Glencore’s succession isn’t over yet

At least partly reassured by the news and dividend promises, investors responded by pushing the stock to its highest level since February.

Glasenberg does remain the second-largest shareholder, though.

Completing the handover demands a refreshed board, too, with new faces to keep his ascendancy in check and to support the stated shift of this coal producer and oil trader to a greener outlook. That should begin with a new chairman to replace Tony Hayward, the former BP Plc chief executive, who has been on Glencore’s board since 2011. He’s already at the limits prescribed by the U.K. corporate governance code.

An outsize, often gruff, personality, Glasenberg has put his stamp on the trading house founded by buccaneering oil trader Marc Rich. First, by listing it — a step he compared to crossing the Rubicon — and then by merging with miner Xstrata. He shook up a mining industry run by engineers and bruised by bad deals, with talk of investing as an owner, not a custodian, and paying generous returns. Bankers would wake at dawn to run with him, hoping to court favor. His bluster remained unaltered even by near-death experiences, as when prices collapsed in 2015.

With the departures of Glasenberg and coal-trading boss Tor Peterson, probably the last of the original gang that turned billionaires in 2011, goes the era of swashbuckling mining and trading, when few restrictions stood between lucrative deals in some of the world’s least savory spots. 

It’s less clear that this will really mean the end of an era at Glencore. Glasenberg’s exit hasn’t been the brutal Darwinian process he so often predicted. The man universally known as Ivan pushed himself into the seat of his own predecessor, Willy Strothotte, who himself had evicted Rich.

Nagle, by contrast, has been carefully picked and has six months to learn the ropes. He shares much of his boss’s South African background, including alma mater, a start in accountancy and a career steeped in coal. It’s been enough to earn him the nickname “mini Ivan,” and raises the question of just how far new management will be able to veer from the current chief executive’s path. Nagle didn’t appear at the show that should have marked a big day in his career.

Certainly, the company has evolved. A year or two ago, few would have expected the world’s largest producer of seaborne thermal coal to present on greenhouse gas reduction targets, as Glencore did Friday, even if its zero-carbon ambitions rest largely on allowing some of its coal mines to deplete. That’s the reality of weaker thermal coal prices and pressure from investors more concerned than ever with environmental, social and governance issues. 

The trouble is that the next strategic steps for Glencore to restore former glory will be challenging, and require a break with the past. Whatever comes of the U.S. Department of Justice’s investigation into compliance with bribery and anti-money laundering laws in the Democratic Republic of Congo, Nigeria and Venezuela, expected to be resolved soon, a new direction will help reduce any reputational damage from past peccadilloes.

There’s the future of the coal business, which as my colleague Chris Bryant and I wrote will likely involve a spin-off if Glencore is to truly embrace its green credentials as a top producer of ingredients for a low-carbon economy.  

Nagle will need time to settle in. But shareholders should also demand to know that Glasenberg will not be the mining executive equivalent of the proverbial Banyan tree, unable to let others thrive under it.

As a major shareholder —  with just over 9% of the stock, second only to Qatar Holding —  Glasenberg is entitled to be heard. He has already said he will not sell, nor take a director’s seat or interfere with his successor’s activities. But investors need guarantees that his powerful voice won’t be louder than everyone else’s. A revamped board, beginning with a new chairman to replace an incumbent steeped in fossil fuels, would be the clearest signal yet.

(By Clara Ferreira Marques)