years
Customer relationships
5 \u2013 9 years
Goodwill impairment testing
For the purpose of impairment testing, goodwill has been allocated to the CGUs, or groups of CGUs, that are expected to\u00a0benefit from the synergies of the business combination and which represent the level at which management monitors and manages the goodwill. In assessing whether an impairment is required, the carrying value of the CGU is compared with its recoverable amount. The recoverable amount is the higher of its\u00a0fair value less costs of disposal (FVLCD) and its value in use (VIU). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill can not be reversed in subsequent periods.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-32": { "value": "
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer\u2019s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the CGUs that are expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods.
Goodwill impairment testing
For the purpose of impairment testing, goodwill has been allocated to the CGUs, or groups of CGUs, that are expected to\u00a0benefit from the synergies of the business combination and which represent the level at which management monitors and manages the goodwill. In assessing whether an impairment is required, the carrying value of the CGU is compared with its recoverable amount. The recoverable amount is the higher of its\u00a0fair value less costs of disposal (FVLCD) and its value in use (VIU). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill can not be reversed in subsequent periods.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-33": { "value": "
Non-current assets held for sale and disposal groups
Non-current assets, liabilities and those included in disposal groups are classified as held for sale if their carrying amount will be\u00a0recovered principally through a sale transaction rather than through continuing use, they are available for immediate disposal and the sale is highly probable. Non-current assets, liabilities and those included in disposal groups held for sale are measured at the lower of their carrying amount or fair value less costs to sell.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-34": { "value": "
Non-current assets held for sale and disposal groups
Non-current assets, liabilities and those included in disposal groups are classified as held for sale if their carrying amount will be\u00a0recovered principally through a sale transaction rather than through continuing use, they are available for immediate disposal and the sale is highly probable. Non-current assets, liabilities and those included in disposal groups held for sale are measured at the lower of their carrying amount or fair value less costs to sell.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-35": { "value": "
Revenue recognition
Revenue is derived principally from the sale of goods (sale of commodities) and in some instances the goods are sold on Cost and Freight (CFR) or Cost, Insurance and Freight (CIF) Incoterms. When goods are sold on a CFR or CIF basis, the Group is responsible for providing these services (shipping and insurance) to the customer, sometimes after the date at which Glencore has lost control of the goods. Revenue is recognised when the performance obligations have been satisfied, which is once control of the goods and/or services has transferred from Glencore to the buyer. Revenue is measured based on consideration specified in the contract with a customer and excludes amounts collected on behalf of third parties. The same recognition and presentation principles apply to revenues arising from physical settlement of forward sale contracts that do not meet the own use exemption.
Revenue related to the sale of goods is recognised when the product is delivered to the destination specified by the customer, which is typically the vessel on\u00a0which it is shipped, the destination port or the customer\u2019s\u00a0premises and the buyer has gained control through their ability to direct the use of and obtain substantially all the benefits from the asset. Where the sale of goods is connected with an agreement to repurchase goods at a later date, revenue is recognised when the repurchase terms are at prevailing market prices, the goods repurchased are readily available in the market, and the buyer gained control of the goods originally sold to them. Should it be determined that control has not transferred or the buyer does not have the ability to benefit substantially from ownership of the asset, revenue is not recognised and any proceeds received are accounted for as a financing arrangement.
For certain commodities, the sales price is determined on a provisional basis at the date of sale as the final selling price is subject to\u00a0movements in market prices up to the date of final pricing, normally ranging from 30 to 90 days after initial booking (provisionally priced sales). Revenue on\u00a0provisionally priced sales is recognised based on the estimated fair value of the total consideration receivable. The revenue adjustment mechanism embedded within provisionally priced sales arrangements has the character of a commodity derivative.
Accordingly, the fair value of the final sales price adjustment is re-estimated continuously and changes in fair value are recognised as an adjustment to revenue. In all cases, fair value is estimated by reference to forward market prices.
Revenue from the sale of material by-products are included within revenue. Where a by-product is not regarded as significant, revenue may be credited against cost of goods sold.
Revenue related to the provision of shipping and insurance related activities is recognised over time as the service is rendered.
Payments received for future metal (primarily gold and silver) deliveries (prepayments) are accounted for as executory contracts whereby the prepayment is initially recorded as deferred revenue in the consolidated statement of financial position. The initial deferred revenue amount is unwound and revenue is recognised in the consolidated statement of income as and when Glencore physically delivers the metal and loses control of it. Where these prepayments are in excess of one year and contain a significant financing component, the amount of the deferred revenue is adjusted for the effects of the time value of money. Glencore applies the practical expedient to not adjust the promised amount of consideration for the effects of time value of money if the period between delivery and the respective payment is one year or less.
Royalty, interest and dividend income is recognised when the right to receive payment has been established, it is probable that the economic benefits will flow to Glencore and the amount of income can be measured reliably. Royalty revenue is recognised on an accruals basis in accordance with the substance of the relevant agreement. Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-36": { "value": "
Revenue related to the sale of goods is recognised when the product is delivered to the destination specified by the customer, which is typically the vessel on\u00a0which it is shipped, the destination port or the customer\u2019s\u00a0premises and the buyer has gained control through their ability to direct the use of and obtain substantially all the benefits from the asset. Where the sale of goods is connected with an agreement to repurchase goods at a later date, revenue is recognised when the repurchase terms are at prevailing market prices, the goods repurchased are readily available in the market, and the buyer gained control of the goods originally sold to them. Should it be determined that control has not transferred or the buyer does not have the ability to benefit substantially from ownership of the asset, revenue is not recognised and any proceeds received are accounted for as a financing arrangement.
For certain commodities, the sales price is determined on a provisional basis at the date of sale as the final selling price is subject to\u00a0movements in market prices up to the date of final pricing, normally ranging from 30 to 90 days after initial booking (provisionally priced sales). Revenue on\u00a0provisionally priced sales is recognised based on the estimated fair value of the total consideration receivable. The revenue adjustment mechanism embedded within provisionally priced sales arrangements has the character of a commodity derivative.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-37": { "value": "
Royalty, interest and dividend income is recognised when the right to receive payment has been established, it is probable that the economic benefits will flow to Glencore and the amount of income can be measured reliably. Royalty revenue is recognised on an accruals basis in accordance with the substance of the relevant agreement. Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate.
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-38": { "value": "
Royalty, interest and dividend income is recognised when the right to receive payment has been established, it is probable that the economic benefits will flow to Glencore and the amount of income can be measured reliably. Royalty revenue is recognised on an accruals basis in accordance with the substance of the relevant agreement. Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate.
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-39": { "value": "
Foreign currency translation
Glencore\u2019s reporting currency and the functional currency of\u00a0the majority of its operations is the US dollar as this is assessed to be the principal currency of the economic environment in which it\u00a0operates.
Notes to the financial statements continued
1. Accounting policies continued
(i) Foreign currency transactions
Transactions in foreign currencies are converted into the functional currency of each entity using the exchange rate prevailing at the transaction date. Monetary assets and liabilities outstanding at year-end are converted at year-end rates. Non-monetary items measured in terms of historical cost are translated using the exchange rate at the date of the transaction. The resulting exchange differences are recorded in the consolidated statement of income.
(ii) Translation of financial statements
For the purposes of consolidation, assets and liabilities of group companies whose functional currency is in a currency other than the US dollar are translated into US dollars using year-end exchange rates, while their statements of income are translated using average rates of exchange for the year. Translation adjustments are included as a separate component of shareholders\u2019 equity and have no consolidated statement of income impact to the extent that no disposal of the foreign operation has occurred.
Where an intragroup balance is, in substance, part of the Group\u2019s net investment in an entity, exchange gains and losses on that balance are taken to the currency translation reserve. Cumulative translation differences are recycled from equity and recognised as income or expense on partial disposal of the net investment in an entity, which includes repayments of capital and loans. On such partial disposals, when the Group\u2019s percentage of equity ownerships do not change, the \u2018absolute\u2019 approach is applied. Under this approach, the amounts held in the foreign currency translation reserve are reclassified to income or expense based on the proportionate share of total cumulative translation differences recognised in the net investment.
Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-40": { "value": "
Glencore\u2019s reporting currency and the functional currency of\u00a0the majority of its operations is the US dollar as this is assessed to be the principal currency of the economic environment in which it\u00a0operates.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-41": { "value": "
Borrowing costs
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-42": { "value": "
Borrowing costs
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-43": { "value": "
Employee and retirement benefits
Wages, salaries, bonuses, social security contributions, paid annual and sick leave are accrued in the period in which the associated services are rendered by the employees of the Group.
Glencore operates various pension schemes in accordance with local requirements and practices of the respective countries. The annual costs for defined contribution plans that are funded by payments to separate trustee administered funds or insurance companies equal the contributions that are required under the plans and accounted for as an expense.
For defined benefit retirement plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurements comprising actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognised immediately in the statement of financial position with a charge or credit to other comprehensive income in the period in which they occur. Remeasurements recognised in other comprehensive income are not reclassified. Past service cost is recognised in profit or loss when the plan amendment or curtailment occurs, or when the Group recognises related restructuring costs or termination benefits, if earlier. Gains or losses on settlement of a defined benefit plan are recognised when the settlement occurs. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset.
Defined benefit costs are split into three categories:
  • service costs, which includes current service cost, past service cost and gains and losses on curtailments and\u00a0settlements;
  • net interest expense or income; and
  • remeasurements.
The Group recognises service costs within the consolidated statement of income.
Net interest expense or income is recognised within interest expense or income within the consolidated statement of income.
Any past service cost (or the gain or loss on settlement) is calculated by measuring the defined benefit liability (asset) using updated assumptions and comparing benefits offered and plan assets before and after the plan amendment (or curtailment or settlement) but ignoring the effect of the asset ceiling (that may arise when the defined benefit plan is in a surplus position). The Group uses the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan. In the case of the net interest for the period post-plan amendment, the net interest is calculated by multiplying the net defined benefit liability (asset) as remeasured with the discount rate used in the remeasurement (also taking into account the effect of contributions and benefit payments on the net defined benefit liability (asset)).
Notes to the financial statements continued
1. Accounting policies continued
The retirement benefit obligation recognised in the consolidated statement of financial position represents the deficit or surplus in the Group\u2019s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Glencore also provides post-retirement healthcare benefits to certain employees in Canada, South Africa and the United States. These are accounted for in a similar manner to the defined benefit pension plans, however are unfunded.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-44": { "value": "
Share-based payments
(i) Equity-settled share-based payments
Equity-settled share-based payments are measured at the fair value of the awards based on the market value of the shares at the grant date. Fair value excludes the effect of non-market-based vesting conditions. The fair value is charged to the consolidated statement of income and credited to retained earnings on a straight-line basis over the period the estimated awards are expected to\u00a0vest.
At each balance sheet date, the Company revises its estimate of\u00a0the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the consolidated statement of income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.
(ii) Cash-settled share-based payments
For cash-settled share-based payments, a liability is initially recognised at fair value based on the estimated number of awards that are expected to vest, adjusting for market and non-market-based performance conditions. Subsequently, at\u00a0each reporting period until the liability is settled, it is remeasured to fair value with any changes in fair value recognised in the consolidated statement of\u00a0income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-45": { "value": "
Income taxes
Income taxes consist of current and deferred income taxes. Current taxes represent income taxes expected to be payable based on enacted or substantively enacted tax rates at the period end on expected current taxable income, and any adjustment to tax payable in respect of previous years. Deferred taxes are recognised for temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable income, using enacted or\u00a0substantively enacted income tax rates which are expected to be effective at\u00a0the time of reversal of the underlying temporary difference. Deferred tax assets and unused tax\u00a0losses are only recognised to\u00a0the extent that their recoverability is probable. Deferred tax assets are reviewed at reporting period end and amended to the extent that it is no longer probable that the related benefit will be realised. To the extent that a deferred tax asset not previously recognised subsequently fulfils the criteria for recognition, an asset is then recognised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same authority and Glencore has both the right and the intention to settle its current tax assets and liabilities on a net or simultaneous basis. The tax effect of certain temporary differences is not recognised principally with respect to the initial recognition of an asset or liability (other than those arising in a\u00a0business combination or in a manner that initially impacted accounting or taxable profit) and temporary differences relating to\u00a0investments in subsidiaries and Associates to the extent that Glencore can control the timing of the reversal of the temporary difference and it is probable the temporary difference will not reverse in the foreseeable future. Deferred tax is provided in respect of\u00a0fair value adjustments on acquisitions. These adjustments may relate to assets such as extraction rights that, in general, are not eligible for income tax allowances.
Current and deferred tax are recognised as an expense or income in the consolidated statement of income, except when they relate to items that are recognised outside the consolidated statement of income (whether in other comprehensive income or directly in equity) or where they arise from the initial accounting for a business combination.
Royalties, extraction taxes and other levies/taxes are treated as taxation arrangements when they have the characteristics of an income tax, including being imposed and determined in accordance with regulations established by the respective government\u2019s taxation authority and the amount payable is based on taxable income \u2013 rather than physical quantities produced or as a percentage of revenues \u2013 after adjustment for temporary differences. For such arrangements, current and deferred tax is provided on the same basis as described above for\u00a0other forms of taxation. Obligations arising from royalty arrangements that do not satisfy these criteria are recognised as\u00a0current provisions and included in cost of goods sold.
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its best estimate of these tax liabilities, including related interest charges, taking into account the range of possible outcomes.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-46": { "value": "
Income taxes
Income taxes consist of current and deferred income taxes. Current taxes represent income taxes expected to be payable based on enacted or substantively enacted tax rates at the period end on expected current taxable income, and any adjustment to tax payable in respect of previous years. Deferred taxes are recognised for temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable income, using enacted or\u00a0substantively enacted income tax rates which are expected to be effective at\u00a0the time of reversal of the underlying temporary difference. Deferred tax assets and unused tax\u00a0losses are only recognised to\u00a0the extent that their recoverability is probable. Deferred tax assets are reviewed at reporting period end and amended to the extent that it is no longer probable that the related benefit will be realised. To the extent that a deferred tax asset not previously recognised subsequently fulfils the criteria for recognition, an asset is then recognised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same authority and Glencore has both the right and the intention to settle its current tax assets and liabilities on a net or simultaneous basis. The tax effect of certain temporary differences is not recognised principally with respect to the initial recognition of an asset or liability (other than those arising in a\u00a0business combination or in a manner that initially impacted accounting or taxable profit) and temporary differences relating to\u00a0investments in subsidiaries and Associates to the extent that Glencore can control the timing of the reversal of the temporary difference and it is probable the temporary difference will not reverse in the foreseeable future. Deferred tax is provided in respect of\u00a0fair value adjustments on acquisitions. These adjustments may relate to assets such as extraction rights that, in general, are not eligible for income tax allowances.
Current and deferred tax are recognised as an expense or income in the consolidated statement of income, except when they relate to items that are recognised outside the consolidated statement of income (whether in other comprehensive income or directly in equity) or where they arise from the initial accounting for a business combination.
Royalties, extraction taxes and other levies/taxes are treated as taxation arrangements when they have the characteristics of an income tax, including being imposed and determined in accordance with regulations established by the respective government\u2019s taxation authority and the amount payable is based on taxable income \u2013 rather than physical quantities produced or as a percentage of revenues \u2013 after adjustment for temporary differences. For such arrangements, current and deferred tax is provided on the same basis as described above for\u00a0other forms of taxation. Obligations arising from royalty arrangements that do not satisfy these criteria are recognised as\u00a0current provisions and included in cost of goods sold.
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its best estimate of these tax liabilities, including related interest charges, taking into account the range of possible outcomes.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-47": { "value": "
Royalties, extraction taxes and other levies/taxes are treated as taxation arrangements when they have the characteristics of an income tax, including being imposed and determined in accordance with regulations established by the respective government\u2019s taxation authority and the amount payable is based on taxable income \u2013 rather than physical quantities produced or as a percentage of revenues \u2013 after adjustment for temporary differences. For such arrangements, current and deferred tax is provided on the same basis as described above for\u00a0other forms of taxation. Obligations arising from royalty arrangements that do not satisfy these criteria are recognised as\u00a0current provisions and included in cost of goods sold.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTaxesOtherThanIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-48": { "value": "
Notes to the financial statements continued
1. Accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at cost, being the fair value of the consideration given to acquire or construct the asset, including directly attributable costs required to bring the asset to\u00a0the location or to a condition necessary for operation and the\u00a0direct cost of dismantling and removing the asset, less accumulated depreciation and any accumulated impairment\u00a0losses.
Property, plant and equipment are depreciated to their estimated residual value over the estimated useful life of the specific asset concerned, or the estimated remaining life of the associated mine (LOM), field or lease.
Depreciation commences when the asset is available for use. The major categories of property, plant and equipment are depreciated/amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Buildings
10 \u2013 45 years
Freehold land
not depreciated
Plant and equipment
3 \u2013 30 years/UOP
Right-of-use assets
2 \u2013 20 years
Mineral and petroleum rights
UOP
Deferred mining costs
UOP
(i) Mineral and petroleum rights
Mineral and petroleum reserves, resources and rights (together \u2018Mineral and petroleum rights\u2019) which can be reasonably valued,
are recognised in the assessment of fair values on acquisition. Mineral and petroleum rights for which values cannot be reasonably determined are not recognised. Exploitable Mineral and petroleum rights are amortised using the UOP basis over the commercially recoverable reserves and, in certain circumstances, other mineral resources. Mineral resources are included in amortisation calculations where there is a high degree of confidence that they will be extracted in an economic\u00a0manner.
(ii) Exploration and evaluation expenditure
Exploration and evaluation expenditure relates to costs incurred in the exploration and evaluation of potential mineral and petroleum resources and includes costs such as exploration and production licences, researching and analysing historical exploration data, exploratory drilling, trenching, sampling and the costs of pre-feasibility studies. Exploration and evaluation expenditure for each area of interest, other than that acquired from another entity, is charged to the consolidated statement of income as incurred except when the expenditure is expected to be recouped from future exploitation or sale of the area of interest and it is planned to continue with active and significant operations in relation to the area, or at the reporting period end, the activity has not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves, in which case the expenditure is capitalised. As the intangible component (i.e. licences) represents an insignificant and indistinguishable portion of the overall expected tangible amount to be incurred and recouped from future exploitation, these costs along with other capitalised exploration and evaluation expenditure are recorded as a component of property, plant and equipment. Purchased exploration and evaluation assets are recognised at their fair value at acquisition.
As the capitalised exploration and evaluation expenditure asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where a potential impairment is\u00a0indicated, an assessment is performed for each area of interest or at the CGU level. To the extent that capitalised expenditure is not expected to be recovered it is charged to the consolidated statement of income.
Administration costs that are not directly attributable to a specific exploration area are charged to the consolidated statement of income. Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit.
Development expenditure
When commercially recoverable reserves are determined and such proposed development receives the appropriate approvals, capitalised exploration and evaluation expenditure is transferred to construction in progress, a component within the plant and equipment asset sub-category. All subsequent development expenditure is similarly capitalised, provided commercial viability conditions continue to be satisfied. Proceeds from the sale of product extracted during the development phase are recognised in the statement of income. Upon completion of development and commencement of production, capitalised development costs are further transferred, as required, to the appropriate plant and equipment asset category and depreciated using the unit of production method (UOP) or straight-line basis.
Notes to the financial statements continued
1. Accounting policies continued
Deferred mining costs
Mainly comprises certain capitalised costs related to underground mining as well as pre-production and in-production stripping activities as outlined below. Deferred mining costs are amortised using the UOP basis over the life of the ore body to which those costs relate.
Deferred stripping costs
Stripping costs incurred in the development of a mine (or pit) before production commences are capitalised as part of the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a UOP basis.
In-production stripping costs related to accessing an identifiable component of the ore body to realise benefits in the form of improved access to ore to be mined in the future (stripping activity asset), are capitalised within deferred mining costs provided all the following conditions are met:
(a)it is probable that the future economic benefit associated with the stripping activity will be realised;
(b)the component of the ore body for which access has been improved can be identified; and
(c)the costs relating to the stripping activity associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are charged to the consolidated statement of income as they are incurred.
The stripping activity asset is subsequently depreciated on a UOP basis over the life of the identified component of the ore body that became more accessible as a result of the stripping activity and is then stated at cost less accumulated depreciation and any accumulated impairment losses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-49": { "value": "
Property, plant and equipment are depreciated to their estimated residual value over the estimated useful life of the specific asset concerned, or the estimated remaining life of the associated mine (LOM), field or lease.
Depreciation commences when the asset is available for use. The major categories of property, plant and equipment are depreciated/amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Buildings
10 \u2013 45 years
Freehold land
not depreciated
Plant and equipment
3 \u2013 30 years/UOP
Right-of-use assets
2 \u2013 20 years
Mineral and petroleum rights
UOP
Deferred mining costs
UOP
Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease over the shorter of the useful life of the right-of-use asset or the end of the lease term.
Identifiable intangible assets with a finite life are amortised on a straight-line basis over their expected useful life. The amortisation method and period are reviewed annually and impairment testing is undertaken when circumstances indicate the carrying amount may not be recoverable. Other than goodwill which is not amortised, Glencore has no identifiable intangible assets with an indefinite life.
The major categories of intangibles are amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Port allocation rights
UOP
Licences, trademarks and software
3 \u2013 20 years
Customer relationships
5 \u2013 9 years
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-50": { "value": "
(i) Mineral and petroleum rights
Mineral and petroleum reserves, resources and rights (together \u2018Mineral and petroleum rights\u2019) which can be reasonably valued,
are recognised in the assessment of fair values on acquisition. Mineral and petroleum rights for which values cannot be reasonably determined are not recognised. Exploitable Mineral and petroleum rights are amortised using the UOP basis over the commercially recoverable reserves and, in certain circumstances, other mineral resources. Mineral resources are included in amortisation calculations where there is a high degree of confidence that they will be extracted in an economic\u00a0manner.
(ii) Exploration and evaluation expenditure
Exploration and evaluation expenditure relates to costs incurred in the exploration and evaluation of potential mineral and petroleum resources and includes costs such as exploration and production licences, researching and analysing historical exploration data, exploratory drilling, trenching, sampling and the costs of pre-feasibility studies. Exploration and evaluation expenditure for each area of interest, other than that acquired from another entity, is charged to the consolidated statement of income as incurred except when the expenditure is expected to be recouped from future exploitation or sale of the area of interest and it is planned to continue with active and significant operations in relation to the area, or at the reporting period end, the activity has not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves, in which case the expenditure is capitalised. As the intangible component (i.e. licences) represents an insignificant and indistinguishable portion of the overall expected tangible amount to be incurred and recouped from future exploitation, these costs along with other capitalised exploration and evaluation expenditure are recorded as a component of property, plant and equipment. Purchased exploration and evaluation assets are recognised at their fair value at acquisition.
As the capitalised exploration and evaluation expenditure asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where a potential impairment is\u00a0indicated, an assessment is performed for each area of interest or at the CGU level. To the extent that capitalised expenditure is not expected to be recovered it is charged to the consolidated statement of income.
Administration costs that are not directly attributable to a specific exploration area are charged to the consolidated statement of income. Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit.
Development expenditure
When commercially recoverable reserves are determined and such proposed development receives the appropriate approvals, capitalised exploration and evaluation expenditure is transferred to construction in progress, a component within the plant and equipment asset sub-category. All subsequent development expenditure is similarly capitalised, provided commercial viability conditions continue to be satisfied. Proceeds from the sale of product extracted during the development phase are recognised in the statement of income. Upon completion of development and commencement of production, capitalised development costs are further transferred, as required, to the appropriate plant and equipment asset category and depreciated using the unit of production method (UOP) or straight-line basis.
Notes to the financial statements continued
1. Accounting policies continued
Deferred mining costs
Mainly comprises certain capitalised costs related to underground mining as well as pre-production and in-production stripping activities as outlined below. Deferred mining costs are amortised using the UOP basis over the life of the ore body to which those costs relate.
Deferred stripping costs
Stripping costs incurred in the development of a mine (or pit) before production commences are capitalised as part of the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a UOP basis.
In-production stripping costs related to accessing an identifiable component of the ore body to realise benefits in the form of improved access to ore to be mined in the future (stripping activity asset), are capitalised within deferred mining costs provided all the following conditions are met:
(a)it is probable that the future economic benefit associated with the stripping activity will be realised;
(b)the component of the ore body for which access has been improved can be identified; and
(c)the costs relating to the stripping activity associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are charged to the consolidated statement of income as they are incurred.
The stripping activity asset is subsequently depreciated on a UOP basis over the life of the identified component of the ore body that became more accessible as a result of the stripping activity and is then stated at cost less accumulated depreciation and any accumulated impairment losses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMiningAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-51": { "value": "
(i) Mineral and petroleum rights
Mineral and petroleum reserves, resources and rights (together \u2018Mineral and petroleum rights\u2019) which can be reasonably valued,
are recognised in the assessment of fair values on acquisition. Mineral and petroleum rights for which values cannot be reasonably determined are not recognised. Exploitable Mineral and petroleum rights are amortised using the UOP basis over the commercially recoverable reserves and, in certain circumstances, other mineral resources. Mineral resources are included in amortisation calculations where there is a high degree of confidence that they will be extracted in an economic\u00a0manner.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMiningRightsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-52": { "value": "
(ii) Exploration and evaluation expenditure
Exploration and evaluation expenditure relates to costs incurred in the exploration and evaluation of potential mineral and petroleum resources and includes costs such as exploration and production licences, researching and analysing historical exploration data, exploratory drilling, trenching, sampling and the costs of pre-feasibility studies. Exploration and evaluation expenditure for each area of interest, other than that acquired from another entity, is charged to the consolidated statement of income as incurred except when the expenditure is expected to be recouped from future exploitation or sale of the area of interest and it is planned to continue with active and significant operations in relation to the area, or at the reporting period end, the activity has not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves, in which case the expenditure is capitalised. As the intangible component (i.e. licences) represents an insignificant and indistinguishable portion of the overall expected tangible amount to be incurred and recouped from future exploitation, these costs along with other capitalised exploration and evaluation expenditure are recorded as a component of property, plant and equipment. Purchased exploration and evaluation assets are recognised at their fair value at acquisition.
As the capitalised exploration and evaluation expenditure asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where a potential impairment is\u00a0indicated, an assessment is performed for each area of interest or at the CGU level. To the extent that capitalised expenditure is not expected to be recovered it is charged to the consolidated statement of income.
Administration costs that are not directly attributable to a specific exploration area are charged to the consolidated statement of income. Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExplorationAndEvaluationExpenditures", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-53": { "value": "
Development expenditure
When commercially recoverable reserves are determined and such proposed development receives the appropriate approvals, capitalised exploration and evaluation expenditure is transferred to construction in progress, a component within the plant and equipment asset sub-category. All subsequent development expenditure is similarly capitalised, provided commercial viability conditions continue to be satisfied. Proceeds from the sale of product extracted during the development phase are recognised in the statement of income. Upon completion of development and commencement of production, capitalised development costs are further transferred, as required, to the appropriate plant and equipment asset category and depreciated using the unit of production method (UOP) or straight-line basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForConstructionInProgressExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-54": { "value": "
Deferred stripping costs
Stripping costs incurred in the development of a mine (or pit) before production commences are capitalised as part of the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a UOP basis.
In-production stripping costs related to accessing an identifiable component of the ore body to realise benefits in the form of improved access to ore to be mined in the future (stripping activity asset), are capitalised within deferred mining costs provided all the following conditions are met:
(a)it is probable that the future economic benefit associated with the stripping activity will be realised;
(b)the component of the ore body for which access has been improved can be identified; and
(c)the costs relating to the stripping activity associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are charged to the consolidated statement of income as they are incurred.
The stripping activity asset is subsequently depreciated on a UOP basis over the life of the identified component of the ore body that became more accessible as a result of the stripping activity and is then stated at cost less accumulated depreciation and any accumulated impairment losses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForStrippingCostsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-55": { "value": "
Leases
As lessee, the Group assesses whether a contract contains a lease at inception of the contract. The Group recognises a right-of-use asset and corresponding lease liability in the statement of financial position for all lease arrangements where it is the lessee, except for short-term leases with a term of twelve months or less and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The lease liability is initially measured at the present value of the future lease payments from the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, the asset and company specific incremental borrowing rates. Lease liabilities are recognised within borrowings on the statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability, with a corresponding adjustment to the related right-of-use assets, whenever:
  • The lease term changes or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;
  • The lease payments change due to the changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate; or
  • A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of modification.
The right-of-use assets are initially recognised on the balance sheet at cost, which comprises the amount of the initial measurement of the corresponding lease liability, adjusted for any lease payments made at or prior to the commencement date of the lease, any lease incentive received and any initial direct costs incurred, and expected costs for obligations to dismantle and remove right-of-use assets when they are no longer used. Right-of-use assets are recognised within property, plant and equipment on the statement of financial position. Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease over the shorter of the useful life of the right-of-use asset or the end of the lease term.
The Group enters into lease arrangements as a lessor with respect to some of its time charter vessels. Leases for which the Group is an intermediate lessor are classified as finance or operating leases by reference to the right-of-use asset arising from the head lease. Income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group\u2019s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group\u2019s net investment outstanding in respect of these leases.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-56": { "value": "
Notes to the financial statements continued
1. Accounting policies continued
Restoration, rehabilitation and decommissioning
Restoration, rehabilitation and decommissioning costs arising from the installation of plant and other site preparation work, discounted using a risk-free rate specific to the liability and the currency in which they are denominated to their net present value, are provided for and capitalised at the time such an obligation arises. The costs are charged to the consolidated statement of income over the life of the operation through depreciation of the asset and the unwinding of the discount on the provision.
Costs for restoration of subsequent site disturbance, which is created on an ongoing basis during production, are provided for at their net present values and charged to the consolidated statement of income as extraction progresses.
Changes in the estimated timing of the rehabilitation or changes to the estimated future costs are accounted for prospectively by recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, provided a\u00a0reduction, if any, in the provision is not greater than the depreciated capitalised cost of the related asset, in which case the capitalised cost is reduced to Nil and the remaining adjustment recognised in the consolidated statement of income. In the case of closed sites, changes to estimated costs are recognised immediately in the consolidated statement of income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDecommissioningRestorationAndRehabilitationProvisionsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-57": { "value": "
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation (calculated on a straight-line basis over their useful lives) and accumulated impairment losses, if any.
Internally generated intangibles are not capitalised. Instead, the related expenditure is recognised in the consolidated statement of income in the period in which the expenditure is incurred.
Identifiable intangible assets with a finite life are amortised on a straight-line basis over their expected useful life. The amortisation method and period are reviewed annually and impairment testing is undertaken when circumstances indicate the carrying amount may not be recoverable. Other than goodwill which is not amortised, Glencore has no identifiable intangible assets with an indefinite life.
The major categories of intangibles are amortised on a units of production (UOP) and/or straight-line basis as\u00a0follows:
Port allocation rights
UOP
Licences, trademarks and software
3 \u2013 20 years
Customer relationships
5 \u2013 9 years
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-58": { "value": "
Goodwill impairment testing
For the purpose of impairment testing, goodwill has been allocated to the CGUs, or groups of CGUs, that are expected to\u00a0benefit from the synergies of the business combination and which represent the level at which management monitors and manages the goodwill. In assessing whether an impairment is required, the carrying value of the CGU is compared with its recoverable amount. The recoverable amount is the higher of its\u00a0fair value less costs of disposal (FVLCD) and its value in use (VIU). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill can not be reversed in subsequent periods.
Impairment or impairment reversals
Glencore conducts, at least annually, an internal review of asset values which is used as a source of information to assess for any indications of impairment or impairment reversal. Formal impairment tests are carried out, at least annually, for cash-generating units containing goodwill and for all other non-current assets, when events or changes in circumstances indicate the carrying value may not be recoverable.
Notes to the financial statements continued
1. Accounting policies continued
A formal impairment or reversal test involves determining whether the carrying amounts are in excess (or below, as the case may be) of their recoverable amounts. An asset\u2019s recoverable amount is determined as the higher of its FVLCD and its VIU. Such reviews are undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken at the CGU level.
If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the consolidated statement of income to reflect the asset at the lower amount.
For those assets which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, and the change in their recoverable amount is not solely due to the passage of time, an impairment reversal is recorded in the consolidated statement of income to reflect the asset at the higher amount to the extent the increased carrying amount does not exceed the carrying value of the asset that would have been determined had no impairment previously been\u00a0recognised. Goodwill impairments cannot be subsequently reversed.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-59": { "value": "
Goodwill impairment testing
For the purpose of impairment testing, goodwill has been allocated to the CGUs, or groups of CGUs, that are expected to\u00a0benefit from the synergies of the business combination and which represent the level at which management monitors and manages the goodwill. In assessing whether an impairment is required, the carrying value of the CGU is compared with its recoverable amount. The recoverable amount is the higher of its\u00a0fair value less costs of disposal (FVLCD) and its value in use (VIU). If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated statement of income. An impairment loss recognised for goodwill can not be reversed in subsequent periods.
Impairment or impairment reversals
Glencore conducts, at least annually, an internal review of asset values which is used as a source of information to assess for any indications of impairment or impairment reversal. Formal impairment tests are carried out, at least annually, for cash-generating units containing goodwill and for all other non-current assets, when events or changes in circumstances indicate the carrying value may not be recoverable.
Notes to the financial statements continued
1. Accounting policies continued
A formal impairment or reversal test involves determining whether the carrying amounts are in excess (or below, as the case may be) of their recoverable amounts. An asset\u2019s recoverable amount is determined as the higher of its FVLCD and its VIU. Such reviews are undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken at the CGU level.
If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the consolidated statement of income to reflect the asset at the lower amount.
For those assets which were impaired in prior periods, if their recoverable amount exceeds their carrying amount, and the change in their recoverable amount is not solely due to the passage of time, an impairment reversal is recorded in the consolidated statement of income to reflect the asset at the higher amount to the extent the increased carrying amount does not exceed the carrying value of the asset that would have been determined had no impairment previously been\u00a0recognised. Goodwill impairments cannot be subsequently reversed.
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for all financial assets (as well as for issued loan commitments and financial guarantee contracts), other than those at FVTPL and investments in equity instruments measured at FVTOCI, at the end of each reporting period. The expected credit loss recognised represents a probability-weighted estimate of credit losses over the expected life of the financial instrument.
The Group applies the simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit losses on these financial assets are estimated using a provision matrix by reference to past default experience and an equivalent credit rating, adjusted as appropriate for current observable data and forward-looking information.
For all other financial assets at amortised cost, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition, which is determined by:
  • A review of overdue amounts;
  • Comparing the risk of default at the reporting date and at the date of initial recognition; and
  • An assessment of relevant historical and forward-looking quantitative and qualitative information.
For those balances that are beyond 30 days overdue, such is presumed to be an indicator of a significant increase in credit risk.
If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit loss, which comprises the expected lifetime loss from the instrument were a default to occur within 12 months of the reporting date.
The Group considers an event of default has materialised and the financial asset is credit impaired when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay the Group without taking into account any collateral held by the Group or if the financial asset is more than 90 days past due, unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-60": { "value": "
Other investments
Equity investments, other than investments in Associates, are recorded at fair value. Glencore designated investments that are not held for trading as at fair value through other comprehensive income (FVTOCI). As a result, changes in fair value are recorded in the consolidated statement of other comprehensive income. Dividends from these investments are recognised in the consolidated statement of income, unless the dividend represents a recovery of part of the cost of the equity investment. Investments that are held for trading are subsequently measured at fair value through profit or loss (FVTPL).
Financial assets and financial liabilities are recognised in the Group\u2019s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Contractual maturities of such financial assets and financial liabilities may be longer than one year. However, in the normal course of trading activities, derivative financial instruments are often settled before their maturity date, and therefore classified as current assets or current liabilities.
Notes to the financial statements continued
1. Accounting policies continued
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. Financial assets are initially recognised at fair value on the trade date, including, in the case of instruments not subsequently measured at fair value through profit or loss, directly attributable transaction costs. Trade receivables with no provisional price features and where there is no significant financing component, are initially recognised at their transaction price.
Subsequently, other investments, provisionally priced trade receivables and derivatives are carried at fair value and trade receivables that do not contain provisional price features, loans and other receivables are carried at amortised cost.
Financial liabilities, other than derivatives and those containing provisional price features, are initially recognised at fair value of consideration received net of transaction costs as appropriate and subsequently carried at amortised cost. Financial liabilities that contain provisional pricing features (accounted for as embedded derivatives) were designated in their entirety as at FVTPL. Derivatives are carried at FVTPL.
Where financial assets and financial liabilities recognised at fair value are managed and reported to key management personnel on the basis of its net exposure to either market risks or credit risk, fair value of that group of financial assets and financial liabilities is measured on the basis of the net price that would be received to sell the long position and to transfer the short position for a particular risk exposure of the specific financial asset or liability being measured. When the group of financial assets and/or financial liabilities are not presented on a net basis in the statement of financial position, any portfolio level adjustments are allocated to the individual instruments that make up the group on an appropriate basis.
Derivatives and hedging activities
Derivative instruments, which include physical contracts to sell or purchase commodities that do not meet the own use exemption, are initially recognised at fair value when Glencore becomes a party to the contractual provisions of the instrument and are subsequently remeasured to fair value at the end of each reporting period. Fair values are determined using quoted market prices, dealer price quotations or using models and other valuation techniques, the key inputs for which include current market and contractual prices for the underlying instrument, time to expiry, yield curves, volatility of\u00a0the underlying instrument and counterparty\u00a0risk.
Gains and losses on derivative instruments for which hedge accounting is not applied, other than the revenue adjustment mechanism embedded within provisionally priced sales and mark-to-market movements on physical forward sales contracts, are recognised in cost of goods sold.
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a\u00a0recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable\u00a0transaction.
At the inception of the hedge and on an ongoing basis, Glencore documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Glencore discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met.
A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of\u00a0income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised in the consolidated statement of comprehensive income and accumulated in the cash flow hedge reserve in shareholders\u2019 equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it\u00a0occurs.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in shareholders\u2019 equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative \u2018host contract\u2019 such as provisionally priced sales and purchases. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-61": { "value": "
Other investments
Equity investments, other than investments in Associates, are recorded at fair value. Glencore designated investments that are not held for trading as at fair value through other comprehensive income (FVTOCI). As a result, changes in fair value are recorded in the consolidated statement of other comprehensive income. Dividends from these investments are recognised in the consolidated statement of income, unless the dividend represents a recovery of part of the cost of the equity investment. Investments that are held for trading are subsequently measured at fair value through profit or loss (FVTPL).
Financial instruments
Financial assets and financial liabilities are recognised in the Group\u2019s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Contractual maturities of such financial assets and financial liabilities may be longer than one year. However, in the normal course of trading activities, derivative financial instruments are often settled before their maturity date, and therefore classified as current assets or current liabilities.
Notes to the financial statements continued
1. Accounting policies continued
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. Financial assets are initially recognised at fair value on the trade date, including, in the case of instruments not subsequently measured at fair value through profit or loss, directly attributable transaction costs. Trade receivables with no provisional price features and where there is no significant financing component, are initially recognised at their transaction price.
Subsequently, other investments, provisionally priced trade receivables and derivatives are carried at fair value and trade receivables that do not contain provisional price features, loans and other receivables are carried at amortised cost.
Financial liabilities, other than derivatives and those containing provisional price features, are initially recognised at fair value of consideration received net of transaction costs as appropriate and subsequently carried at amortised cost. Financial liabilities that contain provisional pricing features (accounted for as embedded derivatives) were designated in their entirety as at FVTPL. Derivatives are carried at FVTPL.
Where financial assets and financial liabilities recognised at fair value are managed and reported to key management personnel on the basis of its net exposure to either market risks or credit risk, fair value of that group of financial assets and financial liabilities is measured on the basis of the net price that would be received to sell the long position and to transfer the short position for a particular risk exposure of the specific financial asset or liability being measured. When the group of financial assets and/or financial liabilities are not presented on a net basis in the statement of financial position, any portfolio level adjustments are allocated to the individual instruments that make up the group on an appropriate basis.
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for all financial assets (as well as for issued loan commitments and financial guarantee contracts), other than those at FVTPL and investments in equity instruments measured at FVTOCI, at the end of each reporting period. The expected credit loss recognised represents a probability-weighted estimate of credit losses over the expected life of the financial instrument.
The Group applies the simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit losses on these financial assets are estimated using a provision matrix by reference to past default experience and an equivalent credit rating, adjusted as appropriate for current observable data and forward-looking information.
For all other financial assets at amortised cost, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition, which is determined by:
  • A review of overdue amounts;
  • Comparing the risk of default at the reporting date and at the date of initial recognition; and
  • An assessment of relevant historical and forward-looking quantitative and qualitative information.
For those balances that are beyond 30 days overdue, such is presumed to be an indicator of a significant increase in credit risk.
If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit loss, which comprises the expected lifetime loss from the instrument were a default to occur within 12 months of the reporting date.
The Group considers an event of default has materialised and the financial asset is credit impaired when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay the Group without taking into account any collateral held by the Group or if the financial asset is more than 90 days past due, unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
(ii) Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a\u00a0collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when the Group\u2019s obligations are discharged, cancelled or have expired.
Notes to the financial statements continued
1. Accounting policies continued
On derecognition of a financial asset/financial liability in its entirety, the difference between the carrying amount of the financial asset/financial liability and the sum of the consideration received and receivable/paid and payable is recognised in profit and loss. On derecognition of equity investments designated and measured at FVTOCI, the cumulative gain or loss recognised in other comprehensive income is reclassified directly to retained earnings.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-62": { "value": "
Other investments
Equity investments, other than investments in Associates, are recorded at fair value. Glencore designated investments that are not held for trading as at fair value through other comprehensive income (FVTOCI). As a result, changes in fair value are recorded in the consolidated statement of other comprehensive income. Dividends from these investments are recognised in the consolidated statement of income, unless the dividend represents a recovery of part of the cost of the equity investment. Investments that are held for trading are subsequently measured at fair value through profit or loss (FVTPL).
Notes to the financial statements continued
1. Accounting policies continued
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. Financial assets are initially recognised at fair value on the trade date, including, in the case of instruments not subsequently measured at fair value through profit or loss, directly attributable transaction costs. Trade receivables with no provisional price features and where there is no significant financing component, are initially recognised at their transaction price.
Subsequently, other investments, provisionally priced trade receivables and derivatives are carried at fair value and trade receivables that do not contain provisional price features, loans and other receivables are carried at amortised cost.
Where financial assets and financial liabilities recognised at fair value are managed and reported to key management personnel on the basis of its net exposure to either market risks or credit risk, fair value of that group of financial assets and financial liabilities is measured on the basis of the net price that would be received to sell the long position and to transfer the short position for a particular risk exposure of the specific financial asset or liability being measured. When the group of financial assets and/or financial liabilities are not presented on a net basis in the statement of financial position, any portfolio level adjustments are allocated to the individual instruments that make up the group on an appropriate basis.
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for all financial assets (as well as for issued loan commitments and financial guarantee contracts), other than those at FVTPL and investments in equity instruments measured at FVTOCI, at the end of each reporting period. The expected credit loss recognised represents a probability-weighted estimate of credit losses over the expected life of the financial instrument.
The Group applies the simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit losses on these financial assets are estimated using a provision matrix by reference to past default experience and an equivalent credit rating, adjusted as appropriate for current observable data and forward-looking information.
For all other financial assets at amortised cost, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition, which is determined by:
  • A review of overdue amounts;
  • Comparing the risk of default at the reporting date and at the date of initial recognition; and
  • An assessment of relevant historical and forward-looking quantitative and qualitative information.
For those balances that are beyond 30 days overdue, such is presumed to be an indicator of a significant increase in credit risk.
If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit loss, which comprises the expected lifetime loss from the instrument were a default to occur within 12 months of the reporting date.
The Group considers an event of default has materialised and the financial asset is credit impaired when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay the Group without taking into account any collateral held by the Group or if the financial asset is more than 90 days past due, unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
(ii) Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a\u00a0collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when the Group\u2019s obligations are discharged, cancelled or have expired.
Notes to the financial statements continued
1. Accounting policies continued
On derecognition of a financial asset/financial liability in its entirety, the difference between the carrying amount of the financial asset/financial liability and the sum of the consideration received and receivable/paid and payable is recognised in profit and loss. On derecognition of equity investments designated and measured at FVTOCI, the cumulative gain or loss recognised in other comprehensive income is reclassified directly to retained earnings.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-63": { "value": "
Other investments
Equity investments, other than investments in Associates, are recorded at fair value. Glencore designated investments that are not held for trading as at fair value through other comprehensive income (FVTOCI). As a result, changes in fair value are recorded in the consolidated statement of other comprehensive income. Dividends from these investments are recognised in the consolidated statement of income, unless the dividend represents a recovery of part of the cost of the equity investment. Investments that are held for trading are subsequently measured at fair value through profit or loss (FVTPL).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-64": { "value": "
Provisions
Provisions are recognised when Glencore has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources embodying economic benefits that can be reliably estimated will be required to settle the liability.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation, including interpretation of specific laws and likelihood of settlement. Where a provision is measured using the cash flow estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Onerous contracts
An onerous contract is considered to exist where Glencore has a\u00a0contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Present obligations arising under onerous contracts are recognised and measured as provisions.
Unfavourable contracts
An unfavourable contract is considered to exist when Glencore, in a business combination, acquires a contract under which the terms of the contract require Glencore to sell or purchase products or services on terms which are economically unfavourable compared to current market terms at the time of the business combination. Unfavourable contracts are recognised at the present value of the economic loss and amortised into the statement of income over the term of\u00a0the contract.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-65": { "value": "
Inventories
The vast majority of inventories attributable to the marketing activities are valued at fair value less costs of disposal with the remainder valued at the lower of cost or net realisable value, with costs allocated using the first-in-first-out (FIFO) method. Unrealised gains and losses from changes in fair value are reported in cost of goods sold.
Inventories held by the industrial activities are valued at the lower of cost or net realisable value. Cost is determined using FIFO or the weighted average method and comprises material costs, labour costs and allocated production related overhead costs. Typically raw materials and consumables are measured using the FIFO method and work in progress inventories using the weighted average method. Where the production process results in more than one product being produced (joint products), cost is allocated between the various products according to the ratio of contribution of these metals to gross sales revenue. Financing and storage costs related to inventory are expensed as incurred.
Non-current inventories primarily relate to stockpiles which are not expected to be utlised within the normal operating cycle.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-66": { "value": "
Non-financial instruments (physical advances or prepayments)
The Group enters into physical advances and prepayment agreements with certain suppliers and customers. When such advances and prepayments are primarily settled in cash or another financial asset, they are classified as financial assets or financial liabilities (see below). Where such advances and prepayments are settled through physical delivery or receipt of an underlying product they are classified as non-financial assets or non-financial liabilities. Such advances and prepayments are initially recorded at the amount of the cash paid or received and are subsequently reduced by the relevant contractual volumes of physical deliveries made. Certain physically-settled advances and prepayments which relate to contracts to buy or sell commodities that can be settled on a net basis are accounted for under IFRS 9 as if they were financial instruments.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-67": { "value": "
Financial instruments
Financial assets and financial liabilities are recognised in the Group\u2019s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Contractual maturities of such financial assets and financial liabilities may be longer than one year. However, in the normal course of trading activities, derivative financial instruments are often settled before their maturity date, and therefore classified as current assets or current liabilities.
Notes to the financial statements continued
1. Accounting policies continued
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. Financial assets are initially recognised at fair value on the trade date, including, in the case of instruments not subsequently measured at fair value through profit or loss, directly attributable transaction costs. Trade receivables with no provisional price features and where there is no significant financing component, are initially recognised at their transaction price.
Subsequently, other investments, provisionally priced trade receivables and derivatives are carried at fair value and trade receivables that do not contain provisional price features, loans and other receivables are carried at amortised cost.
Financial liabilities, other than derivatives and those containing provisional price features, are initially recognised at fair value of consideration received net of transaction costs as appropriate and subsequently carried at amortised cost. Financial liabilities that contain provisional pricing features (accounted for as embedded derivatives) were designated in their entirety as at FVTPL. Derivatives are carried at FVTPL.
Where financial assets and financial liabilities recognised at fair value are managed and reported to key management personnel on the basis of its net exposure to either market risks or credit risk, fair value of that group of financial assets and financial liabilities is measured on the basis of the net price that would be received to sell the long position and to transfer the short position for a particular risk exposure of the specific financial asset or liability being measured. When the group of financial assets and/or financial liabilities are not presented on a net basis in the statement of financial position, any portfolio level adjustments are allocated to the individual instruments that make up the group on an appropriate basis.
Derivatives and hedging activities
Derivative instruments, which include physical contracts to sell or purchase commodities that do not meet the own use exemption, are initially recognised at fair value when Glencore becomes a party to the contractual provisions of the instrument and are subsequently remeasured to fair value at the end of each reporting period. Fair values are determined using quoted market prices, dealer price quotations or using models and other valuation techniques, the key inputs for which include current market and contractual prices for the underlying instrument, time to expiry, yield curves, volatility of\u00a0the underlying instrument and counterparty\u00a0risk.
Gains and losses on derivative instruments for which hedge accounting is not applied, other than the revenue adjustment mechanism embedded within provisionally priced sales and mark-to-market movements on physical forward sales contracts, are recognised in cost of goods sold.
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a\u00a0recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable\u00a0transaction.
At the inception of the hedge and on an ongoing basis, Glencore documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Glencore discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met.
A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of\u00a0income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised in the consolidated statement of comprehensive income and accumulated in the cash flow hedge reserve in shareholders\u2019 equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it\u00a0occurs.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in shareholders\u2019 equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative \u2018host contract\u2019 such as provisionally priced sales and purchases. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-68": { "value": "
Financial liabilities, other than derivatives and those containing provisional price features, are initially recognised at fair value of consideration received net of transaction costs as appropriate and subsequently carried at amortised cost. Financial liabilities that contain provisional pricing features (accounted for as embedded derivatives) were designated in their entirety as at FVTPL. Derivatives are carried at FVTPL.
Where financial assets and financial liabilities recognised at fair value are managed and reported to key management personnel on the basis of its net exposure to either market risks or credit risk, fair value of that group of financial assets and financial liabilities is measured on the basis of the net price that would be received to sell the long position and to transfer the short position for a particular risk exposure of the specific financial asset or liability being measured. When the group of financial assets and/or financial liabilities are not presented on a net basis in the statement of financial position, any portfolio level adjustments are allocated to the individual instruments that make up the group on an appropriate basis.
(ii) Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a\u00a0collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when the Group\u2019s obligations are discharged, cancelled or have expired.
Notes to the financial statements continued
1. Accounting policies continued
On derecognition of a financial asset/financial liability in its entirety, the difference between the carrying amount of the financial asset/financial liability and the sum of the consideration received and receivable/paid and payable is recognised in profit and loss. On derecognition of equity investments designated and measured at FVTOCI, the cumulative gain or loss recognised in other comprehensive income is reclassified directly to retained earnings.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-69": { "value": "
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for all financial assets (as well as for issued loan commitments and financial guarantee contracts), other than those at FVTPL and investments in equity instruments measured at FVTOCI, at the end of each reporting period. The expected credit loss recognised represents a probability-weighted estimate of credit losses over the expected life of the financial instrument.
The Group applies the simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit losses on these financial assets are estimated using a provision matrix by reference to past default experience and an equivalent credit rating, adjusted as appropriate for current observable data and forward-looking information.
For all other financial assets at amortised cost, the Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition, which is determined by:
  • A review of overdue amounts;
  • Comparing the risk of default at the reporting date and at the date of initial recognition; and
  • An assessment of relevant historical and forward-looking quantitative and qualitative information.
For those balances that are beyond 30 days overdue, such is presumed to be an indicator of a significant increase in credit risk.
If the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit loss, which comprises the expected lifetime loss from the instrument were a default to occur within 12 months of the reporting date.
The Group considers an event of default has materialised and the financial asset is credit impaired when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay the Group without taking into account any collateral held by the Group or if the financial asset is more than 90 days past due, unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-70": { "value": "
(ii) Derecognition of financial assets and financial liabilities
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a\u00a0collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when the Group\u2019s obligations are discharged, cancelled or have expired.
Notes to the financial statements continued
1. Accounting policies continued
On derecognition of a financial asset/financial liability in its entirety, the difference between the carrying amount of the financial asset/financial liability and the sum of the consideration received and receivable/paid and payable is recognised in profit and loss. On derecognition of equity investments designated and measured at FVTOCI, the cumulative gain or loss recognised in other comprehensive income is reclassified directly to retained earnings.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-71": { "value": "
Own shares
The cost of purchases of own shares is deducted from equity. Where they are purchased, issued to employees or sold, no gain or loss is recognised in the consolidated statement of income. Such gains and losses are recognised directly in equity. Any proceeds received on disposal of the shares or transfers to employees are recognised in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-72": { "value": "
Derivatives and hedging activities
Derivative instruments, which include physical contracts to sell or purchase commodities that do not meet the own use exemption, are initially recognised at fair value when Glencore becomes a party to the contractual provisions of the instrument and are subsequently remeasured to fair value at the end of each reporting period. Fair values are determined using quoted market prices, dealer price quotations or using models and other valuation techniques, the key inputs for which include current market and contractual prices for the underlying instrument, time to expiry, yield curves, volatility of\u00a0the underlying instrument and counterparty\u00a0risk.
Gains and losses on derivative instruments for which hedge accounting is not applied, other than the revenue adjustment mechanism embedded within provisionally priced sales and mark-to-market movements on physical forward sales contracts, are recognised in cost of goods sold.
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a\u00a0recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable\u00a0transaction.
At the inception of the hedge and on an ongoing basis, Glencore documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Glencore discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met.
A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of\u00a0income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised in the consolidated statement of comprehensive income and accumulated in the cash flow hedge reserve in shareholders\u2019 equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it\u00a0occurs.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in shareholders\u2019 equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative \u2018host contract\u2019 such as provisionally priced sales and purchases. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-73": { "value": "
Derivatives and hedging activities
Derivative instruments, which include physical contracts to sell or purchase commodities that do not meet the own use exemption, are initially recognised at fair value when Glencore becomes a party to the contractual provisions of the instrument and are subsequently remeasured to fair value at the end of each reporting period. Fair values are determined using quoted market prices, dealer price quotations or using models and other valuation techniques, the key inputs for which include current market and contractual prices for the underlying instrument, time to expiry, yield curves, volatility of\u00a0the underlying instrument and counterparty\u00a0risk.
Gains and losses on derivative instruments for which hedge accounting is not applied, other than the revenue adjustment mechanism embedded within provisionally priced sales and mark-to-market movements on physical forward sales contracts, are recognised in cost of goods sold.
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a\u00a0recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable\u00a0transaction.
At the inception of the hedge and on an ongoing basis, Glencore documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Glencore discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met.
A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of\u00a0income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised in the consolidated statement of comprehensive income and accumulated in the cash flow hedge reserve in shareholders\u2019 equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it\u00a0occurs.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in shareholders\u2019 equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative \u2018host contract\u2019 such as provisionally priced sales and purchases. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-74": { "value": "
Those derivatives qualifying and designated as hedges are either (i) a Fair Value Hedge of the change in fair value of a\u00a0recognised asset or liability or an unrecognised firm commitment, or (ii) a Cash Flow Hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable\u00a0transaction.
At the inception of the hedge and on an ongoing basis, Glencore documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationship meets the qualifying hedge effectiveness requirements.
Glencore discontinues hedge accounting when the qualifying criteria for the hedged relationship is no longer met.
A change in the fair value of derivatives designated as a Fair Value Hedge is reflected together with the change in the fair value of the hedged item in the consolidated statement of\u00a0income.
A change in the fair value of derivatives designated as a Cash Flow Hedge is initially recognised in the consolidated statement of comprehensive income and accumulated in the cash flow hedge reserve in shareholders\u2019 equity. The deferred amount is then released to the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of income. Hedge ineffectiveness is recorded in the consolidated statement of income when it\u00a0occurs.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in shareholders\u2019 equity and is recognised in the consolidated statement of income when the committed or forecast transaction is ultimately recognised in the consolidated statement of income. However, if a forecast or committed transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the consolidated statement of income.
A derivative may be embedded in a non-derivative \u2018host contract\u2019 such as provisionally priced sales and purchases. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-75": { "value": "
Financial guarantee contracts
Financial guarantee contracts are accounted for in accordance with IFRS 9 as financial liabilities. After initial recognition, any such contracts are subsequently measured at the higher of the amount of the provision for expected credit losses and the amount initially recognised less any income recognised in accordance with the principles of IFRS 15.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-76": { "value": "
Notes to the financial statements continued
2. Segment information
Glencore is organised and operates on a worldwide basis in two core business segments \u2013 Marketing activities and Industrial activities, reflecting the reporting lines and structure used by Glencore\u2019s Management to allocate resources and assess the performance of Glencore.
The business segments\u2019 contributions to the Group are primarily derived from a) the net margin or premium earned from physical Marketing activities (net sale and purchase of physical commodities) and the provision of marketing and related value-add services and b) the net margin earned from Industrial asset activities (resulting from the sale of physical commodities over the cost of production and/or cost of sales). The marketing-related operating segments have been aggregated under the Marketing reportable segment as their economic characteristics (historic and expected long-term Adjusted EBITDA margins and the nature of the marketing services provided) are similar. The industrial-related operating segments have been aggregated under the Industrial reportable segment as the core activities (extracting raw material and / or processing it further into saleable product, as required, and then selling it at prevailing market prices), the exposure to long-term economic risks (price movements, technology, sovereign and production substitution) and the longer-term average Adjusted EBITDA margins are similar. The economic and operational characteristics of our coal operating and commercial units are not expected to change in the foreseeable future and continue to be included within the industrial assets and marketing reporting segments, respectively.
