World’s largest mining company moves on PolyMet

A Glencore coal train runs near Lochinvar, Australia. (PHOTO: Jack Chambers, Flickr CC)

Today, global mining giant Glencore moves one big step closer to owning the proposed Northern Minnesota copper-nickel venture PolyMet.

Glencore is the largest mining company in the world by revenue with properties on six continents. It is three times larger than the next largest mining company. It is 11 times larger than the world’s largest steelmaker ArcelorMittal and almost 200 times bigger than U.S. Steel. Glencore is a stunning 2,500 times bigger than Cleveland-Cliffs.*

Under a stock offering deal announced yesterday, the longtime partner and financier of the PolyMet project could soon take control of the proposed mine. If it does, we’ll find ourselves in a very different phase of this story.

PolyMet recently received permits to mine copper, nicker and other metals at sites near the former LTV taconite production plant in Hoyt Lakes on Minnesota’s Mesabi Iron Range.

The project has been the touchstone in a ferocious political battle in the state. Pro-mining forces desperately seek jobs and political power in an economically deprived region. Project skeptics and most environmentalists object to the potential impact on Northern Minnesota’s natural world and the region’s continued focus on a shrinking mining workforce.

The stock deal yesterday will pay back PolyMet’s debt to Glencore by allowing stockholders to buy an equivalent amount of newly released stock. The problem: watering down of the stock value means that private investors now sit on virtually worthless stock.

To retain their share of the company those investors have to pay in again. Some may, but others will understandably bow out. Meantime, all the money goes to Glencore, which just feeds it back into new stock. That’s one potential pathway to Glencore ownership.

It’s not the only pathway, though. PolyMet changed its bylaws to allow more Glencore representatives on its board of directors. That will make Glencore the de facto overseer of the company, something that will be enshrined in ownership soon enough.

Glencore owns a flawed record of labor and environmental dealings around the world. Liberal columnist Jim Hightower lambasted Glencore in 2016 as a “rapacious, global lord.” The United Steelworkers of America denounced the company for locking out its workers in Canada and the United States at different times over the past three years.

In one case, the company brought in replacement workers, known in union circles as scabs. In 2014, the Steelworkers called Glencore the “Worst Company in the World” for its labor dealings. It has remained on their list at or near the top ever since.

Fundamentally, Glencore is a different kind of mining company than the Iron Range has dealt with in recent years. They’re enormous and fast-moving, anti-union and hard-bargaining. They’re everything a mining company normally is, but much more so.

Their involvement might mean an aggressive push to complete the mine near Hoyt Lakes quickly. Or it could mean Glencore will use this project as leverage on other projects, essentially putting a pin in the map to drive a harder bargain with other copper-nickel sources. Then again, it could also be a long term plan to secure mineral sources in the future, amid changing global supply and demand.

This can only be seen as a blow to ensure union representation at any resulting mine. I expect it might be spun otherwise, but I’m very skeptical. Companies have new, sophisticated ways to discourage unions in the 21st Century. Glencore tends to inherit unions; it rarely entertains them in new ventures.

It also means we may soon purge the word “PolyMet” from our vocabulary. Now we’re dealing with Glencore. Project supporters will be glad to hear that this company is very, very real. But time will tell whether the region benefits from working with Glencore.

No matter our opinion about copper-nickel mining in northern Minnesota, now is a time to wear our critical thinking caps.

* One important clarification here. The gap between Cliffs’ revenue in 2017 and 2018 is pretty large, and more so when you look at the previous years, which is where the Glencore numbers come from. A more Cliffs-friendly interpretation would go off the most recent year, and that would be more like U.S. Steel’s 200-1 ratio. I realized later that, divided into $220 billion, ratios become very volatile in this example. The point remains that Glencore is much, much larger than any company the Range has ever dealt with before.


  1. When the unions are gutted
    When the water is poisoned,
    When the environment is destroyed
    And the beauty is just a memory
    When the riches have been taken
    and the faux holding companies are bankrupt
    when the land is then returned to the taxpayers . . .
    the only humans still supporting mining interests
    will be Senators Klobuchar and Smith.

  2. The project is fine from a logistics standpoint. The problem has always been the foreign ownership. A lot like Nashwauk. No global player wants to actually mine in the U.S. when they abuse workers elsewhere.

    I would like to see the US State Department shut down this foreign takeover.

  3. Gerald S says

    Overall, I agree with your assessment.

    But, if Glencore owns the mine directly, even with their horrible labor, environmental, and human rights record, there would be one advantage for Minnesotans. Glencore has much deeper pockets and would have a lot harder time bankrupting their way out of an environmental disaster or the costs of protecting the environment after closure than the previous sock puppet corporation.

    But of course Glencore knows that, and given their track record, my bet is that they will set up another puppet corporation — Glencore Minnesota? — to keep hands out of their pockets if they want to shed responsibility.

    Glencore of course has much more resources to fight the upcoming litigation from the Fond du lac Band and environmental groups.

    The other thing that comes to mind is what you alluded too. With copper and nickel prices at about 75% of levels in the original business plan, there is little incentive to actually begin the mine now. More likely they will sit on their permits, do some exploratory work, and wait on the market, just as Antofagasta is doing. Glencore has plenty of active copper mines producing copper for the current demand much more cheaply, and injecting the world’s most expensive copper into the currently moribund market would be of questionable value to the company. Polymet had just the one project, but Glencore has many, so they can wait.

    The shareholders take it in the neck, but the stock was always high risk, so only naive investors should be unprepared.

  4. Is Glencore likely to increase it’s ownership positions in Minnesota politicians, or do its present holdings meet its needs?

    • I’ve often wondered this myself… There have been Glencore connections to Democrats (not MN DFLers specifically) on a national scale ever since the Clinton Administration.

