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Glencore and Xstrata announce $90bn merger deal

Richard — Tue, 07 Feb 2012 10:26:51 +0000

Mining firm Xstrata has formally announced plans to merge with Glencore, the world’s biggest commodity trader. The deal would value the combined new business at $90bn (£56bn), of which Xstrata would comprise $39bn.

The announcement came as Xstrata revealed a 20% increase in profits for 2011, to $5.9bn (£3.8bn).

See http://www.bbc.co.uk/news/business-16907816.

There are significant concerns about both companies’ records on human rights, labour rights and the environment. See articles listed at http://londonminingnetwork.org/tag/xstrata/, http://londonminingnetwork.org/?s=glencore, http://www.minesandcommunities.org/list.php?r=851 and http://www.minesandcommunities.org/list.php?r=333.

See also: How £50m in UN food aid for starving went to buy wheat from Glencore, http://www.guardian.co.uk/business/2012/feb/06/un-food-aid-glencore-xstrata?INTCMP=ILCNETTXT3487.

The market likes the Glencore / Xstrata deal but Money Morning doesn’t

Richard — Tue, 07 Feb 2012 10:25:17 +0000

London Mining Network’s concerns about Glencore and Xstrata involve the companies’ environmental and human rights impacts. But not even all the financial commentators are happy about the proposed merger.

Money Morning says:

Xstrata is a good fit for Glencore. The two firms operate in most of the same areas. What Xstrata digs out of the ground it sells to Glencore, which then flogs the stuff around the world. Xstrata is one of the world’s largest mining and metals firms. It’s a major producer of seven commodities used in everything from making steel, to constructing buildings and delivering electricity to developing jet engines and mobile phones. The combined entity would be the world’s biggest zinc producer with 15% of the market. And it would control 32% of the trade in thermal coal, still a key energy production fuel in China and the US. The merger looks set to be confirmed this week. And investors seem to like the idea. Since Thursday, shares in Xstrata have rocketed 15% while Glencore has jumped up by 12%. So if you have a pension, or maybe a FTSE 100 tracker fund, chances are you’re better off as a result of the merger talks. So why does the deal worry us? Because we don’t think this is a good time to be loading up on commodities. See http://www.moneyweek.com/investments/commodities/glencore-xstrata-merger-marks-top-of-the-market-20600.

Glencore and Xstrata close to takeover

http://www.guardian.co.uk/business/2012/feb/06/glencore-xstrata-takeover-announcement-due

Commodities trader and mining group expected to announced tie-up, with Xstrata taking majority of seats on board The commodities trader Glencore and mining group Xstrata are close to finalising an $80bn (£50bn) tie-up to seal the industry’s largest ever takeover – which could be announced as early as Tuesday. Xstrata, in which Glencore already has a 34% stake, announced last week the two had been in discussion prior to Christmas after years of on-off talks. It is understood a preliminary understanding has been reached on the structure of the top management, according to sources familiar with the deal, with Xstrata expected to take a majority of seats on the board, to keep its chairman – John Bond – as well as its chief executive, Mick Davis, and chief financial officer, Trevor Reid.

Why Xstrata needs to play hard to get with Glencore

http://www.guardian.co.uk/business/nils-pratley-on-finance/2012/feb/02/glencore-xstrata-merger-bargaining

Glencore’s proposed merger with Xstrata: key facts

http://www.guardian.co.uk/business/2012/feb/02/glencore-xstrata-merger-key-facts

See also, from last April:

Glencore: the story behind the $60bn float

http://www.guardian.co.uk/business/2011/apr/14/glencore-story-float?INTCMP=ILCNETTXT3487

Fears Xstrata tailings dam could fail

Richard — Tue, 07 Feb 2012 10:24:49 +0000

AN INDEPENDENT monitor’s report into Xstrata’s McArthur River mine has said there were extreme risks of a tailings dam bank breaking as well as acid draining into one of the river’s tributaries. Environment Centre NT director Dr Stuart Blanch said the independent monitor project director Philip Mulvey told a December stakeholder meeting there was an “extreme risk” of bank failure of the tailings dam. The October released monitor’s audit report for 2010 stated the tailings capacity needed to be increased by the start of the 2010-11 Wet. It also said there was an extreme risk of acid caused by leaching, draining into Surprise Creek.

http://www.ntnews.com.au/article/2012/02/02/286611_ntnews.html

Philippines: ‘Defending the Dignity of Life, Securing our Future’ – against Xstrata

Richard — Tue, 07 Feb 2012 10:23:29 +0000

A conference on mining in Davao in the Philippines, organised by the Ateneo School of Government, concluded with the “Mindanao Declaration: Defending the Dignity of Life, Securing our Future”. The national Chamber of Mines was critical of the conference, and speakers at the conference, including Mines and Communities’ editor Catherine Coumans. The conference focused particularly on Xstrata‘s near-by Tampakan project.

