The Commodities Business

I recommend reading this article in Foreign Policy on Glencore. While it is short on analysis and focuses instead on personalities, it offers a good summary of many practices in the commodities business, from bribery and corruption to gangsterism and sanctions busting. It is notable how having a secure base in the imperial heartlands (US, UK, Switzerland), with ready access to politicians, cash and markets can combine to make these guys billionaires with relative ease.

Glencore’s founder, Marc Rich, was indicted on tax evasion and other charges in the US in 1983, but he had managed to flee to Switzerland shortly before. In 2001, on his last day in office, President Clinton took time out from photo calls to pardon Rich. Former Israeli Prime Minister Ehud Barak was among those lobbying Clinton on Rich’s behalf.

Information from a recent prospectus showed that Glencore ‘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 … It recently announced a $90 billion takeover of Xstrata, a global mining giant [another FTSE100 company] in which it already holds a 34 percent stake … Glencore already trades, manufactures, refines, ships, or stores at least 90 commodities in some three dozen countries’.

Glencore is interesting in that it straddles the industrial, commercial and financial dimensions of monopoly capitalism. As the Foreign Policy report indicates, its profitability has been boosted by its own form of predatory behaviour, using its close links with agents, particularly in Africa and Eastern Europe, who could secure lucrative local deals.

Tony Norfield, 24 April 2012