Corporate and other: consolidated statement of income amounts represent Group related income and expenses (including share of Viterra earnings and certain variable bonus charges). Statement of financial position amounts represent Group related balances.
The financial performance of the operating segments is principally evaluated by management with reference to Adjusted EBIT/EBITDA. Adjusted EBIT is the net result of segmental revenue (revenue including Proportionate adjustments as defined in the Alternative performance measure section) less cost of goods sold and selling and administrative expenses plus share of income from associates and joint ventures, dividend income and the attributable share of Adjusted EBIT of relevant material associates and joint ventures, which are accounted for internally by means of proportionate consolidation, excluding significant items. Adjusted EBITDA consists of Adjusted EBIT plus depreciation and amortisation, including the related Proportionate adjustments. In addition, Volcan, while a subsidiary of the Group, is accounted for under the equity method for internal reporting and analysis due to the relatively low economic ownership held by the Group.
The accounting policies of the operating segments are the same as those described in note 2 with the exception of the Antamina copper/zinc mine, the Collahuasi joint venture and Volcan. Under IAS 28 and IFRS 11, Glencore\u2019s investment in the Antamina copper/zinc mine (34% owned) is considered to be an associate as it is not subject to joint control and the Collahuasi copper mine (44% owned) is considered to be a joint venture. Associates and joint ventures are required to be accounted for in Glencore\u2019s financial statements under the equity method. For internal reporting and analysis, Glencore evaluates the performance of these investments under the proportionate consolidation method, reflecting Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investments. For internal reporting and analysis, management evaluates the performance of Volcan under the equity method, reflecting the Group\u2019s relatively low 23.3% economic ownership in this fully ring-fenced listed entity, with its stand-alone, independent and separate capital structure. The balances as presented for internal reporting purposes are reconciled to Glencore\u2019s statutory disclosures in the following tables and/or in the Alternative performance measures section.
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (coal), that it did not previously own (see note 26), increasing Glencore\u2019s ownership to 100% and providing it with the ability to exercise control and fully consolidate Cerrej\u00f3n. Prior to the transaction, Glencore evaluated the performance of its 33.33% interest in Cerrej\u00f3n under the proportionate consolidation method, such that 2021 segment comparatives reflect Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investment.
In Q4 2022, Glencore commenced a process exploring the possible disposal of its 23.3% economic interest in Volcan. As a result, the carrying amounts of Volcan assets and liabilities as at 31 December 2022 are classified as held for sale (see note 16). For segmental reporting purposes, Volcan continues to be accounted for as an equity accounted associate.
Glencore accounts for intra-segment sales and transfers where applicable as if the sales or transfers were to third parties, i.e. at arm\u2019s length commercial terms.
2022
Marketing
activities
Industrial
activities
Inter-segment
eliminations
US$ million
Total
Revenue
Metals and minerals
77,382
38,993
(25,499)
90,876
Energy products
137,720
39,333
(9,256)
167,797
Corporate and other
\u2013
6
\u2013
6
Revenue \u2013 segmental
215,102
78,332
(34,755)
258,679
Proportionate adjustment \u2013 revenue1
\u2013
(2,695)
\u2013
(2,695)
Revenue \u2013 reported measure
215,102
75,637
(34,755)
255,984
Metals and minerals
Adjusted EBITDA
1,694
9,274
\u2013
10,968
Depreciation and amortisation
(54)
(3,776)
\u2013
(3,830)
Proportionate adjustment \u2013 depreciation1
\u2013
(416)
\u2013
(416)
Adjusted EBIT
1,640
5,082
\u2013
6,722
Energy products
Adjusted EBITDA
5,558
18,590
\u2013
24,148
Depreciation and amortisation
(359)
(2,740)
\u2013
(3,099)
Adjusted EBIT
5,199
15,850
\u2013
21,049
Corporate and other
Adjusted EBITDA2
(457)
(599)
\u2013
(1,056)
Depreciation and amortisation
\u2013
(58)
\u2013
(58)
Adjusted EBIT
(457)
(657)
\u2013
(1,114)
Total Adjusted EBITDA
6,795
27,265
\u2013
34,060
Total depreciation and amortisation
(413)
(6,574)
\u2013
(6,987)
Total depreciation proportionate adjustment
\u2013
(416)
\u2013
(416)
Total Adjusted EBIT
6,382
20,275
\u2013
26,657
Share of associates' significant items1,3
(9)
Movement in unrealised inter-segment profit elimination adjustments4
1,176
Gain on acquisitions and disposals of non-current assets
1,287
Other expense \u2013 net
(911)
Impairments
(3,337)
Interest expense \u2013 net
(1,336)
Income tax expense
(6,368)
Proportionate adjustment \u2013 net finance, impairment and income tax expense1
(648)
Income for the year
16,511
1Refer to segment information on previous page and APMs section for definition.
2Marketing activities include $494 million of Glencore\u2019s equity accounted share of Viterra.
3Share of associates\u2019 significant items comprise Glencore\u2019s share of significant charges relating to impairments and other items booked directly by various associates.
4Represents the required adjustment to eliminate unrealised profit or losses arising on inter-segment transactions, i.e. before ultimate sale to a third party. For Glencore, such adjustments arise on the sale of product, in the ordinary course of business, from its Industrial to Marketing operations. Management assesses segment performance prior to any such adjustments, as if the sales were to third parties.
2021
Marketing
activities
Industrial
activities
Inter-segment
eliminations
US$ million
Total
Revenue
Metals and minerals1
71,318
41,535
(26,506)
86,347
Energy products1
106,265
19,269
(3,955)
121,579
Corporate and other
\u2013
6
\u2013
6
Revenue \u2013 segmental
177,583
60,810
(30,461)
207,932
Proportionate adjustment \u2013 revenue2
\u2013
(4,181)
\u2013
(4,181)
Revenue \u2013 reported measure
177,583
56,629
(30,461)
203,751
Metals and minerals
Adjusted EBITDA
2,588
12,017
\u2013
14,605
Depreciation and amortisation
(94)
(3,485)
\u2013
(3,579)
Proportionate adjustment \u2013 depreciation2
\u2013
(404)
\u2013
(404)
Adjusted EBIT
2,494
8,128
\u2013
10,622
Energy products
Adjusted EBITDA
1,829
5,603
\u2013
7,432
Depreciation and amortisation
(434)
(2,262)
\u2013
(2,696)
Proportionate adjustment \u2013 depreciation2
\u2013
(89)
\u2013
(89)
Adjusted EBIT
1,395
3,252
\u2013
4,647
Corporate and other
Adjusted EBITDA3
(194)
(520)
\u2013
(714)
Depreciation and amortisation
\u2013
(60)
\u2013
(60)
Adjusted EBIT
(194)
(580)
\u2013
(774)
Total Adjusted EBITDA
4,223
17,100
\u2013
21,323
Total depreciation and amortisation
(528)
(5,807)
\u2013
(6,335)
Total depreciation proportionate adjustment
\u2013
(493)
\u2013
(493)
Total Adjusted EBIT
3,695
10,800
\u2013
14,495
Share of associates' significant items2,4
(11)
Movement in unrealised inter-segment profit elimination adjustments5
(549)
Loss on acquisitions and disposals of non-current assets
(607)
Other expense \u2013 net
(1,947)
Impairments
(1,838)
Interest expense \u2013 net
(1,140)
Income tax expense
(3,026)
Proportionate adjustment \u2013 net finance, impairment and income tax expense2
(1,028)
Income for the year
4,349
1Certain prior year balances have been restated to conform with current year presentation of inter-segment eliminations.
2Refer to segment information above and APMs section for definition.
3Marketing activities include $473 million of Glencore\u2019s equity accounted share of Viterra.
4Share of associates\u2019 significant items comprise Glencore\u2019s share of significant charges relating to impairments and other items booked directly by various associates.
5Represents the required adjustment to eliminate unrealised profit or losses arising on inter-segment transactions, i.e. before ultimate sale to a third party. For Glencore, such adjustments arise on the sale of product, in the ordinary course of business, from its Industrial to Marketing operations. Management assesses segment performance prior to any such adjustments, as if the sales were to third parties.
2022
Marketing
activities
Industrial
activities
Corporate
and other
US$ million
Total
Current assets
47,534
17,326
\u2013
64,860
Current liabilities
(32,495)
(9,258)
\u2013
(41,753)
Allocatable current capital employed
15,039
8,068
\u2013
23,107
Property, plant and equipment
920
38,644
\u2013
39,564
Intangible assets
5,142
1,018
\u2013
6,160
Investments in associates and other investments
4,509
7,825
\u2013
12,334
Non-current advances and loans
1,666
988
\u2013
2,654
Inventories
\u2013
605
\u2013
605
Allocatable non-current capital employed
12,237
49,080
\u2013
61,317
Other assets1
6,406
6,406
Other liabilities2
(45,611)
(45,611)
Total net assets
27,276
57,148
(39,205)
45,219
Capital expenditure
Metals and minerals
60
3,597
\u2013
3,657
Energy products
239
1,172
\u2013
1,411
Corporate and other
\u2013
38
\u2013
38
Capital expenditure \u2013 segmental
299
4,807
\u2013
5,106
Proportionate adjustment \u2013 capital expenditure3
\u2013
(461)
\u2013
(461)
Capital expenditure \u2013 reported measure4
299
4,346
\u2013
4,645
2021
Marketing
activities
Industrial
activities
Corporate
and other
US$ million
Total
Current assets
38,080
15,134
\u2013
53,214
Current liabilities
(33,553)
(7,288)
\u2013
(40,841)
Allocatable current capital employed
4,527
7,846
\u2013
12,373
Property, plant and equipment
961
42,198
\u2013
43,159
Intangible assets
5,149
1,086
\u2013
6,235
Investments in associates and other investments
5,565
8,349
\u2013
13,914
Non-current advances and loans
1,943
1,584
\u2013
3,527
Inventories
5
657
\u2013
662
Allocatable non-current capital employed
13,623
53,874
\u2013
67,497
Other assets1
6,799
6,799
Other liabilities2
(49,752)
(49,752)
Total net assets
18,150
61,720
(42,953)
36,917
Capital expenditure
Metals and minerals
145
3,573
\u2013
3,718
Energy products
656
819
\u2013
1,475
Corporate and other
\u2013
31
\u2013
31
Capital expenditure \u2013 segmental
801
4,423
\u2013
5,224
Proportionate adjustment \u2013 capital expenditure3
\u2013
(516)
\u2013
(516)
Capital expenditure \u2013 reported measure4
801
3,907
\u2013
4,708
1Other assets include non-current financial assets, deferred tax assets, cash and cash equivalents and assets held for sale.
2Other liabilities include borrowings, non-current deferred income, deferred tax liabilities, non-current provisions, non-current post-retirement and other employee benefits, non-current financial liabilities and liabilities held for sale.
3Refer to APMs section for definition.
4Includes $425 million (2021: $1,006 million), comprising $219 million (2021: $648 million) in Marketing activities and $206 million (2021: $358 million) in Industrial activities, of \u2018right-of-use assets\u2019 capitalised in accordance with IFRS 16 \u2013 Leases.
Geographical information
US$ million
2022
2021
Revenue from third parties1
The Americas
44,354
37,930
Europe
87,662
64,284
Asia
104,861
86,576
Africa
13,238
9,991
Oceania
5,869
4,970
255,984
203,751
Non-current assets2
The Americas
17,183
16,963
Europe
11,297
11,152
Asia
3,966
4,683
Africa
11,300
12,389
Oceania
14,461
17,163
58,207
62,350
1Revenue by geographical destination is based on the country of incorporation of the sales counterparty, however this may not necessarily be the country of the counterparty\u2019s ultimate parent and/or final destination of product.
2Non-current assets are non-current assets excluding other investments, advances and loans, other financial assets and deferred tax assets. Non-current assets comprise assets in Australia of $14,164 million (2021: $16,714 million), in Peru of $5,519 million (2021: $7,243 million) and the DRC of $6,074 million (2021: $6,555 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-77": { "value": "
Glencore is organised and operates on a worldwide basis in two core business segments \u2013 Marketing activities and Industrial activities, reflecting the reporting lines and structure used by Glencore\u2019s Management to allocate resources and assess the performance of Glencore.
The business segments\u2019 contributions to the Group are primarily derived from a) the net margin or premium earned from physical Marketing activities (net sale and purchase of physical commodities) and the provision of marketing and related value-add services and b) the net margin earned from Industrial asset activities (resulting from the sale of physical commodities over the cost of production and/or cost of sales). The marketing-related operating segments have been aggregated under the Marketing reportable segment as their economic characteristics (historic and expected long-term Adjusted EBITDA margins and the nature of the marketing services provided) are similar. The industrial-related operating segments have been aggregated under the Industrial reportable segment as the core activities (extracting raw material and / or processing it further into saleable product, as required, and then selling it at prevailing market prices), the exposure to long-term economic risks (price movements, technology, sovereign and production substitution) and the longer-term average Adjusted EBITDA margins are similar. The economic and operational characteristics of our coal operating and commercial units are not expected to change in the foreseeable future and continue to be included within the industrial assets and marketing reporting segments, respectively.
Corporate and other: consolidated statement of income amounts represent Group related income and expenses (including share of Viterra earnings and certain variable bonus charges). Statement of financial position amounts represent Group related balances.
The financial performance of the operating segments is principally evaluated by management with reference to Adjusted EBIT/EBITDA. Adjusted EBIT is the net result of segmental revenue (revenue including Proportionate adjustments as defined in the Alternative performance measure section) less cost of goods sold and selling and administrative expenses plus share of income from associates and joint ventures, dividend income and the attributable share of Adjusted EBIT of relevant material associates and joint ventures, which are accounted for internally by means of proportionate consolidation, excluding significant items. Adjusted EBITDA consists of Adjusted EBIT plus depreciation and amortisation, including the related Proportionate adjustments. In addition, Volcan, while a subsidiary of the Group, is accounted for under the equity method for internal reporting and analysis due to the relatively low economic ownership held by the Group.
The accounting policies of the operating segments are the same as those described in note 2 with the exception of the Antamina copper/zinc mine, the Collahuasi joint venture and Volcan. Under IAS 28 and IFRS 11, Glencore\u2019s investment in the Antamina copper/zinc mine (34% owned) is considered to be an associate as it is not subject to joint control and the Collahuasi copper mine (44% owned) is considered to be a joint venture. Associates and joint ventures are required to be accounted for in Glencore\u2019s financial statements under the equity method. For internal reporting and analysis, Glencore evaluates the performance of these investments under the proportionate consolidation method, reflecting Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investments. For internal reporting and analysis, management evaluates the performance of Volcan under the equity method, reflecting the Group\u2019s relatively low 23.3% economic ownership in this fully ring-fenced listed entity, with its stand-alone, independent and separate capital structure. The balances as presented for internal reporting purposes are reconciled to Glencore\u2019s statutory disclosures in the following tables and/or in the Alternative performance measures section.
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (coal), that it did not previously own (see note 26), increasing Glencore\u2019s ownership to 100% and providing it with the ability to exercise control and fully consolidate Cerrej\u00f3n. Prior to the transaction, Glencore evaluated the performance of its 33.33% interest in Cerrej\u00f3n under the proportionate consolidation method, such that 2021 segment comparatives reflect Glencore\u2019s proportionate share of the revenues, expenses, assets and liabilities of the investment.
In Q4 2022, Glencore commenced a process exploring the possible disposal of its 23.3% economic interest in Volcan. As a result, the carrying amounts of Volcan assets and liabilities as at 31 December 2022 are classified as held for sale (see note 16). For segmental reporting purposes, Volcan continues to be accounted for as an equity accounted associate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-78": { "value": "
3. Revenue
US$ million
2022
2021
Sale of commodities
252,356
201,113
Freight, storage and other services
3,628
2,638
Total
255,984
203,751
Revenue is derived principally from the sale of commodities, recognised once control of the goods has transferred from Glencore to the buyer. Revenue from sale of commodities includes $78\u00a0million (2021: $710\u00a0million) of mark-to-market related adjustments on provisionally priced sales arrangements. Revenue derived from freight, storage and other services is recognised over time as the service is rendered. Revenue is measured based on consideration specified in the contract with the customer and is presented net of amounts prepaid as incentives and/or rebates paid to customers, and excludes amounts collected on behalf of third parties. This is consistent with the revenue information disclosed for each reportable segment (see note 2).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-79": { "value": "
3. Revenue
US$ million
2022
2021
Sale of commodities
252,356
201,113
Freight, storage and other services
3,628
2,638
Total
255,984
203,751
Revenue is derived principally from the sale of commodities, recognised once control of the goods has transferred from Glencore to the buyer. Revenue from sale of commodities includes $78\u00a0million (2021: $710\u00a0million) of mark-to-market related adjustments on provisionally priced sales arrangements. Revenue derived from freight, storage and other services is recognised over time as the service is rendered. Revenue is measured based on consideration specified in the contract with the customer and is presented net of amounts prepaid as incentives and/or rebates paid to customers, and excludes amounts collected on behalf of third parties. This is consistent with the revenue information disclosed for each reportable segment (see note 2).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-80": { "value": "
4. Gain/(loss) on acquisitions and disposals of non-current assets
US$ million
Notes
2022
2021
Gain on bargain purchase of Cerrej\u00f3n
26
1,029
\u2013
Gain on sale of Ernest Henry
26
512
\u2013
Loss on sale of Bolivia Zinc
26
(104)
\u2013
Loss on sale of E&P Chad
26
(34)
\u2013
Gain on sale of BaseCore
11
131
\u2013
Loss on sale of Los Quenuales
26
(180)
\u2013
Loss on sale of Access World
26
(23)
\u2013
Derecognition of non-controlling interest on disposal of Mopani
26
\u2013
(1,022)
Gain on sale of Chemoil Terminals
26
\u2013
110
Net gain on sale of other investments/operations
71
98
(Loss)/gain on disposal of property, plant and equipment
(115)
207
Total
1,287
(607)
Acquisition of Cerrej\u00f3n
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, resulting in a bargain purchase gain of $1,029 million (see note 26).
Disposal of Ernest Henry
In January 2022, Glencore completed the disposal of its interest in Ernest Henry Mining Pty Ltd, a copper-gold mine in Queensland, Australia, resulting in a gain on sale of $512 million (see note 26).
Disposal of Bolivia Zinc
In March 2022, Glencore completed the disposal of its interest in the Bolivia zinc assets (Sinchi Wayra and Illapa), resulting in a loss on sale of $104 million (see note 26).
Disposal of E&P Chad
In June 2022, Glencore completed the disposal of its Chad upstream oil operations, resulting in a loss on sale of $34 million (see note 26).
Disposal of BaseCore
In July 2022, BaseCore Metals (a Glencore joint venture) completed the disposal of a royalty package to Sandstrom Gold Ltd, resulting in an overall gain on sale to Glencore of $131 million (see note 11).
Disposal of Los quenuales
In December 2022, Glencore completed the disposal of its Los Quenuales zinc, lead, silver operations in Peru, facilitated by the earlier settlement of an underlying silver streaming arrangement, resulting in a loss on sale of $180 million (see note 26).
Disposal of Access World
In December 2022, Glencore completed the disposal of its interest in the Access World Group, a global commodities storage and logistics group, resulting in a loss on sale of $23 million (see note 26).
Disposal of Mopani
In March 2021, Glencore completed the disposal of its interest in Mopani to ZCCM Investments Holdings plc. The net loss on disposal reflects the derecognition to the statement of income of the previously recognised book value of the non-controlling interest equity balance, which largely related to the non-controlling interest\u2019s share of historical impairments and losses, and net liabilities in Mopani (see note 26).
Disposal of Chemoil Terminals
In December 2021, Glencore completed the disposal of its 100% interest in Chemoil Terminals LLC, which owns the Long Beach and Carson oil products storage terminals in California, resulting in a gain of $110 million (see note 26).
5. Other income/(expense) \u2013 net
US$ million
Notes
2022
2021
Net changes in mark-to-market valuations
\u2013
64
Release of unfavourable contract provision
22
\u2013
122
Gain on energy contracts
264
\u2013
Other income \u2013 net
101
\u2013
Total other income
365
186
Net changes in mark-to-market valuations
(106)
\u2013
Net foreign exchange losses
(349)
(187)
Legal and regulatory proceedings
(302)
(1,640)
Closed sites rehabilitation provisioning
(370)
(177)
Other expenses \u2013 net
(149)
(129)
Total other expenses
(1,276)
(2,133)
Total other expense \u2013 net
(911)
(1,947)
Together with foreign exchange movements and mark-to-market valuations, other net income / (expense) includes other items that, due to their nature and variable financial impact or infrequency of the events giving rise to these items, are reported separately from operating segment results.
Gain on energy contracts
Following the significant appreciation in European traded power prices in the summer of 2022, the Group recognised a $264 million gain over a number of its physically settled electricity contracts within its European metallurgical operations.
Net changes in mark-to-market valuations
Primarily relates to movements on interests in investments and loans (see notes 11 and 14), the ARM Coal non-discretionary dividend obligation (see note 29) and deferred consideration related to Mototolo stake sale in 2018 (see notes 12 and 14), all carried at fair value.
Net foreign exchange losses
2022 net foreign exchange losses include realised foreign currency losses of $431 million (see page 158) recognised on the restructuring and partial repayment of ZAR-denominated intragroup debt and return of capital that were part of the Group\u2019s net investment in its South African operations. These repayments are considered a partial disposal of a net investment in a subsidiary, and thus a proportionate share of the total accumulated foreign exchange losses recognised in the net investment were recycled to the statement of income upon these repayments.
Legal and regulatory proceedings
Comprises various investigations (legal, expert and compliance) related costs and other costs for ongoing legal matters of
$122 million (2021: $1,584 million) and a settlement with the DRC authorities of $180 million (see notes 23 and 32).
Closed sites rehabilitation provisioning
Comprises movements in restoration, rehabilitation and decommissioning estimates related to sites that are no longer operational (see note 23).
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-81": { "value": "
Net foreign exchange losses
2022 net foreign exchange losses include realised foreign currency losses of $431 million (see page 158) recognised on the restructuring and partial repayment of ZAR-denominated intragroup debt and return of capital that were part of the Group\u2019s net investment in its South African operations. These repayments are considered a partial disposal of a net investment in a subsidiary, and thus a proportionate share of the total accumulated foreign exchange losses recognised in the net investment were recycled to the statement of income upon these repayments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-82": { "value": "
Notes to the financial statements continued
6. Interest income/(expense)
US$ million
Notes
2022
2021
Bank deposits and other financial assets
290
110
Interest income and accretion on certain advances repayable with product
12
133
90
Loans to associates
12
8
Interest income
435
208
Interest expense for financial liabilities not classified at FVTPL
Capital market notes
(869)
(733)
Revolving credit facilities
(118)
(55)
Lease liabilities
9
(88)
(98)
Other bank loans
(225)
(93)
Less: capitalised interest
9
31
33
Other interest
(178)
(65)
(1,447)
(1,011)
Other interest expense
Post-retirement employee benefits
24
(19)
(23)
Deferred income
22
(97)
(115)
Restoration and rehabilitation
23
(155)
(153)
Other provisions
23
(36)
(33)
Other interest
(17)
(13)
(324)
(337)
Interest expense
(1,771)
(1,348)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-83": { "value": "
Notes to the financial statements continued
6. Interest income/(expense)
US$ million
Notes
2022
2021
Bank deposits and other financial assets
290
110
Interest income and accretion on certain advances repayable with product
12
133
90
Loans to associates
12
8
Interest income
435
208
Interest expense for financial liabilities not classified at FVTPL
Capital market notes
(869)
(733)
Revolving credit facilities
(118)
(55)
Lease liabilities
9
(88)
(98)
Other bank loans
(225)
(93)
Less: capitalised interest
9
31
33
Other interest
(178)
(65)
(1,447)
(1,011)
Other interest expense
Post-retirement employee benefits
24
(19)
(23)
Deferred income
22
(97)
(115)
Restoration and rehabilitation
23
(155)
(153)
Other provisions
23
(36)
(33)
Other interest
(17)
(13)
(324)
(337)
Interest expense
(1,771)
(1,348)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-84": { "value": "
Notes to the financial statements continued
6. Interest income/(expense)
US$ million
Notes
2022
2021
Bank deposits and other financial assets
290
110
Interest income and accretion on certain advances repayable with product
12
133
90
Loans to associates
12
8
Interest income
435
208
Interest expense for financial liabilities not classified at FVTPL
Capital market notes
(869)
(733)
Revolving credit facilities
(118)
(55)
Lease liabilities
9
(88)
(98)
Other bank loans
(225)
(93)
Less: capitalised interest
9
31
33
Other interest
(178)
(65)
(1,447)
(1,011)
Other interest expense
Post-retirement employee benefits
24
(19)
(23)
Deferred income
22
(97)
(115)
Restoration and rehabilitation
23
(155)
(153)
Other provisions
23
(36)
(33)
Other interest
(17)
(13)
(324)
(337)
Interest expense
(1,771)
(1,348)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-85": { "value": "
Notes to the financial statements continued
6. Interest income/(expense)
US$ million
Notes
2022
2021
Bank deposits and other financial assets
290
110
Interest income and accretion on certain advances repayable with product
12
133
90
Loans to associates
12
8
Interest income
435
208
Interest expense for financial liabilities not classified at FVTPL
Capital market notes
(869)
(733)
Revolving credit facilities
(118)
(55)
Lease liabilities
9
(88)
(98)
Other bank loans
(225)
(93)
Less: capitalised interest
9
31
33
Other interest
(178)
(65)
(1,447)
(1,011)
Other interest expense
Post-retirement employee benefits
24
(19)
(23)
Deferred income
22
(97)
(115)
Restoration and rehabilitation
23
(155)
(153)
Other provisions
23
(36)
(33)
Other interest
(17)
(13)
(324)
(337)
Interest expense
(1,771)
(1,348)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-86": { "value": "
Notes to the financial statements continued
6. Interest income/(expense)
US$ million
Notes
2022
2021
Bank deposits and other financial assets
290
110
Interest income and accretion on certain advances repayable with product
12
133
90
Loans to associates
12
8
Interest income
435
208
Interest expense for financial liabilities not classified at FVTPL
Capital market notes
(869)
(733)
Revolving credit facilities
(118)
(55)
Lease liabilities
9
(88)
(98)
Other bank loans
(225)
(93)
Less: capitalised interest
9
31
33
Other interest
(178)
(65)
(1,447)
(1,011)
Other interest expense
Post-retirement employee benefits
24
(19)
(23)
Deferred income
22
(97)
(115)
Restoration and rehabilitation
23
(155)
(153)
Other provisions
23
(36)
(33)
Other interest
(17)
(13)
(324)
(337)
Interest expense
(1,771)
(1,348)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-87": { "value": "
Notes to the financial statements continued
6. Interest income/(expense)
US$ million
Notes
2022
2021
Bank deposits and other financial assets
290
110
Interest income and accretion on certain advances repayable with product
12
133
90
Loans to associates
12
8
Interest income
435
208
Interest expense for financial liabilities not classified at FVTPL
Capital market notes
(869)
(733)
Revolving credit facilities
(118)
(55)
Lease liabilities
9
(88)
(98)
Other bank loans
(225)
(93)
Less: capitalised interest
9
31
33
Other interest
(178)
(65)
(1,447)
(1,011)
Other interest expense
Post-retirement employee benefits
24
(19)
(23)
Deferred income
22
(97)
(115)
Restoration and rehabilitation
23
(155)
(153)
Other provisions
23
(36)
(33)
Other interest
(17)
(13)
(324)
(337)
Interest expense
(1,771)
(1,348)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-88": { "value": "
Notes to the financial statements continued
7. Impairments
US$\u00a0million
Notes
2022
2021
(Impairments)/reversal of impairments of non-current assets
Property, plant and equipment and intangible assets
9/10
(1,984)
(1,452)
Investments
11
(167)
(333)
Advances and loans \u2013 current and non-current
12/14
(389)
31
VAT receivable \u2013 non-current
12
(632)
(151)
Inventory and other
(113)
\u2013
(3,285)
(1,905)
(Impairments)/reversal of impairments of financial assets
Advances and loans \u2013 current and non-current
12/14
(52)
67
(52)
67
Total impairments1
(3,337)
(1,838)
1Impairments recognised during the year are allocated to Glencore\u2019s operating segments as follows: Marketing activities $515 million (2021: $270 million) and Industrial activities $2,822 million (2021: $1,568 million).
As part of a regular portfolio review, Glencore carries out an assessment of whether there are indicators of cash-generating unit (CGU) or asset impairments or whether a previously recorded impairment may no longer be required.
The recoverable amounts of the property, plant and equipment and intangible assets were measured based on fair value less costs of disposal (FVLCD). The FVLCD of all CGUs are determined by discounted cash flow techniques based on the most recent approved financial budgets, underpinned and supported by the life of asset plans of the respective operations. The valuation models use a combination of internal sources and those inputs available to a market participant, which comprise the most recent reserve and resource estimates, relevant cost assumptions and where possible, market forecasts of commodity price and foreign exchange rate assumptions, discounted using operation specific post-tax real discount rates (unless otherwise indicated) ranging from 7.4% \u2013 14.9% (2021: 6.7% \u2013 15.5%). The valuations generally remain most sensitive to price and a deterioration / improvement in the pricing outlook may result in additional impairments/reversals. The determination of FVLCD used Level 3 valuation techniques for both years. In providing sensitivity analysis (and particularly on commodity price assumptions), a 10% change, representing a typical deviation parameter common in the industry, has been provided. Where a higher percentage is reasonably possible on an operational assumption, that has been clearly identified.
As a result of the regular impairment assessment, the following significant impairment charges were recognised:
2022
Property, plant and equipment and intangible assets
During 2022, significant changes to key macro estimates ensued, exacerbated by the Russian/Ukrainian war, which contributed to significant supply/demand imbalances, extreme commodity price volatility, higher energy prices and, in some cases, which are generally linked, emboldening governments to raise royalties and taxes. 2022 saw broad based cost increases, reflecting:
  • direct and indirect inflationary pressures on goods and services (particularly energy related flow-through impacts on electricity costs, coal, diesel, steel, explosives, chemicals, reagents and Original Equipment Manufacturer spare parts);
  • competition for skilled employees and contractors; and
  • supply chain pressures, including their secondary effects on shipping and handling costs, as trade flows adjusted in response to the war.
The weighting of the above macro factors on certain CGUs, combined with various operational challenges, resulted in a number of impairments in our Industrial activities segment, almost exclusively related to metals and minerals\u2019 CGUs. The valuations are most sensitive to price and discount rate assumptions and a deterioration/improvement in these assumptions could result in additional impairments/reversal of impairments. See below.
2022 impairment/
(reversal of impairment)
Impairments/(reversal of impairments) resulting from changes in key assumptions
US$ million
pre tax
post tax
Capital employed1
Discount
rate
Short to Long-term
price assumption
Decrease/(increase)
in price of 10%2
Increase/(decrease)
in discount rate of 1%
Cash-generating unit
Mt. Isa copper3
656
460
\u2013
9.7%
Cu: 8,157 - 7,400
\u2013
\u2013
\u2013
\u2013
Mt. Isa zinc
455
318
630
9.7%
Zn: 3,250 - 2,450
504
(318)
50
(58)
McArthur River zinc
172
96
869
8.7%
Zn: 3,250 - 2,450
396
(96)
63
(71)
Zhairem zinc
185
148
565
11.0%
Zn: 3,250 - 2,450
161
(148)
21
(22)
Portovesme zinc3
143
105
72
9.9%
Zn: 3,250 - 2,450
\u2013
\u2013
\u2013
\u2013
Volcan zinc
164
116
1,243
9.4%
Zn: 3,250 - 2,450
303
(242)
69
(96)
Koniambo nickel3
227
227
\u2013
10.7%
Ni: 19,500 - 18,400
\u2013
\u2013
\u2013
\u2013
Various other
(18)
(18)
\u2013
1,984
1,452
3,379
1,364
(804)
203
(247)
1Estimated recoverable non-current capital employed, post impairment. Non-current capital employed includes property, plant and equipment, non-current inventory, less rehabilitation provisions and net deferred tax liabilities.
2Across the curve.
3The estimated recoverable value of non-current capital employed of these CGUs is estimated to be de minimis. No reasonably possible change in assumptions would materially impact this value, hence no sensitivity analysis is presented.
Notes to the financial statements continued
7. Impairments continued
  • $656 million, Mt. Isa Copper CGU. During the year, various options for copper mining activities were considered in the context of higher costs due to the above macro factors. These factors outweighed the significant efforts made over the past few years to make the operation more competitive, such that the entire carrying value of this CGU was impaired.
  • $455 million, Mt. Isa Zinc CGU and $172 million, McArthur River Zinc CGU. Resulting primarily from the above noted macro impacts, during 2022, the zinc market and its related treatment and refinery cost / revenue / profit drivers were significantly impacted, particularly in relation to ex-China smelting, where updated Group assumptions have significantly impacted Australia Zinc\u2019s long-term through-the-cycle expected mining returns.
  • $185 million, Zhairem zinc/lead CGU. In addition to the above noted macro impacts, the Zhairem CGU, located in Kazakhstan, was significantly impacted by additional logistical impositions, as traditional supply chains were re-routed and the Kazakhstan government increased mineral extraction tax by some 50% (e.g. the rate applicable to zinc increased from 7% to 10.5%).
  • $143 million, Portovesme zinc/lead CGU. As a result of the above noted macro impacts, particularly relating to increases in European energy costs, Portovesme curtailed its primary zinc and lead smelting operations, with its remaining focus then being the treatment / recycling of waelz oxides. These macro factors outweighed the significant efforts made over the past few years to make the primary operations more competitive, such that the entire carrying value of these CGUs, other than the waelz-oxide line, was impaired.
  • $164 million, Volcan zinc CGU. Resulting primarily from the above noted macro impacts, during 2022, the zinc market and its related treatment and refinery cost / revenue / profit drivers were significantly impacted, particularly in relation to ex-China smelting, whereby updated assumptions, including in relation to Peru\u2019s increasing political challenges, have impacted the long-term through-the-cycle expected returns of Volcan\u2019s southern cluster CGU.
  • $227 million, Koniambo nickel CGU. As a result of persistent operational challenges, high ferro-nickel price discounts, and the above noted macro impacts, which have produced significantly higher energy and other costs, a strategic review of the long-term viability of Koniambo was initiated with one of the options being the potential cessation of operations. These factors outweigh the significant efforts made over the past few years to make the operation more competitive, such that the entire carrying value of this CGU was impaired.
  • Net $18 million reversal of impairments. The balance of the impairment charges of $70 million on property, plant and equipment (none of which were individually material) relate to specific assets (Industrial activities segment) where utilisation is no longer required or to projects no longer progressed due to changes in production and development plans, net of reversals of impairment of $88 million on property, plant and equipment (none of which were individually material) as a result of improved market conditions in the oil and gas market (Industrial activities segment).
Investments
Primarily comprises impairment charges of $55 million in respect of our 26.3% interest in Trevali Mining Corporation (Industrial activities segment), reflecting the Company obtaining creditor protection, following a serious mining incident at its Perkoa Mine in Burkina Faso in April 2022, and $54 million in respect of our 2.1% interest in Britishvolt (Marketing activities segment), owing to its financial difficulties and recent entering into administration. As a result, the entire carrying values of these investments were impaired.
Advances and loans \u2013 current and non-current
During 2022, the originally expected production rate at Mopani was not achieved, in part due to a lack of funding. The new shareholder has conducted operational and strategic reviews, resulting in Mopani seeking additional funding and to restructure
and extend repayment of the transaction debt (see note 12). As a result, the advance was impaired by $422 million to a value of
$596 million. The valuation assumes a long-term copper price of $7,400/t and an asset specific discount rate of 19%, which is reflective of an increase in emerging market risk premiums and underlying interest rates. The valuation remains most sensitive to price, receipt of physical copper and discount rate assumptions, and a deterioration in these assumptions could result in additional impairments. Should the price assumptions fall by 10% (across the curve), a further $43 million of impairment would be recognised. Should the discount rate increase by 1%, a further $36 million of impairment would be recognised, while a 10% decrease in physical copper estimates could result in an additional impairment of $19 million. Conversely, a 10% increase in price assumptions (across the curve) would result in an impairment reversal of $44 million or a 10% increase in physical copper receipts would result in an impairment reversal of $18 million.
VAT receivable \u2013 non-current
As a result of the continued delay and non-performance by the DRC government in settling long outstanding Value Added Tax (\u2018VAT\u2019) claims, impairment charges of $632 million were recognised in respect of balances outstanding at our Mutanda and Katanga CGUs (Industrial activities segment).
Inventories \u2013 non-current
As a result of geotechnical and other operational challenges, the Katanga CGU undertook an extensive technical review and operational optimisation exercise, resulting in a significant reduction in its shorter term production forecasts over the next 3-4 years, such that $113 million of inventory stockpile value has been impaired, consistent with its latest life of mine model.
Notes to the financial statements continued
7. Impairments continued
2021
Property, plant and equipment and intangible assets
  • In H1 2021, Koniambo incurred failures at its power plant and suffered a slag leak in line 2 of its metallurgical plant, resulting in a suspension of production. Extensive investigation into the cause of the leak ensued, following which it was determined to target lower throughput, revise certain grade and process recovery assumptions and increase the frequency of major maintenance shut-downs, with the intention of delivering more sustainable long-term operations. These revised changes in volume and cost assumptions and the emergence of higher discounts on non-battery application nickel relative to the LME nickel benchmark price, resulted in a reduction of Koniambo\u2019s estimated recoverable value (Industrial activities segment) to $550 million and an impairment of $1,170 million. The valuation assumed a long-term realised nickel price of approximately $13,700/t and an operation specific discount rate of 9.8%. Further revisions to the operating plans are possible. As at 31 December 2021, a 10% reduction in either the long-term realised nickel price or life of mine production could have resulted in the remaining carrying value being fully impaired. A 10% increase in variable operating costs could have resulted in an additional impairment of $170 million. Conversely, a 10% increase in the long-term realised nickel price could have resulted in an impairment reversal of $450 million.
  • The balance of the impairment charges on property, plant and equipment (none of which were individually material) relate to specific assets where utilisation is no longer required or to projects no longer progressed due to changes in production and development plans. As a result, the full carrying amount of these assets/projects was impaired, with $282 million recognised in our Industrial activities segment.
Investments
Primarily comprises an impairment charge of $331 million in respect of our 49% investment in HG Storage (Marketing activities segment), to an estimated recoverable value of $189 million following a review of the carrying value against valuation benchmarks. As at 31 December 2021, the valuation of this investment is not considered to be a significant source of estimation uncertainty as no change in assumptions reasonably possible within the next 12 months would materially affect the carrying value.
Advances and loans \u2013 current and non-current
In 2021, impairment reversals on advances and loans of $98 million (none of which were individually material) were recognised following an improvement in the underlying financial condition of various counterparties, with $63 million recognised in our Marketing activities segment and $35 million recognised in our Industrial activities segment. Of the total $98 million of impairment reversals, $67 million relate to financial assets and $31 million relate to non-financial assets.
VAT receivable \u2013 non-current
As a result of continued challenge and non-performance by certain government authorities in settling long outstanding VAT claims, an impairment charge of $151 million was recognised in our Industrial activities segment.
2022
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration
and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2022
6,854
44,580
3,048
30,019
665
15,552
100,718
Business combination
26
542
1,009
20
961
\u2013
271
2,803
Disposal of subsidiaries
26
(169)
(256)
(37)
(163)
(255)
(382)
(1,262)
Additions
67
3,179
425
84
\u2013
876
4,631
Disposals
(59)
(1,127)
(169)
(94)
(4)
(186)
(1,639)
Effect of foreign currency exchange movements
(8)
(171)
(1)
(145)
2
(30)
(353)
Reclassification to held for sale
16
(897)
(953)
(86)
(3,824)
\u2013
(1,199)
(6,959)
Other movements1
174
(411)
(2)
417
5
192
375
31 December 2022
6,504
45,850
3,198
27,255
413
15,094
98,314
Accumulated depreciation and impairment:
1 January 2022
2,940
27,361
1,343
15,777
577
9,561
57,559
Disposal of subsidiaries
26
(137)
(199)
(33)
(113)
(210)
(323)
(1,015)
Disposals
(53)
(1,003)
(134)
(50)
(2)
(185)
(1,427)
Depreciation
383
2,610
573
1,993
\u2013
1,269
6,828
Impairment
7
91
910
\u2013
323
(2)
660
1,982
Effect of foreign currency exchange movements
(3)
(89)
(2)
(54)
(1)
(7)
(156)
Reclassification to held for sale
16
(447)
(474)
(21)
(3,490)
\u2013
(609)
(5,041)
Other movements1
33
26
\u2013
(39)
\u2013
\u2013
20
31 December 2022
2,807
29,142
1,726
14,347
362
10,366
58,750
Net book value 31 December 2022
3,697
16,708
1,472
12,908
51
4,728
39,564
1Primarily consists of increases in rehabilitation costs of $399 million and reclassifications within the various property, plant and equipment headings.
2022
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2022
13,293
1,203
561
669
15,726
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Additions
\u2013
1
6
7
14
Disposals
\u2013
(1)
(25)
(2)
(28)
Effect of foreign currency exchange movements
\u2013
(73)
3
2
(68)
Reclassification to held for sale
16
\u2013
\u2013
(1)
(10)
(11)
Other movements1
\u2013
(2)
14
111
123
31 December 2022
13,134
1,128
554
753
15,569
Accumulated amortisation and impairment:
1 January 2022
8,293
308
341
549
9,491
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Disposals
\u2013
\u2013
(24)
(3)
(27)
Amortisation expense2
\u2013
97
34
28
159
Impairment
7
\u2013
\u2013
2
\u2013
2
Effect of foreign currency exchange movements
\u2013
(24)
\u2013
2
(22)
Reclassification to held for sale
16
\u2013
\u2013
\u2013
(6)
(6)
Other movements
\u2013
\u2013
(1)
\u2013
(1)
31 December 2022
8,134
381
348
546
9,409
Net book value 31 December 2022
5,000
747
206
207
6,160
1Includes $109 million for Mutanda mining license renewal, which is being amortised over 15 years (see note 34).
2Recognised in cost of goods sold.
2021
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2021
13,293
1,312
585
693
15,883
Additions
\u2013
\u2013
4
7
11
Disposals
\u2013
\u2013
(33)
(3)
(36)
Effect of foreign currency exchange movements
\u2013
(109)
(6)
(12)
(127)
Reclassification to held for sale
16
\u2013
\u2013
(19)
(5)
(24)
Other movements
\u2013
\u2013
30
(11)
19
31 December 2021
13,293
1,203
561
669
15,726
Accumulated amortisation and impairment:
1 January 2021
8,293
247
342
534
9,416
Disposals
26
\u2013
\u2013
(22)
(3)
(25)
Amortisation expense1
\u2013
89
37
29
155
Effect of foreign currency exchange movements
\u2013
(28)
(2)
(5)
(35)
Reclassification to held for sale
16
\u2013
\u2013
(16)
(4)
(20)
Other movements
\u2013
\u2013
2
(2)
\u2013
31 December 2021
8,293
308
341
549
9,491
Net book value 31 December 2021
5,000
895
220
120
6,235
1Recognised in cost of goods sold.
Goodwill impairment testing
Given the nature of each CGU\u2019s activities, information on its fair value is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently:
  • The recoverable amount for each of the marketing CGUs is determined by reference to the FVLCD which utilises a price to earnings multiple approach based on the 2023 approved financial budget which includes factors such as marketing volumes handled and operating, interest and income tax charges, generally based on past experience. The price to earnings multiple of 12 times (2021: 12 times) is derived from observable market data for broadly comparable businesses; and
  • Glencore believes that no reasonably possible changes in any of the above key assumptions would cause the recoverable amount to fall below the carrying value of the CGU over the next 12 months. The determination of FVLCD for each of the marketing CGUs used Level 3 valuation techniques in\u00a0both years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-89": { "value": "
Notes to the financial statements continued
8. Income taxes
Income taxes consist of the following:
US$ million
2022
2021
Current income tax expense
(7,165)
(2,923)
Adjustments in respect of prior year current income tax
(274)
158
Deferred income tax credit/(expense)
998
(92)
Adjustments in respect of prior year deferred income tax
73
(169)
Total tax expense reported in the statement of income
(6,368)
(3,026)
Deferred income tax expense recognised directly in other comprehensive income
(65)
(67)
Total tax expense recognised directly in other comprehensive income
(65)
(67)
The effective Group tax rate is different from the statutory Swiss income tax rate applicable to the Company for the following reasons:
US$ million
2022
2021
Income before income taxes
22,879
7,375
Less: Share of income from associates and joint ventures
(2,300)
(2,618)
Parent Company\u2019s and subsidiaries\u2019 income before income tax and attribution
20,579
4,757
Income tax expense calculated at the Swiss income tax rate of 12% (2021: 12%)
(2,469)
(571)
Tax effects of:
Different tax rates from the standard Swiss income tax rate
(3,057)
(1,486)
Tax-exempt income ($360 million (2021: $207 million) from recurring items
538
232
and $178 million (2021: $25\u00a0million) from non-recurring items)
Items not tax deductible ($670 million (2021: $987\u00a0million) from recurring items
(1,252)
(1,365)
and $582\u00a0million (2021:\u00a0$378\u00a0million) from non-recurring items)
Foreign exchange fluctuations
(187)
52
Changes in tax rates
(47)
15
Utilisation and changes in recognition of tax losses and temporary differences
385
101
Tax losses not recognised
(98)
15
Adjustments in respect of prior years
(201)
(11)
Other
20
(8)
Income tax expense
(6,368)
(3,026)
The non-tax deductible items of $1,252\u00a0million (2021: $1,365\u00a0million) primarily relate to financing costs, impairments and various other expenses.
The impact of tax-exempt income of $538\u00a0million (2021: $232\u00a0million) primarily relates to non-taxable dividends, income that is not effectively connected to the taxable jurisdiction, and various other\u00a0items.
The tax impact of foreign exchange fluctuations relates to the foreign currency movements on deferred tax balances where the underlying tax balances are denominated in a currency different to the functional currency determined for accounting purposes.
Deferred taxes
Deferred taxes as at 31\u00a0December\u00a02022 and 2021 are attributable to the items in the table below:
US$ million
2022
Recognised in the statement of income
Recognised in other comprehensive income
Business combination and disposal of subsidiaries
Foreign currency exchange movements
Other
2021
Deferred tax assets1
Tax losses carried forward
1,515
116
\u2013
(4)
1
(16)
1,418
Other
322
(18)
(2)
(17)
(2)
\u2013
361
Total
1,837
98
(2)
(21)
(1)
(16)
1,779
Deferred tax liabilities1
Depreciation and amortisation
(3,299)
1,254
\u2013
(625)
60
168
(4,156)
Mark-to-market valuations
(125)
(1)
(2)
5
\u2013
\u2013
(127)
Other
(227)
(280)
(61)
295
5
\u2013
(186)
Total
(3,651)
973
(63)
(325)
65
168
(4,469)
Total Deferred tax - net
(1,814)
1,071
(65)
(346)
64
152
(2,690)
US$ million
2021
Recognised in the statement of income
Recognised in other comprehensive income
Business combination and disposal of subsidiaries
Foreign currency exchange movements
Other
2020
Deferred tax assets1
Tax losses carried forward
1,418
(532)
\u2013
\u2013
\u2013
(1)
1,951
Other
361
115
(10)
\u2013
(2)
(43)
301
Total
1,779
(417)
(10)
\u2013
(2)
(44)
2,252
Deferred tax liabilities1
Depreciation and amortisation
(4,156)
(150)
\u2013
19
98
\u2013
(4,123)
Mark-to-market valuations
(127)
7
(6)
\u2013
\u2013
\u2013
(128)
Other
(186)
299
(51)
\u2013
(3)
39
(470)
Total
(4,469)
156
(57)
19
95
39
(4,721)
Total Deferred tax - net
(2,690)
(261)
(67)
19
93
(5)
(2,469)
1Asset and liability positions in the same category reflect the impact of tax assets and liabilities arising in local tax jurisdictions that cannot be offset against tax assets and liabilities arising in other tax jurisdictions.
Deferred tax assets are net of $311 million (2021: $287 million) of uncertain tax liabilities related to tax estimation and judgement uncertainties with respect to various open tax disputes discussed below.
Deferred tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable. As at 31 December 2022, $1,915 million (2021: $2,016 million) of deferred tax assets related to available loss carry forwards have been brought to account, of which $1,515\u00a0million (2021: $1,418\u00a0million) are disclosed as deferred tax assets with the remaining balance being offset against deferred tax liabilities arising in the same tax entity. This balance is primarily comprised of:
  • $652 million (2021: $629 million) in entities domiciled in the DRC;
  • $493 million (2021: $482 million) in entities domiciled in Switzerland; and
  • $277 million (2021: $238 million) in entities domiciled in the US.
In evaluating whether it is probable that taxable profits will be earned in future accounting periods prior to any tax loss expiry as may be the case, all available evidence was considered, including approved budgets, forecasts and business plans and, in certain cases, analysis of historical operating results. These forecasts are consistent with those prepared and used internally for business planning and impairment testing purposes. Following this evaluation, it was determined there would be sufficient taxable income generated to realise the benefit of the deferred tax assets. With the exception of the deferred tax assets raised in respect of the Group\u2019s DRC operations (see below), no reasonably possible change in any of the key assumptions would result in a material reduction in forecast headroom of tax profits so that the recognised deferred tax asset would not be realised.
The recognised losses carried forward in the DRC primarily relate to historical development, ramp-up and financing related costs at KCC. The losses carried forward have an unlimited carry forward period, but are subject to annual utilisation limitation. Deferred taxation assets have been recognised for the full estimated available tax losses at 31 December 2022 as sufficient future taxable profits are expected to fully utilise the recognised carry forward tax losses. In recognising these deferred tax assets, consideration was given to the range of possible outcomes to determine the expected value of the tax losses available for future offset, including to what extent previously incurred tax losses would be available to offset future taxable profits. Any adverse challenge by the DRC tax authorities could materially impact the currently recognised tax losses and could result in a reversal of part or all of the recognised deferred tax assets.
The recognised losses carried forward in Switzerland primarily relate to non-recurring events. Based on the core business activities conducted in Switzerland and taxable income forecasts going forward, sufficient taxable profits are expected to fully utilise the recognised tax losses prior to expiration.
The recognised losses carried forward in the US primarily relate to non-recurring events in 2011 and have a carry forward period of 20 years. The US entities comprise our core US marketing activities and based on taxable income forecasts going forward, sufficient taxable profits are expected to fully utilise the recognised tax losses prior to expiration.
Income tax receivable / payable
US$ million
2022
2021
Income tax receivable
401
364
Income tax payable
(4,660)
(1,785)
Net income tax payable
(4,259)
(1,421)
Income tax judgements and uncertain tax liabilities
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its reasoned estimate of these tax liabilities, including related interest charges. These current open tax matters are spread across numerous jurisdictions and consist primarily of legacy transfer pricing matters that have been open for a number of years and may take several more years to resolve. In recognising a provision for these taxation exposures, consideration was given to the range of possible outcomes to determine the Group\u2019s best estimate of the amount to provide. As at 31 December 2022, the Group has recognised $1,486 million (2021: $880 million) of uncertain tax liabilities related to possible adverse outcomes of these open matters, of which, $311 million (2021: $287 million) has been recognised net of deferred tax assets, with the balance of $1,175 million (2021: $593 million) recognised as an income tax payable. The change in the total uncertain tax position during the year reflects the issuance of various new assessments and the outcome of certain settlements and court rulings.
UK Tax Audit
In previous periods, HMRC have issued formal transfer pricing, unallowable purposes and diverted profits tax assessments for the 2008-2018 tax years, amounting to $746 million. The Group has appealed against, and continues to vigorously contest, these assessments, following, over the years, various legal opinions received and detailed analysis conducted, supporting its positions and policies applied. Therefore, the Group has not fully provided for the amount assessed. The matter is now proceeding through the Mutual Agreement Process, pursuant to article 24 of the Switzerland \u2013 United Kingdom Income Tax Treaty 1977. Management does not anticipate a significant risk of material changes in estimates in this matter within the next financial year.
DRC Tax Audit
As a matter of course, various tax authorities in the DRC issue draft assessments adjusting revenue and denying costs and other items, along with customs-related claims for alleged non-compliance or incorrect coding on certain filings. Upon receipt of such draft assessments, the Group engages with the tax authorities to defend its filing positions. As at 31 December 2022, there are various ongoing technical discussions and challenges, the ultimate outcome of which remains uncertain, and therefore there remains a risk that the outcome could materially impact the recognised balances within the next financial year. It is impractical to provide further sensitivity estimates of potential downside variances.
Available gross tax losses
Available gross tax losses carried forward and deductible temporary differences, for which no deferred tax assets have been recognised in the consolidated financial statements, are detailed below and will expire as follows:
US$ million
2022
2021
1 year
115
1,024
2 years
48
425
3 years
44
41
Thereafter
9,642
11,095
Unlimited
13,806
10,335
Total
23,655
22,920
As at 31\u00a0December\u00a02022, unremitted earnings of $62,829 million (2021: $50,116\u00a0million) have been retained by subsidiaries for reinvestment. No provision is made for income taxes.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-90": { "value": "
Deferred taxes
Deferred taxes as at 31\u00a0December\u00a02022 and 2021 are attributable to the items in the table below:
US$ million
2022
Recognised in the statement of income
Recognised in other comprehensive income
Business combination and disposal of subsidiaries
Foreign currency exchange movements
Other
2021
Deferred tax assets1
Tax losses carried forward
1,515
116
\u2013
(4)
1
(16)
1,418
Other
322
(18)
(2)
(17)
(2)
\u2013
361
Total
1,837
98
(2)
(21)
(1)
(16)
1,779
Deferred tax liabilities1
Depreciation and amortisation
(3,299)
1,254
\u2013
(625)
60
168
(4,156)
Mark-to-market valuations
(125)
(1)
(2)
5
\u2013
\u2013
(127)
Other
(227)
(280)
(61)
295
5
\u2013
(186)
Total
(3,651)
973
(63)
(325)
65
168
(4,469)
Total Deferred tax - net
(1,814)
1,071
(65)
(346)
64
152
(2,690)
US$ million
2021
Recognised in the statement of income
Recognised in other comprehensive income
Business combination and disposal of subsidiaries
Foreign currency exchange movements
Other
2020
Deferred tax assets1
Tax losses carried forward
1,418
(532)
\u2013
\u2013
\u2013
(1)
1,951
Other
361
115
(10)
\u2013
(2)
(43)
301
Total
1,779
(417)
(10)
\u2013
(2)
(44)
2,252
Deferred tax liabilities1
Depreciation and amortisation
(4,156)
(150)
\u2013
19
98
\u2013
(4,123)
Mark-to-market valuations
(127)
7
(6)
\u2013
\u2013
\u2013
(128)
Other
(186)
299
(51)
\u2013
(3)
39
(470)
Total
(4,469)
156
(57)
19
95
39
(4,721)
Total Deferred tax - net
(2,690)
(261)
(67)
19
93
(5)
(2,469)
1Asset and liability positions in the same category reflect the impact of tax assets and liabilities arising in local tax jurisdictions that cannot be offset against tax assets and liabilities arising in other tax jurisdictions.
Deferred tax assets are net of $311 million (2021: $287 million) of uncertain tax liabilities related to tax estimation and judgement uncertainties with respect to various open tax disputes discussed below.
Deferred tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable. As at 31 December 2022, $1,915 million (2021: $2,016 million) of deferred tax assets related to available loss carry forwards have been brought to account, of which $1,515\u00a0million (2021: $1,418\u00a0million) are disclosed as deferred tax assets with the remaining balance being offset against deferred tax liabilities arising in the same tax entity. This balance is primarily comprised of:
  • $652 million (2021: $629 million) in entities domiciled in the DRC;
  • $493 million (2021: $482 million) in entities domiciled in Switzerland; and
  • $277 million (2021: $238 million) in entities domiciled in the US.
In evaluating whether it is probable that taxable profits will be earned in future accounting periods prior to any tax loss expiry as may be the case, all available evidence was considered, including approved budgets, forecasts and business plans and, in certain cases, analysis of historical operating results. These forecasts are consistent with those prepared and used internally for business planning and impairment testing purposes. Following this evaluation, it was determined there would be sufficient taxable income generated to realise the benefit of the deferred tax assets. With the exception of the deferred tax assets raised in respect of the Group\u2019s DRC operations (see below), no reasonably possible change in any of the key assumptions would result in a material reduction in forecast headroom of tax profits so that the recognised deferred tax asset would not be realised.
The recognised losses carried forward in the DRC primarily relate to historical development, ramp-up and financing related costs at KCC. The losses carried forward have an unlimited carry forward period, but are subject to annual utilisation limitation. Deferred taxation assets have been recognised for the full estimated available tax losses at 31 December 2022 as sufficient future taxable profits are expected to fully utilise the recognised carry forward tax losses. In recognising these deferred tax assets, consideration was given to the range of possible outcomes to determine the expected value of the tax losses available for future offset, including to what extent previously incurred tax losses would be available to offset future taxable profits. Any adverse challenge by the DRC tax authorities could materially impact the currently recognised tax losses and could result in a reversal of part or all of the recognised deferred tax assets.
The recognised losses carried forward in Switzerland primarily relate to non-recurring events. Based on the core business activities conducted in Switzerland and taxable income forecasts going forward, sufficient taxable profits are expected to fully utilise the recognised tax losses prior to expiration.
The recognised losses carried forward in the US primarily relate to non-recurring events in 2011 and have a carry forward period of 20 years. The US entities comprise our core US marketing activities and based on taxable income forecasts going forward, sufficient taxable profits are expected to fully utilise the recognised tax losses prior to expiration.
