COMPANY PROFILE -Glencore
Business Sector :Commodity trading and mining
Operating Geography :Mining and Commodity Trading, Diversified
About Glencore :
Glencore is essentially an acronym for Global Energy Commodity Resources. It was formed through a merger between Glencore and Xstrata. It is the third-largest family business in the world and was the largest commodity trading company in the world in 2010 with a global market share of 60% for internationally tradable zinc and 50% for internationally tradable copper. Glencore’s business operations are divided into two business segments, Industrial and Marketing. It has a strong marketing policy and a widespread distribution network that caters to the needs of customers in the diverse fields of industrial, food processing industries, power generation and construction, steel, automotive and oil. It has more than 150 assets and operates in more than 35 countries with approximately 1,60,000 employees as of 2020.
Glencore’s USP or unique selling proposition lies in being one of the world’s largest globally diversified natural resource companies.
Glencore Revenue :
USD 215.11 billion – FY ending 31st Dec 2019 (y-o-y growth 34.4%)
USD 220.52 billion – FY ending 31st Dec 2018
Competitive Analysis of Glencore
The SWOT analysis for Glencore is presented below:
Strengths | Weaknesses |
1. Global presence with production facilities in 50 countries.
2. Profitable investments for future in Africa
3. Strong backing as it is family owned business
4. Large quantity of high quality reserves.
5. Low labor and conversion costs
| 1. Accused of not paying enough tax on its profits at one of its mines.
2. High debt
3. Accused of violation of licenses
4. Management issues regarding women in top management
|
Opportunities | Threats |
1. Diversification of business.
2. Heavy industrialization at global level, causing an increase in demand for fuel (Coal)
3. Large mining reserves.
4. High purchasing power and more investment opportunities.
5. Declining energy prices and depreciating operating currencies.
| 1. Price competitiveness from local players
2. Threat from Government Policies
3. Selling of assets to reduce its debt
4. Currently weak global commodity market
5. Pressure from NGOs
|
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Detailed SWOT Analysis of Glencore
Strength
1. Global presence with production facilities in 50 countries: Glencore is one of the world’s largest natural resource companies. Active at every stage of the commodity supply chain, it is uniquely diversified by geography, product and activity, maximizing the value it create for its business and its diverse stakeholders. Glencore has its units scattered all over the globe with a strong presence in all of the major continents. It has around 150 assets which mine a variety of minerals including Nickel, Copper, Zinc, Iron and Oil. Other assets include warehousing facilities at a number of places as well port access and storage which enables it to transport its products easily from one place to another.
2. Profitable investments in Africa: Glencore has major investments and a strong footprint across the African continent. The company is deeply invested in countries such as South Africa, Zambia, Congo and Rwanda among others. These investments are delivering consistent returns and also helping the company’s bottom-line. Further in October 2017, Glencore announced to take over 75pc ownership of Chevron’s refineries in South Africa and Botswana for $973 million.
3. Strong and consistent operational performance: Glencore has consistently outperformed all its UK-listed major diversified mining peers with a strong performance in 2017. Its balance sheet is robust, helped by earnings contribution from the highly cash generative Marketing and Industrial businesses. The marketing business is less correlated to commodity prices and helps the company to balance its financials in times of weak commodity market.
4. High-quality, low-cost assets in desirable commodities: Glencore has a portfolio of high quality assets acquired at low prices. Glencore has a strong footprint in commodities such as zinc, copper, nickel and thermal coal and there is an expected increase in demand in the same with positive price divergence over the next few years.
Weakness
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Opportunity
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Threat
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The PESTLE analysis for Glencore is presented below:
Political | Economical |
1. Increasing mining taxes. | 1. Long-term commercial customers.
2. Bargaining power of buyers reduced as, Glencore’s ability to arrange short- and long-term financing for customers.
3. Reduced bargaining powers of suppliers.
|
Social | Technological |
1. Glencore’s Kidd Operations.
2. Corporate social initiatives in 2015, representing 2.2% of group profit before tax
3. Glencore's shows active engagement in sustainability development.
4. Mining recognitions. | 1. Enhancing processes in the mining industry through collaboration.
2. Developed proven technologies.
3. Innovative approaches reducing costs.
4. Use of renewable energy.
|
Legal | Environmental |
1. Legal action.
2. Mine acquisition raised legal issues. | 1. Water pollution in area of Glencore mine in Peru
2. Greater environmental awareness.
|
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Detailed Pestle Analysis of Glencore
Political
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Economic
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Social
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Technological
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Legal
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Environmental
1. Environmental issues such as water pollution from operations: Globally, the mining sector is one of the worst offenders of violating local environmental laws in the areas where they operate. Glencore is no exception in this regard and the company has been accused of contaminating the area around Tintaya Antapaccay mine in Peru. The residents of the area have complained to the United Nations on the Water contamination and health problems caused by copper mining done by Glencore.
2. Focusing on greater environmental awareness and sustainability: Sustainable growth and operations is a critical parameter for global organizations and Glencore is taking steps in this regard. Glencore has stated its objective is to sustainably grow total shareholder return while maintaining a strong investment grade rating and acting as a responsible operator. Through the integration of sustainability throughout its business practices, the company aims to embody Glencore’s five values that define its purpose, priorities and the fundamental principles by which it conducts business. Glencore’s working group is overseeing the ongoing integration of carbon emissions and energy into its annual business planning process and the mapping to 2020 of its forward projected energy and carbon footprint. The company is investing in a number of low carbon energy projects that address direct and indirect emissions from our operations. They include treatment of fugitive emissions from coal processing and ventilation air methane and the large-scale CCS coal energy demonstration project.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
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References used in Glencore SWOT & PESTLE Analysis Report
1. Glencore half year report 2019 - 2https://www.glencore.com/dam:jcr/de09eded-6a3b-42f7-9b82-f40d1a257dcd/GLEN-2019-Half-Year-Report-.pdf
2. Glencore annual report 2018 - https://www.glencore.com/en/investors/reports-results/2018-annual-report
3. Glencore website - https://www.glencore.com/
4. Glencore Revenue 2008-2018 - https://www.statista.com/statistics/274687/total-revenue-of-glencore-xstrata/
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