PolyMet is on the verge of building Minnesota’s first copper-nickel mine, and now it has a new — and controversial — owner.
At a shareholders’ meeting Wednesday in Toronto, Glencore — one of the world’s largest companies and a juggernaut in the mining industry — took nearly 72 percent of equity in PolyMet Mining Corp. Some had seen the move as inevitable since PolyMet was already $240 million in debt to Glencore and was working to finance its $1 billion mine before starting construction.
Glencore, which has a hefty bankroll, a wealth of experience in the field and a history of labor issues and pollution problems, already owned roughly one-third of issued stock in the company. Yet the change is still significant. Here’s what we know about Glencore and what the move means for the PolyMet project:
What is Glencore and how is it involved in PolyMet?
Glencore was founded in 1974 and has since become an enormous operation. The company’s website says they employ 158,000 people around the world in mining, oil production and more. Glencore’s 2018 revenue was about $220 billion, roughly the same as UnitedHealth Group. By comparison, U.S. Steel in 2017 had $12.25 billion in revenue.
PolyMet spokesman Bruce Richardson said Glencore has “been an important part of this project for almost a decade,” providing technical support and cash to keep the project afloat. PolyMet took 14 years to secure all necessary permits to begin construction.
At the shareholders meeting, PolyMet issued new shares in a “rights offering” as a way to raise money and pay off debt. To keep their level of ownership, shareholders had to buy new shares at a discounted rate. If they didn’t do that, Glencore agreed to buy what was left over. As a result of the rights offering, Richardson said PolyMet will pay off its debt and Glencore will become the majority shareholder.
What’s the upside of new ownership?
PolyMet leadership and its supporters praise Glencore for the expertise they bring to mining and the stability of their organization. Richardson said Glencore’s “leverage in the financial markets is only a plus” as PolyMet looks to raise money for its project.
Richardson pointed to comments from Colorado-based minerals economist David Hammond, who told the Star Tribune that Glencore’s backing would make financing easier. Chris Berry, president of House Mountain Partners, a mining consultancy, told the paper that “having Glencore as a partner is the best thing they have going for them.”
Nancy Norr, chairwoman of Jobs for Minnesotans, a coalition of labor and business organization that supports copper-nickel mining, described Glencore’s support as “like me signing my daughter’s lease in Madison.”
“It’s the ability to say that there’s a substantial party with vast resources standing behind the project,” Norr said.
Glencore is known for bringing muscle to all its work. Reuters wrote in 2011 that Glencore “uses its considerable heft to extract the best possible terms in every deal it does.”
Richardson emphasized Glencore’s new ownership doesn’t necessarily signal any immediate changes for the company. He said PolyMet is still publicly traded, has the same executive and management team leading the project and must comply with the terms set in state permits. In many ways, he said, “it’s business as usual.”
If built, PolyMet has promised 360 direct mining jobs and another 1,000 spinoff jobs.
And the downside?
Glencore has a checkered past dating back to allegations against its founder, Marc Rich, who was indicted for tax evasion and dodged sanctions on apartheid South Africa and elsewhere to cut oil deals. (Rich was pardoned by Bill Clinton in 2001.) The company is currently facing investigations into corruption and money laundering by the Department of Justice and the U.S. Commodity Futures Trading Commission.
Critics also point to Glencore’s history of labor disputes and environmental problems as evidence that having a giant multinational corporation as PolyMet’s majority shareholder could hurt Minnesota.
In 2015, the United Steelworkers union gave Glencore a “silver medal” in “corporate irresponsibility,” a news release from the time says. USW had been involved in a labor dispute with Glencore at sites in Texas and said in a news release that “allegations of firings, anti-union intimidation and tax evasion have followed Glencore to work sites all over the world.”
“Glencore has mistreated workers and harmed communities on nearly every continent,” said Ruben Garza, USW District 13 Director, in the release.
More recently, in May, locked-out Canadian steelworkers and USW protested at a Glencore shareholders meeting.
Richardson, the PolyMet spokesman, played down concerns of Glencore critics by touting Minnesota’s labor laws and environmental regulations. He noted PolyMet reached a deal to hire union workers for mine construction, which is expected to take between 24 to 30 months.
NGOs have reported safety problems and a pattern of spills and toxic emissions at Glencore mines, and the company faced allegations in 2012 that it had polluted the Luilu River in the Democratic Republic of the Congo with acid runoff from a copper mine. The Swiss NGOs Bread for All and Catholic Lenten Fund said May 2018 samples showed no pollution, however, and Glencore at the time said it was working on fixing an inherited problem.
Environmental organizations say PolyMet’s state permits won’t do enough to prevent damaging pollution, either. Kathryn Hoffman, CEO of the Minnesota Center for Environmental Advocacy, said in a written statement sent to media that “Glencore’s worldwide record of environmental disasters, violations of human rights and disregard for workers and labor rights speaks for itself.”
“With former BP CEO Tony Hayward at the helm of Glencore, Minnesota may soon face our own version of the Gulf oil spill,” Hoffman said.
Richardson said PolyMet’s project will still need to comply with state permits and Minnesota laws. “Minnesota has very strict standards and rules and the project has to meet those standards and rules — period,” he said.