Glencore became the owner of the 16.4 per cent stake after Bunge closed a long-delayed deal to merge with Glencore-backed grain handler Viterra in July, two years after announcing the $34 billion (C$46.7 billion) mega-deal.

“The agriculture business is not necessarily consistent with our business model,” Glencore CEO Gary Nagle told a media call on Wednesday after the company released its first-half financial results. “Having a 16.4 per cent shareholding in Bunge is probably not something that would be for Glencore in the long term.”

He added that this did not mean Glencore would be in a rush to sell the stake, and if it ever decided to do that “we would do it in absolute collaboration and conjunction with Bunge, its board and its management”.

The merger with Viterra enhanced Bunge’s grain exporting and oilseed processing businesses in the United States and expanded Bunge’s export capacity and physical grain storage and handling footprint in major wheat suppliers Canada and Australia, according to analysts.

Glencore’s aim is to maximize the value of this investment, while the possible “exit of that at some stage in the future would be done very smartly and carefully to ensure that we preserve that value,” the CEO added.

Glencore said on July 2 that its 16.4 per cent stake in enlarged Bunge had a market value of $2.6 billion (C$3.6 billion) at the deal close, and that those shares were viewed by the miner as a surplus capital.

— Reporting by Polina Devitt

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Carbon capture and storage (CCS) is needed to achieve the world’s net-zero goals and contain global warming, governments say. Its rollout has been slow but is gathering pace.

Swiss commodities giant Glencore plans a three-year, A$210 million (C$190 million) pilot project that would pump 330,000 metric tons of CO2 from a coal-fired power plant in the northeastern state into an aquifer 2.3 km (1.4 miles) underground.

“This is an important test case for onshore CCS in Australia,” said Glencore spokesperson Francis De Rosa.

Glencore says there is no demand for the low-quality, expensive-to-reach water in its pumping site and the CO2 is extremely unlikely to spread significantly from where it is put.

“Our project is based on very robust data, fieldwork and analysis,” De Rosa said, adding that several government agencies had reviewed the plan.

But farm groups say it risks poisoning part of the Great Artesian Basin, a network of groundwater deposits spanning much of eastern Australia that supports agriculture and communities. They say the acidic CO2 in the rock could release and spread toxic substances like lead and arsenic.

The project is “unthinkable,” said Michael Guerin, whose AgForce farm association launched a court case in March to force the federal government to review Glencore’s plans.

Speaking at a beef industry conference this month, Queensland’s premier Steven Miles said the project “doesn’t sound like a good idea to me” and was unlikely to satisfy the state’s environmental rules – prompting a complaint by Glencore that he was interfering in the regulatory process.

“Our project should be judged on the science, not misinformation or political opportunism,” the company said.

Miles’s office declined to comment further. The federal environment ministry declined to comment.

Queensland’s environment department said the state’s independent environmental regulator had considered the potential impacts to groundwater and the Great Artesian Basin and was preparing its final assessment report.

Consequences

The Queensland government will decide by the end of May whether to approve Glencore’s environmental impact assessment. If approved, further permissions would be needed but the main hurdle would be cleared.

Glencore’s plan would capture two per cent of the emissions of the Millmerran power plant but could eventually store 90 per cent, the company said.

The site for the project was originally identified as suitable for carbon storage by a government body.

Australia has only one active CCS project, the world’s largest, at Chevron’s Gorgon liquefied natural gas (LNG) project, on an island off the northwest coast.

Two more are under construction, including the first onshore operation from Santos to inject CO2 into a depleted gas field in South Australia state, and 14 are in development, according to the Global CCS Institute. Most target offshore storage and about half plan to store in depleted oil or gas reservoirs.

The use of aquifers to store carbon is becoming more common, said Alex Zapantis at the CCS Institute. The porous rock of many aquifers can host huge amounts of liquefied CO2. But only those where water is so deep and low quality that it is unsuitable for other use would be chosen or approved by regulators, he said.

The project is being managed by a Glencore subsidiary, Carbon Transport and Storage Corporation (CTSCo). Japan’s Marubeni Corp 8002.T and J-POWER 9513.T each committed A$10 million (C$9.1 million) to it in 2022.

—Additional reporting for Reuters by Melanie Burton in Melbourne

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After the news leaked out last month, Rotterdam-based Viterra confirmed Tuesday morning it’s “concluded an agreement” to merge into Bunge — the St. Louis-based “B” in the “ABCD” of the companies handling the bulk of global grain trade — under the latter company’s banner.