Available gross tax losses
Available gross tax losses carried forward and deductible temporary differences, for which no deferred tax assets have been recognised in the consolidated financial statements, are detailed below and will expire as follows:
US$ million
2022
2021
1 year
115
1,024
2 years
48
425
3 years
44
41
Thereafter
9,642
11,095
Unlimited
13,806
10,335
Total
23,655
22,920
As at 31\u00a0December\u00a02022, unremitted earnings of $62,829 million (2021: $50,116\u00a0million) have been retained by subsidiaries for reinvestment. No provision is made for income taxes.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-91": { "value": "
Income tax receivable / payable
US$ million
2022
2021
Income tax receivable
401
364
Income tax payable
(4,660)
(1,785)
Net income tax payable
(4,259)
(1,421)
Income tax judgements and uncertain tax liabilities
Glencore assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws. For those matters where it is probable that an adjustment will be made, the Group records its reasoned estimate of these tax liabilities, including related interest charges. These current open tax matters are spread across numerous jurisdictions and consist primarily of legacy transfer pricing matters that have been open for a number of years and may take several more years to resolve. In recognising a provision for these taxation exposures, consideration was given to the range of possible outcomes to determine the Group\u2019s best estimate of the amount to provide. As at 31 December 2022, the Group has recognised $1,486 million (2021: $880 million) of uncertain tax liabilities related to possible adverse outcomes of these open matters, of which, $311 million (2021: $287 million) has been recognised net of deferred tax assets, with the balance of $1,175 million (2021: $593 million) recognised as an income tax payable. The change in the total uncertain tax position during the year reflects the issuance of various new assessments and the outcome of certain settlements and court rulings.
UK Tax Audit
In previous periods, HMRC have issued formal transfer pricing, unallowable purposes and diverted profits tax assessments for the 2008-2018 tax years, amounting to $746 million. The Group has appealed against, and continues to vigorously contest, these assessments, following, over the years, various legal opinions received and detailed analysis conducted, supporting its positions and policies applied. Therefore, the Group has not fully provided for the amount assessed. The matter is now proceeding through the Mutual Agreement Process, pursuant to article 24 of the Switzerland \u2013 United Kingdom Income Tax Treaty 1977. Management does not anticipate a significant risk of material changes in estimates in this matter within the next financial year.
DRC Tax Audit
As a matter of course, various tax authorities in the DRC issue draft assessments adjusting revenue and denying costs and other items, along with customs-related claims for alleged non-compliance or incorrect coding on certain filings. Upon receipt of such draft assessments, the Group engages with the tax authorities to defend its filing positions. As at 31 December 2022, there are various ongoing technical discussions and challenges, the ultimate outcome of which remains uncertain, and therefore there remains a risk that the outcome could materially impact the recognised balances within the next financial year. It is impractical to provide further sensitivity estimates of potential downside variances.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-92": { "value": "
9. Property, plant and equipment
2022
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration
and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2022
6,854
44,580
3,048
30,019
665
15,552
100,718
Business combination
26
542
1,009
20
961
\u2013
271
2,803
Disposal of subsidiaries
26
(169)
(256)
(37)
(163)
(255)
(382)
(1,262)
Additions
67
3,179
425
84
\u2013
876
4,631
Disposals
(59)
(1,127)
(169)
(94)
(4)
(186)
(1,639)
Effect of foreign currency exchange movements
(8)
(171)
(1)
(145)
2
(30)
(353)
Reclassification to held for sale
16
(897)
(953)
(86)
(3,824)
\u2013
(1,199)
(6,959)
Other movements1
174
(411)
(2)
417
5
192
375
31 December 2022
6,504
45,850
3,198
27,255
413
15,094
98,314
Accumulated depreciation and impairment:
1 January 2022
2,940
27,361
1,343
15,777
577
9,561
57,559
Disposal of subsidiaries
26
(137)
(199)
(33)
(113)
(210)
(323)
(1,015)
Disposals
(53)
(1,003)
(134)
(50)
(2)
(185)
(1,427)
Depreciation
383
2,610
573
1,993
\u2013
1,269
6,828
Impairment
7
91
910
\u2013
323
(2)
660
1,982
Effect of foreign currency exchange movements
(3)
(89)
(2)
(54)
(1)
(7)
(156)
Reclassification to held for sale
16
(447)
(474)
(21)
(3,490)
\u2013
(609)
(5,041)
Other movements1
33
26
\u2013
(39)
\u2013
\u2013
20
31 December 2022
2,807
29,142
1,726
14,347
362
10,366
58,750
Net book value 31 December 2022
3,697
16,708
1,472
12,908
51
4,728
39,564
1Primarily consists of increases in rehabilitation costs of $399 million and reclassifications within the various property, plant and equipment headings.
Plant and equipment includes expenditure for construction in progress of $3,731\u00a0million (2021: $3,387\u00a0million). Mineral and petroleum rights include biological assets of $25\u00a0million (2021: $24\u00a0million).Depreciation expenses included in cost of goods sold are $6,782\u00a0million (2021: $6,129\u00a0million) and in selling and administrative expenses, $46\u00a0million (2021: $52\u00a0million).
During 2022, $31\u00a0million (2021: $33\u00a0million) of interest was capitalised. With the exception of project specific borrowings, the rate used to determine the amount of borrowing costs eligible for capitalisation was 3.5% (2021: 3%).
As at 31 December 2022, with the exception of leases, no property, plant or equipment was pledged as security for borrowings (2021: $Nil).
2021
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2021
6,576
44,514
2,576
30,495
1,974
17,462
103,597
Disposal of subsidiaries
26
(100)
(352)
(12)
(132)
\u2013
(101)
(697)
Additions
114
2,936
1,006
75
\u2013
566
4,697
Disposals
(73)
(668)
(301)
(50)
\u2013
(171)
(1,263)
Effect of foreign currency exchange movements
(18)
(250)
(17)
(211)
\u2013
(47)
(543)
Reclassification to held for sale
16
(86)
(760)
(207)
(783)
(1,320)
(2,576)
(5,732)
Other movements1
441
(840)
3
625
11
419
659
31 December 2021
6,854
44,580
3,048
30,019
665
15,552
100,718
Accumulated depreciation and impairment:
1 January 2021
2,626
25,438
1,004
14,838
1,884
10,697
56,487
Disposal of subsidiaries
26
(36)
(260)
(5)
(126)
\u2013
(92)
(519)
Disposals
(9)
(600)
(213)
(48)
\u2013
(171)
(1,041)
Depreciation
341
2,553
639
1,354
\u2013
1,293
6,180
Impairment
7
16
902
3
495
\u2013
36
1,452
Effect of foreign currency exchange movements
(5)
(118)
(6)
(74)
\u2013
(13)
(216)
Reclassification to held for sale
16
(31)
(524)
(80)
(651)
(1,317)
(2,246)
(4,849)
Other movements1
38
(30)
1
(11)
10
57
65
31 December 2021
2,940
27,361
1,343
15,777
577
9,561
57,559
Net book value 31 December 2021
3,914
17,219
1,705
14,242
88
5,991
43,159
1Primarily consists of increases in rehabilitation costs of $634 million and reclassifications within the various property, plant and equipment headings.
Leases
The Group leases various assets including land and buildings and plant and equipment. As at 31 December 2022, the net book value of recognised right-of use assets relating to land and buildings was $418\u00a0million (2021: $450\u00a0million) and plant and equipment $1,054\u00a0million (2021: $1,255\u00a0million). The depreciation charge for the period relating to those assets was $58\u00a0million (2021: $89\u00a0million) and $515\u00a0million (2021: $550\u00a0million), respectively.
Disclosure of amounts recognised as lease liabilities in the statement of financial position and cash outflows for leases in the year are included within note 21 and their maturity analysis within note 27.
Amounts recognised in the statement of income are detailed below:
US$ million
2022
2021
Depreciation on right-of-use assets
(573)
(639)
Interest expense on lease liabilities
(88)
(98)
Expense relating to short-term leases
(781)
(493)
Expense relating to low-value leases
(16)
(3)
Expense relating to variable lease payments not included in the
measurement of the lease liability
(7)
(5)
Income from subleasing right-of-use assets
153
304
Total
(1,312)
(934)
At 31 December 2022, the Group is committed to $229\u00a0million of short-term lease payments (2021: $209 million) and $Nil (2021: $56 million) related to capitalised leases not yet commenced.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-93": { "value": "
2022
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration
and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2022
6,854
44,580
3,048
30,019
665
15,552
100,718
Business combination
26
542
1,009
20
961
\u2013
271
2,803
Disposal of subsidiaries
26
(169)
(256)
(37)
(163)
(255)
(382)
(1,262)
Additions
67
3,179
425
84
\u2013
876
4,631
Disposals
(59)
(1,127)
(169)
(94)
(4)
(186)
(1,639)
Effect of foreign currency exchange movements
(8)
(171)
(1)
(145)
2
(30)
(353)
Reclassification to held for sale
16
(897)
(953)
(86)
(3,824)
\u2013
(1,199)
(6,959)
Other movements1
174
(411)
(2)
417
5
192
375
31 December 2022
6,504
45,850
3,198
27,255
413
15,094
98,314
Accumulated depreciation and impairment:
1 January 2022
2,940
27,361
1,343
15,777
577
9,561
57,559
Disposal of subsidiaries
26
(137)
(199)
(33)
(113)
(210)
(323)
(1,015)
Disposals
(53)
(1,003)
(134)
(50)
(2)
(185)
(1,427)
Depreciation
383
2,610
573
1,993
\u2013
1,269
6,828
Impairment
7
91
910
\u2013
323
(2)
660
1,982
Effect of foreign currency exchange movements
(3)
(89)
(2)
(54)
(1)
(7)
(156)
Reclassification to held for sale
16
(447)
(474)
(21)
(3,490)
\u2013
(609)
(5,041)
Other movements1
33
26
\u2013
(39)
\u2013
\u2013
20
31 December 2022
2,807
29,142
1,726
14,347
362
10,366
58,750
Net book value 31 December 2022
3,697
16,708
1,472
12,908
51
4,728
39,564
1Primarily consists of increases in rehabilitation costs of $399 million and reclassifications within the various property, plant and equipment headings.
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2021
6,576
44,514
2,576
30,495
1,974
17,462
103,597
Disposal of subsidiaries
26
(100)
(352)
(12)
(132)
\u2013
(101)
(697)
Additions
114
2,936
1,006
75
\u2013
566
4,697
Disposals
(73)
(668)
(301)
(50)
\u2013
(171)
(1,263)
Effect of foreign currency exchange movements
(18)
(250)
(17)
(211)
\u2013
(47)
(543)
Reclassification to held for sale
16
(86)
(760)
(207)
(783)
(1,320)
(2,576)
(5,732)
Other movements1
441
(840)
3
625
11
419
659
31 December 2021
6,854
44,580
3,048
30,019
665
15,552
100,718
Accumulated depreciation and impairment:
1 January 2021
2,626
25,438
1,004
14,838
1,884
10,697
56,487
Disposal of subsidiaries
26
(36)
(260)
(5)
(126)
\u2013
(92)
(519)
Disposals
(9)
(600)
(213)
(48)
\u2013
(171)
(1,041)
Depreciation
341
2,553
639
1,354
\u2013
1,293
6,180
Impairment
7
16
902
3
495
\u2013
36
1,452
Effect of foreign currency exchange movements
(5)
(118)
(6)
(74)
\u2013
(13)
(216)
Reclassification to held for sale
16
(31)
(524)
(80)
(651)
(1,317)
(2,246)
(4,849)
Other movements1
38
(30)
1
(11)
10
57
65
31 December 2021
2,940
27,361
1,343
15,777
577
9,561
57,559
Net book value 31 December 2021
3,914
17,219
1,705
14,242
88
5,991
43,159
1Primarily consists of increases in rehabilitation costs of $634 million and reclassifications within the various property, plant and equipment headings.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExplorationAndEvaluationAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-94": { "value": "
2022
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration
and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2022
6,854
44,580
3,048
30,019
665
15,552
100,718
Business combination
26
542
1,009
20
961
\u2013
271
2,803
Disposal of subsidiaries
26
(169)
(256)
(37)
(163)
(255)
(382)
(1,262)
Additions
67
3,179
425
84
\u2013
876
4,631
Disposals
(59)
(1,127)
(169)
(94)
(4)
(186)
(1,639)
Effect of foreign currency exchange movements
(8)
(171)
(1)
(145)
2
(30)
(353)
Reclassification to held for sale
16
(897)
(953)
(86)
(3,824)
\u2013
(1,199)
(6,959)
Other movements1
174
(411)
(2)
417
5
192
375
31 December 2022
6,504
45,850
3,198
27,255
413
15,094
98,314
Accumulated depreciation and impairment:
1 January 2022
2,940
27,361
1,343
15,777
577
9,561
57,559
Disposal of subsidiaries
26
(137)
(199)
(33)
(113)
(210)
(323)
(1,015)
Disposals
(53)
(1,003)
(134)
(50)
(2)
(185)
(1,427)
Depreciation
383
2,610
573
1,993
\u2013
1,269
6,828
Impairment
7
91
910
\u2013
323
(2)
660
1,982
Effect of foreign currency exchange movements
(3)
(89)
(2)
(54)
(1)
(7)
(156)
Reclassification to held for sale
16
(447)
(474)
(21)
(3,490)
\u2013
(609)
(5,041)
Other movements1
33
26
\u2013
(39)
\u2013
\u2013
20
31 December 2022
2,807
29,142
1,726
14,347
362
10,366
58,750
Net book value 31 December 2022
3,697
16,708
1,472
12,908
51
4,728
39,564
1Primarily consists of increases in rehabilitation costs of $399 million and reclassifications within the various property, plant and equipment headings.
Depreciation expenses included in cost of goods sold are $6,782\u00a0million (2021: $6,129\u00a0million) and in selling and administrative expenses, $46\u00a0million (2021: $52\u00a0million).
US$ million
Notes
Freehold land and buildings
Plant and equipment
Right-of-use assets
Mineral and petroleum rights
Exploration and
evaluation
Deferred mining costs
Total
Gross carrying amount:
1 January 2021
6,576
44,514
2,576
30,495
1,974
17,462
103,597
Disposal of subsidiaries
26
(100)
(352)
(12)
(132)
\u2013
(101)
(697)
Additions
114
2,936
1,006
75
\u2013
566
4,697
Disposals
(73)
(668)
(301)
(50)
\u2013
(171)
(1,263)
Effect of foreign currency exchange movements
(18)
(250)
(17)
(211)
\u2013
(47)
(543)
Reclassification to held for sale
16
(86)
(760)
(207)
(783)
(1,320)
(2,576)
(5,732)
Other movements1
441
(840)
3
625
11
419
659
31 December 2021
6,854
44,580
3,048
30,019
665
15,552
100,718
Accumulated depreciation and impairment:
1 January 2021
2,626
25,438
1,004
14,838
1,884
10,697
56,487
Disposal of subsidiaries
26
(36)
(260)
(5)
(126)
\u2013
(92)
(519)
Disposals
(9)
(600)
(213)
(48)
\u2013
(171)
(1,041)
Depreciation
341
2,553
639
1,354
\u2013
1,293
6,180
Impairment
7
16
902
3
495
\u2013
36
1,452
Effect of foreign currency exchange movements
(5)
(118)
(6)
(74)
\u2013
(13)
(216)
Reclassification to held for sale
16
(31)
(524)
(80)
(651)
(1,317)
(2,246)
(4,849)
Other movements1
38
(30)
1
(11)
10
57
65
31 December 2021
2,940
27,361
1,343
15,777
577
9,561
57,559
Net book value 31 December 2021
3,914
17,219
1,705
14,242
88
5,991
43,159
1Primarily consists of increases in rehabilitation costs of $634 million and reclassifications within the various property, plant and equipment headings.
2022
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2022
13,293
1,203
561
669
15,726
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Additions
\u2013
1
6
7
14
Disposals
\u2013
(1)
(25)
(2)
(28)
Effect of foreign currency exchange movements
\u2013
(73)
3
2
(68)
Reclassification to held for sale
16
\u2013
\u2013
(1)
(10)
(11)
Other movements1
\u2013
(2)
14
111
123
31 December 2022
13,134
1,128
554
753
15,569
Accumulated amortisation and impairment:
1 January 2022
8,293
308
341
549
9,491
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Disposals
\u2013
\u2013
(24)
(3)
(27)
Amortisation expense2
\u2013
97
34
28
159
Impairment
7
\u2013
\u2013
2
\u2013
2
Effect of foreign currency exchange movements
\u2013
(24)
\u2013
2
(22)
Reclassification to held for sale
16
\u2013
\u2013
\u2013
(6)
(6)
Other movements
\u2013
\u2013
(1)
\u2013
(1)
31 December 2022
8,134
381
348
546
9,409
Net book value 31 December 2022
5,000
747
206
207
6,160
1Includes $109 million for Mutanda mining license renewal, which is being amortised over 15 years (see note 34).
2Recognised in cost of goods sold.
2021
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2021
13,293
1,312
585
693
15,883
Additions
\u2013
\u2013
4
7
11
Disposals
\u2013
\u2013
(33)
(3)
(36)
Effect of foreign currency exchange movements
\u2013
(109)
(6)
(12)
(127)
Reclassification to held for sale
16
\u2013
\u2013
(19)
(5)
(24)
Other movements
\u2013
\u2013
30
(11)
19
31 December 2021
13,293
1,203
561
669
15,726
Accumulated amortisation and impairment:
1 January 2021
8,293
247
342
534
9,416
Disposals
26
\u2013
\u2013
(22)
(3)
(25)
Amortisation expense1
\u2013
89
37
29
155
Effect of foreign currency exchange movements
\u2013
(28)
(2)
(5)
(35)
Reclassification to held for sale
16
\u2013
\u2013
(16)
(4)
(20)
Other movements
\u2013
\u2013
2
(2)
\u2013
31 December 2021
8,293
308
341
549
9,491
Net book value 31 December 2021
5,000
895
220
120
6,235
1Recognised in cost of goods sold.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-95": { "value": "Mineral and petroleum rights include biological assets of $25\u00a0million (2021: $24\u00a0million).", "dimensions": { "concept": "ifrs-full:DisclosureOfBiologicalAssetsAndGovernmentGrantsForAgriculturalActivityExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-96": { "value": "
During 2022, $31\u00a0million (2021: $33\u00a0million) of interest was capitalised. With the exception of project specific borrowings, the rate used to determine the amount of borrowing costs eligible for capitalisation was 3.5% (2021: 3%).
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-97": { "value": "
Leases
The Group leases various assets including land and buildings and plant and equipment. As at 31 December 2022, the net book value of recognised right-of use assets relating to land and buildings was $418\u00a0million (2021: $450\u00a0million) and plant and equipment $1,054\u00a0million (2021: $1,255\u00a0million). The depreciation charge for the period relating to those assets was $58\u00a0million (2021: $89\u00a0million) and $515\u00a0million (2021: $550\u00a0million), respectively.
Disclosure of amounts recognised as lease liabilities in the statement of financial position and cash outflows for leases in the year are included within note 21 and their maturity analysis within note 27.
Amounts recognised in the statement of income are detailed below:
US$ million
2022
2021
Depreciation on right-of-use assets
(573)
(639)
Interest expense on lease liabilities
(88)
(98)
Expense relating to short-term leases
(781)
(493)
Expense relating to low-value leases
(16)
(3)
Expense relating to variable lease payments not included in the
measurement of the lease liability
(7)
(5)
Income from subleasing right-of-use assets
153
304
Total
(1,312)
(934)
At 31 December 2022, the Group is committed to $229\u00a0million of short-term lease payments (2021: $209 million) and $Nil (2021: $56 million) related to capitalised leases not yet commenced.
US$ million
Notes
2022
2021
Non-current borrowings
Capital market notes
17,229
22,376
Amount drawn under syndicated revolving credit facilities
\u2013
2,543
Lease liabilities
934
1,093
Other bank loans
688
799
Total non-current borrowings
18,851
26,811
Current borrowings
Secured inventory/receivables/other facilities
11/13/14
3,292
122
US commercial paper
333
1,764
Capital market notes
2,977
2,884
Lease liabilities
445
525
Other bank loans1
2,879
2,535
Total current borrowings
9,926
7,830
Total borrowings
28,777
34,641
1Comprises various uncommitted bilateral bank credit facilities and other financings.
Changes in liabilities arising from financing activities
Liabilities arising from financing activities are those for which cash flows are classified in the Group's consolidated cash flow statement as cash flows from financing activities. The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes.
Notes to the financial statements continued
21. Borrowings continued
2022
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2022
33,023
1,618
34,641
23
34,664
Cash related movements2
Repayment of capital market notes
(2,850)
\u2013
(2,850)
\u2013
(2,850)
Repurchase of capital market notes
(103)
\u2013
(103)
\u2013
(103)
Repayment of revolving credit facilities
(2,563)
\u2013
(2,563)
\u2013
(2,563)
Proceeds from other non-current borrowings
430
\u2013
430
\u2013
430
Repayment of other non-current borrowings
(73)
\u2013
(73)
\u2013
(73)
Repayment of lease liabilities
\u2013
(577)
(577)
\u2013
(577)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(1,824)
(1,824)
Repayment of US commercial papers
(1,407)
\u2013
(1,407)
\u2013
(1,407)
Proceeds from current borrowings
3,306
\u2013
3,306
\u2013
3,306
(3,260)
(577)
(3,837)
(1,824)
(5,661)
Non-cash related movements
Borrowings acquired in business combinations3
52
30
82
\u2013
82
Borrowings reclassified to held for sale4
(762)
(38)
(800)
\u2013
(800)
Borrowings disposed of on disposal of subsidiaries
\u2013
(2)
(2)
\u2013
(2)
Fair value adjustment to fair value hedged borrowings
(1,250)
\u2013
(1,250)
\u2013
(1,250)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
1,647
1,647
Foreign exchange movements
(436)
(41)
(477)
\u2013
(477)
Change in lease liabilities
\u2013
389
389
\u2013
389
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
10
\u2013
10
\u2013
9
(2,365)
338
(2,027)
1,647
(381)
31 December 2022
27,398
1,379
28,777
(154)
28,623
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
Notes to the financial statements continued
21. Borrowings continued
2021
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2021
35,958
1,521
37,479
91
37,570
Cash related movements2
Proceeds from issuance of capital market notes
4,877
\u2013
4,877
\u2013
4,877
Repayment of capital market notes
(2,807)
\u2013
(2,807)
\u2013
(2,807)
Repurchase of capital market notes
(125)
\u2013
(125)
\u2013
(125)
Repayment of revolving credit facilities
(2,244)
\u2013
(2,244)
\u2013
(2,244)
Proceeds from other non-current borrowings
231
\u2013
231
\u2013
231
Repayment of other non-current borrowings
(493)
\u2013
(493)
\u2013
(493)
Repayment of lease liabilities
\u2013
(634)
(634)
\u2013
(634)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(970)
(970)
Proceeds from US commercial papers
675
\u2013
675
\u2013
675
Repayment of current borrowings
(2,016)
\u2013
(2,016)
\u2013
(2,016)
(1,902)
(634)
(2,536)
(970)
(3,506)
Non-cash related movements
Borrowings (disposed of)/acquired in business combinations3
(1)
(7)
(8)
\u2013
(8)
Borrowings reclassified to held for sale4
\u2013
(138)
(138)
\u2013
(138)
Fair value adjustment to fair value hedged borrowings
(499)
\u2013
(499)
\u2013
(499)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
902
902
Foreign exchange movements
(599)
(45)
(644)
\u2013
(644)
Change in lease liabilities
\u2013
922
922
\u2013
922
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
45
(1)
44
\u2013
44
(1,033)
731
(302)
902
600
31 December 2021
33,023
1,618
34,641
23
34,664
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-98": { "value": "
Notes to the financial statements continued
10. Intangible assets
2022
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2022
13,293
1,203
561
669
15,726
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Additions
\u2013
1
6
7
14
Disposals
\u2013
(1)
(25)
(2)
(28)
Effect of foreign currency exchange movements
\u2013
(73)
3
2
(68)
Reclassification to held for sale
16
\u2013
\u2013
(1)
(10)
(11)
Other movements1
\u2013
(2)
14
111
123
31 December 2022
13,134
1,128
554
753
15,569
Accumulated amortisation and impairment:
1 January 2022
8,293
308
341
549
9,491
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Disposals
\u2013
\u2013
(24)
(3)
(27)
Amortisation expense2
\u2013
97
34
28
159
Impairment
7
\u2013
\u2013
2
\u2013
2
Effect of foreign currency exchange movements
\u2013
(24)
\u2013
2
(22)
Reclassification to held for sale
16
\u2013
\u2013
\u2013
(6)
(6)
Other movements
\u2013
\u2013
(1)
\u2013
(1)
31 December 2022
8,134
381
348
546
9,409
Net book value 31 December 2022
5,000
747
206
207
6,160
1Includes $109 million for Mutanda mining license renewal, which is being amortised over 15 years (see note 34).
2Recognised in cost of goods sold.
2021
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2021
13,293
1,312
585
693
15,883
Additions
\u2013
\u2013
4
7
11
Disposals
\u2013
\u2013
(33)
(3)
(36)
Effect of foreign currency exchange movements
\u2013
(109)
(6)
(12)
(127)
Reclassification to held for sale
16
\u2013
\u2013
(19)
(5)
(24)
Other movements
\u2013
\u2013
30
(11)
19
31 December 2021
13,293
1,203
561
669
15,726
Accumulated amortisation and impairment:
1 January 2021
8,293
247
342
534
9,416
Disposals
26
\u2013
\u2013
(22)
(3)
(25)
Amortisation expense1
\u2013
89
37
29
155
Effect of foreign currency exchange movements
\u2013
(28)
(2)
(5)
(35)
Reclassification to held for sale
16
\u2013
\u2013
(16)
(4)
(20)
Other movements
\u2013
\u2013
2
(2)
\u2013
31 December 2021
8,293
308
341
549
9,491
Net book value 31 December 2021
5,000
895
220
120
6,235
1Recognised in cost of goods sold.
Port allocation rights
Port allocation rights represent contractual entitlements to export certain amounts of coal on an annual basis from Richards Bay Coal Terminal in South Africa recognised as part of previous business combinations. The rights are amortised on a units of production basis.
Licences, trademarks and software
Intangibles related to internally developed technology and patents were recognised in previous business combinations and are amortised over the estimated economic life of the technology which ranges between 3 \u2013 20 years.
Customer relationships
Customer relationships mainly represent intangible assets related to long-standing customer relationships recognised in previous business combinations. These intangible assets are being amortised on a straight-line basis over their estimated economic life which ranges between 5 \u2013 9 years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-99": { "value": "
Notes to the financial statements continued
10. Intangible assets
2022
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2022
13,293
1,203
561
669
15,726
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Additions
\u2013
1
6
7
14
Disposals
\u2013
(1)
(25)
(2)
(28)
Effect of foreign currency exchange movements
\u2013
(73)
3
2
(68)
Reclassification to held for sale
16
\u2013
\u2013
(1)
(10)
(11)
Other movements1
\u2013
(2)
14
111
123
31 December 2022
13,134
1,128
554
753
15,569
Accumulated amortisation and impairment:
1 January 2022
8,293
308
341
549
9,491
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Disposals
\u2013
\u2013
(24)
(3)
(27)
Amortisation expense2
\u2013
97
34
28
159
Impairment
7
\u2013
\u2013
2
\u2013
2
Effect of foreign currency exchange movements
\u2013
(24)
\u2013
2
(22)
Reclassification to held for sale
16
\u2013
\u2013
\u2013
(6)
(6)
Other movements
\u2013
\u2013
(1)
\u2013
(1)
31 December 2022
8,134
381
348
546
9,409
Net book value 31 December 2022
5,000
747
206
207
6,160
1Includes $109 million for Mutanda mining license renewal, which is being amortised over 15 years (see note 34).
2Recognised in cost of goods sold.
2021
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2021
13,293
1,312
585
693
15,883
Additions
\u2013
\u2013
4
7
11
Disposals
\u2013
\u2013
(33)
(3)
(36)
Effect of foreign currency exchange movements
\u2013
(109)
(6)
(12)
(127)
Reclassification to held for sale
16
\u2013
\u2013
(19)
(5)
(24)
Other movements
\u2013
\u2013
30
(11)
19
31 December 2021
13,293
1,203
561
669
15,726
Accumulated amortisation and impairment:
1 January 2021
8,293
247
342
534
9,416
Disposals
26
\u2013
\u2013
(22)
(3)
(25)
Amortisation expense1
\u2013
89
37
29
155
Effect of foreign currency exchange movements
\u2013
(28)
(2)
(5)
(35)
Reclassification to held for sale
16
\u2013
\u2013
(16)
(4)
(20)
Other movements
\u2013
\u2013
2
(2)
\u2013
31 December 2021
8,293
308
341
549
9,491
Net book value 31 December 2021
5,000
895
220
120
6,235
1Recognised in cost of goods sold.
Goodwill
The carrying amount of goodwill has been allocated to cash-generating units (CGUs), or groups of CGUs as follows:
US$\u00a0million
2022
2021
Metals and minerals marketing business
3,326
3,326
Coal marketing business
1,674
1,674
Total
5,000
5,000
Metals and minerals and coal marketing businesses
Goodwill of $3,326\u00a0million and $1,674\u00a0million was recognised in connection with previous business combinations and was allocated to the metals and minerals marketing and coal marketing CGUs, respectively, based on the annual synergies expected to accrue to the respective marketing departments as a result of increased volumes, blending opportunities and freight and logistics arbitrage opportunities.
Goodwill impairment testing
Given the nature of each CGU\u2019s activities, information on its fair value is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently:
  • The recoverable amount for each of the marketing CGUs is determined by reference to the FVLCD which utilises a price to earnings multiple approach based on the 2023 approved financial budget which includes factors such as marketing volumes handled and operating, interest and income tax charges, generally based on past experience. The price to earnings multiple of 12 times (2021: 12 times) is derived from observable market data for broadly comparable businesses; and
  • Glencore believes that no reasonably possible changes in any of the above key assumptions would cause the recoverable amount to fall below the carrying value of the CGU over the next 12 months. The determination of FVLCD for each of the marketing CGUs used Level 3 valuation techniques in\u00a0both years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-100": { "value": "
Notes to the financial statements continued
10. Intangible assets
2022
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2022
13,293
1,203
561
669
15,726
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Additions
\u2013
1
6
7
14
Disposals
\u2013
(1)
(25)
(2)
(28)
Effect of foreign currency exchange movements
\u2013
(73)
3
2
(68)
Reclassification to held for sale
16
\u2013
\u2013
(1)
(10)
(11)
Other movements1
\u2013
(2)
14
111
123
31 December 2022
13,134
1,128
554
753
15,569
Accumulated amortisation and impairment:
1 January 2022
8,293
308
341
549
9,491
Disposal of subsidiaries
26
(159)
\u2013
(4)
(24)
(187)
Disposals
\u2013
\u2013
(24)
(3)
(27)
Amortisation expense2
\u2013
97
34
28
159
Impairment
7
\u2013
\u2013
2
\u2013
2
Effect of foreign currency exchange movements
\u2013
(24)
\u2013
2
(22)
Reclassification to held for sale
16
\u2013
\u2013
\u2013
(6)
(6)
Other movements
\u2013
\u2013
(1)
\u2013
(1)
31 December 2022
8,134
381
348
546
9,409
Net book value 31 December 2022
5,000
747
206
207
6,160
1Includes $109 million for Mutanda mining license renewal, which is being amortised over 15 years (see note 34).
2Recognised in cost of goods sold.
2021
US$\u00a0million
Notes
Goodwill
Port allocation rights
Licences, trademarks
and software
Customer relationships
and other
Total
Cost:
1 January 2021
13,293
1,312
585
693
15,883
Additions
\u2013
\u2013
4
7
11
Disposals
\u2013
\u2013
(33)
(3)
(36)
Effect of foreign currency exchange movements
\u2013
(109)
(6)
(12)
(127)
Reclassification to held for sale
16
\u2013
\u2013
(19)
(5)
(24)
Other movements
\u2013
\u2013
30
(11)
19
31 December 2021
13,293
1,203
561
669
15,726
Accumulated amortisation and impairment:
1 January 2021
8,293
247
342
534
9,416
Disposals
26
\u2013
\u2013
(22)
(3)
(25)
Amortisation expense1
\u2013
89
37
29
155
Effect of foreign currency exchange movements
\u2013
(28)
(2)
(5)
(35)
Reclassification to held for sale
16
\u2013
\u2013
(16)
(4)
(20)
Other movements
\u2013
\u2013
2
(2)
\u2013
31 December 2021
8,293
308
341
549
9,491
Net book value 31 December 2021
5,000
895
220
120
6,235
1Recognised in cost of goods sold.
Goodwill
The carrying amount of goodwill has been allocated to cash-generating units (CGUs), or groups of CGUs as follows:
US$\u00a0million
2022
2021
Metals and minerals marketing business
3,326
3,326
Coal marketing business
1,674
1,674
Total
5,000
5,000
Metals and minerals and coal marketing businesses
Goodwill of $3,326\u00a0million and $1,674\u00a0million was recognised in connection with previous business combinations and was allocated to the metals and minerals marketing and coal marketing CGUs, respectively, based on the annual synergies expected to accrue to the respective marketing departments as a result of increased volumes, blending opportunities and freight and logistics arbitrage opportunities.
Port allocation rights
Port allocation rights represent contractual entitlements to export certain amounts of coal on an annual basis from Richards Bay Coal Terminal in South Africa recognised as part of previous business combinations. The rights are amortised on a units of production basis.
Licences, trademarks and software
Intangibles related to internally developed technology and patents were recognised in previous business combinations and are amortised over the estimated economic life of the technology which ranges between 3 \u2013 20 years.
Customer relationships
Customer relationships mainly represent intangible assets related to long-standing customer relationships recognised in previous business combinations. These intangible assets are being amortised on a straight-line basis over their estimated economic life which ranges between 5 \u2013 9 years.
Goodwill impairment testing
Given the nature of each CGU\u2019s activities, information on its fair value is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently:
  • The recoverable amount for each of the marketing CGUs is determined by reference to the FVLCD which utilises a price to earnings multiple approach based on the 2023 approved financial budget which includes factors such as marketing volumes handled and operating, interest and income tax charges, generally based on past experience. The price to earnings multiple of 12 times (2021: 12 times) is derived from observable market data for broadly comparable businesses; and
  • Glencore believes that no reasonably possible changes in any of the above key assumptions would cause the recoverable amount to fall below the carrying value of the CGU over the next 12 months. The determination of FVLCD for each of the marketing CGUs used Level 3 valuation techniques in\u00a0both years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-101": { "value": "
Notes to the financial statements continued
11. Investments in associates, joint ventures and other investments
Investments in associates and joint ventures
US$\u00a0million
Notes
2022
2021
1 January
12,294
12,400
Additions
157
53
Disposals
(232)
(2)
Share of income from associates and joint ventures
2,300
2,618
Share of other comprehensive loss from associates and joint ventures
(100)
(58)
Transfer of previously held equity accounted investment to subsidiary
26
(598)
\u2013
Impairments
7
(113)
(333)
Dividends received
(1,691)
(2,375)
Reclassification to held for sale
16
(148)
(11)
Other movements
9
2
31 December
11,878
12,294
Of which:
Investments in associates
4,806
5,567
Investments in joint ventures
7,072
6,727
As at 31 December 2022, the carrying value of our listed associates is $430 million (2021: $406 million), mainly comprising Century Aluminum and PT CITA, which have carrying values of $232\u00a0million (2021: $165\u00a0million) and $181\u00a0million (2021: $177 million), respectively. The fair value of our listed associates, using published price quotations (a Level 1 fair value measurement) is $652 million (2021: $967 million). As at 31 December 2021, Glencore\u2019s investment in Century Aluminum was pledged under a loan facility, with proceeds received and recognised in current borrowings of $120\u00a0million (see note 21).
Transfer of previously held equity accounted investment to subsidiary
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, that it did not own. Prior to the acquisition, Glencore owned a 33.33% interest in Cerrej\u00f3n which was accounted for as an associate (see note 26).
Disposals
On 12 July 2022, Glencore effected the sale of a royalty package by BaseCore Metals LP (\u2018BaseCore\u2019) to Sandstorm Gold Ltd. (\u2018Sandstorm\u2019). Glencore received, in aggregate, $300 million in cash and Sandstorm shares for its 50% interest in BaseCore. The disposal resulted in a gain on disposal of non-current assets of $131 million (see note 4).
2022 Details of material associates and joint ventures
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
5,137
5,137
5,540
7,207
12,747
17,884
Current assets
2,105
2,105
2,405
16,480
18,885
20,990
Non-current liabilities
(2,129)
(2,129)
(2,602)
(7,496)
(10,098)
(12,227)
Current liabilities
(681)
(681)
(436)
(10,958)
(11,394)
(12,075)
The above assets and liabilities include the following:
Cash and cash equivalents
87
87
446
637
1,083
1,170
Current financial liabilities1
(50)
(50)
(21)
(4,007)
(4,028)
(4,078)
Non-current financial liabilities1
(1,089)
(1,089)
(1,084)
(6,759)
(7,843)
(8,932)
Net assets 31 December 2022
4,432
4,432
4,907
5,233
10,140
14,572
Glencore's ownership interest
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
1,694
1,694
1,046
1,256
2,302
3,996
Carrying value
3,192
3,192
3,205
3,867
7,072
10,264
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31 December 2022 including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
4,668
4,668
4,817
53,854
58,671
63,339
Income for the year
1,601
1,601
1,807
995
2,802
4,403
Other comprehensive loss
\u2013
\u2013
(13)
(155)
(168)
(168)
Total comprehensive income
1,601
1,601
1,794
840
2,634
4,235
Glencore's share of dividends paid
472
472
660
200
860
1,332
The above income for the year includes the following:
Depreciation and amortisation
(1,039)
(1,039)
(658)
(936)
(1,594)
(2,633)
Interest income1
86
86
9
131
140
226
Interest expense2
(5)
(5)
(120)
(397)
(517)
(522)
Income tax expense
(952)
(952)
(832)
(463)
(1,295)
(2,247)
1Includes foreign exchange gains and other income of $186 million.
2Includes foreign exchange losses and other expenses of $62 million.
2021 Details of material associates and joint ventures
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
2,033
5,288
7,321
5,398
6,118
11,516
18,837
Current assets
1,030
1,607
2,637
1,913
13,399
15,312
17,949
Non-current liabilities
(690)
(1,875)
(2,565)
(1,758)
(5,031)
(6,789)
(9,354)
Current liabilities
(509)
(973)
(1,482)
(994)
(9,682)
(10,676)
(12,158)
The above assets and liabilities include the following:
Cash and cash equivalents
511
134
645
354
472
826
1,471
Current financial liabilities1
(27)
(45)
(72)
(21)
(4,516)
(4,537)
(4,609)
Non-current financial liabilities1
(14)
(847)
(861)
(402)
(4,409)
(4,811)
(5,672)
Net assets 31 December 2021
1,864
4,047
5,911
4,559
4,804
9,363
15,274
Glencore's ownership interest
33.3%
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
(54)
1,756
1,702
1,059
1,265
2,324
4,026
Carrying value
567
3,124
3,691
3,065
3,662
6,727
10,418
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31\u00a0December\u00a02021, including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
2,317
5,307
7,624
5,906
39,704
45,610
53,234
Income for the year
636
1,992
2,628
2,777
947
3,724
6,352
Other comprehensive loss
\u2013
\u2013
\u2013
(13)
(94)
(107)
(107)
Total comprehensive (loss)/income
636
1,992
2,628
2,764
853
3,617
6,245
Glencore's share of dividends paid
240
749
989
1,144
150
1,294
2,283
The above (loss)/income for the year includes the following:
Depreciation and amortisation
(267)
(919)
(1,186)
(653)
(776)
(1,429)
(2,615)
Interest income1
\u2013
\u2013
\u2013
66
55
121
121
Interest expense2
(18)
(38)
(56)
(13)
(229)
(242)
(298)
Income tax credit/(expense)
(435)
(1,241)
(1,676)
(1,470)
(282)
(1,752)
(3,428)
1Includes foreign exchange gains and other income of $114 million.
2Includes foreign exchange losses and other expenses of $58 million.
Aggregate information of associates and joint ventures that are not individually material:
US$ million
2022
2021
The Group's share of income
467
38
The Group's share of other comprehensive loss
(17)
(5)
The Group's share of total comprehensive income
450
33
Aggregate carrying value of the Group's interests
1,614
1,876
The amount of corporate guarantees in favour of associates and joint ventures as at 31 December 2022 was $463\u00a0million (2021: $611\u00a0million). No amounts have been claimed or\u00a0provided as at 31 December 2022. Glencore\u2019s share of joint ventures\u2019 capital commitments amounts to $464\u00a0million (2021: $213\u00a0million).
Refer to note 35 for further details of the Group\u2019s principal associates and joint ventures.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal joint ventures6
Viterra Group
Jersey
49.9
49.9
Agriculture business
Compania Minera Dona Ines de Collahuasi SCM
Chile
44.0
44.0
Copper production
Principal joint operation and other unincorporated arrangement7
Bulga Joint Venture
Australia
87.5
85.9
Coal production
Hail Creek Joint Venture
Australia
84.7
84.7
Coal production
Hunter Valley Operations Joint Venture
Australia
49.0
49.0
Coal production
Liddell and Foybrook Joint Ventures
Australia
67.5
67.5
Coal production
Oaky Creek Coal Joint Venture
Australia
55.0
55.0
Coal production
United Wambo Joint Venture
Australia
47.5
47.5
Coal production
Goedgevonden Joint Venture
South Africa
74.0
74.0
Coal production
Ernest Henry Mining Pty Ltd
Australia
\u2013
70.0
Copper production
Glencore Merafe Chrome Pooling and Share Joint Venture
South Africa
79.5
79.5
Ferroalloys production
Glencore Bakwena-Ba-Mogopa Rhovan Pooling and Sharing Joint Venture
South Africa
74.0
74.0
Vanadium production
6The principal joint arrangements are accounted for as joint ventures as the shareholder agreements do not provide the Group the ability to solely control the entities.
7Classified as joint operations under IFRS 11, as these joint arrangements convey a direct right to a share of the underlying operations\u2019 assets, liabilities, revenues and expenses. The Hail Creek interest is an \u2018other unincorporated arrangement\u2019 accounted for similar to a joint operation.
", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-102": { "value": "
Notes to the financial statements continued
11. Investments in associates, joint ventures and other investments
Investments in associates and joint ventures
US$\u00a0million
Notes
2022
2021
1 January
12,294
12,400
Additions
157
53
Disposals
(232)
(2)
Share of income from associates and joint ventures
2,300
2,618
Share of other comprehensive loss from associates and joint ventures
(100)
(58)
Transfer of previously held equity accounted investment to subsidiary
26
(598)
\u2013
Impairments
7
(113)
(333)
Dividends received
(1,691)
(2,375)
Reclassification to held for sale
16
(148)
(11)
Other movements
9
2
31 December
11,878
12,294
Of which:
Investments in associates
4,806
5,567
Investments in joint ventures
7,072
6,727
As at 31 December 2022, the carrying value of our listed associates is $430 million (2021: $406 million), mainly comprising Century Aluminum and PT CITA, which have carrying values of $232\u00a0million (2021: $165\u00a0million) and $181\u00a0million (2021: $177 million), respectively. The fair value of our listed associates, using published price quotations (a Level 1 fair value measurement) is $652 million (2021: $967 million). As at 31 December 2021, Glencore\u2019s investment in Century Aluminum was pledged under a loan facility, with proceeds received and recognised in current borrowings of $120\u00a0million (see note 21).
Transfer of previously held equity accounted investment to subsidiary
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, that it did not own. Prior to the acquisition, Glencore owned a 33.33% interest in Cerrej\u00f3n which was accounted for as an associate (see note 26).
Disposals
On 12 July 2022, Glencore effected the sale of a royalty package by BaseCore Metals LP (\u2018BaseCore\u2019) to Sandstorm Gold Ltd. (\u2018Sandstorm\u2019). Glencore received, in aggregate, $300 million in cash and Sandstorm shares for its 50% interest in BaseCore. The disposal resulted in a gain on disposal of non-current assets of $131 million (see note 4).
2022 Details of material associates and joint ventures
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
5,137
5,137
5,540
7,207
12,747
17,884
Current assets
2,105
2,105
2,405
16,480
18,885
20,990
Non-current liabilities
(2,129)
(2,129)
(2,602)
(7,496)
(10,098)
(12,227)
Current liabilities
(681)
(681)
(436)
(10,958)
(11,394)
(12,075)
The above assets and liabilities include the following:
Cash and cash equivalents
87
87
446
637
1,083
1,170
Current financial liabilities1
(50)
(50)
(21)
(4,007)
(4,028)
(4,078)
Non-current financial liabilities1
(1,089)
(1,089)
(1,084)
(6,759)
(7,843)
(8,932)
Net assets 31 December 2022
4,432
4,432
4,907
5,233
10,140
14,572
Glencore's ownership interest
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
1,694
1,694
1,046
1,256
2,302
3,996
Carrying value
3,192
3,192
3,205
3,867
7,072
10,264
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31 December 2022 including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
4,668
4,668
4,817
53,854
58,671
63,339
Income for the year
1,601
1,601
1,807
995
2,802
4,403
Other comprehensive loss
\u2013
\u2013
(13)
(155)
(168)
(168)
Total comprehensive income
1,601
1,601
1,794
840
2,634
4,235
Glencore's share of dividends paid
472
472
660
200
860
1,332
The above income for the year includes the following:
Depreciation and amortisation
(1,039)
(1,039)
(658)
(936)
(1,594)
(2,633)
Interest income1
86
86
9
131
140
226
Interest expense2
(5)
(5)
(120)
(397)
(517)
(522)
Income tax expense
(952)
(952)
(832)
(463)
(1,295)
(2,247)
1Includes foreign exchange gains and other income of $186 million.
2Includes foreign exchange losses and other expenses of $62 million.
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
2,033
5,288
7,321
5,398
6,118
11,516
18,837
Current assets
1,030
1,607
2,637
1,913
13,399
15,312
17,949
Non-current liabilities
(690)
(1,875)
(2,565)
(1,758)
(5,031)
(6,789)
(9,354)
Current liabilities
(509)
(973)
(1,482)
(994)
(9,682)
(10,676)
(12,158)
The above assets and liabilities include the following:
Cash and cash equivalents
511
134
645
354
472
826
1,471
Current financial liabilities1
(27)
(45)
(72)
(21)
(4,516)
(4,537)
(4,609)
Non-current financial liabilities1
(14)
(847)
(861)
(402)
(4,409)
(4,811)
(5,672)
Net assets 31 December 2021
1,864
4,047
5,911
4,559
4,804
9,363
15,274
Glencore's ownership interest
33.3%
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
(54)
1,756
1,702
1,059
1,265
2,324
4,026
Carrying value
567
3,124
3,691
3,065
3,662
6,727
10,418
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31\u00a0December\u00a02021, including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
2,317
5,307
7,624
5,906
39,704
45,610
53,234
Income for the year
636
1,992
2,628
2,777
947
3,724
6,352
Other comprehensive loss
\u2013
\u2013
\u2013
(13)
(94)
(107)
(107)
Total comprehensive (loss)/income
636
1,992
2,628
2,764
853
3,617
6,245
Glencore's share of dividends paid
240
749
989
1,144
150
1,294
2,283
The above (loss)/income for the year includes the following:
Depreciation and amortisation
(267)
(919)
(1,186)
(653)
(776)
(1,429)
(2,615)
Interest income1
\u2013
\u2013
\u2013
66
55
121
121
Interest expense2
(18)
(38)
(56)
(13)
(229)
(242)
(298)
Income tax credit/(expense)
(435)
(1,241)
(1,676)
(1,470)
(282)
(1,752)
(3,428)
1Includes foreign exchange gains and other income of $114 million.
2Includes foreign exchange losses and other expenses of $58 million.
Aggregate information of associates and joint ventures that are not individually material:
US$ million
2022
2021
The Group's share of income
467
38
The Group's share of other comprehensive loss
(17)
(5)
The Group's share of total comprehensive income
450
33
Aggregate carrying value of the Group's interests
1,614
1,876
The amount of corporate guarantees in favour of associates and joint ventures as at 31 December 2022 was $463\u00a0million (2021: $611\u00a0million). No amounts have been claimed or\u00a0provided as at 31 December 2022. Glencore\u2019s share of joint ventures\u2019 capital commitments amounts to $464\u00a0million (2021: $213\u00a0million).
Refer to note 35 for further details of the Group\u2019s principal associates and joint ventures.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal joint ventures6
Viterra Group
Jersey
49.9
49.9
Agriculture business
Compania Minera Dona Ines de Collahuasi SCM
Chile
44.0
44.0
Copper production
Principal joint operation and other unincorporated arrangement7
Bulga Joint Venture
Australia
87.5
85.9
Coal production
Hail Creek Joint Venture
Australia
84.7
84.7
Coal production
Hunter Valley Operations Joint Venture
Australia
49.0
49.0
Coal production
Liddell and Foybrook Joint Ventures
Australia
67.5
67.5
Coal production
Oaky Creek Coal Joint Venture
Australia
55.0
55.0
Coal production
United Wambo Joint Venture
Australia
47.5
47.5
Coal production
Goedgevonden Joint Venture
South Africa
74.0
74.0
Coal production
Ernest Henry Mining Pty Ltd
Australia
\u2013
70.0
Copper production
Glencore Merafe Chrome Pooling and Share Joint Venture
South Africa
79.5
79.5
Ferroalloys production
Glencore Bakwena-Ba-Mogopa Rhovan Pooling and Sharing Joint Venture
South Africa
74.0
74.0
Vanadium production
6The principal joint arrangements are accounted for as joint ventures as the shareholder agreements do not provide the Group the ability to solely control the entities.
7Classified as joint operations under IFRS 11, as these joint arrangements convey a direct right to a share of the underlying operations\u2019 assets, liabilities, revenues and expenses. The Hail Creek interest is an \u2018other unincorporated arrangement\u2019 accounted for similar to a joint operation.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal associates
Carbones del Cerrej\u00f3n LLC8
Anguilla
\u2013
33.3
Coal production
Newcastle Coal Shippers Pty Limited
Australia
50.2
50.2
Coal terminal
GS Coal Holdings Pty Ltd
Australia
50.0
50.0
Coal production
Richards Bay Coal Terminal Company Limited
South Africa
19.3
19.3
Coal terminal
Century Aluminum Company9
USA
46.1
46.4
Aluminium production
PT CITA Mineral Investindo Tbk
Indonesia
31.7
31.7
Alumina production
HG Storage International Limited
Jersey
49.0
49.0
Oil storage
Noranda Income Fund
Canada
25.0
25.0
Zinc production
Compania Minera Antamina S.A.
Peru
33.8
33.8
Zinc/Copper production
Minera Agua Rica Alumbrera Limited
Cayman Islands
43.7
25.0
Copper production
8In 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (see note 26).
9Represents the Group\u2019s economic interest in Century, comprising 42.9% (2021: 42.9%) voting interest and 3.2% non-voting interest (2021: 3.4%). Century is publicly traded on NASDAQ under the symbol CENX.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-103": { "value": "
Notes to the financial statements continued
11. Investments in associates, joint ventures and other investments
Investments in associates and joint ventures
US$\u00a0million
Notes
2022
2021
1 January
12,294
12,400
Additions
157
53
Disposals
(232)
(2)
Share of income from associates and joint ventures
2,300
2,618
Share of other comprehensive loss from associates and joint ventures
(100)
(58)
Transfer of previously held equity accounted investment to subsidiary
26
(598)
\u2013
Impairments
7
(113)
(333)
Dividends received
(1,691)
(2,375)
Reclassification to held for sale
16
(148)
(11)
Other movements
9
2
31 December
11,878
12,294
Of which:
Investments in associates
4,806
5,567
Investments in joint ventures
7,072
6,727
As at 31 December 2022, the carrying value of our listed associates is $430 million (2021: $406 million), mainly comprising Century Aluminum and PT CITA, which have carrying values of $232\u00a0million (2021: $165\u00a0million) and $181\u00a0million (2021: $177 million), respectively. The fair value of our listed associates, using published price quotations (a Level 1 fair value measurement) is $652 million (2021: $967 million). As at 31 December 2021, Glencore\u2019s investment in Century Aluminum was pledged under a loan facility, with proceeds received and recognised in current borrowings of $120\u00a0million (see note 21).
Transfer of previously held equity accounted investment to subsidiary
In January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, that it did not own. Prior to the acquisition, Glencore owned a 33.33% interest in Cerrej\u00f3n which was accounted for as an associate (see note 26).
Disposals
On 12 July 2022, Glencore effected the sale of a royalty package by BaseCore Metals LP (\u2018BaseCore\u2019) to Sandstorm Gold Ltd. (\u2018Sandstorm\u2019). Glencore received, in aggregate, $300 million in cash and Sandstorm shares for its 50% interest in BaseCore. The disposal resulted in a gain on disposal of non-current assets of $131 million (see note 4).
2022 Details of material associates and joint ventures
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
5,137
5,137
5,540
7,207
12,747
17,884
Current assets
2,105
2,105
2,405
16,480
18,885
20,990
Non-current liabilities
(2,129)
(2,129)
(2,602)
(7,496)
(10,098)
(12,227)
Current liabilities
(681)
(681)
(436)
(10,958)
(11,394)
(12,075)
The above assets and liabilities include the following:
Cash and cash equivalents
87
87
446
637
1,083
1,170
Current financial liabilities1
(50)
(50)
(21)
(4,007)
(4,028)
(4,078)
Non-current financial liabilities1
(1,089)
(1,089)
(1,084)
(6,759)
(7,843)
(8,932)
Net assets 31 December 2022
4,432
4,432
4,907
5,233
10,140
14,572
Glencore's ownership interest
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
1,694
1,694
1,046
1,256
2,302
3,996
Carrying value
3,192
3,192
3,205
3,867
7,072
10,264
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31 December 2022 including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
4,668
4,668
4,817
53,854
58,671
63,339
Income for the year
1,601
1,601
1,807
995
2,802
4,403
Other comprehensive loss
\u2013
\u2013
(13)
(155)
(168)
(168)
Total comprehensive income
1,601
1,601
1,794
840
2,634
4,235
Glencore's share of dividends paid
472
472
660
200
860
1,332
The above income for the year includes the following:
Depreciation and amortisation
(1,039)
(1,039)
(658)
(936)
(1,594)
(2,633)
Interest income1
86
86
9
131
140
226
Interest expense2
(5)
(5)
(120)
(397)
(517)
(522)
Income tax expense
(952)
(952)
(832)
(463)
(1,295)
(2,247)
1Includes foreign exchange gains and other income of $186 million.
2Includes foreign exchange losses and other expenses of $62 million.
2021 Details of material associates and joint ventures
Summarised financial information in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Non-current assets
2,033
5,288
7,321
5,398
6,118
11,516
18,837
Current assets
1,030
1,607
2,637
1,913
13,399
15,312
17,949
Non-current liabilities
(690)
(1,875)
(2,565)
(1,758)
(5,031)
(6,789)
(9,354)
Current liabilities
(509)
(973)
(1,482)
(994)
(9,682)
(10,676)
(12,158)
The above assets and liabilities include the following:
Cash and cash equivalents
511
134
645
354
472
826
1,471
Current financial liabilities1
(27)
(45)
(72)
(21)
(4,516)
(4,537)
(4,609)
Non-current financial liabilities1
(14)
(847)
(861)
(402)
(4,409)
(4,811)
(5,672)
Net assets 31 December 2021
1,864
4,047
5,911
4,559
4,804
9,363
15,274
Glencore's ownership interest
33.3%
33.8%
44.0%
49.9%
Acquisition fair value and other adjustments
(54)
1,756
1,702
1,059
1,265
2,324
4,026
Carrying value
567
3,124
3,691
3,065
3,662
6,727
10,418
1Financial liabilities exclude trade, other payables and provisions.
Summarised profit and loss in respect of Glencore\u2019s associates and joint ventures, reflecting 100% of the underlying associates\u2019 and joint ventures\u2019 relevant figures for the year ended 31\u00a0December\u00a02021, including group adjustments relating to alignment of accounting policies or fair value adjustments, is set out below.
US$ million
Cerrej\u00f3n
Antamina
Total
material
associates
Collahuasi
Viterra
Total
material
joint
ventures
Total
material
associates
and
joint
ventures
Revenue
2,317
5,307
7,624
5,906
39,704
45,610
53,234
Income for the year
636
1,992
2,628
2,777
947
3,724
6,352
Other comprehensive loss
\u2013
\u2013
\u2013
(13)
(94)
(107)
(107)
Total comprehensive (loss)/income
636
1,992
2,628
2,764
853
3,617
6,245
Glencore's share of dividends paid
240
749
989
1,144
150
1,294
2,283
The above (loss)/income for the year includes the following:
Depreciation and amortisation
(267)
(919)
(1,186)
(653)
(776)
(1,429)
(2,615)
Interest income1
\u2013
\u2013
\u2013
66
55
121
121
Interest expense2
(18)
(38)
(56)
(13)
(229)
(242)
(298)
Income tax credit/(expense)
(435)
(1,241)
(1,676)
(1,470)
(282)
(1,752)
(3,428)
1Includes foreign exchange gains and other income of $114 million.
2Includes foreign exchange losses and other expenses of $58 million.
Aggregate information of associates and joint ventures that are not individually material:
US$ million
2022
2021
The Group's share of income
467
38
The Group's share of other comprehensive loss
(17)
(5)
The Group's share of total comprehensive income
450
33
Aggregate carrying value of the Group's interests
1,614
1,876
The amount of corporate guarantees in favour of associates and joint ventures as at 31 December 2022 was $463\u00a0million (2021: $611\u00a0million). No amounts have been claimed or\u00a0provided as at 31 December 2022. Glencore\u2019s share of joint ventures\u2019 capital commitments amounts to $464\u00a0million (2021: $213\u00a0million).
