Europe's news in English

COPY LINK

MINING

Swiss mining company Glencore post higher profits despite fraud probes

Mining giant Glencore posted higher first-half net profit on Wednesday August 8th, shrugging off a number of adverse factors, such as a corruption probe in the United States

Published: 9 August 2018 09:10 CEST

Swiss mining company Glencore post higher profits despite fraud probes

Photo: Fabrice Coffrini/AFP.

The Switzerland-based company reported net profit of $2.7 billion (2.3 billion euros) in the first six months of 2018, a 13-percent improvement over the same period last year.

That came despite the announcement from the US justice department last month that it was investigating Glencore's operations in Nigeria, Venezuela and the Democratic Republic of Congo (DRC) over possible money laundering and violations of the Foreign Corrupt Practices Act.

News of the US probe, which had sent Glencore shares plunging, followed reports that Britain's Serious Fraud Office was also investigating the firm over its operations in DR Congo.

Meanwhile, Glencore in June had to settle a burgeoning legal dispute with its former partner in DR Congo, Israeli businessman Dan Gertler, who had threatened a multi-billion-dollar lawsuit.

Glencore was forced to temporarily stop paying royalties to Gertler once he was slapped with US sanctions over allegedly improper payments to DR Congo's President Joseph Kabila.

The company also had to cancel a share swap with aluminium giant Rusal after the Russian firm was itself slapped with sanctions by Washington.

But despite the headwinds, Glencore chief executive Ivan Glasenberg was able to boast that his firm remained on track for a strong year.

“We remain focused on creating value for shareholders through the disciplined allocation of long-term capital,” he said in a statement. Glencore's stock price ticked down about 0.5 per cent to 324.48 pence in early morning trading on the London exchange.

READ MORE: Glencore CEO quits Rusal board after US sanctions smash share prices

Spain's vast supplies of untapped rare minerals pit environmentalists against high-tech

Rare earths are essential in a range of high-tech products key to combatting climate change. Photo: Christophe ARCHAMBAULT/AFP

The group of 17 minerals are — despite their name — widely distributed across the globe, but exist in such thin concentrations that extracting even small quantities requires the processing of enormous quantities of ore.

Still, they are key ingredients in a range of high-tech and cutting-edge products, from wind turbines and electric vehicles to smart phones, medical devices and missile-guidance systems.

With China having a stranglehold on global supply and demand surging to meet the transition to a low-carbon economy, the political pressure – and financial incentive – to put strategic interests ahead of the environment is growing.

“Spain has the largest amount of rare earths in Europe after Finland. There is real potential,” said Vicente Gutiérrez Peinador, president of the National Confederation of Mining and Metallurgy Companies (Confedem).

Ninety-eight percent of the rare earths used in the EU are imported from China, prompting Brussels to recently urge member states to develop their own extraction capacities.

Spain’s reserves are estimated at 70,000 tonnes, according to the Geological and Mining Institute of Spain.

“On a global level this is not much, but on a European scale it is significant,” said Roberto Martínez, head of mineral resources at the institute.

‘Opportunity for Spain’

And it is enough to arouse the interest of investors as demand for the minerals continues to surge.

“It is an opportunity for Spain,” said Confedem’s Peinador, but also “for Europe”.

“Two sites in particular are considered interesting: one in Monte Galineiro, in Galicia,” and the other in the province of Ciudad Real, in the Castilla y Leon region, said Martinez.

Only the 240-hectare (590-acre) Matamulas site in Ciudad Real has so far been the subject of an application to mine.

The site is rich in monazite — an ore containing rare earth minerals including thorium, lanthanum and cerium.

A cyclist wears a protective face mask while riding along a dusty roadv where dozens of factories processing rare earths — China has a stranglehold on global supply of rare earths — along with the environmental devastation their extraction creates Photo: FREDERIC J. BROWN / AFP

However, the project has been blocked: the region refused the mining permit filed by Madrid-based Quantum Mineria in 2019 due to concerns about its environmental impact.

“This deposit is located in an area of great environmental value”, between two protected areas, said Elena Solis, coordinator for mining issues of the NGO Ecologists in Action.

It would involve “moving an astronomical amount of earth, which would put the whole area at risk”, said Solis, who also pointed to the “enormous amount of water” needed for this operation and the risk of pollution by toxic or even radioactive dust.

Holes filled in

These arguments were rejected by the company, which lodged a legal appeal.

The refusal of the permit “is incomprehensible” because “we are in a territory considered suitable for mining” by the administration, said Enrique Burkhalter, project director of Quantum Mineria, who denounced “unfounded fears” around the proposal.

According to the company, the extraction would take place on the surface, using a technique that limits the risk of toxic dust: the earth would be transported by truck to a factory, then sieved and finally returned to the site, once the minerals have been removed.

“It is not an open pit… The holes would be quickly filled in so that the crops could be cultivated again,” said Burkhalter.

These arguments are in turn rejected by Ecologists in Action, which believes that the land concerned will be permanently affected.

What will the courts say?

Beyond their differences, industrialists and environmentalists agree on the importance of the court’s decision, which could make or break the extraction projects.

The ruling, expected in several months’ time, will be “important” but “will not put an end to the debate”, said Martinez, who pointed to a paradox inherent in mining: “On paper, everyone wants to reduce external dependence, but as soon as we talk about concrete projects, it’s a different matter.”

Url copied to clipboard!