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2017 Annual Report of Glencore plc (“Glencore” or the “Company”)

Glencore has today:

  • published its Annual Report for the year ended 31 December 2017 on its website as required by DTR 6.3.5 R (3); and
  • submitted a copy of the Annual Report to the UK National Storage Mechanism in accordance with LR 9.6.1 R.


The 2017 Annual Report will shortly be available for inspection on the National Storage Mechanism:

Glencore will hold its 2018 Annual General Meeting in Zug on 2 May 2018. The notice of meeting will be released by the beginning of April 2018. 

The Appendix to this announcement contains the following additional information which has been extracted from the 2017 Annual Report for the purposes of compliance with DTR 6.3.5 only:

  • a description of principal risks and uncertainties;
  • a note on related party transactions; and
  • the Directors' Responsibilities Statement.

The Appendix should be read in conjunction with Glencore's Preliminary Results Announcement issued on 21 February 2018 (including the notice on forward looking statements at the end of that announcement). Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This announcement should be read in conjunction with and is not a substitute for reading the full 2017 Annual Report. Page and note references in the text below refer to page numbers and notes in the Annual Report and terms defined in that document have the same meanings in these extracts.

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Glencore’s Principal risks and uncertainties

The following has been extracted from pages 42 - 51 of the 2017 Annual Report:

Our risk management framework identifies and manages risk in a way that is supportive of our strategic priorities of opportunistically deploying capital, while protecting our future financial security and flexibility. Our approach towards risk management is framed by our ongoing understanding of the risks that we are exposed to, our risk appetite and how these risks change over time. 

The Board assesses and approves our overall risk appetite, monitors our risk exposure and sets the Group-wide limits, which are reviewed on an ongoing basis. This process is supported by the Audit and HSEC Committees, whose roles include evaluating and monitoring the risks inherent in their respective areas as described on pages 92–93. The current assessment of our principal risks, according to exposure and impact, is detailed on the following pages. In accordance with UK Financial Reporting Council guidance, we define a principal risk as a risk or combination of risks that can seriously affect the performance, future prospects or reputation of Glencore. These include those risks which would threaten the business model, future performance, solvency or liquidity of the Group. We look at risk appetite from the context of severity of the consequences should the risk materialise, factors influencing the risk and the Company’s ability to mitigate it. 

In compiling this assessment we have indicated the impact and likelihood of these risks in comparison with a year ago in the chart below. 

The commentary on the risks in this section should be read in conjunction with the explanatory text under Understanding the information on risks which is set out on the following page.

The natural diversification of our portfolio of commodities, geographies, currencies, assets and liabilities is a source of mitigation for some of the risks we face. In addition, through our governance processes and our proactive management approach we seek to mitigate, where possible, the impacts of certain risks should they materialise. In particular:

  • our liquidity risk management policy requires us to maintain (via a $3 billion minimum prescribed level) sufficient cash and cash equivalents and other sources of committed funding available to meet anticipated and unanticipated funding needs;
  • making use of credit enhancement products, such as letters of credit, insurance policies and bank guarantees and imposing limits on open accounts extended; and
  • our management of marketing risk, including daily analysis of Group value at risk (VaR). 

2017 developments

The following remain the leading risks (i.e. those posing the greatest potential threat) which the
Group faces:

1.    Reduction in commodity prices: there has been a general rise in commodity prices over the past 18 months. Notwithstanding these firmer price conditions, we remain mindful that underlying markets can be volatile and we continue to focus on the partially controllable element of the margin equation – costs. Any significant downturn in the current commodity price environment, especially in zinc, copper or coal, would have a severe drag on our financial performance. As a result, this continues to be the Group’s foremost risk.

2.    Fluctuations in supply of, or demand for commodities: the depression of commodity prices reflects the actual, perceived or prospective increases in supply of commodities and/or reductions in demand.

3.    Fluctuations in currency exchange rates: the rise in commodity prices noted above is associated with a generally weaker U.S. dollar versus producer country currencies. Although strong producer currencies are generally detrimental over the short term to our locally denominated operating costs, this can be outweighed by stronger world economic conditions and the associated increases in commodity prices that may derive from this. Additionally, currency rates can change for political and economic reasons unlinked to the commodities markets, which could result in a mismatched impact of pricing and currency movements resulting in income volatility.

