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London – Ivan Glasenberg, a former coal trader who became Glencore’s billionaire boss, will step down as the commodity giant navigates through corruption investigations, scrutiny of its environmental goodwill and the price of a share. It has lost half its value over the last decade.
The CEO will resign from his post in the next six months, he told investors on Friday. He will be replaced by fellow South African Gary Nagle, who now oversees the company’s coal assets. Glencore’s London-listed shares rose.
The relentless Glasenberg took over as CEO in 2002 and became synonymous with the world’s largest trader in coal, nickel, oil and agriculture. During its first nine years, the privately held company took advantage of a China-led commodity boom that sent demand for raw materials and their prices to record highs.
That increase encouraged him to take the company public at a £ 36.7 billion listing in London, providing the cash for a dizzying series of deals that reshaped the industry. It bought Xstrata in a $ 90 billion deal, becoming the world’s largest coal hauler in the process. Glasenberg has an estimated net worth of about $ 4.3 billion, according to the Bloomberg Billionaires Index.
“We will miss Ivan,” said Ben Davis, a mining analyst at Liberum Capital in London. “Much more able to speak frankly than most CEOs, and it was always nice to hear him cut through the illogical strategies of his peers.”
Justice department investigation
Glencore’s troubles began in July 2018, when the company announced that it was under investigation by the US Department of Justice for possible money laundering and corruption. Similar investigations followed in Brazil, the United Kingdom and Switzerland, where Glencore is based and Glasenberg lives.
At the center are Glencore’s operations in the Democratic Republic of the Congo and its deals with Israeli billionaire Dan Gertler, who was sanctioned by US authorities for alleged corruption.
The investigations took investors’ faith in Glencore. The company subsequently lost more than half its value, prompting the first serious questions as to whether Glasenberg was the right person to right the ship. Those doubts were exacerbated as more institutional investors became embittered by the company’s gigantic thermal coal operations due to its greenhouse gas emissions.
To help allay those concerns, Glencore said on Friday it aims to be a net zero emissions company by 2050. That means the company will be largely carbon-free by then as the life of its current mines is exhausted, even as name. a veteran of the coal business to be the new CEO.
Raised in johannesburg
Glasenberg was born in 1957 and grew up near Johannesburg, the son of a Lithuanian immigrant who imported and distributed luggage. He was a high school athlete and became a national marching champion. He graduated from Wits University in 1981 with a degree in accounting and earned his MBA two years later from the University of Southern California.
He learned commodity trading at Marc Rich, the eponymous firm founded in 1974 by the man famous for inventing the spot oil market. Rich later spent 17 years evading American justice after making oil deals with Iran during the hostage crisis of 1979-1981. He was pardoned by President Bill Clinton in 2001.
Glasenberg was part of a 1994 buyout by Rich’s management that caused the company to change its name to Glencore. Working under then-CEO Willy Strothotte, Glasenberg was instrumental in a strategy to buy the mines, smelters and refineries that produced the commodities it traded, helping to separate the company from its main rivals.
Glasenberg succeeded Strothotte in 2002, just as China was embarking on a decade of economic expansion and infrastructure development that would make it Glencore’s largest user of metals and Glencore’s largest customer. The company’s global commodity trading made its owners, including Glasenberg, rich, but the 2008 global financial crisis forced a change. Glencore’s reliance on bank leverage rather than shareholder capital left it exposed, while the company grew too large to be able to pay its owners when they wanted to leave.
That helped propel Glencore to go public in 2011 just as commodity prices hit record highs. The promise of its black box trading operation, which sets it apart from pure mining competitors, attracted investors to pay 530 pence per share.
Empire building
Over the next four years, the company went from revolutionizing the world of commodity trading to taking on the world’s largest miners. Glasenberg implemented an empire building strategy that picked up mines around the world. The Xstrata deal, a search for Rio Tinto Group and speculation by analysts about a possible offering for Anglo American Plc created an industry frenzy.
The Xstrata acquisition made Glencore the largest coal hauler, while highlighting Glasenberg’s ruthless side. Mining magnate Mick Davis, who had turned Xstrata from a debt-laden miner into a $ 50 billion powerhouse, was about to become CEO of the combined company, but shareholders rebelled over the payments he was going to make. to receive.
He was expelled and Glasenberg assumed the main position. Davis has called that situation his professional low point.
Glasenberg sought more deals, spending billions of dollars on zinc mines in South America, soy silos in Argentina and gas stations in South Africa.
Iron ore lady
In 2014, Bloomberg News reported on Glencore’s tentative approaches to Rio Tinto, the second-largest miner, before talks progressed. Rio nullified the possibility and Glasenberg lost the opportunity to absorb his massive tonnes of iron ore, the world’s most traded mined commodity, in Glencore’s legendary marketing business.
The loss of iron ore has hurt Glencore for years, and the company now dwarfs Rio in value. That drop in Glencore’s value, especially compared to its rivals, prompted Glasenberg to say Friday that it will play no role. in the mining industry after retirement. Still, the company dominates the commodity supply chain as the largest trader in cobalt, nickel and coal, and the second largest in copper.
Glasenberg’s chief lieutenants, who became billionaires when the company went public, have been gone for the past two years. The exodus included former copper trading chief Telis Mistakidis, oil chief Alex Beard and Daniel MatThis, who ran his zinc business.
Although Glasenberg is retiring, Glencore will remain under his influence in many ways. It has a 9.1% stake in the company, which makes it its second largest shareholder.
“I have no intention of selling my shares and I have full confidence in Gary to take care of my investment,” he said in an interview minutes after announcing that he would step down.
Bloomberg
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