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PolyMet is now owned by Switzerland’s Glencore. Why it matters

Glencore's corporate offices in Switzerland
Courtesy of Glencore
Glencore's corporate offices in Switzerland

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.  

Based in Switzerland, Glencore is led by chairman Anthony Hayward, a former British Petroleum executive and CEO Ivan Glasenberg, who rose through Glencore’s ranks. The company has a vast portfolio of copper mines in Africa, Australia and South America. It produced 1.45 million tons of copper and sold another 4.5 million tons in 2018.

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.”

A river runs near a proposed tailings basin for PolyMet's mine copper-nickel mine operation.
Photo by Rob Levine/Minnesota Center for Environmental Advocacy
A river runs near a proposed tailings basin for PolyMet's mine copper-nickel mine operation.
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.”

Aaron Brown, a columnist for the Hibbing Daily Tribune and independent writer following mining, cautioned on his website that Glencore’s enormous profile and strength means PolyMet could be used as “leverage in negotiations with some other source of copper and nickel.” In other words, it is just one piece of Glencore’s massive portfolio.

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.

The Embarrass River near PolyMet's proposed mining operation.
Photo by Rob Levine/Minnesota Center for Environmental Advocacy
The Embarrass River near PolyMet's proposed mining operation.
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.

A request for comment made to District of 11 of USW, which covers Minnesota, was unsuccessful on Thursday. But Jessica Looman, executive director at the Minnesota State Building and Trades Council, praised PolyMet’s construction deal and said they have “assurances” that the “project labor agreement is going to continue and be honored.”

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.

Comments (13)

  1. Submitted by Peter Gove on 06/28/2019 - 10:25 am.

    Getting very weary of the mining industry and their proponents talking about ‘Minnesota’s strict environmental laws and standards’. That is no longer the case given the attack on same starting back in 2015, with considerable help from mining’s proponents in the Legislature, to terminate the MPCA citizens board and make other changes to state statutes. That continued in the subsequent legislative sessions by mining proponents v.v. MPCA/DNR authority and resources. Only Mark Dayton stood in the breach for two successive sessions. And the basic mining statute goes back some 30 years and is not ‘best practice’ for hard rock mining in any case. Does anyone believe the unfolding Polymet permit controversy would have happened as it did if the MPCA citizens board was still in place?

  2. Submitted by Richard Owens on 06/28/2019 - 10:38 am.

    What a horrible development. Polymet now has the financial backing and multi-continent experience at getting by with environmental pollution, labor exploitation and abuse, and a track record of local rule-breaking.

    We really do need a functioning MPCA. Will the governor ignore this?

    Minnesota is no match for these guys’ and their experience. They do as they please, paying almost nothing in taxes and hanging out in their legal hideout Switzerland, protected by their charters and outside contractors, waiting for the next DAVOS meeting.

    It looks increasingly that we will have traded the very land and air upon which we live for some wages.

  3. Submitted by Joel Stegner on 06/28/2019 - 11:18 am.

    It needs to be made clear to the new owner that if they pollute our pristine waters, they will have hell to pay. I view them like the Iranians. Cannot be trusted to respect the terms of their agreement without constant inspections, done by the state and paid for by the company. Everything that could go wrong needs to be identified up front with frequency of inspections (perhaps daily and unannounced. Keep that up for five years and if they have earned our trust, details can be renegotiated. I think a special session of the Legislature is needed to accomplish this. It will give the Republican Senate to show it is willing to protect the environment

    • Submitted by Eric Snyder on 06/28/2019 - 01:37 pm.


      If we were serious about protecting the Boundary Waters, which we don’t appear to be, we’d do additional things like:

      -Mandating a $30-$50 billion dollar escrow fund for cleanup purposes. This money would have be relinquished before the start of any operations and would not be refundable.
      -Require the mine to allow immediate and unrestricted regulatory and investigatory access to anything on the mining site.
      -A $10 million/day penalty for any violations of state regulations along with automatic shutdowns until such violations are remedied.
      -An agreement, which Glencore and associated companies would agree has final and unappealable force, that any detectable pollution of groundwater will result in minimal 10 year jail sentences for the executives of any company involved in mining operations.

      Instead, a known criminal destroyer of environments is allowed to come waltzing into the state with support from Klobuchar, Smith and others.

      • Submitted by Julie Stroeve on 06/28/2019 - 05:41 pm.

