| Type | Public limited company |
|---|---|
| Traded as | LSE: GLEN, SEHK: 0805 |
| Industry | Raw materials / Merchant |
| Founded | 1974 |
| Headquarters | Baar, Switzerland (Head office) Saint Helier, Jersey (Registered office) |
| Key people | Ivan Glasenberg (CEO) Simon Murray (Chairman) |
| Revenue | US $ 144.9 billion (2010)[1] |
| Operating income | US $ 5.290 billion (2010)[1] |
| Net income | US $ 3.799 billion (2010)[1] |
| Employees | 2,000 in marketing, 50,000 in industrial production through subsidiaries (2006) |
| Website | www.glencore.com |
Glencore International plc (LSE: GLEN, SEHK: 0805) is a multinational mining and commodities trading company headquartered in Baar, Switzerland and with its registered office in Saint Helier, Jersey. It is the world's largest commodities trading company, with a 2010 global market share of 60 percent in the internationally tradeable zinc market, 50 percent in the internationally tradeable copper market, 9 percent in the internationally tradeable grain market and 3 percent in the internationally tradeable oil market.[2][3][4]
Glencore has production facilities around the world and supplies metals, minerals, crude oil, oil products, coal, natural gas and agricultural products to international customers in the automotive, power generation, steel production and food processing industries.[3] The company was formed in 1974 by a management buyout of Marc Rich & Co AG.[3]
Glencore listed on the London Stock Exchange in May 2011 and is a constituent of the FTSE 100 Index.[5][6] It has a secondary listing on the Hong Kong Stock Exchange.[7]
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According to an Australian Public Radio report, "Glencore's history reads like a spy novel".[8] The company was founded as Marc Rich & Co. AG in 1974 by now-billionaire commodity trader Marc Rich, who was charged with tax evasion and illegal business dealings with Iran in the U.S., but pardoned by President Bill Clinton in 2001.[9] He was never brought before U.S. justice before his pardoning, therefore there was never a verdict on these charges.
In 1993 commodity trading and marketing company Trafigura was "split off from" Marc Rich's group of companies.[10] As physical commodities traders, along with Trafigura, Glencore's main rivals in 2011 were identified as Vitol and Cargill,[11] amongst a number of others.[12]
In 1993 and 1994, after failing to control the zinc market, losing $172 million and nearly bankrupting the company, Rich was forced[13][11] to sell his majority share in Marc Rich & Co. AG back to the company.[14] The enterprise, renamed Glencore, is now owned and run by Marc Rich's secretive inner-circle of "lieutenants", including founding Glencore CEO Willy Strothotte and present CEO Ivan Glasenberg.
In 2005, proceeds from an oil sale to Glencore were seized as fraudulent, in an investigation into corruption in the Republic of Congo.[15]
In a 2011 survey of Glencore, Reuters reviewed an example of its opportunistic, contrarian, well-funded investment approach -- focusing on equity participation, controlling interest, and working upstream from trading relationships:
The acquisition was the culmination of 18 months of deal-making in Congo... [including fighting off a counterbid by] former England cricketer Phil Edmonds.... [Starting i]n June 2007, Glencore and partner Dan Gertler, an Israeli mining magnate, paid 300 million pounds for a quarter-stake in mining company Nikanor, which was seeking to revive derelict copper mines next to Katanga Mining's properties. That deal gave Glencore exclusive rights to sell all Nikanor's output -- an "offtake" agreement.... [Then, o]n Christmas Eve 2008, ... [having] lost 97 percent of its market value over the previous six months ... in the depths of the global financial crisis and ... running out of cash, Katanga accepted a lifeline it could not refuse. [Glencore] wanted control. For about $500 million in a convertible loan and rights issue, Katanga agreed to issue more than a billion new shares and hand what would become a stake of 74 percent to Glencore. ... [By early 2011], with copper prices regularly setting records above $10,000 a ton, Katanga's stock market value [had reached] nearly $3.2 billion.... [Since the Glencore acquisition], Katanga ... is reaping the benefit of the surging markets and its wealthy, powerful owner. After losing $108 million in 2009, it posted an annual profit of $265 million in 2010.[11]
