Glencore : Payments to Governments Report 2023

Payments to Governments Report 2023

Energising today Advancing tomorrow

	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Energising today, advancing tomorrow: As the world moves towards a low-carboneconomy, we are focused on supporting the energy needs of today whilst investing in our portfolio of transition-enablingcommodities.

Explore further publications in	Explore our Group Reporting Glossary for
our 2023 reporting suite at:	the 2023 reporting suite online at:
glencore.com/publications	glencore.com/publications

Introduction

Chief Financial Officer's introduction	3
Our business at a glance	5
Performance highlights	7
Our approach to tax and transparency	8

Our contribution

How we contribute	10
Our payments to governments	11
Extractive Industries Transparency	17
Initiative

Additional information

Appendix One - Detailed country	22
disclosures
About this report	24
Important notice	25
Contact us	25

This document has not been prepared as financial or investment advice or to provide any guidance in relation to our future performance. Refer to the Important notice concerning this report on page 25.

Welcome to Glencore's 2023 Payments to Governments Report

This report addresses our UK regulatory obligations under DTR 4.3A of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (UK Transparency Requirements), which were introduced to implement the payments to governments requirements provided for in the EU Transparency and Accounting Directives. It also includes our commodity trading payments made to state-owned enterprises (SOEs) in Extractive Industry Transparency Initiative-implementing countries for the purchase of oil and gas and minerals and metals originating in those countries.

Further information on our approach to transparency, including the disclosure of the beneficial ownership information of our active industrial joint ventures in which we hold more than 5%, a list of entities in which the Group owns more than 20% interest, and our active marketing sales/purchase agents, is available at: glencore. com/who-we-are/transparency.

• Alternative performance measures
  Adjusted measures referred to as alternative performance measures (APMs) which are not defined or specified under the requirements of International Financial Reporting Standards; refer to our 2023 Annual Report's APMs section beginning on page 282 for definitions, explanation of use and reconciliations and note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.

• Selected ESG information
  Selected Environmental, Social and Governance (ESG) metrics (Selected Information) in this report have been subject to independent limited assurance under ISAE 3000 (Revised) by Deloitte LLP. The Selected Information is identified by the Δ symbol. The scope and limitations of Deloitte LLP's assurance are set out in their unqualified report in our 2023 Annual Report, page 295. Please also see the Basis of Reporting 2023 online at glencore.com/publications

2023 Glencore Payments to Governments Report

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	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Chief Financial Officer's introduction

During 2023, our total payments to governments were $12.7 billionΔ in tax, royalty, levy and other payments.

Steve Kalmin

Chief Financial Officer

I am pleased to introduce our annual Payments to Governments Report.

Following 2022, a year characterised by extreme global macroeconomic and geopolitical events resulting in extraordinary energy market dislocation, volatility, risk, supply disruptions and record prices for various coal and gas benchmarks, 2023, for the most part, saw international energy trade flows rebalance and normalise, with coal and LNG, and to a lesser extent, oil prices materially declining.

year increase, largely reflecting the payment timing lag-effect relating to higher commodity prices (mainly energy) in 2022. Around 88.4% of total royalties, duties and taxes were paid in Australia, Canada, Colombia, the DRC, Kazakhstan, Peru and South Africa.

Resolutions and ongoing investigations

Glencore has been subject to a number of investigations over the last few years. We have taken all of these investigations very seriously and our response to the investigations has been overseen by our Investigations Committee, comprised of Non-Executive Directors, led by our Chairman. We have sought to cooperate extensively with the various authorities investigating Glencore in order to resolve these investigations as expeditiously as possible, while also seeking to learn from these investigations in order to support the continuous improvement of our Ethics and Compliance Programme.

In 2022, we announced a number of resolutions of certain long-standing investigations by authorities in the US, the UK and Brazil into past practices at certain Group businesses. Separately, in December 2022, we reached an agreement with the Democratic Republic of Congo (DRC)

Under the terms of our resolutions with the US Department of Justice (DOJ), independent compliance monitors were appointed to assess and monitor the Company's compliance with the resolutions and evaluate the effectiveness of our Ethics and Compliance Programme and internal controls. The DOJ acknowledged the enhancements we have made to our Ethics and Compliance Programme but required the appointment of the monitors because certain of these enhancements were new and not fully implemented or tested.

