Among corruption and human rights violations, Swiss trader Glencore becomes main owner of Brazilian aluminum

Brazilian aluminum has since the end of 2023 a new major owner: the Swiss company Glencore, the world’s largest commodities trader, bought Vale’s 40% stake and Hydro’s 5% stake in Mineração Rio Norte (MRN) and became the largest shareholder in the main producer of bauxite, the raw material for aluminum, in Brazil. The transaction was valued at more than 1 billion dollars.

Glencore now owns 45% of MRN. Glencore receives an estate of 12 million tons of bauxite a year, exported to three continents, with a complex of dams that collects problems and causes fear in the riverside and quilombola population that lives around the project in Oriximiná, in the west of state of Pará, in Brazilian Amazon.

As Mining Observatory has revealed , the risk classifications and damage potential of the tailings dams were changed dozens of times without detailed explanations, training was started and then not restarted after the Covid-19 pandemic, risks were admitted by MRN and then denied in contact with communities, compensation actions are insufficient, there are doubts about the construction methods adopted and there is a lack of dialog and transparency.

MRN’s history merged with the methods of Glencore, which has been involved in corruption cases and human rights violations around the world.

Present in more than 35 countries, with profit of more than $34 billion by 2022, responsible for marketing more than 60 different commodities and owner of a complete value chain in mining, including a significant share in copper, cobalt, aluminum, nickel and iron ore, Glencore’s gigantism is also reflected in the size of the problems it faces and the extent of its questionable practices of the company.

Photo: Carlos Penteado / Comissão Pro-Indio SP

Endemic corruption in several countries

In mid-2022, Glencore admitted its involvement in a major transcontinental corruption scheme that operated for more than a decade, including the payment of bribes to authorities and the manipulation of prices. Glencore agreed to pay $1.5 billion in fines for illegal activities in African countries, Brazil, Venezuela, the United States and the United Kingdom.

In Brazil, Glencore was investigated by the Federal Public Prosecutor’s Office (MPF) for paying millionaire bribes, together with the companies Vitol and Trafigura, to Petrobras officials in Operation Car Wash. The bribery involved around 160 transactions for the purchase and sale of oil and oil products, as well as the rental of fuel storage tanks between 2009 and 2014.

At the beginning of 2022, the company signed a leniency agreement – an anti-corruption mechanism between confessed offenders and state bodies – with Petrobras to pay the state-owned company US$39.6 million for the acts of corruption.

After being consulted by Mining Observatory, the MPF said that “the agreements are not public, but restricted to the parties”. In other words: unlike many leniency agreements, the one between the MPF and Glencore is confidential. There is no clarity as to whether the agreement is being complied with or not, which should be monitored by the federal courts.

“The scope of this criminal bribery scheme is staggering,” said U.S. Attorney Damian Williams of the Southern District of New York at the time. ” “Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear. At bottom, Glencore paid bribes to make money – hundreds of millions of dollars. And it did so with the approval, and even encouragement, of its top executives”, said Williams .

In addition to paying the fine, Glencore has committed to improving its compliance area, with improvements in internal controls, risk assessment, policies, procedures and guidelines “based on international best practices”.

Change of shareholders could make the situation even worse for quilombolas and riverine communities

Juliene Pereira dos Santos is a quilombola from the Trombetas river, has a PhD in anthropology from the Federal University of Pará (UFPA) and is well aware of the impacts caused by MRN’s history of operations. The researcher criticizes the promises of “progress” made by mining, a hallmark of the sector.

“The idea of development is illusory. You see that the communities closest to the mining company are the most miserable because they can no longer fish, the river is contaminated and the amount of water used for mining is absurd,” she says.

Pereira dos Santos is from the quilombola land of Cachoeira Porteira, one of the largest titled lands in Brazil, with 225,000 hectares. However, this reality does not extend to some neighboring quilombola lands, such as Alto Trombetas II, which has still not been titled and is heavily threatened by mining, which is expanding onto the community’s land.

Now it is Glencore that is going to carry out the expansion of bauxite extraction in the territory, materialized in the so-called “New Mines Project”, precisely what most threatens the Alto Trombetas II quilombo.

The entire territory is controlled by MRN and ICMBio, as it is in the area of a national forest, Saracá-Taquera, explains Pereira dos Santos. While titling is still pending, the proposals for the quilombolas involve fragile arrangements such as the “term of multiple uses”, a kind of management plan that guarantees little to the communities. In the current expansion, the public hearings, full of technical terms and with little effective participation, were held only to record and seal the project, says Pereira dos Santos, who accompanied the hearings.

“Everything was done for the record, so there was no guarantee of any effective participation by voices opposed to the project. Many people who were there were co-opted by the mining company in one way or another,” she says.

As for what the relationship with the new majority shareholder, Glencore, will be like, Pereira dos Santos says that this is a question that will only be answered properly with time, but that the prognosis is not good. “There will probably be changes, but the business logic prevails. I don’t expect a different outlook. If it was hard enough dealing with a Brazilian company (Vale), imagine dealing with an international company. I don’t have a good perspective on this”, she believes.

For Marcel Hazeu, who holds a doctorate in socio-environmental development from UFPA, the way in which companies as large as Glencore are structured and their transnational operations with powerful shareholders makes the possibility of dialogue even more difficult, because there is a total lack of interest in what happens in regions like Oriximiná.

