Xstrata watch: will the proposed merger with Glencore proceed? Qatar and Norway opposed.

Regular readers of The Network will know that I keep a watching brief on Xstrata.  I do this because of connections with Mount Isa and McArthur River - both sites of mining activity by the Swiss-headquartered Xstrata in Australia.  For previous posts relating to Xstrata on this blog, please go here.

The watch on XStrata is becoming more frequent because of a proposed merger between Xstrata and Glencore which would put the merged corporation up there with the really big boys of Rio Tinto and BHP Billiton.  In the background, just to add some spice to the narrative, is the Qatar Investment Authority.  All this is covered in the blogs at the link above.  New Networkers will need to delve into these to begin to understand the whole story.

A lot of background noise goes on in Australia around Gina Rinehart and Twiggy Forest.  Understandable in the case of Rinehart, the world's richest woman, but not so much in the case of Twiggy who has quite a few shadows in his background.  Real stories will always be about the biggest and the best and the most international.  Xstrata and Glencore are both international mining corporations - in the case of Glencore, they have a wider reach and have become known as a commodities based corporation.

Merger discussions and manoeuvres have been going on - well, on and off to be precise - during 2012.  Currently, the talk is about whether a proposed decision/meeting will go ahead as proposed on September 7.  So, because there is a due date, people around the world are watching with bated breath.

Yesterday, shares tumbled in price following news that not only was Qatar opposing the merger but Norway had now enjoined the opposition. Norway's oil-based sovereign wealth fund has been in the market buying shares and, while their holding is a long way off that of the Qatar's, their stance on the merger is significant and influential.

Another influential with a negative view to the proposed merger is PIRC - the UK's leading independent research and advisory consultancy providing services to institutional investors on corporate governance and corporate social responsibility.  PIRC has outlined to investors a number of reasons why the merger should be opposed.

Meanwhile, over in Qatar they are hitching up their skirts or rolling up their sleeves - depending on your metaphorical view.  Qatar is not happy with the merger because the pay-off for them is not as good as it should and could be.  However, Qatar has provided assurances to Xstrata that, in the event the proposed merger is not given the go-ahead, then it will up its stake in Xstrata.  Between the devil and the deep blue sea?  Xstrata currently seems to lie somewhere between Glencore and Qatar.

So in all this pushing and shoving, Glencore becomes the focus of the wait and see game.  With opposition to the merger mounting, will Glencore hold its ground or will it increase its offer in some way or another?  Or will it give the Kenny Rogers response?

 Further reading:

Up date 3/9/12

Xstrata chiefs for the axe if tie-up with Glencore fails

Schroder's Buxton says  Glencore-Xstrata merger dead without without bump up

Qatar fund  to vote against Glencore-Xstrata merger

Glencore and Xstrata?

Glencore  mine deaths  give Xstrata funds extra ratio to mull

Activist investor looks to  reshuffle Xstrata board if Glencore deal fails

Related articles

• Glencore, Xstrata Deal Unraveling
• Xstrata and Glencore - certification of the social licence - business ethics or lack of them
• Glencore misses Xstrata deadline offer
• Glencore hit by commodity prices
• Speak Mandarin, Cantonese, Shanghainese ... what about Arabic to negotiate Gulf States money?
• Glencore says Xstrata deal is not a 'must-do'
• Glencore Vs. Xstrata Pits Billionaire Glasenberg Against Qatar's Sovereign Wealth Fund
• Xstrata to lash out $260,000 for each resident of tiny Australian town
• Xstrata digs deep for $350m mine expansion
• Sinking coal prices force Xstrata, BHP and Rio Tinto to major job cuts in Australia

Mining and Resources: Xstrata and Glencore merger in doubt?

Miss Eagle keeps a bit of a watch on Xstrata because of Mount Isa and McArthur River connections.  I recently did a number of posts related to the proposed merger of Xstrata and Glencore.  To see them, please go here.

To-day, Australian Mining reports that there is doubt about whether the merger will proceed.  A number of questions are raised in this Guardian article.

Later on Monday afternoon, Crikey is talking about the Xstrata-Glencore deal.  Please find the article here.

Related articles

• Glencore Posts A Half Year Drop, & Embraces Xstrata Deal
• Year's Biggest Deal? Meh. Glencore Could Live Without Xstrata
• Glencore's merger with Xstrata close to collapse

Xstrata and Glencore - certification of the social licence - business ethics or lack of them

Picture from here

On 20 May 2011, The Times Business Editor, Ian King, voiced little doubt that “small” investors, at least, should steer clear of carving out a stake for themselves in this particular golden calf.

In a remarkably robust comment, King damned Glencore as "...a business with dubious morals. It trades grain amid food riots and has been accused of profiteering and environmental offences in numerous poor and war-torn countries”. He went on: "Most of those signing up to buy shares in Glencore's flotation are major Middle Eastern and Far Eastern investors. Few of the traditional City institutions will touch the shares with a bargepole. The question is, should you?"

This quote is from here

^^^^^

I posted yesterday about goings on in a proposed merger between Xstrata and Glencore - particularly involving a major shareholder, Qatar Holding. To-day The Network is having a closer look at Glencore.

Are money and morals mutually exclusive when money is large, omnipresent, and the clear focus of the actors involved?  This question can be asked of many corporate players but, in researching Glencore, questions of ethics and morality come up time and again - across the globe.  I think Australians should look closely at this corporation because, if the much mooted merger of Glencore and Xstrata comes into play after meetings in September, Glencore and Xstrata will become the third largest minerals and mining company in the world and a rival for BHPBilliton and Rio Tinto.