        Eric has hit the proverbial nail. Where is the transparency in the review process? the MPCA regs? the public hearings? I’d like actual data before I say yea or nea to a big, dirty mining project that has the potential (almost certainty based upon history) to cause cataclismic damage to earth, water, and air, as well as potential human disease and damage. why in the world would a permit be issued without the $30 to $50 billion dollar escrow – for – environmental repair when they’ve done their deed? let’s re-set and start again with this multi-national player with the bad history to call into account. if the costs to it are too enormous to extract the projected and required profits, maybe they’ll rethink their venture into a sacred watershed area for a large, fresh water, protected lake. Minnesota DNR and MPCA should also be rethinking their lasse faire economic gain positions around protecting Minnesota land, air and water. this really should be a no-brainer. if it isn’t, who’s doing the arm-twisting, and how much cash money is going into the pockets of the reviewers and permit-makers? if this doesn’t look and smell like corruption, I don’t know what does. The men and women of the Duluth area want to protect the land and water that surrounds them. A few jobs (hugely exaggerated by the permit owner) can’t possibly justify a thousand year mining catastrophe that’s almost a certainty. At some point there is a cost-benefit evaluation that doesn’t pass the test. With smart governance, there will be massive infrastructure jobs that potential miner-workers can take up rather than the option of short-term raping of the earth and its waters. There’s another way out of this.

        • Submitted by Mark Bradley on 07/19/2019 - 11:31 am.

          30 billion escrow for cleanup of an imaginary disaster? Well, that will certainly prevent any mining in the state, because no company could afford such a bond. It’s simply preposterous.

          But if that is what the people of the state want, I suppose it’s their right. But how about this: every product that is produced inside the state which uses any metal is taxed a hefty ‘environmental tax’. Why should other states/countries supply Minnesota with minerals at their cost so that Minnesotans can live in their imaginary pristine world?

          By all means, enforce rigid environmental laws. But idiocy like unreasonable bonds for imaginary accidents, or jailing the mine owners (not even remotely constitutional unless you can prove ACTUAL negligence or intentional crimes)? That will merely shift the burden to other jurisdictions. It solves nothing and basically just removes any legitimacy from those who call for it.

    • Submitted by Frank Phelan on 06/29/2019 - 08:25 am.

      And why is it that the same crowd that advises and practices absolute cynicism and distrust of the Chinese, Iranians, etc, are so quick to trust these foreigners?

  4. Submitted by William Duncan on 06/28/2019 - 11:52 am.

    The waters of the bottom 2/3 of Minnesota are more polluted than ever, thanks mostly to industrial, corporate agriculture (and their enablers in gov). But we are led to believe Minnesota has some of the strictist environmental laws in the world?

    This is a mining plan with a long history in Central and South America: plunder, pollute and run. Now at least 70% of the profits will leave America. I’ll bet a five-spot, in thirty years there won’t be an money for clean-up either, the fund raided by Glencore, private equity, or politicians.

    Bow to your new foreign lords, Patriots.

  5. Submitted by Charles Thompson on 06/28/2019 - 02:37 pm.

    Welcome to the third world.

  6. Submitted by Joe Musich on 06/28/2019 - 11:05 pm.

    Deregulation and any regulation left has no teeth…we were warned by citizen canaries in the coal mine opps copper mine and ignored it because of fake job promises. Those accountable will have nice personal rewards at at the expense of health. Yep the turd world is here.

  7. Submitted by gloria flor on 06/30/2019 - 01:50 pm.

    Those who plant trees care about tomorrow’s children; those who plant sulfide waste do not–it really is that simple. Sulfide mining, like many other practices we humans have engaged in, is obsolete as an option on the table of how to move forward without apathetic blindness to what we will leave tomorrow’s citizens of this beautiful earth we all call home.

  8. Submitted by Jeffrey Swainhart on 07/01/2019 - 09:07 pm.

    I’m going to make a prediction. This mine is going to cost the people of Minnesota more than the sum total of all the jobs/wages created. The wealth of the mine will be in the pockets of the corporations, they’ll be long gone and the people of Minnesota will be left with the mess.

    • Submitted by Mark Bradley on 07/19/2019 - 11:42 am.

      The vast majority of the value of any mine goes to the people who do the work. The miners, contractors, truckers and suppliers of every product needed. most goes to the local community. Mining companies spend billions, often 10 or more years in advance of any actual return, and in the end receive about $1 for every dollar spent over a period of 20-30 yrs in most cases. Will you give me $100 if I agree that, if everything goes well I will repay you $200 over the next 30 yrs, but that there is a good chance that my plans will fail at any of 100 points, so that you receive no return at all? That’s the reality of modern mining. Glencore itself isn’t primarily a mining company, so their results look BETTER than most pure miners. But with $134 Billion invested, their shareholders netted $3.4 billion in 2018. In other words they’d have been far smarter to have placed the money in the bank than risk it in producing the minerals that our economy needs.

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