Sweet deal for Rotterdam as Glencore pulls global sugar trading desk from London
London — Glencore Plc plans to relocate its global sugar trading desk to Rotterdam from London as the commodities giant consolidates all its European agriculture traders in the Dutch city where its farming division is headquartered.
The relocation, expected by the end of the year or early 2018, will affect about a dozen traders, according to people familiar with the matter, who asked not to be named because the information is not yet public.
Glencore is grouping all European agriculture trading in Rotterdam after the company spun off its agribusiness unit last year and sold 49% to Canada Pension Plan Investment Board and British Columbia Investment Management for $3.1bn in cash.
The relocation also comes as the sugar business changes its reporting line to Chris Mahoney, chief executive of Glencore Agriculture, replacing Glencore CEO Ivan Glasenberg, who personally oversaw the unit because of a quirk of company history. The veteran head of sugar trading at Glencore, Michael Rembaum, is retiring.
Glencore declined to comment.
Although Glencore is not as big in sugar as rivals such as Alvean, a venture between Cargill and Copersucar, and Bunge, the company runs a substantial business.
Historically, it acted similar to a quasi-hedge fund, making proprietary financial bets on the sugar prices while keeping a small presence in the physical market. More recently, it has expanded its physical presence, including sugar cane and ethanol processing plants in Brazil.
Glencore is trying to grow its agriculture business to break the century-long dominance of the industry by the so-called ABCD quartet — Archer-Daniels-Midland Company, Bunge, Cargill and Louis Dreyfus.
In an interview this year, Mahoney said Glencore was close to achieving its target.
"I think it’s very much ABCD and G now," Mahoney said in May in his office in central Rotterdam, just inland from Europe’s biggest port.
The sugar business could grow significantly if Glencore buys Bunge. The commodities trading house disclosed it made a preliminary approach about a potential "consensual business combination" to its rival earlier this year. Bunge, which responded that it was not in talks with Glencore at that time, runs a large sugar business, particularly in Brazil, although the US trader has struggled to make money.
Glencore, founded by the late tycoon Marc Rich in the 1970s, built its agribusiness through a mix of acquisitions and organic growth, starting with the purchase of Dutch grain trader Granaria Group in 1982.