All you need to know about Glencore
Glencore is based in Baar, Switzerland.
It has over 50 offices in over 40 countries.
Glencore’s CEO is Ivan Glasenberg who holds joint SA and Israeli citizenship.
It is a producer and marketer of commodities including metals, minerals and agricultural products.
The company employs around 55,000 people in more than 30 countries.
Globally, Glencore is the biggest player in the supply of seaborne steam coal.
As at December 31, 2010, the company’s total assets were put at US$79.8 billion.
Glencore has ratings of BBB- (stable) and Baa2 (negative) at Standard & Poor’s and Moody’s respectively.
One of its main units is Katang Mining, which is listed on the Toronto Stock Exchange and operates a copper-cobalt project in the Democratic Republic of Congo.
Another key unit is Mopani Copper Mine located in Zambia.
May 5, 2011 | Sherilee Lakmidas
South African born Ivan Glasenberg, the CEO of Glencore, is about to become South Africa’s richest man and the second richest in Africa, knocking Nicky Oppenheimer to third place, when the company lists later this month.
The pricing of Glencore’s public offer yesterday implies the commodities trading company would have a market value of $61 billion or R403.8 billion.
This means that Glasenberg’s stake in the company, which is rumoured to be as much as 15%, would be worth $9.5 billion or 62.9 Rbillion at yesterday’s exchange rate.
Should the value of this stake, which is just one of Glasenberg’s assets, be compared to the wealth of the billionaires on the Sunday Times Rich List, which is based on publicly available information and only includes disclosed shareholdings in JSE-listed companies, Glasenberg would be South Africa’s richest man by far.
According to the Sunday Times Rich List 2010, Indian steel magnate Laskhmi Mittal, who bought what is now ArcelorMittal SA in 2001, led the pack for the sixth consecutive year with a fortune of R21.5 billion. This only reflects the value of his holding in ArcelorMittal SA, and not the international ArcelorMittal Group.
In second place, and the richest South African, was mining executive Patrice Motsepe, who is worth R19.9 billion through his stake in African Rainbow Minerals (ARM) and Sanlam. This excludes, however, the value of his other investments.
De Beers chairman Nicky Oppenheimer was ranked third on this year’s Rich List, based on his 2.5% stake in Anglo American, which was founded by his grandfather Ernest in 1917.
The listing of Glencore will also make Glasenberg one of Africa’s richest men. Placed against the net worth of individuals making the Forbes Rich List, Glasenberg would become the fifth South African on its list of 1,250 dollar billionaires.
He would be ranked at 93 along with Malaysian telecoms tycoon Ananda Krishnan and Russian fertilizer baron Dmitry Rybolovlev.
On Forbes list of African billionaires, he would knock Oppenheimer from the second spot to take a place behind Nigerian Aliko Dangote. Dangote has a net worth of $13.8 billion while Oppenheimer and family have a net worth of $7 billion.
Other South Africans on the list include Johann Rupert and family with a net worth of $4.8 billion, Motsepe at $3.3 billion and Christoffel Wiese at $1.6 billion.
When Glencore publishes its full flotation prospectus later on Wednesday, it is also expected to show that another two South Africans have become paper billionaires.
Steven Blumgart, the co-ordinator of Glencore’s alumina and aluminium division, and Stuart Cutler, co-director of ferroalloys, nickel and cobalt, are seen as holding substantial stakes in the company – enough to make them rand billionaires.
Glencore has made its senior management promise not to sell their shares for at least five years after the public offering, which is set to take place later this month.
Glasenberg, in the meantime, has pledged not to sell a single share till he steps down as chief executive. For the 54-year old, who took up the seat of CEO in 2002, the stock market listing converts his stake into currency. Glasenberg who joined Glencore in 1984 has worked for Glencore for 27 years, Glasenberg, initially in the coal department in South Africa and Australia.
A fiercely private man, Glasenberg has been thrust into the limelight by the proposed listing on the London and Hong Kong bourses.
In fact the company’s listing is one of London’s largest ever with Glencore set to be the first company in 25 years and only the third ever to enter the FTSE 100 index on the day of listing. Glencore’s equity makes it slightly bigger than Anglo American and puts it among the world’s top-five commodities groups, which also include BHP Billiton, Rio Tinto and Vale. The listing also puts the publicity-shy company under the spotlight after 54 years as a private company.
Like Goldman Sachs, the company has an aura of misery, perhaps in part due to its beginnings.
