Glencore’s Bedfellows

Glencore’s Bedfellows

As Glencore heads towards a financing showdown with ASX-listed Aurelia Metals on Monday, its sometimes predatory approach suggests its relationship with junior partners must be tense.

“There may be synergies and that is terrific,” Rio Tinto’s boss Sam Walsh quipped last year, having rebuffed a coal joint-venture with Glencore, “but if you lose your shirt going into a transaction like that, then it doesn’t matter what the synergies are.”

Glencore’s partners however stand firmly behind the group. “From day one, Glencore has supported our operations with innovative structures and during some very difficult times,” one partner in Zimbabwe says, “during the Zimdollar experiment and so on. They gave us off-take terms that were very, very competitive, which nobody has ever been able to match.”

“They put in the money, they supported the project as they said, they did everything right,” echoes Chris Giles, managing director at Havilah Resources, a gold-copper explorer that is 6.5 per cent owned by Glencore, after it invested in Havilah’s Kalkaroo copper discovery in South Australia.

“They liked the project and had the right to have all the off-take, which is what they were primarily interested in.”

“We did have a bit of a dispute over the price the shares should be issued at, but that wasn’t their fault. The agreement wasn’t as clear as it could have been and naturally, they take the interpretation that favours them. That was just poor drafting.”