Thursday, February 23, 2012
Edition 32 (May 2011)
PREVIOUS EDITIONS
David Rae, Editor
The flotation of commodity trading giant Glencore could indicate a watershed in global commodity markets
As we were going to press with this issue, Swiss-based commodities giant Glencore was in the midst of an initial public offering on the London Stock Exchange that was expected to raise between $9bn and $12bn, valuing the company at between $45bn and $60bn.
The timing of the flotation is interesting. Essentially, Glencore is a giant commodities trader, supplying a huge volume of raw materials to customers in the automotive, power generation, steel production and food-processing industries. It has significant interests in basic metals, energy and agricultural products and because of this has been riding the commodities wave for the past few years to become one of the largest private companies in the world.
So, why float? After all, becoming a public company brings a huge amount of additional complexity – onerous regulation and red tape, the unwanted glare of the media spotlight and investor activism, to name just a few.
Okay, the firm’s current shareholders will be in line for a massive payday (according to some reports, chief executive Ivan Glasenberg will be sitting on shares worth $7bn, while dozens of its top partners on stock worth more than $150m) but it’s not as if any of them would struggle to get a mortgage approval as it is...
The official reason is that the company wants to increase its ownership of copper, zinc, lead and precious metals producer Kassinc (it currently has 50.7%) and needs cash to expand its capital expenditure programmes over the next three years, as well as reduce debt.
The unofficial reason could be that CEO Glasenberg and his crew want to cash in at the top of the market – after all, growing Chinese inflation could slow the global economy, and with it, bring the latest commodities boom back to earth with a bump.
The images of sheer devastation that we saw following the Japanese earthquake and tsunami certainly put things into perspective and reminded us all of the human toll of events we often think about and plan for in business terms alone. While the full financial implications of events on the Pacific rim are still to unfold, it will pale into insignificance alongside the desolation local communities have experienced.
David Rae is editor of Procurement Leaders
More from the editor
PROCUREMENT FEATURES
- Editor’s Letter: Warning sign
Wed, 25 May 2011 07:46:48 - The quake that shook the world
Thu, 19 May 2011 08:41:36 - Thought Leaders: In-sourcing, not outsourcing
Thu, 19 May 2011 08:41:36 - Procurement in space
Thu, 19 May 2011 08:41:36 - Shell’s Stijn van Els on the people differential
Thu, 19 May 2011 08:41:36 - Green credentials are wearing thin
Thu, 19 May 2011 08:41:36 - CFOs weigh up supplier relationships
Thu, 19 May 2011 08:41:36 - Companies slow in the race to carbon neutral
Thu, 19 May 2011 08:41:36 - Cash is the CFO's top prize
Thu, 19 May 2011 08:41:36 - The hunt for real volatility
Thu, 19 May 2011 08:41:36
PROCUREMENT OPINIONS
Overreacting to rising commodity prices could be a sign of inexperience - instead, a calm approach is required, writes Neil Deverill Economic View: A season of supply chain shocks
Supply disruption and rising prices following global events may test the markets, but they’re not the only challenge, writes economist Philip Thornton Sponsored comment: The future of automation
Which technology trends do procurement executives need to keep an eye on over the coming years, writes Ariba’s Tim Minahan
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