May 17, 2020

Glencore Xstrata PLC Drops Merger Name

Ivan Glasenberg
Glencore Xstrata
2 min
Glencore Xstrata drops its merger name to become Glencore
Glencore has decided to drop Xstrata and is now simply Glencore. It was only in May of last year, 2013, that this trading and mining giant came together...

Glencore has decided to drop Xstrata and is now simply Glencore. It was only in May of last year, 2013, that this trading and mining giant came together through the merger of Glencore and Xstrata.

The decision to execute this change was made by the company’s shareholders during the annual general meeting. The merger was initially set up and portrayed as a “merger of equals”. However, the dropping of Xstrata points to the situation as having been something more similar to a discreet and somewhat gradual takeover.

Of particular interest in regards to the dropping of Xstrata is the dogged pursuit of increasing profitability undertaken by Chief Executive Ivan Glasenberg. Dating back to the merger which equated to a mammoth $US44.6 billion tie-up, Glasenberg has endeavored to drastically reduce spending and temporarily hold off on certain; a majority of which were brought to the table by Xstrata. Coming off the tail end of the global commodities boom has proven to create a modicum of additional pressure to ensure the profitability of the company. What’s of further interest is that the Xstrata component of the company has been the one to suffer from the most cuts. Some analysts believe this to be a result of by Chief Executive Ivan Glasenberg’s coal trading background influencing the decisions behind the way he’s been aggressively remolding company.

“We have reduced a large amount of the costs since acquiring Xstrata,” commented Glasenberg. This was part of a speech to shareholders at which point he outline his success at improving efficiencies that represented $US349 million. “The savings now, we have increased them by another $US349m since our last announcement, and its taking the cost savings in view of the merger, which will all be coming into place by the end of 2014, to an amount of $US2.4bn.”

Glasenberg went on to comment that, “We are not big players in iron ore market ...prices are coming off because we see massive expansions coming there from our major competitors. A large amount of them have these brownfields expansions, they continue to expand ... and put more supply into the market.”

It will be interesting to track Glencore’s progress with their new lighter weight form and steadily improving efficiency and cost cutting. 

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Jun 16, 2021

DRC selects Fortescue to develop giant hydro project

Fortescue Metals Group
Green Energy
Renewable Energy
3 min
Democratic Republic of Congo's (DRC's) government working with Fortescue Metals Group to develop Grand Inga hydroelectric power project

Democratic Republic of Congo's (DRC's) government said on Tuesday Fortescue Metals Group would develop the Grand Inga hydroelectric power project, including a 4,800-megawatt dam that has already been committed to Chinese and Spanish developers.

Fortescue to develop dams for world's largest hydroelectric project

Australia's Fortescue confirmed it was in talks with Congo to develop a series of dams that could become the world's largest hydroelectric project, but it said no formal binding agreement had been concluded.

Fortescue's involvement is the latest twist in Congo's decades-long quest to expand Inga, whose two existing dams - completed in 1972 and 1982 - have a combined installed capacity of nearly 1,800 MW.

The proposed expansion of six more dams would bring capacity to over 40,000 MW, roughly double the size of China's Three Gorges dam, currently the world's largest. Total development costs have been estimated at up to $80bn.

In 2018, a Chinese consortium that includes China Three Gorges Corporation and a Spanish consortium that includes AEE Power signed a deal with Congo's government to develop the third dam, known as Inga 3.

Ground has yet to be broken on Inga 3 because of questions over its financial viability. Alexy Kayembe De Bampende, President Felix Tshisekedi's top infrastructure advisor, said the project would now be led by Fortescue.

"Fortescue will be the sole operator for the entire Grand Inga (3 to 8). Chinese & co are welcome to join Fortescue," he told Reuters."There has been discussion between Chinese (Three Gorges) & AEE and (Fortescue) since last year to work together."

Three Gorges and AEE Power did not respond immediately to requests for comment.

DRC's Grand Inga green energy project will create hundreds of thousands of jobs

In a memorandum of understanding signed between Fortescue and Congo in September 2020, Fortescue "acknowledges the existing potential rights held on Inga 3 by third parties".

"In the event that, for any reason, such rights to develop Inga 3 become available, the government of the DRC undertakes to secure for Fortescue Future Industries an exclusive first option to develop Inga 3," it said.

A senior official at the government's Agency for the Development and Promotion of Grand Inga (ADPI), speaking on condition of anonymity, said the ADPI had not been involved in the talks with Fortescue.

Fortescue chairman Andrew Forrest met Congo President Felix Tshisekedi on Sunday to discuss the project. Forrest said Fortescue would use the energy from Inga to produce hydrogen to export around the world.

"The capital cost of this will be many many tens of billions of dollars and direct and indirect employment will be in the hundreds of thousands," he told reporters.

Fortescue has said it plans to fund the majority of its green energy projects off its balance sheet, investing about $1bn a year of its own money.

Fortescue's statement was made in response to an article in the Australian Financial Review.

Meanwhile, Fortescue has teamed up with Hatch, Anglo American and BHP, to form a Green Hydrogen Consortium focused on ways of using green hydrogen to accelerate decarbonisation within their operations globally.


Grand Inga


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