Billionaire Glasenberg’s Reign Spanned IPO Glory to Graft Probes

Ivan Glasenberg, a former coal trader who became the billionaire boss of Glencore Plc, will step down next year as the commodities behemoth navigates through corruption probes, scrutiny of its environmental bona fides and a share price that’s lost half its value during the past decade.

The 63-year-old chief executive officer will relinquish his position within the next six months, he told investors Friday. He’ll be replaced by fellow South African Gary Nagle, 45, who oversees the company’s coal assets. Glencore’s London-listed shares rose to their highest in almost 10 months.

The relentless Glasenberg took over as CEO in 2002 and became synonymous with the world’s biggest trader in coal, nickel, oil and agriculture. During his first nine years, the closely held company rode the Chinese-fueled commodity boom that sent demand for raw materials, and their prices, to unprecedented levels.

That surge encouraged him to take the company public in a 36.7 billion-pound ($59 billion at the time) listing in London, providing the cash for a breakneck spree of deals that reshaped the industry. It bought Xstrata Plc in a $90 billion deal, becoming the world’s biggest coal shipper in the process. Glasenberg has a net worth estimated at about $4.3 billion, according to the Bloomberg Billionaires Index.

“Ivan will be missed,” said Ben Davis, a mining analyst at Liberum Capital Ltd. in London. “Far more capable of straight-talking than most CEOs, and it was always enjoyable to hear him cut through the illogical strategies of his peers.”

Glencore’s troubles started in July 2018, when the company announced it was being investigated by the U.S. Department of Justice for possible money laundering and corruption. Similar probes followed in Brazil, the U.K. and Switzerland, where Glencore is based and Glasenberg lives.

Billionaire Glasenberg’s Reign Spanned IPO Glory to Graft Probes

At the core are Glencore’s operations in Democratic Republic of Congo and its deals with Israeli billionaire Dan Gertler, who was sanctioned by U.S. authorities for alleged corruption.

The investigations sucked investor faith out of Glencore. The company subsequently lost more than half its value, prompting the first serious questions about whether Glasenberg was the right person to right the ship.

Billionaire Glasenberg’s Reign Spanned IPO Glory to Graft Probes

Those doubts compounded as more institutional investors soured on the company’s giant thermal coal operations because of their greenhouse gas emissions.

To help allay those concerns, Glencore said Friday it’s seeking to be a net-zero emissions company by 2050. That implies the company will be largely coal-free by then after running down the life of its current mines -- even while naming a coal-business veteran to be the new CEO. Glencore shares rose 3.1% in London, closing at their highest price since February.

“We expect a seamless transition from Ivan to Gary,” said Chris LaFemina, an analyst with Jefferies LLC. “The announcement of Gary Nagle as Ivan Glasenberg’s successor is a positive.”

Glasenberg was born in 1957 and grew up near Johannesburg, the son of a Lithuanian immigrant who imported and distributed luggage. He was a high-school athlete and became a national champion in race-walking. He graduated in 1981 from South Africa’s University of the Witwatersrand with an accounting degree and earned his master’s degree in business administration two years later at the University of Southern California.

He learned the commodities trade at Marc Rich, the eponymous firm founded in 1974 by the man celebrated for inventing the spot-oil market. Rich later spent 17 years evading U.S. justice after making oil deals with Iran during the hostage crisis of 1979-1981. He was pardoned by President Bill Clinton in 2001.

Billionaire Glasenberg’s Reign Spanned IPO Glory to Graft Probes

Glasenberg was part of a management buyout from Rich in 1994 that saw the company renamed Glencore. Working under then-CEO Willy Strothotte, Glasenberg was instrumental in a strategy of buying the mines, smelters and refineries that produced the commodities it traded, helping separate the company from its major rivals.

Glasenberg succeeded Strothotte in 2002, just as China embarked on a decade of economic expansion and infrastructure build-out that would make it the largest user of metals -- and Glencore’s biggest customer.

The company’s global dealing in commodities enriched its owners, including Glasenberg, but the global financial crisis in 2008 forced change. Glencore’s reliance on bank leverage rather than shareholder equity left it exposed, while the company grew too big to be able to pay out its owners when they wanted to leave.

That helped prompt Glencore to go public in 2011 just as commodity prices were hitting record highs. The promise of its black-box trading operation, which distinguished it from pure mining competitors, lured investors to pay 530 pence a share.

During the next four years, the company evolved from disrupting the world of commodity trading to taking on the world’s biggest miners. Glasenberg implemented an empire-building strategy that scooped up mines across the globe. The Xstrata deal, a pursuit of Rio Tinto Group and analyst speculation about a possible bid for Anglo American Plc created an industry frenzy.

Billionaire Glasenberg’s Reign Spanned IPO Glory to Graft Probes

The Xstrata takeover made Glencore the biggest coal shipper, while also spotlighting Glasenberg’s ruthless side. Mining grandee Mick Davis, who’d built Xstrata from a debt-laden miner into a $50 billion powerhouse, was poised to become CEO of the combined company, but shareholders revolted over payments he was set to receive.

He was ousted, and Glasenberg took the top job. Davis has called that situation his lowest professional point.

Glasenberg pursued more deals, spending billions of dollars on zinc mines in South America, soybean silos in Argentina and gas stations in South Africa.

Looking back on almost 40 years of trading and investing in commodities, Glasenberg said Friday he got it right -- nearly always.

“We’ve made investments over the years, most have been good,” he said. “I’d say 95% of them have been good.”

As for the ones that didn’t work out, he said: “They’ve been small, thank God.”

In 2014, Bloomberg News reported on Glencore’s tentative approaches to Rio Tinto, the second-biggest miner, before the talks progressed. Rio quashed the possibility, and Glasenberg missed the chance to absorb its huge iron ore tons, the world’s most-traded mined commodity, into Glencore’s fabled marketing business.

Missing out on iron ore has hurt Glencore for years, with the company now dwarfed in value by Rio. That slump in Glencore’s value, especially compared with its rivals, led Glasenberg to say Friday he won’t play any role in the mining industry after retiring.

Billionaire Glasenberg’s Reign Spanned IPO Glory to Graft Probes

Still, the company dominates the commodity supply chain as the biggest trader of cobalt, nickel and coal, and second-biggest of copper.

Glasenberg’s chief lieutenants, who themselves became billionaires when the company listed, have been leaving the past two years. The exodus included former head of copper trading Telis Mistakidis, head of oil Alex Beard and Daniel Mate, who headed up its zinc business.

Though Glasenberg is retiring, in many ways Glencore will remain under his influence. He holds a 9.1% stake in the company, making him its second-biggest shareholder.

”I have no intention of selling my shares, and I have the full confidence of Gary to look after my investment,” he said in an interview minutes after announcing he was stepping down.

©2020 Bloomberg L.P.

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