See http://www.minesandcommunities.org/article.php?a=11456&l=1.

Dominican Republic: Fears over the Future with Xstrata’s Falcondo

Richard — Tue, 07 Feb 2012 10:22:04 +0000

The Loma Miranda mineral deposit is located some 17km southeast of the city of La Vega and 22km north of the city of Bonao. According to its owner, Xstrata-Falcondo, the deposit contains 22.9 million tonnes of ore grading 1,44% of nickel. Development of Loma Miranda could extend Falcondo’s mining and smelting operations in Dominican Republic for another 20 years. Ecologists and local people fear that solid wastes and gases, resulting from the expansion, will accelerate degradation of the soil and the air, as well as negatively impact on the vital Jima River.

See http://www.minesandcommunities.org/article.php?a=11461&l=1.

Glencore CEO is South Africa’s richest

Richard — Tue, 07 Feb 2012 10:20:09 +0000

The Rich List has been published, showcasing South Africa’s wealthiest business men and women. Topping the list for 2011 Ivan Glasenberg from Swiss-based, London-listed Glencore International, who has an estimated net worth of R61.48 billion.

See http://www.iol.co.za/business/business-news/glencore-ceo-is-sa-s-richest-1.1216359.

GCM Resources in the red with loss of £690,000

Richard — Tue, 07 Feb 2012 10:17:48 +0000

GCM Resources plunged into the red in the six months to the end of December posting an after-tax loss of £690,000 against a profit of £3.3m last time. GCM says the Phulbari coal project remains the company’s key opportunity and it continue to pursue approval of the scheme of development from the government of Bangladesh.

See http://www.stockmarketwire.com/article/4301283/GCM-Resources-in-the-red-with-loss-of-690000.html.

Rio Tinto Agrees to Buy BHP’s Stake in Richards Bay Minerals

Richard — Tue, 07 Feb 2012 10:16:48 +0000

Rio Tinto Group, the third-biggest mining company, will gain control of Richards Bay Minerals, or RBM, on South Africa’s east coast in a deal that sees BHP Billiton Ltd. exiting the titanium minerals industry. Rio, operator of the RBM venture, will double its stake to 74 percent after BHP exercised an option to sell 37 percent, the companies said, without disclosing the value of the deal. RBM produces mainly titania slag, which is mostly titanium dioxide, used to make products from paint to toothpaste.

See http://www.businessweek.com/news/2012-02-02/rio-tinto-agrees-to-buy-bhp-s-stake-in-richards-bay-minerals.html.

Rio firms up a pipeline jewel

Richard — Tue, 07 Feb 2012 10:15:47 +0000

While it may only be a formality, Rio Tinto’s $US302 million purchase of another two per cent of Ivanhoe Mines finally cements its control of the group and its prize asset, the giant Oyu Tolgoi copper-gold prospect in Mongolia. By moving to 51 per cent of Ivanhoe, and with anti-dilution rights to protect its position, Rio has finally buried the already-remote prospect that Ivanhoe’s founder, Robert Friedland, might devise yet another plan for preventing Rio from securing absolute control.

See http://www.businessspectator.com.au/bs.nsf/Article/Rio-Tinto-Oyu-Tolgoi-Ivanhoe-Friendland-control-sh-pd20120125-QU2BR?opendocument&src=rss.

Mining threatens herders in Mongolia: report

Richard — Tue, 07 Feb 2012 10:14:52 +0000

Mining in southern Mongolia is threatening the livelihoods of herders and straining water supplies, a report said recently, as foreign companies race to exploit the country’s rich mineral deposits. Mongolia has opened up it vast reserves of natural resources to foreign investors in the hope of pulling thousands out of poverty, but activist groups said herders, townspeople and the environment were paying a heavy price. In 2009, Mongolia sealed a long-awaited multi-billion dollar deal with Canada’s Ivanhoe Mines and Anglo-Australian miner Rio Tinto to develop Oyu Tolgoi, one of the world’s richest copper deposits and a key gold source.

See http://www.google.com/hostednews/afp/article/ALeqM5ggU5a5myh4ewO_qJ9P-8EasAa_YQ?docId=CNG.b16557cdf41a87e85d20681fb83362ab.31.

Read the Bankwatch report at http://bankwatch.org/sites/default/files/spirited-away-mongolia-mining.pdf.

See the video at http://bankwatch.org/news-media/blog/video-spirited-away-mongolias-mining-boom-and-people-development-left-behind.

Indigenous landowners want Rio Tinto’s Bougainville Copper Agreement repealed

Richard — Tue, 07 Feb 2012 10:13:07 +0000

LANDOWNERS of the Bougainville Copper Mine have called on the government for the Bougainville Copper Agreement (BCA) Act 1969 to be repealed. Panguna Landowners Association (PLA) stated that if Panguna Mine is to be re-opened, this has to be negotiated under a totally new agreement.

