Glencore now a majority shareholder of PolyMet
The Swiss company, known for its shoddy environmental and labor practices, has a controlling interest in the company trying to open Minnesota's first copper-nickel mine.
Swiss mining giant Glencore is now the majority shareholder of PolyMet, the company trying to open Minnesota's first copper-nickel mine, a move that gives Glencore a substantial say in the direction of the contentious project.
The results of a rights offering to clear over $240 million in debt PolyMet owned to Glencore has resulted in Glencore owning almost 72% of PolyMet's common shares, PolyMet announced in a news release Thursday morning. Glencore had owned 29% of PolyMet's common shares prior to the completion of the rights offering.
The rights offering, announced by the company when it earned its final permit , allowed shareholders to purchase additional shares at a discounted rate, the proceeds of which are used to pay off the debt.
The deal was fully backstopped by Glencore, meaning if the other shareholders fall short in raising the $265 million needed in combined debt and closing costs, Glencore promised to fulfill the remainder.
PolyMet still needs to raise nearly $1 billion in financing for the project. In a news release Thursday, PolyMet CEO Jon Cherry said that would be easier with its debt cleared.
"Clearing our balance sheet of debt with this rights offering puts us in a much stronger position to obtain construction financing for the project," Cherry said. "We could not have achieved either one of these major milestones without Glencore’s longstanding technical and financial support.”
Had all PolyMet shareholders exercised their rights in the offering, ownership breakdown in shares would have remained the same.
By becoming a majority shareholder Glencore now has substantial say in the direction of PolyMet, including the ability to replace corporate officers and hold more positions on the board of directors.
That's worrisome to opponents of the mine, who say Glencore's shoddy labor and environmental record would only make the controversial project even more dangerous. T he U.S. Commodity Futures Trading Commission is investigating Glencore for alleged corrupt practices and the Justice Department has subpoenaed Glencore for alleged money laundering and possible corruption .
In 2015, United Steelworkers ranked Glencore as the second-worst company in the world for its anti-union behavior and mistreatment of workers at refineries.
PolyMet spokesperson Bruce Richardson said Thursday afternoon that there were "no immediate changes that I'm aware of" at PolyMet now that Glencore is its majority shareholder.
Richardson stressed that PolyMet remains a publicly traded company run by a board of directors made up of both Glencore and independent directors.
"Our leadership team remains focused on moving the project forward," Richardson said.
Glencore did not immediately respond to a request for comment Thursday.
Paula Maccabee, counsel and advocacy director of WaterLegacy, an environmental group opposed to PolyMet, has argued in the Minnesota Court of Appeals that Glencore should be listed on permits recently awarded to PolyMet.
"Glencore isn’t on any of the PolyMet permits," Maccabee said. "Glencore is not responsible for any NorthMet mine treatment, financial assurance or any liability for NorthMet mine toxic pollution or a catastrophic dam failure at the NorthMet tailings waste disposal facility."
Since 2008, PolyMet has borrowed almost exclusively from Glencore and has promised to give all its mined ore to Glencore.
Just as Glencore's majority stake in PolyMet was announced, news broke that at least 41 "illegal artisanal miners" died at a Kamoto Copper Company mine, operated by Glencore's subsidiary Katanga, in the Democratic Republic of Congo. In a statement, Glencore said the miners had trespassed and were illegally mining on a shelf above the main extraction area when the shelf collapsed.
"These incidents were not linked to KCC operations or activities," Glencore said in a news release. "KCC is currently engaged in assisting search and rescue operations with the local authorities."
Critics of the PolyMet project say it could release tainted wastewater into the St. Louis River ecosystem, while supporters say the project would bring 300 jobs to the region.
PolyMet, with its mine and processing plant near Hoyt Lakes and Babbitt, is the state's first fully permitted copper-nickel mine.
Kathryn Hoffman, CEO of the Minnesota Center for Environmental Advocacy, which opposes the mine, released a statement Thursday decrying the takeover. Hoffman noted that Glencore is headed by Tony Hayward, who was forced to leave his job as head of BP after the Gulf oil spill in 2010.
"Glencore’s worldwide record of environmental disasters, violations of human rights and disregard for workers and labor rights speaks for itself ... The terrible record of Glencore and its leaders should concern every Minnesotan," Hoffman said.
Several state and federal agencies are investigating the review process for a water permit later granted to PolyMet over allegations the Minnesota Pollution Control Agency stifled concerns made by the Environmental Protection Agency.