Glencore under fire over Iran and in Dominican RepublicPublished by MAC on 2013-05-28
Source: Mining.com, Bloomberg, Dominican Today (2013-06-04)
It's not been an easy year so far for Glencore, the world's largest commodities trader.
A confidential U.N. Panel of Experts is said to confirm that the company supplied thousands of tons of alumina to Iranian, which may have aided the country's nuclear program.
The UNDP has also rejected Glencore's environmental plan for its Falcondo nickel mine in the Dominican Republic. See: Environmental groups call for halt to Xstrata's Falcondo mine, Dominican Republic
Glencore trade with Iran may have helped Tehran avoid UN sanctions: report
23 May 2013
Glencore trade with Iran earned the company $659 million in 2012, but it could have been a way for Iran to avoid the United Nation sanctions against the country over its nuclear program, reports Reuters.
Accordingto the news agency, which was granted access to a confidential U.N. Panel of Experts report, Glencore supplied thousands of tons of alumina to an Iranian company that has provided aluminum, a key ingredient in the manufacture of tubes used in uranium enrichment centrifuges, aiding Iran's nuclear program.
The document quoted by the agency shows that Glencore provided Iralco [Iranian Aluminum Co.] with "thousands of tons of alumina last year in exchange for a lesser amount of aluminum metal."
Although it is unknown whether any of the raw alumina sent to Iran was actually used to make the aluminum tubes, the terms of the deal between the companies imply that for every five tons of alumina supplied by Glencore, it received just one ton of finished aluminum. Typically it takes just only tons of alumina to make one ton of aluminum. So the big question is where the rest went.
Glencore acknowledged the deal was struck in August 2011 and said it first learned of a relationship between Iralco and Iran's nuclear centrifuge maker in December of 2012 and stopped further shipments immediately. The last actual shipment was made in October 2012, said the commodities trader.
Several reports in the media yesterday say Glencore's head of aluminum, Gary Fegel, is set to leave the company this summer, becoming the first senior executive departure since the merger with Xstrata earlier this month.
The timing and reasons for Fegel's exit remain unclear, but many believe it is connected to the document Reuters got access to.
Dominican Republic denies Xstrata Nickel mine
4 June 2013
Santo Domingo - The government of the Dominican Republic on Monday cited "economic and environmental conditions and mining technologies" to deny Xstrata Nickel Falcondo the permit to mine Loma Miranda, just two weeks after the UN Program for Development released a study contrary to the miner's project.
Environment minister Bautista Rojas said the decision seeks to avert harming the integrity of the area's natural resources, especially water.
Reading a document in a press conference, the official said the environmental impact study submitted by Xstrata Nickel doesn't "analyze the possible water pollution from chrome in detail", or doesn't "clearly state" Loma Miranda's ecological and hydrogeological characteristics.
Moreover Rojas said that the mining company didn't "properly focus on the economic and environmental conditions and mining technologies ensure sustainable exploitation and the project's social impact."
UNDP Rejects Glencore Exploration at Dominican Nickel Mine
By Adam Williams
23 May 2013
The United Nations Development Programme said an environmental study conducted by Glencore Xstrata Plc (GLEN) at a mine in the Dominican Republic is incomplete and ferronickel exploration at the site should be reconsidered.
Glencore's environmental study at the Falcondo Lomo Miranda mine failed to consider the social and environmental impact of extraction at the mine, UNDP said in a statement published today. The Dominican government requested the review last year prior to allowing the Baar, Switzerland-based company to extract ferronickel from the mine, located 80 kilometers (50 miles) north of Santo Domingo.
"The environmental impact study is, according to our evaluation, incomplete and superficial," Valerie Julliand, UNDP's representative in the Dominican Republic, said in a news conference in Santo Domingo. The company's study failed to consider the mine's impact on local communities, drinking water and the environment, and the project "does not address environmental and social demands" of the country, she said.
UNDP studied the possible social and environmental impacts of the mine for four months to determine if Glencore should be granted an environmental license for extraction. The miner owns 85 percent of the outstanding shares of Falcondo and has operated in the Dominican Republic since 1971, according to the company website.
"We will study the technical recommendations contained in the report, evaluate them and implement action plans where necessary," Peter Fuchs, director of corporate affairs at Xstrata Nickel in Toronto, said in a statement.
Extraction at the Falcondo Lomo Miranda mine is expected to generate $5.4 billion for the Dominican Republic during the next 25 years, according to newspaper El Dia, citing comments by Xstrata Nickel President Darren Bowden. The mine contains an estimated reserve of 20 million tons of ferronickel, Bowden said, according to El Dia.
Glencore Xstrata shares in the U.S. fell 3.3 percent to $5.05 today.