Tag Archives: Glencore

The Power of Giving Love

Russia’s sale of one-fifth of its state-owned oil company to Qatar and commodities giant Glencore PLC last year had an unusual provision: Moscow and Doha agreed Russia would buy a stake back, people familiar with the matter said.  Russian President Vladimir Putin hailed the $11.5 billion sale of the Rosneft stake in December 2016 as a sign of investor confidence in his country. But the people with knowledge of the deal say it functioned as an emergency loan to help Moscow through a budget squeeze.

Moscow agreed with Qatar that Russia would buy back at least a portion of the stake from the rich Persian Gulf emirate, the people said. The Qatar Investment Authority and Glencore, the Swiss-based commodities giant, formed a partnership to buy the 19.5% stake in Russia’s energy jewel at a time when Mr. Putin’s government needed cash. The people with knowledge of the deal say the buyback arrangement was negotiated with involvement from Mr. Putin and the emir of Qatar, Sheikh Tamim bin Hamad Al Thani. Russia and Qatar saw it as an opportunity to build a bridge between countries that had taken up opposite sides in the Syrian civil war, the people said. One of the people said the buyback would happen in the next 10 years…

Rosneft, the world’s largest listed oil producer, is traded publicly in Moscow, but it isn’t easy to buy and sell large pieces of the company because it remains majority-owned by the Russian state and is an instrument of economic power for Mr. Putin.  The people familiar with the deal said a time-limited structure and a buyback agreement for the deal worked for both Qatar and Russia.

Qatar wanted its Rosneft stake to be temporary, the people said. The emirate believes it will profit from selling the shares back to Russia at a later date, the people said, betting that oil prices will rise and push up Rosneft’s share price. Qatar saw the political benefits of giving Russia access to quick cash as a sort of loan to address a budget deficit that had widened due to lower oil prices, the people said.  After the deal, a range of talks opened between Russian and Qatari businesses on a scale not seen before, Russian news agencies have reported….The deal was called the largest-ever foreign investment in a Russian company.

In an unusual arrangement, the rest of the financing was provided by Russian banks, which contributed EUR2.2 billion, and Italian bank Intesa Sanpaolo SpA, which lent EUR5.2 billion to the Glencore-Qatar consortium, according to a Dec. 10, 2016 new release issued by Glencore. The financing is “non-recourse,” Glencore said in the release, meaning the lenders couldn’t pursue Glencore and the Qatar Investment Authority if they weren’t repaid….Under the deal, the Rosneft shares aren’t held directly by Glencore and Qatar but by a U.K. limited liability partnership, according to British corporate records….

After the deal was announced, Mr. Putin awarded one of Russia’s top honors for foreigners — the Order of Friendship — to Qatar Investment Authority’s chief executive, Sheikh Abdullah bin Mohammed bin Saud Al-Thani, Intesa’s chief executive, Carlo Messina, and Glencore’s chief executive, Ivan Glasenberg.

Excepts from Russia’s Rosneft Stake Sale Had a Twist , Wall Street Journal, June 8, 2017

 

 

 

A Love Affair with Iran: Glencore and Trafigura

logo of atomic energy organization of iran

Glencore, a commodity trading house run by the billionaire Ivan Glasenberg, traded $659m (£430m) of goods, including aluminium oxide, to Iran last year, the Guardian has established.  The company…has admitted that some of its aluminium oxide ended up in the hands of Iranian Aluminium Company (Iralco).  Trafigura, another commodity trading house, has also admitted to trading an unspecified aluminium oxide (also known as alumina) with Iralco in the past.

The International Atomic Energy Agency has named Iralco as supplying aluminium to Iran Centrifuge Technology Company (Tesa), which is part of the Atomic Energy Organisation of Iran (AEOI). Aluminium oxide is an important material in gas centrifuges used to enrich uranium.  At the time of the Glencore and Trafigura trades with Iralco, it was not illegal or a breach of sanctions to supply Iran with alumina. It is unknown whether Glencore or Trafigura’s alumina passed from Iralco to Tesa, or whether it was used in centrifuge construction.

Since 2006, AEOI has been subject to UN sanctions designed to prevent Iran’s nuclear armament ambitions. Trading with Tesa has been specifically banned under US, EU and UK sanctions since July 2010. Iralco was added to the EU sanctions list in December 2012.  Glencore said it “ceased transactions” with Iralco immediately when it learned of its links with Tesa, and the last trade was in October 2012. “Prior to EU sanctions in December 2012, we were not aware of a link/contract between Iralco and Tesa,” the company said in a statement.  Glencore said it is “reliant on the relevant regulatory bodies/governments to advise us on developments in who we can/can’t do business with”.

Tehran, which some experts say already has enough enriched uranium to make several nuclear weapons, is in the middle of upgrading its stock of more than 10,000 centrifuges. The IAEA said Iran is replacing outdated centrifuges with thousands of more powerful IR-2m models.  Experts at the Institute for Science and International Security (Isis) in London said: “Iran is trying to replace maraging [super-strong] steel end-caps with high strength aluminium end-caps.”  Mark Fitzpatrick, director of Isis’s nonproliferation and disarmament programme, said the new centrifuges could enrich uranium four to five times faster than the existing ones. Iran insists its enriched material is for peaceful use, not for nuclear weapons, but it has refused to allow IAEA inspectors into several of its atomic facilities.

The Guardian has learned that Glencore traded $659m worth of metals, wheat and coal with Iranian entities during 2012. Buried deep in its annual report, one of Glencore’s US affiliates, Century Aluminium, 46% owned by Glencore, states: “During 2012 non-US affiliates of the largest stockholder of the company [Glencore] entered into sales contracts for wheat and coal as well as sale and purchase contracts for metal oxides and metals with Iranian entities, which are either fully or majority owned by the GOI [government of Iran].”…..

Trafigura, which came to global political attention when it was revealed that a licensed independent contractor of a ship it had chartered dumped tonnes of toxic oil slops in Ivory Coast, said: “We can confirm that Trafigura has traded with Iralco in the past. In October 2011, a physical swap agreement was reached whereby Trafigura provided alumina to Iralco in return for aluminium for Trafigura to export worldwide. No deliveries have been made or exports received since new EU sanctions were published in December 2012.

Excerpts, Rupert Neate, Glencore traded with Iranian supplier to nuclear weapon’s programme, Guardian,  Apr. 21, 2013