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>>>16569271 Glencore & Xstrata Bun Part One
>>>16569275 Glencore & Xstrata Bun Part Two
This article explains how Glencore conducts business, hires employees and it discusses Congo’s Katanga deal to give perspective
“Special report: The biggest company you never heard of”[Glencore] - Willy Strothotte – Part 1
https://www.reuters.com/article/us-glencore-idUSTRE71O1DC20110225
February 25, 2011
Yet within the commodities and mining sectors, Glencore is regarded with a mix of admiration and fear. “It’s an incredibly performance-based culture – investment banking times three, probably,” says a second outsider.
Glencore’s client list is a roster of the world’s largest firms including BP, Total, Exxon Mobil, ConocoPhilips, Chevron, Vale, Rio Tinto, ArcelorMittal and Sony, as well as the national oil companies of Iran, Mexico and Brazil and public utilities in Spain, France, China, Taiwan and Japan.
Physical commodities traders, like Glencore and its main rivals Vitol, Trafigura and Cargill, make their money finding customers for raw materials and selling them at a mark-up, using complex hedges to reduce the risk of bad weather, market swings, piracy or regime change.
Unlike Chicago traders who scream out bets on the future prices of orange juice or pork bellies, physical commodity traders negotiate prices and arrange shipments of cargo quietly, keeping their positions well hidden from others.
“It’s modern financial engineering meshed with an old-fashioned commodity trading house,” said John Kilduff, a partner at the hedge fund Again Capital LLC in New York. “It’s amazing how this formula has flown under the radar for so long, as the profits and growth of these firms has been astounding.”
Glencore’s profit after tax topped $4.75 billion in 2008, not far off its best year ever, 2007, when profit ran to around $5.19 billion. Even in the gruesome market of 2009, it raked in more than $2.72 billion.
Employees are hired young and expected to make a career at the group, where they are known as either “thinkers” bright number-crunchers who design the company’s complex financial deals or “soldiers”, the hard-driven traders who fight to win the transactions.
The company’s 10 division managers are aged 37 to 52 and remain largely anonymous outside Glencore’s business circles. “They’re really bright guys, they are really focused, they play to win every day,” says a mining executive in North America. Or as the second outsider puts it: “They look like kids, really – but they are incredibly impressive individuals.”
THE MARC RICH LEGACY
Glencore likes to promote from within and build a kind of closed, self-sustaining network of senior traders, a culture encouraged by the company’s founder Marc Rich. Not that Glencore likes to mention Rich, a figure so notorious that he’s not even mentioned in the official history on Glencore’s website.
Rich escaped Nazi Europe as a seven year old, and grew up in the United States. He launched the trading group which would become Glencore under his own name in 1974.
Rich was ultimately forced to sell out to his management and hand over control to a former metals trader, the German Willy Strothotte.
The company was reborn under Strothotte as Glencore.
The firm continued to trade, make money – and occasionally become implicated in controversial dealings. It was one of dozens accused of paying kickbacks to Iraq in 2005 by a commission that probed the United Nation’s Oil for Food program. But while Dutch-based rival Vitol was fined $17.5 million after pleading guilty, a preliminary judicial investigation into Glencore by Switzerland’s attorney-general found a “lack of culpable information”. Glencore maintained that if any payments were made by agents it did not know or approve of them.