The monitors were appointed in June 2023 and in early 2024 completed their first review period, during which they undertook various activities including extensive document review and multiple site visits, involving interviews, transaction testing, and other analysis.

Highlights in 2023*

Governments

$12.7bnΔ

in taxes, royalties and other payments

Applicable tax rate

33.6%◊

Employees

$6.0bn

in salaries, wages, social security and other benefits

Social contribution

$110m

including discretionary and non- discretionary payments

In 2023, our total payments to governments were $12.7 billionΔ in tax, royalty, levy and other payments (2022: $12 billionΔ). Corporate income tax contributed most to the year-on-

relating to past conduct.

• Refer to the 2023 Annual Report for further information

2023 Glencore Payments to Governments Report

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	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Chief Financial Officer's introduction continued

Strengthening our socioeconomic contribution

In addition to our employment, local procurement and taxes, royalties, and other levies, we seek to make a positive contribution to the social and economic development of our host communities and society more broadly through our social investment programmes.

Our strategic objective is to support initiatives that build resilient communities and regions by reducing dependency on our operations. This is challenging when the immediate, short-term needs in many of our communities are high. Our aim is to focus our efforts on developing programmes that contribute to longer-term social objectives through activities such as enterprise and job creation, education, health and wellbeing and capacity building.

We base our socio-economic development activities on the resources, needs and plans identified at a local or regional level, which relevant data gathering and community engagement informs. During 2023, significant work was undertaken to develop our Social Contribution Framework, which has launched in 2024. The Framework aims

to sharpen our definition and articulation of social contribution and social investment, and what it means to Glencore and the communities and stakeholders with whom we work; set clear expectations for governance, performance and reporting; and support a social contribution approach that promotes long-term partnerships as an enabler of enduring positive social and economic outcomes.

We welcome feedback on our public disclosures, and look forward to engaging with interested stakeholders on the topic of our contributions.

Steve Kalmin,

Chief Financial Officer

27 June 2024

Our performance in 2023

During 2023, we made payments to governments of $9.6 billion, calculated in line with the UK Transparency Requirements (2022: $9.4 billion).

Amounts in US$'000

• Argentina $2,432
• Australia $4,599,644
• Cameroon $14,932
• Canada $129,570
• Chile $384,946
• Colombia $2,377,796
• Democratic Republic of the Congo $585,068
• Equatorial Guinea (EG) $427,622
• Kazakhstan $371,616
• Peru $436,234
• South Africa $285,799

In 2023, our total payments to government were around $12.7 billionΔ in tax, royalty, levy and other payments (2022: $12 billionΔ).

2023 Glencore Payments to Governments Report

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	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Our business at a glance

Our Purpose and business model

Our Purpose is to responsibly source the commodities that advance everyday life. As one of the world's largest diversified natural resource companies, we can play an important role in supporting the global transition to a low-carbon economy.

We are committed to supporting the transition by supplying the transition-enabling commodities needed for the energy systems of tomorrow, while continuing to responsibly serve the energy needs of today.

Our business model is well placed to advance our Purpose. Our industrial business produces

Our recycling business

We recycle key commodities to support the circular economy

s on

Industrial business

As a global producer and marketer of commodities, we are diversified by geography,

Exploration, acquisition and development

Our focus on brownfield sites and exploration close to existing assets lowers our risk profile and lets us use existing infrastructure, realise synergies and control costs

Extraction and production

We mine and beneficiate minerals across a range of commodities, mining techniques and countries, for processing or refining at our own facilities, or for sale

Processing and refining

Our expertise and technological advancement in processing and refining mean we can optimise our end products to suit a wider customer base and provide security of supply as well as valuable market knowledge

commodities needed for both the metals and energy markets - while our marketing business moves these commodities globally to where they are needed. The businesses mutually reinforce each other: our industrial business uses marketing insights and knowledge to strengthen their position, while our marketing business uses industrial volumes to create value.