Viterra’s shareholders, which include international commodities trader Glencore, the Canada Pension Plan Investment Board and British Columbia Investment Management Corp., will receive about 65.6 million shares in Bunge — worth about $6.2 billion — and $2 billion cash (all figures US$).

Once a $2 billion share repurchase plan Bunge announced in tandem with the merger is completed, the Viterra shareholders would together hold about 33 per cent of the merged company, up from 30 when the merger deal closes. Viterra shareholders would not take part in the share buyback plan.

The deal also calls for Bunge to assume about $9.8 billion in Viterra debt.

“Our highly complementary asset footprints will create a network that connects the world’s largest production regions to areas of fastest growing consumption, enhancing the geographical balance and adaptability of our global value chains and benefitting farmers and end-customers,” Bunge CEO Greg Heckman said in a release.

“In combining our highly complementary origination, processing and distribution networks, we are better positioned to meet the increasing demand for the food, feed and fuel products we offer,” Viterra CEO David Mattiske said in the same release.

“Together, we will play a leading role in the future of the agriculture industry, developing fully traceable, sustainable supply chains and moving towards carbon-neutral operations, while creating a strong growth platform for our combined business.”

Heckman and Bunge CFO John Neppl would remain in their posts with the merged firm, while Mattiske would become the new firm’s “co-chief operating officer.”

The two companies said the combination is expected to generate about $250 million per year in gross pre-tax “operational synergies” within three years of closing, plus “significant incremental network synergies” and “relatively more stable cash flows from the larger, more diversified footprint.”

Those synergies, Heckman said on a conference call later Tuesday morning, would not be based on reduced staff head count but rather mainly on “operational” synergies such as asset utilization and procurement savings. In terms of human capital, he said access to talent in the agrifood sector is “at a premium.”

The combined firm would be based in St. Louis, where Bunge relocated its global head office from White Plains, N.Y. in 2019. Rotterdam, where Viterra’s global head office sits today, “will be an important commercial location in the future of the combined company.”

Glencore and CPP Investments would each be able to name two members to the merged Bunge board, while Bunge would nominate the remaining eight. Glencore and CPP’s shareholder agreements with Bunge also include a 12-month lock-up period on sales of Bunge shares.

For its part, Toronto-based CPP Investments said separately its 40 per cent stake in Viterra will translate to about a 12 per cent equity stake in Bunge and about $800 million.

On Tuesday’s conference call, Bunge said its own shareholders would have 70 per cent equity in the combined firm when the deal closes, while Glencore would have 15 per cent and BCIC, three per cent.

“Combining these two highly complementary companies will create an enhanced agribusiness that can provide an expanded product offering to end-customers, with an increased ability to innovate and promote sustainable practices in the global food supply,” Bruce Hogg, head of sustainable energies with CPP Investments, said in a separate release.

Glencore CEO Gary Nagle, in a separate release, said the deal “is expected to realize significant value for Glencore” and described the planned merged group as “a premier pure-play agribusiness solutions company, well placed to meet increased global demand as well as the ongoing challenge of providing sustainable, traceable food and feed products to customers around the world.”

Bunge and Viterra said the merger is expected to close in mid-2024, subject to the usual closing conditions, including approval by Bunge shareholders and the relevant regulatory approvals.

Those approvals are likely to include review by Canada’s Competition Bureau, given Viterra’s significant stakes in Prairie grain handling, oilseed crushing and port terminal capacity, and Bunge’s stakes in Canadian crushing and its part-ownership of Prairie grain handler G3.

Asked on Tuesday’s conference call about any plans to divest assets to appease regulators in countries where the two firms operate, Neppl described the companies’ asset footprints as “very complementary” and said Bunge looks forward to working with regulators and “helping them to understand the footprint.”

Viterra formed in 2007 in a merger of Saskatchewan Wheat Pool with Agricore United — the latter having formed in a 2001 merger of the former Alberta and Manitoba wheat pools with another former Prairie grain co-operative, United Grain Growers (UGG).

The Regina-based firm went international in 2009 with a deal for Australia’s ABB Grain, then was majority-acquired by Glencore in 2012, becoming Glencore Agriculture before rebranding as Viterra internationally in 2020. It expanded its U.S. footprint last year with a takeover of grain firm Gavilon.

