PolyMet Mining, the company on the brink of building the state’s first copper-nickel mine, has been sold as a Minnesota operation.
But Minnesotans are about to get better acquainted with the global behemoth behind it, the mining and commodities giant Glencore PLC, which took majority ownership of PolyMet in June after years as a quiet financial partner.
Glencore is one of the world’s largest publicly traded companies, with more than $200 billion in annual revenue on operations stretching from Australia to central Africa — deep pockets that are welcomed by local supporters eager for a mining renaissance on the Iron Range.
But Glencore also carries a checkered record with regulators across the globe, including a history of environmental citations and civil penalties for financial infractions, and is under investigation by the U.S. Department of Justice.
That record — and Glencore’s new ownership of PolyMet, based in Toronto but run from St. Paul — has heightened concerns among opponents of the proposed mine.
Arne Carlson, a moderate Republican who was Minnesota’s governor through most of the 1990s, went so far as to say the state should cancel PolyMet’s permits.
“Alarm bells should have gone off all over the place,” Carlson said of Glencore’s deepened involvement. “It’s like making an investment in a company and suddenly finding out the mob owns it.”
Minnesota regulators say they are reviewing all the approved permits for the $1 billion project, documents that have PolyMet’s name on them, not Glencore’s.
“We have a lot of questions about both their global track record and their intentions here,” said Darin Broton, a spokesman for the Minnesota Pollution Control Agency.
Glencore rejects the notion its record is bad. A spokesman said the company works “continuously” to improve its health and safety programs, its environmental performance and commitment to human rights.
“We believe that by being a better operator and doing things the right way, we will become a partner of choice for our stakeholders,” the company said in statement.
The Switzerland-based company also expressed confidence that its first major operation in Minnesota has long-term economic promise, producing mineral concentrates that could be smelted into metals at its plants in Canada.
Glencore’s global reach
Glencore was founded in 1974 by the commodities trader Marc Rich. Rich, who was famously indicted for tax evasion and doing business with Iran, fled to Switzerland and was pardoned by Bill Clinton in one of his last acts as president. Rich was forced out in 1993, when the company was renamed Glencore. In 2011, it went public, raising $10 billion in what at the time was the largest initial public offering on the London Stock Exchange.
Within about a year, Glencore swallowed a huge Swiss mining company called Xstrata, instantly becoming one of the world’s largest miners. Now, mining makes up about 85% of Glencore’s operating profits.
“Their business model became: ‘We can make more money if we are not just the middleman,’ ” said David Hammond, a Colorado-based minerals economist. “They had a big appetite for risk that was carried over from the high-risk commodity-trading business.”
Glencore has been PolyMet’s main financier since 2008, pouring about $350 million into the project and committing to buy all of its output. Glencore’s ownership stake rose from about 30% to more than 70% in a special stock offering in June.
If Glencore were based here, its 2018 revenue of $220 billion would put it just behind Minnesota’s biggest publicly traded company, the insurer UnitedHealth Group. It’s on par with Cargill — the world’s largest private company and a competitor in agricultural markets — in terms of global reach and workforce.
Glencore’s U.S. presence is relatively small. Until now its only Minnesota operation has been a little-known plant in northeast Minneapolis that processes Canadian brown mustard seeds for makers of Dijon-style mustard in the U.S., an operation it acquired when it bought Canadian grain handler Viterra.
Mining is an inherently messy industry, but none of Glencore’s operations have generated as much controversy recently as its copper and cobalt mines in the Democratic Republic of the Congo (DRC).
One of the poorest countries in the world, DRC boasts immense and coveted mineral reserves. In addition to rich veins of copper, it’s home to about 60% of the world’s cobalt, a critical mineral for a new generation of batteries that power all manner of electronics.
Glencore mines both metals there through operations including Katanga Mining. Among its business partners has been the Israeli mining billionaire Dan Gertler, a diamond merchant who in 2017 was sanctioned by the United States for alleged corruption in DRC.
The connection between Gertler and Glencore-controlled Katanga, which trades on the Toronto stock exchange, was one of several issues cited by the Ontario Securities Commission when it fined Katanga $22.5 million in December. Katanga admitted in its settlement with securities regulators that it broke Canadian laws.
The U.S. Justice Department has subpoenaed Glencore under foreign corruption and money-laundering statutes, asking for more than a decade’s worth of documents for DRC, Venezuela and Nigeria. The inquiry into the latter two appears to involve oil trading. In April, Glencore disclosed that the U.S. Commodity Futures Trading Commission is pursuing a similar probe.
‘Toehold’ in Minnesota
Glencore also gets low marks from international human rights groups, labor organizations and environmentalists.
In an effort to spur industry reform, a Swiss nonprofit called the Responsible Mining Foundation rated 30 large companies on such measures as working conditions and environmental responsibility. Glencore was among the better performers on the foundations 2018 Index, but all the mining companies got what amount to failing grades.
The overall level of results was “disappointing given the financial and intellectual resources of the industry,” said Hélène De Villiers-Piaget, the foundation’s chief executive. The foundation does not comment on individual companies.
Glencore also has workplace fatality rates significantly above the industry average in three of the last five years, according to the International Council on Metals and Mining, an industry group.
In their “Shadow Report” on Glencore on 2017, a coalition of nongovernmental groups in Latin America excoriated the company for damaging business practices and a legacy of pollution and overuse of water in Argentina, Bolivia, Colombia and Peru, charging that it diverted streams and rivers and sometimes left local communities dry. The company has been the subject of scores of investigations, sanctions and fines, according to the report. In Colombia, for example, entire towns have had to be resettled because of toxic air emissions from its coal operations.
“It’s a notorious company,” said Andy Whitmore, co-chairman of the industry watchdog London Mining Network. “They’re the one with the poorest records, and the one that seems to have changed the least.”
Glencore says the Shadow Report contains “unfounded allegations and misleading statements, the majority of which have been addressed by Glencore in numerous publications.”
“We operate our mines in a responsible manner, with the aim of protecting the environment and our surrounding communities,” the company said in a response to the report.
And while saying any fatality is unacceptable, Glencore said it operates across a larger number of developing countries than its competitors, “where the general approach to safety can be different outside the mine gate.” It also noted that it operates more underground mines, which can be more hazardous, than its competitors.
Hammond, the Colorado minerals economist, said PolyMet is a gamble for Glencore. The first phase “is not a barnburner economically,” he said, but the long-term prospects will be more lucrative and could include Glencore acquiring other copper-nickel properties in northern Minnesota.
“This is a toehold,” Hammond said. “I think there is a long game being played.”