  

Check these links below

Glencore digs deep to clean up its environmental record

Glencore's Colombia coal operations halted by strike

Glencore linked to acid waterfall in DR Congo

Mining giant Glencore accused in child labour and acid dumping row

In Australia, the Australian Competition & Consumer Commission has looked at the proposed merger and won't intervene to stop it.  What a surprise!  

ACCC report:  Glencore international  plc - proposed acquisition of Xstrata plc

Australia won't block Glenmore-Xstrata deal

Seems to me that  we need a body that can look at corporate ethics and whether corporations are worthy of receiving social licence/certification to carry out their operations in Australia.  Sometimes one thinks it would be just as easy for Hitler Inc to come into the country and build gas ovens.  Why do nations everywhere have to open wide their doors to corporate cowboys simply because they are now wearing city suits and steering, not horses, but fancy motor vehicles? 

Bolivia has nationalised Glencore mines there.  This is part of an overall economic policy carried out by the Bolivian Government under President Evo Morales.  Read more about this here.

Related articles

• Glenstrata takes shape this week

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• Speak Mandarin, Cantonese, Shanghainese ... what about Arabic to negotiate Gulf States money?

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• Xstrata chief's big payday should be tied to performance

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Is majority or near majority foreign ownership of Australia's dairy, sugar, and red meat industries endangering our food security?

From Australian Food News:

Almost half Australia’s food industry is owned by foreign investors, report shows

• January 19, 2012
• Matt Paish

A report on foreign investment in Australia from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has found that foreign firms accounted for ownership of about half of the nation’s dairy, sugar and red meat sectors.

The report, commissioned by the Australian Government’s Rural Industries Research and Development Corporation (RIRDC), also says that current foreign ownership of agricultural land, business and water entitlements in Australia is comparable with the levels of 1983-84.

According to the report, major companies investing in Australian agribusiness include private companies such as Cargill and Finasucre, public companies such as Wilmar and Parmalat, at least one farmer cooperative, Fonterra, and a state-owned conglomerate, COFCO.

The report states, “Foreign investment in agribusiness has typically been made by companies involved in the same or similar business in other countries seeking to expand their activities at an opportunistic time. However, Kirin (a brewing company) and Wilmar (active in a number of commodities not including sugar) each branched out into new sectors when they invested in Australia’s dairy and sugar sectors, respectively.”

Foreign investment growth in Australian red meat processing

The level of foreign ownership in Australia’s red meat processing industry is now higher than ever, according to the report, with 42 per cent of the industry owned by foreign companies.

According to the report, foreign investment in Australian meat processing has been undertaken largely by companies established in the meat industries of other countries, and their interest has been focused on export rather than domestic operations.

The largest player in Australian meat processing is the Brazilian-owned company JBS Australia, a division of JBS, Brazil’s largest multinational in the food sector, and one of the world’s largest meat companies. The plants now owned by JBS accounted for around 24 per cent of Australian red meat production in 2006 and 2007.

Other major players include US company Cargill, which accounts for 8 per cent of red meat production in Australia, Japanese company Nippon (6 per cent of red meat production) and Harmony, a company based in the Cayman Islands.

Foreign investment in Australian dairy manufacturing

More than half the milk produced in Australia is now processed by foreign-owned companies, with 47 per cent of the nation’s milk processors were still Australian-owned.

Fonterra, a New Zealand farmer-owned cooperative, and the Japanese-owned Lion together handle around 45 per cent of Australia’s milk production. Parmalat, formerly Italian but now under French control, accounts for a little over 5 per cent.

The Australian-owned cooperative Murray Goulburn is still the largest individual dairy processor in Australia, taking around 35 per cent of milk produced. Fonterra, one of the world’s largest dairy manufacturing and exporting companies, is cooperatively owned by New Zealand dairy farmers.

According to the report, foreign ownership of milk processing capacity appears to have been beneficial for the industry. Major foreign investors have injected funds to improve efficiency and maintain profitability while at the same time engaging in some winding down of existing, out-of-date capacities.

Foreign investment in Australian sugar milling

Three foreign-owned milling groups, Sucrogen (controlled from Singapore–Malaysia), Bundaberg (from Belgium) and Tully (from China), now undertake around 60 per cent of Australia’s raw sugar production. Sucrogen mills account for around 43 per cent, Bundaberg for 11 per cent and Tully for 5 per cent.

According to the report, Sugar production in Australia has declined through the past decade as a result of low sugar prices, and a process of rationalisation has taken place, with a number of mills closing. The availability of additional capital from new foreign owners has facilitated this rationalisation and maintained efficiency in the industry.

Tags: 

ABARES, Australian-Bureau-of-Agricultural-and-Resource-Economics-and-Sciences,dairy, foreign investment, investment, red-meat, RIRDC, rural-industries-research-and-development-corporation, sugar

PLEASE NOTE

Below the embedded document immediately below these words

are updates + a list of links for further reading.

Update 2012-01-21

Reports to-day that Chinese investment in Australia is coming under increased federal government scrutiny, with ASIO and other intelligence groups weighing up possible national security risks.

Read more: http://www.theage.com.au/national/asio-watch-on-chinese-money-20120120-1qaed.html#ixzz1k2EHcDcY

Further reading:

Security and sovereignty : the truth  behind  foreign investment - Paul Barratt

Foreign investment will boost food security - Stephen Kirchner

Food security the fear as foreign investors rush in

Australia’s Food Security May be Jeopardised by Foreign Investments into Agri Firms

Foreign investment concerns not settled yet : farm groups
MSF Sugar directors accept Mitr Phol  Offer
Bill Heffernan worried about foreign investment report
ASIO watch on Chinese money
ASIO now targetting Chinese investors
Foreign farmers are small players
China gets a taste for Australian produce
Australian Govt failing farmers on foreign ownership  - WA Farmers Federation
China's interest in agriculture growing