The Xstrata Glencore Story from History to Controversies

The Xstrata Glencore story is a fascinating tale of growth and controversy. Xstrata was a Swiss-based mining company founded in 1948 by Swiss entrepreneur Joseph Samuelson.

The company's early years were marked by steady growth, with Xstrata expanding its operations in the 1980s and 1990s. By the early 2000s, Xstrata had become one of the largest mining companies in the world.

In 2011, Xstrata merged with Glencore, a Swiss-based commodities trading company, to form a new entity. The merger created one of the largest mining companies in the world, with a presence in over 30 countries.

The combined company was valued at over $90 billion, making it one of the largest companies in the world.

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Xstrata was founded in 1926 in Switzerland as Südelektra, an infrastructure and electricity projects concern operating in Latin America.

In 1990, Marc Rich + Co AG became its majority shareholder, marking a significant shift in the company's ownership.

The company diversified into mining in the 1990s and disposed of its non-core businesses.

Mick Davis was appointed CEO of Xstrata in 2001 and it was first listed on the London Stock Exchange in 2002.

Xstrata acquired Glencore's coal assets in Australia and South Africa in 2002, further expanding its operations.

In 2003, Xstrata doubled in size with the A$2.9 billion takeover of Australian copper, zinc and lead miner MIM Holdings.

The company closed its Windimurra Vanadium plant in Western Australia in 2004, which had the effect of increasing Vanadium prices received for Xstrata's other Vanadium mines around the world.

Xstrata purchased a 19.9% stake in Falconbridge Limited, a diversified Canadian mining company, in August 2005.

The company acquired the remaining 80.1% of Falconbridge in August 2006 after a contested take-over battle with Inco Limited.

Glencore controlled 40% of Xstrata stock in 2001, giving it significant influence over the company's operations.

The Northern Territory and Australian Governments approved the expansion of the McArthur River zinc mine in 2006, despite opposition from local communities.

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Xstrata was acquired by Glencore in 2013, marking the end of an era for the company.

Marc Rich & Co. AG was founded in 1974 by Marc Rich and Pincus Green, and was later sold to Glencore in 1994 after Rich's failed attempt to take control of the zinc market.

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Xstrata, a major player in the mining industry, expanded rapidly after 2000 through a series of large acquisitions. By 2008, it had become one of the world's largest diversified mining groups, with a degree of transnationality of 93.2 percent.

The company had significant operations in eighteen countries, including Australia, Argentina, and the United Kingdom. Xstrata was a major producer of several key minerals, including copper, coking coal, and nickel.

Some of the key countries where Xstrata had major operations include Australia, Argentina, Brazil, and the United Kingdom. China also played a significant role in Xstrata's operations, accounting for up to one-third of its global sales.

Xstrata had a significant presence in the global mining industry, with major operations in many countries around the world.

Bulga Coal was operated by Xstrata, who managed the mine on behalf of Bulga Coal Pty Ltd shareholders since 2001 after purchasing Enex Resources Limited from Glencore International AG.

The Bulga Coal mine site served as the headquarters for Xstrata Coal's NSW division.

The George Fisher mine is a significant operation in the Mount Isa region. In October 2010, a major expansion plan was approved by the government of Queensland. This expansion, valued at A$274 million, marked a significant investment in the mine's infrastructure.

In Colombia, Glencore's Cerrejón mining subsidiary was accused of forced expropriations and evacuations of entire villages to enable mine expansion, in complicity with Colombian authorities.

A local union president, Francisco Ramirez, made these allegations in 2006. He claimed that Cerrejón was working with Colombian authorities to forcibly remove people from their land.

In 2012, a BBC investigation uncovered sale documents showing that Glencore had paid associates of paramilitary killers in Colombia. This suggests a disturbing level of involvement with violent groups.

A Colombian court concluded in 2011 that a massacre had taken place, and that the motive was to sell land to Glencore's subsidiary Prodeco for an open-cast coal mine. Glencore disputed this ruling.

Prodeco, Glencore's Colombian subsidiary, was fined nearly $700,000 in 2009 for several environmental violations, including waste disposal without a permit and producing coal without an environmental management plan.

The Netherlands-based NGO, Pax for Peace, investigated Prodeco's activities in Colombia and found that the company had supported paramilitary forces with finance, equipment, and information.

In 2005, proceeds from an oil sale to Glencore were seized as fraudulent gains as part of an investigation into corruption in the Democratic Republic of Congo.

Glencore's operations in the Congo have been marked by controversy, including a 2007 merger with Nikanor, a transaction valued at US$3.3 billion.