Refer to note 35 for further details of the Group\u2019s principal associates and joint ventures.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal associates
Carbones del Cerrej\u00f3n LLC8
Anguilla
\u2013
33.3
Coal production
Newcastle Coal Shippers Pty Limited
Australia
50.2
50.2
Coal terminal
GS Coal Holdings Pty Ltd
Australia
50.0
50.0
Coal production
Richards Bay Coal Terminal Company Limited
South Africa
19.3
19.3
Coal terminal
Century Aluminum Company9
USA
46.1
46.4
Aluminium production
PT CITA Mineral Investindo Tbk
Indonesia
31.7
31.7
Alumina production
HG Storage International Limited
Jersey
49.0
49.0
Oil storage
Noranda Income Fund
Canada
25.0
25.0
Zinc production
Compania Minera Antamina S.A.
Peru
33.8
33.8
Zinc/Copper production
Minera Agua Rica Alumbrera Limited
Cayman Islands
43.7
25.0
Copper production
8In 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (see note 26).
9Represents the Group\u2019s economic interest in Century, comprising 42.9% (2021: 42.9%) voting interest and 3.2% non-voting interest (2021: 3.4%). Century is publicly traded on NASDAQ under the symbol CENX.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-104": { "value": "
The amount of corporate guarantees in favour of associates and joint ventures as at 31 December 2022 was $463\u00a0million (2021: $611\u00a0million). No amounts have been claimed or\u00a0provided as at 31 December 2022. Glencore\u2019s share of joint ventures\u2019 capital commitments amounts to $464\u00a0million (2021: $213\u00a0million).
31. Future commitments
Capital expenditure for the acquisition of property, plant and equipment is generally funded through the cash flow generated by the respective industrial entities. As at 31 December\u00a02022, $1,295\u00a0million (2021: $1,111\u00a0million), of which 94% (2021: 86%) relates to expenditure to be incurred over the next year, was contractually committed for the acquisition of property, plant and\u00a0equipment.
Certain of Glencore\u2019s exploration tenements and licences require it to spend a minimum amount per year on development activities, a significant portion of which would have been incurred in the ordinary course of operations. As at 31 December 2022, $118\u00a0million (2021: $118\u00a0million) of such development expenditures are to be incurred, of which 20% (2021: 27%) are for commitments to be settled over the next year.
As part of Glencore\u2019s ordinary sourcing and procurement of physical commodities and other ordinary marketing obligations, the selling party may request that a financial institution act as either a) the paying party upon the delivery of product and qualifying documents through the issuance of a letter of credit or b) the guarantor by way of issuing a bank guarantee accepting responsibility for Glencore\u2019s contractual obligations. Similarly, Glencore is required to post rehabilitation and pension guarantees in respect of some of these future, primarily industrial, long-term obligations. As at 31 December 2022, $7,965\u00a0million (2021: $8,965\u00a0million) of procurement and $4,256\u00a0million (2021: $4,353\u00a0million) of rehabilitation and pension commitments have been issued on behalf of Glencore, which will generally be settled simultaneously with the payment for such commodity and rehabilitation and pension obligations.
Astron related commitments
As part of the regulatory approval process relating to the acquisition of a 75% shareholding in Astron Energy, Glencore and Astron Energy entered into certain commitments (subject to variation for good cause) with the South Africa Competition Tribunal and the South African Economic Development Department. These commitments include investment expenditure of up to ZAR 6.5 billion ($384 million) over the period to 2024 so as to debottleneck and improve the performance of the Cape Town oil refinery, contribute to the rebranding of certain retail sites and establish a development fund to support small and black-owned businesses in Astron Energy\u2019s value chain.
Notes to the financial statements continued
32. Contingent liabilities
There were no corporate guarantees in favour of third parties as at 31\u00a0December 2022 (2021: None), except those disclosed in note 11. The Group is subject to various legal and regulatory proceedings as detailed below. These contingent liabilities are reviewed on a regular basis and where appropriate an estimate is made of the potential financial impact on the Group. As at 31 December 2022 and 2021, it was not feasible to make such an assessment.
Legal and regulatory proceedings
Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, a provision is recognised when Glencore has a present obligation (legal or constructive), as a result of a past event, and it is probable that an outflow of resources embodying economic benefits, that can be reliably estimated, will be required to settle the liability. A contingent liability is a possible obligation that arises from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Glencore. If it is not clear whether there is a present obligation, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the end of the reporting period. When a present obligation arises but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability, a contingent liability is disclosed.
Investigations by regulatory and enforcement authorities
As described in note 23, the Group remains subject to investigations by the OAG and Dutch authorities. At 31 December 2022, taking account of all available evidence, the Investigations Committee concluded that, with respect to these investigations, it is not probable that a present obligation existed at the end of the reporting period. In addition, the timing and amount, if any, of the possible financial effects (such as fines, penalties or damages, which could be material) or other consequences, including external costs, from the OAG and Dutch investigations and any change in their scope are not currently possible to predict or estimate.
The Group notes that other authorities may commence investigations against the Group in connection with the resolved investigations or the matters under investigation. In respect of these investigations, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these potential investigations as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Claims against the Company in connection with investigations by regulatory and enforcement authorities
Claims have been issued against the Group in the United Kingdom in connection with the various Government investigations, constituting claims on behalf of approximately 400 current and former shareholders. The claims are, inter alia, made under s90 of the Financial Services and Markets Act 2000 (\u2018FSMA\u2019) relating to prospectus liability, while two currently include s90A FSMA claims relating to misstatements in other information by the Company. The bases for the claims are that the prospectuses issued in 2011 and 2013 and other published information by the Company were untrue, misleading or contained omissions. The claims are at a very early stage.
The Group may be the subject of further legal claims brought by other parties in connection with the Government investigations, including collective, group or representative actions.
In respect of these claims, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these claims or potential claims as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Other legal proceedings
Other claims and unresolved disputes are pending against Glencore. However, based on the Group\u2019s current assessment of these matters any future individually material financial obligations are considered to be remote.
Environmental contingencies
Glencore\u2019s operations are subject to various environmental laws and regulations. Glencore is not aware of any material non-compliance with those laws and regulations. Glencore accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At this time, Glencore is unaware of any material environmental incidents at its locations. Any potential liability arising from environmental incidents in the ordinary course of the Group\u2019s business would not usually be expected to have a material adverse effect on its consolidated income, financial position or cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-105": { "value": "
The amount of corporate guarantees in favour of associates and joint ventures as at 31 December 2022 was $463\u00a0million (2021: $611\u00a0million). No amounts have been claimed or\u00a0provided as at 31 December 2022. Glencore\u2019s share of joint ventures\u2019 capital commitments amounts to $464\u00a0million (2021: $213\u00a0million).
31. Future commitments
Capital expenditure for the acquisition of property, plant and equipment is generally funded through the cash flow generated by the respective industrial entities. As at 31 December\u00a02022, $1,295\u00a0million (2021: $1,111\u00a0million), of which 94% (2021: 86%) relates to expenditure to be incurred over the next year, was contractually committed for the acquisition of property, plant and\u00a0equipment.
Certain of Glencore\u2019s exploration tenements and licences require it to spend a minimum amount per year on development activities, a significant portion of which would have been incurred in the ordinary course of operations. As at 31 December 2022, $118\u00a0million (2021: $118\u00a0million) of such development expenditures are to be incurred, of which 20% (2021: 27%) are for commitments to be settled over the next year.
As part of Glencore\u2019s ordinary sourcing and procurement of physical commodities and other ordinary marketing obligations, the selling party may request that a financial institution act as either a) the paying party upon the delivery of product and qualifying documents through the issuance of a letter of credit or b) the guarantor by way of issuing a bank guarantee accepting responsibility for Glencore\u2019s contractual obligations. Similarly, Glencore is required to post rehabilitation and pension guarantees in respect of some of these future, primarily industrial, long-term obligations. As at 31 December 2022, $7,965\u00a0million (2021: $8,965\u00a0million) of procurement and $4,256\u00a0million (2021: $4,353\u00a0million) of rehabilitation and pension commitments have been issued on behalf of Glencore, which will generally be settled simultaneously with the payment for such commodity and rehabilitation and pension obligations.
Astron related commitments
As part of the regulatory approval process relating to the acquisition of a 75% shareholding in Astron Energy, Glencore and Astron Energy entered into certain commitments (subject to variation for good cause) with the South Africa Competition Tribunal and the South African Economic Development Department. These commitments include investment expenditure of up to ZAR 6.5 billion ($384 million) over the period to 2024 so as to debottleneck and improve the performance of the Cape Town oil refinery, contribute to the rebranding of certain retail sites and establish a development fund to support small and black-owned businesses in Astron Energy\u2019s value chain.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-106": { "value": "
Other investments
US$ million
2022
2021
Fair value through other comprehensive income1
EN+ GROUP PLC
\u2013
789
Yancoal
\u2013
160
OSJC Rosneft
\u2013
485
Press Metal Aluminium
129
\u2013
Shenzhen Energy Gas Investment Holding
104
\u2013
Other
186
186
419
1,620
Fair value through profit and loss
Sandstorm Gold Ltd
35
\u2013
Other
2
\u2013
37
\u2013
Total
456
1,620
1Movements in fair value through other comprehensive income for the year comprise negative changes in fair value of $1,274 million relating to EN+ and Rosneft (see below) net of positive changes in fair value of $150 million (2021: negative changes of $52 million) relating to other investments.
During the year, dividend income from equity investments designated as at fair value through other comprehensive income amounted to $45\u00a0million (2021: $23\u00a0million).
Refer to note 35 for further details of the Group\u2019s principal other investments.
Investments in EN+ and Rosneft
In February 2022, the Russian government commenced a war against the people of Ukraine, resulting in a humanitarian crisis and significant disruption to financial and commodity markets. A number of countries including, the United States of America, European Union, Switzerland and United Kingdom imposed a series of sanctions against the Russian government, various companies, and certain individuals. In response to these sanctions, Russia implemented a number of counter-sanctions including restrictions on the divestment from Russian assets by foreign investors.
Glencore owns equity stakes in EN+ (10.6%) and Rosneft (0.57%), listed on the London Stock Exchange and Moscow Stock Exchange. On 3 March 2022, EN+ was suspended from trading on the London Stock Exchange and Rosneft stopped trading on the Moscow exchange. On 24 March, Rosneft resumed trading, however, Glencore is not able to sell its Rosneft shares on the Moscow Stock Exchange and is unable to ascribe probabilities to possible outcomes of any potential exit process.
IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Further, an entity should take into account the characteristics of the asset or liability if market participants would take those into account when pricing the asset or liability, where such characteristics would include restrictions on the sale or use of the asset. Under current market conditions, given the restrictions noted above, the quoted share prices for both investments are not deemed to be reliable evidence of fair value and thus it was determined that it is no longer appropriate to classify these investments as Level 1 financial instruments in accordance with IFRS, but rather as Level 3 financial instruments. In valuing these investments as a Level 3 investment, Glencore concluded that there is no realistic way to exit these stakes in the current environment and considered that the measure of fair value is subject to high measurement uncertainty. Both equity interests were written down to $Nil on the basis that their fair value is not materially different to $Nil given the valuation a market participant would ascribe to a hypothetical transfer reflecting their inability to access the market. The corresponding negative mark-to-market adjustments was recognised in other comprehensive income.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Other investments
Shenzhen Energy Gas Investment Holding Co., Ltd
China
7.8
\u2013
Energy distribution
EN+ GROUP IPJSC
Russia
10.6
10.6
Aluminium production
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-107": { "value": "
Other investments
US$ million
2022
2021
Fair value through other comprehensive income1
EN+ GROUP PLC
\u2013
789
Yancoal
\u2013
160
OSJC Rosneft
\u2013
485
Press Metal Aluminium
129
\u2013
Shenzhen Energy Gas Investment Holding
104
\u2013
Other
186
186
419
1,620
Fair value through profit and loss
Sandstorm Gold Ltd
35
\u2013
Other
2
\u2013
37
\u2013
Total
456
1,620
1Movements in fair value through other comprehensive income for the year comprise negative changes in fair value of $1,274 million relating to EN+ and Rosneft (see below) net of positive changes in fair value of $150 million (2021: negative changes of $52 million) relating to other investments.
During the year, dividend income from equity investments designated as at fair value through other comprehensive income amounted to $45\u00a0million (2021: $23\u00a0million).
Refer to note 35 for further details of the Group\u2019s principal other investments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-108": { "value": "
Other investments
US$ million
2022
2021
Fair value through other comprehensive income1
EN+ GROUP PLC
\u2013
789
Yancoal
\u2013
160
OSJC Rosneft
\u2013
485
Press Metal Aluminium
129
\u2013
Shenzhen Energy Gas Investment Holding
104
\u2013
Other
186
186
419
1,620
Fair value through profit and loss
Sandstorm Gold Ltd
35
\u2013
Other
2
\u2013
37
\u2013
Total
456
1,620
1Movements in fair value through other comprehensive income for the year comprise negative changes in fair value of $1,274 million relating to EN+ and Rosneft (see below) net of positive changes in fair value of $150 million (2021: negative changes of $52 million) relating to other investments.
During the year, dividend income from equity investments designated as at fair value through other comprehensive income amounted to $45\u00a0million (2021: $23\u00a0million).
Refer to note 35 for further details of the Group\u2019s principal other investments.
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
Financial assets at fair value through profit and loss
Other non-current receivables and loans
During 2022, no fair value movements were recognised (2021: positive $35\u00a0million)(see note 7).
Convertible loan
In May 2022, Glencore subscribed for $200 million of convertible debt in Li-Cycle Holdings Corp. (\u2018Li-Cycle\u2019), a lithium-ion battery recycler in North America, listed on the New York Stock Exchange. The convertible loan is repayable by 2027 at an effective interest rate of SOFR plus 5% per annum. If Glencore elects to convert during the conversion option period, Glencore would hold an approximate 10% equity stake in Li-Cycle. The loan is classified as financial asset at fair value through profit and loss in accordance with IFRS (see notes 28 and 29). During 2022, fair value movements of negative $40 million were recognised (see note 5).
Contingent consideration
In 2022, fair value movements of positive $117\u00a0million (2021: $39\u00a0million) were recognised (see note 5).
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
2Includes advances, net of $487\u00a0million (2021: $409\u00a0million) provided by banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production over the next 12 months.
3Comprises sales and other tax receivables of $1,351\u00a0million (2021: $1,253\u00a0million) and other receivables of $152\u00a0million (2021: $169\u00a0million).
25. Accounts payable
US$ million
Notes
2022
2021
Financial liabilities at amortised cost
Trade payables
11,044
10,397
Margin calls received and other broker balances
112
729
Associated companies
903
1,124
Other payables and accrued liabilities
644
889
12,703
13,139
Financial liabilities at fair value through profit and loss
Trade payables containing provisional pricing features
28
14,079
13,806
Other payables
28
102
\u2013
14,181
13,806
Non-financial liabilities
Advances settled in product
676
459
Other payables and accrued liabilities1
1,839
1,460
Other tax and related payables
327
449
2,842
2,368
Total
29,726
29,313
1 Primarily comprised of employee benefits accruals.
Trade payables are obligations to pay for goods and services. Trade payables typically have maturities up to 90 days depending on the type of material and the geographic area in which the purchase transaction occurs and the agreed terms. The carrying value of trade payables approximates fair value.
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore\u2019s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values. When market values are not available, fair values have been calculated by discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate the fair values with the exception of $27,398\u00a0million (2021: $33,023\u00a0million) of borrowings, the fair value of which at 31 December 2022 was $26,675 million (2021: $34,169 million). $6,918 million (2021: $10,132 million) represents the listed portion of the borrowing portfolio, based on quoted prices on active markets (a Level 1 fair value measurement), and $19,757 million (2021: $24,037 million) is based on observable market prices (a Level 2 fair value measurement).
2022
Amortised
cost
FVTPL1
FVTOCI2
US$ million
Total
Assets
Other investments
\u2013
37
419
456
Non-current other financial assets
\u2013
206
\u2013
206
Advances and loans
729
293
\u2013
1,022
Accounts receivable
16,019
5,627
\u2013
21,646
Other financial assets
\u2013
6,109
\u2013
6,109
Cash and cash equivalents
1,923
\u2013
\u2013
1,923
Total financial assets
18,671
12,272
419
31,362
Liabilities
Borrowings
28,777
\u2013
\u2013
28,777
Non-current other financial liabilities
14
2,041
\u2013
2,055
Accounts payable
12,703
14,181
\u2013
26,884
Other financial liabilities
\u2013
4,882
\u2013
4,882
Total financial liabilities
41,494
21,104
\u2013
62,598
2021
Amortised
cost
FVTPL1
FVTOCI2
Total
US$ million
Assets
Other investments
\u2013
\u2013
1,620
1,620
Non-current other financial assets
\u2013
458
\u2013
458
Advances and loans
795
163
\u2013
958
Accounts receivable
11,672
5,523
\u2013
17,195
Other financial assets
\u2013
4,636
\u2013
4,636
Cash and cash equivalents
3,241
\u2013
\u2013
3,241
Total financial assets
15,708
10,780
1,620
28,108
Liabilities
Borrowings
34,641
\u2013
\u2013
34,641
Non-current other financial liabilities
87
623
\u2013
710
Accounts payable
13,139
13,806
\u2013
26,945
Other financial liabilities
\u2013
6,077
\u2013
6,077
Total financial liabilities
47,867
20,506
\u2013
68,373
1FVTPL \u2013 Fair value through profit and loss.
2FVTOCI \u2013 Fair value through other comprehensive income.
Offsetting of financial assets and liabilities
In accordance with IAS 32 the Group reports financial assets and liabilities on a net basis in the consolidated statement of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The financial assets and liabilities subject to offsetting, enforceable master netting and similar agreements as at 31 December 2022 and 2021 were as follows:
Amounts not subject to netting agreements
Total as presented
in the consolidated
statement
of financial position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2022
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
3,422
(2,141)
1,281
(608)
(26)
647
5,034
6,315
Derivative liabilities1
(5,929)
2,141
(3,788)
608
2,638
(542)
(3,149)
(6,937)
Amounts
not subject
to netting
agreements
Total as
presented
in the
consolidated
statement
of financial
position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2021
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
19,327
(17,846)
1,481
(437)
(315)
729
3,613
5,094
Derivative liabilities1
(22,166)
17,846
(4,320)
437
3,522
(361)
(2,467)
(6,787)
1Presented within current and non-current other financial assets and other financial liabilities.
For the financial assets and liabilities subject to enforceable master netting or similar arrangements above, each agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities in the ordinary course of business. Where practical reasons may prevent net settlement, financial assets and liabilities may be settled on a gross basis, however, each party to the master netting or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party. Per the terms of each agreement, an event of default includes failure by a party to make payment when due, failure by a party to perform any obligation required by the agreement (other than payment) if such failure is not remedied within periods of 30 to 60\u00a0days after notice of such failure is given to the party or bankruptcy.
29. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can assess at the measurement date; or
Level 2
Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3
Unobservable inputs for the assets or liabilities, requiring Glencore to make market-based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded, whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options, swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair value predominantly from models that use broker quotes and applicable market-based estimates surrounding location, quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different valuation model could produce a materially different estimate of fair value.
It is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
Notes to the financial statements continued
29. Fair value measurements continued
The following tables show the fair values of the derivative financial instruments including trade-related financial and physical forward purchase and sale commitments by type of contract and non-current other financial assets and liabilities as at 31 December 2022 and 2021. Other assets and liabilities which are measured at fair value on a recurring basis are marketing inventories, other investments, cash and cash equivalents. There are no non-recurring fair value measurements.
Financial assets
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
\u2013
5,426
\u2013
5,426
Contingent consideration
\u2013
\u2013
128
128
Other receivables
\u2013
\u2013
73
73
Other non-current receivables and loans
\u2013
\u2013
22
22
Convertible loan
\u2013
\u2013
168
168
Non-current contingent consideration
\u2013
\u2013
103
103
Other investments
280
176
\u2013
456
Financial assets
280
5,602
494
6,376
Other financial assets
Commodity-related contracts
Futures
809
156
\u2013
965
Options
120
4
\u2013
124
Swaps
40
165
18
223
Physical forwards
\u2013
1,786
2,949
4,735
Financial contracts
Foreign currency and interest rate contracts
\u2013
62
\u2013
62
Current other financial assets
969
2,173
2,967
6,109
Non-current other financial assets
Cross currency swaps
\u2013
24
\u2013
24
Foreign currency and interest rate contracts
\u2013
1
\u2013
1
Purchased call options over Glencore shares1
\u2013
181
\u2013
181
Non-current other financial assets
\u2013
206
\u2013
206
Total
1,249
7,981
3,461
12,691
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables2
\u2013
5,269
\u2013
5,269
Contingent consideration2
\u2013
\u2013
175
175
Other receivables2
\u2013
\u2013
79
79
Other non-current receivables and loans2
\u2013
\u2013
28
28
Non-current contingent consideration
\u2013
\u2013
135
135
Other investments
1,536
84
\u2013
1,620
Financial assets
1,536
5,353
417
7,306
Other financial assets
Commodity-related contracts
Futures3
420
138
\u2013
558
Options
133
31
\u2013
164
Swaps3
5
245
40
290
Physical forwards
\u2013
2,878
646
3,524
Financial contracts
Cross currency swaps
\u2013
5
\u2013
5
Foreign currency and interest rate contracts
\u2013
95
\u2013
95
Current other financial assets
558
3,392
686
4,636
Non-current other financial assets
Cross currency swaps
\u2013
125
\u2013
125
Foreign currency and interest rate contracts
\u2013
272
\u2013
272
Purchased call options over Glencore shares1
\u2013
61
\u2013
61
Non-current other financial assets
\u2013
458
\u2013
458
Total
2,094
9,203
1,103
12,400
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
US$ million
Contingent consideration
Convertible loan
Physical
forwards
Swaps
Other1
Total
Level 3
1 January 2022
261
\u2013
411
40
(63)
649
Total gain recognised in revenue
\u2013
\u2013
231
67
\u2013
298
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
2,403
(70)
\u2013
2,333
Acquisition
(20)
200
\u2013
\u2013
\u2013
180
Fair value recognised in other income/(expense)
105
(32)
\u2013
\u2013
(173)
(100)
Realised
(189)
\u2013
(209)
(19)
(12)
(429)
31 December 2022
157
168
2,836
18
(248)
2,931
1 January 2021
376
\u2013
6
\u2013
(70)
312
Total gain recognised in revenue
\u2013
\u2013
117
337
\u2013
454
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
389
(297)
\u2013
92
Fair value recognised in other income/(expense)
26
\u2013
\u2013
\u2013
7
33
Realised
(141)
\u2013
(101)
\u2013
\u2013
(242)
31 December 2021
261
\u2013
411
40
(63)
649
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
During the year, no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Fair value of financial assets / financial liabilities
Some of the Group\u2019s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
Futures, options and swaps classified as Level 1 financial assets and liabilities are measured using quoted prices in an active market.
Accounts receivable and payables, and certain futures, options, swaps, physical forwards, cross currency swaps, foreign currency and interest rate contracts classified as Level 2 financial assets and liabilities are measured using discounted cash flow models. Key inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required.
Call options over Glencore shares classified as Level 2 financial assets and liabilities are measured using an option pricing model. Key inputs include the current price of Glencore shares, strike price, maturity date of the underlying convertible debt security, risk-free rate and volatility.
Given the extent to which the Group recognises financial instrument assets and liabilities at fair value, the preparation of the Group\u2019s consolidated financial statements requires management to consider on an on-going basis, the key valuation metrics and judgements involved in the determination of the fair value of financial instruments. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Management reviewed the key valuation metrics, assumptions and methodologies involved in the determination of the Level 3 fair value of financial instruments and determined that the valuations were materially reasonable.
The\u00a0following table provides information on the valuation techniques and inputs used to determine the fair value of Level 3 financial assets and financial liabilities.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-109": { "value": "
Other investments
US$ million
2022
2021
Fair value through other comprehensive income1
EN+ GROUP PLC
\u2013
789
Yancoal
\u2013
160
OSJC Rosneft
\u2013
485
Press Metal Aluminium
129
\u2013
Shenzhen Energy Gas Investment Holding
104
\u2013
Other
186
186
419
1,620
Fair value through profit and loss
Sandstorm Gold Ltd
35
\u2013
Other
2
\u2013
37
\u2013
Total
456
1,620
1Movements in fair value through other comprehensive income for the year comprise negative changes in fair value of $1,274 million relating to EN+ and Rosneft (see below) net of positive changes in fair value of $150 million (2021: negative changes of $52 million) relating to other investments.
Investments in EN+ and Rosneft
In February 2022, the Russian government commenced a war against the people of Ukraine, resulting in a humanitarian crisis and significant disruption to financial and commodity markets. A number of countries including, the United States of America, European Union, Switzerland and United Kingdom imposed a series of sanctions against the Russian government, various companies, and certain individuals. In response to these sanctions, Russia implemented a number of counter-sanctions including restrictions on the divestment from Russian assets by foreign investors.
Glencore owns equity stakes in EN+ (10.6%) and Rosneft (0.57%), listed on the London Stock Exchange and Moscow Stock Exchange. On 3 March 2022, EN+ was suspended from trading on the London Stock Exchange and Rosneft stopped trading on the Moscow exchange. On 24 March, Rosneft resumed trading, however, Glencore is not able to sell its Rosneft shares on the Moscow Stock Exchange and is unable to ascribe probabilities to possible outcomes of any potential exit process.
IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Further, an entity should take into account the characteristics of the asset or liability if market participants would take those into account when pricing the asset or liability, where such characteristics would include restrictions on the sale or use of the asset. Under current market conditions, given the restrictions noted above, the quoted share prices for both investments are not deemed to be reliable evidence of fair value and thus it was determined that it is no longer appropriate to classify these investments as Level 1 financial instruments in accordance with IFRS, but rather as Level 3 financial instruments. In valuing these investments as a Level 3 investment, Glencore concluded that there is no realistic way to exit these stakes in the current environment and considered that the measure of fair value is subject to high measurement uncertainty. Both equity interests were written down to $Nil on the basis that their fair value is not materially different to $Nil given the valuation a market participant would ascribe to a hypothetical transfer reflecting their inability to access the market. The corresponding negative mark-to-market adjustments was recognised in other comprehensive income.
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore\u2019s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values. When market values are not available, fair values have been calculated by discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate the fair values with the exception of $27,398\u00a0million (2021: $33,023\u00a0million) of borrowings, the fair value of which at 31 December 2022 was $26,675 million (2021: $34,169 million). $6,918 million (2021: $10,132 million) represents the listed portion of the borrowing portfolio, based on quoted prices on active markets (a Level 1 fair value measurement), and $19,757 million (2021: $24,037 million) is based on observable market prices (a Level 2 fair value measurement).
2022
Amortised
cost
FVTPL1
FVTOCI2
US$ million
Total
Assets
Other investments
\u2013
37
419
456
Non-current other financial assets
\u2013
206
\u2013
206
Advances and loans
729
293
\u2013
1,022
Accounts receivable
16,019
5,627
\u2013
21,646
Other financial assets
\u2013
6,109
\u2013
6,109
Cash and cash equivalents
1,923
\u2013
\u2013
1,923
Total financial assets
18,671
12,272
419
31,362
Liabilities
Borrowings
28,777
\u2013
\u2013
28,777
Non-current other financial liabilities
14
2,041
\u2013
2,055
Accounts payable
12,703
14,181
\u2013
26,884
Other financial liabilities
\u2013
4,882
\u2013
4,882
Total financial liabilities
41,494
21,104
\u2013
62,598
2021
Amortised
cost
FVTPL1
FVTOCI2
Total
US$ million
Assets
Other investments
\u2013
\u2013
1,620
1,620
Non-current other financial assets
\u2013
458
\u2013
458
Advances and loans
795
163
\u2013
958
Accounts receivable
11,672
5,523
\u2013
17,195
Other financial assets
\u2013
4,636
\u2013
4,636
Cash and cash equivalents
3,241
\u2013
\u2013
3,241
Total financial assets
15,708
10,780
1,620
28,108
Liabilities
Borrowings
34,641
\u2013
\u2013
34,641
Non-current other financial liabilities
87
623
\u2013
710
Accounts payable
13,139
13,806
\u2013
26,945
Other financial liabilities
\u2013
6,077
\u2013
6,077
Total financial liabilities
47,867
20,506
\u2013
68,373
1FVTPL \u2013 Fair value through profit and loss.
2FVTOCI \u2013 Fair value through other comprehensive income.
29. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can assess at the measurement date; or
Level 2
Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3
Unobservable inputs for the assets or liabilities, requiring Glencore to make market-based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded, whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options, swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair value predominantly from models that use broker quotes and applicable market-based estimates surrounding location, quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different valuation model could produce a materially different estimate of fair value.
It is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
The following tables show the fair values of the derivative financial instruments including trade-related financial and physical forward purchase and sale commitments by type of contract and non-current other financial assets and liabilities as at 31 December 2022 and 2021. Other assets and liabilities which are measured at fair value on a recurring basis are marketing inventories, other investments, cash and cash equivalents. There are no non-recurring fair value measurements.
Financial assets
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
\u2013
5,426
\u2013
5,426
Contingent consideration
\u2013
\u2013
128
128
Other receivables
\u2013
\u2013
73
73
Other non-current receivables and loans
\u2013
\u2013
22
22
Convertible loan
\u2013
\u2013
168
168
Non-current contingent consideration
\u2013
\u2013
103
103
Other investments
280
176
\u2013
456
Financial assets
280
5,602
494
6,376
Other financial assets
Commodity-related contracts
Futures
809
156
\u2013
965
Options
120
4
\u2013
124
Swaps
40
165
18
223
Physical forwards
\u2013
1,786
2,949
4,735
Financial contracts
Foreign currency and interest rate contracts
\u2013
62
\u2013
62
Current other financial assets
969
2,173
2,967
6,109
Non-current other financial assets
Cross currency swaps
\u2013
24
\u2013
24
Foreign currency and interest rate contracts
\u2013
1
\u2013
1
Purchased call options over Glencore shares1
\u2013
181
\u2013
181
Non-current other financial assets
\u2013
206
\u2013
206
Total
1,249
7,981
3,461
12,691
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables2
\u2013
5,269
\u2013
5,269
Contingent consideration2
\u2013
\u2013
175
175
Other receivables2
\u2013
\u2013
79
79
Other non-current receivables and loans2
\u2013
\u2013
28
28
Non-current contingent consideration
\u2013
\u2013
135
135
Other investments
1,536
84
\u2013
1,620
Financial assets
1,536
5,353
417
7,306
Other financial assets
Commodity-related contracts
Futures3
420
138
\u2013
558
Options
133
31
\u2013
164
Swaps3
5
245
40
290
Physical forwards
\u2013
2,878
646
3,524
Financial contracts
Cross currency swaps
\u2013
5
\u2013
5
Foreign currency and interest rate contracts
\u2013
95
\u2013
95
Current other financial assets
558
3,392
686
4,636
Non-current other financial assets
Cross currency swaps
\u2013
125
\u2013
125
Foreign currency and interest rate contracts
\u2013
272
\u2013
272
Purchased call options over Glencore shares1
\u2013
61
\u2013
61
Non-current other financial assets
\u2013
458
\u2013
458
Total
2,094
9,203
1,103
12,400
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
US$ million
Contingent consideration
Convertible loan
Physical
forwards
Swaps
Other1
Total
Level 3
1 January 2022
261
\u2013
411
40
(63)
649
Total gain recognised in revenue
\u2013
\u2013
231
67
\u2013
298
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
2,403
(70)
\u2013
2,333
Acquisition
(20)
200
\u2013
\u2013
\u2013
180
Fair value recognised in other income/(expense)
105
(32)
\u2013
\u2013
(173)
(100)
Realised
(189)
\u2013
(209)
(19)
(12)
(429)
31 December 2022
157
168
2,836
18
(248)
2,931
1 January 2021
376
\u2013
6
\u2013
(70)
312
Total gain recognised in revenue
\u2013
\u2013
117
337
\u2013
454
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
389
(297)
\u2013
92
Fair value recognised in other income/(expense)
26
\u2013
\u2013
\u2013
7
33
Realised
(141)
\u2013
(101)
\u2013
\u2013
(242)
31 December 2021
261
\u2013
411
40
(63)
649
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
During the year, no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Fair value of financial assets / financial liabilities
Some of the Group\u2019s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
Futures, options and swaps classified as Level 1 financial assets and liabilities are measured using quoted prices in an active market.
Accounts receivable and payables, and certain futures, options, swaps, physical forwards, cross currency swaps, foreign currency and interest rate contracts classified as Level 2 financial assets and liabilities are measured using discounted cash flow models. Key inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required.
Call options over Glencore shares classified as Level 2 financial assets and liabilities are measured using an option pricing model. Key inputs include the current price of Glencore shares, strike price, maturity date of the underlying convertible debt security, risk-free rate and volatility.
Given the extent to which the Group recognises financial instrument assets and liabilities at fair value, the preparation of the Group\u2019s consolidated financial statements requires management to consider on an on-going basis, the key valuation metrics and judgements involved in the determination of the fair value of financial instruments. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Management reviewed the key valuation metrics, assumptions and methodologies involved in the determination of the Level 3 fair value of financial instruments and determined that the valuations were materially reasonable.
The\u00a0following table provides information on the valuation techniques and inputs used to determine the fair value of Level 3 financial assets and financial liabilities.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-110": { "value": "
Other investments
US$ million
2022
2021
Fair value through other comprehensive income1
EN+ GROUP PLC
\u2013
789
Yancoal
\u2013
160
OSJC Rosneft
\u2013
485
Press Metal Aluminium
129
\u2013
Shenzhen Energy Gas Investment Holding
104
\u2013
Other
186
186
419
1,620
Fair value through profit and loss
Sandstorm Gold Ltd
35
\u2013
Other
2
\u2013
37
\u2013
Total
456
1,620
1Movements in fair value through other comprehensive income for the year comprise negative changes in fair value of $1,274 million relating to EN+ and Rosneft (see below) net of positive changes in fair value of $150 million (2021: negative changes of $52 million) relating to other investments.
Investments in EN+ and Rosneft
In February 2022, the Russian government commenced a war against the people of Ukraine, resulting in a humanitarian crisis and significant disruption to financial and commodity markets. A number of countries including, the United States of America, European Union, Switzerland and United Kingdom imposed a series of sanctions against the Russian government, various companies, and certain individuals. In response to these sanctions, Russia implemented a number of counter-sanctions including restrictions on the divestment from Russian assets by foreign investors.
Glencore owns equity stakes in EN+ (10.6%) and Rosneft (0.57%), listed on the London Stock Exchange and Moscow Stock Exchange. On 3 March 2022, EN+ was suspended from trading on the London Stock Exchange and Rosneft stopped trading on the Moscow exchange. On 24 March, Rosneft resumed trading, however, Glencore is not able to sell its Rosneft shares on the Moscow Stock Exchange and is unable to ascribe probabilities to possible outcomes of any potential exit process.
Notes to the financial statements continued
12. Advances and loans
US$ million
Notes
2022
2021
Financial assets at amortised cost
Loans to associates
130
128
Other non-current receivables and loans
309
519
Deferred consideration
26
142
\u2013
Rehabilitation trust fund1
148
148
729
795
Financial assets at fair value through profit and loss
Other non-current receivables and loans
28
22
28
Convertible loan
28
168
\u2013
Contingent consideration
28
103
135
293
163
Non-financial assets
Pension surpluses
24
148
125
Advances repayable with product2
1,254
1,673
Land rights prepayment
150
150
Other tax and related non-current receivables3
80
621
1,632
2,569
Total
2,654
3,527
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
Financial assets at amortised cost
Loans to associates
Loans to associates generally bear interest at applicable floating market rates plus a premium.
Other non-current receivables and loans
Other non-current receivables and loans comprise the following:
US$\u00a0million
2022
2021
Secured financing arrangements
306
511
Other
3
8
Total
309
519
Various financing facilities, generally marketing related and secured against certain assets and/or payable from the future sale of production of the counterparty. The non-current receivables and loans are interest-bearing and on average are to be repaid over a three-year period.
Rehabilitation trust fund
Glencore makes contributions to controlled funds established to meet the costs of its restoration and rehabilitation liabilities, primarily in South Africa. These funds are not available for the general purposes of the Group, and there is no present obligation to make any further contributions.
Loss allowances of financial assets at amortised cost
The Group determines the expected credit loss of loans to associates, other non-current receivables and loans (at amortised cost) and deferred consideration based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. Expected credit losses for these assets are measured as either 12-month expected credit losses, taking into account prior experience regarding probability of default adjusted for forward looking information, or as lifetime expected credit losses (when there is significant increase in credit risk or the asset is credit-impaired). The movement in loss allowance for financial assets classified at amortised cost is detailed below:
2022
Loans to associates
Other non-current receivables and loans and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 20223
15
191
206
365
431
796
1,002
Allowance for credit loss
1 January 2022
\u2013
62
62
14
240
254
316
Released during the period4
\u2013
\u2013
\u2013
\u2013
(9)
(9)
(9)
Charged during the period4
\u2013
14
14
\u2013
91
91
105
Effect of foreign currency exchange movements
\u2013
\u2013
\u2013
(5)
\u2013
(5)
(5)
Reclassifications from current accounts receivable
\u2013
\u2013
\u2013
\u2013
14
14
14
31 December 2022
\u2013
76
76
9
336
345
421
Net carrying value 31 December 2022
15
115
130
356
95
451
581
1Comprises stage 3 credit losses of $76 million.
2Comprises stage 2 credit losses of $51 million and stage 3 credit losses of $285 million.
3Increases in lifetime ECL gross carrying values during the year result primarily from reclassifications from 12 months ECL.
4$37 million recognised as impairment (see note 7) and the balancing charge of $59 million recognised in cost of goods sold.
2021
Loans to associates
Other non-current receivables and loans and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2021
31
159
190
529
244
773
963
Allowance for credit loss
1 January 2021
\u2013
62
62
37
303
340
402
Released during the period3
\u2013
\u2013
\u2013
(23)
(5)
(28)
(28)
Charged during the period3
\u2013
\u2013
\u2013
15
\u2013
15
15
Utilised during the period
\u2013
\u2013
\u2013
(13)
(35)
(48)
(48)
Reclassifications to current accounts receivable
\u2013
\u2013
\u2013
(2)
(23)
(25)
(25)
31 December 2021
\u2013
62
62
14
240
254
316
Net carrying value 31 December 2021
31
97
128
515
4
519
647
1Comprises stage 3 credit losses of $62 million.
2Comprises stage 3 credit losses of $240 million.
3$22 million recognised as impairment (see note 7) and the balancing charge of $9 million recognised in cost of goods sold.
Financial assets at fair value through profit and loss
Other non-current receivables and loans
During 2022, no fair value movements were recognised (2021: positive $35\u00a0million)(see note 7).
Convertible loan
In May 2022, Glencore subscribed for $200 million of convertible debt in Li-Cycle Holdings Corp. (\u2018Li-Cycle\u2019), a lithium-ion battery recycler in North America, listed on the New York Stock Exchange. The convertible loan is repayable by 2027 at an effective interest rate of SOFR plus 5% per annum. If Glencore elects to convert during the conversion option period, Glencore would hold an approximate 10% equity stake in Li-Cycle. The loan is classified as financial asset at fair value through profit and loss in accordance with IFRS (see notes 28 and 29). During 2022, fair value movements of negative $40 million were recognised (see note 5).
Contingent consideration
In 2022, fair value movements of positive $117\u00a0million (2021: $39\u00a0million) were recognised (see note 5).
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
2Includes advances, net of $487\u00a0million (2021: $409\u00a0million) provided by banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production over the next 12 months.
3Comprises sales and other tax receivables of $1,351\u00a0million (2021: $1,253\u00a0million) and other receivables of $152\u00a0million (2021: $169\u00a0million).
The average credit period on sales of goods is 17 days (2021: 16 days). The carrying value of trade receivables approximates fair value.
The Group applies a simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit loss on trade receivables is estimated using a provision matrix by reference to past default experience and credit rating, adjusted as appropriate for current observable data. Expected credit loss provisions are recognised in cost of goods sold and during the period, $148\u00a0million (2021: $11 million) of such losses were recognised. Current year provision is up over prior year due primarily to higher over-all gross receivable balances on-hand at period-end as a result of higher commodity prices and a specific slow-moving exposure which is expected to be settled during 2023. The following table details the risk profile of trade receivables based on the Group\u2019s provision matrix.
US$ million
Trade receivables \u2013 days past due
As at 31 December 2022
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
5,014
444
158
85
1,673
7,374
Weighted average expected credit loss rate
0.45%
0.67%
0.98%
1.17%
7.34%
Lifetime expected credit loss
(23)
(3)
(2)
(1)
(143)
(172)
Total
4,991
441
156
84
1,530
7,202
US$ million
Trade receivables \u2013 days past due
As at 31 December 2021
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
4,034
287
157
152
337
4,967
Weighted average expected credit loss rate
0.27%
0.55%
0.82%
1.10%
2.33%
Lifetime expected credit loss
(11)
(2)
(1)
(2)
(8)
(24)
Total
4,023
285
156
150
329
4,943
The Group determines the expected credit loss of receivables from associates, deferred consideration and other receivables (at amortised cost) based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. Expected credit losses for these assets are measured as either 12-month expected credit losses, taking into account prior experience regarding probability of default adjusted for forward looking information, or as lifetime expected credit losses (when there is significant increase in credit risk or the asset is credit-impaired). The movement in allowance for credit loss relating to receivables from associates and other receivables is detailed below:
2022
Receivables from associates
Other receivables and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2022
432
136
568
896
108
1,004
1,572
Allowance for credit loss
1 January 2022
\u2013
116
116
23
106
129
245
Released during the period3
\u2013
(2)
(2)
(5)
\u2013
(5)
(7)
Charged during the period3
\u2013
21
21
34
16
50
71
Utilised during the period
\u2013
\u2013
\u2013
(3)
(4)
(7)
(7)
Effect of foreign currency exchange movements
\u2013
(8)
(8)
\u2013
(4)
(4)
(12)
Reclassification to held for sale
\u2013
\u2013
\u2013
\u2013
(6)
(6)
(6)
Reclassifications to non-current receivables and loans
\u2013
\u2013
\u2013
(10)
(4)
(14)
(14)
31 December 2022
\u2013
127
127
39
104
143
270
Net carrying value 31 December 2022
432
9
441
857
4
861
1,302
1Comprises stage 2 credit losses of $2 million and stage 3 credit losses of $125 million.
2Comprises stage 2 credit losses of $29 million and stage 3 credit losses of $75 million.
3$15 million recognised as impairment (see note 7) and the balancing $49 million net charge recognised in cost of goods sold.
2021
Receivables from associates
Other receivables and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2021
391
138
529
387
144
531
1,060
Allowance for credit loss
1 January 2021
\u2013
122
122
51
81
132
254
Released during the period3
\u2013
\u2013
\u2013
(10)
\u2013
(10)
(10)
Charged during the period3
\u2013
3
3
15
15
30
33
Utilised during the period
\u2013
\u2013
\u2013
(29)
(19)
(48)
(48)
Effect of foreign currency exchange movements
\u2013
(9)
(9)
\u2013
\u2013
\u2013
(9)
Reclassifications from non-current receivables and loans
\u2013
\u2013
\u2013
(4)
29
25
25
31 December 2021
\u2013
116
116
23
106
129
245
Net carrying value 31 December 2021
391
22
413
364
38
402
815
1Comprises stage 2 credit losses of $2 million and stage 3 credit losses of $114 million.
2Comprises stage 2 credit losses of $33 million and stage 3 credit losses of $73 million.
3$7 million recognised as a reversal of impairment (see note 7) and the balancing $30 million net charge recognised in cost of goods sold.
Glencore has a number of dedicated financing facilities, which finance a portion of its receivables. The receivables have not been derecognised, as the Group retains the principal risks and rewards of ownership. The proceeds received are recognised as current borrowings (see note 21). As at 31 December 2022, the total amount of trade receivables pledged was $278\u00a0million (2021: $Nil) and proceeds received and classified as current borrowings amounted to $200\u00a0million (2021: $Nil).
US$ million
Notes
2022
2021
Non-current borrowings
Capital market notes
17,229
22,376
Amount drawn under syndicated revolving credit facilities
\u2013
2,543
Lease liabilities
934
1,093
Other bank loans
688
799
Total non-current borrowings
18,851
26,811
Current borrowings
Secured inventory/receivables/other facilities
11/13/14
3,292
122
US commercial paper
333
1,764
Capital market notes
2,977
2,884
Lease liabilities
445
525
Other bank loans1
2,879
2,535
Total current borrowings
9,926
7,830
Total borrowings
28,777
34,641
1Comprises various uncommitted bilateral bank credit facilities and other financings.
25. Accounts payable
US$ million
Notes
2022
2021
Financial liabilities at amortised cost
Trade payables
11,044
10,397
Margin calls received and other broker balances
112
729
Associated companies
903
1,124
Other payables and accrued liabilities
644
889
12,703
13,139
Financial liabilities at fair value through profit and loss
Trade payables containing provisional pricing features
28
14,079
13,806
Other payables
28
102
\u2013
14,181
13,806
Non-financial liabilities
Advances settled in product
676
459
Other payables and accrued liabilities1
1,839
1,460
Other tax and related payables
327
449
2,842
2,368
Total
29,726
29,313
1 Primarily comprised of employee benefits accruals.
Trade payables are obligations to pay for goods and services. Trade payables typically have maturities up to 90 days depending on the type of material and the geographic area in which the purchase transaction occurs and the agreed terms. The carrying value of trade payables approximates fair value.
Notes to the financial statements continued
28. Financial instruments
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore\u2019s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values. When market values are not available, fair values have been calculated by discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate the fair values with the exception of $27,398\u00a0million (2021: $33,023\u00a0million) of borrowings, the fair value of which at 31 December 2022 was $26,675 million (2021: $34,169 million). $6,918 million (2021: $10,132 million) represents the listed portion of the borrowing portfolio, based on quoted prices on active markets (a Level 1 fair value measurement), and $19,757 million (2021: $24,037 million) is based on observable market prices (a Level 2 fair value measurement).
2022
Amortised
cost
FVTPL1
FVTOCI2
US$ million
Total
Assets
Other investments
\u2013
37
419
456
Non-current other financial assets
\u2013
206
\u2013
206
Advances and loans
729
293
\u2013
1,022
Accounts receivable
16,019
5,627
\u2013
21,646
Other financial assets
\u2013
6,109
\u2013
6,109
Cash and cash equivalents
1,923
\u2013
\u2013
1,923
Total financial assets
18,671
12,272
419
31,362
Liabilities
Borrowings
28,777
\u2013
\u2013
28,777
Non-current other financial liabilities
14
2,041
\u2013
2,055
Accounts payable
12,703
14,181
\u2013
26,884
Other financial liabilities
\u2013
4,882
\u2013
4,882
Total financial liabilities
41,494
21,104
\u2013
62,598
2021
Amortised
cost
FVTPL1
FVTOCI2
Total
US$ million
Assets
Other investments
\u2013
\u2013
1,620
1,620
Non-current other financial assets
\u2013
458
\u2013
458
Advances and loans
795
163
\u2013
958
Accounts receivable
11,672
5,523
\u2013
17,195
Other financial assets
\u2013
4,636
\u2013
4,636
Cash and cash equivalents
3,241
\u2013
\u2013
3,241
Total financial assets
15,708
10,780
1,620
28,108
Liabilities
Borrowings
34,641
\u2013
\u2013
34,641
Non-current other financial liabilities
87
623
\u2013
710
Accounts payable
13,139
13,806
\u2013
26,945
Other financial liabilities
\u2013
6,077
\u2013
6,077
Total financial liabilities
47,867
20,506
\u2013
68,373
1FVTPL \u2013 Fair value through profit and loss.
2FVTOCI \u2013 Fair value through other comprehensive income.
Offsetting of financial assets and liabilities
In accordance with IAS 32 the Group reports financial assets and liabilities on a net basis in the consolidated statement of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The financial assets and liabilities subject to offsetting, enforceable master netting and similar agreements as at 31 December 2022 and 2021 were as follows:
Amounts not subject to netting agreements
Total as presented
in the consolidated
statement
of financial position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2022
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
3,422
(2,141)
1,281
(608)
(26)
647
5,034
6,315
Derivative liabilities1
(5,929)
2,141
(3,788)
608
2,638
(542)
(3,149)
(6,937)
Amounts
not subject
to netting
agreements
Total as
presented
in the
consolidated
statement
of financial
position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2021
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
19,327
(17,846)
1,481
(437)
(315)
729
3,613
5,094
Derivative liabilities1
(22,166)
17,846
(4,320)
437
3,522
(361)
(2,467)
(6,787)
1Presented within current and non-current other financial assets and other financial liabilities.
For the financial assets and liabilities subject to enforceable master netting or similar arrangements above, each agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities in the ordinary course of business. Where practical reasons may prevent net settlement, financial assets and liabilities may be settled on a gross basis, however, each party to the master netting or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party. Per the terms of each agreement, an event of default includes failure by a party to make payment when due, failure by a party to perform any obligation required by the agreement (other than payment) if such failure is not remedied within periods of 30 to 60\u00a0days after notice of such failure is given to the party or bankruptcy.
29. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can assess at the measurement date; or
Level 2
Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3
Unobservable inputs for the assets or liabilities, requiring Glencore to make market-based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded, whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options, swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair value predominantly from models that use broker quotes and applicable market-based estimates surrounding location, quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different valuation model could produce a materially different estimate of fair value.
It is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
The following tables show the fair values of the derivative financial instruments including trade-related financial and physical forward purchase and sale commitments by type of contract and non-current other financial assets and liabilities as at 31 December 2022 and 2021. Other assets and liabilities which are measured at fair value on a recurring basis are marketing inventories, other investments, cash and cash equivalents. There are no non-recurring fair value measurements.
Financial assets
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
\u2013
5,426
\u2013
5,426
Contingent consideration
\u2013
\u2013
128
128
Other receivables
\u2013
\u2013
73
73
Other non-current receivables and loans
\u2013
\u2013
22
22
Convertible loan
\u2013
\u2013
168
168
Non-current contingent consideration
\u2013
\u2013
103
103
Other investments
280
176
\u2013
456
Financial assets
280
5,602
494
6,376
Other financial assets
Commodity-related contracts
Futures
809
156
\u2013
965
Options
120
4
\u2013
124
Swaps
40
165
18
223
Physical forwards
\u2013
1,786
2,949
4,735
Financial contracts
Foreign currency and interest rate contracts
\u2013
62
\u2013
62
Current other financial assets
969
2,173
2,967
6,109
Non-current other financial assets
Cross currency swaps
\u2013
24
\u2013
24
Foreign currency and interest rate contracts
\u2013
1
\u2013
1
Purchased call options over Glencore shares1
\u2013
181
\u2013
181
Non-current other financial assets
\u2013
206
\u2013
206
Total
1,249
7,981
3,461
12,691
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables2
\u2013
5,269
\u2013
5,269
Contingent consideration2
\u2013
\u2013
175
175
Other receivables2
\u2013
\u2013
79
79
Other non-current receivables and loans2
\u2013
\u2013
28
28
Non-current contingent consideration
\u2013
\u2013
135
135
Other investments
1,536
84
\u2013
1,620
Financial assets
1,536
5,353
417
7,306
Other financial assets
Commodity-related contracts
Futures3
420
138
\u2013
558
Options
133
31
\u2013
164
Swaps3
5
245
40
290
Physical forwards
\u2013
2,878
646
3,524
Financial contracts
Cross currency swaps
\u2013
5
\u2013
5
Foreign currency and interest rate contracts
\u2013
95
\u2013
95
Current other financial assets
558
3,392
686
4,636
Non-current other financial assets
Cross currency swaps
\u2013
125
\u2013
125
Foreign currency and interest rate contracts
\u2013
272
\u2013
272
Purchased call options over Glencore shares1
\u2013
61
\u2013
61
Non-current other financial assets
\u2013
458
\u2013
458
Total
2,094
9,203
1,103
12,400
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
US$ million
Contingent consideration
Convertible loan
Physical
forwards
Swaps
Other1
Total
Level 3
1 January 2022
261
\u2013
411
40
(63)
649
Total gain recognised in revenue
\u2013
\u2013
231
67
\u2013
298
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
2,403
(70)
\u2013
2,333
Acquisition
(20)
200
\u2013
\u2013
\u2013
180
Fair value recognised in other income/(expense)
105
(32)
\u2013
\u2013
(173)
(100)
Realised
(189)
\u2013
(209)
(19)
(12)
(429)
31 December 2022
157
168
2,836
18
(248)
2,931
1 January 2021
376
\u2013
6
\u2013
(70)
312
Total gain recognised in revenue
\u2013
\u2013
117
337
\u2013
454
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
389
(297)
\u2013
92
Fair value recognised in other income/(expense)
26
\u2013
\u2013
\u2013
7
33
Realised
(141)
\u2013
(101)
\u2013
\u2013
(242)
31 December 2021
261
\u2013
411
40
(63)
649
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
During the year, no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Fair value of financial assets / financial liabilities
Some of the Group\u2019s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
Futures, options and swaps classified as Level 1 financial assets and liabilities are measured using quoted prices in an active market.
Accounts receivable and payables, and certain futures, options, swaps, physical forwards, cross currency swaps, foreign currency and interest rate contracts classified as Level 2 financial assets and liabilities are measured using discounted cash flow models. Key inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required.
Call options over Glencore shares classified as Level 2 financial assets and liabilities are measured using an option pricing model. Key inputs include the current price of Glencore shares, strike price, maturity date of the underlying convertible debt security, risk-free rate and volatility.
Given the extent to which the Group recognises financial instrument assets and liabilities at fair value, the preparation of the Group\u2019s consolidated financial statements requires management to consider on an on-going basis, the key valuation metrics and judgements involved in the determination of the fair value of financial instruments. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Management reviewed the key valuation metrics, assumptions and methodologies involved in the determination of the Level 3 fair value of financial instruments and determined that the valuations were materially reasonable.
The\u00a0following table provides information on the valuation techniques and inputs used to determine the fair value of Level 3 financial assets and financial liabilities.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-111": { "value": "
Other investments
US$ million
2022
2021
Fair value through other comprehensive income1
EN+ GROUP PLC
\u2013
789
Yancoal
\u2013
160
OSJC Rosneft
\u2013
485
Press Metal Aluminium
129
\u2013
Shenzhen Energy Gas Investment Holding
104
\u2013
Other
186
186
419
1,620
Fair value through profit and loss
Sandstorm Gold Ltd
35
\u2013
Other
2
\u2013
37
\u2013
Total
456
1,620
1Movements in fair value through other comprehensive income for the year comprise negative changes in fair value of $1,274 million relating to EN+ and Rosneft (see below) net of positive changes in fair value of $150 million (2021: negative changes of $52 million) relating to other investments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsHeldForTradingExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-112": { "value": "
Notes to the financial statements continued
12. Advances and loans
US$ million
Notes
2022
2021
Financial assets at amortised cost
Loans to associates
130
128
Other non-current receivables and loans
309
519
Deferred consideration
26
142
\u2013
Rehabilitation trust fund1
148
148
729
795
Financial assets at fair value through profit and loss
Other non-current receivables and loans
28
22
28
Convertible loan
28
168
\u2013
Contingent consideration
28
103
135
293
163
Non-financial assets
Pension surpluses
24
148
125
Advances repayable with product2
1,254
1,673
Land rights prepayment
150
150
Other tax and related non-current receivables3
80
621
1,632
2,569
Total
2,654
3,527
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
2Includes advances, net of $487\u00a0million (2021: $409\u00a0million) provided by banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production over the next 12 months.
3Comprises sales and other tax receivables of $1,351\u00a0million (2021: $1,253\u00a0million) and other receivables of $152\u00a0million (2021: $169\u00a0million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-113": { "value": "
Notes to the financial statements continued
12. Advances and loans
US$ million
Notes
2022
2021
Financial assets at amortised cost
Loans to associates
130
128
Other non-current receivables and loans
309
519
Deferred consideration
26
142
\u2013
Rehabilitation trust fund1
148
148
729
795
Financial assets at fair value through profit and loss
Other non-current receivables and loans
28
22
28
Convertible loan
28
168
\u2013
Contingent consideration
28
103
135
293
163
Non-financial assets
Pension surpluses
24
148
125
Advances repayable with product2
1,254
1,673
Land rights prepayment
150
150
Other tax and related non-current receivables3
80
621
1,632
2,569
Total
2,654
3,527
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
Financial assets at amortised cost
Loans to associates
Loans to associates generally bear interest at applicable floating market rates plus a premium.
Other non-current receivables and loans
Other non-current receivables and loans comprise the following:
US$\u00a0million
2022
2021
Secured financing arrangements
306
511
Other
3
8
Total
309
519
Various financing facilities, generally marketing related and secured against certain assets and/or payable from the future sale of production of the counterparty. The non-current receivables and loans are interest-bearing and on average are to be repaid over a three-year period.
During 2022, no fair value movements were recognised (2021: positive $35\u00a0million)(see note 7).
Advances repayable with product
US$\u00a0million
2022
2021
Counterparty
Mopani transaction debt
579
881
Soci\u00e9t\u00e9 Nationale d'Electricit\u00e9 (SNEL) power advances
338
304
Chad State National Oil Company
199
293
Soci\u00e9t\u00e9 Nationale des P\u00e9troles du Congo
86
129
Other1
52
66
Total
1,254
1,673
1Comprises no individually material items.