  5. Norshorguy says

    In light of this news there was a very interesting analysis yesterday on MinnPost regarding PolyMet and the plan for its financial assurance.

    • Gerald S says

      As I said, if Glencore took over in a straight-shooter way, MN would benefit in terms of the financial viability of the guarantees made. However, “straight-shooter” and “Glencore” do not belong in the same sentence — this is one of the most sociopathic corporations in the world, and can be counted on to try every trick available on its workers, the environment, and the state. I cannot believe they will not create a structure that prevents them from being financially liable for any damage they do and allows them to dump any costs on the grateful taxpayers of Minnesota. Anything else would be out of character. The fact that the article in the MN Post shows that they are probably lying to the DNR and other state and federal regulators in their submissions for permitting is completely typical.

      Range politicians and union leaders may well be in the position of needing to be careful what they wish for, since they may get it.

      In an aside on the non-ferrous mining issue, a far-right think tank just had an op-ed published in the DNT. Although nominally about mining, it was actually an attack on renewable energy. However, the interesting thing in the op-ed to me was that beyond the usual echo-chamber comments, they made a supposition for direct employment by non-ferrous mining that was literally over 20 times the current numbers Polymet is citing after their recent substantial downward revision of promised jobs. Does this mean they are assuming more than 20 additional mines at least as big as Polymet? Or eight or ten much bigger ones? If so, where are they getting their information, and who is watching for the damage twenty sulfide-substrate mines will cause under even ideal circumstances? In this circumstance, “overburden” becomes a verb.

      • Norshorguy says

        “I cannot believe they will not create a structure that prevents them from being financially liable for any damage they do and allows them to dump any costs on the grateful taxpayers of Minnesota.”

        Gerald, I think you are correct. The article I cited seems to indicate that the terms for Financial Assurance are exactly that.

  6. independant says

    If anyone has heartburn over a huge multinational corporation getting involved to this degree they need to ask themselves a few things. Is 14 years and $377 million dollars in upfront costs to get a mining operation permitted, yes just permitted, in our best interest as local citizens? No doubt we need strict environmental due diligence for a new mining project but is that really all that’s been going on over the last decade and a half. There are all too many groups that don’t want mining of any kind and exploit the process and twist it into a delay tactic to accrue so much up front debt that a company is forced to walk away. If we are being honest, we cannot in one breath say we want only local companies to develop all mining projects on the Iron Range and in the next be such obstructionists that it forces a situation where only a huge multinational corporation can possibly complete that lift.

    • Gerald S says

      One important part about the “14 years.” Polymet themselves prolonged the process, probably by almost double, by first filing a plan they themselves now concede was inadequate. It was only after the first plan failed and was rejected that they got serious and began the real work of filing.

      As to international mega-corporations, non-ferrous mining is completely dominated by huge multinational companies, among the biggest in the world, all with horrible labor, environmental, and human rights track records, so anyone who thought that non-ferrous mining on the Range would be done by boutique corporations independent of the big players was just naive. Polymet itself has always been a cat’s paw of Glencore, and this recent development was inevitable due to the problem of raising operating capital for non-ferrous mining in MN in the face of world copper and nickel prices too low for the costs of production in MN, something Aaron has discussed earlier.

      I suspect, as I said above, that Glencore will now take the same path as Antofagasta, waiting to begin serious development until markets become more favorable. The alternative possibility is that Glencore is willing to eat a very large loss, at least for a few years, in order to finish development of this smallish project so as to be able to claim “me too” permitting on more and larger future Minnesota projects, including a very large expansion of Polymet itself beyond the permitted operation.

      • independant says

        I would like to see companies the likes of Lundin out of Toronto who operate the Eagle mine in the upper peninsula of Michigan make plays on projects here in Minnesota. Glencore and Anotfagasta are not the only players in this industry but they are probably the only two capable of dealing with the unnecessary layers of B.S. and cost we have baked into the cake here in Minnesota. Teck out of Vancouver would be another one I would like to see make a move on developing their leases here on the Iron Range but I cannot blame them for sitting on the sidelines with the drama. Too bad we cannot develop our resources and better our communities.

        • Gerald S says

          The problem is not regulation, but cost of production. These Range mines are going to produce the most expensive copper in the world. And copper prices are down by 25% compared to prevailing prices at the time the mines were conceived in the late 00’s, and probably at least 33% compared with prices that business plans were projecting. Changes in technology in consumption of copper are the main thing holding prices down, although weakened demand in China is a part of the issue. The technology is only going to change in the direction of demanding less copper, and, barring the introduction of a new technology dependent on copper, prices are likely to stay in the rough range they have been since 2011.

          That is why the deposits, known for at least sixty years, have not been exploited up until now. The copper was just too expensive for the market, and now is again. The boom in copper in the late 00’s made it look like that had changed, but although prices are still above historical levels, the prices are not high enough to make mining rational at this time.

          And that is why only huge corporations with very deep pockets are in a position to enter into projects planning opening mines and investing in the groundwork and permitting, and why, at least for the moment, they are hanging back, doing exploration and securing permits, but not turning a shovel yet. The smaller, and perhaps more ethical, companies you cite are not blessed with enough cash or credit to enter into the projects just now. They may be able to come in later, using by then established techniques and “me too” permitting, and perhaps in a market that has recovered some.

          Many pro-non-ferrous mining people like to point to the DNR and the MPCA as obstacles here, but in fact they have been relative pushovers, including approving Polymet’s original “sweetheart” plan before it was killed by federal courts and federal agencies, and approving the current Polymer project. The problem is not state regulators, it is the implacable forces of the market.

  7. Norshorguy says

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.