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

Photo: Getty
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What Jeremy Corbyn gets right about the single market

Technically, you can be outside the EU but inside the single market. Philosophically, you're still in the EU. 

I’ve been trying to work out what bothers me about the response to Jeremy Corbyn’s interview on the Andrew Marr programme.

What bothers me about Corbyn’s interview is obvious: the use of the phrase “wholesale importation” to describe people coming from Eastern Europe to the United Kingdom makes them sound like boxes of sugar rather than people. Adding to that, by suggesting that this “importation” had “destroy[ed] conditions”, rather than laying the blame on Britain’s under-enforced and under-regulated labour market, his words were more appropriate to a politician who believes that immigrants are objects to be scapegoated, not people to be served. (Though perhaps that is appropriate for the leader of the Labour Party if recent history is any guide.)

But I’m bothered, too, by the reaction to another part of his interview, in which the Labour leader said that Britain must leave the single market as it leaves the European Union. The response to this, which is technically correct, has been to attack Corbyn as Liechtenstein, Switzerland, Norway and Iceland are members of the single market but not the European Union.

In my view, leaving the single market will make Britain poorer in the short and long term, will immediately render much of Labour’s 2017 manifesto moot and will, in the long run, be a far bigger victory for right-wing politics than any mere election. Corbyn’s view, that the benefits of freeing a British government from the rules of the single market will outweigh the costs, doesn’t seem very likely to me. So why do I feel so uneasy about the claim that you can be a member of the single market and not the European Union?

I think it’s because the difficult truth is that these countries are, de facto, in the European Union in any meaningful sense. By any estimation, the three pillars of Britain’s “Out” vote were, firstly, control over Britain’s borders, aka the end of the free movement of people, secondly, more money for the public realm aka £350m a week for the NHS, and thirdly control over Britain’s own laws. It’s hard to see how, if the United Kingdom continues to be subject to the free movement of people, continues to pay large sums towards the European Union, and continues to have its laws set elsewhere, we have “honoured the referendum result”.

None of which changes my view that leaving the single market would be a catastrophe for the United Kingdom. But retaining Britain’s single market membership starts with making the argument for single market membership, not hiding behind rhetorical tricks about whether or not single market membership was on the ballot last June, when it quite clearly was. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.