4.    Health, safety, environment including catastrophic hazards: a serious failure in safety, health and environmental management could result in an operational emergency or catastrophe, injuries or fatalities and a negative impact on our corporate reputation. In particular, catastrophic hazards such as tailings leakages and collapses of pit walls or underground tunnels represent significant unquantifiable risks for resources companies. During 2017, the HSEC Committee continued to concentrate on the management and mitigation of the Group’s catastrophic hazards – see page 100.

5.    Liquidity risk: while our net debt has further reduced in 2017, we remain cognisant that access to credit is vital and that debt markets can be volatile. 

Changes in risk exposure and analysis

As a result of the strong economic growth momentum seen over the past 18 months and the repositioning of our balance sheet and reduction in the cost and capex structures of our portfolio, the probability of liquidity risk and counterparty credit and performance exposures materialising has reduced. Climate change initiatives continue to be at the forefront during 2017. Many countries began to implement their commitments to address climate change, e.g. through announcing limits on the number of petrol/diesel cars to be produced or imposing production limits on certain industries. These events have led to an increase, compared to 2016, both in the probability of risk exposure and its impact related to emissions and climate change. 

In reassessing our risk analysis, we have concluded that: cyber should now be a stand-alone risk; sourcing, freight, storage infrastructure and logistics related risks no longer merit inclusion as a separate risk; and we have combined development and operating risks and cost control as Operating and cost risks as they are largely inter-related.

Longer-term viability

In accordance with the requirements of the UK Corporate Governance Code, the Board has assessed the prospects of the Group’s viability over the four-year period from 1 January 2018. This period is consistent with the Group’s established annual business planning and forecasting processes and cycle which is subject to review and approval each year by the Board. The four-year plan considers Glencore’s Adjusted EBITDA, Capital expenditure, Funds from operations (FFO) and Net debt, and the key financial ratios of Net debt to Adjusted EBITDA and FFO to Net debt over the forecasted years and incorporates stress tests to simulate the potential impacts of exposure to the Group’s principal risks and uncertainties. 

These scenarios included:

a prolonged downturn in the price and demand of commodities most impacting Glencore’s operations 

foreign exchange movements to which the Group is exposed as a result of its global operations

consideration of the potential impact of adverse movements in macro-economic assumptions and their effect on certain key financial KPIs and ratios which could increase the Group’s access to or cost of funding

The scenarios were assessed taking into account current risk appetite and any mitigating actions Glencore could take, as required, in response to the potential realisation of any of the stressed scenarios.

Based on the results of the related analysis, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the four-year period of this assessment. They also believe that the review period of four years is appropriate having regard to the Group’s business model, strategy, principal risks and uncertainties and viability.

Understanding the information on risks

There are many risks and uncertainties which have the potential to significantly impact our business, including competitive, economic, political, legal, regulatory, social, business and financial risk. The order in which these risks and uncertainties appear does not necessarily reflect the likelihood of their occurrence or the relative magnitude of their potential material adverse effect on our business.

We have sought to provide examples of specific risks. However, in every case these do not attempt to be an exhaustive list. These principal risks and uncertainties should be considered in connection with any forward looking statements in this document as explained on page 220.

Identifying, quantifying and managing risk is complex and challenging. Although it is our policy to identify and, where appropriate and practical, actively manage risk, our policies and procedures may not adequately identify, monitor and quantify all risks.

This section describes our attempts to manage, balance or offset risk. Risk is, however, by its very nature uncertain and inevitably events may lead to our policies and procedures not having a material mitigating effect on the negative impacts of the occurrence of a particular event. Our scenario planning and stress testing may accordingly prove to be optimistic, particularly in situations where material negative events occur in close proximity. Since many risks are connected, our analysis should be read against all risks to which it may be relevant.

In this section, we have sought to update our explanations, reflecting our current outlook. Mostly this entails emphasising certain risks more strongly than other risks rather than the elimination of, or creation of, risks. Certain investors may also be familiar with the risk factors that are published in the Group debt or equity prospectuses or listing documents. These provide in part some differing descriptions of our principal risks. A recent example is available on our website at: 

In addition, more information on our risks is available in the relevant sections of our website.