See http://www.postcourier.com.pg/20120124/news18.htm.

Canadian Rio Tinto lockout nears one month

Richard — Tue, 07 Feb 2012 10:11:40 +0000

On January 1, 2012, Rio Tinto’s aluminium subsidiary Alcan locked out 780 members of United Steelworkers at its smelter and refinery in Alma, Québec. The company refuses to negotiate limits on contract work.

See http://www.minesandcommunities.org/article.php?a=11463&l=1.

See also Rio Tinto’s lockout of Alma workers looks set to drag on,

http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=144916&sn=Detail&pid=92730.

Largest Open Pit Copper Mine in the World Pollutes Utah

Richard — Tue, 07 Feb 2012 10:10:40 +0000

For at least the last five years, Kennecott Utah Copper, a subsidiary of Rio Tinto, violated the federal limits on ore and waste rock production at its Bingham Canyon Mine, the largest open pit copper mine in the world. Kennecott agreed in 1994 to limit production to 150,500,000 tons of ore and waste rock a year at the Bingham Canyon Mine. The EPA approved the limit, and adopted it into federal regulations. Every year since 2006, Rio Tinto violated the production limit, reaching levels up to 192,684,252 in 2009 — more than 40 million tons over the limit, according to data submitted to the Utah Division of Oil, Gas and Mining.

Tell the Utah Division of Air Quality what you think. Sign the petition: Clean Up the Bingham County Mine. Read more: http://www.care2.com/causes/largest-open-pit-copper-mine-in-the-world-pollutes-utah.html#ixzz1lc0BaML3.

Australia’s mining industry muscling into media

Richard — Tue, 07 Feb 2012 10:09:34 +0000

She’s the richest female in the Asia-Pacific region and bidding fair to become the wealthiest woman of the world. This year, Gina Rinehart’s estimated personal pickings are likely to double – to at least $20 billion. This is thanks to a 15% investment recently made by POSCO in her Roy Hill iron ore mine; her 50-50 joint venture with Rio Tinto in the Hope Downs operations; and $125 million in iron ore royalties she banks each year. Late last month Ms Rinehart also acquired around 13% in the Australian Fairfax Media group, potentially making her the country’s second most powerful media mogul after Rupert Murdoch.

See http://www.minesandcommunities.org/article.php?a=11476&l=1.

The organisation Get Up! Action for Australia believes it is part of a strategy by the mining industry.

They said: “This week mining billionaire Gina Rinehart became the largest shareholder in Fairfax, having already bought a stake in Channel Ten. But this new video (http://www.getup.org.au/minersmediaplan) reveals this move is bigger than one woman’s ambition – it’s part of a coordinated and very deliberate strategy, with climate skeptic ‘Lord’ Monkton seen here advising a room full of mining executives on how the industry must gain control of Australia’s media.

“We’ve seen what happened in the USA when coordinated, super-wealthy corporate interests set about deliberately reshaping the media landscape to suit their agendas. It’s bad news for democracy and it’s bad news for the issues we care about. And while this most recent purchase was a brazen move, it’s hardly the first time a mining industry executive has used their vast wealth to push an agenda.

“Last year, Rinehart helped set up a new lobby group calling for a special ‘Northern Economic Zone’ demanding lower tax, government concessions and cheap migrant labor from Asia. She helped bankroll the campaign against Government efforts to ask the mining industry to pay their fair share of tax through the Mining Super Profits tax and she’s been actively sponsoring prominent climate skeptics like Monckton, Ian Plimer and Andrew Bolt, who got his own TV show weeks after she invested in Channel Ten.”

Big miners must be reined in

Richard — Tue, 07 Feb 2012 10:08:06 +0000

Nearly 10 years of a mining boom has made big changes to Australia’s economy and environment. Resource companies have made record profits. This has given Australia’s rich mining billionaires an inflated sense of entitlement. When the Resources Super Profits Tax (RSPT) was proposed we saw Gina Rinehart speaking to an anti-tax rally from the back of a truck along with fellow billionaire Andrew Forrest, who wore a high-visibility work shirt as though he was just another struggling worker. Having helped sink the RSPT (and its proponent Kevin Rudd), Rinehart went on to become the richest person in the country. But these prominent individuals are only the tip of the iceberg. The big three players are BHP, Rio Tinto and Xstrata. Their combined value, internationally, is more than the size of Australia’s federal budget. They were not shy of throwing their weight behind the moves to sink the RSPT. Mining interests spent $22 million on its advertising campaign against the RSPT. BHP spent $4.2 million.

See http://www.greenleft.org.au/node/49930.