Bunge formed as a trading company in Amsterdam in 1818, expanding to Argentina in 1884, Brazil in 1905 and North America in 1918, moving its global headquarters from Brazil to the U.S. in 2001, when it became a publicly traded company.

Bunge’s stake in Winnipeg-based G3 was acquired through a joint venture with a Saudi state grain firm in 2015, which bought the assets of the privatized Canadian Wheat Board. — Glacier FarmMedia Network

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There is no certainty that Viterra, part-owned by Switzerland-based mining and trading giant Glencore, will be able to reach an agreement on the terms of a deal, the source said, requesting anonymity as these discussions are confidential.

The structure of the deal is still yet to be finalized and is being discussed by both parties, sources said.

Shares of Bunge were trading at $93.76 apiece on Thursday, valuing the company at about $14 billion (all figures US$).

Global commodities merchants have built up cash reserves after turning in hefty profits over the past year as Russia’s invasion of Ukraine disrupted shipments and crop prices soaring.

Traders like Bunge and Viterra make money buying, selling, storing and processing crops, often capitalizing on supply disruptions caused by crises like drought or war.

A merger with Bunge would put Viterra among the top tier of global grains merchants, which include giants like Cargill and ADM, with access to export terminals in the U.S., one of the largest grain producers and suppliers.

Viterra bought U.S.-based Gavilon from Japan’s Marubeni last year for $1.1 billion, giving giving it significantly more physical grain handling assets in the U.S. and making it the third-largest exporter of soybeans in Brazil, where Bunge already has a strong presence. Gavilon rebranded to the Viterra name in February this year.

Viterra, formerly known as Glencore Agriculture, made headlines in 2017 for a failed takeover approach to Bunge, one of the giant names of global grain trading, then valued at $11 billion.

In May 2017, Bunge rebuffed Glencore after the latter made an informal approach to discuss “a possible consensual business combination.”

Bunge’s Canadian businesses today include oilseed crushing and processing and a joint stake in Prairie grain handler G3 Canada.

The Viterra brand dates back to 2007, when Canadian grain firms Saskatchewan Wheat Pool and Agricore United merged under the new name, followed by a takeover of Australia’s ABB Grain in 2009.

Viterra’s owners other than Glencore today include Canadian pension funds B.C. Investment Management Corp. and CPP Investments, which together hold 50 per cent.

Glencore has publicly said it was reviewing options for its interest in Viterra, looking to unlock more value.

Glencore, Viterra, and Bunge declined to comment. Bloomberg first reported on the talks between Viterra and Bunge.

— Reporting for Reuters by Anirban Sen; additional reporting by Deep Vakil in Bangalore, Gus Trompiz in Paris, Clara Denina in London and Karl Plume in Chicago.

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Bunge and rival agribusinesses ADM and Cargill suspended operations in Ukraine last week after Russia invaded its neighbour. But none have stopped their business in Russia so far.

The conflict is threatening to further tighten global grain and edible oils supplies, likely exacerbating soaring food inflation. Russia and Ukraine supply nearly 30 per cent of the world’s wheat exports, about 19 per cent of corn exports and around 80 per cent of sunflower oil.

“The continuation of the conflict may trigger a series of additional economic and other sanctions … Any such sanctions may also result in an adverse effect on our Russian operations,” Bunge said in a filing with the U.S. Securities and Exchange Commission.

The West has moved to punish Russia by closing airspace to Russian aircraft, shutting out some Russian banks from the SWIFT global financial network and restricting Moscow’s ability to use its foreign reserves. A growing list of companies were looking to exit Russia on Monday.

Bunge has been scaling back its Russian grain trading activities in recent years, including the sale of its Rostov grain export terminal last year that has left it with just US$121 million in assets in Russia, according to the filing.

ADM did not have an immediate comment on its Russian operations. The company has an arm of its WILD flavourings business in Russia and owns a 50 per cent stake in Aston Foods and Food Ingredients, a sweeteners and starches business.

Cargill maintains a far larger presence in Russia, with about 2,500 employees and investments of more than US$1.1 billion in grain and oilseed processing, animal feed, poultry processing and other businesses, according to the Cargill website.

Cargill declined to comment.

