PolyMet Financial Dependence on Glencore
Glencore is a huge multinational corporation based in Switzerland, with more than $200 billion in annual revenues and $136 billion in assets (2018). Glencore is PolyMet’s primary investor, its self-described “strategic partner,” the sole purchaser of any metals or concentrates that would be produced by the NorthMet project, and a significant influence on PolyMet operational project decision-making. Based on documents posted to Canada’s official securities disclosure website in 2018:
- Glencore owns all the rights to all products from the PolyMet sulfide mine and plant for the entire duration of the project.
- If Glencore were to exercise all of its rights under agreements with PolyMet, it would own 40.0% of PolyMet’s shares.
- Glencore advises PolyMet on finances, technical issues and detailed project design for the PolyMet mine project. Glencore has three members on PolyMet’s Board of Directors and a member on every PolyMet Board committee.
- Since 2012, NorthMet costs have skyrocketed, while the rate of return has dropped by two-thirds, from 30.6% to around 10%. PolyMet is not attractive to independent investors.
- PolyMet’s March 2018 feasibility report acknowledged PolyMet’s dependence on Glencore for financing, stating that the risk that PolyMet’s mine project will be suspended due to failure to raise money “is partially mitigated through the company’s ongoing relationship with Glencore.”
Glencore in the News
The U.S. Department of Justice has launched an investigation of Glencore for money-laundering and violation of the Foreign Corrupt Practices Act. This investigation and the Department of Justice subpoena of Glencore records for corrupt mining and oil deals across the globe in July 2018 caused Glencore stock prices to drop.
At least two lawsuits have been filed by stockholders claiming that Glencore’s failure to disclose the pending investigation misled shareholders and resulted in financial losses.
Glencore has also been under scrutiny for circumventing U.S. sanctions against Russia. Glencore participated in a deal where Glencore and Qatar provided Russia with a huge cash infusion by temporarily “buying” an $11.5 billion stake in Russia’s state-owned oil company.
In Australia, Glencore has made headlines by suggesting that it plans to expand its McArthur River lead and zinc mine, but cease involvement with the mine after operations cease and reclamation and monitoring begin and let an outside entity, likely the provincial government, take over responsibility. As explained in The Guardian,
[A] risk assessment table deep within the document indicates Glencore intends to have little or no involvement after the mine’s life ends and the “adaptive and reactive management phases” begin in 2048. . . .
[Quoting Dr. Gavin Mudd, chair of the Mineral Policies Institute] “It’s absolutely incredible … Anyone with a brain would realise that means huge, long-term environmental risk, and ﬁnancial risk. . .We know the very nature of these types of problems. They can last for 1000 years.”
WaterLegacy Requests Scrutiny of Glencore/PolyMet Relationships
Based on recent disclosures, WaterLegacy has asked Minnesota and federal regulators to rigorously scrutinize PolyMet’s relationship with Glencore and to make sure that Glencore cannot walk away from responsibility for PolyMet long-term pollution.
- In July 2018, WaterLegacy petitioned for supplemental environmental review of the PolyMet copper-nickel sulfide mine project, highlighting new threats of PolyMet project expansion and the financial and corruption risks reflected by the U.S. Department of Justice investigation of Glencore for bribery, corruption and money-laundering.
- In April 2018, WaterLegacy requested that Glencore be held financially responsible on any PolyMet permits and that a Contested Case Hearing examine the relationship between PolyMet and Glencore.
- In February 2018, WaterLegacy objected to the draft PolyMet Permit to Mine and called for more financial assurance and environmental liability insurance to protect Minnesota resources and property owners from contaminated seepage, dam collapse, and failure of long-term containment and treatment of pollution.
Ask Governor Dayton to protect Minnesota from PolyMet & Glencore
Use the Contact Form on the web site for Governor Mark Dayton. Where the form states Question/Comment/Request, paste the following text (or draft your own variation):
Glencore is the real power and money behind the PolyMet NorthMet project. I urge you to deny any Permit to Mine for the PolyMet NorthMet project. At very least, don’t allow Glencore to take profit from Minnesota without being on every permit as the company responsible to treat and remediate pollution.