Our core industrial and marketing businesses are supported by our carbon solutions and recycling businesses. Our carbon solutions team supports

i t u l o s

n o b

r a

C

products and activities.

Integrating our marketing and industrial business sets us apart from most of our competitors in creating an enhanced entrepreneurial focus on value generation

R e

c y

c l i n g

Logistics and delivery

Our logistics assets and capabilities allow us to handle large volumes of commodities, both to fulfil our obligations and

Blending and optimisation

Our ability to blend and optimise allows us to offer a wide range of

both clients and Glencore itself in efforts to reduce their carbon footprints. Our recycling business supports the demand growth for metals and the global shift to a circular economy.

Our commodities in everyday products

The products we produce and market play an essential role in modern life

Marketing

business

to take advantage of demand and supply imbalances. These value-added services make us a preferred counterparty for customers without such capabilities

product specifications, resulting in an ability to meet our customer- specific requirements and provide a high- quality service

2023 Glencore Payments to Governments Report

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	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Our business at a glance continued

Our global operations

Head office

Office

Industrial asset

One of the world's largest natural resource companies

6 >30 >150k >50

continents

countries

employees and contractors

offices

For further information, see glencore.com/en/ who-we-are/purpose-and-values/

• delivered through two business segments

Industrial activities

Our industrial business spans the metals and energy markets, producing multiple commodities from over 60 industrial assets

Adjusted EBITDA ◊ Industrial 2023

	Metal	41%
	Energy	59%

$13.2bn

2022: $27.3bn

Marketing activities

We move commodities from where they are plentiful to where they are needed

Adjusted EBIT ◊ Marketing 2023

	Metal	50%
	Energy	50%

$3.5bn

2022: $6.4bn

… supported by our Values

Safety

We never compromise on safety. We look out for one another and stop work if it's not safe

Responsibility

We take responsibility for our actions. We talk and listen to others to understand what they expect from us. We work to improve our commercial, social and environmental performance

Simplicity

We work efficiently and focus on what's important. We avoid unnecessary complexity and look for simple, pragmatic solutions

Integrity

We have the courage to do what's right, even when it's hard. We do what we say and treat each other fairly and with respect

Openness

We're honest and straightforward when we communicate. We push ourselves to improve by sharing information and encouraging dialogue and feedback

Entrepreneurialism

We encourage new ideas and quickly adapt to change. We're always looking for new opportunities to create value and find better and safer ways of working

2023 Glencore Payments to Governments Report

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	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Performance highlights

"Aided by healthy Adjusted EBITDA, we reported net income attributable to equity holders of $4.3 billion in 2023 and continue to enjoy significant financial headroom and strength."

Gary Nagle

Chief Executive Officer

Net income attributable to equity holders (US$ billion)

20				17.	4.3
						2022: 17.3
					3
15
10
5			5
			.0				4.
							3
0	2021	2022	2023

Shareholder returns

(US$ billion)

12									10.1
10								3.6	2022: 7.3
8
							2.5
								6.5
6
							4.8
4
					0.8
		2.1
2
0		2021		2022	2023
		Distributions
		Buybacks

Total borrowings (US$ billion)

30			34.6			32.2	32.2
35								2022: 28.8
					28.
					8
25
20
15
10
5
0			2021	2022	2023

Net debt◊

(US$ billion)

8						4.9
						2022: 0.1
6			6.
			0
							4.9
4
2
				0.1
0			2021	2022	2023

Adjusted EBITDA◊

(US$ billion)

35
			34.1
30
25
		21.3
20
						17.1
15
10
5
0	2021	2022	2023

17.1

2022: 34.1

2023 Glencore Payments to Governments Report

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	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Our approach to tax and transparency

We are committed to complying with all applicable tax laws, rules and regulations. We pay all relevant taxes, royalties and other levies in amounts determined by the legislation of relevant national, regional or local governments. We seek to maintain long-term, open, transparent and cooperative relationships with tax authorities in our host countries.