Glencore was founded by Marc Rich, an American oil trader accused of breaking sanctions against Iran and later pardoned by US president Bill Clinton. Rich was bought out by Glasenberg and other managers about 17 years ago.
According to Australian daily, The Australian, the other part of the Glencore aura is speculation about how much its top traders are paid – the top traders are believed to earn at least what their counterparts at Goldman earn, if not more.
Last year, Glencore’s directors and top managers split £90 million, the newspaper said.
But as the newspaper pointed out, the traders’ salaries and bonuses will be dwarfed by the float payout. It will give the 485 partners who own Glencore shares on average $103 million each.
Glencore reveals secrets of success in agriculture
Agrimoney.com | 5 May 2011
Choose your battles. Is that the secret of the successful grain merchant?
It would appear so, to judge by Glencore, which for a multi-commodities giant maintains a relatively modest share of the “addressable” global grain trade, at 8.7%, and only 4.5% in oilseeds and oils, despite claiming an enviable record of winning business.
“Glencore estimates that it is awarded at least part of the tender in at least half of the agricultural tenders in which it participates,” the company says in the prospectus to accompany its stockmarket flotation later this month.
And even when it loses, “it is sometimes able to supply part of the tender to the successful applicant”.
Little wonder that the group’s agricultural products segment more than doubled underlying operating profits last year, to $717m, a performance in line with the company average, and making it, unusually, a bigger earner than Glencore’s energy products division, which is nearly nine times the size by revenues.
Growing in cotton
Not that winning tenders is the only trick boasted by the division’s 8,000 staff, with last year’s result also reflecting “tight and dislocated market conditions” – in contrast to a slump in profits in 2009, when low grain price volatility “reduced the number of arbitrage opportunities”.
And Glencore also gained traction in cotton, a market it entered in 2008 when wrong bets on volatile prices price, coupled with tight credit, forced a number of merchants into financial difficulties. America’s fourth-ranked merchant, Paul Reinhart Inc, filed for bankruptcy protection.
“Numerous traditional and single commodity players were exiting the industry. This lack of competition was seen as an opportunity for another major player,” Glencore said, noting that its trading volumes in the fibre reached some 200,000 tonnes last year, from minimal levels in 2009.
This was the reversal of the group’s performance in sugar, in which volumes halved to some 500,000 tonnes – a decline which was left unexplained.
Furthermore, Glencore’s 270,000-hectare farming operations achieved higher production last year despite the poor weather which beset many of the regions in which it operates.
Sure, the group’s Kazakh division suffered amid the drought in the former Soviet Union, seeing production fall by more than 60% to 18.6m tonnes. (It is not clear from the prospectus if farm expansion or sales are also involved in changes in output data.)
And the company was not alone in Australia in reporting a bumper harvest, up by more than one-half at 103,500 tonnes.
But it achieved higher production in both Ukraine, its biggest production operation by crop volume, where the corn harvest soared, and Russia.
Volumes rose 16% in Argentina, where Glencore appears to have near given up on wheat (about which many farmers have gripes over government export restrictions) in favour of corn and, in particular, soybeans. The company’s harvest of the oilseed doubled last year.
The data are among the raft of revelations about what was a famously secretive business, widely touted as “the biggest company you have never heard of”, in the run up to its flotation in London and Hong Kong.
In agriculture, other snippets include an acknowledgment that it is “very active” in trading in sugar on New York’s Ice exchange, besides on markets in China, India and Russia.
Glencore also boasts 4.8m tonnes in elevator and silo capacity and owns 250 rail wagons in the former Soviet Union.
Perhaps the most widely publicised detail has been the revelation that the flotation will value the stake belonging to Glencore chief executive Ivan Glasenburg at $10bn, with four other executives becoming overnight billionaires.
However, it is not all plain sailing, as one unnamed current employee, a former staff member and Glencore Grain Rotterdam have found, who have been charged with corruption “in exchange for information covered by professional secrecy in the course of the applications for European export restitutions”.
The case, involving “violation of professional secrecy, corruption of an international civil servant and criminal conspiracy”, and which has dragged in the European Commission’s agriculture directorate, is a dated one, relating to 1999-2003.
But, with the trial scheduled for this year, that may not prevent the allegations from reaping Glencore unsavoury coverage, now that the media have been alerted.
Will the group regret allowing sunlight in on its operations? That the flotation will create scores of Glencore millionaires, besides the billionaires and give the group a market value of some $60bn suggests otherwise.