Mopani
On 31 March 2021, Glencore completed the disposal of its 90% interest in Mopani to ZCCM Investments Holdings plc, the holder of the remaining 10% interest in Mopani, in exchange for $1 and the rights to offtake copper and other metals from Mopani until
$1.5 billion of existing intercompany debt (the \u2018transaction debt\u2019) has been repaid to Glencore. The transaction debt attracts interest at a floating benchmark rate plus 3%. The repayment of the transaction debt is in substance based on Glencore receiving physical product deliveries from Mopani through its offtake rights and retaining defined percentages of Mopani\u2019s annual gross revenues until the transaction debt is fully repaid. On the date of completion, the fair value of the transaction debt was determined to be
$838 million (see note 26). During 2022, the originally expected production rate at Mopani was not achieved, in part due to a lack of funding. The new shareholder has conducted operational and strategic reviews, resulting in Mopani seeking additional funding and to restructure and extend repayment of the transaction debt. As a result, an impairment of $422 million was recognised (see note 7). As at 31 December 2022, $596 million (2021: $904 million) of debt is outstanding, of which $579 million (2021: $881 million) is due after 12 months and is presented above and $17 million (2021: $23 million) is due within 12 months and is included in Accounts receivable.
SNEL power advances
In early 2012, a joint agreement with Soci\u00e9t\u00e9 Nationale d\u2019\u00c9lectricit\u00e9 (SNEL), the Democratic Republic of the Congo\u2019s (DRC) national electricity utility, was signed whereby Glencore\u2019s operations would contribute $375 million to a major electricity infrastructure refurbishment programme, including transmission and distribution systems. This facilitated a progressive increase in power availability to 450 megawatts by the end of Q1 2020. Funding commenced in the second quarter of 2012 and completed in Q4 2021. The loans are being repaid via discounts on electricity purchases.
Chad State National Oil Company
The net outstanding amount of advances to the Chad State National Oil Company (SHT) is $232\u00a0million (2021: $321\u00a0million). These amounts are to be settled through future oil deliveries over ten years. As at 31 December 2022, the advance is net of $393\u00a0million (2021: $604\u00a0million) provided by a syndicate of lenders, the repayment terms of which are contingent upon and connected to the receipt of oil due from SHT under the prepayment. Of the net amount advanced, $199\u00a0million (2021: $293\u00a0million) is receivable after
12 months and is presented within Other non-current receivables and loans and $33\u00a0million (2021: $31\u00a0million) is due within 12 months and included within Accounts receivable.
Soci\u00e9t\u00e9 Nationale des P\u00e9troles du Congo (SNPC)
The net outstanding amount of advances to SNPC is $131\u00a0million (2021: $156\u00a0million). These amounts are to be settled through future oil deliveries over five years. As at 31 December 2022, the advance is net of $385\u00a0million (2021: $498\u00a0million) provided by the lenders, the repayment terms of which are contingent upon and connected to the future receipt of oil contractually due from SNPC. Of the net amount advanced, $86\u00a0million (2021: $129\u00a0million) is due after 12 months and is presented within Other long-term receivables and loans and $45\u00a0million (2021: $27\u00a0million) is due within 12 months and included within Accounts receivable.
Land rights prepayment
In 2019, Kamoto Copper Company (\u2018KCC\u2019) entered into an agreement with La G\u00e9n\u00e9rale des Carri\u00e8res et des Mines (\u2018G\u00e9camines\u2019), Glencore\u2019s 25% joint venture partner in KCC, to acquire from G\u00e9camines a comprehensive land package covering areas adjacent to KCC\u2019s existing mining concessions for $250 million. The package includes multiple blocks for construction of a new long-term tailings facility and the possible exploitation of additional resources that will enhance KCC\u2019s ability to more efficiently operate its mines, facilities and other key infrastructure requirements.
Notes to the financial statements continued
12. Advances and loans continued
In addition to the above consideration, the agreement includes the following key additional undertakings:
  • obligations on KCC to remove tailings (estimated at circa 15m dmt), currently in a sub-section of these areas, to another suitable location;
  • contingent obligations to pay \u2018Pas de Porte\u2019 payments to G\u00e9camines if KCC declares a JORC compliant reserve or otherwise elects to mine any resources in the Resource Areas; and
  • a new royalty to G\u00e9camines of 2.5% of net sales from the acquired land areas if KCC elects to mine any resources in such areas.
In August 2020, KCC advanced $150 million to G\u00e9camines as an agreed prepayment of the consideration due. If the closing conditions as prescribed in the agreement are not fulfilled, Glencore has the right to accrue interest on the prepaid amount, terminate the agreement and, if funds are not returned, offset against future amounts owing to G\u00e9camines. The balance of the consideration is due 5 days after the respective closing conditions of each area to be transferred are satisfied. During 2022, activities to progress the transfer of these land packages (e.g. removal of tailings and drilling activities to confirm resource availability) continued. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-114": { "value": "
Notes to the financial statements continued
12. Advances and loans
US$ million
Notes
2022
2021
Financial assets at amortised cost
Loans to associates
130
128
Other non-current receivables and loans
309
519
Deferred consideration
26
142
\u2013
Rehabilitation trust fund1
148
148
729
795
Financial assets at fair value through profit and loss
Other non-current receivables and loans
28
22
28
Convertible loan
28
168
\u2013
Contingent consideration
28
103
135
293
163
Non-financial assets
Pension surpluses
24
148
125
Advances repayable with product2
1,254
1,673
Land rights prepayment
150
150
Other tax and related non-current receivables3
80
621
1,632
2,569
Total
2,654
3,527
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
Financial assets at amortised cost
Loans to associates
Loans to associates generally bear interest at applicable floating market rates plus a premium.
Other non-current receivables and loans
Other non-current receivables and loans comprise the following:
US$\u00a0million
2022
2021
Secured financing arrangements
306
511
Other
3
8
Total
309
519
Various financing facilities, generally marketing related and secured against certain assets and/or payable from the future sale of production of the counterparty. The non-current receivables and loans are interest-bearing and on average are to be repaid over a three-year period.
Other non-current receivables and loans
During 2022, no fair value movements were recognised (2021: positive $35\u00a0million)(see note 7).
Non-financial assets
Advances repayable with product
US$\u00a0million
2022
2021
Counterparty
Mopani transaction debt
579
881
Soci\u00e9t\u00e9 Nationale d'Electricit\u00e9 (SNEL) power advances
338
304
Chad State National Oil Company
199
293
Soci\u00e9t\u00e9 Nationale des P\u00e9troles du Congo
86
129
Other1
52
66
Total
1,254
1,673
1Comprises no individually material items.
Mopani
On 31 March 2021, Glencore completed the disposal of its 90% interest in Mopani to ZCCM Investments Holdings plc, the holder of the remaining 10% interest in Mopani, in exchange for $1 and the rights to offtake copper and other metals from Mopani until
$1.5 billion of existing intercompany debt (the \u2018transaction debt\u2019) has been repaid to Glencore. The transaction debt attracts interest at a floating benchmark rate plus 3%. The repayment of the transaction debt is in substance based on Glencore receiving physical product deliveries from Mopani through its offtake rights and retaining defined percentages of Mopani\u2019s annual gross revenues until the transaction debt is fully repaid. On the date of completion, the fair value of the transaction debt was determined to be
$838 million (see note 26). During 2022, the originally expected production rate at Mopani was not achieved, in part due to a lack of funding. The new shareholder has conducted operational and strategic reviews, resulting in Mopani seeking additional funding and to restructure and extend repayment of the transaction debt. As a result, an impairment of $422 million was recognised (see note 7). As at 31 December 2022, $596 million (2021: $904 million) of debt is outstanding, of which $579 million (2021: $881 million) is due after 12 months and is presented above and $17 million (2021: $23 million) is due within 12 months and is included in Accounts receivable.
SNEL power advances
In early 2012, a joint agreement with Soci\u00e9t\u00e9 Nationale d\u2019\u00c9lectricit\u00e9 (SNEL), the Democratic Republic of the Congo\u2019s (DRC) national electricity utility, was signed whereby Glencore\u2019s operations would contribute $375 million to a major electricity infrastructure refurbishment programme, including transmission and distribution systems. This facilitated a progressive increase in power availability to 450 megawatts by the end of Q1 2020. Funding commenced in the second quarter of 2012 and completed in Q4 2021. The loans are being repaid via discounts on electricity purchases.
Chad State National Oil Company
The net outstanding amount of advances to the Chad State National Oil Company (SHT) is $232\u00a0million (2021: $321\u00a0million). These amounts are to be settled through future oil deliveries over ten years. As at 31 December 2022, the advance is net of $393\u00a0million (2021: $604\u00a0million) provided by a syndicate of lenders, the repayment terms of which are contingent upon and connected to the receipt of oil due from SHT under the prepayment. Of the net amount advanced, $199\u00a0million (2021: $293\u00a0million) is receivable after
12 months and is presented within Other non-current receivables and loans and $33\u00a0million (2021: $31\u00a0million) is due within 12 months and included within Accounts receivable.
Soci\u00e9t\u00e9 Nationale des P\u00e9troles du Congo (SNPC)
The net outstanding amount of advances to SNPC is $131\u00a0million (2021: $156\u00a0million). These amounts are to be settled through future oil deliveries over five years. As at 31 December 2022, the advance is net of $385\u00a0million (2021: $498\u00a0million) provided by the lenders, the repayment terms of which are contingent upon and connected to the future receipt of oil contractually due from SNPC. Of the net amount advanced, $86\u00a0million (2021: $129\u00a0million) is due after 12 months and is presented within Other long-term receivables and loans and $45\u00a0million (2021: $27\u00a0million) is due within 12 months and included within Accounts receivable.
Land rights prepayment
In 2019, Kamoto Copper Company (\u2018KCC\u2019) entered into an agreement with La G\u00e9n\u00e9rale des Carri\u00e8res et des Mines (\u2018G\u00e9camines\u2019), Glencore\u2019s 25% joint venture partner in KCC, to acquire from G\u00e9camines a comprehensive land package covering areas adjacent to KCC\u2019s existing mining concessions for $250 million. The package includes multiple blocks for construction of a new long-term tailings facility and the possible exploitation of additional resources that will enhance KCC\u2019s ability to more efficiently operate its mines, facilities and other key infrastructure requirements.
Notes to the financial statements continued
12. Advances and loans continued
In addition to the above consideration, the agreement includes the following key additional undertakings:
  • obligations on KCC to remove tailings (estimated at circa 15m dmt), currently in a sub-section of these areas, to another suitable location;
  • contingent obligations to pay \u2018Pas de Porte\u2019 payments to G\u00e9camines if KCC declares a JORC compliant reserve or otherwise elects to mine any resources in the Resource Areas; and
  • a new royalty to G\u00e9camines of 2.5% of net sales from the acquired land areas if KCC elects to mine any resources in such areas.
In August 2020, KCC advanced $150 million to G\u00e9camines as an agreed prepayment of the consideration due. If the closing conditions as prescribed in the agreement are not fulfilled, Glencore has the right to accrue interest on the prepaid amount, terminate the agreement and, if funds are not returned, offset against future amounts owing to G\u00e9camines. The balance of the consideration is due 5 days after the respective closing conditions of each area to be transferred are satisfied. During 2022, activities to progress the transfer of these land packages (e.g. removal of tailings and drilling activities to confirm resource availability) continued.
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
2Includes advances, net of $487\u00a0million (2021: $409\u00a0million) provided by banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production over the next 12 months.
3Comprises sales and other tax receivables of $1,351\u00a0million (2021: $1,253\u00a0million) and other receivables of $152\u00a0million (2021: $169\u00a0million).
The average credit period on sales of goods is 17 days (2021: 16 days). The carrying value of trade receivables approximates fair value.
The Group applies a simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit loss on trade receivables is estimated using a provision matrix by reference to past default experience and credit rating, adjusted as appropriate for current observable data. Expected credit loss provisions are recognised in cost of goods sold and during the period, $148\u00a0million (2021: $11 million) of such losses were recognised. Current year provision is up over prior year due primarily to higher over-all gross receivable balances on-hand at period-end as a result of higher commodity prices and a specific slow-moving exposure which is expected to be settled during 2023. The following table details the risk profile of trade receivables based on the Group\u2019s provision matrix.
US$ million
Trade receivables \u2013 days past due
As at 31 December 2022
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
5,014
444
158
85
1,673
7,374
Weighted average expected credit loss rate
0.45%
0.67%
0.98%
1.17%
7.34%
Lifetime expected credit loss
(23)
(3)
(2)
(1)
(143)
(172)
Total
4,991
441
156
84
1,530
7,202
US$ million
Trade receivables \u2013 days past due
As at 31 December 2021
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
4,034
287
157
152
337
4,967
Weighted average expected credit loss rate
0.27%
0.55%
0.82%
1.10%
2.33%
Lifetime expected credit loss
(11)
(2)
(1)
(2)
(8)
(24)
Total
4,023
285
156
150
329
4,943
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-115": { "value": "
Notes to the financial statements continued
12. Advances and loans
US$ million
Notes
2022
2021
Financial assets at amortised cost
Loans to associates
130
128
Other non-current receivables and loans
309
519
Deferred consideration
26
142
\u2013
Rehabilitation trust fund1
148
148
729
795
Financial assets at fair value through profit and loss
Other non-current receivables and loans
28
22
28
Convertible loan
28
168
\u2013
Contingent consideration
28
103
135
293
163
Non-financial assets
Pension surpluses
24
148
125
Advances repayable with product2
1,254
1,673
Land rights prepayment
150
150
Other tax and related non-current receivables3
80
621
1,632
2,569
Total
2,654
3,527
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
Financial assets at amortised cost
Loans to associates
Loans to associates generally bear interest at applicable floating market rates plus a premium.
Other non-current receivables and loans
Other non-current receivables and loans comprise the following:
US$\u00a0million
2022
2021
Secured financing arrangements
306
511
Other
3
8
Total
309
519
Various financing facilities, generally marketing related and secured against certain assets and/or payable from the future sale of production of the counterparty. The non-current receivables and loans are interest-bearing and on average are to be repaid over a three-year period.
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
2Includes advances, net of $487\u00a0million (2021: $409\u00a0million) provided by banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production over the next 12 months.
3Comprises sales and other tax receivables of $1,351\u00a0million (2021: $1,253\u00a0million) and other receivables of $152\u00a0million (2021: $169\u00a0million).
The average credit period on sales of goods is 17 days (2021: 16 days). The carrying value of trade receivables approximates fair value.
The Group applies a simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit loss on trade receivables is estimated using a provision matrix by reference to past default experience and credit rating, adjusted as appropriate for current observable data. Expected credit loss provisions are recognised in cost of goods sold and during the period, $148\u00a0million (2021: $11 million) of such losses were recognised. Current year provision is up over prior year due primarily to higher over-all gross receivable balances on-hand at period-end as a result of higher commodity prices and a specific slow-moving exposure which is expected to be settled during 2023. The following table details the risk profile of trade receivables based on the Group\u2019s provision matrix.
US$ million
Trade receivables \u2013 days past due
As at 31 December 2022
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
5,014
444
158
85
1,673
7,374
Weighted average expected credit loss rate
0.45%
0.67%
0.98%
1.17%
7.34%
Lifetime expected credit loss
(23)
(3)
(2)
(1)
(143)
(172)
Total
4,991
441
156
84
1,530
7,202
US$ million
Trade receivables \u2013 days past due
As at 31 December 2021
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
4,034
287
157
152
337
4,967
Weighted average expected credit loss rate
0.27%
0.55%
0.82%
1.10%
2.33%
Lifetime expected credit loss
(11)
(2)
(1)
(2)
(8)
(24)
Total
4,023
285
156
150
329
4,943
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-116": { "value": "
12. Advances and loans
US$ million
Notes
2022
2021
Financial assets at amortised cost
Loans to associates
130
128
Other non-current receivables and loans
309
519
Deferred consideration
26
142
\u2013
Rehabilitation trust fund1
148
148
729
795
Financial assets at fair value through profit and loss
Other non-current receivables and loans
28
22
28
Convertible loan
28
168
\u2013
Contingent consideration
28
103
135
293
163
Non-financial assets
Pension surpluses
24
148
125
Advances repayable with product2
1,254
1,673
Land rights prepayment
150
150
Other tax and related non-current receivables3
80
621
1,632
2,569
Total
2,654
3,527
1The balance has been assessed for impairment and is deemed recoverable.
2Net of $538\u00a0million (2021: $1,074\u00a0million) provided by various banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production.
3 Includes VAT impairment charges of $632 million (see note 7).
Financial assets at fair value through profit and loss
Other non-current receivables and loans
During 2022, no fair value movements were recognised (2021: positive $35\u00a0million)(see note 7).
Convertible loan
In May 2022, Glencore subscribed for $200 million of convertible debt in Li-Cycle Holdings Corp. (\u2018Li-Cycle\u2019), a lithium-ion battery recycler in North America, listed on the New York Stock Exchange. The convertible loan is repayable by 2027 at an effective interest rate of SOFR plus 5% per annum. If Glencore elects to convert during the conversion option period, Glencore would hold an approximate 10% equity stake in Li-Cycle. The loan is classified as financial asset at fair value through profit and loss in accordance with IFRS (see notes 28 and 29). During 2022, fair value movements of negative $40 million were recognised (see note 5).
Contingent consideration
In 2022, fair value movements of positive $117\u00a0million (2021: $39\u00a0million) were recognised (see note 5).
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore\u2019s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values. When market values are not available, fair values have been calculated by discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate the fair values with the exception of $27,398\u00a0million (2021: $33,023\u00a0million) of borrowings, the fair value of which at 31 December 2022 was $26,675 million (2021: $34,169 million). $6,918 million (2021: $10,132 million) represents the listed portion of the borrowing portfolio, based on quoted prices on active markets (a Level 1 fair value measurement), and $19,757 million (2021: $24,037 million) is based on observable market prices (a Level 2 fair value measurement).
2022
Amortised
cost
FVTPL1
FVTOCI2
US$ million
Total
Assets
Other investments
\u2013
37
419
456
Non-current other financial assets
\u2013
206
\u2013
206
Advances and loans
729
293
\u2013
1,022
Accounts receivable
16,019
5,627
\u2013
21,646
Other financial assets
\u2013
6,109
\u2013
6,109
Cash and cash equivalents
1,923
\u2013
\u2013
1,923
Total financial assets
18,671
12,272
419
31,362
Liabilities
Borrowings
28,777
\u2013
\u2013
28,777
Non-current other financial liabilities
14
2,041
\u2013
2,055
Accounts payable
12,703
14,181
\u2013
26,884
Other financial liabilities
\u2013
4,882
\u2013
4,882
Total financial liabilities
41,494
21,104
\u2013
62,598
2021
Amortised
cost
FVTPL1
FVTOCI2
Total
US$ million
Assets
Other investments
\u2013
\u2013
1,620
1,620
Non-current other financial assets
\u2013
458
\u2013
458
Advances and loans
795
163
\u2013
958
Accounts receivable
11,672
5,523
\u2013
17,195
Other financial assets
\u2013
4,636
\u2013
4,636
Cash and cash equivalents
3,241
\u2013
\u2013
3,241
Total financial assets
15,708
10,780
1,620
28,108
Liabilities
Borrowings
34,641
\u2013
\u2013
34,641
Non-current other financial liabilities
87
623
\u2013
710
Accounts payable
13,139
13,806
\u2013
26,945
Other financial liabilities
\u2013
6,077
\u2013
6,077
Total financial liabilities
47,867
20,506
\u2013
68,373
1FVTPL \u2013 Fair value through profit and loss.
2FVTOCI \u2013 Fair value through other comprehensive income.
29. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can assess at the measurement date; or
Level 2
Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3
Unobservable inputs for the assets or liabilities, requiring Glencore to make market-based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded, whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options, swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair value predominantly from models that use broker quotes and applicable market-based estimates surrounding location, quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different valuation model could produce a materially different estimate of fair value.
It is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
Notes to the financial statements continued
29. Fair value measurements continued
The following tables show the fair values of the derivative financial instruments including trade-related financial and physical forward purchase and sale commitments by type of contract and non-current other financial assets and liabilities as at 31 December 2022 and 2021. Other assets and liabilities which are measured at fair value on a recurring basis are marketing inventories, other investments, cash and cash equivalents. There are no non-recurring fair value measurements.
Financial assets
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
\u2013
5,426
\u2013
5,426
Contingent consideration
\u2013
\u2013
128
128
Other receivables
\u2013
\u2013
73
73
Other non-current receivables and loans
\u2013
\u2013
22
22
Convertible loan
\u2013
\u2013
168
168
Non-current contingent consideration
\u2013
\u2013
103
103
Other investments
280
176
\u2013
456
Financial assets
280
5,602
494
6,376
Other financial assets
Commodity-related contracts
Futures
809
156
\u2013
965
Options
120
4
\u2013
124
Swaps
40
165
18
223
Physical forwards
\u2013
1,786
2,949
4,735
Financial contracts
Foreign currency and interest rate contracts
\u2013
62
\u2013
62
Current other financial assets
969
2,173
2,967
6,109
Non-current other financial assets
Cross currency swaps
\u2013
24
\u2013
24
Foreign currency and interest rate contracts
\u2013
1
\u2013
1
Purchased call options over Glencore shares1
\u2013
181
\u2013
181
Non-current other financial assets
\u2013
206
\u2013
206
Total
1,249
7,981
3,461
12,691
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables2
\u2013
5,269
\u2013
5,269
Contingent consideration2
\u2013
\u2013
175
175
Other receivables2
\u2013
\u2013
79
79
Other non-current receivables and loans2
\u2013
\u2013
28
28
Non-current contingent consideration
\u2013
\u2013
135
135
Other investments
1,536
84
\u2013
1,620
Financial assets
1,536
5,353
417
7,306
Other financial assets
Commodity-related contracts
Futures3
420
138
\u2013
558
Options
133
31
\u2013
164
Swaps3
5
245
40
290
Physical forwards
\u2013
2,878
646
3,524
Financial contracts
Cross currency swaps
\u2013
5
\u2013
5
Foreign currency and interest rate contracts
\u2013
95
\u2013
95
Current other financial assets
558
3,392
686
4,636
Non-current other financial assets
Cross currency swaps
\u2013
125
\u2013
125
Foreign currency and interest rate contracts
\u2013
272
\u2013
272
Purchased call options over Glencore shares1
\u2013
61
\u2013
61
Non-current other financial assets
\u2013
458
\u2013
458
Total
2,094
9,203
1,103
12,400
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
US$ million
Contingent consideration
Convertible loan
Physical
forwards
Swaps
Other1
Total
Level 3
1 January 2022
261
\u2013
411
40
(63)
649
Total gain recognised in revenue
\u2013
\u2013
231
67
\u2013
298
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
2,403
(70)
\u2013
2,333
Acquisition
(20)
200
\u2013
\u2013
\u2013
180
Fair value recognised in other income/(expense)
105
(32)
\u2013
\u2013
(173)
(100)
Realised
(189)
\u2013
(209)
(19)
(12)
(429)
31 December 2022
157
168
2,836
18
(248)
2,931
1 January 2021
376
\u2013
6
\u2013
(70)
312
Total gain recognised in revenue
\u2013
\u2013
117
337
\u2013
454
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
389
(297)
\u2013
92
Fair value recognised in other income/(expense)
26
\u2013
\u2013
\u2013
7
33
Realised
(141)
\u2013
(101)
\u2013
\u2013
(242)
31 December 2021
261
\u2013
411
40
(63)
649
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
During the year, no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Fair value of financial assets / financial liabilities
Some of the Group\u2019s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
Futures, options and swaps classified as Level 1 financial assets and liabilities are measured using quoted prices in an active market.
Accounts receivable and payables, and certain futures, options, swaps, physical forwards, cross currency swaps, foreign currency and interest rate contracts classified as Level 2 financial assets and liabilities are measured using discounted cash flow models. Key inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required.
Call options over Glencore shares classified as Level 2 financial assets and liabilities are measured using an option pricing model. Key inputs include the current price of Glencore shares, strike price, maturity date of the underlying convertible debt security, risk-free rate and volatility.
Given the extent to which the Group recognises financial instrument assets and liabilities at fair value, the preparation of the Group\u2019s consolidated financial statements requires management to consider on an on-going basis, the key valuation metrics and judgements involved in the determination of the fair value of financial instruments. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Management reviewed the key valuation metrics, assumptions and methodologies involved in the determination of the Level 3 fair value of financial instruments and determined that the valuations were materially reasonable.
The\u00a0following table provides information on the valuation techniques and inputs used to determine the fair value of Level 3 financial assets and financial liabilities.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
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Loss allowances of financial assets at amortised cost
The Group determines the expected credit loss of loans to associates, other non-current receivables and loans (at amortised cost) and deferred consideration based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. Expected credit losses for these assets are measured as either 12-month expected credit losses, taking into account prior experience regarding probability of default adjusted for forward looking information, or as lifetime expected credit losses (when there is significant increase in credit risk or the asset is credit-impaired). The movement in loss allowance for financial assets classified at amortised cost is detailed below:
2022
Loans to associates
Other non-current receivables and loans and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 20223
15
191
206
365
431
796
1,002
Allowance for credit loss
1 January 2022
\u2013
62
62
14
240
254
316
Released during the period4
\u2013
\u2013
\u2013
\u2013
(9)
(9)
(9)
Charged during the period4
\u2013
14
14
\u2013
91
91
105
Effect of foreign currency exchange movements
\u2013
\u2013
\u2013
(5)
\u2013
(5)
(5)
Reclassifications from current accounts receivable
\u2013
\u2013
\u2013
\u2013
14
14
14
31 December 2022
\u2013
76
76
9
336
345
421
Net carrying value 31 December 2022
15
115
130
356
95
451
581
1Comprises stage 3 credit losses of $76 million.
2Comprises stage 2 credit losses of $51 million and stage 3 credit losses of $285 million.
3Increases in lifetime ECL gross carrying values during the year result primarily from reclassifications from 12 months ECL.
4$37 million recognised as impairment (see note 7) and the balancing charge of $59 million recognised in cost of goods sold.
2021
Loans to associates
Other non-current receivables and loans and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2021
31
159
190
529
244
773
963
Allowance for credit loss
1 January 2021
\u2013
62
62
37
303
340
402
Released during the period3
\u2013
\u2013
\u2013
(23)
(5)
(28)
(28)
Charged during the period3
\u2013
\u2013
\u2013
15
\u2013
15
15
Utilised during the period
\u2013
\u2013
\u2013
(13)
(35)
(48)
(48)
Reclassifications to current accounts receivable
\u2013
\u2013
\u2013
(2)
(23)
(25)
(25)
31 December 2021
\u2013
62
62
14
240
254
316
Net carrying value 31 December 2021
31
97
128
515
4
519
647
1Comprises stage 3 credit losses of $62 million.
2Comprises stage 3 credit losses of $240 million.
3$22 million recognised as impairment (see note 7) and the balancing charge of $9 million recognised in cost of goods sold.
The Group determines the expected credit loss of receivables from associates, deferred consideration and other receivables (at amortised cost) based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. Expected credit losses for these assets are measured as either 12-month expected credit losses, taking into account prior experience regarding probability of default adjusted for forward looking information, or as lifetime expected credit losses (when there is significant increase in credit risk or the asset is credit-impaired). The movement in allowance for credit loss relating to receivables from associates and other receivables is detailed below:
2022
Receivables from associates
Other receivables and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2022
432
136
568
896
108
1,004
1,572
Allowance for credit loss
1 January 2022
\u2013
116
116
23
106
129
245
Released during the period3
\u2013
(2)
(2)
(5)
\u2013
(5)
(7)
Charged during the period3
\u2013
21
21
34
16
50
71
Utilised during the period
\u2013
\u2013
\u2013
(3)
(4)
(7)
(7)
Effect of foreign currency exchange movements
\u2013
(8)
(8)
\u2013
(4)
(4)
(12)
Reclassification to held for sale
\u2013
\u2013
\u2013
\u2013
(6)
(6)
(6)
Reclassifications to non-current receivables and loans
\u2013
\u2013
\u2013
(10)
(4)
(14)
(14)
31 December 2022
\u2013
127
127
39
104
143
270
Net carrying value 31 December 2022
432
9
441
857
4
861
1,302
1Comprises stage 2 credit losses of $2 million and stage 3 credit losses of $125 million.
2Comprises stage 2 credit losses of $29 million and stage 3 credit losses of $75 million.
3$15 million recognised as impairment (see note 7) and the balancing $49 million net charge recognised in cost of goods sold.
2021
Receivables from associates
Other receivables and deferred consideration
US$ million
12-Month ECL
Lifetime ECL1
Total
12-Month ECL
Lifetime ECL2
Total
Total
Gross carrying value 31 December 2021
391
138
529
387
144
531
1,060
Allowance for credit loss
1 January 2021
\u2013
122
122
51
81
132
254
Released during the period3
\u2013
\u2013
\u2013
(10)
\u2013
(10)
(10)
Charged during the period3
\u2013
3
3
15
15
30
33
Utilised during the period
\u2013
\u2013
\u2013
(29)
(19)
(48)
(48)
Effect of foreign currency exchange movements
\u2013
(9)
(9)
\u2013
\u2013
\u2013
(9)
Reclassifications from non-current receivables and loans
\u2013
\u2013
\u2013
(4)
29
25
25
31 December 2021
\u2013
116
116
23
106
129
245
Net carrying value 31 December 2021
391
22
413
364
38
402
815
1Comprises stage 2 credit losses of $2 million and stage 3 credit losses of $114 million.
2Comprises stage 2 credit losses of $33 million and stage 3 credit losses of $73 million.
3$7 million recognised as a reversal of impairment (see note 7) and the balancing $30 million net charge recognised in cost of goods sold.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-118": { "value": "
13. Inventories
US$ million
2022
2021
Inventory at fair value less costs of disposal
19,157
16,073
Raw materials and consumables
5,970
5,077
Semi finished products
5,527
4,901
Finished goods
2,806
2,383
Inventory at the lower of cost or net realisable value
14,303
12,361
Total current inventory
33,460
28,434
Raw materials and consumables
605
662
Inventory at the lower of cost or net realisable value
605
662
Total non-current inventory
605
662
Current inventory
The amount of inventories and related ancillary costs recognised as an expense during the period was $211,666\u00a0million (2021: $177,704\u00a0million).
Fair value of inventories are predominantly a Level 2 fair value measurement (see note 29) using observable market prices obtained from exchanges, traded reference indices or market survey services adjusted for relevant location and quality differentials. There are no significant unobservable inputs in the fair value measurement of such inventories.
Glencore has a number of dedicated financing facilities, which finance a portion of its inventories. In each case, the inventory has not been derecognised as the Group has not transferred control. The proceeds received are recognised as current borrowings (see note 21). As at 31 December 2022, the total amount of inventory pledged under such facilities was $3,455\u00a0million (2021: $17\u00a0million). The proceeds received and recognised as current borrowings were $3,092\u00a0million (2021: $2\u00a0million) and $80\u00a0million (2021: $80\u00a0million) as non-current borrowings.
Non-current inventory
Non-current inventories valued at lower of cost or net realisable value are not expected to be utilised or sold within the normal operating cycle and are therefore classified as non-current inventory.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-119": { "value": "
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
2Includes advances, net of $487\u00a0million (2021: $409\u00a0million) provided by banks, the repayment terms of which are contingent upon and connected to the future delivery of contractual production over the next 12 months.
3Comprises sales and other tax receivables of $1,351\u00a0million (2021: $1,253\u00a0million) and other receivables of $152\u00a0million (2021: $169\u00a0million).
The average credit period on sales of goods is 17 days (2021: 16 days). The carrying value of trade receivables approximates fair value.
The Group applies a simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit loss on trade receivables is estimated using a provision matrix by reference to past default experience and credit rating, adjusted as appropriate for current observable data. Expected credit loss provisions are recognised in cost of goods sold and during the period, $148\u00a0million (2021: $11 million) of such losses were recognised. Current year provision is up over prior year due primarily to higher over-all gross receivable balances on-hand at period-end as a result of higher commodity prices and a specific slow-moving exposure which is expected to be settled during 2023. The following table details the risk profile of trade receivables based on the Group\u2019s provision matrix.
US$ million
Trade receivables \u2013 days past due
As at 31 December 2022
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
5,014
444
158
85
1,673
7,374
Weighted average expected credit loss rate
0.45%
0.67%
0.98%
1.17%
7.34%
Lifetime expected credit loss
(23)
(3)
(2)
(1)
(143)
(172)
Total
4,991
441
156
84
1,530
7,202
US$ million
Trade receivables \u2013 days past due
As at 31 December 2021
Not past due
<30
31 \u2013 60
61 \u2013 90
>90
Total
Gross carrying amount
4,034
287
157
152
337
4,967
Weighted average expected credit loss rate
0.27%
0.55%
0.82%
1.10%
2.33%
Lifetime expected credit loss
(11)
(2)
(1)
(2)
(8)
(24)
Total
4,023
285
156
150
329
4,943
The Group determines the expected credit loss of receivables from associates, deferred consideration and other receivables (at amortised cost) based on different scenarios of probability of default and expected loss applicable to each of the material underlying balances. Expected credit losses for these assets are measured as either 12-month expected credit losses, taking into account prior experience regarding probability of default adjusted for forward looking information, or as lifetime expected credit losses (when there is significant increase in credit risk or the asset is credit-impaired). The movement in allowance for credit loss relating to receivables from associates and other receivables is detailed below:
Glencore has a number of dedicated financing facilities, which finance a portion of its receivables. The receivables have not been derecognised, as the Group retains the principal risks and rewards of ownership. The proceeds received are recognised as current borrowings (see note 21). As at 31 December 2022, the total amount of trade receivables pledged was $278\u00a0million (2021: $Nil) and proceeds received and classified as current borrowings amounted to $200\u00a0million (2021: $Nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-120": { "value": "
US$ million
Notes
2022
2021
Financial assets at amortised cost
Trade receivables
7,202
4,943
Margin calls paid and other broker balances
7,515
5,914
Receivables from associates
441
413
Deferred consideration
26
333
\u2013
Other receivables1
528
402
16,019
11,672
Financial assets at fair value through profit and loss
Trade receivables containing provisional pricing features
28
5,426
5,267
Finance lease receivable
28
\u2013
2
Contingent consideration
28
128
175
Other receivables
28
73
79
5,627
5,523
Non-financial assets
Advances repayable with product2
1,416
876
Other tax and related receivables3
1,503
1,422
2,919
2,298
Total
24,565
19,493
1Includes current portion of non-current loans receivable of $319\u00a0million (2021: $296\u00a0million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-121": { "value": "
15. Cash and cash equivalents
US$\u00a0million
2022
2021
Bank and cash on hand
1,445
2,403
Deposits and treasury bills
478
838
Total
1,923
3,241
Cash and cash equivalents comprise cash held at bank, cash in hand and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
As at 31 December 2022, $78\u00a0million (2021: $547\u00a0million) was restricted, including $Nil (2021: $477\u00a0million) held in on-shore accounts in our DRC operations, available to effect payment to on-shore counterparts only.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-122": { "value": "
As at 31 December 2022, $78\u00a0million (2021: $547\u00a0million) was restricted, including $Nil (2021: $477\u00a0million) held in on-shore accounts in our DRC operations, available to effect payment to on-shore counterparts only.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-123": { "value": "
16. Assets and liabilities held for sale
Net assets held for sale are measured at their carrying amount, being the lower of carrying amount and fair value less costs to sell. As of 31 December 2022, the carrying amounts of assets and liabilities held for sale were lower than their fair value less costs to sell, hence no gains or losses were recognised in the statement of income for the period.
The carrying value of the assets and liabilities classified as held for sale are detailed below:
2022
US$ million
Cobar
Volcan
Total
Non-current assets
Property, plant and equipment
451
1,467
1,918
Intangible assets
1
4
5
Investments in associates and joint ventures
\u2013
148
148
Advances and loans
\u2013
71
71
Deferred tax assets
\u2013
32
32
452
1,722
2,174
Current assets
Inventories
25
57
82
Accounts receivable
4
68
72
Income tax receivable
\u2013
29
29
Prepaid expenses
3
5
8
Cash and cash equivalents
1
74
75
33
233
266
Total assets held for sale
485
1,955
2,440
Non-current liabilities
Borrowings
\u2013
(777)
(777)
Deferred tax liabilities
(25)
(151)
(176)
Provisions
(20)
(322)
(342)
Deferred income
\u2013
(6)
(6)
Post-retirement and other employee benefits
(1)
\u2013
(1)
(46)
(1,256)
(1,302)
Current liabilities
Borrowings
(1)
(22)
(23)
Accounts payable
(42)
(315)
(357)
Provisions
\u2013
(31)
(31)
Income tax payable
\u2013
(28)
(28)
(43)
(396)
(439)
Total liabilities held for sale
(89)
(1,652)
(1,741)
Total net assets held for sale
396
303
699
Non-controlling interest
\u2013
201
201
Cobar
In March 2022, Glencore entered into an agreement with Metals Acquisition Corp (MAC) for the disposal of its 100% interest in Cobar, a copper mine in New South Wales, Australia for $775 million in cash and an additional up to $100 million cash or equity stake in MAC, plus $75 million dependent on a future equity raise with an equity back-stop provision for Glencore\u2019s benefit, plus $75 million contingent payment when copper averages exceed $4.25/lb for 18 continuous months over the life of mine and a $75 million contingent payment when copper averages exceed US$4.50/lb for 24 continuous months over the life of mine. Completion of the sale is conditional on approval of MAC\u2019s shareholders and receipt of certain regulatory approvals and is expected to occur in H1 2023.
Volcan
In Q4 2022, Glencore commenced a process exploring the possible disposal of its 23.3% economic interest in Volcan.

2021
US$ million
Ernest Henry
Bolivia
Access World
E&P Chad
Total
Non-current assets
Property, plant and equipment
311
161
171
240
883
Intangible assets
\u2013
2
2
\u2013
4
Investments
\u2013
\u2013
11
\u2013
11
Advances and loans
\u2013
\u2013
10
\u2013
10
Deferred tax assets
30
10
4
\u2013
44
341
173
198
240
952
Current assets
Inventories
16
36
\u2013
22
74
Accounts receivable
26
82
93
14
215
Income tax receivable
\u2013
\u2013
1
\u2013
1
Prepaid expenses
2
\u2013
10
\u2013
12
Cash and cash equivalents
1
21
45
\u2013
67
45
139
149
36
369
Total assets held for sale
386
312
347
276
1,321
Non-current liabilities
Borrowings
\u2013
(3)
(111)
\u2013
(114)
Deferred income
(138)
\u2013
\u2013
\u2013
(138)
Deferred tax liabilities
\u2013
(4)
(1)
(4)
(9)
Provisions
(74)
(29)
(1)
(85)
(189)
Post-retirement and other employees benefits
(1)
(17)
(1)
\u2013
(19)
(213)
(53)
(114)
(89)
(469)
Current liabilities
Borrowings
\u2013
(7)
(17)
\u2013
(24)
Accounts payable
(32)
(55)
(97)
(6)
(190)
Deferred income
(53)
\u2013
\u2013
\u2013
(53)
Provisions
(1)
(35)
(3)
\u2013
(39)
Income tax payable
\u2013
(14)
(1)
\u2013
(15)
(86)
(111)
(118)
(6)
(321)
Total liabilities held for sale
(299)
(164)
(232)
(95)
(790)
Total net assets held for sale
87
148
115
181
531
Non-controlling interest
\u2013
\u2013
(2)
\u2013
(2)
Ernest Henry
In November 2021, Glencore agreed to dispose of its 100% interest in Ernest Henry Mining Pty Ltd, a copper-gold mine in Queensland, Australia for AUD $1 billion (c.US$720 million), comprising AUD $800 million on closing and the balance (AUD $200 million) due 12 months post closing. The transaction closed in January 2022 (see note 26).
Bolivia
In October 2021, Glencore agreed to sell its Bolivian zinc assets (Sinchi Wayra and Illapa), to Santacruz Silver Mining Ltd, for approximately $110 million and a 1.5% NSR royalty over the life of the mines. $20 million was due on completion with the balance
(c.$90 million) due over the following four years. The transaction closed in March 2022 (see note 26).
Access World
At 31 December 2021, Glencore was in advanced negotiations with a prospective buyer to dispose of its 100% interest in the Access World Group, a global storage and logistics group, for $180 million. The share purchase agreement was subsequently signed on
31 January 2022 and the transaction closed in December 2022 (see note 26).
E&P Chad
In August 2021, Glencore agreed to dispose 100% of its Chad upstream oil operations to Perenco S.A.. The transaction closed in June 2022 (see note 26).
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-124": { "value": "
16. Assets and liabilities held for sale
Net assets held for sale are measured at their carrying amount, being the lower of carrying amount and fair value less costs to sell. As of 31 December 2022, the carrying amounts of assets and liabilities held for sale were lower than their fair value less costs to sell, hence no gains or losses were recognised in the statement of income for the period.
The carrying value of the assets and liabilities classified as held for sale are detailed below:
2022
US$ million
Cobar
Volcan
Total
Non-current assets
Property, plant and equipment
451
1,467
1,918
Intangible assets
1
4
5
Investments in associates and joint ventures
\u2013
148
148
Advances and loans
\u2013
71
71
Deferred tax assets
\u2013
32
32
452
1,722
2,174
Current assets
Inventories
25
57
82
Accounts receivable
4
68
72
Income tax receivable
\u2013
29
29
Prepaid expenses
3
5
8
Cash and cash equivalents
1
74
75
33
233
266
Total assets held for sale
485
1,955
2,440
Non-current liabilities
Borrowings
\u2013
(777)
(777)
Deferred tax liabilities
(25)
(151)
(176)
Provisions
(20)
(322)
(342)
Deferred income
\u2013
(6)
(6)
Post-retirement and other employee benefits
(1)
\u2013
(1)
(46)
(1,256)
(1,302)
Current liabilities
Borrowings
(1)
(22)
(23)
Accounts payable
(42)
(315)
(357)
Provisions
\u2013
(31)
(31)
Income tax payable
\u2013
(28)
(28)
(43)
(396)
(439)
Total liabilities held for sale
(89)
(1,652)
(1,741)
Total net assets held for sale
396
303
699
Non-controlling interest
\u2013
201
201
Cobar
In March 2022, Glencore entered into an agreement with Metals Acquisition Corp (MAC) for the disposal of its 100% interest in Cobar, a copper mine in New South Wales, Australia for $775 million in cash and an additional up to $100 million cash or equity stake in MAC, plus $75 million dependent on a future equity raise with an equity back-stop provision for Glencore\u2019s benefit, plus $75 million contingent payment when copper averages exceed $4.25/lb for 18 continuous months over the life of mine and a $75 million contingent payment when copper averages exceed US$4.50/lb for 24 continuous months over the life of mine. Completion of the sale is conditional on approval of MAC\u2019s shareholders and receipt of certain regulatory approvals and is expected to occur in H1 2023.
Volcan
In Q4 2022, Glencore commenced a process exploring the possible disposal of its 23.3% economic interest in Volcan.

2021
US$ million
Ernest Henry
Bolivia
Access World
E&P Chad
Total
Non-current assets
Property, plant and equipment
311
161
171
240
883
Intangible assets
\u2013
2
2
\u2013
4
Investments
\u2013
\u2013
11
\u2013
11
Advances and loans
\u2013
\u2013
10
\u2013
10
Deferred tax assets
30
10
4
\u2013
44
341
173
198
240
952
Current assets
Inventories
16
36
\u2013
22
74
Accounts receivable
26
82
93
14
215
Income tax receivable
\u2013
\u2013
1
\u2013
1
Prepaid expenses
2
\u2013
10
\u2013
12
Cash and cash equivalents
1
21
45
\u2013
67
45
139
149
36
369
Total assets held for sale
386
312
347
276
1,321
Non-current liabilities
Borrowings
\u2013
(3)
(111)
\u2013
(114)
Deferred income
(138)
\u2013
\u2013
\u2013
(138)
Deferred tax liabilities
\u2013
(4)
(1)
(4)
(9)
Provisions
(74)
(29)
(1)
(85)
(189)
Post-retirement and other employees benefits
(1)
(17)
(1)
\u2013
(19)
(213)
(53)
(114)
(89)
(469)
Current liabilities
Borrowings
\u2013
(7)
(17)
\u2013
(24)
Accounts payable
(32)
(55)
(97)
(6)
(190)
Deferred income
(53)
\u2013
\u2013
\u2013
(53)
Provisions
(1)
(35)
(3)
\u2013
(39)
Income tax payable
\u2013
(14)
(1)
\u2013
(15)
(86)
(111)
(118)
(6)
(321)
Total liabilities held for sale
(299)
(164)
(232)
(95)
(790)
Total net assets held for sale
87
148
115
181
531
Non-controlling interest
\u2013
\u2013
(2)
\u2013
(2)
Ernest Henry
In November 2021, Glencore agreed to dispose of its 100% interest in Ernest Henry Mining Pty Ltd, a copper-gold mine in Queensland, Australia for AUD $1 billion (c.US$720 million), comprising AUD $800 million on closing and the balance (AUD $200 million) due 12 months post closing. The transaction closed in January 2022 (see note 26).
Bolivia
In October 2021, Glencore agreed to sell its Bolivian zinc assets (Sinchi Wayra and Illapa), to Santacruz Silver Mining Ltd, for approximately $110 million and a 1.5% NSR royalty over the life of the mines. $20 million was due on completion with the balance
(c.$90 million) due over the following four years. The transaction closed in March 2022 (see note 26).
Access World
At 31 December 2021, Glencore was in advanced negotiations with a prospective buyer to dispose of its 100% interest in the Access World Group, a global storage and logistics group, for $180 million. The share purchase agreement was subsequently signed on
31 January 2022 and the transaction closed in December 2022 (see note 26).
E&P Chad
In August 2021, Glencore agreed to dispose 100% of its Chad upstream oil operations to Perenco S.A.. The transaction closed in June 2022 (see note 26).
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-125": { "value": "
Notes to the financial statements continued
17. Share capital and reserves
Number
of ordinary shares (thousand)
Share capital (US$\u00a0million)
Share
premium
(US$\u00a0million)
Authorised:
31 December 2022 and 2021 Ordinary shares with a par value of $0.01 each
50,000,000
Issued and fully paid up:
1 January 2021 and 31 December 2021 \u2013 Ordinary shares
14,586,200
146
43,679
Own shares cancelled during the year
(500,000)
(5)
(2,130)
Distributions paid (see note 19)
\u2013
\u2013
(4,832)
31 December 2022 \u2013 Ordinary shares
14,086,200
141
36,717
Treasury Shares
Trust Shares
Total
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Own shares:
1 January 2021
1,261,887
(4,801)
103,001
(503)
1,364,888
(5,304)
Own shares purchased during the year
128,501
(616)
32,000
(130)
160,501
(746)
Own shares disposed during the year
\u2013
\u2013
(35,788)
173
(35,788)
173
31 December 2021
1,390,388
(5,417)
99,213
(460)
1,489,601
(5,877)
1 January 2022
1,390,388
(5,417)
99,213
(460)
1,489,601
(5,877)
Own shares purchased during the year
425,309
(2,503)
\u2013
\u2013
425,309
(2,503)
Own shares transferred to satisfy employee share awards
(50,000)
225
50,000
(271)
\u2013
(46)
Own shares disposed during the year
\u2013
\u2013
(93,567)
430
(93,567)
430
Own shares cancelled during the year
(500,000)
2,135
\u2013
\u2013
(500,000)
2,135
31 December 2022
1,265,697
(5,560)
55,646
(301)
1,321,343
(5,861)
Own shares
Own shares comprise shares acquired under the Company\u2019s share buyback programmes (\u2018Treasury Shares\u2019) and shares of Glencore plc held by Group employee benefit trusts (\u2018the Trusts\u2019) to satisfy the potential future settlement of the Group\u2019s employee stock plans (\u2018Trust Shares\u2019).
The Trusts also coordinate the funding and manage the delivery of Trust Shares and free share awards under certain of Glencore\u2019s share plans. The Trust Shares have been acquired by either stock market purchases or share issues from the Company. The Trusts may hold an aggregate of Trust Shares up to 5% of the issued share capital of the Company at any one time and are permitted to sell them. The Trusts have waived the right to receive distributions from the Trust Shares that they hold. Costs relating to the administration of the Trusts are expensed in the period in which they are incurred.
In July 2022, Glencore announced a $3 billion share buyback programme to be completed by February 2023, effected in accordance with the terms of the authority granted by shareholders at the 2022 Annual General Meeting. As at 31 December 2022, $1,920 million of shares have been purchased. No liability has been recognised in respect of this share buyback programme as the terms of the arrangement do not result in a contractual obligation.
During the year, Glencore also purchased the remaining $33 million of shares under the $650 million share buyback programme announced in August 2021 and $550 million shares under the share buyback programme announced in February 2022.
In October 2022, Glencore cancelled 500 million of treasury shares, adopting a policy to reduce and maintain from time to time treasury shares below 10% of total issued share capital.
As at 31 December\u00a02022: 1,321,342,547 shares (2021: 1,489,601,292 shares), including 1,265,696,812 Treasury Shares (2021: 1,390,388,731 shares), equivalent to 9.38% (2021: 9.36%) of the issued share capital were held at a cost of $5,861\u00a0million (2021: $5,877\u00a0million) and market value of $8,809 million (2021: $7,559 million).
Other reserves
US$\u00a0million
Foreign currency translation reserve
Cash flow
hedge reserve
Net
unrealised
gain/(loss)
Net ownership
changes in
subsidiaries
Total
1 January 2022
(2,898)
(124)
(300)
(2,609)
(5,931)
Exchange loss on translation of foreign operations
(290)
\u2013
\u2013
\u2013
(290)
Items recycled to the statement of income on restructuring of intragroup debt (see note 5)
431
\u2013
\u2013
\u2013
431
Items recycled to the statement of income upon disposal of subsidiaries (see note 26)
84
\u2013
\u2013
(34)
50
Gain on cash flow hedges, net of tax
\u2013
27
\u2013
\u2013
27
Loss on equity investments accounted for at fair value through other comprehensive income, net of tax
\u2013
\u2013
(1,122)
\u2013
(1,122)
Change in ownership interest in subsidiaries (see note 34)
\u2013
\u2013
\u2013
(3)
(3)
Gain due to changes in credit risk on financial liabilities accounted for at fair value through profit and loss
\u2013
\u2013
2
\u2013
2
Reclassifications
\u2013
\u2013
3
\u2013
3
31 December 2022
(2,673)
(97)
(1,417)
(2,646)
(6,833)
1 January 2021
(2,832)
(147)
(266)
(2,603)
(5,848)
Exchange loss on translation of foreign operations
(66)
\u2013
\u2013
\u2013
(66)
Gain on cash flow hedges, net of tax
\u2013
23
\u2013
\u2013
23
Loss on equity investments accounted for at fair value through other comprehensive income, net of tax
\u2013
\u2013
(52)
\u2013
(52)
Change in ownership interest in subsidiaries (see note 34)
\u2013
\u2013
\u2013
(6)
(6)
Loss due to changes in credit risk on financial liabilities accounted for at fair value through profit and loss
\u2013
\u2013
(7)
\u2013
(7)
Reclassifications
\u2013
\u2013
25
\u2013
25
31 December 2021
(2,898)
(124)
(300)
(2,609)
(5,931)
The translation adjustment reserve is used to capture the cumulative impact of foreign currency translation adjustments arising from the Group\u2019s non-USD denominated functional currency subsidiaries.
The cash flow hedge reserve is used to accumulate the gains and losses from the effective portion of hedging instruments contained within hedge relationships until the hedged item impacts profit or loss. Cost of hedging is recorded within the cash flow hedge reserve due to its immaterial amount.
The net unrealised gain/loss reserve is used to accumulate the gains and losses associated with the remeasurement of the Group\u2019s investments carried at FVTOCI and changes in credit risk on financial liabilities measured at FVTPL.
The net ownership changes in subsidiaries reserve is used to capture equity movements arising from changes in the Group\u2019s ownership in its subsidiaries.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-126": { "value": "
Notes to the financial statements continued
17. Share capital and reserves
Number
of ordinary shares (thousand)
Share capital (US$\u00a0million)
Share
premium
(US$\u00a0million)
Authorised:
31 December 2022 and 2021 Ordinary shares with a par value of $0.01 each
50,000,000
Issued and fully paid up:
1 January 2021 and 31 December 2021 \u2013 Ordinary shares
14,586,200
146
43,679
Own shares cancelled during the year
(500,000)
(5)
(2,130)
Distributions paid (see note 19)
\u2013
\u2013
(4,832)
31 December 2022 \u2013 Ordinary shares
14,086,200
141
36,717
19. Distributions
US$ million
2022
2021
Paid during the year:
First tranche distribution \u2013 $0.13 per ordinary share (2021: $0.06)
1,707
794
Second tranche and additional distribution \u2013 $0.24 per ordinary share (2021: $0.10)
3,125
1,321
Total
4,832
2,115
The proposed distribution in respect of the year ended 31 December 2022 of $0.44per ordinary share amounting to some $5.6\u00a0billion is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. Such declared distributions are expected to be paid equally ($0.22 each) in June 2023 and September 2023.
A distribution of $0.37per ordinary share amounting to $4,832\u00a0million was paid in 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-127": { "value": "
Number
of ordinary shares (thousand)
Share capital (US$\u00a0million)
Share
premium
(US$\u00a0million)
Authorised:
31 December 2022 and 2021 Ordinary shares with a par value of $0.01 each
50,000,000
Issued and fully paid up:
1 January 2021 and 31 December 2021 \u2013 Ordinary shares
14,586,200
146
43,679
Own shares cancelled during the year
(500,000)
(5)
(2,130)
Distributions paid (see note 19)
\u2013
\u2013
(4,832)
31 December 2022 \u2013 Ordinary shares
14,086,200
141
36,717
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-128": { "value": "
Treasury Shares
Trust Shares
Total
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Number
of shares
(thousand)
Own
shares
(US$\u00a0million)
Own shares:
1 January 2021
1,261,887
(4,801)
103,001
(503)
1,364,888
(5,304)
Own shares purchased during the year
128,501
(616)
32,000
(130)
160,501
(746)
Own shares disposed during the year
\u2013
\u2013
(35,788)
173
(35,788)
173
31 December 2021
1,390,388
(5,417)
99,213
(460)
1,489,601
(5,877)
1 January 2022
1,390,388
(5,417)
99,213
(460)
1,489,601
(5,877)
Own shares purchased during the year
425,309
(2,503)
\u2013
\u2013
425,309
(2,503)
Own shares transferred to satisfy employee share awards
(50,000)
225
50,000
(271)
\u2013
(46)
Own shares disposed during the year
\u2013
\u2013
(93,567)
430
(93,567)
430
Own shares cancelled during the year
(500,000)
2,135
\u2013
\u2013
(500,000)
2,135
31 December 2022
1,265,697
(5,560)
55,646
(301)
1,321,343
(5,861)
Own shares
Own shares comprise shares acquired under the Company\u2019s share buyback programmes (\u2018Treasury Shares\u2019) and shares of Glencore plc held by Group employee benefit trusts (\u2018the Trusts\u2019) to satisfy the potential future settlement of the Group\u2019s employee stock plans (\u2018Trust Shares\u2019).
The Trusts also coordinate the funding and manage the delivery of Trust Shares and free share awards under certain of Glencore\u2019s share plans. The Trust Shares have been acquired by either stock market purchases or share issues from the Company. The Trusts may hold an aggregate of Trust Shares up to 5% of the issued share capital of the Company at any one time and are permitted to sell them. The Trusts have waived the right to receive distributions from the Trust Shares that they hold. Costs relating to the administration of the Trusts are expensed in the period in which they are incurred.
In July 2022, Glencore announced a $3 billion share buyback programme to be completed by February 2023, effected in accordance with the terms of the authority granted by shareholders at the 2022 Annual General Meeting. As at 31 December 2022, $1,920 million of shares have been purchased. No liability has been recognised in respect of this share buyback programme as the terms of the arrangement do not result in a contractual obligation.
During the year, Glencore also purchased the remaining $33 million of shares under the $650 million share buyback programme announced in August 2021 and $550 million shares under the share buyback programme announced in February 2022.
In October 2022, Glencore cancelled 500 million of treasury shares, adopting a policy to reduce and maintain from time to time treasury shares below 10% of total issued share capital.
As at 31 December\u00a02022: 1,321,342,547 shares (2021: 1,489,601,292 shares), including 1,265,696,812 Treasury Shares (2021: 1,390,388,731 shares), equivalent to 9.38% (2021: 9.36%) of the issued share capital were held at a cost of $5,861\u00a0million (2021: $5,877\u00a0million) and market value of $8,809 million (2021: $7,559 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-129": { "value": "
Other reserves
US$\u00a0million
Foreign currency translation reserve
Cash flow
hedge reserve
Net
unrealised
gain/(loss)
Net ownership
changes in
subsidiaries
Total
1 January 2022
(2,898)
(124)
(300)
(2,609)
(5,931)
Exchange loss on translation of foreign operations
(290)
\u2013
\u2013
\u2013
(290)
Items recycled to the statement of income on restructuring of intragroup debt (see note 5)
431
\u2013
\u2013
\u2013
431
Items recycled to the statement of income upon disposal of subsidiaries (see note 26)
84
\u2013
\u2013
(34)
50
Gain on cash flow hedges, net of tax
\u2013
27
\u2013
\u2013
27
Loss on equity investments accounted for at fair value through other comprehensive income, net of tax
\u2013
\u2013
(1,122)
\u2013
(1,122)
Change in ownership interest in subsidiaries (see note 34)
\u2013
\u2013
\u2013
(3)
(3)
Gain due to changes in credit risk on financial liabilities accounted for at fair value through profit and loss
\u2013
\u2013
2
\u2013
2
Reclassifications
\u2013
\u2013
3
\u2013
3
31 December 2022
(2,673)
(97)
(1,417)
(2,646)
(6,833)
1 January 2021
(2,832)
(147)
(266)
(2,603)
(5,848)
Exchange loss on translation of foreign operations
(66)
\u2013
\u2013
\u2013
(66)
Gain on cash flow hedges, net of tax
\u2013
23
\u2013
\u2013
23
Loss on equity investments accounted for at fair value through other comprehensive income, net of tax
\u2013
\u2013
(52)
\u2013
(52)
Change in ownership interest in subsidiaries (see note 34)
\u2013
\u2013
\u2013
(6)
(6)
Loss due to changes in credit risk on financial liabilities accounted for at fair value through profit and loss
\u2013
\u2013
(7)
\u2013
(7)
Reclassifications
\u2013
\u2013
25
\u2013
25
31 December 2021
(2,898)
(124)
(300)
(2,609)
(5,931)
The translation adjustment reserve is used to capture the cumulative impact of foreign currency translation adjustments arising from the Group\u2019s non-USD denominated functional currency subsidiaries.
