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How Glencore has built one of the world’s worst mining reputations

Bullying happens in life, whether we like it or not. In the business world it happens a lot too.

Mark Zuckerberg unfairly diluted Eduardo Saverin’s Facebook shares in “The Social Network” (and in real life), though Saverin is believed to settled for a pretty hefty sum.

Or how about how Apple charges app developers a 30% commission fee in it’s app store.

In the mining world, it’s no different - but one major company stands out from the rest.

This is the story of selling Iranian oil to Israel, bribery, tax-evasion and one of the largest mining companies in the world today, behind it all.

What is a mining bully?

Controlling a large part of the worlds production of valuable commodities like Copper, Gold & Lithium comes with a lot of responsibility, and there’s bound to be a few bad actors.

With a market cap of over $50 billion, Glencore is no stranger to controversy.

Who is Glencore?

Glencore PLC (LON: GLEN) is one of the largest mining companies in the world, amongst other giants like BHP, Rio Tinto and Vale.

The company is based in Switzerland, though they have offices and projects around the world .

Their focus is on valuable and crucial commodities like copper, zinc, nickel - selling over 3.6 million tons of Copper in 2022.

Glencore History

Here's how Glencore used acquisitions to grow so big:

• Copper: It all began with Noranda creating the Horne Smelter in 1927. The Horne Smelter recycles 50,000 tonnes of electronic waste yearly from Canada and the U.S. to reuse copper and other metals.

• Nickel Moves: In 1928, Falconbridge started focusing on nickel. Fast forward, and Glencore is now in charge of their Sudbury INO and Raglan Mine. These are big names in the nickel world.

• Zinc and Lead: Noranda also got into zinc and lead in the 1960s. They set up CEZinc, a really big zinc refinery. Today, it's under Glencore's wing.

One of Glencore's biggest steps though wasn’t until 2013, when they merged with Xstrata.

Xstrata was known for it’s huge global presence in coal, copper, nickel, and zinc production.

Following one of the industries largest ever mergers, Glencore flourished.

Where did it go wrong?

It started early.

In the 1980s, Marc Rich (founder) was indicted in the United States on charges of tax evasion, wire fraud, and illegal dealings with Iran during the Iran hostage crisis.

It was alleged that his company illegally bought oil from Iran and sold it to Israel, avoiding U.S. sanctions against Iran that were in place at the time.

This event was particularly significant because it led to Marc Rich fleeing to Switzerland and living there as a fugitive.

He was pardoned by U.S. President Bill Clinton in 2001, but the episode cast a shadow over the company's reputation - and they’ve been under watch since.

Bribery

You can’t talk about the ongoing mining problems in Africa (particularly the Democratic Republic of Congo (DRC)) without mentioning Glencore.

From 2007 to 2018, Glencore paid bribes to officials in the DRC to secure better terms for copper and cobalt mining projects.

The company admitted to the U.S. Department of Justice in 2021 that its employees and agents paid more than $100 million in bribes to African officials over that time.

This resulted in $180 million in fines and penalties to Glencore, marking one of the most significant legal actions against the company.

Environmental issues

In 2018, Glencore's mining operations in Peru, run by its subsidiary Antapaccay, faced protests from local communities in Espinar over concerns of water pollution.

Reports & studies suggested that the mining activities were contaminating water with harmful substances like arsenic, mercury, and lead, leading to health and environmental issues.

Yes, Glencore said they would do better - but only because they got caught.

Where does Glencore stand?

Glencore is at an important point in their history They’ve said are trying to do business more responsibly and carefully - but no one believes them.

They’re going to keep making moves, as seen by their latest $6.3 billion acquisition of Teck Resources steelmaking coal business in 2023.

The company is still one of the largest miners in the world and that wont change anytime soon, but when the world talks about the issues of mining, Glencore is at the forefront.

Do you really want to invest in that? Maybe you do - but you might want to keep it a secret.

👋 Colton, Stock Monster.

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