1 October 2012
It looks as though the on-off merger between Glencore and its already partly-owned associate Xstrata will go ahead after all, with Xstrata’s board recommending shareholders to vote in favour of the deal. This after Tony Blair earned a reported $1 million for saving the deal in a three hour meeting in Claridge’s hotel.
Jon Snow has already noted that the result may be too big and too global to regulate. The Guardian yesterday reported on Glencore’s underhand tax practices (http://www.guardian.co.uk/business/2012/sep/30/glencore-insurance-tax-bill).
But there is a lot more to be said.
As London Mining Network pointed out in our February 2012 report, UK-listed mining companies and the case for stricter regulation (https://londonminingnetwork.org/docs/lmn-the-case-for-stricter-oversight.pdf), even London’s conservative Times newspaper took a dim view of Glencore when it floated on the London Stock Exchange. Business editor Ian King damned Glencore as ‘a business with dubious morals. It trades grain amid food riots and has been accused of profiteering and environmental offences in numerous poor and war-torn countries.’ He noted that few traditional City of London institutions would purchase the company’s shares.
Glencore’s Colombian subsidiary, Prodeco, is associated with paramilitary land-grabbing and military repression of protest. In Bolivia, Glencore has polluted rivers. Its 44% owned Century Aluminum associate in the USA has been pursued for environmental pollution. Glencore’s mining and smelting operations in Zambia have been criticised for illegal toxic pollution of air and water which has resulted in the hospitalisation of numerous local people, while the company has done its best to avoid paying taxes. In the Democratic Republic of Congo, it has not only been avoiding taxes and causing pollution, but destroying agricultural livelihoods and using child labour. The company shows little more respect for its workers than it does the communities whose lands and livelihoods it destroys. In Peru it is accused of anti-union aggression. Its safety record is appalling – while BHP Billiton, the world’s biggest mining company, reported 0.2 deaths per 10,000 workers in its 2011 reporting year, and Xstrata reported 0.8, Glencore reported three deaths per 10,000, fifteen times that of BHP.
Glencore does an effective job of giving the impression that its sole interest is the rapacious pursuit of profit and that every ethical consideration is to be ruthlessly shoved out of the way to maximise financial gain.
But Xstrata’s record is nothing to be proud of either. At the Cerrejon coal mine in Colombia it has benefitted from unjust removals of agricultural communities to make way for mine expansion. At Tintaya in Peru it is embroiled in violent conflict with the local community over pollution from its copper mine. Protests have led to killings and illegal detention of mining opponents. Xstrata is also a major shareholder in Peru’s Antamina copper-zinc-molybdenum mine, which has recently come under fire for pollution and has long been criticised for ignoring poor worker health. In Argentina Xstrata faces strong criticism over the environmental impacts of its operations on glaciers. In the Philippines it continues to develop the Tampakan copper mine despite massive local opposition, a lack of legal consent to proceed and the suspension of its government clearance to operate. Now the Xstrata subsidiary running the mine has teamed up with the UK’s notorious G4S to provide ‘security’ in an area of conflict. Xstrata is also a major shareholder in Lonmin, which has recently hit the headlines for the killing of striking workers at its Marikana platinum mine in South Africa.
Then there are the climate impacts of both companies’ massive investment in coal.
Glencore and Xstrata are each already huge companies in their own right. Together, they will combine metals production and metals trading, exerting control all along the mining value chain (particularly in the production and trading of thermal coal). At a time when there are concerns that banks have become too big to fail, mergers within the mining industry are creating beasts of companies who have enough market muscle to exert monopolistic tendencies. In May this year, Glencore’s Chief Executive Ivan Glasenberg talked about how the mining industry can counter growing attempts by developing countries to get a better share of mining tax revenue. How much of a better position will the new Glenstrata be in to get its own way?
If Glencore succeeds in swallowing Xstrata our fear is that the combined company’s approach to human rights, community rights, worker rights, Indigenous rights, environmental pollution and taxation will be a combination of the lowest standards applied in each company – a real Frankenstein’s monster of a company, but with a less developed conscience.