To provide for concise text:

  • where we hold minority interests in certain businesses, although these entities are not generally subsidiaries, the interests are mostly taken as being referred to in analysing these risks, and “business” refers to these and any business of the Group
  • where we refer to natural hazards, events of nature or similar phraseology we are referring to matters such as earthquake, flood, severe weather and other natural phenomena
  • where we refer to “mitigation” we do not intend to suggest that we eliminate the risk, but rather it shows the Group’s attempt to reduce or manage the risk. Our mitigation of risks will usually include the taking out of insurance where it is customary and economic to do so
  • this section should be read as a whole – often commentary in one section is relevant to other risks
  • “commodity/ies” will usually refer to those commodities which the Group produces or sells
  • “law” includes regulation of any type
  • “risk” includes uncertainty and hazard and together with “material adverse effect on the business” should be understood as a negative change which can seriously affect the performance, future prospects or reputation of the Group. These include those risks which would threaten the business model, future performance, reputation, solvency or liquidity of the Group
  • a reference to a note is a note to the 2017 financial statements
  • a reference to the sustainability report is our 2017 sustainability report to be published in May 2018



1.    Reductions in commodity prices

Risk appetite - Low. Outside of the inherent risk of commodity prices on unmined reserves/ resources, flat price exposure on extracted or trading related positions is to be hedged.

Risk - The revenue and earnings of substantial parts of our industrial activities and, to a lesser extent, our marketing activities, are dependent upon prevailing commodity prices. Commodity prices are influenced by a number of external factors, including the supply of and demand for commodities, speculative activities by market participants, global political and economic conditions, related industry cycles and production costs in major producing countries.

Comments - A significant downturn in the price of commodities generally results in a decline in our profitability and could potentially result in impairment and balance sheet constraints. It is especially harmful to profitability in the industrial activities, which are more directly exposed to price risk due to the higher level of fixed costs.

The dependence of the Group (especially our industrial business) on commodity prices, make this the Group’s foremost risk. See the Chief Executive Officer’s review on page 4 and the financial review on page 52.

Any economic developments, particularly impacting China and other fast growing countries, could lead to reductions in demand for, and consequently prices of, commodities.

Mitigation - A Diversification of our portfolio of commodities, geographies, currencies, assets and liabilities.

Government policy decisions can be very important, e.g. in reducing the demand for coal or increasing it’s pricing (via carbon taxes) – see Emissions and climate change below. New or improved energy production or technologies can also reduce the demand for some commodities such as coal.

Also see our longer-term viability analysis above and the business review on page 60.

2.    Fluctuations in the supply of, or demand for, the commodities in which we operate

Risk appetite - Low. Although an inherent risk in the extractive and marketing industries, we seek to ensure this risk is minimised through scale of operations and diversity of product.

Risk - We are dependent on the expected volumes of supply or demand for commodities which can vary for many reasons, such as competitor supply policies, changes in resource availability, government policies and regulation, costs of production, global and regional economic conditions, demand in end markets for products in which the commodities are used. These also include technological developments, e.g. commodity substitutions, fluctuations in global production capacity, global and regional weather conditions, natural disasters and diseases, all of which impact global markets and demand for commodities. Furthermore, changes in expected supply and demand conditions impact the expected future prices (and thus the price curve) of each commodity.

Comments - Future demand for certain commodities might decline (fossil fuels), whereas others might increase (such as copper, cobalt, and nickel for their use in electric vehicles and batteries), taking into consideration the “greening” of the global economy.

This risk is currently prevalent in various commodities, such as steel, coal and oil. In particular, many analysts believe that demand for coal will reduce sooner than previously expected due to significant cost reductions in renewable capacity and greater efficiencies from coal power plants.

Also see Emissions and climate change below.

Market price responses to such changes are neither instantaneous nor perfectly calibrated nor can the sustained implementation of such policies be certain.

Mitigation - Diversification of our portfolio of commodities, geographies, currencies, assets and liabilities.

Making sure we are prepared for the shift in commodity demand by putting a special focus on the parts of the business that will potentially grow with the anticipated increase of electric vehicles and battery production and closely monitor fossil fuel (particularly thermal coal) demands.

See the Chief Executive Officer’s review on page 4 and the business review on page 60.

3.    Fluctuations in currency exchange rates

Risk appetite - Low. Where possible foreign exchange exposure to non operating foreign exchange risk are to be hedged.

Risk - The vast majority of our transactions are denominated in U.S. dollars, while operating costs are spread across many different countries, the currencies of which fluctuate against the U.S. dollar. A depreciation in the value of the U.S. dollar against one or more of these currencies will result in an increase in the cost base of the relevant operations in U.S. dollar terms.