Commodities firm Glencore, which owns a joint stake in grain handler Viterra, issued a statement Tuesday saying it has “no operational footprint in Russia” and its trading exposure is “not material.”

However, Glencore also said it’s “reviewing all our business activities” in Russia, which include stakes in aluminum producer En+ and energy firm Rosneft, and that it “condemns the actions taken by the Russian government against the people of Ukraine.”

Viterra, which until 2020 operated under the name Glencore Agriculture, has six marketing offices plus port terminals at Taman and Rostov-on-Don in Russia. It also has six marketing offices, a sunflower crush plant and port terminals at Chornomorsk and Mykolaiv in Ukraine.

— Reporting for Reuters by Karl Plume in Chicago. Includes files from Glacier FarmMedia Network staff.

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The firm, formerly known as Glencore Agriculture, made the headlines in 2017 for a failed takeover approach to Bunge, one of the giant names of global grain trading, then valued at $11 billion (all figures US$).

Four years later, its owners have not made any sizeable deal and are still exploring ways to show value at a time of sustained higher grain prices. They are more likely to buy smaller or privately-held companies, expanding mostly in the U.S., but also South America and Australia, where Viterra already owns assets, the sources said.

Glencore owns 50 per cent of Viterra, having sold the other half to Canadian pension funds CPP Investments and British Columbia Investment Management Corp. (BCI) in 2016, for a total $3.125 billion.

Glencore, Viterra and CPP Investments declined to comment. BCI was not immediately available to comment.

With an EBITDA (earnings before interest, taxes, depreciation and amortization) of $991 million in the first half of 2021, the company holds 180 storage and handling facilities, 30 processing and refining plants and 25 port terminals, used to handle millions of tonnes of grains, oilseeds, pulses, rice, sugar and cotton around the world.

The company’s last deal was in 2020, when it bought out the stake it didn’t already own in Argentine soy crushing plant Renova from its bankrupt partner.

Other large western grain trading houses, including Archer Daniels Midland, Cargill and Louis Dreyfus, which battled years of global oversupply and thin margins, have seen their fortunes turn during the COVID pandemic as governments and food companies rushed to stockpile.

Still, the sector is ripe for a wave of consolidation similar to the mergers and acquisitions in the farm chemicals and seed industries to face off stiff competition from Asian rivals and guarantee supplies against shortages.

There is a big number of medium-sized companies and co-operatives, including The Andersons, Scoular and CHS among others, in the U.S., where agriculture and food contributes more than $1 trillion a year to the economy.

— Clara Denina is a Reuters correspondent in London, England; additional reporting by Maiya Keidan in Toronto.

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Glencore Agriculture, co-owned by commodity firm Glencore and two Canadian public-sector pension fund investment firms, announced Monday it has started to use the name Viterra — and a new brand, “Viterra: The Agriculture Network” — in most of the 37 countries where it operates.

Apart from the name change — for which the company first announced plans in August — and the “refreshed” brand, “it is business as usual across the company,” Viterra said.

The Viterra brand dates back to 2007, when Regina-based grain firm Saskatchewan Wheat Pool merged with its Winnipeg rival Agricore United under the new name. Viterra then expanded that brand into Australia in 2009 when it took over ABB Grain.

“Over the last four decades, we have steadily grown to become one of the world’s leading agricultural businesses,” David Mattiske, the rebranded company’s CEO, said in a release.

“The name Viterra, which means vitality from the earth, unites our business under one brand with a shared purpose, further strengthens our identity and strongly positions us for future growth.”

The rebranding won’t take full effect until May next year in Australia, Brazil, Egypt, Kazakhstan, New Zealand, Romania, Russia and Ukraine due to “timing issues and business activities,” the company said.

Glencore started as a metals and minerals firm under the name Marc Rich and Co. and got into agriculture with the purchase of Dutch grain trader Granaria in 1981. The firm rebranded as Glencore in 1993 and its Glencore Agriculture arm bought Viterra in 2012.

Glencore then sold stakes of 40 and 9.9 per cent of Glencore Agriculture in 2016, to CPP Investments and British Columbia Investment Management Corp. (BCI) respectively.

Viterra — in which Glencore has held its stake since it spun off the Glencore Agriculture business later in 2016 — today deals in grains, oilseeds, pulses, rice, cotton and sugar through 24 port terminals, 180-plus elevators and handling facilities and over 30 processing plants. — Glacier FarmMedia Network

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David Mattiske, CEO of Glencore Agriculture, announced in a statement Wednesday the company will rebrand the business to Viterra in “late 2020.”

