After Rio Tinto revealed it had recently rejected Glencore, CEO Ivan Glasenberg is plotting his next move
There’s a new game being played in the City at the moment, called “guess what Ivan does next” where participants try to predict what deal Ivan Glasenberg, the chief executive of the commodities giant Glencore, is secretly cooking up.
If it sounds simple, it isn’t. Few individuals encapsulate the term “dealmaker” as perfectly as Glasenberg. A former trader, it is something that genuinely seems to be in his DNA and that has undoubtedly enabled him to turn Glencore into the unparalleled force that is today.
That means two things: firstly, he is likely to keep everyone guessing; and secondly, anything could be on the menu.
The latter point was confirmed a fortnight ago, when Rio Tinto, the world’s biggest iron ore miner, revealed that it had recently rejected a $140bn (£87bn) merger proposal from Glencore. With the company responding by saying it was no longer looking at the deal, under the UK Takeover Code Glencore now has to wait six months before it can attempt the ambitious move again.
Most observers believe Glasenberg will spend that time putting together another bid and it is easy to see why. A tie-up would create a new superpower in the mining world, uniting what most mining experts regard as the most sophisticated commodities trading business on the planet with the world’s best collection of assets.
Rio generates almost all its earnings from iron ore, which Glencore trades but does not mine. A combination of the two would create billions of dollars in cost savings.
Another potential target is a bunch of mines being spun out of BHP Billiton, one of Glencore’s other big rivals. The diverse collection of aluminium, nickel, silver and coal assets is due to be hived off and turned into a separate company next year, with an expected value of between $10bn and $15bn.
Glasenberg has helped to fuel speculation that he might pounce by speaking publicly about the attractiveness of the portfolio and hinting that they would be a better fit for Glencore than BHP.
“There are some good assets, but they’re non-core for BHP, they don’t move the needle for them,” Glasenberg said. “They want, big, easy-to-run operations with a long life. We’ve got a different structure, with trading units to feed into.
“Cerro Matoso, the Colombia nickel mine, is a great asset. South African coal – not bad. They’re just assets that don’t fit into BHP,” he said in August.
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