Glencore plans to take full control of PolyMet Mining, buying out the shares it doesn't already own for about $73 million.
Glencore bids $73M to take full ownership of PolyMet
The international mining company already owns 82% of the company proposing a controversial copper-nickel mine in northern Minnesota.
July 3, 2023 at 4:02PM
The Switzerland-based mining giant has long financed and owned significant pieces of PolyMet, which is trying to develop a controversial copper-nickel mine in northeastern Minnesota.
The two companies announced Monday that Glencore has offered $2.11 a share for the 18% stake it doesn't own in PolyMet. That's a 167% premium over PolyMet's closing price of 79 cents a share on Friday.
PolyMet, which is based in St. Paul and registered in Canada, declined to comment beyond a news release on Glencore's offer, which needs shareholder approval. The company plans a mine near Babbitt and a processing plant in Hoyt Lakes.
Glencore began financing PolyMet in 2008 with $25 million in debt that was convertible into equity. Over the years, it has continued to use that same financing mechanism, and by 2019 it had amassed a 29% stake.
With a shareholder right offering in 2019, Glencore took control of PolyMet with a 72% stake, which has since grown to 82%.
Earlier this year, PolyMet and Canadian mining heavyweight Teck Resources formed a 50-50 joint venture called New Range Copper Nickel. It includes PolyMet's project and Teck's nearby copper-nickel venture, the latter of which is only in its nascent stages.
Glencore's deal to buy out the remainder of PolyMet doesn't appear to affect the joint venture.
PolyMet has long said its $1.2 billion mining project would be an economic boost for the Iron Range and would help the U.S. meet growing demand for copper and nickel in electric vehicles and clean power projects.
Environmental groups have long opposed PolyMet for its potential to pollute water with toxic acids and metals.
PolyMet opponents also point to Glencore's checkered past. Last year, Glencore admitted guilt in bribery and corruption charges and agreed to pay nearly $1.2 billion in a settlement between the company and prosecutors in the United States, Britain and Brazil. In November, the company was fined $314 million for bribing oil officials in Africa.
"Minnesota needs to look carefully whether we want to put our mineral resources and water resources in the hands of a notorious multinational corporation," Paula Maccabee, an attorney for the environmental group WaterLegacy, said of Glencore.
A Glencore spokesman declined to comment, instead pointing to the company's "code of conduct," which says, "We responsibly supply the commodities that are fundamental to the building blocks of life."
The U.S. Army Corps of Engineers dealt PolyMet a significant blow in June when it revoked the project's wetland permit, saying the facility would be too damaging to water quality.
The revocation came after a challenge by the Fond du Lac Band of Lake Superior Chippewa, which was backed by the U.S. Environmental Protection Agency.
Two key state mining permits granted to PolyMet are also on hold as they've been challenged by environmental groups.
Plus, the Glencore transaction could lead to complications around PolyMet's permit to mine in Minnesota.
Already, the Minnesota Department of Natural Resources (DNR) has said that the NewRange Copper Nickel joint venture cannot simply step into PolyMet's "corporate shoes and become a party to [PolyMet's state] permit to mine."
"New Range will have to go through the right regulatory process to be added on as a permittee," an attorney for the DNR said at a March hearing before a state administrative law judge.
New Range Copper Nickel is proceeding with an $18 million project to transform a former taconite plant in Hoyt Lakes into a copper-nickel operation. PolyMet bought the sprawling former LTV Steel plant in 2005.
NewRange earlier this month started salvage work at the plant, which closed in 2001. The project is expected to take 13 months and employ up to 120 union workers.
NewRange wants to process copper and nickel and smaller amounts of platinum, palladium, cobalt and gold from what would be Minnesota's first hard rock mine.
Earlier this year, Glencore made a $23 billion bid for Teck, which would likely put all of NewRange Copper Nickel under its control. But Teck has rejected Glencore's courtship.
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