The cash flow hedge reserve is used to accumulate the gains and losses from the effective portion of hedging instruments contained within hedge relationships until the hedged item impacts profit or loss. Cost of hedging is recorded within the cash flow hedge reserve due to its immaterial amount.
The net unrealised gain/loss reserve is used to accumulate the gains and losses associated with the remeasurement of the Group\u2019s investments carried at FVTOCI and changes in credit risk on financial liabilities measured at FVTPL.
The net ownership changes in subsidiaries reserve is used to capture equity movements arising from changes in the Group\u2019s ownership in its subsidiaries.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-130": { "value": "
Notes to the financial statements continued
18. Earnings per share
US$ million
2022
2021
Income attributable to equity holders of the Parent for basic earnings per share
17,320
4,974
Weighted average number of shares for the purposes of basic earnings per share (thousand)
13,042,304
13,204,101
Effect of dilution:
Equity-settled share-based payments (thousand)
98,454
132,503
Weighted average number of shares for the purposes of diluted earnings per share (thousand)
13,140,758
13,336,604
Basic earnings per share (US$)
1.33
0.38
Diluted earnings per share (US$)
1.32
0.37
Headline earnings:
Headline earnings is a Johannesburg Stock Exchange (JSE) defined performance measure. The calculation of basic and diluted earnings per share, based on headline earnings as determined by the requirements of the Circular 1/2021 as issued by the South\u00a0African Institute of Chartered Accountants (SAICA), is reconciled using the following data:
US$ million
2022
2021
Income attributable to equity holders of the Parent for basic earnings per share
17,320
4,974
Net (gain)/loss on acquisitions and disposals1
(1,287)
652
Net (gain)/loss on acquisitions and disposals \u2013 non-controlling interest
(4)
\u2013
Net (gain)/loss on acquisitions and disposals \u2013 tax
86
75
Impairments2
3,181
1,906
Impairments \u2013 non-controlling interest
(404)
(689)
Impairments \u2013 tax
(585)
(34)
Headline and diluted earnings for the year
18,307
6,884
Headline earnings per share (US$)
1.40
0.52
Diluted headline earnings per share (US$)
1.39
0.52
1See note 4.
2Comprises impairments of property, plant and equipment and intangible assets, investments, advances and loans, VAT receivable (see note 7) and Glencore\u2019s share of impairments booked directly by associates (see note 2).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-131": { "value": "440000", "decimals": -4, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "fact-132": { "value": "5600000000", "decimals": -8, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:USD" } }, "fact-133": { "value": "370000", "decimals": -4, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "fact-134": { "value": "
Notes to the financial statements continued
20. Share-based payments
Number of
awards
granted
(thousands)
Fair value at
grant date
(US$ million)
Number
of awards
outstanding 2022
(thousands)
Number
of awards
outstanding 2021
(thousands)
Expense
recognised 2022
(US$ million)
Expense
recognised
2021
(US$ million)
Deferred awards
2018 Series
12,891
65
3,535
3,535
3
\u2013
2019 Series
10,791
37
667
667
\u2013
\u2013
2020 Series
45,798
85
\u2013
31,538
\u2013
(2)
2021 Series1
21,327
94
13,016
20,565
(1)
90
2022 Series
6,403
38
5,267
\u2013
30
\u2013
97,210
22,485
56,305
32
88
Performance share awards
2017 Series
19,750
95
344
400
\u2013
3
2018 Series
28,499
104
2,293
9,823
2
12
2019 Series
29,705
90
9,066
18,504
9
23
2020 Series
33,583
104
19,555
31,466
26
55
2021 Series1
26,803
129
24,918
16,005
69
8
2022 Series
20,928
135
19,793
\u2013
12
\u2013
159,268
75,969
76,198
118
101
Total
256,478
98,454
132,503
150
189
1During the current year, 762 thousand shares have been granted as part of the deferred awards 2021 series and 10,798 thousand shares have been granted as part of the performance share awards 2021 series, resulting in an increase of the fair value at grant date amount by $3 million for deferred share awards and $53 million for performance share awards.
Between 2011-2021 deferred awards were made under the Company\u2019s Deferred Bonus Plan and performance share awards were made under the Company\u2019s Performance Share Plan. In May 2021 the Company introduced a single Incentive Plan which replaced both of these plans and under which both deferred awards and performance share awards continue to be made.
Deferred awards
Under a deferred award the payment of a portion of a participant\u2019s annual bonus is deferred for a period of one to seven years as an award of either ordinary shares (a \u2018\u2018Bonus Share Award\u2019\u2019) or cash. Awards vest over a specified period, subject to continued employment and forfeiture for malus events. The Bonus Share Awards may be satisfied, at Glencore\u2019s option, in shares by the issue of new ordinary shares, by the transfer of ordinary shares held in treasury or by the transfer of ordinary shares purchased in the market or in cash, with a value equal to the market value of the award at settlement, including distributions paid between award and settling. Glencore currently intends to settle all Bonus Share Awards in shares. The associated expense is recorded in the statement of income/loss as part of the expense for performance bonuses. The fair value at grant date is determined as the monthly volume-weighted average share price (VWAP) of Glencore plc prior to the respective award date.
Performance Share awards
Performance share awards vest in tranches over a specified period, subject to continued employment and forfeiture for malus events. At grant date, each award is equivalent to one ordinary share of Glencore. Awards vest in one, two or three tranches on 31 January or 30 June of the years following the year of grant, as may be the case. The awards may be satisfied, at Glencore\u2019s option, in shares by the issue of new ordinary shares, by the transfer of ordinary shares held in treasury or by the transfer of ordinary shares purchased in the market or in cash, with a value equal to the market value of the award at vesting, including distributions paid between award and vesting. Glencore currently intends to settle these awards in shares. The fair value at grant date is determined as the monthly volume-weighted average share price (VWAP) of Glencore plc prior to the respective award date.
Share-based awards assumed in previous business combinations
Total options
outstanding
(thousands)
Weighted
average
exercise
price (GBP)
1 January 2022
44,537
3.91
Exercised
(44,537)
4.16
31 December 2022
\u2013
\u2013
1 January 2021
71,667
4.25
Lapsed
(27,130)
4.80
Exercised
\u2013
\u2013
31 December 2021
44,537
3.91
As at 31 December 2021, a total of 44,536,755 options were outstanding and exercisable, having an exercise price of GBP3.91 and a weighted average exercise price of GBP3.91. Since the share price leading up to the expiry date of 17 February 2022 was above the exercise price, all of these options were exercised. Glencore settled these awards by the transfer of ordinary shares held as Trust Shares.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-135": { "value": "
US$ million
Notes
2022
2021
Non-current borrowings
Capital market notes
17,229
22,376
Amount drawn under syndicated revolving credit facilities
\u2013
2,543
Lease liabilities
934
1,093
Other bank loans
688
799
Total non-current borrowings
18,851
26,811
Current borrowings
Secured inventory/receivables/other facilities
11/13/14
3,292
122
US commercial paper
333
1,764
Capital market notes
2,977
2,884
Lease liabilities
445
525
Other bank loans1
2,879
2,535
Total current borrowings
9,926
7,830
Total borrowings
28,777
34,641
1Comprises various uncommitted bilateral bank credit facilities and other financings.
Changes in liabilities arising from financing activities
Liabilities arising from financing activities are those for which cash flows are classified in the Group's consolidated cash flow statement as cash flows from financing activities. The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes.
2022
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2022
33,023
1,618
34,641
23
34,664
Cash related movements2
Repayment of capital market notes
(2,850)
\u2013
(2,850)
\u2013
(2,850)
Repurchase of capital market notes
(103)
\u2013
(103)
\u2013
(103)
Repayment of revolving credit facilities
(2,563)
\u2013
(2,563)
\u2013
(2,563)
Proceeds from other non-current borrowings
430
\u2013
430
\u2013
430
Repayment of other non-current borrowings
(73)
\u2013
(73)
\u2013
(73)
Repayment of lease liabilities
\u2013
(577)
(577)
\u2013
(577)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(1,824)
(1,824)
Repayment of US commercial papers
(1,407)
\u2013
(1,407)
\u2013
(1,407)
Proceeds from current borrowings
3,306
\u2013
3,306
\u2013
3,306
(3,260)
(577)
(3,837)
(1,824)
(5,661)
Non-cash related movements
Borrowings acquired in business combinations3
52
30
82
\u2013
82
Borrowings reclassified to held for sale4
(762)
(38)
(800)
\u2013
(800)
Borrowings disposed of on disposal of subsidiaries
\u2013
(2)
(2)
\u2013
(2)
Fair value adjustment to fair value hedged borrowings
(1,250)
\u2013
(1,250)
\u2013
(1,250)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
1,647
1,647
Foreign exchange movements
(436)
(41)
(477)
\u2013
(477)
Change in lease liabilities
\u2013
389
389
\u2013
389
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
10
\u2013
10
\u2013
9
(2,365)
338
(2,027)
1,647
(381)
31 December 2022
27,398
1,379
28,777
(154)
28,623
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
2021
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2021
35,958
1,521
37,479
91
37,570
Cash related movements2
Proceeds from issuance of capital market notes
4,877
\u2013
4,877
\u2013
4,877
Repayment of capital market notes
(2,807)
\u2013
(2,807)
\u2013
(2,807)
Repurchase of capital market notes
(125)
\u2013
(125)
\u2013
(125)
Repayment of revolving credit facilities
(2,244)
\u2013
(2,244)
\u2013
(2,244)
Proceeds from other non-current borrowings
231
\u2013
231
\u2013
231
Repayment of other non-current borrowings
(493)
\u2013
(493)
\u2013
(493)
Repayment of lease liabilities
\u2013
(634)
(634)
\u2013
(634)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(970)
(970)
Proceeds from US commercial papers
675
\u2013
675
\u2013
675
Repayment of current borrowings
(2,016)
\u2013
(2,016)
\u2013
(2,016)
(1,902)
(634)
(2,536)
(970)
(3,506)
Non-cash related movements
Borrowings (disposed of)/acquired in business combinations3
(1)
(7)
(8)
\u2013
(8)
Borrowings reclassified to held for sale4
\u2013
(138)
(138)
\u2013
(138)
Fair value adjustment to fair value hedged borrowings
(499)
\u2013
(499)
\u2013
(499)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
902
902
Foreign exchange movements
(599)
(45)
(644)
\u2013
(644)
Change in lease liabilities
\u2013
922
922
\u2013
922
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
45
(1)
44
\u2013
44
(1,033)
731
(302)
902
600
31 December 2021
33,023
1,618
34,641
23
34,664
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
Capital Market Notes
US$\u00a0million
Maturity
2022
2021
Euro 1,000 million 1.875% coupon bonds
Sep 2023
\u2013
1,136
Euro 400 million 3.70% coupon bonds
Oct 2023
\u2013
467
Euro 600 million 0.625% coupon bonds
Sep 2024
644
682
Euro 750 million 1.75% coupon bonds
Mar 2025
749
862
Euro 500 million 3.75% coupon bonds
Apr 2026
499
598
Euro 500 million 1.50% coupon bonds
Oct 2026
470
566
Euro 950 million 1.125% coupon bonds
Mar 2028
1,014
1,079
Euro 600 million 0.75% coupon bonds
Mar 2029
510
653
Euro 500 million 1.25% coupon bonds
Mar 2033
367
526
Eurobonds
4,253
6,569
GBP 500 million 3.125% coupon bonds
Mar 2026
541
677
Sterling bonds
541
677
CHF 175 million 1.25% coupon bonds
Oct 2024
184
194
CHF 250 million 0.35% coupon bonds
Sep 2025
270
274
CHF 225 million 1.00% coupon bonds
Mar 2027
244
248
CHF 150 million 0.51% coupon bonds
Sep 2028
142
160
Swiss Franc bonds
840
876
US$ 1,500 million 4.125% coupon bonds
May 2023
\u2013
1,538
US$ 1,000 million 4.125% coupon bonds
Mar 2024
972
970
US$ 1,000 million 4.625% coupon bonds
Apr 2024
960
1,029
US$ 625 million non-dilutive convertible bonds
Mar 2025
574
552
US$ 500 million 4.00% coupon bonds
Apr 2025
470
510
US$ 1,000 million 1.625% coupon bonds
Sep 2025
995
994
US$ 365 million 4.375% coupon bonds1
Feb 2026
\u2013
469
US$ 600 million 1.625% coupon bonds
Apr 2026
503
587
US$ 1,000 million 4.00% coupon bonds
Mar 2027
926
1,043
US$ 50 million 4.00% coupon bonds
Mar 2027
50
50
US$ 500 million 3.875% coupon bonds
Oct 2027
460
522
US$ 750 million 4.875% coupon bonds
Mar 2029
697
811
US$ 1,000 million 2.50% coupon bonds
Sep 2030
993
992
US$ 600 million 2.85% coupon bonds
Apr 2031
535
598
US$ 750 million 2.65% coupon bonds
Sep 2031
621
745
US$ 250 million 6.20% coupon bonds
Jun 2035
269
269
US$ 500 million 6.90% coupon bonds
Nov 2037
580
582
US$ 497 million 6.00% coupon bonds
Nov 2041
535
536
US$ 468 million 5.55% coupon bonds
Oct 2042
473
473
US$ 500 million 3.875% coupon bonds
Apr 2051
496
496
US$ 500 million 3.375% coupon bonds
Sep 2051
486
488
US$ bonds
11,595
14,254
Total non-current bonds
17,229
22,376
Euro 1,000 million 1.875% coupon bonds
Sep 2023
1,070
\u2013
Euro 400 million 3.70% coupon bonds
Oct 2023
422
\u2013
GBP 500 million 6.00% coupon bonds
Apr 2022
\u2013
677
JPY 10 billion 1.075% coupon bonds
May 2022
\u2013
87
US$ 600 million 5.375% coupon bonds
Feb 2022
\u2013
410
US$ 250 million LIBOR plus 1.65% coupon bonds
May 2022
\u2013
250
US$ 996 million 4.25% coupon bonds
Oct 2022
\u2013
999
US$ 500 million 3.00% coupon bonds
Oct 2022
\u2013
461
US$ 1,500 million 4.125% coupon bonds
May 2023
1,485
\u2013
Total current bonds
2,977
2,884
1The book value of $361 million has been reclassified to liabilities held for sale (see note 16).
Notes to the financial statements continued
21. Borrowings continued
2022 Bond activities
There were no bond activities during the year.
2021 Bond activities
  • In February 2021, issued:
  • \u2013 5 year $475 million, 4.375% coupon bond (Volcan)
  • In March 2021, issued:
  • \u2013 8 year EUR600 million, 0.75% coupon bond
  • \u2013 12 year EUR500 million, 1.25% coupon bond
  • In April 2021, issued:
  • \u2013 5 year $600 million, 1.625% coupon bond
  • \u2013 10 year $600 million, 2.85% coupon bond
  • \u2013 30 year $500 million, 3.875% coupon bond
  • In September 2021, issued:
  • \u2013 7 year CHF150 million, 0.5% coupon bond
  • \u2013 10 year $750 million, 2.625% coupon bond
  • \u2013 30 year $500 million, 3.375% coupon bond
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-136": { "value": "
US$ million
Notes
2022
2021
Non-current borrowings
Capital market notes
17,229
22,376
Amount drawn under syndicated revolving credit facilities
\u2013
2,543
Lease liabilities
934
1,093
Other bank loans
688
799
Total non-current borrowings
18,851
26,811
Current borrowings
Secured inventory/receivables/other facilities
11/13/14
3,292
122
US commercial paper
333
1,764
Capital market notes
2,977
2,884
Lease liabilities
445
525
Other bank loans1
2,879
2,535
Total current borrowings
9,926
7,830
Total borrowings
28,777
34,641
1Comprises various uncommitted bilateral bank credit facilities and other financings.
Changes in liabilities arising from financing activities
Liabilities arising from financing activities are those for which cash flows are classified in the Group's consolidated cash flow statement as cash flows from financing activities. The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes.
2022
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2022
33,023
1,618
34,641
23
34,664
Cash related movements2
Repayment of capital market notes
(2,850)
\u2013
(2,850)
\u2013
(2,850)
Repurchase of capital market notes
(103)
\u2013
(103)
\u2013
(103)
Repayment of revolving credit facilities
(2,563)
\u2013
(2,563)
\u2013
(2,563)
Proceeds from other non-current borrowings
430
\u2013
430
\u2013
430
Repayment of other non-current borrowings
(73)
\u2013
(73)
\u2013
(73)
Repayment of lease liabilities
\u2013
(577)
(577)
\u2013
(577)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(1,824)
(1,824)
Repayment of US commercial papers
(1,407)
\u2013
(1,407)
\u2013
(1,407)
Proceeds from current borrowings
3,306
\u2013
3,306
\u2013
3,306
(3,260)
(577)
(3,837)
(1,824)
(5,661)
Non-cash related movements
Borrowings acquired in business combinations3
52
30
82
\u2013
82
Borrowings reclassified to held for sale4
(762)
(38)
(800)
\u2013
(800)
Borrowings disposed of on disposal of subsidiaries
\u2013
(2)
(2)
\u2013
(2)
Fair value adjustment to fair value hedged borrowings
(1,250)
\u2013
(1,250)
\u2013
(1,250)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
1,647
1,647
Foreign exchange movements
(436)
(41)
(477)
\u2013
(477)
Change in lease liabilities
\u2013
389
389
\u2013
389
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
10
\u2013
10
\u2013
9
(2,365)
338
(2,027)
1,647
(381)
31 December 2022
27,398
1,379
28,777
(154)
28,623
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
2021
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2021
35,958
1,521
37,479
91
37,570
Cash related movements2
Proceeds from issuance of capital market notes
4,877
\u2013
4,877
\u2013
4,877
Repayment of capital market notes
(2,807)
\u2013
(2,807)
\u2013
(2,807)
Repurchase of capital market notes
(125)
\u2013
(125)
\u2013
(125)
Repayment of revolving credit facilities
(2,244)
\u2013
(2,244)
\u2013
(2,244)
Proceeds from other non-current borrowings
231
\u2013
231
\u2013
231
Repayment of other non-current borrowings
(493)
\u2013
(493)
\u2013
(493)
Repayment of lease liabilities
\u2013
(634)
(634)
\u2013
(634)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(970)
(970)
Proceeds from US commercial papers
675
\u2013
675
\u2013
675
Repayment of current borrowings
(2,016)
\u2013
(2,016)
\u2013
(2,016)
(1,902)
(634)
(2,536)
(970)
(3,506)
Non-cash related movements
Borrowings (disposed of)/acquired in business combinations3
(1)
(7)
(8)
\u2013
(8)
Borrowings reclassified to held for sale4
\u2013
(138)
(138)
\u2013
(138)
Fair value adjustment to fair value hedged borrowings
(499)
\u2013
(499)
\u2013
(499)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
902
902
Foreign exchange movements
(599)
(45)
(644)
\u2013
(644)
Change in lease liabilities
\u2013
922
922
\u2013
922
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
45
(1)
44
\u2013
44
(1,033)
731
(302)
902
600
31 December 2021
33,023
1,618
34,641
23
34,664
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
Capital Market Notes
US$\u00a0million
Maturity
2022
2021
Euro 1,000 million 1.875% coupon bonds
Sep 2023
\u2013
1,136
Euro 400 million 3.70% coupon bonds
Oct 2023
\u2013
467
Euro 600 million 0.625% coupon bonds
Sep 2024
644
682
Euro 750 million 1.75% coupon bonds
Mar 2025
749
862
Euro 500 million 3.75% coupon bonds
Apr 2026
499
598
Euro 500 million 1.50% coupon bonds
Oct 2026
470
566
Euro 950 million 1.125% coupon bonds
Mar 2028
1,014
1,079
Euro 600 million 0.75% coupon bonds
Mar 2029
510
653
Euro 500 million 1.25% coupon bonds
Mar 2033
367
526
Eurobonds
4,253
6,569
GBP 500 million 3.125% coupon bonds
Mar 2026
541
677
Sterling bonds
541
677
CHF 175 million 1.25% coupon bonds
Oct 2024
184
194
CHF 250 million 0.35% coupon bonds
Sep 2025
270
274
CHF 225 million 1.00% coupon bonds
Mar 2027
244
248
CHF 150 million 0.51% coupon bonds
Sep 2028
142
160
Swiss Franc bonds
840
876
US$ 1,500 million 4.125% coupon bonds
May 2023
\u2013
1,538
US$ 1,000 million 4.125% coupon bonds
Mar 2024
972
970
US$ 1,000 million 4.625% coupon bonds
Apr 2024
960
1,029
US$ 625 million non-dilutive convertible bonds
Mar 2025
574
552
US$ 500 million 4.00% coupon bonds
Apr 2025
470
510
US$ 1,000 million 1.625% coupon bonds
Sep 2025
995
994
US$ 365 million 4.375% coupon bonds1
Feb 2026
\u2013
469
US$ 600 million 1.625% coupon bonds
Apr 2026
503
587
US$ 1,000 million 4.00% coupon bonds
Mar 2027
926
1,043
US$ 50 million 4.00% coupon bonds
Mar 2027
50
50
US$ 500 million 3.875% coupon bonds
Oct 2027
460
522
US$ 750 million 4.875% coupon bonds
Mar 2029
697
811
US$ 1,000 million 2.50% coupon bonds
Sep 2030
993
992
US$ 600 million 2.85% coupon bonds
Apr 2031
535
598
US$ 750 million 2.65% coupon bonds
Sep 2031
621
745
US$ 250 million 6.20% coupon bonds
Jun 2035
269
269
US$ 500 million 6.90% coupon bonds
Nov 2037
580
582
US$ 497 million 6.00% coupon bonds
Nov 2041
535
536
US$ 468 million 5.55% coupon bonds
Oct 2042
473
473
US$ 500 million 3.875% coupon bonds
Apr 2051
496
496
US$ 500 million 3.375% coupon bonds
Sep 2051
486
488
US$ bonds
11,595
14,254
Total non-current bonds
17,229
22,376
Euro 1,000 million 1.875% coupon bonds
Sep 2023
1,070
\u2013
Euro 400 million 3.70% coupon bonds
Oct 2023
422
\u2013
GBP 500 million 6.00% coupon bonds
Apr 2022
\u2013
677
JPY 10 billion 1.075% coupon bonds
May 2022
\u2013
87
US$ 600 million 5.375% coupon bonds
Feb 2022
\u2013
410
US$ 250 million LIBOR plus 1.65% coupon bonds
May 2022
\u2013
250
US$ 996 million 4.25% coupon bonds
Oct 2022
\u2013
999
US$ 500 million 3.00% coupon bonds
Oct 2022
\u2013
461
US$ 1,500 million 4.125% coupon bonds
May 2023
1,485
\u2013
Total current bonds
2,977
2,884
1The book value of $361 million has been reclassified to liabilities held for sale (see note 16).
Notes to the financial statements continued
21. Borrowings continued
2022 Bond activities
There were no bond activities during the year.
2021 Bond activities
  • In February 2021, issued:
  • \u2013 5 year $475 million, 4.375% coupon bond (Volcan)
  • In March 2021, issued:
  • \u2013 8 year EUR600 million, 0.75% coupon bond
  • \u2013 12 year EUR500 million, 1.25% coupon bond
  • In April 2021, issued:
  • \u2013 5 year $600 million, 1.625% coupon bond
  • \u2013 10 year $600 million, 2.85% coupon bond
  • \u2013 30 year $500 million, 3.875% coupon bond
  • In September 2021, issued:
  • \u2013 7 year CHF150 million, 0.5% coupon bond
  • \u2013 10 year $750 million, 2.625% coupon bond
  • \u2013 30 year $500 million, 3.375% coupon bond
Committed syndicated revolving credit facilities
In March 2022 (effective May 2022), Glencore refinanced its short term revolving credit facilities. The borrowing rate of the short term facilities now aligns with the LIBOR reform protocols, and stands at SOFR compounded in arrears across the relevant borrowing period, plus a margin of 45bps. The borrowing rate of the medium term facility remains unchanged, at US$ LIBOR plus 27.5bps subject to a ratings grid, but will be updated during a planned 2023 refinancing exercise, into a SOFR-based rate.
As at 31 December 2022, the facilities comprise:
  • a $6,535 million one year revolving credit facility with a one-year borrower\u2019s term-out option (to May 2024);
  • a $450 million medium-term revolving credit facility (to May 2025); and
  • a $4,200 million medium-term revolving credit facility (to May 2026).
As in previous years, these committed unsecured facilities contain no financial covenants, no rating triggers, no material adverse change clauses and no external factor clauses.
Secured facilities
US$\u00a0million
Maturity1
Interest
2022
2021
Syndicated committed metals
inventory/receivables facilities2
Nov 2024
5.7%
101
82
Syndicated uncommitted metals and oil
inventory/receivables facilities2
Jul 2023
SOFR + 65 bps
610
\u2013
Other secured facilities2,3
Jan 2023
5.0%
2,661
120
Total
3,372
202
Current
3,292
122
Non-current
80
80
1Uncommitted facilities are re-drawn several times until actual expiry of the facility contract.
2Comprises various facilities. The maturity and interest detail represent the weighted average of the various debt balances outstanding at year end.
3Inventory related. Since year end, in the ordinary course of business, these maturities have been rolled/extended. The maturity and interest detail represent the weighted average of the various debt balances outstanding at year end.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-137": { "value": "
Changes in liabilities arising from financing activities
Liabilities arising from financing activities are those for which cash flows are classified in the Group's consolidated cash flow statement as cash flows from financing activities. The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes.
Notes to the financial statements continued
21. Borrowings continued
2022
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2022
33,023
1,618
34,641
23
34,664
Cash related movements2
Repayment of capital market notes
(2,850)
\u2013
(2,850)
\u2013
(2,850)
Repurchase of capital market notes
(103)
\u2013
(103)
\u2013
(103)
Repayment of revolving credit facilities
(2,563)
\u2013
(2,563)
\u2013
(2,563)
Proceeds from other non-current borrowings
430
\u2013
430
\u2013
430
Repayment of other non-current borrowings
(73)
\u2013
(73)
\u2013
(73)
Repayment of lease liabilities
\u2013
(577)
(577)
\u2013
(577)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(1,824)
(1,824)
Repayment of US commercial papers
(1,407)
\u2013
(1,407)
\u2013
(1,407)
Proceeds from current borrowings
3,306
\u2013
3,306
\u2013
3,306
(3,260)
(577)
(3,837)
(1,824)
(5,661)
Non-cash related movements
Borrowings acquired in business combinations3
52
30
82
\u2013
82
Borrowings reclassified to held for sale4
(762)
(38)
(800)
\u2013
(800)
Borrowings disposed of on disposal of subsidiaries
\u2013
(2)
(2)
\u2013
(2)
Fair value adjustment to fair value hedged borrowings
(1,250)
\u2013
(1,250)
\u2013
(1,250)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
1,647
1,647
Foreign exchange movements
(436)
(41)
(477)
\u2013
(477)
Change in lease liabilities
\u2013
389
389
\u2013
389
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
10
\u2013
10
\u2013
9
(2,365)
338
(2,027)
1,647
(381)
31 December 2022
27,398
1,379
28,777
(154)
28,623
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
Notes to the financial statements continued
21. Borrowings continued
2021
US$ million
Borrowings
excluding
lease
liabilities
Lease
liabilities
Total borrowings
Cross currency and interest rate swaps and net margins1
Total liabilities arising from financing activities
1 January 2021
35,958
1,521
37,479
91
37,570
Cash related movements2
Proceeds from issuance of capital market notes
4,877
\u2013
4,877
\u2013
4,877
Repayment of capital market notes
(2,807)
\u2013
(2,807)
\u2013
(2,807)
Repurchase of capital market notes
(125)
\u2013
(125)
\u2013
(125)
Repayment of revolving credit facilities
(2,244)
\u2013
(2,244)
\u2013
(2,244)
Proceeds from other non-current borrowings
231
\u2013
231
\u2013
231
Repayment of other non-current borrowings
(493)
\u2013
(493)
\u2013
(493)
Repayment of lease liabilities
\u2013
(634)
(634)
\u2013
(634)
Margin payments for financing related hedging activities
\u2013
\u2013
\u2013
(970)
(970)
Proceeds from US commercial papers
675
\u2013
675
\u2013
675
Repayment of current borrowings
(2,016)
\u2013
(2,016)
\u2013
(2,016)
(1,902)
(634)
(2,536)
(970)
(3,506)
Non-cash related movements
Borrowings (disposed of)/acquired in business combinations3
(1)
(7)
(8)
\u2013
(8)
Borrowings reclassified to held for sale4
\u2013
(138)
(138)
\u2013
(138)
Fair value adjustment to fair value hedged borrowings
(499)
\u2013
(499)
\u2013
(499)
Fair value movement of hedging derivatives
\u2013
\u2013
\u2013
902
902
Foreign exchange movements
(599)
(45)
(644)
\u2013
(644)
Change in lease liabilities
\u2013
922
922
\u2013
922
Interest on convertible bonds
21
\u2013
21
\u2013
21
Other movements
45
(1)
44
\u2013
44
(1,033)
731
(302)
902
600
31 December 2021
33,023
1,618
34,641
23
34,664
1 The currency and interest rate swaps are reported on the balance sheet within the headings \u2018Other financial assets\u2019 and \u2018Other financial liabilities\u2019 (see note 27) and margin calls paid/received within accounts receivable/payable (see notes 14 and 25).
2See consolidated statement of cash flows.
3 See note 26.
4 See note 16.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-138": { "value": "
Notes to the financial statements continued
22. Deferred income
US$\u00a0million
Notes
Unfavourable contracts
Prepayments
Total
1 January 2022
336
3,325
3,661
Additions
\u2013
562
562
Accretion in the year
\u2013
97
97
Revenue recognised in the year
(66)
(1,633)
(1,699)
Reclassification to held for sale
16
\u2013
(6)
(6)
Effect of foreign currency exchange difference
(5)
(3)
(8)
31 December 2022
265
2,342
2,607
Current
72
988
1,060
Non-current
193
1,354
1,547
1 January 2021
529
3,131
3,660
Additions
\u2013
1,336
1,336
Accretion in the year
\u2013
115
115
Revenue recognised in the year
(70)
(1,066)
(1,136)
Released in the year
5
(122)
\u2013
(122)
Reclassification to held for sale
16
\u2013
(191)
(191)
Effect of foreign currency exchange difference
(1)
\u2013
(1)
31 December 2021
336
3,325
3,661
Current
56
1,517
1,573
Non-current
280
1,808
2,088
Unfavourable contracts
In several business combinations, Glencore recognised liabilities related to various assumed contractual agreements to deliver tonnes of coal over various periods ending until 2032 at fixed prices lower than the prevailing market prices on the respective acquisition dates.
These amounts are released to revenue as the underlying commodities are delivered to the buyers over the life of the contracts at rates consistent with the extrapolated forward price curves at the time of the acquisitions.
In 2021, certain contractual terms were renegotiated and related unfavourable contract provisions in the amount of $122 million were released (see note 5).
Prepayments
Prepayments comprise various short- to long-term product supply agreements whereby an upfront prepayment is received in exchange for the future delivery of a specific product, such as gold, silver or cobalt. The arrangements are accounted for as executory contracts whereby the advance payment is recorded as deferred revenue. The revenue from the advance payment is recognised as the specific product identified in the contract is delivered consistent with the implied forward price curve at the time of the transaction and an accretion expense, representing the time value of the upfront deposit, is also recognised.
Prepayments mainly comprise:
  • Life of mine arrangements \u2013 long-term streaming agreements for the future delivery of gold and/or silver produced over the life of mine from our Antamina and Antapaccay operations. In addition to the upfront payment received Glencore receives an ongoing amount equal to 20% of the spot silver and gold price. Once certain delivery thresholds have been met at Antapaccay, the ongoing cash payment increases to 30% of the spot gold and silver prices. As at 31 December 2022, $1,025 million (2021: $1,068 million) of product delivery obligations remain, of which $42 million (2021: $35 million) are due within 12 months.
  • Silver supply arrangement \u2013 Various silver prepayment arrangements for the future delivery of an average of 13 million ounces of silver per annum, over a remaining three-year period. As at 31 December 2022, $507 million (2021: $784 million) of product delivery obligations remain, of which $277 million (2021: $408 million) are due within 12 months.
  • Palladium supply arrangements \u2013 Various palladium prepayment arrangements for the future delivery of an average of
    31 thousand ounces of palladium per annum, over a remaining three-year period. As at 31 December 2022, $85 million (2021: $141 million) of product delivery obligations remain, of which $41 million (2021: $58 million) are due within 12 months.
  • Gold supply arrangements \u2013 Various gold supply arrangements for the future delivery of 269 thousand ounces (2021: 518 thousand ounces) of gold over a six-month period. As at 31 December 2022, $391 million (2021: $765 million) of product delivery obligations remain, which are due within 12 months.
  • Cobalt supply arrangement \u2013 In March 2019, Glencore signed a six year cobalt prepayment arrangement in exchange for an upfront advance payment of $100 million. Under the terms of the arrangement Glencore is required to deliver an average of
    1,621 metric tons of cobalt per annum over a four-year period starting 2021. As at 31 December 2022, $58 million (2021: $94 million) of product delivery obligations remain, of which $47 million (2021: $26 million) are due within 12 months.
  • Iron ore supply arrangement \u2013 In November 2021, Glencore signed an 18-month iron ore prepayment arrangement in exchange for an upfront advance payment of $200 million. Under the terms of the arrangement, Glencore is required to deliver an average of 3,600,000 metric tons of iron ore per annum. As at 31 December 2022, $100 million (2021: $200 million) of product delivery obligations remain of which, $100 million (2021: $117 million) are due within 12 months.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-139": { "value": "
23. Provisions
US$\u00a0million
Notes
Rehabilitation costs
Onerous contracts
Legal investigations
Other
provisions
Total
1 January 2022
5,731
455
1,500
524
8,210
Utilised
(238)
(143)
(883)
(152)
(1,416)
Released
(30)
(71)
(133)
(30)
(264)
Accretion
155
26
\u2013
10
191
Assumed in business combination
26
998
\u2013
\u2013
73
1,071
Disposal of subsidiaries
26
(158)
\u2013
\u2013
(9)
(167)
Additions
840
265
\u2013
285
1,390
Reclassification to held for sale
16
(290)
\u2013
\u2013
(83)
(373)
Effect of foreign currency exchange movements
(45)
(2)
\u2013
(7)
(54)
31 December 2022
6,963
530
484
611
8,588
Current
531
185
484
225
1,425
Non-current
6,432
345
\u2013
386
7,163
1 January 2021
5,182
535
\u2013
746
6,463
Utilised
(190)
(122)
\u2013
(276)
(588)
Released
(14)
(103)
\u2013
(31)
(148)
Accretion
153
31
\u2013
2
186
Disposal of subsidiaries
26
(67)
\u2013
\u2013
(10)
(77)
Additions
918
116
1,500
137
2,671
Reclassification to held for sale
16
(191)
\u2013
\u2013
(37)
(228)
Effect of foreign currency exchange movements
(60)
(2)
\u2013
(7)
(69)
31 December 2021
5,731
455
1,500
524
8,210
Current
337
109
1,500
147
2,093
Non-current
5,394
346
\u2013
377
6,117
Rehabilitation costs
Rehabilitation provision represents the accrued costs required to provide adequate restoration and rehabilitation upon the completion of production activities. These amounts will be settled when rehabilitation is undertaken, generally at the end of a project\u2019s life, which ranges from two to in excess of 50 years with an average for all sites, weighted by closure provision, of some
19 years (2021: 23 years). Discount rates were determined for each relevant jurisdiction by reference to the average annual real-terms return on a relevant government security with a tenor of 20 years.
As at 31 December 2022, the discount rate applied in calculating the restoration and rehabilitation provision is a pre-tax risk free rate specific to the liability and the currency in which they are denominated as follows: US dollar 1.25% (2021: 1.5%), South African rand 3.75% (2021: 3.75%), Australian dollar 2.0% (2021: 2.0%), Canadian dollar 1.25% (2021: 1.5%), and Chilean peso 2.5% (2021: 2.5%).
23. Provisions continued
The sensitivity of the rehabilitation costs provision to changes in the discount rate assumptions as at 31 December 2022, assuming that all other assumptions are held constant, is set out below:
Discount rate
US$\u00a0million
Increase 1%
Decrease 1%
Decrease/(increase) in overall rehabilitation provision
822
(1,096)
(Decrease)/increase in property, plant and equipment
(662)
878
Net increase/(decrease) in statement of income
160
(218)
Effect in the following year
Decrease/(increase) in depreciation expense
35
(46)
(Increase)/decrease in interest expense
(22)
36
Net increase/(decrease) in statement of income
13
(10)
Onerous contracts
Onerous contracts represent liabilities related to contractual take or pay commitments for securing coal logistics capacity at fixed prices and quantities higher than the acquisition date forecasted usage and prevailing market price. The provision is released to costs of goods sold as the underlying commitments are incurred.
Investigations by regulatory and enforcement authorities
The Board has appointed a committee, the Investigations Committee, to oversee the response to the investigations on behalf of the Board.
On 24 May 2022 the Group announced that it had resolved the previously disclosed investigations by authorities in the United States, the United Kingdom and Brazil.
Under the terms of the US resolutions, Glencore agreed to pay penalties of $701 million to resolve bribery investigations and
$486 million to resolve market manipulation investigations by the Department of Justice (\u2018DOJ\u2019) and the Commodity Futures Trading Commission (\u2018CFTC\u2019). Of this amount, up to $166 million would be credited against other parallel matters, including in the UK, so that the net amount payable to the US authorities is expected to be $1,020 million. Glencore further agreed to pay $40 million under a resolution signed with the Brazilian Federal Prosecutor\u2019s Office (\u2018MPF\u2019) in connection with its bribery investigation into the Group. On 3 November 2022, Glencore Energy UK Limited was sentenced to pay a financial penalty and costs of \u00a3281 million in the Serious Fraud Office (\u2018SFO\u2019) investigation.
The Group has settled the amounts due to the CFTC, the DOJ in respect of the market manipulation matter and the SFO and expects to settle the amounts due to the DOJ in respect of the bribery matter and the MPF during the first half of 2023.
Accordingly, the Group has retained a provision for the United States and Brazil resolutions which at 31 December 2022 amounts to $484 million.
The Group remains subject to the following ongoing investigations:
  • The Office of the Attorney General of Switzerland (\u2018OAG\u2019) is investigating Glencore International AG for failure to have the organisational measures in place to prevent alleged corruption.
  • The Dutch authorities are conducting a criminal investigation into Glencore International AG related to potential corruption pertaining to the DRC. The scope of the investigation is similar to that of the OAG investigation. The Dutch authorities are coordinating their investigation with the OAG and the Group expects any possible resolution to avoid duplicative penalties for the same conduct.
The timing and outcome of the OAG and Dutch investigations remains uncertain \u2013 see note 32.
Other provisions
Other comprises provisions for possible demurrage, mine concession and construction-related claims, a royalty indemnification related to the disposal of the Ernest Henry operations (see note 26) and various other individually immaterial legal matters. This balance comprises no individually material provisions.
Notes to the financial statements continued
32. Contingent liabilities
There were no corporate guarantees in favour of third parties as at 31\u00a0December 2022 (2021: None), except those disclosed in note 11. The Group is subject to various legal and regulatory proceedings as detailed below. These contingent liabilities are reviewed on a regular basis and where appropriate an estimate is made of the potential financial impact on the Group. As at 31 December 2022 and 2021, it was not feasible to make such an assessment.
Legal and regulatory proceedings
Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, a provision is recognised when Glencore has a present obligation (legal or constructive), as a result of a past event, and it is probable that an outflow of resources embodying economic benefits, that can be reliably estimated, will be required to settle the liability. A contingent liability is a possible obligation that arises from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Glencore. If it is not clear whether there is a present obligation, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the end of the reporting period. When a present obligation arises but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability, a contingent liability is disclosed.
Investigations by regulatory and enforcement authorities
As described in note 23, the Group remains subject to investigations by the OAG and Dutch authorities. At 31 December 2022, taking account of all available evidence, the Investigations Committee concluded that, with respect to these investigations, it is not probable that a present obligation existed at the end of the reporting period. In addition, the timing and amount, if any, of the possible financial effects (such as fines, penalties or damages, which could be material) or other consequences, including external costs, from the OAG and Dutch investigations and any change in their scope are not currently possible to predict or estimate.
The Group notes that other authorities may commence investigations against the Group in connection with the resolved investigations or the matters under investigation. In respect of these investigations, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these potential investigations as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Claims against the Company in connection with investigations by regulatory and enforcement authorities
Claims have been issued against the Group in the United Kingdom in connection with the various Government investigations, constituting claims on behalf of approximately 400 current and former shareholders. The claims are, inter alia, made under s90 of the Financial Services and Markets Act 2000 (\u2018FSMA\u2019) relating to prospectus liability, while two currently include s90A FSMA claims relating to misstatements in other information by the Company. The bases for the claims are that the prospectuses issued in 2011 and 2013 and other published information by the Company were untrue, misleading or contained omissions. The claims are at a very early stage.
The Group may be the subject of further legal claims brought by other parties in connection with the Government investigations, including collective, group or representative actions.
In respect of these claims, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these claims or potential claims as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Other legal proceedings
Other claims and unresolved disputes are pending against Glencore. However, based on the Group\u2019s current assessment of these matters any future individually material financial obligations are considered to be remote.
Environmental contingencies
Glencore\u2019s operations are subject to various environmental laws and regulations. Glencore is not aware of any material non-compliance with those laws and regulations. Glencore accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At this time, Glencore is unaware of any material environmental incidents at its locations. Any potential liability arising from environmental incidents in the ordinary course of the Group\u2019s business would not usually be expected to have a material adverse effect on its consolidated income, financial position or cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-140": { "value": "
23. Provisions
US$\u00a0million
Notes
Rehabilitation costs
Onerous contracts
Legal investigations
Other
provisions
Total
1 January 2022
5,731
455
1,500
524
8,210
Utilised
(238)
(143)
(883)
(152)
(1,416)
Released
(30)
(71)
(133)
(30)
(264)
Accretion
155
26
\u2013
10
191
Assumed in business combination
26
998
\u2013
\u2013
73
1,071
Disposal of subsidiaries
26
(158)
\u2013
\u2013
(9)
(167)
Additions
840
265
\u2013
285
1,390
Reclassification to held for sale
16
(290)
\u2013
\u2013
(83)
(373)
Effect of foreign currency exchange movements
(45)
(2)
\u2013
(7)
(54)
31 December 2022
6,963
530
484
611
8,588
Current
531
185
484
225
1,425
Non-current
6,432
345
\u2013
386
7,163
1 January 2021
5,182
535
\u2013
746
6,463
Utilised
(190)
(122)
\u2013
(276)
(588)
Released
(14)
(103)
\u2013
(31)
(148)
Accretion
153
31
\u2013
2
186
Disposal of subsidiaries
26
(67)
\u2013
\u2013
(10)
(77)
Additions
918
116
1,500
137
2,671
Reclassification to held for sale
16
(191)
\u2013
\u2013
(37)
(228)
Effect of foreign currency exchange movements
(60)
(2)
\u2013
(7)
(69)
31 December 2021
5,731
455
1,500
524
8,210
Current
337
109
1,500
147
2,093
Non-current
5,394
346
\u2013
377
6,117
Rehabilitation costs
Rehabilitation provision represents the accrued costs required to provide adequate restoration and rehabilitation upon the completion of production activities. These amounts will be settled when rehabilitation is undertaken, generally at the end of a project\u2019s life, which ranges from two to in excess of 50 years with an average for all sites, weighted by closure provision, of some
19 years (2021: 23 years). Discount rates were determined for each relevant jurisdiction by reference to the average annual real-terms return on a relevant government security with a tenor of 20 years.
As at 31 December 2022, the discount rate applied in calculating the restoration and rehabilitation provision is a pre-tax risk free rate specific to the liability and the currency in which they are denominated as follows: US dollar 1.25% (2021: 1.5%), South African rand 3.75% (2021: 3.75%), Australian dollar 2.0% (2021: 2.0%), Canadian dollar 1.25% (2021: 1.5%), and Chilean peso 2.5% (2021: 2.5%).
23. Provisions continued
The sensitivity of the rehabilitation costs provision to changes in the discount rate assumptions as at 31 December 2022, assuming that all other assumptions are held constant, is set out below:
Discount rate
US$\u00a0million
Increase 1%
Decrease 1%
Decrease/(increase) in overall rehabilitation provision
822
(1,096)
(Decrease)/increase in property, plant and equipment
(662)
878
Net increase/(decrease) in statement of income
160
(218)
Effect in the following year
Decrease/(increase) in depreciation expense
35
(46)
(Increase)/decrease in interest expense
(22)
36
Net increase/(decrease) in statement of income
13
(10)
Onerous contracts
Onerous contracts represent liabilities related to contractual take or pay commitments for securing coal logistics capacity at fixed prices and quantities higher than the acquisition date forecasted usage and prevailing market price. The provision is released to costs of goods sold as the underlying commitments are incurred.
Investigations by regulatory and enforcement authorities
The Board has appointed a committee, the Investigations Committee, to oversee the response to the investigations on behalf of the Board.
On 24 May 2022 the Group announced that it had resolved the previously disclosed investigations by authorities in the United States, the United Kingdom and Brazil.
Under the terms of the US resolutions, Glencore agreed to pay penalties of $701 million to resolve bribery investigations and
$486 million to resolve market manipulation investigations by the Department of Justice (\u2018DOJ\u2019) and the Commodity Futures Trading Commission (\u2018CFTC\u2019). Of this amount, up to $166 million would be credited against other parallel matters, including in the UK, so that the net amount payable to the US authorities is expected to be $1,020 million. Glencore further agreed to pay $40 million under a resolution signed with the Brazilian Federal Prosecutor\u2019s Office (\u2018MPF\u2019) in connection with its bribery investigation into the Group. On 3 November 2022, Glencore Energy UK Limited was sentenced to pay a financial penalty and costs of \u00a3281 million in the Serious Fraud Office (\u2018SFO\u2019) investigation.
The Group has settled the amounts due to the CFTC, the DOJ in respect of the market manipulation matter and the SFO and expects to settle the amounts due to the DOJ in respect of the bribery matter and the MPF during the first half of 2023.
Accordingly, the Group has retained a provision for the United States and Brazil resolutions which at 31 December 2022 amounts to $484 million.
The Group remains subject to the following ongoing investigations:
  • The Office of the Attorney General of Switzerland (\u2018OAG\u2019) is investigating Glencore International AG for failure to have the organisational measures in place to prevent alleged corruption.
  • The Dutch authorities are conducting a criminal investigation into Glencore International AG related to potential corruption pertaining to the DRC. The scope of the investigation is similar to that of the OAG investigation. The Dutch authorities are coordinating their investigation with the OAG and the Group expects any possible resolution to avoid duplicative penalties for the same conduct.
The timing and outcome of the OAG and Dutch investigations remains uncertain \u2013 see note 32.
Other provisions
Other comprises provisions for possible demurrage, mine concession and construction-related claims, a royalty indemnification related to the disposal of the Ernest Henry operations (see note 26) and various other individually immaterial legal matters. This balance comprises no individually material provisions.
There were no corporate guarantees in favour of third parties as at 31\u00a0December 2022 (2021: None), except those disclosed in note 11. The Group is subject to various legal and regulatory proceedings as detailed below. These contingent liabilities are reviewed on a regular basis and where appropriate an estimate is made of the potential financial impact on the Group. As at 31 December 2022 and 2021, it was not feasible to make such an assessment.
Legal and regulatory proceedings
Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, a provision is recognised when Glencore has a present obligation (legal or constructive), as a result of a past event, and it is probable that an outflow of resources embodying economic benefits, that can be reliably estimated, will be required to settle the liability. A contingent liability is a possible obligation that arises from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Glencore. If it is not clear whether there is a present obligation, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the end of the reporting period. When a present obligation arises but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability, a contingent liability is disclosed.
Investigations by regulatory and enforcement authorities
As described in note 23, the Group remains subject to investigations by the OAG and Dutch authorities. At 31 December 2022, taking account of all available evidence, the Investigations Committee concluded that, with respect to these investigations, it is not probable that a present obligation existed at the end of the reporting period. In addition, the timing and amount, if any, of the possible financial effects (such as fines, penalties or damages, which could be material) or other consequences, including external costs, from the OAG and Dutch investigations and any change in their scope are not currently possible to predict or estimate.
The Group notes that other authorities may commence investigations against the Group in connection with the resolved investigations or the matters under investigation. In respect of these investigations, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these potential investigations as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Claims against the Company in connection with investigations by regulatory and enforcement authorities
Claims have been issued against the Group in the United Kingdom in connection with the various Government investigations, constituting claims on behalf of approximately 400 current and former shareholders. The claims are, inter alia, made under s90 of the Financial Services and Markets Act 2000 (\u2018FSMA\u2019) relating to prospectus liability, while two currently include s90A FSMA claims relating to misstatements in other information by the Company. The bases for the claims are that the prospectuses issued in 2011 and 2013 and other published information by the Company were untrue, misleading or contained omissions. The claims are at a very early stage.
The Group may be the subject of further legal claims brought by other parties in connection with the Government investigations, including collective, group or representative actions.
In respect of these claims, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these claims or potential claims as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Other legal proceedings
Other claims and unresolved disputes are pending against Glencore. However, based on the Group\u2019s current assessment of these matters any future individually material financial obligations are considered to be remote.
Environmental contingencies
Glencore\u2019s operations are subject to various environmental laws and regulations. Glencore is not aware of any material non-compliance with those laws and regulations. Glencore accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At this time, Glencore is unaware of any material environmental incidents at its locations. Any potential liability arising from environmental incidents in the ordinary course of the Group\u2019s business would not usually be expected to have a material adverse effect on its consolidated income, financial position or cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-141": { "value": "
Notes to the financial statements continued
24. Personnel costs and employee benefits
US$\u00a0million
Notes
Post-retirement employee benefits
Other employee entitlements
Total
1 January 2022
782
157
939
Utilised
(82)
(37)
(119)
Released
(1)
(1)
(2)
Accretion
19
\u2013
19
Additions
97
79
176
Actuarial gain
(298)
\u2013
(298)
Reclassification to held for sale
16
\u2013
(1)
(1)
Effect of foreign currency exchange movements
(29)
(8)
(37)
31 December 2022
488
189
677
1 January 2021
980
181
1,161
Utilised
(84)
(9)
(93)
Released
(1)
(7)
(8)
Accretion
23
\u2013
23
Additions
151
14
165
Actuarial gain
(284)
\u2013
(284)
Reclassification to held for sale
16
\u2013
(19)
(19)
Effect of foreign currency exchange movements
(3)
(3)
(6)
31 December 2021
782
157
939
The provision for post-retirement employee benefits includes pension plan liabilities of $178\u00a0million (2021: $352\u00a0million) and post-retirement medical plan liabilities of $310\u00a0million (2021: $430\u00a0million).
The other employee entitlements provision represents the value of governed employee entitlements due to employees upon their termination of employment. The associated expenditure will occur in a pattern consistent with when employees choose to exercise their entitlements.
Total personnel costs, which include salaries, wages, social security, other personnel costs and share-based payments, incurred for the years ended 31\u00a0December 2022 and 2021, were $6,319\u00a0million and $6,012\u00a0million, respectively. Personnel costs related to consolidated industrial subsidiaries of $4,284 million (2021: $4,188 million) are included in cost of goods sold. Other personnel costs, including deferred bonus and performance share plans, are included in selling and administrative expenses.
The Company and certain subsidiaries sponsor various pension schemes in accordance with local regulations and practices. Eligibility for participation in the various plans is either based on completion of a specified period of continuous service, or date of hire. Among these schemes are defined contribution plans as well as defined benefit plans.
Defined contribution plans
Glencore\u2019s contributions under these plans amounted to $171\u00a0million in 2022 (2021: $173\u00a0million).
Post-retirement medical plans
The Company participates in a number of post-retirement medical plans in Canada, USA and South Africa, which provide coverage for prescription drugs, medical, dental, hospital and life insurance to eligible retirees. Almost all of the post-retirement medical plans in the Group are unfunded.
Defined benefit pension plans
The Company operates defined benefit plans in various countries, the main locations being Canada, Switzerland, UK and the US. Approximately 63% of the present value of the pension obligations accrued relates to the defined benefit plans in Canada, which are pension plans that provide benefits to members in the form of a guaranteed level of pension payable for life. Contributions to the Canadian plans are made to meet or exceed minimum funding requirements based on provincial statutory requirements and associated federal taxation rules.
The majority of benefit payments are from trustee-administered funds; however, there are also a number of unfunded plans where Glencore meets the benefit payments as they fall due. Plan assets held in trusts are governed by local regulations and practices in each country. Responsibility for governance of the plans \u2013 overseeing all aspects of the plans including investment decisions and contribution schedules \u2013 lies with Glencore. Glencore has set up committees to assist in the management of the plans and has also appointed experienced, independent professional experts such as investment managers, actuaries, custodians, and trustees.
The movement in the defined benefit pension and post-retirement medical plans over the year is as follows:
Defined benefit pension plans
US$ million
Notes
Post-retirement
medical plans
Present value
of defined
benefit
obligation
Fair value
of plan
assets
Net liability
for defined
benefit
pension plans
1 January 2022
430
2,760
(2,533)
227
Current service cost
8
52
\u2013
52
Past service cost \u2013 plan amendments
1
3
\u2013
3
Settlement of pension plan disposal
\u2013
(115)
121
6
Interest expense/(income)
17
67
(65)
2
Total expense recognised in consolidated statement of income
26
7
56
63
Loss on plan assets, excluding amounts included
in interest expense \u2013 net
\u2013
\u2013
383
383
Gain from change in demographic assumptions
(7)
(26)
\u2013
(26)
Gain from change in financial assumptions
(91)
(576)
\u2013
(576)
(Gain)/loss from actuarial experience
(6)
25
\u2013
25
Actuarial (gains)/losses recognised in consolidated
statement of comprehensive income
(104)
(577)
383
(194)
Employer contributions
\u2013
\u2013
(64)
(64)
Benefits paid directly by the Company
(18)
(8)
8
\u2013
Benefits paid from plan assets
\u2013
(130)
130
\u2013
Net cash (outflow)/inflow
(18)
(138)
74
(64)
Exchange differences
(24)
(140)
138
(2)
31 December 2022
310
1,912
(1,882)
30
Of which:
Pension surpluses
12
\u2013
(148)
Pension deficits
310
178
The actual return on plan assets in respect of defined benefit pension plans amounted to a loss of $456\u00a0million (2021: gain of $107\u00a0million), comprising interest income and the re-measurement of plan assets, including exchange differences.
During the next financial year, the Group expects to make a contribution of $76 million in respect of the defined benefit pension and post-retirement medical plans across all countries, including current service costs and contributions required by pension legislation. Contributions over the next five years for the Canadian plans only, based on the most recently filed actuarial reports, approximate $115 million. Future funding requirements and contributions are reviewed and adjusted on an annual basis.
Defined benefit pension plans
US$ million
Notes
Post-retirement
medical plans
Present value
of defined
benefit
obligation
Fair value
of plan
assets
Net liability
for defined
benefit
pension plans
1 January 2021
476
3,138
(2,674)
464
Current service cost
7
62
\u2013
62
Past service cost \u2013 plan amendments
(6)
\u2013
\u2013
\u2013
Settlement of pension plan disposal
\u2013
(137)
138
1
Interest expense/(income)
18
64
(59)
5
Total expense/(income) recognised in consolidated statement of income
19
(11)
79
68
Gain on plan assets, excluding amounts included
in interest expense \u2013 net
\u2013
\u2013
(46)
(46)
Gain from change in demographic assumptions
\u2013
(12)
\u2013
(12)
Loss from change in financial assumptions
(37)
(188)
\u2013
(188)
Loss from actuarial experience
(4)
3
\u2013
3
Actuarial losses/(gains) recognised in consolidated
statement of comprehensive income
(41)
(197)
(46)
(243)
Employer contributions
\u2013
\u2013
(63)
(63)
Employee contributions
\u2013
1
(1)
\u2013
Benefits paid directly by the Company
(22)
(8)
8
\u2013
Benefits paid from plan assets
\u2013
(165)
166
1
Net cash (outflow)/inflow
(22)
(172)
110
(62)
Exchange differences
(2)
2
(2)
\u2013
31 December 2021
430
2,760
(2,533)
227
Of which:
Pension surpluses
12
\u2013
(125)
Pension deficits
430
352
The defined benefit obligation accrued in Canada represents the majority for the Company. The breakdown below provides details of the Canadian plans for both the statement of financial position and the weighted average duration of the defined benefit obligation as at 31\u00a0December 2022 and 2021. The net liability of any of the Group\u2019s defined benefit plans outside of Canada as at 31\u00a0December 2022 does not exceed $34 million (2021: $70 million).
