Glencore International broken down

Glencore International AG (management buy out of Marc Rich & Co AG) is a Swiss-based company, which is one of the world’s largest suppliers of commodities and raw materials, and is also among the world’s largest privately held companies.
As of 2006, it was Europe’s sixth-largest company in terms of turnover.1 According to The Sunday Times,2 the company had USD 10.9 billion in shareholders’ equity at the end of 2006 and is completely owned by its management.
With production facilities around the world, Glencore 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.
The company has 50,000 employees across the world.

Controversial involvements

According to an Australian Public Radio report, “Glencore’s history reads like a spy novel”.3 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 2001.4 He was never brought before U.S. justice before his pardoning, therefore there was never a verdict on these charges. In 1993 and 1994, Rich sold all of his majority share in Marc Rich & Co. AG back to the company.5 The enterprise, renamed Glencore, is now owned and run by his inner-circle of associates, including former 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.6

Dealings with rogue states

ABC Radio also 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”.3 Specifically, Glencore was reported to have been named by the CIA to have paid USD 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

Investments in Colombia

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”.7

Investments in Bolivia

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.;89 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.10

Association with mining companies

Glencore is also noted for its association with the publicly traded Xstrata mining group, also headquartered in the Canton of Zug, Switzerland. Glencore is reported to serve as a marketing partner for Xstrata.211 As of 2006, Glencore leaders Willy Strothotte and Ivan Glasenberg are on the board of Xstrata, which Strothotte chairs.12 According to The Sunday Times, Glencore controls 40% of Xstrata stock and has appointed the Xstrata CEO, Mick Davis.213 Similar arrangements exist with Century in the U.S. and Glencore partial subsidiary Minara Resources Ltd in Australia.14 In 1993 several managers of Glencore left the company to establish their own trading and marketing company, Trafigura.
In May 2009, Glencore has announced it would manage Brazilian bankrupted agricultural products company Agrenco 15

Corporate assets

As of 2006, assets fully or partly controlled by Glencore include:16

Production facilities

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 2010.17

Other subsidiaries, participations and joint ventures

ca. 14%, controlling 40%2
Operates the Murrin Murrin project.
33.3% up until Q2/2006	BHP Billiton plc, Anglo American plc and Xstrata plc each own 33.3%