5 September, 2012The Glencore-Xstrata merger is on a knife edge. IndustriALL Global Union warns of the threat posed to workers by the new behemoth should the deal go through, and tells Xstrata of the reputational damage Glencore will bring them.
IndustriALL Global Union has consistently condemned the intended merger as being against the interests of workers and society in general.
Glen Mpufane, IndustriALL Global Union Director of Mining and DGOJP, said, “Global industrial relations and the global labour market in the metals and mining industry do not need another multinational mining company of this monstrous size and power, a new behemoth.”
The anticipated merger between Glencore and Xstrata is poised for a dramatic vote on 7 September 2012. Xstrata equity shareholders look likely to scupper what had been considered to be a done deal before the Qatar sovereign wealth fund started to flex its muscle after it acquired a 12 per cent shareholding in Xstrata. The Qatar sovereign fund’s opposition to the deal is a result of what it considers to be an unfair deal ratio. Glencore has offered 2.8 shares for each Xstrata share while Qatar demands a ratio of 3.25.
Although Glencore owns 34 per cent of Xstrata, it cannot vote on the deal. The deal structure allows 16.5 per cent of shareholders to block the merger and the Qatar sovereign wealth fund needs support from only 4 per cent to block it.
The Qatari fund hopes to hold off the deal after other Xstrata equity shareholders such as Standard Life, Schroder, Norges Bank and Knight Vinke, recommended a vote against if Glencore does not improve its ratio.
Another sore point for Xstrata shareholders is the huge payday for both CEOs Ivan Glasenberg and Mick Davis, some 218 million EUR retention payments if the merger happens.
“The intended merger is bad news for mineworkers across the world and we urge shareholders to vote against it, if not for benevolent reasons but for the sake of their equity interest, which will be jeopardised by the reputational damage Glencore brings to the merger,” added Mpufane.
The lack of transparency associated with Glencore as a hitherto private commodity trading company and its dismal and abhorrent safety and fatality record must be a cause for concern. According to Bloomberg, Glencore reported three deaths for every 10,000 workers in 2011, which is more than triple the 0.8 rate at Xstrata, the world's largest exporter of thermal coal. In June 2011, Reuters reported that the European Investment Bank had frozen all new loans to the commodities trader Glencore and its subsidiaries over serious concerns relating to company’s corporate governance and environmental impact issues. In May 2012, at the company’s first AGM as a public listed company, Global Witness issued a report accusing Glencore of potentially corrupt deals in the Democratic Republic of Congo.
“In the event that the deal happens, IndustriALL Global Union and its 50 million members across 140 countries stand ready, shoulder to shoulder, to take on the new behemoth,” said Mpufane.