2022
US$ million
Canada
Other
Total
Post-retirement medical plans
Present value of defined benefit obligation
264
46
310
of which: amounts owing to active members
74
8
82
of which: amounts owing to pensioners
190
38
228
Defined benefit pension plans
Present value of defined benefit obligation
1,203
709
1,912
of which: amounts owing to active members
261
364
625
of which: amounts owing to non-active members
14
91
105
of which: amounts owing to pensioners
928
254
1,182
Fair value of plan assets
(1,277)
(605)
(1,882)
Net defined benefit (asset)/liability at 31 December 2022
(74)
104
30
Of which:
Pension surpluses
(126)
(22)
(148)
Pension deficits
52
126
178
Weighted average duration of defined benefit obligation \u2013 years
10
12
11
2021
US$ million
Canada
Other
Total
Post-retirement medical plans
Present value of defined benefit obligation
379
51
430
of which: amounts owing to active members
123
11
134
of which: amounts owing to pensioners
256
40
296
Defined benefit pension plans
Present value of defined benefit obligation
1,753
1,007
2,760
of which: amounts owing to active members
434
484
918
of which: amounts owing to non-active members
25
167
192
of which: amounts owing to pensioners
1,294
356
1,650
Fair value of plan assets
(1,772)
(761)
(2,533)
Net defined benefit (asset)/liability at 31 December 2021
(19)
246
227
Of which:
Pension surpluses
(115)
(10)
(125)
Pension deficits
96
256
352
Weighted average duration of defined benefit obligation \u2013 years
13
15
13
Estimated future benefit payments of the Canadian plans, which reflect expected future services but exclude plan expenses, up until 2032 are as follows:
US$ million
Post-retirement
medical plans
Defined benefit
pension plans
Total
2023
18
83
101
2024
18
83
101
2025
18
82
100
2026
17
82
99
2027
17
82
99
2028-2032
85
402
487
Total
173
814
987
The plan assets consist of the following:
2022
2021
Active market
Non-active market
Active market
Non-active market
Cash and short-term investments
37
\u2013
40
\u2013
Fixed income
569
182
823
195
Equities
567
\u2013
851
\u2013
Other
329
198
416
208
Total
1,502
380
2,130
403
The fair value of plan assets includes none of Glencore\u2019s own financial instruments and no property occupied by or other assets used by Glencore. For many of the plans, representing a large portion of the global plan assets, asset-liability matching strategies are in place, where the fixed-income assets are invested broadly in alignment with the duration of the plan liabilities, and the proportion allocated to fixed-income assets is raised when the plan funding level increases. The asset mix for each plan reflects the nature, expected changes in, and size of the liabilities and the assessment of long-term economic conditions, market risk, expected investment returns as considered during a formal asset mix study, including sensitivity analysis and/or scenario analysis, conducted periodically for the plans.
Through its defined benefit plans, Glencore is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this will create a deficit. The funded plans hold a significant proportion of equities, which are expected to outperform bonds in the long term while contributing volatility and risk in the short term. Glencore believes that due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of Glencore\u2019s long-term strategy to manage the plans efficiently.
Change in bond yields: A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans\u2019 bond holdings.
Inflation risk: Some of the plans\u2019 benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities, although, in\u00a0most cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation.
Life expectancy: The majority of the plans\u2019 obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans\u2019 liability.
Salary increases: Some of the plans\u2019 benefit obligations related to active members are linked to their salaries. Higher salary increases will therefore tend to lead to higher plan liabilities.
The principal weighted-average actuarial assumptions used were as follows:
Post-retirement medical plans
Defined benefit pension plans
2022
2021
2022
2021
Discount rate
6.2%
4.1%
4.9%
2.7%
Future salary increases
\u2013
\u2013
2.7%
2.6%
Future pension increases
\u2013
\u2013
0.4%
0.5%
Ultimate medical cost trend rate
3.5%
4.6%
\u2013
\u2013
Mortality assumptions are based on the latest available standard mortality tables for the individual countries concerned. As at 31\u00a0December 2022, these tables imply expected future life expectancy, for employees aged 65, 16 to 24 years for males (2021: 16 to 23) and 20 to 25 years for females (2021: 20 to 25). The assumptions for each country are reviewed regularly and are adjusted where necessary to reflect changes in fund experience and actuarial recommendations.
The sensitivity of the defined benefit obligation to changes in principal assumptions as at 31\u00a0December\u00a02022 is set out below, assuming that all other assumptions are held constant and the effect of interrelationships is excluded.
Increase/(decrease) in pension obligation
US$ million
Post-retirement medical plans
Defined benefit pension plans
Total
Discount rate
Increase by 100 basis points
(34)
(168)
(202)
Decrease by 100 basis points
38
194
232
Rate of future salary increase
Increase by 100 basis points
\u2013
23
23
Decrease by 100 basis points
\u2013
(22)
(22)
Rate of future pension benefit increase
Increase by 100 basis points
\u2013
24
24
Decrease by 100 basis points
\u2013
(22)
(22)
Medical cost trend rate
Increase by 100 basis points
36
\u2013
36
Decrease by 100 basis points
(29)
\u2013
(29)
Life expectancy
Increase in longevity by one year
8
41
49
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-142": { "value": "
25. Accounts payable
US$ million
Notes
2022
2021
Financial liabilities at amortised cost
Trade payables
11,044
10,397
Margin calls received and other broker balances
112
729
Associated companies
903
1,124
Other payables and accrued liabilities
644
889
12,703
13,139
Financial liabilities at fair value through profit and loss
Trade payables containing provisional pricing features
28
14,079
13,806
Other payables
28
102
\u2013
14,181
13,806
Non-financial liabilities
Advances settled in product
676
459
Other payables and accrued liabilities1
1,839
1,460
Other tax and related payables
327
449
2,842
2,368
Total
29,726
29,313
1 Primarily comprised of employee benefits accruals.
Trade payables are obligations to pay for goods and services. Trade payables typically have maturities up to 90 days depending on the type of material and the geographic area in which the purchase transaction occurs and the agreed terms. The carrying value of trade payables approximates fair value.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-143": { "value": "
25. Accounts payable
US$ million
Notes
2022
2021
Financial liabilities at amortised cost
Trade payables
11,044
10,397
Margin calls received and other broker balances
112
729
Associated companies
903
1,124
Other payables and accrued liabilities
644
889
12,703
13,139
Financial liabilities at fair value through profit and loss
Trade payables containing provisional pricing features
28
14,079
13,806
Other payables
28
102
\u2013
14,181
13,806
Non-financial liabilities
Advances settled in product
676
459
Other payables and accrued liabilities1
1,839
1,460
Other tax and related payables
327
449
2,842
2,368
Total
29,726
29,313
1 Primarily comprised of employee benefits accruals.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-144": { "value": "
US$ million
Notes
2022
2021
Financial liabilities at amortised cost
Trade payables
11,044
10,397
Margin calls received and other broker balances
112
729
Associated companies
903
1,124
Other payables and accrued liabilities
644
889
12,703
13,139
Financial liabilities at fair value through profit and loss
Trade payables containing provisional pricing features
28
14,079
13,806
Other payables
28
102
\u2013
14,181
13,806
Non-financial liabilities
Advances settled in product
676
459
Other payables and accrued liabilities1
1,839
1,460
Other tax and related payables
327
449
2,842
2,368
Total
29,726
29,313
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-145": { "value": "
US$ million
Notes
2022
2021
Financial liabilities at amortised cost
Trade payables
11,044
10,397
Margin calls received and other broker balances
112
729
Associated companies
903
1,124
Other payables and accrued liabilities
644
889
12,703
13,139
Financial liabilities at fair value through profit and loss
Trade payables containing provisional pricing features
28
14,079
13,806
Other payables
28
102
\u2013
14,181
13,806
Non-financial liabilities
Advances settled in product
676
459
Other payables and accrued liabilities1
1,839
1,460
Other tax and related payables
327
449
2,842
2,368
Total
29,726
29,313
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-146": { "value": "
Notes to the financial statements continued
26. Acquisition and disposal of subsidiaries and other entities
2022 Acquisitions
In 2022, Glencore acquired the remaining 66.67% interest in Cerrej\u00f3n that it did not already own, and various other businesses, none of which are individually material. The acquisition accounting for Cerrej\u00f3n has now been finalised, with no adjustments to the previously reported provisional fair values.
The net cash acquired/(used) in the acquisition of subsidiaries and the fair value of assets acquired and liabilities assumed on the acquisition date are detailed below:
US$ million
Cerrej\u00f3n
Other
Total
Non-current assets
Property, plant and equipment
2,470
333
2,803
2,470
333
2,803
Current assets
Inventories
315
51
366
Accounts receivable1
312
13
325
Cash and cash equivalents
511
5
516
1,138
69
1,207
Non-current liabilities
Non-current borrowings
(13)
\u2013
(13)
Deferred tax liabilities
(278)
(50)
(328)
Provisions
(1,033)
(8)
(1,041)
(1,324)
(58)
(1,382)
Current liabilities
Borrowings
(17)
(52)
(69)
Accounts payable
(232)
(70)
(302)
Provisions
(30)
\u2013
(30)
Income tax payable
(309)
\u2013
(309)
(588)
(122)
(710)
Total fair value of net assets acquired
1,696
222
1,918
Cash and cash equivalents paid
(100)
(95)
(195)
Less: amounts previously recognised as investments
(567)
(31)
(598)
Gain on bargain purchase of subsidiaries
1,029
96
1,125
Cash and cash equivalents paid
(100)
(95)
(195)
Cash and cash equivalents acquired
511
5
516
Net cash acquired/(used) in acquisition of subsidiaries
411
(90)
321
1There is no material difference between the gross contractual amounts for accounts receivable and their fair value.
Cerrej\u00f3n
On 11 January 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n, a coal mine in Colombia, that it did not own. The purchase price consideration of $588 million was based on an economic effective date of 31 December 2020. After taking into account the dividends generated during 2021, together with certain other adjustments, the completion cash payment made by Glencore amounted to $100 million. As Glencore holds 100% of the voting shares, providing it the ability to control the key strategic, operating and capital decisions of the business, it is required to account for Cerrej\u00f3n using the full consolidation method in accordance with IFRS 10.
Prior to the acquisition, Glencore owned a 33.33% interest in Cerrej\u00f3n which was accounted for as an associate. In accordance with IFRS 3 Business Combinations, the equity interest is required to be revalued, at the date of acquisition, to its fair value with any resulting gain or loss recognised in the statement of income. On the date of acquisition, the fair value of 100% of the net assets acquired was determined to be $1,696 million, a value broadly consistent with the carrying value of the initial 33.33% equity interest and as a result, no gain or loss was recognised on the revaluation of the original equity interest.
The valuation was determined using a bottom-up approach to identify the fair value of the specific assets and liabilities within the Cerrej\u00f3n Group, with the mineral reserves being valued using a discounted cash-flow method that assumes life of mine saleable coal production of 223 million tonnes over the period 2022-2032, at a long-term CIF price of $67/t, adjusted as appropriate for coal quality, applying a discount rate of 8.56%.
As the assessed fair value of $1,696 million was in excess of the completion cash payment and the fair value of the previously held investment, a bargain purchase gain on acquisition of $1,029 million was recognised in the consolidated statement of income. Glencore assessed that all identifiable assets and liabilities had been included in the valuation prior to recognising the gain as noted above. The gain effectively represents the discount that the selling joint venture partners were willing to accept in order to achieve timely execution of their respective decarbonisation strategies. The immediate near-term valuation was also supported by the net $411 million of unencumbered cash assumed on completion, benefitting from the transaction effective date of 31 December 2020.
From the date of acquisition, the operation contributed $5,393 million of revenue and $2,909 million of attributable income (including the bargain purchase gain) for the period ended 31 December 2022.
Other
From the date of acquisition, the other operations contributed $223 million of revenue and $241 million of attributable income (including the bargain purchase gain) for the period ended 31 December 2022.
2021 Acquisitions
There were no material acquisitions.
2022 Disposals
The carrying value of the assets and liabilities over which control was lost and consideration receivable from the 2022 disposals are detailed below:
US$ million
Ernest Henry1
Bolivia Zinc1
E&P Chad1
Access World1
Los Quenuales
Other
Total
Non-current assets
Property, plant and equipment
311
163
247
206
126
121
1,174
Intangible assets
\u2013
2
\u2013
11
\u2013
\u2013
13
Investments in associates
\u2013
\u2013
\u2013
10
\u2013
\u2013
10
Advances and loans
\u2013
43
\u2013
9
2
\u2013
54
Deferred tax assets
16
13
\u2013
4
21
\u2013
54
327
221
247
240
149
121
1,305
Current assets
Inventories
16
97
21
\u2013
5
6
145
Accounts receivable
24
90
19
159
9
19
320
Prepaid expenses
\u2013
\u2013
\u2013
12
\u2013
1
13
Cash and cash equivalents
1
17
5
42
7
3
75
41
204
45
213
21
29
553
Non-controlling interest
\u2013
\u2013
\u2013
(2)
(2)
(24)
(28)
Non-current liabilities
Non-current borrowings
\u2013
(8)
\u2013
(110)
(1)
\u2013
(119)
Deferred income
(138)
\u2013
\u2013
\u2013
\u2013
\u2013
(138)
Deferred tax liabilities
\u2013
(4)
(3)
(1)
\u2013
(3)
(11)
Non-current provisions
(74)
(26)
(86)
(3)
(97)
(59)
(345)
Post-retirement and other employee benefits
(1)
(16)
\u2013
(1)
\u2013
\u2013
(18)
(213)
(54)
(89)
(115)
(98)
(62)
(631)
Current liabilities
Borrowings
\u2013
(2)
\u2013
(19)
(1)
\u2013
(22)
Accounts payable
(30)
(139)
(7)
(154)
(23)
(19)
(372)
Provisions
(38)
(44)
\u2013
(3)
(9)
(2)
(96)
Income tax payable
\u2013
(13)
\u2013
(4)
\u2013
\u2013
(17)
(68)
(198)
(7)
(180)
(33)
(21)
(507)
Carrying value of net assets disposed
87
173
196
156
37
43
692
Cash and cash equivalents (received)/paid
(585)
\u2013
(17)
(40)
10
(30)
(662)
Items recycled to the statement of income
\u2013
\u2013
\u2013
22
1
27
50
Reclassified to investment in associate
\u2013
\u2013
\u2013
\u2013
\u2013
(17)
(17)
Royalty indemnification2
125
\u2013
\u2013
\u2013
\u2013
\u2013
125
Streaming settlement
\u2013
\u2013
\u2013
\u2013
132
\u2013
132
Future consideration
(139)
(69)
(145)
(115)
\u2013
(3)
(471)
Net (gain)/loss on disposal
(512)
104
34
23
180
20
(151)
Cash and cash equivalents received/(paid)
585
\u2013
17
40
(142)
30
530
Less: cash and cash equivalents disposed
(1)
(17)
(5)
(42)
(7)
(3)
(75)
Net cash received/(used) in disposal
584
(17)
12
(2)
(149)
27
455
1 As at 31 December 2021, total assets and liabilities were presented as current assets and liabilities \u2018held for sale\u2019 (see note 16).
2See note 23.
Ernest Henry
In January 2022, Glencore disposed of its 70% interest in Ernest Henry Mining Pty Ltd, a copper-gold mine in Queensland, Australia. After closing adjustments, $585 million was received with $139 million receivable in January 2023. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost. A $125 million provision was recognised for the indemnification of future royalty payments under an existing agreement.
Bolivia Zinc
In March 2022, Glencore disposed of its 100% interest in the Bolivian zinc assets (Sinchi Wayra and Illapa), to Santacruz Silver Mining Ltd. After closing adjustments, $90 million is receivable over a four-year period and a 1.5% NSR royalty over the life of the mines. The fair value of the future consideration was determined to be $69 million using a discounted cash flow model of the projected amount and timing of receipts, discounted using an asset specific discount rate of 11%. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost.
E&P Chad
In June 2022, Glencore disposed of its Chad upstream oil operations to Perenco S.A. for $197 million, of which $17 million was due on closing and $180 million is due through a price and production participation arrangement payable annually. The fair value of the future consideration was determined to be $145 million using a discounted cash flow model of the projected amount and timing of receipts, discounted using an asset specific discount rate of 13%. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost.
Los Quenuales
In December 2022, Glencore disposed of its 100% interest in Los Quenuales, a zinc-lead-silver mine in Peru, to Alpayana S.A for
$10 million in cash. Conditional on completion of the transaction, Glencore earlier settled its silver streaming arrangement over one of Los Quenuales\u2019 mining properties with Wheaton Precious Metals for a payment of $132 million.
Access World
In December 2022, Glencore disposed of its 100% interest in the Access World Group, a global commodities storage and logistics group, for $180 million. $40 million was received in December and, after closing adjustments, $115 million is receivable over 2023. The contractual terms of the deferred consideration give rise to cash flows that are solely payments of principal and interest, therefore the receivable is accounted for as financial asset at amortised cost.
2021 Disposals
The carrying value of the assets and liabilities over which control was lost and consideration receivable from the 2021 disposals are detailed below:
US$ million
Mopani
Chemoil Terminals
Others
Total
Non-current assets
Property, plant and equipment
748
158
20
926
Advances and loans
5
\u2013
\u2013
5
753
158
20
931
Current assets
Inventories
168
\u2013
\u2013
168
Accounts receivable
99
3
14
116
Prepaid expenses
3
\u2013
\u2013
3
Cash and cash equivalents
\u2013
10
10
20
270
13
24
307
Non-current liabilities
Non-current borrowings
\u2013
(6)
\u2013
(6)
Deferred tax liabilities
\u2013
(18)
(1)
(19)
Non-current provisions
(55)
\u2013
(61)
(116)
Post-retirement and other employee benefits
(9)
\u2013
\u2013
(9)
(64)
(24)
(62)
(150)
Current liabilities
Borrowings
\u2013
(1)
(1)
(2)
Accounts payable
(81)
(8)
\u2013
(89)
Provisions
(23)
\u2013
(16)
(39)
Income tax payable
(12)
\u2013
\u2013
(12)
(116)
(9)
(17)
(142)
Carrying value of net assets disposed
843
138
(35)
946
Cash and cash equivalents received
\u2013
(248)
(24)
(272)
Future consideration
(838)
\u2013
\u2013
(838)
Net loss/(gain) on disposal before non-controlling interest
5
(110)
(59)
(164)
Derecognition of non-controlling interest
1,017
\u2013
\u2013
1,017
Net loss/(gain) on disposal after non-controlling interest
1,022
(110)
(59)
853
Cash and cash equivalents received
\u2013
248
24
272
Less: cash and cash equivalents disposed
\u2013
(10)
(10)
(20)
Net cash received in disposal
\u2013
238
14
252
Mopani
On 31 March 2021, Glencore completed the disposal of its 90% interest in Mopani to ZCCM Investments Holdings plc, the holder of the remaining 10% interest in Mopani, in exchange for $1 and the rights to offtake copper and other metals from Mopani until
$1.5 billion of existing intercompany debt (the \u2018transaction debt\u2019) has been repaid to Glencore. The repayment of the transaction debt is based on Glencore receiving physical commodities from Mopani through its offtake rights and applying fixed percentages of annual gross revenues generated from the sale of such commodities against the transaction debt until it is fully repaid. As Glencore is no longer able to unilaterally direct the key strategic, operating and capital decisions of Mopani, it was deemed to have disposed of its controlling interest at the fair value of the transaction debt on the date of completion, being $838 million. Fair value was determined using a discounted cash flow model of the projected amount and timing of metal volumes received from Mopani under the offtake rights and market forecasts of commodity prices, discounted using an asset specific discount rate of 11.4%.
The net loss on disposal reflects the derecognition to the statement of income of the previously recognised book value of the non-controlling interest equity balance, which largely related to the non-controlling interests\u2019 share of historical impairments and losses, and resulting net liabilities in Mopani.
Chemoil Terminals
On 17 December 2021, Glencore completed the disposal of its 100% interest in Chemoil Terminals LLC, which owns the Long Beach and Carson oil products storage terminals in California, for a consideration of $248 million.
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Notes to the financial statements continued
27. Financial and capital risk management
Financial risks arising in the normal course of business from Glencore\u2019s operations comprise market risk (including commodity price risk, interest rate risk and currency risk), credit risk (including performance risk) and liquidity risk. It is Glencore\u2019s policy and practice to identify and, where appropriate and practical, actively manage such risks (for management of \u2018margin\u2019 risk within Glencore\u2019s extensive and diversified industrial portfolio, refer net present value at risk below) to support its objectives in managing its capital and future financial security and flexibility. Glencore\u2019s overall risk management programme focuses on the unpredictability of financial markets and seeks to protect its financial security and flexibility by using derivative financial instruments where possible to substantially hedge these financial risks. Glencore\u2019s finance and risk professionals, working in coordination with the commodity departments, monitor, manage and report regularly to senior management and the Board of Directors on the approach and effectiveness in managing financial risks along with the financial exposures facing the Group.
Glencore\u2019s objectives in managing its \u2018capital attributable to equity holders\u2019 include preserving its overall financial health and strength for the benefit of all stakeholders, maintaining an optimal capital structure in order to provide a high degree of financial flexibility at an attractive cost of capital and safeguarding its ability to continue as a going concern, while generating sustainable long-term profitability. Central to meeting these objectives is maintaining an investment grade credit rating status. Glencore\u2019s current credit ratings are Baa1 (positive) from Moody\u2019s and BBB+ (positive) from S&P.
Distribution policy and other capital management initiatives
Glencore\u2019s base cash distribution policy comprises two components: (1) a fixed $1 billion component and (2) a variable element representing 25% of free cash flow generated by our industrial assets during the preceding year. Distributions are expected to be formally declared by the Board annually (with the preliminary full-year results). Distributions, when declared, will be settled equally in May/June and September of the year they are declared in. In addition, reflecting the Group\u2019s through the cycle Net debt objective of
c.$10 billion, and consideration of the cyclical nature of the industry and other relevant factors, the Board could declare additional distributions to be included with the distribution confirmed with respect to the prior year, consider top-up distributions during the year and/or initiate or continue share buyback programmes. Notwithstanding that the cash distribution is declared and paid in US dollars, shareholders will be able to elect to receive their distribution payments in Pounds Sterling, Euros or Swiss Francs based on the exchange rates in effect around the date of payment. Shareholders on the JSE will receive their distributions in South African Rand.
Commodity price risk
Glencore is exposed to price movements for the inventory it holds and the products it produces which are not held to meet priced forward contract obligations and forward priced purchase or sale contracts. Glencore manages a significant portion of this exposure through futures and options transactions on worldwide commodity exchanges or in over the counter (OTC) markets, to the extent available. Commodity price risk management activities are considered an integral part of Glencore\u2019s physical commodity marketing activities and the related assets and liabilities are included in other financial assets from and other financial liabilities to derivative counterparties, including clearing brokers and exchanges. Whilst it is Glencore\u2019s policy to substantially hedge its commodity price risks, there remains the possibility that the hedging instruments chosen may not always provide effective mitigation of the underlying price risk. The hedging instruments available to the marketing businesses may differ in specific characteristics to the risk exposure to be hedged, resulting in an ongoing and unavoidable basis risk exposure. Residual basis risk exposures represent a key focus point for Glencore\u2019s commodity department teams who actively engage in the management of such.
Value at risk
One of the tools used by Glencore to monitor and limit its primary market risk exposure, principally commodity price risk related to its physical marketing activities, is a value at risk (VaR) computation. VaR is a risk measurement technique which estimates a threshold for potential loss that could occur on risk positions as a result of movements in risk factors over a specified time horizon, given a specific level of confidence and based on a specific price history. The VaR methodology is a statistically defined, probability-based approach that takes into account market volatilities, as well as risk diversification by recognising offsetting positions and correlations between commodities and markets. In this way, risks can be measured consistently across markets and commodities and risk measures can be aggregated to derive a single risk value.
Glencore uses a VaR approach based on Monte Carlo simulations computed at a 95% confidence level and utilising a weighted data history for a one-day time horizon. Glencore\u2019s Board, as part of its annual review process in H2 2021, approved an increase in the Group\u2019s consolidated VaR limit (one day 95% confidence level) from $100 million to $150 million, with effect from 1 January 2022, which represents approximately 0.3% of total equity.
Prior to the Russia/Ukraine conflict, Glencore operated within the $150 million limit. Around the time of the invasion, the Group\u2019s VaR spiked due to the unprecedented levels of volatility in commodity markets (primarily energy but also certain metals), rather than due to any change in the Group\u2019s marketing positions or trading strategies. Given the market backdrop, prior to any likely breach, the Chief Risk Officer proactively consulted with the Board and received a temporary waiver from the application of a Group VaR limit. During the waiver period, the Chief Risk Officer reported regularly to the Board.
In mid-May, as some non-energy markets started to normalise, the temporary waiver was rescinded and replaced with a VaR limit of $200 million, to account for the statistically elevated energy market risk environment.
Similarly, prior to any breach, a temporary waiver was approved in mid-August due to increasing LNG volatilities as the European gas market was under significant pressure. In mid-September, following a comprehensive review, the Board determined it was appropriate to revert to the prior VaR limit of $150 million, but to exclude LNG from the Group VaR limit, while maintaining a separate multipronged LNG risk reporting and control structure, including the continued calculation and highlighting of VaR outcomes.\u00a0
Position sheets are regularly distributed and monitored and daily Monte Carlo simulations are applied to the various business groups\u2019 net marketing positions to determine potential losses.
Market risk VaR (one-day 95% confidence level) ranges and year-end positions were as follows:
US$ million (all including LNG)
2022
2021
Year-end position 1
88
72
Average during the year
158
54
High during the year
451
126
Low during the year
66
27
1The year-end VaR, excluding LNG, was $76 million, comfortably within the Group\u2019s $150 million limit. Average Group VaR, excluding LNG since its exclusion in mid-September, was $70 million.
VaR does not purport to represent actual gains or losses in fair value in earnings to be incurred by Glencore, nor does Glencore claim that these VaR results are indicative of future market movements or representative of any actual impact on its future results. VaR should always be viewed in the context of its limitations; notably, the use of historical data as a proxy for estimating future events, market illiquidity risks and tail risks. Glencore recognises these limitations, and thus complements and continuously refines its VaR analysis by analysing forward looking stress scenarios, benchmarking against an alternative VaR computation based on historical simulations and back testing calculated VaR against the hypothetical portfolio returns arising in the next business day.
Glencore\u2019s VaR computation currently covers its business in the key base metals (including aluminium, nickel, zinc, copper and lead), cobalt, coal, coal freight, iron ore and oil products and natural gas/LNG, and assesses the open priced positions which are subject to price risk, including inventories of these commodities. Due to the lack of a liquid terminal market, Glencore does not include a VaR calculation for products such as alumina, molybdenum and some risk associated with metals\u2019 concentrates as it does not consider the nature of these markets to be suited to this type of analysis. Alternative measures are used to monitor exposures related to these products.
Net present value at risk
Glencore\u2019s future cash flows related to its forecast Industrial production activities are also exposed to commodity price movements. Glencore manages this exposure through a combination of portfolio diversification, occasional shorter-term hedging via futures and options transactions, insurance products and continuous internal monitoring, reporting and quantification of the underlying operations\u2019 estimated cash flows and valuations.
Interest rate risk
Glencore is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its assets and liabilities and cash flows. Matching of assets and liabilities is utilised as the dominant method to hedge interest rate risks; other methods include the use of interest rate swaps and similar derivative instruments with the same critical terms as the underlying interest rate exposures. See details on swap instruments used below.
Floating rate debt which is predominantly used to fund fast turning working capital (interest is internally charged on the funding of this working capital) is now primarily based on SOFR plus an appropriate premium. Accordingly, prevailing market interest rates are continuously factored into transactional pricing and terms.
Assuming the amount of floating rate liabilities at the reporting period end were outstanding for the whole year, interest rates were 100 basis points higher/lower and all other variables held constant, Glencore\u2019s income for the year ended 31\u00a0December 2022 would decrease/increase by $188 million (2021: $197 million).
Interest rate benchmark reform
The Group established a multidisciplinary working group to assess the impact of LIBOR reform and prepare and implement a LIBOR transition plan. This transition plan included updating policies, systems and processes.
The Group is primarily exposed to the transition of USD LIBOR into an alternative reference rate. Exposures arise on derivatives and non-derivative financial assets and liabilities.
To cater for the transition of interest rate hedging arrangements, the Group has adhered to the ISDA Fallback Protocol. All USD LIBOR derivative contracts will transition to the Secured Overnight Funding Rate (SOFR) upon cessation date and in accordance with the terms of the Protocol. Starting from 1 January 2022, all newly executed interest rate hedging arrangements directly reference an alternative reference rate/SOFR.
To cater for the transition of interest rates within other financial and non-financial assets and liabilities, the Group has adopted a combination of Term SOFR, daily SOFR compounded in arrears, and the cost of funds quoted by the bank (if any) involved in such financing. The decision as to which one to adopt is made on a case-by-case basis and generally reflects the need to either have a fixed rate known in advance of the interest period (Term SOFR/cost of funds), or not (SOFR compounded in arrears). It may be that a particular agreement switches from one reference rate to another, with these decisions being made on a case-by-case basis.
As of 31 December 2022, only one financial debt facility had not transitioned to SOFR/cost of funds, being the medium term RCF.
Currency risk
The US dollar is the predominant functional currency of the Group. Currency risk is the risk of loss from movements in exchange rates related to transactions and balances in currencies other than the US dollar. Such transactions include operating expenditure, capital expenditure and to a lesser extent purchases and sales in currencies other than the functional currency. Purchases or sales of commodities concluded in currencies other than the functional currency, apart from certain limited domestic sales at industrial operations which act as a hedge against local operating costs, are ordinarily economically hedged through forward exchange contracts. Consequently, foreign exchange movements against the US dollar on recognised transactions would have an immaterial financial impact. Glencore enters into currency hedging transactions with leading financial\u00a0institutions.
Glencore\u2019s debt-related payments (both principal and interest) are primarily denominated in or swapped using hedging instruments into US dollars. Glencore\u2019s operating expenses, being a small portion of its revenue base, are incurred in a mix of currencies of which the US dollar, Swiss Franc, Pound Sterling, Canadian dollar, Australian dollar, Euro, Kazakhstan Tenge, Colombian Peso and South African Rand are the predominant currencies.
Glencore has issued Euro, Swiss Franc, Sterling and Yen denominated bonds (see note 21). Cross currency swaps were concluded to hedge the currency risk on the principal and related interest payments of these bonds. These contracts were designated as fair value or cash flow hedges of the associated foreign currency risks. The critical terms of these swap contracts and their corresponding hedged items are matched and the Group expects a highly effective hedging relationship with the swap contracts and the value of the corresponding hedged items to change systematically in opposite direction in response to movements in the underlying exchange rates. The corresponding fair value and notional amounts of these derivatives is as\u00a0follows:
Notional amounts
Average FX
rates
Carrying amount
Assets
(Note 29)
Carrying amount
Liabilities
(Note 29)
Average maturity1
US$ million
2022
2021
2022
2021
2022
2021
2022
2021
Cross currency swap agreements
Cash flow hedges \u2013 currency risk
Eurobonds
2,907
2,907
1.14
1.14
\u2013
3
203
42
2025
Sterling bonds
\u2013
798
\u2013
1.60
\u2013
\u2013
\u2013
129
2022
Swiss franc bonds
504
504
1.06
1.06
20
12
\u2013
\u2013
2026
Fair value hedges \u2013 currency and interest
rate risk
Eurobonds
3,947
3,947
1.22
1.22
3
67
903
285
2027
Yen bonds
\u2013
81
\u2013
0.01
\u2013
5
\u2013
\u2013
2022
Sterling bonds
663
663
1.33
1.33
1
33
106
\u2013
2026
Swiss franc bonds
347
347
1.07
1.07
\u2013
11
24
5
2026
8,368
9,247
24
131
1,236
461
Interest rate swap agreements
Fair value hedges \u2013 interest rate risk
US$ bonds
7,200
6,450
\u2013
\u2013
2
272
507
12
2026
15,568
15,697
26
403
1,743
473
1Refer to note 21 for details.
27. Financial and capital risk management continued
The carrying amounts of the fair value hedged items are as\u00a0follows:
Carrying amount of the
hedged item
(Note 21)
Of which,
accumulated fair value
hedge adjustments and FX
US$ million
2022
2021
2022
2021
Foreign exchange and interest rate risk
Eurobonds
3,017
3,672
(866)
(255)
Yen bonds
\u2013
87
\u2013
5
Swiss franc bonds
326
354
(20)
38
Sterling bonds
541
677
(122)
22
US$ bonds
6,657
6,638
(505)
226
10,541
11,428
(1,513)
36
Credit risk
Credit risk arises from the possibility that counterparties may not be able to settle obligations due to Glencore within their agreed payment terms. Financial assets which potentially expose Glencore to credit risk consist principally of cash and cash equivalents, receivables and advances, derivative instruments and non-current advances and loans. Glencore\u2019s credit management process includes the assessment, monitoring and reporting of counterparty exposure on a regular basis. Glencore\u2019s cash and cash equivalents are placed overnight with a diverse group of highly credit rated financial institutions. Margin calls paid are similarly held with credit rated financial institutions. Glencore determines these instruments to have low credit risk at the reporting date. Credit risk with respect to receivables and advances is mitigated by the large number of customers comprising Glencore\u2019s customer base, their diversity across various industries and geographical areas, as well as Glencore\u2019s policy to mitigate these risks through letters of credit, netting, collateral and insurance arrangements where appropriate. Additionally, it is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable offsetting of balances due to/from a common counterparty in the event of default by the counterparty. Glencore actively and continuously monitors the credit quality of its counterparties through internal reviews and a credit scoring process, which includes, where available, public credit ratings. Balances with counterparties not having a public investment grade or equivalent internal rating are typically enhanced to investment grade through the extensive use of credit enhancement products, such as letters of credit or insurance products. Glencore has a diverse customer base, with no customer representing more than 7.1% (2021: 4.7%) of its trade receivables (taking into account credit enhancements) or accounting for more than 3.2% of its revenues over the year ended 31\u00a0December 2022 (2021: 3.6%) (see notes 3 and 14).
The maximum exposure to credit risk (including performance risk \u2013 see below), without considering netting agreements or without taking account of any collateral held or other credit enhancements, is equal to the carrying amount of Glencore\u2019s financial assets (see\u00a0note 28) and physically settled advances (see notes 12 and 14).
Management information used to monitor credit risk indicates that the prima facie risk profile % categories of financial assets which are subject to review for impairment under IFRS 9, is as set out below. The total balance for those assets as at 31 December 2022 is $11,469\u00a0million (2021: $10,765\u00a0million)(see notes 12, 14 and 15).
in %
2022
2021
AAA to AA-
8
8
A+ to A-
55
59
BBB+ to BBB-
17
11
BB+ to BB-
6
3
B+ to B-
8
8
CCC+ and below
6
11
Movements in credit losses for accounts receivable and advances and loans are shown in notes 12 and 14.
27. Financial and capital risk management continued
Performance risk
Performance risk (part of the broader credit risk subject matter, discussed above) is inherent in contracts, with agreements in the future, to physically purchase or sell commodities with fixed price attributes, and arises from the possibility that counterparties may not be willing or able to meet their future contractual physical sale or purchase obligations to/from Glencore. Glencore undertakes the assessment, monitoring and reporting of performance risk within its overall credit management process. Glencore\u2019s market breadth, diversified supplier and customer base as well as the standard pricing mechanism in the vast majority of Glencore\u2019s commodity portfolio which does not fix the primary commodity price beyond three months, ensure that performance risk is adequately mitigated.
The commodity industry has trended towards shorter-term fixed price contract periods, in part to mitigate against such potential performance risk, but also due to the continuous development of transparent and liquid spot commodity markets, with their associated derivative products and indexes.
Liquidity risk
Liquidity risk is the risk that Glencore is unable to meet its payment obligations when due, or that it is unable, on an ongoing basis, to borrow funds in the market on an unsecured or secured basis at an acceptable price to fund actual or proposed commitments. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and availability of adequate committed funding facilities. Glencore has set itself an internal minimum liquidity target to maintain at all times, including via available committed undrawn credit facilities, of $3 billion (2021: $3 billion), which has purposely been substantially exceeded in recent years, accounting for the more volatile market backdrop. Glencore\u2019s credit profile, diversified funding sources and committed credit facilities, ensure that sufficient liquid funds are maintained to meet its liquidity requirements. As part of its liquidity management, Glencore closely monitors and plans for its future capital expenditure, working capital needs and proposed investments, as well as credit facility refinancing/extension requirements, well ahead of time (see notes 1, 12, 21, 22 and 25).
As at 31\u00a0December 2022, Glencore had available committed undrawn credit facilities and cash amounting to $13,000\u00a0million (2021: $10,296\u00a0million), refer to Other reconciliations section. The maturity profile of Glencore\u2019s financial liabilities based on the contractual terms is presented in the table below.
The liquidity risk related to physical forward purchase obligations represents the gross contractual cash outflows expected to be paid upon transfer of control of the underlying physical commodity. Gross cash inflows expected from physical forward sales are not presented in the below table, but would approximate the expected gross cash outflows related to forward purchase obligations plus an appropriate margin. Prior year balances have been restated to conform with current year presentation.
The gross liquidity risk relating to cross currency swaps entered into for the purposes of hedging foreign currency and interest rate risks arising from the Group\u2019s non-US dollar denominated bonds is presented below. The amounts reflect the expected gross settlement of the US dollar pay leg of these swaps. The inflows from the related foreign currency receive leg of these swaps are not presented in the below table, but would approximate the foreign currency equivalent of the US dollar pay leg. Counterparty settlement date risk related to these swaps is limited, as the Group has entered into margining arrangements for both the outflow and inflow legs of the swap.
27. Financial and capital risk management continued
2022
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
8,203
4,330
3,262
3,350
9,821
28,966
Expected future interest payments
2,876
722
456
553
720
5,327
Lease liabilities \u2013 undiscounted
637
196
167
328
526
1,854
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,884
26,884
Derivative financial liabilities
Physical forward purchases
13,078
25,750
26,884
32,321
58,919
156,952
Cross currency swaps
2,840
2,408
1,289
1,138
2,072
9,747
Other financial liabilities1
384
242
296
63
2,090
3,075
Total
28,018
33,648
32,354
37,753
101,032
232,805
2021
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
10,310
6,365
3,014
6,106
7,496
33,291
Expected future interest payments
3,219
861
547
716
830
6,173
Lease liabilities \u2013 undiscounted
730
257
209
345
596
2,137
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,945
26,945
Derivative financial liabilities
Physical forward purchases
7,920
16,260
15,023
27,121
54,595
120,919
Cross currency swaps
3,088
3,242
1,034
1,895
1,109
10,368
Other financial liabilities1
108
131
21
32
3,743
4,035
Total
25,375
27,116
19,848
36,215
95,314
203,868
1Other financial liabilities exclude physical forwards and cross currency swaps as separately disclosed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-148": { "value": "
Financial risks arising in the normal course of business from Glencore\u2019s operations comprise market risk (including commodity price risk, interest rate risk and currency risk), credit risk (including performance risk) and liquidity risk. It is Glencore\u2019s policy and practice to identify and, where appropriate and practical, actively manage such risks (for management of \u2018margin\u2019 risk within Glencore\u2019s extensive and diversified industrial portfolio, refer net present value at risk below) to support its objectives in managing its capital and future financial security and flexibility. Glencore\u2019s overall risk management programme focuses on the unpredictability of financial markets and seeks to protect its financial security and flexibility by using derivative financial instruments where possible to substantially hedge these financial risks. Glencore\u2019s finance and risk professionals, working in coordination with the commodity departments, monitor, manage and report regularly to senior management and the Board of Directors on the approach and effectiveness in managing financial risks along with the financial exposures facing the Group.
Glencore\u2019s objectives in managing its \u2018capital attributable to equity holders\u2019 include preserving its overall financial health and strength for the benefit of all stakeholders, maintaining an optimal capital structure in order to provide a high degree of financial flexibility at an attractive cost of capital and safeguarding its ability to continue as a going concern, while generating sustainable long-term profitability. Central to meeting these objectives is maintaining an investment grade credit rating status. Glencore\u2019s current credit ratings are Baa1 (positive) from Moody\u2019s and BBB+ (positive) from S&P.
Distribution policy and other capital management initiatives
Glencore\u2019s base cash distribution policy comprises two components: (1) a fixed $1 billion component and (2) a variable element representing 25% of free cash flow generated by our industrial assets during the preceding year. Distributions are expected to be formally declared by the Board annually (with the preliminary full-year results). Distributions, when declared, will be settled equally in May/June and September of the year they are declared in. In addition, reflecting the Group\u2019s through the cycle Net debt objective of
c.$10 billion, and consideration of the cyclical nature of the industry and other relevant factors, the Board could declare additional distributions to be included with the distribution confirmed with respect to the prior year, consider top-up distributions during the year and/or initiate or continue share buyback programmes. Notwithstanding that the cash distribution is declared and paid in US dollars, shareholders will be able to elect to receive their distribution payments in Pounds Sterling, Euros or Swiss Francs based on the exchange rates in effect around the date of payment. Shareholders on the JSE will receive their distributions in South African Rand.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-149": { "value": "
Commodity price risk
Glencore is exposed to price movements for the inventory it holds and the products it produces which are not held to meet priced forward contract obligations and forward priced purchase or sale contracts. Glencore manages a significant portion of this exposure through futures and options transactions on worldwide commodity exchanges or in over the counter (OTC) markets, to the extent available. Commodity price risk management activities are considered an integral part of Glencore\u2019s physical commodity marketing activities and the related assets and liabilities are included in other financial assets from and other financial liabilities to derivative counterparties, including clearing brokers and exchanges. Whilst it is Glencore\u2019s policy to substantially hedge its commodity price risks, there remains the possibility that the hedging instruments chosen may not always provide effective mitigation of the underlying price risk. The hedging instruments available to the marketing businesses may differ in specific characteristics to the risk exposure to be hedged, resulting in an ongoing and unavoidable basis risk exposure. Residual basis risk exposures represent a key focus point for Glencore\u2019s commodity department teams who actively engage in the management of such.
Value at risk
One of the tools used by Glencore to monitor and limit its primary market risk exposure, principally commodity price risk related to its physical marketing activities, is a value at risk (VaR) computation. VaR is a risk measurement technique which estimates a threshold for potential loss that could occur on risk positions as a result of movements in risk factors over a specified time horizon, given a specific level of confidence and based on a specific price history. The VaR methodology is a statistically defined, probability-based approach that takes into account market volatilities, as well as risk diversification by recognising offsetting positions and correlations between commodities and markets. In this way, risks can be measured consistently across markets and commodities and risk measures can be aggregated to derive a single risk value.
Glencore uses a VaR approach based on Monte Carlo simulations computed at a 95% confidence level and utilising a weighted data history for a one-day time horizon. Glencore\u2019s Board, as part of its annual review process in H2 2021, approved an increase in the Group\u2019s consolidated VaR limit (one day 95% confidence level) from $100 million to $150 million, with effect from 1 January 2022, which represents approximately 0.3% of total equity.
Prior to the Russia/Ukraine conflict, Glencore operated within the $150 million limit. Around the time of the invasion, the Group\u2019s VaR spiked due to the unprecedented levels of volatility in commodity markets (primarily energy but also certain metals), rather than due to any change in the Group\u2019s marketing positions or trading strategies. Given the market backdrop, prior to any likely breach, the Chief Risk Officer proactively consulted with the Board and received a temporary waiver from the application of a Group VaR limit. During the waiver period, the Chief Risk Officer reported regularly to the Board.
In mid-May, as some non-energy markets started to normalise, the temporary waiver was rescinded and replaced with a VaR limit of $200 million, to account for the statistically elevated energy market risk environment.
Similarly, prior to any breach, a temporary waiver was approved in mid-August due to increasing LNG volatilities as the European gas market was under significant pressure. In mid-September, following a comprehensive review, the Board determined it was appropriate to revert to the prior VaR limit of $150 million, but to exclude LNG from the Group VaR limit, while maintaining a separate multipronged LNG risk reporting and control structure, including the continued calculation and highlighting of VaR outcomes.\u00a0
Position sheets are regularly distributed and monitored and daily Monte Carlo simulations are applied to the various business groups\u2019 net marketing positions to determine potential losses.
Market risk VaR (one-day 95% confidence level) ranges and year-end positions were as follows:
US$ million (all including LNG)
2022
2021
Year-end position 1
88
72
Average during the year
158
54
High during the year
451
126
Low during the year
66
27
1The year-end VaR, excluding LNG, was $76 million, comfortably within the Group\u2019s $150 million limit. Average Group VaR, excluding LNG since its exclusion in mid-September, was $70 million.
VaR does not purport to represent actual gains or losses in fair value in earnings to be incurred by Glencore, nor does Glencore claim that these VaR results are indicative of future market movements or representative of any actual impact on its future results. VaR should always be viewed in the context of its limitations; notably, the use of historical data as a proxy for estimating future events, market illiquidity risks and tail risks. Glencore recognises these limitations, and thus complements and continuously refines its VaR analysis by analysing forward looking stress scenarios, benchmarking against an alternative VaR computation based on historical simulations and back testing calculated VaR against the hypothetical portfolio returns arising in the next business day.
Glencore\u2019s VaR computation currently covers its business in the key base metals (including aluminium, nickel, zinc, copper and lead), cobalt, coal, coal freight, iron ore and oil products and natural gas/LNG, and assesses the open priced positions which are subject to price risk, including inventories of these commodities. Due to the lack of a liquid terminal market, Glencore does not include a VaR calculation for products such as alumina, molybdenum and some risk associated with metals\u2019 concentrates as it does not consider the nature of these markets to be suited to this type of analysis. Alternative measures are used to monitor exposures related to these products.
Net present value at risk
Glencore\u2019s future cash flows related to its forecast Industrial production activities are also exposed to commodity price movements. Glencore manages this exposure through a combination of portfolio diversification, occasional shorter-term hedging via futures and options transactions, insurance products and continuous internal monitoring, reporting and quantification of the underlying operations\u2019 estimated cash flows and valuations.
Interest rate risk
Glencore is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its assets and liabilities and cash flows. Matching of assets and liabilities is utilised as the dominant method to hedge interest rate risks; other methods include the use of interest rate swaps and similar derivative instruments with the same critical terms as the underlying interest rate exposures. See details on swap instruments used below.
Floating rate debt which is predominantly used to fund fast turning working capital (interest is internally charged on the funding of this working capital) is now primarily based on SOFR plus an appropriate premium. Accordingly, prevailing market interest rates are continuously factored into transactional pricing and terms.
Assuming the amount of floating rate liabilities at the reporting period end were outstanding for the whole year, interest rates were 100 basis points higher/lower and all other variables held constant, Glencore\u2019s income for the year ended 31\u00a0December 2022 would decrease/increase by $188 million (2021: $197 million).
Interest rate benchmark reform
The Group established a multidisciplinary working group to assess the impact of LIBOR reform and prepare and implement a LIBOR transition plan. This transition plan included updating policies, systems and processes.
The Group is primarily exposed to the transition of USD LIBOR into an alternative reference rate. Exposures arise on derivatives and non-derivative financial assets and liabilities.
To cater for the transition of interest rate hedging arrangements, the Group has adhered to the ISDA Fallback Protocol. All USD LIBOR derivative contracts will transition to the Secured Overnight Funding Rate (SOFR) upon cessation date and in accordance with the terms of the Protocol. Starting from 1 January 2022, all newly executed interest rate hedging arrangements directly reference an alternative reference rate/SOFR.
To cater for the transition of interest rates within other financial and non-financial assets and liabilities, the Group has adopted a combination of Term SOFR, daily SOFR compounded in arrears, and the cost of funds quoted by the bank (if any) involved in such financing. The decision as to which one to adopt is made on a case-by-case basis and generally reflects the need to either have a fixed rate known in advance of the interest period (Term SOFR/cost of funds), or not (SOFR compounded in arrears). It may be that a particular agreement switches from one reference rate to another, with these decisions being made on a case-by-case basis.
As of 31 December 2022, only one financial debt facility had not transitioned to SOFR/cost of funds, being the medium term RCF.
Currency risk
The US dollar is the predominant functional currency of the Group. Currency risk is the risk of loss from movements in exchange rates related to transactions and balances in currencies other than the US dollar. Such transactions include operating expenditure, capital expenditure and to a lesser extent purchases and sales in currencies other than the functional currency. Purchases or sales of commodities concluded in currencies other than the functional currency, apart from certain limited domestic sales at industrial operations which act as a hedge against local operating costs, are ordinarily economically hedged through forward exchange contracts. Consequently, foreign exchange movements against the US dollar on recognised transactions would have an immaterial financial impact. Glencore enters into currency hedging transactions with leading financial\u00a0institutions.
Glencore\u2019s debt-related payments (both principal and interest) are primarily denominated in or swapped using hedging instruments into US dollars. Glencore\u2019s operating expenses, being a small portion of its revenue base, are incurred in a mix of currencies of which the US dollar, Swiss Franc, Pound Sterling, Canadian dollar, Australian dollar, Euro, Kazakhstan Tenge, Colombian Peso and South African Rand are the predominant currencies.
Glencore has issued Euro, Swiss Franc, Sterling and Yen denominated bonds (see note 21). Cross currency swaps were concluded to hedge the currency risk on the principal and related interest payments of these bonds. These contracts were designated as fair value or cash flow hedges of the associated foreign currency risks. The critical terms of these swap contracts and their corresponding hedged items are matched and the Group expects a highly effective hedging relationship with the swap contracts and the value of the corresponding hedged items to change systematically in opposite direction in response to movements in the underlying exchange rates. The corresponding fair value and notional amounts of these derivatives is as\u00a0follows:
Notional amounts
Average FX
rates
Carrying amount
Assets
(Note 29)
Carrying amount
Liabilities
(Note 29)
Average maturity1
US$ million
2022
2021
2022
2021
2022
2021
2022
2021
Cross currency swap agreements
Cash flow hedges \u2013 currency risk
Eurobonds
2,907
2,907
1.14
1.14
\u2013
3
203
42
2025
Sterling bonds
\u2013
798
\u2013
1.60
\u2013
\u2013
\u2013
129
2022
Swiss franc bonds
504
504
1.06
1.06
20
12
\u2013
\u2013
2026
Fair value hedges \u2013 currency and interest
rate risk
Eurobonds
3,947
3,947
1.22
1.22
3
67
903
285
2027
Yen bonds
\u2013
81
\u2013
0.01
\u2013
5
\u2013
\u2013
2022
Sterling bonds
663
663
1.33
1.33
1
33
106
\u2013
2026
Swiss franc bonds
347
347
1.07
1.07
\u2013
11
24
5
2026
8,368
9,247
24
131
1,236
461
Interest rate swap agreements
Fair value hedges \u2013 interest rate risk
US$ bonds
7,200
6,450
\u2013
\u2013
2
272
507
12
2026
15,568
15,697
26
403
1,743
473
1Refer to note 21 for details.
The carrying amounts of the fair value hedged items are as\u00a0follows:
Carrying amount of the
hedged item
(Note 21)
Of which,
accumulated fair value
hedge adjustments and FX
US$ million
2022
2021
2022
2021
Foreign exchange and interest rate risk
Eurobonds
3,017
3,672
(866)
(255)
Yen bonds
\u2013
87
\u2013
5
Swiss franc bonds
326
354
(20)
38
Sterling bonds
541
677
(122)
22
US$ bonds
6,657
6,638
(505)
226
10,541
11,428
(1,513)
36
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-150": { "value": "
Currency risk
The US dollar is the predominant functional currency of the Group. Currency risk is the risk of loss from movements in exchange rates related to transactions and balances in currencies other than the US dollar. Such transactions include operating expenditure, capital expenditure and to a lesser extent purchases and sales in currencies other than the functional currency. Purchases or sales of commodities concluded in currencies other than the functional currency, apart from certain limited domestic sales at industrial operations which act as a hedge against local operating costs, are ordinarily economically hedged through forward exchange contracts. Consequently, foreign exchange movements against the US dollar on recognised transactions would have an immaterial financial impact. Glencore enters into currency hedging transactions with leading financial\u00a0institutions.
Glencore\u2019s debt-related payments (both principal and interest) are primarily denominated in or swapped using hedging instruments into US dollars. Glencore\u2019s operating expenses, being a small portion of its revenue base, are incurred in a mix of currencies of which the US dollar, Swiss Franc, Pound Sterling, Canadian dollar, Australian dollar, Euro, Kazakhstan Tenge, Colombian Peso and South African Rand are the predominant currencies.
Glencore has issued Euro, Swiss Franc, Sterling and Yen denominated bonds (see note 21). Cross currency swaps were concluded to hedge the currency risk on the principal and related interest payments of these bonds. These contracts were designated as fair value or cash flow hedges of the associated foreign currency risks. The critical terms of these swap contracts and their corresponding hedged items are matched and the Group expects a highly effective hedging relationship with the swap contracts and the value of the corresponding hedged items to change systematically in opposite direction in response to movements in the underlying exchange rates. The corresponding fair value and notional amounts of these derivatives is as\u00a0follows:
Notional amounts
Average FX
rates
Carrying amount
Assets
(Note 29)
Carrying amount
Liabilities
(Note 29)
Average maturity1
US$ million
2022
2021
2022
2021
2022
2021
2022
2021
Cross currency swap agreements
Cash flow hedges \u2013 currency risk
Eurobonds
2,907
2,907
1.14
1.14
\u2013
3
203
42
2025
Sterling bonds
\u2013
798
\u2013
1.60
\u2013
\u2013
\u2013
129
2022
Swiss franc bonds
504
504
1.06
1.06
20
12
\u2013
\u2013
2026
Fair value hedges \u2013 currency and interest
rate risk
Eurobonds
3,947
3,947
1.22
1.22
3
67
903
285
2027
Yen bonds
\u2013
81
\u2013
0.01
\u2013
5
\u2013
\u2013
2022
Sterling bonds
663
663
1.33
1.33
1
33
106
\u2013
2026
Swiss franc bonds
347
347
1.07
1.07
\u2013
11
24
5
2026
8,368
9,247
24
131
1,236
461
Interest rate swap agreements
Fair value hedges \u2013 interest rate risk
US$ bonds
7,200
6,450
\u2013
\u2013
2
272
507
12
2026
15,568
15,697
26
403
1,743
473
1Refer to note 21 for details.
The carrying amounts of the fair value hedged items are as\u00a0follows:
Carrying amount of the
hedged item
(Note 21)
Of which,
accumulated fair value
hedge adjustments and FX
US$ million
2022
2021
2022
2021
Foreign exchange and interest rate risk
Eurobonds
3,017
3,672
(866)
(255)
Yen bonds
\u2013
87
\u2013
5
Swiss franc bonds
326
354
(20)
38
Sterling bonds
541
677
(122)
22
US$ bonds
6,657
6,638
(505)
226
10,541
11,428
(1,513)
36
The liquidity risk related to physical forward purchase obligations represents the gross contractual cash outflows expected to be paid upon transfer of control of the underlying physical commodity. Gross cash inflows expected from physical forward sales are not presented in the below table, but would approximate the expected gross cash outflows related to forward purchase obligations plus an appropriate margin. Prior year balances have been restated to conform with current year presentation.
The gross liquidity risk relating to cross currency swaps entered into for the purposes of hedging foreign currency and interest rate risks arising from the Group\u2019s non-US dollar denominated bonds is presented below. The amounts reflect the expected gross settlement of the US dollar pay leg of these swaps. The inflows from the related foreign currency receive leg of these swaps are not presented in the below table, but would approximate the foreign currency equivalent of the US dollar pay leg. Counterparty settlement date risk related to these swaps is limited, as the Group has entered into margining arrangements for both the outflow and inflow legs of the swap.
2022
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
8,203
4,330
3,262
3,350
9,821
28,966
Expected future interest payments
2,876
722
456
553
720
5,327
Lease liabilities \u2013 undiscounted
637
196
167
328
526
1,854
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,884
26,884
Derivative financial liabilities
Physical forward purchases
13,078
25,750
26,884
32,321
58,919
156,952
Cross currency swaps
2,840
2,408
1,289
1,138
2,072
9,747
Other financial liabilities1
384
242
296
63
2,090
3,075
Total
28,018
33,648
32,354
37,753
101,032
232,805
2021
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
10,310
6,365
3,014
6,106
7,496
33,291
Expected future interest payments
3,219
861
547
716
830
6,173
Lease liabilities \u2013 undiscounted
730
257
209
345
596
2,137
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,945
26,945
Derivative financial liabilities
Physical forward purchases
7,920
16,260
15,023
27,121
54,595
120,919
Cross currency swaps
3,088
3,242
1,034
1,895
1,109
10,368
Other financial liabilities1
108
131
21
32
3,743
4,035
Total
25,375
27,116
19,848
36,215
95,314
203,868
1Other financial liabilities exclude physical forwards and cross currency swaps as separately disclosed.
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore\u2019s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values. When market values are not available, fair values have been calculated by discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate the fair values with the exception of $27,398\u00a0million (2021: $33,023\u00a0million) of borrowings, the fair value of which at 31 December 2022 was $26,675 million (2021: $34,169 million). $6,918 million (2021: $10,132 million) represents the listed portion of the borrowing portfolio, based on quoted prices on active markets (a Level 1 fair value measurement), and $19,757 million (2021: $24,037 million) is based on observable market prices (a Level 2 fair value measurement).
2022
Amortised
cost
FVTPL1
FVTOCI2
US$ million
Total
Assets
Other investments
\u2013
37
419
456
Non-current other financial assets
\u2013
206
\u2013
206
Advances and loans
729
293
\u2013
1,022
Accounts receivable
16,019
5,627
\u2013
21,646
Other financial assets
\u2013
6,109
\u2013
6,109
Cash and cash equivalents
1,923
\u2013
\u2013
1,923
Total financial assets
18,671
12,272
419
31,362
Liabilities
Borrowings
28,777
\u2013
\u2013
28,777
Non-current other financial liabilities
14
2,041
\u2013
2,055
Accounts payable
12,703
14,181
\u2013
26,884
Other financial liabilities
\u2013
4,882
\u2013
4,882
Total financial liabilities
41,494
21,104
\u2013
62,598
2021
Amortised
cost
FVTPL1
FVTOCI2
Total
US$ million
Assets
Other investments
\u2013
\u2013
1,620
1,620
Non-current other financial assets
\u2013
458
\u2013
458
Advances and loans
795
163
\u2013
958
Accounts receivable
11,672
5,523
\u2013
17,195
Other financial assets
\u2013
4,636
\u2013
4,636
Cash and cash equivalents
3,241
\u2013
\u2013
3,241
Total financial assets
15,708
10,780
1,620
28,108
Liabilities
Borrowings
34,641
\u2013
\u2013
34,641
Non-current other financial liabilities
87
623
\u2013
710
Accounts payable
13,139
13,806
\u2013
26,945
Other financial liabilities
\u2013
6,077
\u2013
6,077
Total financial liabilities
47,867
20,506
\u2013
68,373
1FVTPL \u2013 Fair value through profit and loss.