The main currency exchange rate exposure is through our industrial assets, as a large proportion of the costs incurred by these operations is denominated in the currency of the country in which each asset is located. The largest of these exposures are to the currencies listed on page 61.

Comments - Currency fluctuations tend to move in symmetry with those in commodity prices and supply and demand fundamentals as noted above, such that decreases in commodity prices are generally associated with increases in the U.S. dollar relative to local producer currencies and vice versa. If this occurs then it is detrimental to us through higher equivalent U.S. dollar operating costs at the relevant operations. This negative, however, would usually be offset to some extent by the increases in commodity prices which had caused this change.

Mitigation - In respect of commodity purchase and sale transactions denominated in currencies other than U.S. dollars, the Group’s policy is usually to hedge the specific future commitment through a forward exchange contract. From time to time, the Group may hedge a portion of its currency exposures and requirements in an attempt to limit any adverse effect of exchange rate fluctuations.

4.    Geopolitical risk

Risk appetite - High. We operate in countries with less developed political regimes. To be considered a truly diversified commodities group, operations in these jurisdictions are required.

Risk - We operate and own assets in a large number of geographic regions and countries, some of which are categorised as developing, complex or having unstable political or social climates. As a result, we are exposed to a wide range of political, economic, regulatory, social and tax environments. The Group transacts business in locations where it is exposed to a risk of overt or effective expropriation – resource nationalism continues to be a challenging issue in many countries. Our operations may also be affected by political and economic instability, including terrorism, civil disorder, violent crime, war and social unrest.

Increased scrutiny by governments and tax authorities in pursuit of perceived aggressive tax structuring by multinational companies has elevated potential tax exposures for the Group.

Comments - Policies or laws in the countries in which we do business may change in a manner that may be adverse for us, even those with stable political environments e.g. many governments have sought additional sources of revenue by increasing rates of taxation, royalties or resource rent taxes.

We have no control over changes to policies, laws and taxes.

The OECD tax reporting initiative on Base Erosion and Profit Sharing (BEPS) is now effective and in 2018 the Group will report for the first time with regard to the 2017 tax year.

The continued operation of our existing assets and future plans are in part dependent upon broad support, our ‘‘social licence to operate’’, and a healthy relationship with the respective local communities – see further Community Relations and Skills availability and retention concerning workforce disputes.

Mitigation - The Group’s industrial assets are diversified across various countries. Also, the Group continues to actively engage with governmental authorities in light of upcoming changes and developments in legislation and enforcement policies.

See map on page 3 which sets out our global operational footprint.

In 2017, we also published our second Payments to Governments report. This detailed total government contributions in 2016 of around $4 billion. We also continue to be an active member of the Extractive Industries Transparency Initiative (EITI).

5.    Laws, regulations, enforcement, permits and licences to operate

Risk appetite - Medium. The Group maintains programmes which seek to ensure that we comply with or exceed the laws and external requirements applicable to our operations and products. However, some of our industrial activities are located in countries that are categorised as developing, complex or having political or social climates and/or where corruption is generally understood to exist.

Risk - We are exposed to extensive laws including those relating to bribery and corruption, sanctions, taxation, anti-trust, financial markets regulation, environmental protection, use of hazardous substances, product safety and dangerous goods regulations, development of natural resources, licences over resources, exploration, production and post-closure reclamation, employment of labour and occupational health and safety standards and preservation. The terms attaching to any permit or licence to operate may also be onerous and obtaining these and other approvals, which may be revoked, can be particularly onerous to comply with. Furthermore, in certain countries title to land and rights and permits in respect of resources are not always clear or may be challenged.

The legal system and dispute resolution mechanisms in some countries may be uncertain so that we may be unable to enforce our understanding of our rights. Successful lawsuits based upon damage resulting from operations could lead to the imposition of substantial penalties, the cessation of operations, compensation and remedial and/or preventative orders. Moreover, the costs associated with legal compliance, including regulatory permits, are substantial and increasing. Any changes to these laws or their more stringent enforcement or restrictive interpretation could cause additional significant expenditure to be incurred or cause suspensions of operations and delays in the development of industrial assets. Failure to obtain or renew a necessary permit or the occurrence of other disputes could mean that we would be unable to proceed with the development or continued operation of an asset and/or impede our ability to develop new industrial properties.

