Friday, February 17, 2012

"Glencore: A Finger in Every Pie"

From Africa Report:

Secretive mining giant Glencore expands its activities across the continent after listing in the UK.
Flush with cash from listing on the London Stock Exchange in May 2011, Swiss commodities trader and mining giant Glencore has been on a buying spree in Africa and around the world.

Despite its listing in London, Glencore has not shaken off its old secretive ways and declined to talk to The Africa Report on the record.

Nonetheless, a source close to the company says, "The current environment is throwing up huge opportunities. Thanks to the listing, Glencore has the financial firepower to act.
And there are a lot of distressed assets out there going for good prices." In late September, Glencore snapped up the Sable copper and cobalt processing facility in Kabwe, Zambia, from South Africa's Metorex for $24.5m.

Earlier in the month, a consortium consisting of Glencore and South African politician-turned-tycoon Cyril Ramaphosa's Lexshell 849 Investments proposed a cash offer for Johannesburg Stock Exchange- listed Optimum Coal that valued the company at R8.5bn ($1.1bn).
A few days after Glencore made the offer, two subsidiaries purchased Optimum shares, making an eventual takeover more likely. Glencore is best known as a commodity trader, yet its strategy of buying up mining assets dates back to the 1980s.

As one source close to the company puts it, "Because of Glencore's trading operations, it sees opportunities that others just aren't aware of. And it takes those opportunities, because mining assets not only assure the commodity-trading side of the business of supply, but also give Glencore exposure to commodity prices."

According to Gregory Lotis of Johannesburg-based commodity trader Metmar, it has become increasingly important for traders to have their own guaranteed sources of supply, since it is harder than ever to make a profit off arbitrage and trading alone....MORE