More Argentine interests for Glencore

The merger worth US$90 billion agreed yesterday between Anglo-Swiss mining group Xstrata and commodities trading giant Glencore International is of interest in Argentina for several reasons.

Glencore already owns 34 percent of Xstrata which has interests in Argentina and Chile, and although its regional interests are dwarfed by the commodities trader’s, Xstrata’s concerns are by no means small fry.

It owns 44 percent of Chile’s Collahuasi copper mine, the world’s third-largest, which was subject to various strikes by workers during 2011 and is currently undergoing expansion. AngloAmerican mining company also holds 44 percent while Japanese business partners own the remaining 12 percent of Collahuasi.

Xtrata is also the main shareholder of the Minera Alumbrera Limited (MAA) project, which has the rights to exploit gold and copper beds in the province of Catamarca and has around 2,200 employees, as well as a copper mine in the province of San Juan and interests in Peru and Bolivia.

Glencore, however, is no newcomer to Argentina and is already well-established around the country. The commodities trading giant and its subsidiaries process, handle and market wheat, corn, barley, rice, oilseeds, meals, edible oils and biodiesel. It also owns Moreno, one of the world’s largest producers and exporters of sunflower oil and meal, which it acquired in 1997.

Based in Necochea, Daireaux and Villegas in the province of Buenos Aires, Moreno’s assets include three crushing plants, part-ownership of a biodiesel facility, an export elevator in the port of Bahía Blanca and a network of country elevators. Moreno is also engaged in the procurement of grains and oilseeds for export and its country elevators offer agribusiness services to third parties.

Glencore subsidiaries also own shareholdings of between 50 percent and 100 percent in flour and rice mills in Argentina, Uruguay and Brazil, while it also owns an oilseed crushing plant with an annual capacity of 350,000 metric tons in the latter neighbouring country.

With so many regional interests already in place between the two companies welcoming Xstrata and its mining concerns to the already vast Glencore stable is only likely to prove beneficial to the companies once the merger is completed later this year to create Glencore Xstrata.

The question is: how will the Cristina Fernández de Kirchner administration, which is making it increasingly difficult for foreign firms to invest in and import to Argentina and is also keen to limit foreign land ownership via a new law passed on December 16, 2011, react to the deal?

Published in the Buenos Aires Herald on February 8, 2012

Leave a Reply

Your email address will not be published. Required fields are marked *