As a diversified sourcing, marketing and distribution company conducting complex transactions globally, we are exposed to the risks of fraud, corruption, sanctions breaches and other unlawful activities both internally and externally. Our marketing operations are large in scale, which may make fraudulent or accidental transactions difficult to detect. In addition, some of our industrial activities are located in countries, such as the DRC, where corruption is generally understood to exist. Corruption and sanctions risks remain highly relevant for businesses operating in international markets as shown by recent regulatory enforcement actions both inside and outside the resources sector.

Comments - Since 2007 the Group has had various business dealings with entities associated with Dan Gertler in connection with its copper assets in the DRC. In December 2017 the United States government designated Dan Gertler and affiliated companies as Specially Designated Nationals (SDNs), thereby imposing blocking sanctions on them and companies owned 50% or more by them, under Executive Order 13818, titled “Blocking the Property of Persons Involved in Serious Human Rights Abuses or Corruption”. The Group has pre-existing contractual obligations to make royalty and pas-de-porte payments in respect of KCC and Mutanda to certain of these companies which pre-date the SDN designation and which arose when the companies acquired rights from Gecamines. The Group has not made any payment to the companies since the SDN designation. The Group is still considering how best to mitigate its risks in relation to these obligations.

In January 2018, the DRC parliament adopted a revised Mining Code. This includes significant increases in royalties, taxes, government ownership requirements and repatriation restrictions and terminates retroactively the 10-year stability clause that exists in the current Mining Code. If the revised Mining Code is promulgated and implemented in this form, it would have a significant impact on the investments of the Group in the DRC and their value.

During the year, a restatement of past financial statements at Katanga Mining Limited, a subsidiary of the Group, was required and the Ontario Securities Commission is investigating various matters relating to Katanga (see pages 92 and 97).

As KCC (Katanga’s 75% held main operating subsidiary) did not rectify a capital deficiency by 31 December 2017 as required by DRC corporate laws, an interested party may commence legal action before DRC judicial authorities. Katanga continues to assess options to address the capital deficiency including options which may partially adversely impact its entitlement to KCC’s future cash flows.

Mitigation - We seek to ensure full compliance through our commitment to complying with or exceeding the laws and external requirements applicable to our operations and products and through monitoring of legislative requirements, engagement with government and regulators, and compliance with the terms of permits and licences. We keep informed of new regulations and legal requirements. We seek to manage the risk of breaching applicable laws and external requirements through our policy framework which is described on page 91. However, there can be no assurance that such policies, procedures and controls will adequately protect the Group against fraud, corruption, sanctions breaches or other unlawful activities.

6.    Liquidity risk

Risk appetite - Low. It is the Group’s policy to operate a BBB rating or above balance sheet and to ensure a minimum level of cash or committed funding is available at any given time.

Risk - Our failure to access funds (liquidity) would severely limit our ability to engage in desired activities. 

Liquidity risk is the risk that we are unable to meet our payment obligations when due, or are unable, on an ongoing basis, to borrow funds in the market at an acceptable price to fund our commitments. While we adjust our minimum internal liquidity threshold from time to time in response to changes in market conditions, this minimum internal liquidity target may be breached due to circumstances we are unable to control, such as general market disruptions, sharp movements in commodity prices or an operational problem that affects our suppliers, customers or ourselves.

Comments - A lack of liquidity may mean that we will not have sufficient funds available for our marketing and industrial activities, both of which employ substantial amounts of capital. If we do not have funds available for these activities then they will decrease. 

Note 25 details our financial and capital risk management including liquidity risk.

Mitigation - The Financial Review on page 52 sets out the Group’s Net Funding and Net Debt in 2017, which are both currently within our targets. We also issued during the year the following bonds with applicable coupon and redemption dates: $500 million 3% 2022, $500 million 3.875% 2027 and $1.0 billion 4% 2027.

While we have delevered and repositioned the Group’s balance sheet in the past two years, we remain cognisant that access to credit is vital and that market conditions can change rapidly.

As at 31 December 2017, the Group had available undrawn committed credit facilities and cash amounting to $12.9 billion (31 December 2016:$16.7 billion), comfortably ahead of our $3 billion minimum prescribed level.

Standard & Poor’s and Moody’s latest assessments for the Company’s investment grade credit are BBB (positive outlook) and Baa2 (stable) respectively.


