Glencore looks to Mine and Market Iron Ore

Iron ore is a key ingredient in manufacturing steel, and Glencore International PLC has been an integral player in marketing the commodity around the globe.  However, the company is now considering becoming an iron ore miner itself. 

"There's no reason why we shouldn't be a miner," says CEO Ivan Glasenberg.  "We have always said we wish to grow the iron ore business since it" became a spot tradeable business.

Glencore owns 34.5 percent of mining company Xstrata PLC. The companies have commercial agreements for Glencore to market nickel and zinc produced by Xstrata, and Glencore has been reported as stating it would consider entering into marketing deals for iron ore produced by Xstrata.  But Glasenberg notes, "we have a close relation but there is no reason to say they are the miner and we are the marketer... If opportunities present themselves, we will become the miners."

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Glencore already has several commercial agreements for marketing iron ore in Australia, Sierra Leone and the U.S. to name just a few regions.  The company this week agreed to purchase 48 percent of Australian iron ore miner Mount Gibson Iron Ltd.’s output from its upcoming Extension Hill mine.  In January the company formed an offtake agreement with London Mining PLC for ore from its Sierra Leone mine.  The deal will see the transfer of 9.5 million tons of iron ore over a five-year period. 

Glencore also entered into an agreement with U.S.-based Wings Enterprises Inc. to jointly develop an abandoned magnetite mine in Missouri.  The mine will yield rare earth elements and iron ore, for which Glencore will have exclusive marketing rights. 

Glencore’s interest in entering the iron ore mining sector will diversify the company’s offerings.  Considering its position as one of the world’s leading ore marketers, it shouldn’t have a problem getting the ore out of the ground and into the market relatively quickly.