“It’s difficult to influence these multinationals because they are spread all over the world and concentrated in the hands of a few. These shareholders have no connection with what is happening here and, as a result, history tells us that it is more difficult to open negotiations or raise awareness about the local reality,” says Hazeu.

Professor Rosa Acevedo Marin, who has a PhD in History and Civilization from the École des Hautes Études en Sciences Sociales in Paris and is a professor at UFPA, and has been following the conflicts generated by mining in Oriximiná for decades, agrees with this analysis.

For Rosa, institutions as economically and politically powerful as Glencore, like other mining companies of this size, tend to shield themselves internally and it is unlikely that a mobilization will be able to change their worldview beyond the ESG -environmental and social discourse – that these companies practice, for example, which is usually only theoretical.

“We are facing a major problem. These companies have little respect for Brazilian laws. It’s very difficult to reach these giants, there’s little repercussion in the press and it’s complicated for a quilombola or river dweller to reach Europe and tell what’s going on. Whether in the Amazon, the Congo or elsewhere, the impression is that there is no communication”, she says.

Local communities suffer from Glencore in Peru and Colombia

A report released in November by Oxfam highlights the terrible legacy of human rights violations and other problems caused by Glencore in Peru, at the Antapaccay copper mine, and in Colombia, at the Cerrejón coal mine.

The Swiss company’s business, they claim, has “serious consequences for local communities and the environment”. Various scandals, they point out, provide evidence of Glencore’s involvement in human rights violations, corruption, tax evasion and environmental destruction.

In Colombia, a river was diverted to favor Glencore’s mine in an area where access to water is scarce. In both Peru and Colombia, the water around Glencore’s mines is polluted with lead and heavy metals, especially affecting indigenous and black communities.

As is often the case, Glencore and the company’s investors claim to adhere to global initiatives, conventions and agreements aimed at mitigating climate change and guaranteeing the rights of affected communities. But this usually remains theoretical and the Swiss company does not guarantee that its national subsidiaries, such as those in Latin America, comply with these agreements.

In Brazil, Glencore still has an application for gold extraction, dating back to 1996, which is overlapping the Kayapó indigenous land in Pará, with an extension of 3,731 hectares, more than 3,000 soccer fields, according to data from the National Mining Agency. Extraction on indigenous land is not allowed, but the scenario could change if the law changes, which has been a goal of the legislature for many years .

Even with market concentration, CADE approved Glencore’s purchase of MRN without restrictions

Because it involves possible market concentration in cross-operations of a few companies, in this case the bauxite and aluminum chain, Glencore’s acquisition of MRN was subject to analysis by the Administrative Council for Economic Defense (CADE), which could approve the transaction or not.

The mandatory notification to CADE also occurred because Glencore had revenues in Brazil of over R$750 million in 2022. Glencore also bought a 30% stake in Alunorte from Norway’s Hydro. Alunorte is the company responsible for processing bauxite from Oriximiná into aluminum, based in Barcarena, Pará, the largest refinery of its kind in the world outside of China. In other words: end-to-end control of the chain. From extraction and processing to export and marketing.

In addition to Glencore, the largest shareholder with 45%, MRN is now divided into 30% for the Australian mining company South 32, 12.5% for Companhia Brasileira de Alumínio and 12.5% for the Canadian company Alcan Alumina, the original owner of the bauxite deposits in the Trombetas river valley.

In its review, CADE recognizes that Glencore’s purchase of MRN involves horizontal and vertical overlap in the aluminium and bauxite chain, including the fact that Glencore’s market share now exceeds 20% in four of the five markets affected by the transaction.

The following excerpt reveals the questionable logic used by CADE, in clear contradiction to the facts presented by the Council itself and by the companies, to ultimately approve the operation.

“As for the geographical dimension, the Applicants understand that the bauxite market is global, as bauxite is widely supplied around the world, with large volumes being transported between the country where the bauxite is extracted and the country where it will be refined into alumina. Bauxite is a commodity that involves low transportation costs, and there are no significant regulatory barriers to its import and supply around the world. The Applicants point out that other competition authorities, such as the European Commission, have already adopted a world market definition for the bauxite market. In any case, in other precedents, CADE has considered the bauxite market to be national, due to the competitive advantages of Brazil’s significant bauxite reserves”.

As opposed to concentrating the market, said CADE, Glencore’s entry into MRN and Alunorte is “pro-competitive” because there is no “horizontal overlap” of markets in Brazil, but merely a substitution of shareholders, while in the world market, yes, there is an impact. Inverting the logic, although globally it concentrates power, in Brazil the deal leaves the bauxite and aluminum market the same, said CADE.

The justification is that globally Glencore’s market share in the bauxite market would be below 10%, lower than competitors such as Australia’s Rio Tinto (15.3%), the US’s Alcoa, with 14.3%, Chalco’s 9.5% and Weiqiao’s 8%, both Chinese.

Point by point and market by market, CADE considered that, in the end, the companies involved in the operation are cross-operating with each other, with no potential to affect the national or global bauxite and aluminum market. Because of this, the committee approved the operation without restrictions and with summary rites.

In response to Mining Observatory request for a position on the points raised in this story, Glencore’s press office said that the company would not comment.

O post Among corruption and human rights violations, Swiss trader Glencore becomes main owner of Brazilian aluminum apareceu primeiro em Observatório da Mineração .