Glencore International trades in the stuff of which stuff is made. The company is a commodities trader (metals and minerals, agricultural products, and energy) and a diversified natural resources conglomerate with interests in companies involved in mining, smelting, and refining. In the energy sector, it markets such products as coal, crude oil, jet fuel, and gasoline. Glencore's holdings include a 34% share in Xstrata, a 44% interest in Century Aluminum, three-quarters ownership of Australian nickel miner Minara Resources, and a 32% share in French base metals refiner Recylex. Glencore became public in an IPO of about 20% of its shares in 2011. In 2012 it made an offer for the remaining shares of Xstrata.
In one of its largest takeover bids to date, the company offered $41 billion for the remaining stake in Xstrata. If the deal is successful, the company would be renamed Glencore Xstrata and become the world's fourth-largest diversified miner. However, the companies need to garner the support of at least 75% of their individual shareholders to complete the acquisition. The merger must also gain regulatory approval in various regions by such groups as the European Union, China, and the US. Glencore expects the merger to lead to annual savings of about $500 million.
Also in 2012, Glencore made a bid to acquire Canada's largest grain company, Viterra, for $6.2 billion. The purchase would give Glencore entry into North American grain markets, and Canada ranks as the world's third-largest wheat exporter. It is also the top exporter of durum wheat, which is used in making pasta. Glencore already had agricultural operations in Europe, Russia, and Australia. To get the deal greenlighted by Canadian authorities, Glencore agreed to sell some of Viterra's assets to a couple of Canadian companies. Fertilizer producer Agrium has agreed to pay $1.8 billion for about 90% of Viterra's retail stores. And Richardson International, a top grain handler, has agreed to buy Viterra's 19 grain elevators, some port-terminal assets, and North America's largest oat-processing business for about $806 million.
The proposed acquisitions are the latest in Glencore's long-term strategy to move beyond trading. Although extremely active in mergers and acquisitions, the company tends to hold onto investments for the long term rather than looking for short-term gains.
Its investments proved profitable in 2010. Higher commodity prices drove up revenues that year for Glencore, which racked up nearly $145 billion in sales -- a 36% spike over $106.4 billion in 2009. Jumps in the average prices of nickel, copper, thermal coal, aluminum, zinc, and crude oil contributed to the overall increase in revenues. Higher oil prices were the most significant driver of the total revenue increase that year. Its net income also increased from $2.7 billion in 2009 to nearly $3.8 billion in 2010.
In addition to diversifying its operations, the company has been expanding globally. Glencore entered a joint venture in 2011 with the newly formed government of South Sudan to develop the fledgling country's national oil company and market its oil. South Sudan became Africa's newest country when it split away from the north in July 2011 after years of civil war. The new country's economy is almost totally dependent on oil and could produce as much as 350,000 barrels per day, based on previous production figures.
The company also made a cash takeover bid in 2011 for all the shares in Australian nickel producer Minara Resources it didn't already own. Glencore owns more than 70% of Minara Resources, one of the world's top nickel producers. The company's buying spree has also included an increased stake in Canadian company PolyMet Mining and a 70% stake in a copper project in Peru.
In 2011 Glencore also set its sights on Optimum Coal; the company is steadily increasing its stake in the South African coal producer and currently owns more than 25%.
Founded in 1974 and owned by its employees, Glencore has offices in more than 40 countries worldwide.
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