The Democratic Republic of Congo is a significant location for Glencore's operations, with the company's activities in the region dating back to at least 2005.

Glencore's IPO in 2011 valued the business at US$61 billion and created five new billionaires, but the company's activities in the Congo have also raised questions about transparency and follow-through.

Glencore went public in May 2011 with a dual listing in London and Hong Kong, valued at about $US60 billion.

This initial public offering (IPO) was a significant milestone for the company, raising gross proceeds of around $10 billion.

The IPO document was a whopping 1,637 pages long, revealing valuable information about the private company that had remained discreet for thirty-seven years.

Ivan Glasenberg's shareholding was diluted from 18.1% to 15.8% after the IPO, while Daniel Mate and Telis Mistakidis, zinc, copper, and lead co-directors, saw their shareholding diluted from 6.9% to 6%.

Aabar Investments, a United Arab Emirates state-owned company, invested $850 million in Glencore International plc and became the largest cornerstone investor in the IPO, with a 1.4% stake.

Less than two years later, in November 2012, Aabar Investments wrote off over $392 million of its $1 billion investment in Glencore's IPO.

In Peru, corporate power is concentrated among a few large conglomerates. These conglomerates have significant influence over the country's economy and politics.

Some of the most powerful conglomerates in Peru include Grupo Gloria, which has a market share of over 30% in the food and beverage industry. Grupo Gloria's influence extends beyond its business interests, with its owner, Pedro Pablo Kuczynski, serving as the President of Peru from 2016 to 2018.

The company's dominance in the market is due in part to its ability to control key distribution channels and supply chains. This allows Grupo Gloria to maintain a strong competitive advantage over smaller businesses.

Peru's business environment is also characterized by a high level of corruption and cronyism, which can make it difficult for smaller companies to compete. This has led to concerns about the concentration of corporate power and its impact on the country's economy and democracy.

Glencore has faced numerous investigations and controversies over the years. The company has been scrutinized by the Office of the Attorney General of Switzerland and the Dutch Public Prosecution Service.

Glencore's largest competitor, Vitol, has been linked to similar legal challenges in resource-rich countries. This may be connected to the ongoing investigations.

Since 2010, over 70 human rights abuse accusations have been documented against Glencore by the Business & Human Rights Resource Centre.

In 2007, Xstrata Coal bought the Mangoola coal mine in the Hunter Valley from Centennial Coal. This acquisition led to several instances of media scrutiny regarding the company's management of the pre-mining stage of the mining project.

Xstrata Coal faced criticism for its community relations approach, with allegations of misleading actions being cited in local and regional media. The company's actions even led to the establishment of a local action group named WAG (Wybong Action Group) in opposition to the mine.

The controversy surrounding Xstrata Coal's management of the Mangoola coal mine highlights the importance of transparency and community engagement in the mining industry. This experience serves as a reminder that companies must prioritize open communication and respect for local communities to avoid similar issues in the future.

The Paradise Papers revealed that Glencore loaned $45 million to Israeli billionaire Dan Gertler in exchange for his help with officials of the Democratic Republic of Congo in negotiations over a joint venture at the Katanga copper mine.

Glencore had effectively taken over Katanga and agreed to vote for the joint venture, with repayment of the loan dependent on agreement being reached within three months.

Gertler and Glencore have denied any wrongdoing in this deal.

In 2024, Chilean tax authorities initiated the process of recouping more than $1.5 billion in unpaid taxes from Glencore.

The Australian branch of Glencore has been accused of using complex financial instruments, such as cross-currency interest rate swaps, to avoid paying taxes in Australia, with a total of $25 billion in swaps carried out.

Dan Gertler and the Congo is a complex web of controversy that has been unfolding for years.

In 2005, proceeds from an oil sale to Glencore were seized as fraudulent gains as part of an investigation into corruption in the Democratic Republic of Congo. This was a significant development in the story of Dan Gertler's dealings with the country.

In 2007, Nikanor was merged into Katanga in a transaction valued at US$3.3 billion. This move was a key part of Glencore's expansion in the region.

The Paradise Papers revealed that Glencore loaned $45 million to Dan Gertler in exchange for his help with officials of the Democratic Republic of Congo in negotiations over a joint venture with state-owned Gécamines at the Katanga copper mine. This loan was contingent on the agreement being reached within three months.

Glencore effectively took over Katanga, and agreed to vote for the joint venture. The company's major shareholder, Telis Mistakidis, was a board member of Katanga.