So now that Glenstrata is a go, should we be concerned?

The good news is that when it comes to transparency, bigger is (normally) better.

Vows have been declared and permission granted; the ceremony is set for the marriage of the two largest names in commodities – Glencore and Xstrata. The $76 bn merger to create Glenstrata is the largest in the industry’s history and yesterday was finally approved by the Chinese Ministry of Commerce (Mofcom).

Previously, I wrote of how governments were fretting at the deal. Since it was first announced in February 2012, many have vented their disapproval of a marriage between the two largest commodities companies in the world. The deal was held up by Qatar, South Africa, the EU and China. At each hurdle, Glencore – the one wearing the trousers in this relationship – was forced to pay a little bit extra, or sell a few more businesses.

Yesterday’s announcement was no different: Glencore was forced to sell Las Bambas, a big copper project in Peru. The decision was inevitable from a Chinese point of view: Glenstrata would control over 10 percent of the world’s copper concentrate supplies and China is the world’s largest copper consumer.

So now that Glenstrata is a go, should we be concerned? Will Glenstrata be the Ayatollah or the Mandela of the world’s commodities? The word monopoly is too easily deployed, but when one company dominates so many essentials – thermal coal, ferrochrome, zinc and copper to name a few – there is reason for concern.

The world of commodities is traditionally discreet. An earlier blog I wrote on Marc Rich, Glencore’s founder, shows just how suspect it can be. Price fixing, sanctions busting, illicit trading are all buzz words surrounding the industry, let alone the environmental and human rights issues that follow mining companies into the darkest corners of the earth.

But there is good news. When it comes to transparency, bigger is (normally) better. The larger the company and the more stock exchanges on which it is required to report to generally means that it is forced to clear up its act. Just look at ENRC’s move out of the Congo in December, when it was accused of entering a dodgy partnership with the suspicious mining billionaire Dan Gertler.

More good news for transparency came the same day that the Glencore-Xstrata deal was approved. Greg Page, chief executive of the trading house Cargill, advised the commodities industry to embrace greater transparency: “The industry, as a whole, must accept its responsibility to behave appropriately, properly, ethically,” Page said. “There are lessons to be learnt from the banking sector, and the forced legislation it prompted and is continuing to prompt.”

The marriage of Glencore and Xstrata is now scheduled for 2nd May. Let’s hope the honeymoon precedents a new era of transparency.

Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

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Where Labour has no chance, hold your nose and vote Lib Dem

May's gamble, MacKenzie's obsession and Wisden obituaries - Peter Wilby's First Thoughts.

In 2007 Gordon Brown allowed rumours to circulate that he would call an early general election for the spring of 2008. When he failed to do so, he was considered a coward and a ditherer and never recovered. Theresa May has tried a different strategy. After firmly denying that she would call an early election and killing off speculation about one, she suddenly announced an election after all. Will this work better for her than the opposite worked for Brown?

The Prime Minister risks being seen as a liar and an opportunist. Her demand for “unity” at Westminster is alarming, because it suggests that there is no role for opposition parties on the most important issue of the day. If Labour and the Lib Dems are smart enough to co-operate sufficiently to rally the country against what looks like an attempt to instal an authoritarian, right-wing Tory regime, May, even if she wins the election, could find herself weakened, not strengthened. I never thought I would write this but, in constituencies where Labour has no chance, its supporters should hold their noses and vote Lib Dem.

Taken for granted

I wonder if May, before she took her decision, looked at the precedents of prime ministers who called unnecessary elections when they already had comfortable parliamentary majorities. In 1974, after three and a half years in office, Edward Heath, with a Tory majority of 30, called a “Who runs Britain?” election during a prolonged dispute with the miners. He lost. In 1923, Stanley Baldwin, a new Tory leader sitting on a majority of 75 obtained by his predecessor just a year earlier, called an election because he wished to introduce tariffs, an issue strikingly similar to the one raised by Brexit. He also lost. The lesson, I think (and hope), is that prime ministers take the electorate for granted at their peril.

China’s long game

Commentators compare the crisis ­involving North Korea and the US with the Cuban missile crisis of 1962. It doesn’t feel that way to me. For several days that year, nuclear war seemed, to my 17-year-old mind, all but inevitable. I went to the cinema one afternoon and felt surprise when I emerged three hours later to find the world – or, at least, the city of Leicester – going about its business as normal. Two nuclear powers were in direct confrontation. The US threatened to invade communist Cuba to remove Soviet missiles and blockaded the island to prevent deliveries of more weapons. Soviet ships sailed towards the US navy. It wasn’t easy to imagine a compromise, or who would broker one. Nobody doubted that the two sides’ weapons would work. The Soviet Union had carried out nearly 200 nuclear tests. North Korea has claimed just five.

For all the talk of intercontinental missiles, North Korea at present isn’t a credible threat to anybody except possibly its neighbours, and certainly not to the US or Britain. It is in no sense a geopolitical or economic rival to the US. Donald Trump, who, like everybody else, finds the Middle East infernally complicated, is looking for an easy, short-term victory. The Chinese will probably arrange one for him. With 3,500 years of civilisation behind them, they are accustomed to playing the long game.

Mussel pains

Whenever I read Kelvin MacKenzie’s columns in the Sun, I find him complaining about the size of mussels served by the Loch Fyne chain, a subject on which he happens to be right, though one wonders why he doesn’t just order something else. Otherwise, he writes badly and unfunnily, often aiming abuse at vulnerable people such as benefit claimants. It’s a new departure, however, to insult someone because they were on the receiving end of what MacKenzie calls “a nasty right-hander”, apparently unprovoked, in a Liverpool nightclub. He called the victim, the Everton and England footballer Ross Barkley, who has a Nigerian grandfather, “one of our dimmest footballers” and likened him to “a gorilla at the zoo”.
The paper has suspended MacKenzie, a former Sun editor, and Merseyside Police is investigating him for racism, though he claims he didn’t know of Barkley’s ancestry.

Several commentators express amazement that Sun editors allowed such tripe to be published. It was not, I think, a mistake. Britain has no equivalent of America’s successful alt-right Breitbart website, disruptively flinging insults at all and sundry and testing the boundaries of what it calls “political correctness”, because our alt right is already established in the Sun, Express and Mail. To defend their position, those papers will continue to be as nasty as it takes.

Over and out

Easter is the time to read the cricket annual Wisden and, as usual, I turn first to the obituaries. Unlike newspaper obituaries, they record failures as well as successes – those who managed just a few undistinguished performances in first-class cricket and, most poignantly, some who promised much but died early. We learn of a 22-year-old Indian who, during demonstrations against the alleged molestation of a schoolgirl, was shot dead by police and whose grieving mother (invoking the name of one of India’s greatest batsmen) cried, “Bring my Gavaskar back!” In England, two young men drowned, having played one first-class match each, and a 22-year-old Sussex fast bowler, described as “roguish” and “enormously popular”, fell off a roof while celebrating New Year with friends in Scotland. In South Africa, a young batsman was among five municipal employees killed when their truck crashed; the local mayor fled the funeral as his workmates “chanted menacingly” about unpaid wages.

Among the better-known deaths is that of Martin Crowe, probably New Zealand’s best batsman. In a Test match, he once got out on 299 and reckoned the near-miss contributed to the cancer that killed him at 53. “It tore at me like a vulture pecking dead flesh,” he said. Cricket can do that kind of thing to you. 

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 20 April 2017 issue of the New Statesman, May's gamble

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