[Marxism] A Giant Among Giants

Louis Proyect lnp3 at panix.com
Tue May 13 09:01:49 MDT 2014

A Giant Among Giants

Glencore -- founded by famous fugitive Marc Rich -- has cornered the 
market on just about everything. Now that it's going public, will its 
ties to dictators and spies stand up to scrutiny?

     BY Ken Silverstein
     APRIL 23, 2012

When Glencore, the world's biggest commodities brokerage firm, went 
public in May 2011, the initial public offering (IPO) on the London and 
Hong Kong stock exchanges made headlines for weeks in the Financial 
Times and the trade-industry press, which devoted endless columns to the 
company's astonishing valuation of nearly $60 billion -- higher than 
Boeing or Ford Motor Co. The massive new wealth turned nearly 500 
employees into overnight multimillionaires and made billionaires of at 
least five senior executives, including CEO Ivan Glasenberg. "We are not 
going to change the way we operate," vowed Glasenberg, who had started 
as a lowly coal trader for the Swiss firm nearly three decades earlier 
and, with the IPO, immediately became one of Europe's richest men. 
"Being public will have absolutely no effect on the business."

And what a business it is. The firm was forced to pull back the curtain 
on its famously secretive doings to go public, and what it revealed 
shocked even seasoned commodities traders. Glencore, which Reuters once 
called "the biggest company you never heard of," turned out to be far 
more globally dominant than analysts had realized. According to its 
1,637-page IPO prospectus, the company controlled more than half the 
international tradable market in zinc and copper and about a third of 
the world's seaborne coal; was one of the world's largest grain 
exporters, with about 9 percent of the global market; and handled 3 
percent of daily global oil consumption for customers ranging from 
state-owned energy companies in Brazil and India to American 
multinationals like ExxonMobil and Chevron. All of which, the prospectus 
said, helped the firm post revenues of $186 billion in 2011 and employ 
some 55,000 people in at least 40 countries, generating an average 
return on equity of 38 percent, about three times higher than that of 
the gold-standard investment bank Goldman Sachs in 2010. Since then, the 
company has only gotten vaster in scale. It recently announced a $90 
billion takeover of Xstrata, a global mining giant in which it already 
holds a 34 percent stake; if the deal goes through, Glencore will rule 
over an "empire stretching from the Sahara to South Africa," as the 
Africa Confidential newsletter put it. As it is, Glencore already 
trades, manufactures, refines, ships, or stores at least 90 commodities 
in some three dozen countries. "Glencore is at the center of the raw 
material world," said Peter Brandt, a longtime commodities trader. 
"Within this world there are giants, and Glencore is becoming a giant 
among giants."

What the IPO filing did not make clear was just how Glencore, founded 
four decades ago by Marc Rich, a defiant friend of dictators and spies 
who later became one of the world's richest fugitives, achieved this 
kind of global dominance. The answer -- pieced together for this article 
over a year of reporting that included numerous interviews with past and 
current Glencore employees and a review of leaked corporate records, 
dossiers prepared by private investigative firms, court documents, and 
various international investigations -- is at once simpler and far more 
complicated than it appears. Like all traders, Glencore makes its money 
at the margins, but Glencore, even more so than its competitors, profits 
by working in the globe's most marginal business regions and often, 
investigators have found, at the margins of what is legal.

full: http://www.foreignpolicy.com/articles/2012/04/23/a_giant_among_giants

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