Spare a thought for the silent victims of Glencore's financial shock therapy

Outlook: By mothballing the two mines and restricting the global supply of copper, the company is hoping to put a little life into the metal’s bombed-out price

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The Independent Online

Am I alone in thinking that there was a huge and glaring omission from the deluge of excitable coverage generated by the mining giant Glencore?

The vast majority of it was focused on the financial shock therapy the company announced, with the aim of reducing its $30bn (£19bn) debt mountain, including a rights issue, dividend suspension and the mothballing of two large African mines. Needless to say the City was cock-a-hoop.

However, the fate of the thousands of people employed at those two mines, in Zambia and the Democratic Republic of Congo, barely merited a mention.

On the subject of those mines, Glencore simply “noted” an announcement made by its majority owned subsidiary Katanga Mining of a business review. It also informed investors that a similar process was under way at Mopani Copper. These, it explained, would involve the “suspension of production” for 18 months “up until the completion of the expansionary and upgrade projects”.

By mothballing the two mines and restricting the global supply of copper, the company is hoping to put a little life into the metal’s bombed-out price. The latter duly cheered up in London trading, as did Glencore’s shares, although opinion on the longer-term outlook for both remains divided.

Cheer is a commodity that will be in short supply at the two mines right now, but to what extent remains open to question.

The work to expand and upgrade the mines, and the need to keep things ticking over until production is re-started, will limit the number of job losses. When I contacted the company Glencore was also at pains to stress that when production is restarted those made redundant could be re-hired. However, the fact remains they will be without incomes in the interim in parts of the world where it won’t be easy to find other employment at comparable rates of pay.

They are the silent victims of Glencore’s attempt to restore the fortunes of its wealthy managers and investors by polishing the global price of copper.

It is a brutal lesson in the realities of global capitalism and the price it exacts from those at the bottom of the heap; the people engaged in the difficult, dirty and dangerous job of extracting the raw materials.

The final number of those caught up in Glencore’s financial squall is not yet known. It will probably only emerge following the aforementioned business reviews, while the stories of those affected are all but certain to go unreported in much of the Western media.

PwC’s executive pay report doesn’t seem too complex

 Talking of wealthy managers, the latest attempt to bring a measure of sanity to the way the pay of those at the very top of Britain’s biggest businesses is set will be launched in London today.

The Investment Association (IA), which represents Britain’s fund management industry, believes the issue is “becoming too complex, leading to a lack of clear incentives for company management to act in the best long-term interests of the companies themselves and their investors”.

There was, however, nothing complex about the findings of PwC’s annual review of executive pay in the FTSE 100, at least when it comes to annual bonuses. As I reported yesterday, in the majority of cases there is only minimal variation between one year and the next. The money appears to be handed over from one year to the next regardless of how well companies do.

The IA’s new executive remuneration working group has attracted some heavy hitters. They include Nigel Wilson, the chief executive of Legal & General, which is the biggest investor in the FTSE 100. He’ll be sitting alongside Sainsbury’s chairman David Tyler and Russell King, who chairs the remuneration committees of both Spectris and Aggreko, both of which reside in the FTSE 250 index.

The IA makes the point that complex pay structures are damaging the reputation of business by making it hard to judge whether “high rewards are being earned for exceptional management performance or mediocre performance flattered by favourable external factors”.

Oh, I don’t think it’s all that hard. PwC’s report rather suggests that it doesn’t matter whether the former or the latter is true, at least when it comes to annual bonuses.

If the committee is at all serious about improving the reputation of British business this should be right at the top of the agenda for its first meeting.

Who’s on the team for some sport at Sports Direct?

 Fund managers might have been handed new powers to bring the boards of the companies in which they invest to heel, but they’re been notably reluctant to use them.

Defeats for company boards have been conspicuous by their absence from this year’s AGM season. That may change at the Sports Direct get-together later this week

Unions, through their share ownership arm, have already said they’re planning to vote against the board. Now a substantial investor has broken cover to join them in the form of Royal London Asset Management, which has used some unusually blunt language to describe its unhappiness over the company’s handling of its executives’ pay, together with its history of governance failings.

It is a welcome intervention in what is rapidly become a test bed for the investment community’s willingness to take action on the latter. If others don’t join forces with RLAM, it’s rather hard to see quite what would persuade them to act.

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