2FVTOCI \u2013 Fair value through other comprehensive income.
Offsetting of financial assets and liabilities
In accordance with IAS 32 the Group reports financial assets and liabilities on a net basis in the consolidated statement of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The financial assets and liabilities subject to offsetting, enforceable master netting and similar agreements as at 31 December 2022 and 2021 were as follows:
Amounts not subject to netting agreements
Total as presented
in the consolidated
statement
of financial position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2022
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
3,422
(2,141)
1,281
(608)
(26)
647
5,034
6,315
Derivative liabilities1
(5,929)
2,141
(3,788)
608
2,638
(542)
(3,149)
(6,937)
Amounts
not subject
to netting
agreements
Total as
presented
in the
consolidated
statement
of financial
position

Amounts eligible for set off
under netting agreements

Related amounts not set off
under netting agreements
2021
Gross
amount
Amounts
offset
Net
amount
Financial
instruments
Financial
collateral
Net
amount
US$ million
Derivative assets1
19,327
(17,846)
1,481
(437)
(315)
729
3,613
5,094
Derivative liabilities1
(22,166)
17,846
(4,320)
437
3,522
(361)
(2,467)
(6,787)
1Presented within current and non-current other financial assets and other financial liabilities.
For the financial assets and liabilities subject to enforceable master netting or similar arrangements above, each agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities in the ordinary course of business. Where practical reasons may prevent net settlement, financial assets and liabilities may be settled on a gross basis, however, each party to the master netting or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party. Per the terms of each agreement, an event of default includes failure by a party to make payment when due, failure by a party to perform any obligation required by the agreement (other than payment) if such failure is not remedied within periods of 30 to 60\u00a0days after notice of such failure is given to the party or bankruptcy.
29. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can assess at the measurement date; or
Level 2
Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3
Unobservable inputs for the assets or liabilities, requiring Glencore to make market-based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded, whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options, swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair value predominantly from models that use broker quotes and applicable market-based estimates surrounding location, quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different valuation model could produce a materially different estimate of fair value.
It is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
The following tables show the fair values of the derivative financial instruments including trade-related financial and physical forward purchase and sale commitments by type of contract and non-current other financial assets and liabilities as at 31 December 2022 and 2021. Other assets and liabilities which are measured at fair value on a recurring basis are marketing inventories, other investments, cash and cash equivalents. There are no non-recurring fair value measurements.
Financial assets
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
\u2013
5,426
\u2013
5,426
Contingent consideration
\u2013
\u2013
128
128
Other receivables
\u2013
\u2013
73
73
Other non-current receivables and loans
\u2013
\u2013
22
22
Convertible loan
\u2013
\u2013
168
168
Non-current contingent consideration
\u2013
\u2013
103
103
Other investments
280
176
\u2013
456
Financial assets
280
5,602
494
6,376
Other financial assets
Commodity-related contracts
Futures
809
156
\u2013
965
Options
120
4
\u2013
124
Swaps
40
165
18
223
Physical forwards
\u2013
1,786
2,949
4,735
Financial contracts
Foreign currency and interest rate contracts
\u2013
62
\u2013
62
Current other financial assets
969
2,173
2,967
6,109
Non-current other financial assets
Cross currency swaps
\u2013
24
\u2013
24
Foreign currency and interest rate contracts
\u2013
1
\u2013
1
Purchased call options over Glencore shares1
\u2013
181
\u2013
181
Non-current other financial assets
\u2013
206
\u2013
206
Total
1,249
7,981
3,461
12,691
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables2
\u2013
5,269
\u2013
5,269
Contingent consideration2
\u2013
\u2013
175
175
Other receivables2
\u2013
\u2013
79
79
Other non-current receivables and loans2
\u2013
\u2013
28
28
Non-current contingent consideration
\u2013
\u2013
135
135
Other investments
1,536
84
\u2013
1,620
Financial assets
1,536
5,353
417
7,306
Other financial assets
Commodity-related contracts
Futures3
420
138
\u2013
558
Options
133
31
\u2013
164
Swaps3
5
245
40
290
Physical forwards
\u2013
2,878
646
3,524
Financial contracts
Cross currency swaps
\u2013
5
\u2013
5
Foreign currency and interest rate contracts
\u2013
95
\u2013
95
Current other financial assets
558
3,392
686
4,636
Non-current other financial assets
Cross currency swaps
\u2013
125
\u2013
125
Foreign currency and interest rate contracts
\u2013
272
\u2013
272
Purchased call options over Glencore shares1
\u2013
61
\u2013
61
Non-current other financial assets
\u2013
458
\u2013
458
Total
2,094
9,203
1,103
12,400
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
US$ million
Contingent consideration
Convertible loan
Physical
forwards
Swaps
Other1
Total
Level 3
1 January 2022
261
\u2013
411
40
(63)
649
Total gain recognised in revenue
\u2013
\u2013
231
67
\u2013
298
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
2,403
(70)
\u2013
2,333
Acquisition
(20)
200
\u2013
\u2013
\u2013
180
Fair value recognised in other income/(expense)
105
(32)
\u2013
\u2013
(173)
(100)
Realised
(189)
\u2013
(209)
(19)
(12)
(429)
31 December 2022
157
168
2,836
18
(248)
2,931
1 January 2021
376
\u2013
6
\u2013
(70)
312
Total gain recognised in revenue
\u2013
\u2013
117
337
\u2013
454
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
389
(297)
\u2013
92
Fair value recognised in other income/(expense)
26
\u2013
\u2013
\u2013
7
33
Realised
(141)
\u2013
(101)
\u2013
\u2013
(242)
31 December 2021
261
\u2013
411
40
(63)
649
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
During the year, no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Fair value of financial assets / financial liabilities
Some of the Group\u2019s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
Futures, options and swaps classified as Level 1 financial assets and liabilities are measured using quoted prices in an active market.
Accounts receivable and payables, and certain futures, options, swaps, physical forwards, cross currency swaps, foreign currency and interest rate contracts classified as Level 2 financial assets and liabilities are measured using discounted cash flow models. Key inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required.
Call options over Glencore shares classified as Level 2 financial assets and liabilities are measured using an option pricing model. Key inputs include the current price of Glencore shares, strike price, maturity date of the underlying convertible debt security, risk-free rate and volatility.
Given the extent to which the Group recognises financial instrument assets and liabilities at fair value, the preparation of the Group\u2019s consolidated financial statements requires management to consider on an on-going basis, the key valuation metrics and judgements involved in the determination of the fair value of financial instruments. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Management reviewed the key valuation metrics, assumptions and methodologies involved in the determination of the Level 3 fair value of financial instruments and determined that the valuations were materially reasonable.
The\u00a0following table provides information on the valuation techniques and inputs used to determine the fair value of Level 3 financial assets and financial liabilities.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-151": { "value": "
Credit risk
Credit risk arises from the possibility that counterparties may not be able to settle obligations due to Glencore within their agreed payment terms. Financial assets which potentially expose Glencore to credit risk consist principally of cash and cash equivalents, receivables and advances, derivative instruments and non-current advances and loans. Glencore\u2019s credit management process includes the assessment, monitoring and reporting of counterparty exposure on a regular basis. Glencore\u2019s cash and cash equivalents are placed overnight with a diverse group of highly credit rated financial institutions. Margin calls paid are similarly held with credit rated financial institutions. Glencore determines these instruments to have low credit risk at the reporting date. Credit risk with respect to receivables and advances is mitigated by the large number of customers comprising Glencore\u2019s customer base, their diversity across various industries and geographical areas, as well as Glencore\u2019s policy to mitigate these risks through letters of credit, netting, collateral and insurance arrangements where appropriate. Additionally, it is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable offsetting of balances due to/from a common counterparty in the event of default by the counterparty. Glencore actively and continuously monitors the credit quality of its counterparties through internal reviews and a credit scoring process, which includes, where available, public credit ratings. Balances with counterparties not having a public investment grade or equivalent internal rating are typically enhanced to investment grade through the extensive use of credit enhancement products, such as letters of credit or insurance products. Glencore has a diverse customer base, with no customer representing more than 7.1% (2021: 4.7%) of its trade receivables (taking into account credit enhancements) or accounting for more than 3.2% of its revenues over the year ended 31\u00a0December 2022 (2021: 3.6%) (see notes 3 and 14).
The maximum exposure to credit risk (including performance risk \u2013 see below), without considering netting agreements or without taking account of any collateral held or other credit enhancements, is equal to the carrying amount of Glencore\u2019s financial assets (see\u00a0note 28) and physically settled advances (see notes 12 and 14).
Management information used to monitor credit risk indicates that the prima facie risk profile % categories of financial assets which are subject to review for impairment under IFRS 9, is as set out below. The total balance for those assets as at 31 December 2022 is $11,469\u00a0million (2021: $10,765\u00a0million)(see notes 12, 14 and 15).
in %
2022
2021
AAA to AA-
8
8
A+ to A-
55
59
BBB+ to BBB-
17
11
BB+ to BB-
6
3
B+ to B-
8
8
CCC+ and below
6
11
Movements in credit losses for accounts receivable and advances and loans are shown in notes 12 and 14.
Performance risk
Performance risk (part of the broader credit risk subject matter, discussed above) is inherent in contracts, with agreements in the future, to physically purchase or sell commodities with fixed price attributes, and arises from the possibility that counterparties may not be willing or able to meet their future contractual physical sale or purchase obligations to/from Glencore. Glencore undertakes the assessment, monitoring and reporting of performance risk within its overall credit management process. Glencore\u2019s market breadth, diversified supplier and customer base as well as the standard pricing mechanism in the vast majority of Glencore\u2019s commodity portfolio which does not fix the primary commodity price beyond three months, ensure that performance risk is adequately mitigated.
The commodity industry has trended towards shorter-term fixed price contract periods, in part to mitigate against such potential performance risk, but also due to the continuous development of transparent and liquid spot commodity markets, with their associated derivative products and indexes.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-152": { "value": "
Liquidity risk
Liquidity risk is the risk that Glencore is unable to meet its payment obligations when due, or that it is unable, on an ongoing basis, to borrow funds in the market on an unsecured or secured basis at an acceptable price to fund actual or proposed commitments. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and availability of adequate committed funding facilities. Glencore has set itself an internal minimum liquidity target to maintain at all times, including via available committed undrawn credit facilities, of $3 billion (2021: $3 billion), which has purposely been substantially exceeded in recent years, accounting for the more volatile market backdrop. Glencore\u2019s credit profile, diversified funding sources and committed credit facilities, ensure that sufficient liquid funds are maintained to meet its liquidity requirements. As part of its liquidity management, Glencore closely monitors and plans for its future capital expenditure, working capital needs and proposed investments, as well as credit facility refinancing/extension requirements, well ahead of time (see notes 1, 12, 21, 22 and 25).
As at 31\u00a0December 2022, Glencore had available committed undrawn credit facilities and cash amounting to $13,000\u00a0million (2021: $10,296\u00a0million), refer to Other reconciliations section. The maturity profile of Glencore\u2019s financial liabilities based on the contractual terms is presented in the table below.
The liquidity risk related to physical forward purchase obligations represents the gross contractual cash outflows expected to be paid upon transfer of control of the underlying physical commodity. Gross cash inflows expected from physical forward sales are not presented in the below table, but would approximate the expected gross cash outflows related to forward purchase obligations plus an appropriate margin. Prior year balances have been restated to conform with current year presentation.
The gross liquidity risk relating to cross currency swaps entered into for the purposes of hedging foreign currency and interest rate risks arising from the Group\u2019s non-US dollar denominated bonds is presented below. The amounts reflect the expected gross settlement of the US dollar pay leg of these swaps. The inflows from the related foreign currency receive leg of these swaps are not presented in the below table, but would approximate the foreign currency equivalent of the US dollar pay leg. Counterparty settlement date risk related to these swaps is limited, as the Group has entered into margining arrangements for both the outflow and inflow legs of the swap.
2022
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
8,203
4,330
3,262
3,350
9,821
28,966
Expected future interest payments
2,876
722
456
553
720
5,327
Lease liabilities \u2013 undiscounted
637
196
167
328
526
1,854
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,884
26,884
Derivative financial liabilities
Physical forward purchases
13,078
25,750
26,884
32,321
58,919
156,952
Cross currency swaps
2,840
2,408
1,289
1,138
2,072
9,747
Other financial liabilities1
384
242
296
63
2,090
3,075
Total
28,018
33,648
32,354
37,753
101,032
232,805
2021
US$ million
After 5 years
Due 3 - 5 years
Due 2 - 3 years
Due 1 - 2 years
Due 0 - 1 year
Total
Non-derivative financial liabilities
Borrowings excluding lease liabilities, fair value hedge adjustments and other non-cash items
10,310
6,365
3,014
6,106
7,496
33,291
Expected future interest payments
3,219
861
547
716
830
6,173
Lease liabilities \u2013 undiscounted
730
257
209
345
596
2,137
Accounts payable
\u2013
\u2013
\u2013
\u2013
26,945
26,945
Derivative financial liabilities
Physical forward purchases
7,920
16,260
15,023
27,121
54,595
120,919
Cross currency swaps
3,088
3,242
1,034
1,895
1,109
10,368
Other financial liabilities1
108
131
21
32
3,743
4,035
Total
25,375
27,116
19,848
36,215
95,314
203,868
1Other financial liabilities exclude physical forwards and cross currency swaps as separately disclosed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-153": { "value": "
Notes to the financial statements continued
28. Financial instruments
Fair value of financial instruments
The following tables present the carrying values and fair values of Glencore\u2019s financial instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (most advantageous) market at the measurement date under current market conditions. Where available, market values have been used to determine fair values. When market values are not available, fair values have been calculated by discounting expected cash flows at prevailing market interest and exchange rates. The estimated fair values have been determined using market information and appropriate valuation methodologies, but are not necessarily indicative of the amounts that Glencore could realise in the normal course of business.
The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate the fair values with the exception of $27,398\u00a0million (2021: $33,023\u00a0million) of borrowings, the fair value of which at 31 December 2022 was $26,675 million (2021: $34,169 million). $6,918 million (2021: $10,132 million) represents the listed portion of the borrowing portfolio, based on quoted prices on active markets (a Level 1 fair value measurement), and $19,757 million (2021: $24,037 million) is based on observable market prices (a Level 2 fair value measurement).
2022
Amortised
cost
FVTPL1
FVTOCI2
US$ million
Total
Assets
Other investments
\u2013
37
419
456
Non-current other financial assets
\u2013
206
\u2013
206
Advances and loans
729
293
\u2013
1,022
Accounts receivable
16,019
5,627
\u2013
21,646
Other financial assets
\u2013
6,109
\u2013
6,109
Cash and cash equivalents
1,923
\u2013
\u2013
1,923
Total financial assets
18,671
12,272
419
31,362
Liabilities
Borrowings
28,777
\u2013
\u2013
28,777
Non-current other financial liabilities
14
2,041
\u2013
2,055
Accounts payable
12,703
14,181
\u2013
26,884
Other financial liabilities
\u2013
4,882
\u2013
4,882
Total financial liabilities
41,494
21,104
\u2013
62,598
2021
Amortised
cost
FVTPL1
FVTOCI2
Total
US$ million
Assets
Other investments
\u2013
\u2013
1,620
1,620
Non-current other financial assets
\u2013
458
\u2013
458
Advances and loans
795
163
\u2013
958
Accounts receivable
11,672
5,523
\u2013
17,195
Other financial assets
\u2013
4,636
\u2013
4,636
Cash and cash equivalents
3,241
\u2013
\u2013
3,241
Total financial assets
15,708
10,780
1,620
28,108
Liabilities
Borrowings
34,641
\u2013
\u2013
34,641
Non-current other financial liabilities
87
623
\u2013
710
Accounts payable
13,139
13,806
\u2013
26,945
Other financial liabilities
\u2013
6,077
\u2013
6,077
Total financial liabilities
47,867
20,506
\u2013
68,373
1FVTPL \u2013 Fair value through profit and loss.
2FVTOCI \u2013 Fair value through other comprehensive income.
29. Fair value measurements
Fair values are primarily determined using quoted market prices or standard pricing models using observable market inputs where available and are presented to reflect the expected gross future cash in/outflows. Glencore classifies the fair values of its financial instruments into a three-level hierarchy based on the degree of the source and observability of the inputs that are used to derive the fair value of the financial asset or liability as follows:
Level 1
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that Glencore can assess at the measurement date; or
Level 2
Inputs other than quoted inputs included in Level 1 that are observable for the assets or liabilities, either directly or indirectly; or
Level 3
Unobservable inputs for the assets or liabilities, requiring Glencore to make market-based assumptions.
Level 1 classifications primarily include futures with a tenor of less than one year and options that are exchange traded, whereas Level 2 classifications primarily include futures with a tenor greater than one year, over the counter options, swaps and physical forward transactions which derive their fair value primarily from exchange quotes and readily observable broker quotes. Level 3 classifications primarily include physical forward transactions which derive their fair value predominantly from models that use broker quotes and applicable market-based estimates surrounding location, quality and credit differentials and financial liabilities linked to the fair value of certain mining operations. In circumstances where Glencore cannot verify fair value with observable market inputs (Level 3 fair values), it is possible that a different valuation model could produce a materially different estimate of fair value.
It is Glencore\u2019s policy that transactions and activities in trade-related financial instruments be concluded under master netting agreements or long form confirmations to enable balances due to/from a common counterparty to be offset in the event of default, insolvency or bankruptcy by the counterparty.
Notes to the financial statements continued
29. Fair value measurements continued
The following tables show the fair values of the derivative financial instruments including trade-related financial and physical forward purchase and sale commitments by type of contract and non-current other financial assets and liabilities as at 31 December 2022 and 2021. Other assets and liabilities which are measured at fair value on a recurring basis are marketing inventories, other investments, cash and cash equivalents. There are no non-recurring fair value measurements.
Financial assets
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables
\u2013
5,426
\u2013
5,426
Contingent consideration
\u2013
\u2013
128
128
Other receivables
\u2013
\u2013
73
73
Other non-current receivables and loans
\u2013
\u2013
22
22
Convertible loan
\u2013
\u2013
168
168
Non-current contingent consideration
\u2013
\u2013
103
103
Other investments
280
176
\u2013
456
Financial assets
280
5,602
494
6,376
Other financial assets
Commodity-related contracts
Futures
809
156
\u2013
965
Options
120
4
\u2013
124
Swaps
40
165
18
223
Physical forwards
\u2013
1,786
2,949
4,735
Financial contracts
Foreign currency and interest rate contracts
\u2013
62
\u2013
62
Current other financial assets
969
2,173
2,967
6,109
Non-current other financial assets
Cross currency swaps
\u2013
24
\u2013
24
Foreign currency and interest rate contracts
\u2013
1
\u2013
1
Purchased call options over Glencore shares1
\u2013
181
\u2013
181
Non-current other financial assets
\u2013
206
\u2013
206
Total
1,249
7,981
3,461
12,691
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial assets
Trade receivables2
\u2013
5,269
\u2013
5,269
Contingent consideration2
\u2013
\u2013
175
175
Other receivables2
\u2013
\u2013
79
79
Other non-current receivables and loans2
\u2013
\u2013
28
28
Non-current contingent consideration
\u2013
\u2013
135
135
Other investments
1,536
84
\u2013
1,620
Financial assets
1,536
5,353
417
7,306
Other financial assets
Commodity-related contracts
Futures3
420
138
\u2013
558
Options
133
31
\u2013
164
Swaps3
5
245
40
290
Physical forwards
\u2013
2,878
646
3,524
Financial contracts
Cross currency swaps
\u2013
5
\u2013
5
Foreign currency and interest rate contracts
\u2013
95
\u2013
95
Current other financial assets
558
3,392
686
4,636
Non-current other financial assets
Cross currency swaps
\u2013
125
\u2013
125
Foreign currency and interest rate contracts
\u2013
272
\u2013
272
Purchased call options over Glencore shares1
\u2013
61
\u2013
61
Non-current other financial assets
\u2013
458
\u2013
458
Total
2,094
9,203
1,103
12,400
1Call options over the Company\u2019s shares in relation to conversion rights of the $500 million non-dilutive convertible bond, due in 2025.
2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
The following table shows the net changes in fair value of Level 3 other financial assets and other financial liabilities:
US$ million
Contingent consideration
Convertible loan
Physical
forwards
Swaps
Other1
Total
Level 3
1 January 2022
261
\u2013
411
40
(63)
649
Total gain recognised in revenue
\u2013
\u2013
231
67
\u2013
298
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
2,403
(70)
\u2013
2,333
Acquisition
(20)
200
\u2013
\u2013
\u2013
180
Fair value recognised in other income/(expense)
105
(32)
\u2013
\u2013
(173)
(100)
Realised
(189)
\u2013
(209)
(19)
(12)
(429)
31 December 2022
157
168
2,836
18
(248)
2,931
1 January 2021
376
\u2013
6
\u2013
(70)
312
Total gain recognised in revenue
\u2013
\u2013
117
337
\u2013
454
Total gain/(loss) recognised in cost of goods
\u2013
\u2013
389
(297)
\u2013
92
Fair value recognised in other income/(expense)
26
\u2013
\u2013
\u2013
7
33
Realised
(141)
\u2013
(101)
\u2013
\u2013
(242)
31 December 2021
261
\u2013
411
40
(63)
649
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
During the year, no amounts were transferred between Level 1 and Level 2 of the fair value hierarchy and no amounts were transferred into or out of Level 3 of the fair value hierarchy for either other financial assets or other financial liabilities.
Fair value of financial assets / financial liabilities
Some of the Group\u2019s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
Futures, options and swaps classified as Level 1 financial assets and liabilities are measured using quoted prices in an active market.
Accounts receivable and payables, and certain futures, options, swaps, physical forwards, cross currency swaps, foreign currency and interest rate contracts classified as Level 2 financial assets and liabilities are measured using discounted cash flow models. Key inputs include observable quoted prices sourced from exchanges or traded reference indices in active markets for identical assets or liabilities. Prices are adjusted by a discount rate which captures the time value of money and counterparty credit considerations, as required.
Call options over Glencore shares classified as Level 2 financial assets and liabilities are measured using an option pricing model. Key inputs include the current price of Glencore shares, strike price, maturity date of the underlying convertible debt security, risk-free rate and volatility.
Given the extent to which the Group recognises financial instrument assets and liabilities at fair value, the preparation of the Group\u2019s consolidated financial statements requires management to consider on an on-going basis, the key valuation metrics and judgements involved in the determination of the fair value of financial instruments. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Management reviewed the key valuation metrics, assumptions and methodologies involved in the determination of the Level 3 fair value of financial instruments and determined that the valuations were materially reasonable.
The\u00a0following table provides information on the valuation techniques and inputs used to determine the fair value of Level 3 financial assets and financial liabilities.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
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2Prior year Level 3 other receivables have increased by $79 million and Level 3 other non-current receivables and loans have increased by $28 million after being restated to conform with current year presentation of financial assets.
3Commodity-related contracts have been restated to conform with current year presentation of financial assets and commodity-related contracts classification. $251 million Level 1 and $9 million Level 2 swaps have been reclassified as $240 million Level 1 and $20 million Level 2 futures.
Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
1Certain prior year balances have been restated to conform with current year presentation of financial assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-156": { "value": "
Financial liabilities
2022
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
14,079
\u2013
14,079
Non-discretionary dividend obligation1
\u2013
\u2013
102
102
Financial liabilities
\u2013
14,079
102
14,181
Other financial liabilities
Commodity-related contracts
Futures
714
459
\u2013
1,173
Options
32
119
\u2013
151
Swaps
\u2013
660
\u2013
660
Physical forwards
\u2013
2,498
113
2,611
Financial contracts
Cross currency swaps
\u2013
181
\u2013
181
Foreign currency and interest rate contracts
1
105
\u2013
106
Current other financial liabilities
747
4,022
113
4,882
Non-current other financial liabilities
Cross currency swaps
\u2013
1,055
\u2013
1,055
Foreign currency and interest rate contracts
\u2013
490
\u2013
490
Non-discretionary dividend obligation1
\u2013
\u2013
219
219
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
74
74
Embedded call options over Glencore shares2
\u2013
181
\u2013
181
Non-current other financial liabilities
\u2013
1,726
315
2,041
Total
747
19,827
530
21,104
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
Notes to the financial statements continued
29. Fair value measurements continued
2021
US$ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Accounts payable
\u2013
13,806
\u2013
13,806
Financial liabilities
\u2013
13,806
\u2013
13,806
Other financial liabilities
Commodity-related contracts
Futures3
2,126
365
\u2013
2,491
Options
52
92
\u2013
144
Swaps3
859
161
\u2013
1,020
Physical forwards
\u2013
1,872
235
2,107
Financial contracts
Cross currency swaps
\u2013
227
\u2013
227
Foreign currency and interest rate contracts
\u2013
88
\u2013
88
Current other financial liabilities
3,037
2,805
235
6,077
Non-current other financial liabilities
Cross currency swaps
\u2013
331
\u2013
331
Foreign currency and interest rate contracts
\u2013
12
\u2013
12
Non-discretionary dividend obligation1
\u2013
\u2013
148
148
Option over non-controlling interest in Ale
\u2013
\u2013
22
22
Contingent consideration
\u2013
\u2013
49
49
Embedded call options over Glencore shares2
\u2013
61
\u2013
61
Non-current other financial liabilities
\u2013
404
219
623
Total
3,037
17,015
454
20,506
1A ZAR denominated derivative liability payable to ARM Coal, a partner in one of the Group\u2019s principal coal joint operations based in South Africa. The liability arises from ARM Coal\u2019s rights as an investor to a share of agreed free cash flows from certain coal operations in South Africa and is valued based on those cash flows using a risk-adjusted discount rate. The derivative liability is settled over the life of those operations with a modelled mine life of 13 years as at 31\u00a0December 2022.
2Embedded call option bifurcated from the 2025 convertible bond.
3Prior-year balances have been restated to conform with current year presentation of commodity-related contracts classification. $140 million Level 1 and $14 million Level 2 swaps have been reclassified as $133 million Level 1 and $21 million Level 2 futures.
29. Fair value measurements continued
US$ million
2022
2021
Swaps \u2013 Level 3
Assets
18
40
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long term commodity prices
The significant unobservable inputs represent the long-term commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $2 million (2021: $4 million) adjustment to the current carrying value.
Physical Forwards \u2013 Level 3
Assets
2,949
646
Liabilities
(113)
(235)
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
Valuation of the Group\u2019s commodity physical forward contracts categorised within this level is based on observable market prices that are adjusted by unobservable differentials, as required, including:
\u2013 quality;
\u2013 geographic location;
\u2013 local supply & demand;
\u2013 customer requirements; and
\u2013 counterparty credit considerations.
These unobservable inputs generally represent 1%\u201330% of the overall value of the instruments. The valuation prices are applied consistently to value physical forward sale and purchase contracts, and changing a particular input to reasonably possible alternative assumptions does not result in a material change in the underlying value of the portfolio.
As at 31 December 2022, physical forward Level 3 assets relating to LNG contracts amount to $2,552 million (2021: $322 million) and liabilities of $19 million (2021: $12 million). Valuation of these contracts is based on observable Oil and Global Gas prices that are adjusted by unobservable differentials which collectively represent, but are not limited to, transportation, storage, liquification and regasification premiums.

The value of our Level 3 long term LNG physical supply contracts reflects the price dislocation between Europe and other international markets and uncertainty of pricing inputs beyond the observable range. There is limited observable LNG pricing data beyond 2025 and an estimation uncertainty exists over global gas supply and demand and to extent to which the current dislocation impacts long term LNG pricing. For the longer dated portion of the curve, complex modelling techniques are also required where there is limited observable market data. Extrapolation of observable pricing is applied and correlated to third party long-term forecast macro pricing assumptions for various Oil and Global Gas indices, on which the long-term LNG prices are based. Given the resulting inherent estimation uncertainty, reasonable valuation ranges are developed to reflect the expected transfer value of these arrangements to another market participant in accordance with IFRS 13. The Group considers the risks associated with realising market value from unobservable long term prices in selecting pricing from within those ranges.

The potential impact of a 10% favourable and unfavourable change in the unobservable valuation inputs could result in a gain of $0.1 billion and loss of $0.1 billion, respectively, both of which would be reflected in the consolidated statement of income.
29. Fair value measurements continued
US$ million
2022
2021
Contingent consideration and Other Receivables (Mototolo) \u2013 Level 3
Assets
231
282
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology;
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in a $19 million (2021: $27 million) adjustment to the current carrying value.
Contingent consideration (Orion) \u2013 Level 3
Assets
\u2013
28
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Estimated production plan;
\u2013 Long-term forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. In 2021, a 10% increase in gold price would have resulted in no adjustment to the carrying value of the asset, while a 10% decrease in gold price would have resulted in a $9 million negative adjustment.
Other receivables and non-current receivables and loans \u2013 Level 3
Assets
95
107
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow model
\u2013 Discount rates specific to the operation; and
\u2013 Underlying business plans and forecasts.
Significant and other unobservable inputs:
The valuation remains sensitive to repayment cash flows dependent upon the underlying business plans and forecasts. A one-year delay in the underlying cash flows would result in a $19 million (2021: $9 million) reduction to the current carrying value of the asset while bringing forward repayments by one-year would result in a $11 million (2021: $8 million) increase.
Convertible loan (Li-Cycle) \u2013 Level 3
Assets
168
\u2013
Liabilities
\u2013
\u2013
Valuation techniques and key inputs:
Discounted cash flow and option pricing model
\u2013 Share price; and
\u2013 Risk-free rate and volatility.
Significant and other unobservable inputs:
The valuation remains sensitive to the share price and a 10% increase/decrease in share price assumptions would result in an $6 million adjustment to the current carrying value.
29. Fair value measurements continued
US$ million
2022
2021
Non-discretionary dividend obligation (ARM Coal) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(321)
(148)
Valuation techniques:
Discounted cash flow model
Significant and other unobservable inputs:
\u2013 Long-term forecast commodity prices;
\u2013 Discount rates using weighted average cost of capital methodology;
\u2013 Production models;
\u2013 Operating costs; and
\u2013 Capital expenditures.
The resultant liability is essentially a discounted cash flow valuation of the underlying mining operation. Increases/decreases in forecast commodity prices will result in an increase/decrease to the value of the liability though this will be partially offset by associated increases/decreases in the assumed production levels, operating costs and capital expenditures, which are inherently linked to forecast commodity prices. The significant unobservable inputs represent the long-term forecast commodity prices to which the valuation remains sensitive to. A 10% increase/decrease in commodity price assumptions would result in an $108 million (2021: $94 million) adjustment to the current carrying value.
Option over non-controlling interest (AleSat) \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(22)
(22)
Valuation techniques and key inputs:
Discounted cash flow model
Significant unobservable inputs:
The resultant liability is the value of the remaining minority stake in the subsidiary, measured as the higher value of the acquisition date valuation of the shares, and a discounted future earnings based valuation. The valuation is additionally sensitive to movement in the spot exchange rates between the Brazilian real and US dollar.
Contingent consideration \u2013 Level 3
Assets
\u2013
\u2013
Liabilities
(74)
(49)
Valuation techniques and key inputs:
Discounted cash flow models
Significant and other unobservable inputs:
\u2013 Estimated production plans;
\u2013 Forecast commodity prices; and
\u2013 Discount rates using weighted average cost of capital methodology.
The resultant liabilities was mainly determined using forecasted production estimates and assumed actual coal prices higher than a royalty trigger price. Should production volumes increase/decrease by 10% the value of the liability would increase/decrease by $7 million (2021: $6 million), and for any given quarter should commodity prices be lower than the royalty trigger, no amounts would be due under the price contingent royalty arrangement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-157": { "value": "
Notes to the financial statements continued
30. Auditor\u2019s remuneration
US$\u00a0million
2022
20211
Remuneration in respect of the audit of Glencore's consolidated financial statements
21
20
Other audit fees, primarily in respect of audits of accounts of subsidiaries
5
5
Audit-related assurance services2
2
3
Total audit and related assurance fees
28
28
Other assurance services3
1
1
Total non-audit fees
1
1
Total professional fees
29
29
12021 restated to better reflect the nature of audit services.
2Audit-related assurance services primarily related to interim reviews of the Group\u2019s half-year accounts as well as bond issuances and comfort letters.
3Other assurance services primarily comprises assurance in respect of certain aspects of the Group\u2019s sustainability reporting.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-158": { "value": "
Notes to the financial statements continued
32. Contingent liabilities
There were no corporate guarantees in favour of third parties as at 31\u00a0December 2022 (2021: None), except those disclosed in note 11. The Group is subject to various legal and regulatory proceedings as detailed below. These contingent liabilities are reviewed on a regular basis and where appropriate an estimate is made of the potential financial impact on the Group. As at 31 December 2022 and 2021, it was not feasible to make such an assessment.
Legal and regulatory proceedings
Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, a provision is recognised when Glencore has a present obligation (legal or constructive), as a result of a past event, and it is probable that an outflow of resources embodying economic benefits, that can be reliably estimated, will be required to settle the liability. A contingent liability is a possible obligation that arises from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Glencore. If it is not clear whether there is a present obligation, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the end of the reporting period. When a present obligation arises but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability, a contingent liability is disclosed.
Investigations by regulatory and enforcement authorities
As described in note 23, the Group remains subject to investigations by the OAG and Dutch authorities. At 31 December 2022, taking account of all available evidence, the Investigations Committee concluded that, with respect to these investigations, it is not probable that a present obligation existed at the end of the reporting period. In addition, the timing and amount, if any, of the possible financial effects (such as fines, penalties or damages, which could be material) or other consequences, including external costs, from the OAG and Dutch investigations and any change in their scope are not currently possible to predict or estimate.
The Group notes that other authorities may commence investigations against the Group in connection with the resolved investigations or the matters under investigation. In respect of these investigations, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these potential investigations as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Claims against the Company in connection with investigations by regulatory and enforcement authorities
Claims have been issued against the Group in the United Kingdom in connection with the various Government investigations, constituting claims on behalf of approximately 400 current and former shareholders. The claims are, inter alia, made under s90 of the Financial Services and Markets Act 2000 (\u2018FSMA\u2019) relating to prospectus liability, while two currently include s90A FSMA claims relating to misstatements in other information by the Company. The bases for the claims are that the prospectuses issued in 2011 and 2013 and other published information by the Company were untrue, misleading or contained omissions. The claims are at a very early stage.
The Group may be the subject of further legal claims brought by other parties in connection with the Government investigations, including collective, group or representative actions.
In respect of these claims, taking into account all available evidence, the Investigations Committee does not consider it probable that a present obligation existed in relation to these claims or potential claims as at the balance sheet date, and the amount of any financial effects, which could be material, is not currently possible to predict or estimate.\u00a0
Other legal proceedings
Other claims and unresolved disputes are pending against Glencore. However, based on the Group\u2019s current assessment of these matters any future individually material financial obligations are considered to be remote.
Environmental contingencies
Glencore\u2019s operations are subject to various environmental laws and regulations. Glencore is not aware of any material non-compliance with those laws and regulations. Glencore accrues for environmental contingencies when such contingencies are probable and reasonably estimable. Such accruals are adjusted as new information develops or circumstances change. Recoveries of environmental remediation costs from insurance companies and other parties are recorded as assets when the recoveries are virtually certain. At this time, Glencore is unaware of any material environmental incidents at its locations. Any potential liability arising from environmental incidents in the ordinary course of the Group\u2019s business would not usually be expected to have a material adverse effect on its consolidated income, financial position or cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-159": { "value": "
Notes to the financial statements continued
33. Related party transactions
In the normal course of business, Glencore enters into various arm\u2019s length transactions with related parties, including fixed price commitments to sell and to purchase commodities, forward sale and purchase contracts, agency agreements and management service agreements. Outstanding balances at period end are unsecured and settlement occurs in cash (see notes 12, 14 and 25). There have been no guarantees provided or received for any related party receivables or payables.
All transactions between Glencore and its subsidiaries are eliminated on consolidation along with any unrealised profits and losses between its subsidiaries, associates and joint ventures. In 2022, sales and purchases with associates and joint ventures amounted to $3,941\u00a0million (2021: $3,877\u00a0million) and $8,091\u00a0million (2021: $8,021\u00a0million), respectively.
Remuneration of key management personnel
Glencore\u2019s key management personnel are the members of the Board of Directors, CEO, CFO, General Counsel and Head of the Industrial activities segment. The remuneration of Directors and other members of key management personnel recognised in the consolidated statement of income including salaries and other current employee benefits amounted to $29 million (2021: $27 million). Amounts expensed relating to long-term benefits or share-based payments to key management personnel amounted to $7 million (2021 restated: $4 million). Further details on remuneration of Directors are set out in the Directors\u2019 remuneration report on page 119.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-160": { "value": "
Remuneration of key management personnel
Glencore\u2019s key management personnel are the members of the Board of Directors, CEO, CFO, General Counsel and Head of the Industrial activities segment. The remuneration of Directors and other members of key management personnel recognised in the consolidated statement of income including salaries and other current employee benefits amounted to $29 million (2021: $27 million). Amounts expensed relating to long-term benefits or share-based payments to key management personnel amounted to $7 million (2021 restated: $4 million). Further details on remuneration of Directors are set out in the Directors\u2019 remuneration report on page 119.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-161": { "value": "
34. Principal subsidiaries with material non-controlling interests
Non-controlling interest is comprised of the following:
US$ million
2022
2021
Kazzinc
1,156
1,368
Koniambo
(5,745)
(5,180)
Kamoto Copper Company (KCC)
88
474
Volcan
(201)
(106)
Other1
511
430
Total
(4,191)
(3,014)
1Other comprises various subsidiaries in which no individual balance attributable to non-controlling interests is material, including a balance of $98 million relating to Mutanda. See below.
Renewal of Mutanda\u2019s mining licence and 5% dilution
Three mining permits (\u2018permis d\u2019exploitation\u2019) (PE662, PE643 and PE662) were successfully renewed by Mutanda Mining in 2022 for an additional period of 15 years. The renewal of the mining titles triggered the transfer of 5% of the equity of Mutanda Mining to the DRC government in accordance with the DRC Mining Code, which resulted in a $109 million non-controlling interest and an intangible asset related to the right to mine over a 15-year period being recognised (see note 10).
Summarised financial information in respect of Glencore\u2019s subsidiaries that have material non-controlling interest as at 31\u00a0December\u00a02022 and 2021, reflecting 100% of the underlying subsidiary\u2019s relevant figures, is set out below.
US$\u00a0million
Kazzinc
Koniambo
KCC
Volcan
31 December 2022
Non-current assets
3,377
507
4,429
1,723
Current assets
1,613
519
1,351
241
Total assets
4,990
1,026
5,780
1,964
Non-current liabilities
494
15,019
9,602
1,256
Current liabilities
673
147
1,456
405
Total liabilities
1,167
15,166
11,058
1,661
Net assets
3,823
(14,140)
(5,278)
303
Equity attributable to owners of the Company
2,667
(8,395)
(5,366)
504
Non-controlling interest
1,156
(5,745)
88
(201)
Non-controlling interest %
30.3%
51.0%
25.0%
76.7%
2022
Revenue
3,564
713
2,545
1,000
Expenses
(3,615)
(1,823)
(3,127)
(1,124)
Net loss for the year
(51)
(1,110)
(582)
(124)
Loss attributable to owners of the Company
(35)
(544)
(407)
(29)
Loss attributable to non-controlling interests
(16)
(566)
(175)
(95)
Total comprehensive loss for the year
(51)
(1,110)
(582)
(124)
Dividends paid to non-controlling interests
(196)
\u2013
(211)
\u2013
Net cash inflow/(outflow) from operating activities
549
(78)
898
234
Net cash outflow from investing activities
(335)
(19)
(393)
(245)
Net cash (outflow)/inflow from financing activities
(309)
112
(632)
(146)
Total net cash (outflow)/inflow
(95)
15
(127)
(157)
US$\u00a0million
Kazzinc
Koniambo
KCC
Volcan
31 December 2021
Non-current assets
4,210
434
5,266
1,796
Current assets
1,515
461
1,135
400
Total assets
5,725
895
6,401
2,196
Non-current liabilities
721
13,822
9,313
980
Current liabilities
480
104
804
789
Total liabilities
1,201
13,926
10,117
1,769
Net assets
4,524
(13,031)
(3,716)
427
Equity attributable to owners of the Company
3,156
(7,851)
(4,190)
533
Non-controlling interest
1,368
(5,180)
474
(106)
Non-controlling interest %
30.3%
51.0%
25.0%
76.7%
2021
Revenue
3,502
242
3,899
981
Expenses
(2,940)
(2,364)
(2,820)
(941)
Net profit/(loss) for the year
562
(2,122)
1,079
40
Profit/(loss) attributable to owners of the Company
392
(1,040)
837
9
Profit/(loss) attributable to non-controlling interests
170
(1,082)
242
31
Total comprehensive income/(loss) for the year
562
(2,122)
1,079
40
Dividends paid to non-controlling interests
(150)
\u2013
\u2013
\u2013
Net cash inflow/(outflow) from operating activities
837
(165)
1,708
318
Net cash outflow from investing activities
(318)
(13)
(301)
(174)
Net cash (outflow)/inflow from financing activities
(394)
193
(1,294)
(28)
Total net cash inflow
125
15
113
116
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-162": { "value": "
Notes to the financial statements continued
35. Principal operating, finance and industrial subsidiaries and investments
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal subsidiaries
Industrial activities
Cobar Management Pty Limited
Australia
100.0
100.0
Copper production
Compania Minera Lomas Bayas
Chile
100.0
100.0
Copper production
Complejo Metalurgico Altonorte SA
Chile
100.0
100.0
Copper production
Compania Minera Antapaccay S.A.
Peru
100.0
100.0
Copper production
Pasar Group
Philippines
78.2
78.2
Copper production
Glencore Recycling LLC
USA
100.0
100.0
Copper production
Polymet Mining Corp.
Canada
71.0
71.5
Copper production
Kamoto Copper Company SA1
DRC
75.0
75.0
Copper/Cobalt production
Mutanda Group
DRC
95.0
100.0
Copper/Cobalt production
Mount Isa Mines Limited
Australia
100.0
100.0
Copper/Zinc/Lead production
Kazzinc Ltd
Kazakhstan
69.7
69.7
Copper/Zinc/Lead production
Zhayremsky Gorno-Obogatitelny Kombinat JSC
Kazakhstan
69.7
69.7
Copper/Zinc/Lead production
Altyntau Kokshetau JSC
Kazakhstan
69.7
69.7
Gold production
Britannia Refined Metals Limited
UK
100.0
100.0
Lead production
Access World Group
Switzerland
\u2013
100.0
Logistics services
Murrin Murrin Operations Pty Ltd
Australia
100.0
100.0
Nickel production
Koniambo Nickel S.A.S.2
New Caledonia
49.0
49.0
Nickel production
Glencore Nikkelverk AS
Norway
100.0
100.0
Nickel production
McArthur River Mining Pty Limited
Australia
100.0
100.0
Zinc production
Nordenhamer Zinkh\u00fctte GmbH
Germany
100.0
100.0
Zinc production
Asturiana de Zinc S.A.U.
Spain
100.0
100.0
Zinc production
Volcan Companja Minera S.A.A.3
Peru
23.3
23.3
Zinc production
Portovesme S.r.L.
Italy
100.0
100.0
Zinc/Lead production
Empresa Minera Los Quenuales S.A.
Peru
\u2013
97.6
Zinc/Lead production
Sinchi Wayra Group
Bolivia
\u2013
100.0
Zinc/Tin production
1Refer to note 34.
2The Group has control of Koniambo Nickel S.A.S. as a result of the ability to direct the key activities of the operation and to appoint key management personnel provided by the terms of the financing arrangements underlying the Koniambo project.
3The Group has control of Volcan Compania Minera S.A.A. as a result of the ability to control the entity through the voting of its 63.0% of the voting shares (Class A); the economic interest is diluted by the outstanding non-voting shares (Class B).
Country of incorporation
% interest 2022
% interest 2021
Main activity
Industrial activities
Oakbridge Pty Limited
Australia
98.2
98.2
Coal production
Cumnock No. 1 Colliery Pty Limited
Australia
100.0
100.0
Coal production
Rolleston Coal Holdings Pty Limited
Australia
100.0
100.0
Coal production
Mangoola Coal Operations Pty Limited
Australia
100.0
100.0
Coal production
Mt Owen Pty Limited
Australia
100.0
100.0
Coal production
NC Coal Company Pty Limited
Australia
100.0
100.0
Coal production
Ravensworth Operations Pty Limited
Australia
100.0
100.0
Coal production
Ulan Coal Mines Pty Limited
Australia
100.0
100.0
Coal production
Prodeco group
Colombia
100.0
100.0
Coal production
Umcebo Mining (Pty) Ltd4
South Africa
48.7
48.7
Coal production
ARM Coal (Proprietary) Limited4
South Africa
47.5
47.5
Coal production
Carbones del Cerrej\u00f3n Limited5
Anguilla
100.0
\u2013
Coal production
Glencore Exploration Cameroon Ltd.
Bermuda
100.0
100.0
Oil production
Glencore Exploration (EG) Limited
Bermuda
100.0
100.0
Oil production
Petrochad (Mangara) Limited
Bermuda
\u2013
100.0
Oil exploration/production
Astron Energy (Pty) Ltd
South Africa
72.0
72.0
Oil refining / distribution
Marketing activities and other operating and finance
Xstrata Limited
UK
100.0
100.0
Holding
Glencore Australia Investment Holdings Pty Ltd
Australia
100.0
100.0
Holding
Glencore Operations Australia Pty Limited
Australia
100.0
100.0
Holding
Glencore Queensland Limited
Australia
100.0
100.0
Holding
Glencore Investment Pty Limited
Australia
100.0
100.0
Holding
Glencore Australia Holdings Pty Limited
Australia
100.0
100.0
Finance
Glencore Finance (Bermuda) Ltd.
Bermuda
100.0
100.0
Finance
Alesat Combustiveis S.A.
Brazil
88.0
88.0
Oil distribution
Topley Corporation
B.V.I.
100.0
100.0
Ship owner
Glencore Finance (Canada) Limited
Canada
100.0
100.0
Finance
Glencore Finance (Europe) Limited
Jersey
100.0
100.0
Finance
Glencore Capital Finance Designated Activity Company
Ireland
100.0
100.0
Finance
Finges Investment B.V.
Netherlands
100.0
100.0
Finance
Glencore (Schweiz) AG
Switzerland
100.0
100.0
Finance
Glencore Group Funding Limited
UAE
100.0
100.0
Finance
Glencore Funding LLC
USA
100.0
100.0
Finance
Glencore Australia Oil Pty Limited
Australia
100.0
100.0
Operating
Glencore Canada Corporation
Canada
100.0
100.0
Operating
Glencore Chile SpA
Chile
100.0
100.0
Operating
Glencore China Ltd.
China
100.0
100.0
Operating
Glencore Singapore Pte. Ltd.
Singapore
100.0
100.0
Operating
ST Shipping and Transport Pte. Ltd.
Singapore
100.0
100.0
Operating
Glencore AG (Ltd/SA)
Switzerland
100.0
100.0
Operating
Glencore International AG (Ltd/SA)
Switzerland
100.0
100.0
Operating
Glencore Commodities Ltd
UK
100.0
100.0
Operating
Glencore Energy UK Ltd.
UK
100.0
100.0
Operating
Glencore UK Ltd.
UK
100.0
100.0
Operating
4Although Glencore holds less than 50% of the voting rights, it has the ability to exercise control over Umcebo as a result of shareholder agreements which provide Glencore the ability to control the Board of Directors.
5In 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (see note 26).

", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138002658CPO9NBH955", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-163": { "value": "
Notes to the financial statements continued
35. Principal operating, finance and industrial subsidiaries and investments
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal subsidiaries
Industrial activities
Cobar Management Pty Limited
Australia
100.0
100.0
Copper production
Compania Minera Lomas Bayas
Chile
100.0
100.0
Copper production
Complejo Metalurgico Altonorte SA
Chile
100.0
100.0
Copper production
Compania Minera Antapaccay S.A.
Peru
100.0
100.0
Copper production
Pasar Group
Philippines
78.2
78.2
Copper production
Glencore Recycling LLC
USA
100.0
100.0
Copper production
Polymet Mining Corp.
Canada
71.0
71.5
Copper production
Kamoto Copper Company SA1
DRC
75.0
75.0
Copper/Cobalt production
Mutanda Group
DRC
95.0
100.0
Copper/Cobalt production
Mount Isa Mines Limited
Australia
100.0
100.0
Copper/Zinc/Lead production
Kazzinc Ltd
Kazakhstan
69.7
69.7
Copper/Zinc/Lead production
Zhayremsky Gorno-Obogatitelny Kombinat JSC
Kazakhstan
69.7
69.7
Copper/Zinc/Lead production
Altyntau Kokshetau JSC
Kazakhstan
69.7
69.7
Gold production
Britannia Refined Metals Limited
UK
100.0
100.0
Lead production
Access World Group
Switzerland
\u2013
100.0
Logistics services
Murrin Murrin Operations Pty Ltd
Australia
100.0
100.0
Nickel production
Koniambo Nickel S.A.S.2
New Caledonia
49.0
49.0
Nickel production
Glencore Nikkelverk AS
Norway
100.0
100.0
Nickel production
McArthur River Mining Pty Limited
Australia
100.0
100.0
Zinc production
Nordenhamer Zinkh\u00fctte GmbH
Germany
100.0
100.0
Zinc production
Asturiana de Zinc S.A.U.
Spain
100.0
100.0
Zinc production
Volcan Companja Minera S.A.A.3
Peru
23.3
23.3
Zinc production
Portovesme S.r.L.
Italy
100.0
100.0
Zinc/Lead production
Empresa Minera Los Quenuales S.A.
Peru
\u2013
97.6
Zinc/Lead production
Sinchi Wayra Group
Bolivia
\u2013
100.0
Zinc/Tin production
1Refer to note 34.
2The Group has control of Koniambo Nickel S.A.S. as a result of the ability to direct the key activities of the operation and to appoint key management personnel provided by the terms of the financing arrangements underlying the Koniambo project.
3The Group has control of Volcan Compania Minera S.A.A. as a result of the ability to control the entity through the voting of its 63.0% of the voting shares (Class A); the economic interest is diluted by the outstanding non-voting shares (Class B).
Country of incorporation
% interest 2022
% interest 2021
Main activity
Industrial activities
Oakbridge Pty Limited
Australia
98.2
98.2
Coal production
Cumnock No. 1 Colliery Pty Limited
Australia
100.0
100.0
Coal production
Rolleston Coal Holdings Pty Limited
Australia
100.0
100.0
Coal production
Mangoola Coal Operations Pty Limited
Australia
100.0
100.0
Coal production
Mt Owen Pty Limited
Australia
100.0
100.0
Coal production
NC Coal Company Pty Limited
Australia
100.0
100.0
Coal production
Ravensworth Operations Pty Limited
Australia
100.0
100.0
Coal production
Ulan Coal Mines Pty Limited
Australia
100.0
100.0
Coal production
Prodeco group
Colombia
100.0
100.0
Coal production
Umcebo Mining (Pty) Ltd4
South Africa
48.7
48.7
Coal production
ARM Coal (Proprietary) Limited4
South Africa
47.5
47.5
Coal production
Carbones del Cerrej\u00f3n Limited5
Anguilla
100.0
\u2013
Coal production
Glencore Exploration Cameroon Ltd.
Bermuda
100.0
100.0
Oil production
Glencore Exploration (EG) Limited
Bermuda
100.0
100.0
Oil production
Petrochad (Mangara) Limited
Bermuda
\u2013
100.0
Oil exploration/production
Astron Energy (Pty) Ltd
South Africa
72.0
72.0
Oil refining / distribution
Marketing activities and other operating and finance
Xstrata Limited
UK
100.0
100.0
Holding
Glencore Australia Investment Holdings Pty Ltd
Australia
100.0
100.0
Holding
Glencore Operations Australia Pty Limited
Australia
100.0
100.0
Holding
Glencore Queensland Limited
Australia
100.0
100.0
Holding
Glencore Investment Pty Limited
Australia
100.0
100.0
Holding
Glencore Australia Holdings Pty Limited
Australia
100.0
100.0
Finance
Glencore Finance (Bermuda) Ltd.
Bermuda
100.0
100.0
Finance
Alesat Combustiveis S.A.
Brazil
88.0
88.0
Oil distribution
Topley Corporation
B.V.I.
100.0
100.0
Ship owner
Glencore Finance (Canada) Limited
Canada
100.0
100.0
Finance
Glencore Finance (Europe) Limited
Jersey
100.0
100.0
Finance
Glencore Capital Finance Designated Activity Company
Ireland
100.0
100.0
Finance
Finges Investment B.V.
Netherlands
100.0
100.0
Finance
Glencore (Schweiz) AG
Switzerland
100.0
100.0
Finance
Glencore Group Funding Limited
UAE
100.0
100.0
Finance
Glencore Funding LLC
USA
100.0
100.0
Finance
Glencore Australia Oil Pty Limited
Australia
100.0
100.0
Operating
Glencore Canada Corporation
Canada
100.0
100.0
Operating
Glencore Chile SpA
Chile
100.0
100.0
Operating
Glencore China Ltd.
China
100.0
100.0
Operating
Glencore Singapore Pte. Ltd.
Singapore
100.0
100.0
Operating
ST Shipping and Transport Pte. Ltd.
Singapore
100.0
100.0
Operating
Glencore AG (Ltd/SA)
Switzerland
100.0
100.0
Operating
Glencore International AG (Ltd/SA)
Switzerland
100.0
100.0
Operating
Glencore Commodities Ltd
UK
100.0
100.0
Operating
Glencore Energy UK Ltd.
UK
100.0
100.0
Operating
Glencore UK Ltd.
UK
100.0
100.0
Operating
4Although Glencore holds less than 50% of the voting rights, it has the ability to exercise control over Umcebo as a result of shareholder agreements which provide Glencore the ability to control the Board of Directors.
5In 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (see note 26).

Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal joint ventures6
Viterra Group
Jersey
49.9
49.9
Agriculture business
Compania Minera Dona Ines de Collahuasi SCM
Chile
44.0
44.0
Copper production
Principal joint operation and other unincorporated arrangement7
Bulga Joint Venture
Australia
87.5
85.9
Coal production
Hail Creek Joint Venture
Australia
84.7
84.7
Coal production
Hunter Valley Operations Joint Venture
Australia
49.0
49.0
Coal production
Liddell and Foybrook Joint Ventures
Australia
67.5
67.5
Coal production
Oaky Creek Coal Joint Venture
Australia
55.0
55.0
Coal production
United Wambo Joint Venture
Australia
47.5
47.5
Coal production
Goedgevonden Joint Venture
South Africa
74.0
74.0
Coal production
Ernest Henry Mining Pty Ltd
Australia
\u2013
70.0
Copper production
Glencore Merafe Chrome Pooling and Share Joint Venture
South Africa
79.5
79.5
Ferroalloys production
Glencore Bakwena-Ba-Mogopa Rhovan Pooling and Sharing Joint Venture
South Africa
74.0
74.0
Vanadium production
6The principal joint arrangements are accounted for as joint ventures as the shareholder agreements do not provide the Group the ability to solely control the entities.
7Classified as joint operations under IFRS 11, as these joint arrangements convey a direct right to a share of the underlying operations\u2019 assets, liabilities, revenues and expenses. The Hail Creek interest is an \u2018other unincorporated arrangement\u2019 accounted for similar to a joint operation.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Principal associates
Carbones del Cerrej\u00f3n LLC8
Anguilla
\u2013
33.3
Coal production
Newcastle Coal Shippers Pty Limited
Australia
50.2
50.2
Coal terminal
GS Coal Holdings Pty Ltd
Australia
50.0
50.0
Coal production
Richards Bay Coal Terminal Company Limited
South Africa
19.3
19.3
Coal terminal
Century Aluminum Company9
USA
46.1
46.4
Aluminium production
PT CITA Mineral Investindo Tbk
Indonesia
31.7
31.7
Alumina production
HG Storage International Limited
Jersey
49.0
49.0
Oil storage
Noranda Income Fund
Canada
25.0
25.0
Zinc production
Compania Minera Antamina S.A.
Peru
33.8
33.8
Zinc/Copper production
Minera Agua Rica Alumbrera Limited
Cayman Islands
43.7
25.0
Copper production
8In 2022, Glencore completed the acquisition of the remaining 66.67% interest in Cerrej\u00f3n (see note 26).
9Represents the Group\u2019s economic interest in Century, comprising 42.9% (2021: 42.9%) voting interest and 3.2% non-voting interest (2021: 3.4%). Century is publicly traded on NASDAQ under the symbol CENX.
Country of incorporation
% interest 2022
% interest 2021
Main activity
Other investments
Shenzhen Energy Gas Investment Holding Co., Ltd
China
7.8
\u2013
Energy distribution
EN+ GROUP IPJSC
Russia
10.6
10.6
Aluminium production
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36. Subsequent events
  • On 1 February 2023, the Group cancelled 286,200,066 of treasury shares amounting to $1,115 million. Following the cancellation, the total number of issued ordinary shares is 13,800,000,000 and the number of ordinary shares in treasury is 1,079,521,793.
  • On 24 February 2023, the Group announced the commencement of a new $1.5 billion share buyback programme, with intended completion by the time of the Group\u2019s interim results announcement in August 2023.
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