Glencore announces biggest IPO this year

Swiss commodities giant Glencore on Thursday announced the world's biggest initial public offering so far this year, saying it plans to list in London and Hong Kong.

The company says it expects the IPO to raise up to $11 billion. 

“The global offer is expected to represent between 15 and 20 percent of the company’s post-IPO issued share capital,” the Baar-based group said in a statement. 

The bid to raise between $9 billion and $11 billion (€6.2 billion to 7.6 billion) is to be completed in May, and values the world’s biggest commodities trader by revenues at up to $60 billion.

If the IPO is over-subscribed, the company has an option to expand its shares allotment by 10 percent, bringing the potential total sum raised to around $12 billion.

“Over many decades, we have developed Glencore into an unrivalled global integrated commodity producer and marketer, active in almost every bulk commodity market,” said Ivan Glasenberg, the group’s chief executive officer.

“An IPO is the next logical step in our development and strategy. It will provide us with the financial flexibility to capitalise upon long-term growth opportunities throughout our business and achieve further sustainable growth,” he added.

The group said it would use the funds raised to increase its stakes in JSC Kazzinc, a zinc producer with core operations in east Kazakhstan, from 50.7 percent to 93.0 percent.

The Kazzinc transaction is worth $3.2 billion and would include $1.0 billion in new Glencore shares and $2.2 billion in cash.

Glencore added that it also has an option to further increase its stake in Kazzinc to 99.4 percent.

In addition, the group plans to use the IPO proceeds on other expansion projects as well as paying off debts.

Glencore’s IPO comes as commodity prices sit at highs amid huge demand from Asia, particularly China and India, for resources to power their red-hot economies.

Oil is at two-and-a-half-year peaks, while the prices for iron, copper and aluminium are also riding high.

The IPO is set to be the world’s largest this year, doubling the $5.5 billion offering in Singapore of Hong Kong billionaire Li Ka-shing’s Hutchison Port Holdings Trust last month.

Founded in April 1974 by trader Marc Rich, Glencore operated initially out of a small apartment in central Switzerland’s Zug canton. But it quickly emerged as a key trader in the commodities sector.

From metals, minerals and crude oil trading, the group began moving into agricultural goods trading, as well as purchasing its own mines.

Through the 1990s and 2000s, Glencore acquired key assets, and now owns mines rich in zinc, copper, iron, aluminium, petrol and coal.

It also owns about a third of Anglo-Swiss mining giant Xstrata.  

The group now employs almost 55,000 people in more than 40 countries and is involved in all stages of the commodities supply chain — from extraction to refining and supplying.

Glencore posted net profits of $3.8 billion for 2010, while its revenues reached $145 billion.


At least 19 illegal miners killed at subsidiary of Swiss-based Glencore

At least 19 illegal miners were killed on Thursday after part of a copper mine collapsed in southeastern DR Congo, Swiss-based mining giant Glencore said.

At least 19 illegal miners killed at subsidiary of Swiss-based Glencore
Photo: AFP

The incident happened when two galleries caved in at a mine in the Kolwezi area operated by Kamoto Copper Company (KCC), a subsidiary of Glencore.

“Tragically there were 19 fatalities today, with possible further unconfirmed fatalities,” Glencore said in a statement, which said there had been recurrent problems with illicit mining on its concessions.

Other reports suggest the death toll could be higher. 

The Congolese site Actualite.CD reported at least 36 deaths.

“The illegal artisanal miners were working two galleries in benches overlooking the extraction area. Two of these galleries caved in,” the company said.

Glencore said KCC had observed a “growing presence” of illegal miners, with on average 2,000 people a day intruding on its operating sites.

“KCC urges all illegal miners to cease from putting their lives at risk by trespassing on a major industrial site,” Glencore said.

Illegal mining is common and frequently deadly in Democratic Republic of Congo, where safety is often poor and risk-taking high.

Figures indicating the scale of the problem are sketchy, given that many mines are illegal and remote.