Glencore to take majority stake of PolyMet project

Glencore Headquarters in Baar, Switzerland.

The preliminary results of PolyMet’s stock dilution scheme are in. Glencore, the world’s largest mining company and a lightning rod for labor and environmental criticism, will soon hold more than 71 percent of the Northern Minnesota copper-nickel project.

“We thank all of our shareholders for their interest in and support for this project, and are grateful to those who participated in this rights offering,” said Jon Cherry, PolyMet president and CEO. “The issuance of the federal wetlands permit in March, which brought the project to a fully permitted status, and clearing our balance sheet of debt with this rights offering puts us in a much stronger position to obtain construction financing for the project. We could not have achieved either one of these major milestones without Glencore’s longstanding technical and financial support.”

PolyMet sought to clear its $251 million debt to Glencore through a rights offering. This essentially meant asking stockholders to pay back the debt by repurchasing their stake in the company. This rendered the shares of early investors in the project nearly worthless.

I wrote last month about an investor affected by this decision. Dr. Bob Friedman had put $1 million into the company over ten years. He now offers a chilling warning about Glencore’s record regarding the environment, labor and minority ownership.

“You look at their history, how they treat unions, and I don’t know how people in Minnesota could think this would turn out well,” said Friedman in that piece.

In the end, the coming of Glencore should not have been a surprise. Their infusion of capital years ago set the ball in motion. But local labor leaders and elected officials now must try to spin their support for their project into support for a sworn enemy of the United Steelworkers.

State Rep. David Lislegard (DFL-Aurora), who is also a manager for one of the region’s largest industrial construction contractors, offered a defense of the situation in a June 23 Duluth News Tribune op-ed. He argued that Glencore is nothing to fear, thanks to Minnesota’s regulatory environment. Essentially, if they try anything fishy he and the state will get tough.

But that seems weak tea coming from one of many local leaders who routinely lambasts environmental regulations and owns a drawerful of PolyMet t-shirts. Furthermore, we see much evidence that Minnesota mining companies — while legally compliant — hold incredible influence over the enforcement of regulatory process, often securing sprawling extensions of long-expired permits.

As I’ve written before, PolyMet has a lot to sort out before it become a reality. Namely, it will need to establish a profitable business model before Glencore pours more than $1 billion into constructing the plant. Right now, the company’s stated cost of production appears to exceed the price of commodities like copper.

However, new problems have cropped up. Namely, a federal whistle-blower recently revealed serious allegations about how the Minnesota Pollution Control Agency’s handled comments and EPA concerns during the permitting process. Pointed, technical questions about the company’s environmental claims were apparently ignored and left out of the record.

I happen to agree with Marshall Helmberger of the Timberjay that this issue deserves proper investigation. Already the Court of Appeals and Office of the Legislative Auditor are looking into it. However, I doubt seriously this will be the copper bullet that stops the project. That distinction belongs to the volatile, preternatural power of market forces.

Glencore is PolyMet. PolyMet is Glencore. There can be no doubt that this company now has the wherewithal to open a mine. The question is now if and when, and what the people of Northern Minnesota can honestly expect to receive in return.


  1. “The question is now if and when, and what the people of Northern Minnesota can honestly expect to receive in return.”
    Acidic water, Long term toxic waste, union busting, loss of recreational revenue.

  2. Gerald S says

    In related news, a mine collapse at a Glencore copper mine in the Democratic Republic of the Congo just killed 40 miners. Glencore described the miners as “illegal artisanal miners,” and claimed that they had no way of preventing the independent miners from working the mine — in other words, in a region where guards can be hired for two or three dollars a day, they could not keep people out of the mine. Plus their agents were buying the copper ore the miners produced. Money for nothing for Glencore, with no overhead and without spending money on making the mine safe again.

    The DRC obviously is a whole different world in terms of regulation and the rule of law from Minnesta, but this does illustrate the standard operating procedure for Glencore: do whatever you can get away with to make money. If Glencore proceeds with the plans, Minnesota regulators will have their hands full keeping them on the strait and narrow.

    Given the price of copper and the cost of production at Polymet, I am puzzled as to just what Glencore is up to. They clearly are not in the business of losing money. Three possibilities emerge: 1.) Glencore actually does not intend to open the mine at this time, but will wait for the market to recover, and start building the facility and mining if and when it does. 2.) Glencore has elected to spend the money to open the mine in order to establish a precedent that will allow “me too” permitting of additional mines, making the entire deposit fair game for quick development if markets improve. 3.) Glencore has a plan to not follow the proposed safety features of the permit, greatly reducing costs of production.

    View three is a bit paranoid, but there have been some leaks suggesting that production of the mine will be considerably greater than proposed in the permit and that dry land disposal of waste would be used instead of the planned lagoon with its reverse osmosis water purification –although of course everything in Northeastern MN is subject to periodic saturation by rain and snowmelt and subsequent run-off into the water system, and sometimes that saturation and run-off is dramatic and near catastrophic, as the infamous 2012 deluge showed.

    My bet, eschewing paranoia, is that Glencore will pick option one, following the same path that Antofagasta announced when it did a similar takeover of Twin Metals to become the proprietor of that potential mine. The construction spending and promised mining jobs will have to await a stronger market, something that could take years or even decades, especially in the increasingly precarious world trade and economic conditions.

    • Bill Hansen says

      Option 4. The investors are international criminals, looking to launder their billions in the world’s biggest money laundering market, aka the USA.

  3. Somehow I doubt that Friedman would be making those comments if he hadn’t been ripped off. I daresay that like many absentee investors in harmful projects, he’s getting his just deserts.

    Likewise, those same Range politicians who yap about Minnesota’s “strict environmental standards,” etc are the same ones who have been in the forefront of gutting the integrity and technical competence of the MPCA. What a bunch of sleazy liars…..

  4. Joe musich says

    This entire Glencore/Polymet thing as it affects wether it be Friedman or the local hopeful for a job worker is a come to the demon example of the old adage “be careful what you wish for, it might just come true.” The connections to the grift and crime was apparent from the beginning. Few have not been complicit at some level in this process. Now with Twin Metals coming in right behind and the local mouthpieces being even more willing to “give it all away” and their company leader working to handing out candy mansions in DC. The truth of the matter is that we all have lost.

  5. Gerald S says

    Here is what the USW has to say about working with Glencore. I suspect that the local USW won’t have to worry, since without an existing contract or agreement, Polymet, if and when it opens, won’t be unionized.

    From Minnesota Post:

    “In 2015, the United Steelworkers union gave Glencore a “silver medal” in “corporate irresponsibility,” a news release from the time says. USW had been involved in a labor dispute with Glencore at sites in Texas and said in a news release that “allegations of firings, anti-union intimidation and tax evasion have followed Glencore to work sites all over the world.”

    “Glencore has mistreated workers and harmed communities on nearly every continent,” said Ruben Garza, USW District 13 Director, in the release.

    More recently, in May, locked-out Canadian steelworkers and USW protested at a Glencore shareholders meeting.”

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