Tax transparency

We welcome fiscal transparency as it encourages the responsible management of revenues from our activities. We believe that countries that transparently and effectively allocate natural resource wealth for the benefit of their communities have the potential to attract greater, more responsible and longer-term business investment. It is imperative that businesses, governments and civil society work in partnership to support transparency.

Our global reach and presence in some higher-risk jurisdictions result in Glencore generally having to navigate enhanced complexity and uncertainty in accounting for income taxes, particularly the evaluation of tax exposures and recoverability of deferred tax assets.

Our Board Audit Committee regularly reviews with senior management our potential tax exposures globally and the key estimates taken in determining the positions recorded, including the status of material communications with local tax authorities

and the carrying values of deferred tax assets.

Intra-group transactions

The Glencore group comprises separate legal entities established in many jurisdictions. Like many multinational enterprises, our business activities are co-ordinated (in terms of personnel, assets and capital) on a worldwide basis.

Our global nature necessitates us apportioning overall Group profitability between our operating jurisdictions. International tax law and in particular the OECD Transfer Pricing Guidelines (Guidelines) and Article 9 of the OECD Model Tax Convention, governs this process. These require that individual entities within the Group transact with each other at the same price that they would if they were independent parties and in due recognition of the true value to be accorded to the transaction.

The purpose of this apportionment and of the Guidelines is twofold: for the fair division of Group profit to enable the levying of tax according to where it is earned; and to ensure that the same profit is taxed only once.

Our Group Tax Policy, which is approved by the Board on an annual basis and publicly available, commits us to not engineer structures or transactions that exploit transfer-pricing rules by artificially 'transferring' profit into lower tax jurisdictions. We trace all intragroup transactions to value-adding commercial activities.

Reflecting the complexity of the Group's operations, and the legitimate concern of tax administrations to collect the full amount

due to them, our transfer pricing is open to audit and challenge from tax administrations.

We approach both scrutiny and dispute in a fair and transparent manner, but we resolutely defend the principle that profit must be taxed only once and that tax administrations are as bound in law by the Guidelines as we are.

'Tax havens'

Although there is no universally applied definition of the term 'tax haven', it is generally understood to refer to a jurisdiction that imposes little or no tax on income or profits. In recent years, governments, the media and the public at large have raised legitimate questions regarding the alleged diversion of business profits by multinational enterprises into tax havens mainly to avoid paying local taxes. It should be noted that Pillar 2 of the OECD's continuing Base Erosion and Profit Shifting Project introduces a minimum tax rate of 15% to reduce the advantage of any such diversion.

In any case, we do not undertake any such activity. Both our Group Tax Policy and our adherence to the Guidelines forbid the allocation of profit to jurisdictions that do not provide value-adding activities and do not have any real commercial substance.

Nevertheless, we continue to make use of companies incorporated in what would be termed tax neutral or tax haven jurisdictions. Where that occurs, it is always for a specific purpose and the companies used can be referred to as special purpose vehicles (SPVs). Glencore primarily uses SPVs for two broad purposes:

• As intermediate holding companies (to hold single investments, groups of similar investments or joint venture investments for accounting, administrative, governance or legal convenience).
• As parties to a legal contract with a non-Group member where it is necessary that the SPV has no other function.

Our continued use of SPVs is to serve a commercial or administrative purpose, has no tax motivation and is fiscally neutral, i.e. it generates neither a tax saving nor expense. For this reason, when we need to establish an SPV, it is often in a tax-neutral jurisdiction, as tax in these cases is an irrelevance.

We have undertaken a review of all entities established in 'tax haven' jurisdictions with the intention of consolidating or liquidating as many as possible. Where it is not possible to do this, these entities usually adopt tax residence in a non-tax haven jurisdiction where the Group can establish enhanced local substance.

As a result of this review, we have removed from our Group structure many tax haven- incorporated companies, or established their tax residence in Switzerland, the UK or another non-tax haven jurisdiction. This review continues to be a focus during 2024.

External engagement

We are committed to transparent and constructive dialogue with our stakeholders. We recognise that this is an evolving space and that by understanding a range of external perspectives, we can improve our standards of corporate governance and disclosure.

Throughout the year, we engaged with a variety of organisations on tax and transparency matters.

