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The coming of Glencore

February 25, 2011

Checking background for our Special Report on Glencore, “The Biggest Company You Never Heard Of”, I stumbled on the novel “The Fortunes of Glencore” by Charles Leveglencore acquisitionsr. On a whim I read it. There were some intriguing parallels between the 20th-century company and the book, even though that was published in 1857.

The further I read, the more I asked myself if this little heard-of scrap of 19th-century literature couldn’t be used as some kind of coda. It sounds crazy, but maybe you can understand the temptation. Glencore is a secretive, controversial Swiss-based commodities trading and mining giant, and even though it may soon be quoted on the London and Hong Kong stock exchanges, it works hard to maintain its mystique. Could this little novel be some kind of “Da Vinci Code” for Glencore?

MYSTERY AND EXILE

The Glencore of the book is a mysterious figure to all those around him: “Little, or indeed nothing, was known of Lord Glencore…” it says. “‘Who is Lord Glencore?’ people would say. ‘What is the strange story of his birth? Has anyone yet got at the truth?’”

That’s the company to a tee.

We know it emerged from a management buyout of Marc Rich + Co — Rich was a fugitive from U.S. justice in Switzerland after he was found to have sold oil to Iran during the 1979-81 hostage crisis. But apart from that, beyond a sense that it’s an omnipresent commodities trader with secretive high- level connections in just about any country that has raw materials, there’s not an awful lot more in the public consciousness.

The origins of its name are a mystery, although some bright spark has figured out it could stand for GLobal ENergy COmmodities and REsources.

The novel’s plot is driven by disinheritance and exile. Young Lord Glencore is cruelly disinherited — and stripped of his name — by his father. Similarly, Marc Rich, who founded the group in 1974, was run out of the firm in a management buyout after which the company shed his name and became Glencore.

RESOURCE HUNGER

The novel is set in the epoch of Europe’s colonialist forays, and the exiled young Lord Viscount Glencore in “The Fortunes” finds himself living in Italy — notably in Massa, an ancient mining town in Tuscany known for its marble.

When the novel was written, Europe had an industrial revolution to feed, and few scruples about how it secured access to the resources it needed — so to some extent the novel presages the hunger for resources which the Glencore of today is busy feeding. (I later learned Massa pioneered the use of the magnetic needle compass in mines to map them, and determine how much their owners had a right to — a very relevant topic to Glencore, the company.)

Like Glencore’s legions of sharp traders, the novel has no illusions about human nature. We meet a character who “had started with an humble opinion of mankind, their hopes, fears, and ambitions, and so he continued, not disappointed, to the end.”

It’s also bursting with commentary on the drive for wealth and power, and morality. One character, an inscrutable, scheming gentleman-diplomat, Lord Horace Upton, has “a keen insight into every phase of that complex machinery by which one-half of the world cheats the other.” Here’s Upton in a rare moment of frankness:

“‘National greatness, honor, and security are nothing, — the maintenance of that equipoise which preserves peace is nothing, — the nice management which, by the exhibition of courtesy here, or of force there, is nothing compared to alliances that secure us ample supplies of raw material, and abundant markets for manufactures.’”

That feels broadly familiar today.

VICTORY IN SURVIVAL

The Glencores in Lever’s book go from having wealth and potential power to having nothing, and, potentially, back again. “Involved in difficulties innumerable, engaged in plots, conspiracies, luckless undertakings, abortive enterprises, still they contrived to survive all around them …”

Even the final sentence of the novel is apt. We leave it in the company of one of the main characters, Billy Traynor, who is walking in Ireland through the “cheerless and leaden-hued” landscape by a “wide waste of water”, waiting. “To this hour he lives, and waits the ‘coming of Glencore’.”

It wouldn’t be fair to give away the ending. But Rich has said he would like to buy into a Glencore IPO, should that happen.

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