In the course of the Congo events, Nikanor was merged into Katanga in late 2007 in a transaction valued at $3.3Bn.[16]
In May 2009, Glencore announced it would manage Brazilian bankrupted agricultural products company Agrenco.[17]
In early 2011, the Reuters report included speculation that, after an IPO, Glencore could develop an interest in London/Kazakh Eurasian Natural Resources Corporation.[11] In May 2011 the Company launched an Initial Public Offering valuing the business at $61 billion[18] and creating five new billionaires.[19] Trading was limited to institutional investors for the first week and private investors were only allowed to buy the shares from 24 May 2011.[20]
As of 2006 (updated 2011), assets fully or partly controlled by Glencore included:[21]
| Area | Facility | Product | Location | Employees ('06) | Glencore ownership ('11) |
|---|---|---|---|---|---|
| North America | Evergreen Aluminum | Aluminium | Washington, USA | 10 (plant idle) | No interest indicated |
| Columbia Falls Aluminum Co. | Montana, USA | 145 | No interest indicated | ||
| Century Aluminum Company | HQ: Monterey, USA | 44% economic interest (39% voting) | |||
| Windalco | Jamaica | 1,200 | No interest indicated | ||
| Alpart | 1,300 | No interest indicated | |||
| Sherwin Alumina | Texas, USA | 550 ('11) | 100% | ||
| South America | Prodeco | Coal | Santa Marta (port) and Calenturitas (mine), Colombia | 256 | 100% 1 |
| Carbones de La Jagua (formerly Caribe) | La Jagua, Colombia | 350 | No interest indicated | ||
| Los Quenuales | Zinc, lead | Yauliyacu, Peru | 1,998 | 97% | |
| Iscaycruz, Peru | 1,271 | 97% | |||
| Perubar | Rosaura, Peru | 444 | No interest indicated | ||
| Sinchi Wayra | Zinc, lead, tin | 5 mines, Oruro and Potosi regions, Bolivia | 3,427 | 100% | |
| Aguilar mine/AR Zinc Group | Zinc, lead, sulphuric acid | North west of Argentina | 1,725 | 100% | |
| Moreno | Sunflower oil and meal | Crushing plants: Necochea, Daireaux, Villegas and Grainer; Argentina | 575 | 100% | |
| Europe | Portovesme | Zinc, lead | Sardinia, Italy | 773 | 100% |
| Eurallumina | Aluminium | 575 | No interest indicated | ||
| Kubikenborg Aluminium AB (Kubal) | Sundsvall, Sweden | 470 | No interest indicated | ||
| Aughinish Alumina | Alumina | Ireland | 472 | No interest indicated | |
| Africa | Mopani Copper Mine | Copper | Zambia | 8,848 | 73% |
| Katanga Mining | Copper, Cobalt | Democratic Republic of the Congo | 6,400 ('11) | 74.4% | |
| Mutanda Mine | Copper, Cobalt | Democratic Republic of the Congo | 930 (2010) | 40% | |
| Shanduka | Coal | South Africa | 1,500 ('11) | 70% | |
| Eurasia | OAO Russneft | Oil | Oil fields across Russia | 10,000 | 40-49% in joint interests w/OAO |
| Rostov on Don grain export elevator and wheat flour mill | Cereals | Rostov on Don, Russia | 470 | No interest indicated | |
| Kazzinc | Zinc | Kazakhstan | 21,000 | 50.7% | |
| Asia | PASAR | Copper | The Philippines | 1,047 | 78% |
| Australia | Murrin Murrin Joint Venture | Nickel, cobalt | Western Australia | 671 | 82.3% (effective) |
| Cobar Copper Mine | Copper | Cobar, Central Western NSW, Australia | 267 | 100% |
1 The Prodeco stake has been sold to XStrata as part of XStrata's 2009 rights issue. Glencore retains a 100% re-purchase option, it is expected to exercise this option in 2010;[22] 100%-owned by Glencore, per link in chart, April, 2011.
