x

Abu Dhabi, UAEMonday 15 October 2018

A glimpse into the world's largest commodity trader

The company was founded by oil trader Marc Rich, pardoned by former President Bill Clinton

Glencore’s logo. The Swiss-based firm's reach is global. Reuters
Glencore’s logo. The Swiss-based firm's reach is global. Reuters

Glencore is in the world’s top 10 most valuable companies, according to Forbes, with revenue of $205 billion in the last reporting year.

Not bad for a company few people have heard of.

The world’s largest commodity brokerage has a history more colourful than most. It was founded by Marc Rich, billionaire oil trader and for nearly 20 years, a fugitive from US justice.

Placed on the FBI’s "most wanted" list in 1983 for tax evasion, Mr Rich built his company from his new residence in Switzerland. He only returned to the US after former US President Bill Clinton pardoned him during his last hours in office.

In the meantime, Mr Rich built a fortune for himself and the company. He became known as "apartheid’s oilman", helping the white nationalist government in South Africa evade energy sanctions. Shuttling between Pretoria and Tehran, which between them headed two of the most shunned regimes of the 1980s, Mr Rich ensured the oil kept flowing between the two countries for the next two decades.

Mr Rich died in 2013, but two years previously the company had already begun plans for succession. A London listing was drawn up.

Glencore also worked towards a merger with Xstrata, a South African mining company headed by Ivan Glasenberg. Meanwhile, the initial public offering (IPO) in London took place, valuing the company at around $60 billion, the largest listing that London had ever seen.

FILE: Ivan Glasenberg, chief executive officer of Glencore International Plc, pauses during a conference session on day two of the Saint Petersburg International Economic Forum 2012 (SPIEF) in Saint Petersburg, Russia, on Friday, June 22, 2012. Glencore Plc tumbled the most in two years as its African troubles escalated dramatically after U.S. authorities demanded documents relating to possible corruption and money laundering. The world’s biggest commodity trader said Tuesday that it’s been subpoenaed by the U.S. Department of Justice to produce documents with respect to compliance with the Foreign Corrupt Practices Act and United States money laundering statutes. Our editors select archive images from Glencore’s Katanga Mining Ltd. and Mutanda operations in the Democratic Republic of Congo. Photographer: Andrey Rudakov/Bloomberg
Ivan Glasenberg, CEO of Glencore. Bloomberg

Mr Glasenberg as CEO of the newly floated Glencore and one of the largest shareholders became an instant billionaire worth around $10bn, according to Bloomberg.

Under Mr Glasenberg the company broadened its footprint from trading commodities to producing them. It is the largest coal miner in Australia, one of the largest producers of copper and the single biggest cobalt miner.

Cobalt is vital to modern lithium battery technology, used in every day electronics and even electric cars. Copper, too, is a key mineral in electric cars – each battery powered vehicle contains at least 75 kilograms of the metal, compared to 25 kilograms in a conventional car.

_______________

Read more:

Glencore tests US sanctions reach with Gertler deal

Apple to secure cobalt directly from miners to hedge against shortage

_______________

Any car maker that hopes to get in on the electric car revolution will, sooner or later, come into Glencore’s orbit. So too will the manufacturers of smartphones, laptops and other gadgets that are part of modern living.

Unfortunately for Glencore, mining - unlike trading - is location specific. The company has no choice but to deal with some difficult regimes. One of these is the government of Joseph Kabila the president of the Democratic Republic of Congo.

Mr Kabila was expected to leave office when his second term expired in 2016. However, he has hung on in spite of street protests and threats of rebellion in the country’s far flung provinces. Elections will finally be held this December, but it is still unclear whether Mr Kabila will step down or try run for a third term.

Since Glencore depends on the Congo for a quarter of its revenue, its fate is closely tied to that of the country. Investors in the company, from London to Paris to Dubai will need to pay close attention as events in Kinshasa play out.