Glencore's listing shines a spotlight on South Africa's commodity traders
Nice work if you can get it, as the song goes, and some do get it if they try. Like Ivan Glasenberg, the South African CEO of Glencore, the world's largest trader of bulk commodities, who will be worth $9bn after the London listing of the company. Another nine senior traders, among them Steven Blumgart and Stuart Cutler, two fellow South Africans, can also expect rich pickings, as well as its other 475 partners.
Glencore's IPO, flagged for months, was finally officially announced today. A 20% stake, worth between $9bn and $11.2bn, will be sold. It will be the biggest in UK history and only the third-largest in Europe after Germany's Deutsche Telekom and Italy's Enel. Glasenberg rode the wave of the commodities boom to transform Glencore into a global powerhouse: in 1984 when he joined as a coal trader, after five years working as an accountant in South Africa, the company's annual turnover was $23bn. Last year it was $144bn.
The decision to list was taken to achieve "sustainable growth" and is not an attempt to cash in at the top of the commodities cycle. "Nobody is cashing out or taking money off the table," Glasenberg insists. "We are going to run this company to make maximum returns for our investors, including ourselves." The partners will all become multimillionaires, but they are locked in for a five-year period before they can sell their shares.
Glencore's phenomenal success has shone a spotlight not just on the secretive world of Glasenberg and partners, but more in general on the little-known world of commodity traders.
Being in South Africa helps, experts say. "Eleven countries within Africa are ranked amongst the top ten sources for at least one major mineral," says Alison Thom, senior consultant at Anton Apps International Recruitment Specialists in Johannesburg. "For many companies this is worth investing in and commodity traders are becoming more and more important in global trading."
South Africans have the reputation of a good eye for commodities but also have a daring others lack.
Glasenberg made money investing in places like the Democratic Republic of Congo where others fear to tread. Now, however, good and ambitious commodity traders no longer need to leave South Africa, as Glasenberg did, in order to rise up the ranks.
"With the increase in opportunities in South Africa and the increase in foreign direct investment, there is no longer the need to move abroad to gain the experience needed to fly up the corporate ladder," says Thom. "Salaries and packages in South Africa are now becoming on a par with those in the UK, and as the country is still producing some of the world's best platinum, gold and diamonds, commodity trading will continue to be part of the largest employment sector."