7.    Counterparty credit and performance

Risk appetite - Low. Where possible, credit exposure are to be covered through credit mitigation products.

Risk - Financial assets consisting principally of receivables and advances, derivative instruments and long-term advances and loans can expose us to concentrations of credit risk.

Furthermore, we are subject to non-performance risk by our suppliers, customers and hedging counterparties, in particular via our marketing activities.

Comments - Non-performance by suppliers, customers and hedging counterparties may occur and cause losses in a range of situations, such as:

  • a significant increase in commodity prices resulting in suppliers being unwilling to honour their contractual commitments to sell commodities at pre-agreed prices
  • a significant reduction in commodity prices resulting in customers being unwilling or unable to honour their contractual commitments to purchase commodities at pre-agreed prices
  • suppliers subject to prepayment or hedging counterparties may find themselves unable to honour their contractual obligations due to financial distress or other reasons

Mitigation - We monitor the credit quality of our counterparties and seek to reduce the risk of customer non-performance by requiring credit support from creditworthy financial institutions including making extensive use of credit enhancement products, such as letters of credit, bank guarantees and insurance policies. Specific credit risk policy rules apply to open account risk with an established threshold for referral of credit positions by departments to central management. In addition, note 25 details our financial and capital risk management approach.

8.    Operating and cost risks

Risk appetite - Low. It is the Company’s strategic objective to focus on cost control and operating efficiencies.

Risk - Our industrial activities are subject to numerous risks and hazards normally associated with the initiation, development, operation and/or expansion of natural resource projects, many of which are beyond our control. These include unanticipated variations in grade and other geological problems (so that anticipated or stated reserves, may not conform to expectations). Other examples include natural hazards, processing problems, technical malfunctions, unavailability of materials and equipment, unreliability and/or constraints of infrastructure, industrial accidents, labour force challenges, disasters, protests, force majeure factors, cost overruns, delays in permitting or other regulatory matters, vandalism and crime.

Comments - The development and operating of assets may lead to future upward revisions in estimated costs, delays or other operational difficulties or damage to properties or facilities. This may cause production to be reduced or to cease and may further result in a decrease in production, personal injury or death, third party damage or loss or require greater infrastructure spending. Also, the realisation of these risks could require significant and additional capital and operating expenditures.

Some of the Group’s interests in industrial assets do not constitute controlling stakes. Although the Group has various structures in place which seek to protect its position where it does not exercise control, these other shareholders may have interests or goals that are inconsistent with ours. They may take action contrary to the Group’s interests or be unable or unwilling to fulfil their obligations.

Infrastructure availability remains a key risk, e.g. availability of continuous high-voltage power to our copper operations in the Democratic Republic of Congo. We are continuing to seek long-term power solutions via the Inga dam refurbishment.

Mitigation - Development and operating risks and hazards are managed through our continuous development status evaluation and reporting processes and ongoing assessment, reporting and communication of the risks that affect our operations along with updates to the risk register.

We publish quarterly our production results and annually our assessment of reserves and resources based on available drilling and other data sources. Conversion of resources to reserves and, eventually, reserves to production is an ongoing process that takes into account technical and operational challenges, economics of the particular commodities concerned and the impact on the communities in which we operate.

Local cost control measures are complemented by global procurement that leverages our scale to seek to achieve favourable terms on high-consumption materials such as fuel, explosives and tyres.

Details of the significant impairments recorded during the year are contained in note 5. Deterioration in the price outlook or operating difficulties may result in additional impairments.

9.    Cyber risk

Risk appetite - Low. Where possible, cyber exposures are to be mitigated through proactive monitoring and routing test to confirm security of systems.

Risk - A cyber security breach, incident or failure of Glencore’s IT systems could disrupt our businesses, result in the disclosure of confidential information, damage our reputation and create significant financial and legal exposures.

Although Glencore invests heavily to monitor, maintain and regularly upgrade its systems, processes and networks, absolute security is not possible.

Comments - Cyber risks for firms have increased significantly in recent years owing in part to the proliferation of new technologies, the use of the internet and the increasing degree of connectivity, telecommunications technologies and major increase in cyber-crime.

Our activities depend on technology for industrial production, efficient operations, environmental management, health and safety, communications, transaction processing and risk management.

We see the increasing convergence of IT and OT (Operational Technology) networks that will create new risks and demand additional management time and focus. We also depend on third parties in long supply chains that are exposed to the same cyber risks but which are largely outside our control.