Glencore is a bad actor – harming the environment and abusing workers at mines and smelters worldwide. We don’t need this kind of corporate influence in Minnesota.
Background – Glencore and PolyMet – Bad Deal for Minnesota
Glencore Multinational Corporation Ranked among World’s “Worst”
- Glencore is notorious for environmental and human rights violations worldwide. In 2013, Glencore was identified as one of the worst corporations in the world for environmental and human rights abuses.
- Glencore’s Board Chairman is Tony Hayward, who was group chief executive of British Petroleum from 2007 to 2010; during the time of the Deepwater Horizon explosion and oil spill disaster in the Gulf of Mexico.
- In 2015, members of the United Steelworkers union ranked Glencore the second-worst corporation in terms of lifetime corporate irresponsibility:
“Glencore is truly deserving of this recognition as one of the most irresponsible companies on the planet… Glencore has mistreated workers and harmed communities on nearly every continent.”
Glencore’s Poor Environmental Track Record
WaterLegacy’s 2011 PolyMet & Glencore Report, prepared with Elliot Wyse, William Mitchell Law School Intern, provides information underscoring the need for financial scrutiny of the PolyMet project:
- Glencore, a multi-billion dollar privately-held foreign company founded by pardoned U.S. tax exile, Marc Rich, was named by European NGOs as the “Worst Corporation of the Year” – globally;
- Glencore has cut jobs at the Mopani copper mine in Zambia, Africa when copper prices fluctuated, creating a boom and bust for the local economy. Observers report that infrastructure in the host community has been left derelict;
- Environmental problems at Glencore’s Mopani mine have resulted in fish kills and drinking water contamination resulting in hospitalizations of 800 people;
- Glencore’s Prodeco coal operation in Columbia was fined $700,000 in 2009 for numerous environmental violations; its Cerrejon plant is notorious for displacing indigenous peoples and razing their villages;
- Glencore’s South American operations have also been criticized for systematic firings of union workers and intimidation through the use of armed guards;
- Glencore’s Metaleurop copper processing subsidiary removed corporate resources, leaving workers uncompensated and imposing on France a $411 million unfunded pollution liability.
Glencore’s Violation of Workers’ and Unions’ Rights
IndustriALL Global Union provided a summary of Glencore’s anti-union behavior through 2014, including:
- Reports from 32 delegates representing IndustriALL affiliates from 14 countries agreed, “the consistent brutality and disrespect for workers’ and unions’ rights displayed by Glencore throughout its operations . . are in clear contrast to the public mirage created by its public relations machines.”
- In the United States, management at Glencore’s Sherwin Alumina plant in Texas locked out members of the United Steelworkers (USW) demanding drastic concessions, including stripping retirees of health care benefits.
- In Peru, workers at Antamina mine were subjected to health and safety violations on a regular basis and were denied fair payment for bonuses and overtime. Workers are being excluded from the Miners’ Pension Fund and Glencore routinely violated the collective bargaining agreement.
- In Australia, Glencore refused to re-hire former employees at the Collinsville mine who were union members and evicted the former workers and their families from company housing, with devastating impact on the local community.
- In Colombia, a group of former army officers linked Glencore to a paramilitary group responsible for murdering trade unionists. The paramilitary group trained at a camp located inside a Glencore mine. Glencore has violently evicted farmers from their homes as well as violated national health and safety laws.
- In Peru and Colombia, the safety and health situation of workers has been particularly disturbing, with reports of how injuries to workers are commonplace with Glencore refusing to work with trade unions to address these issues. In addition, it was found that the wholesale use of sub-contracting and precarious employment by Glencore at its global operations was a major contributing factor to the alarming statistics on safety and health.