The Viterra brand dates back to 2007, when Regina-based grain firm Saskatchewan Wheat Pool merged with its Winnipeg rival Agricore United under the new name. Viterra then expanded that brand into Australia in 2009 when it took over ABB Grain.

“Viterra is a globally recognized brand within the business. It also has a deep connection to agriculture, with Viterra meaning vitality from the earth,” Mattiske said Wednesday. “This is an opportunity to unite our business under one brand with a shared purpose and identity.”

Glencore started as a metals and minerals firm under the name Marc Rich and Co. and got into agriculture with the purchase of Dutch grain trader Granaria in 1981. The firm rebranded as Glencore in 1993 and its Glencore Agriculture arm bought Viterra in 2012.

In debt-reduction mode by 2016, Glencore that year sold stakes of 40 and 9.9 per cent of Glencore Agriculture, to Canadian public-sector investment firms CPP Investments and British Columbia Investment Management Corp. (BCI) respectively.

Glencore Agriculture — in which Glencore has held its stake since it spun off the ag business later in 2016 — today deals in grains, oilseeds, pulses, rice, cotton and sugar through 24 port terminals, 180-plus elevators and handling facilities and over 30 processing plants, across 35 countries.

Mattiske said Wednesday the company is “planning for a smooth transition to the new brand over the coming months, while for employees and customers it’s business as usual.” — Glacier FarmMedia Network

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The grain merchant, which is part owned by diversified commodity group Glencore, dismissed Kleine due to disappointing results, two of the sources said.

It was not clear if Kleine was still with the company.

Glencore declined to comment. Kleine did not respond to a request for comment.

The Frenchman, who has spent six years at Rotterdam-based Glencore Agriculture, was in charge of one of the main product lines for the firm’s global grain trading business.

Glencore sources barley from production zones such as Europe and the Black Sea region to supply countries including China and Saudi Arabia.

Kleine has worked at Soufflet, one of France’s biggest grain handlers and a major supplier of barley malt for the beer industry.

— Reporting for Reuters by Gus Trompiz in Paris.

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Merchants have been grappling with lower profits from sourcing and shipping commodities such as grain and oilseeds, prompting cutbacks in trading teams, investments in food processing activities and acquisition speculation.

Investor pressure has centred on Bunge, which has drawn interest from both Glencore and Archer Daniels Midland for a potential mega-merger.

But LDC CEO Ian McIntosh is unconvinced on the merits of wholesale tie-ups.

“Each of the participants — the ABCDs, Gs, Cs, all the various acronyms — are becoming increasingly different businesses,” he said in a telephone interview, referring to the so-called ABCD quartet of ADM, Bunge, Cargill and Dreyfus, along with Glencore and Chinese-owned COFCO International.

“Which means that consolidation at total-company level is, I think, increasingly difficult to execute because the business fits have become less obvious.”

ADM CEO Juan Luciano is another who has played down the prospect of major consolidation, telling Reuters in January that he didn’t see the need for his company to enter “monster” transactions.

Privately held LDC expects consolidation to happen more locally, with more-focused tie-ups to speed its own shift further along the food chain, McIntosh said.

“I think you will see consolidation at a regional level,” he said, arguing that some struggling niche players would be taken over or exit some businesses.

For LDC, such deals could take the form of acquisitions or joint ventures, McIntosh said, noting that his group had reinforced its acquisition last year of an oilseed processing factory in Tianjin, China, by forming a joint venture to produce fish feed at the site.

McIntosh was talking after LDC reported a 12 per cent jump in group net profit last year, supported by a strong oilseed performance linked to demand for Brazilian soybeans during a U.S.-China tariff battle.

Profit was also helped by a very strong year in cotton and improved returns in other businesses, he said.

This year looks similar to last in terms of market conditions, but a settlement between Washington and Beijing would change the outlook, McIntosh said, adding that it is too early to talk about LDC’s performance this year.

McIntosh took the helm last September at a turbulent time for the 168-year-old company that also changed its finance chief, reported lower first-half profit and was burdened with an acrimonious buyout of minority shareholders and a bailout of Brazilian sugar business Biosev.

— Reporting for Reuters by Gus Trompiz in Paris.

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