| Name | Activity | Location | Glencore ownership | Notes |
|---|---|---|---|---|
| Xstrata plc | Mining | HQ: Zug, Switzerland | ca. 14%, controlling 40%[23] 34.5% | See also text above. |
| Minara Resources Ltd | HQ: Perth, Australia | 70.5% | Operates the Murrin Murrin project. | |
| Cerrejón | Coal mining | Guajira department, Colombia | 33.3% up until Q2/2006 | BHP Billiton plc, Anglo American plc and Xstrata plc each own 33.3%. In 2006, Xstrata acquired Glencore's share.[24] See also text above. |
| Rusal | Aluminium, alumina | Russia | 8.8% | Announced merger / joint venture with RUSAL (66%) and SUAL Group (22%). World's largest aluminum and alumina producer with 110,000 employees in 17 countries.[25] |
| Katanga Mining Limited | Copper and cobalt | Democratic Republic of Congo | 74.4% | See also text above. |
| Chemoil | Marine fuels and clean fuels | Worldwide | 51.5% |
Five NGOs have filed a complaint to the OECD against a subsidiary of Glencore over allegations that a mine it owns in Zambia may not be paying enough tax on its profits. The cause for the complaint lies in the financial and accounting manipulations performed by the two companies’ subsidiary, Mopani Copper Mines Plc (MCM), in order to evade taxation in Zambia. [26] [27]
ABC Radio reported that Glencore "has been accused of illegal dealings with rogue states: apartheid South Africa, USSR, Iran, and Iraq under Saddam Hussein", and has a "history of busting UN embargoes to profit from corrupt or despotic regimes".[8] Specifically, Glencore was reported to have been named by the CIA to have paid $3,222,780 in illegal kickbacks to obtain oil in the course of the UN oil-for-food programme for Iraq. The company denied these charges, according to the CIA report quoted by ABC.[23][8]
Moreover, Swiss public television (TSR) reported in 2006 that allegations of corruption and severe human rights violations were being raised against Glencore on account of the alleged conduct of its Colombian Cerrejón mining subsidiary. Local union president Francisco Ramirez was reported to have accused Cerrejón of forced expropriations and evacuations of entire villages in order to enable mine expansion, in complicity with Colombian authorities. According to TSR, a representative of the local Wayuu Indians also accused Colombian paramilitary and military units, including those charged with Cerrejón mining security, of forcibly driving the Wayuu off their land, in what she described as a "massacre".[28]
Glencore/Xtrata's "huge coal operation in Colombia, Prodeco, was fined a total of nearly $700,000 in 2009 for several environmental violations [running in earlier years], including waste disposal without a permit and producing coal without an environmental management plan."[11]
Through its Bolivian subsidiary, Sinchi Wayra (which it acquired in 2005), Glencore operates six businesses in Bolivia that mine and process tin, silver, gold and zinc.;[29][30] notable among these has been Empresa Metalurgica Vinto, reportedly the world's largest privately-run smelter complex, located in the department of Oruro, which was seized and nationalized by Bolivian President Evo Morales on February 9, 2007. At the time of the seizure there were no plans to compensate Glencore.[31]
"In Ecuador, the current government has tried to reduce the role played by middle men such as Glencore with state oil company Petroecuador" due to questions about transparency and follow-through, according to Fernando Villavicencio, a Quito-based oil sector analyst.[11]
"[O]fficials in Zambia believe pollution from Glencore's Mopani mines is causing acid rain and health problems in an area where 5 million people live."[11]
Glencore is also noted for its association with the publicly traded Xstrata mining group, also headquartered in the low-tax[11] Canton of Zug, Switzerland. Glencore is reported to serve as a marketing partner for Xstrata.[23][32] As of 2006, Glencore leaders Willy Strothotte and Ivan Glasenberg are on the board of Xstrata, which Strothotte chairs.[33] According to The Sunday Times in 2005, Glencore controlled 40% of Xstrata stock and has appointed the Xstrata CEO, Mick Davis.[23][34] In 2011, Reuters put the ownership stake at 34.4%, and said that the Glencore IPO would facilitate a full merger between the two companies. Alternatively, if a merger were not consummated, "a messy competitive battle" between the affiliated companies could ensue, the report speculated.[11] Relationships also exist with Century Aluminum Co. (CENX; 44% economic ownership interest)[35]) in the U.S.; Glencore partial subsidiary Minara Resources Ltd (AU:MRE), a 70.5% stake in one of Australia’s top three nickel producers[35]);[36]; and 8.8% in United Company Rusal (HK:486), the Russian aluminum giant that went public in 2010.[35]
In mid-2011, Century was called "[o]ne of the most harrowing stocks of the past few years" but identified as a risky but potentially profitable investment going forward.[37]
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