2023 Glencore Payments to Governments Report

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	Introduction		Our contribution	Additional information
	Chief Financial	Our business	Performance	Our approach to tax and
	Officer's introduction	at a glance	highlights	transparency

Our approach to tax and transparency continued

Extractive Industries

Transparency Initiative

The Extractive Industries Transparency Initiative (EITI) is a multi-stakeholder initiative supported by countries, NGOs and companies in the extractives and commodities trading sector. It promotes open and accountable management of extractive resources. Glencore has been a supporting company since 2011, being active in the extractives as well as the commodity trading industry.

We also take an active role in the EITI's Working Group on Transparency in Commodity Trading, a multi-stakeholder group that works towards increasing transparency in commodity trading.

Our industrial assets in EITI-implementing countries support the ongoing development of the EITI in country, by contributing to national reports with local EITI disclosures, participating in EITI multi-stakeholder groups and engaging in policy consultation processes where applicable. For example, in the Democratic Republic of Congo (DRC), we are a member of the EITI's in-country Executive Committee.

International Council on Mining & Metals

We are an active member of the International Council on Mining & Metals (ICMM). The ICMM is an international organisation made up of 28 mining and metals companies and 45 regional and commodities' associations. Its members are committed to strengthening the industry's environmental and social performance and enhancing mining's contribution to society.

Through our membership of the ICMM's Mineral Resource and Tax Working Groups, we collaborate with our peers to address natural resource governance challenges and improve the transparency of mineral revenues - including their management, distribution or spending.

Investors, analysts and banks

Transparency and disclosure are of great interest to our shareholders and representatives of financial institutions. As part of our Annual Report process, we review and revise our approach to presenting information that is of interest to these stakeholders. In addition to meeting our regulatory reporting obligations, we also provide periodic operational, financial and market updates to investors and participate in conferences and other events where we provide relevant disclosure and information.

Civil society and nongovernmental organisations

We regularly engage with civil society groups and NGOs that have a particular focus on transparency and advancing disclosure. In addition to working with these organisations to understand better the developments in the transparency space, we welcome feedback from these organisations on our Payments to Governments Report.

2023 Glencore Payments to Governments Report

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Introduction	Our contribution	Additional information
How we contribute	Our payments to governments	Extractive Industries
		Transparency Initiative

Our contribution

Mining activities can make a significant contribution to national, regional and local economies, through the provision of employment and training, tax, royalty and levy payments, local procurement, social development and environmental stewardship. Our aim is to minimise negative impacts from our activities and to build partnerships to support sustainable development and growth.

How we contribute

We pay all relevant taxes, royalties and levies required by local and national regulation in our host countries. The payments we make to the governments of the countries in which we operate include local, national,

Payments to governments, calculated in line with the UK Transparency Requirements

US$ billion

			9.4	9.6
4.0		3.9
	2.1
2019	2020	2021	2022	2023

Payments to governments and tax transparency

We pay all relevant taxes, royalties and other levies in amounts determined by the legislation of relevant national, regional or local governments. We welcome transparency in the redistribution and reinvestment of these payments. In 2023, our payments to governments totalled

$12.7 billionΔ, reflecting the taxes, royalties and other levies we pay in the relevant countries for our marketing and industrial activities.

sales and employment taxes, government royalties and licence and permitting fees.

In addition, we contribute to local economies through our use of local suppliers, payment of wages and provision of employee benefits, and voluntary support of socio-economic initiatives such as health and education projects and infrastructure improvements.

Local contribution

We promote employing people from the regions close to our industrial assets. We support families' livelihoods via direct employment at our assets and indirectly via the engagement of contractors and our use of local suppliers. We use local suppliers when appropriate, to provide our host countries with employment opportunities that support economic wellbeing and diversification.

Societal contribution

Our social investment programmes are intended to help reduce dependency on our industrial assets, encourage self-reliance and contribute to sustainable regional growth. In remote and underdeveloped areas, we install infrastructure, such as roads, water, sanitation and electricity, which is often shared as appropriate with local communities.

2023 Glencore Payments to Governments Report

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