Mitigation - We have invested in global IT security platforms in order to seek to proactively monitor and manage our cyber risks. We conduct routine third party penetration tests to confirm the security of our systems. Our designated IT Security Council sets the global cyber security strategy, conducts regular risk assessments and designs targeted cyber security packages that seek to thwart emerging malware, virus, vulnerabilities etc. Our incident response team is established and responsible to respond in the event of any major cyber incident. We conduct ongoing training of our employees in order to raise the awareness of cyber security threats.


10.    Emissions and climate change  

Risk appetite - High. Our business involves mining and consuming fossil fuels along with processing minerals which inevitably entails emitting harmful emissions.

Risk - Our global presence exposes us to a number of jurisdictions in which regulations have been or are being considered to reduce emissions. The likely effect of these changes will be to increase the cost for fossil fuels, impose levies for emissions and increase costs for monitoring and reporting and to reduce demand for fossil fuels. Third parties, including potential or actual investors, may also introduce policies adverse to the Company due to its interest in fossil fuels.

Comments - A number of national governments have already introduced, or are contemplating the introduction of regulatory responses to greenhouse gas emissions. This includes countries where we have assets such as Australia, Canada and Chile, as well as customer markets such as China, India and Europe.

Many countries are also pledging to stop using fossil fuels (specifically coal) in power generation, e.g. in 2017 25 countries and regions including the UK, France and Mexico undertook to do so by 2030.

As a result of these factors, some other market participants and analysts have a more bearish view (some strongly so) in relation to coal and oil and believe that many fossil fuel assets could become “stranded”, i.e. no longer capable of operating for an economic return with the capital invested being irretrievably lost.

We are one of the major producers of key metals (including copper, cobalt, nickel) that are currently essential for electric vehicles and the transition to a low carbon economy, although technological change may over time reduce their requirement.

Mitigation - Through our sustainability programme, we strive to ensure emissions and climate change issues are identified, understood and monitored in order to meet international best practice standards and ensure regulatory compliance. We seek to ensure that there is a balanced debate with regard to the ongoing use of fossil fuels.

During 2017, we published our second Climate Change Considerations for our Business which sets out information about how our business operates, our position on climate change and how we are managing the opportunities and challenges of climate change across our business.

In order to understand and plan for the effects of climate change on our business, we are seeking to provide a framework for identifying, understanding and, ultimately, managing (to the extent possible) climate-related challenges and opportunities facing our portfolio. This covers in particular government policy, energy costs, physical impacts, stakeholder perceptions, and market impacts.

Further information is available at 

11.    Community relations and human rights

Risk appetite - Low. It is our policy to ensure we proactively engage with local communities to maintain our social licence to operate.

Risk - The continued success of our existing operations and our future projects are in part dependent upon broad support and a healthy relationship with the respective local communities.

Comments - A perception that we are not respecting or advancing the interests of the communities in which we operate, could have a negative impact on our ‘‘social licence to operate’’, our ability to secure access to new resources and our financial performance. The consequences of negative community reaction could also have a material adverse impact on the cost, profitability, ability to finance or even the viability of an operation and the safety and security of our workforce and assets. Such events could lead to disputes with governments, with local communities or any other stakeholders, and give rise to reputational damage. Even in cases where no adverse action is actually taken, the uncertainty associated with this instability could negatively impact the perceived value of our assets.

Mitigation - We believe that the best way to manage these vital relationships is to adhere to the principles of open dialogue and cooperation. In doing so, we engage with local communities to demonstrate our operations’ contribution to socio-economic development and seek to ensure that appropriate measures are taken to prevent or mitigate possible adverse impacts on the communities, along with the regular reporting as outlined on our website at:

Some of our mine sites are in remote locations where they are a – or the – key employer in the region. Inevitably, every mine will reach a point of depletion where it is no longer economic to operate and must be closed in an orderly fashion. We are working with all stakeholders at our mine sites to operate for as long as it is economically viable to do so, and to prepare long-term plans that provide for a gradual transition to the end of mine life.

12.    Skills availability and retention

Risk appetite - Low. It is a key strategic objective of the Company to maintain positive employee relationships and to attract and retain skilled workers.

Risk - The maintenance of positive employee and union relations and the ability to attract and retain skilled workers, including senior management, are key to our success. This attraction and retention of highly qualified and skilled personnel can be challenging, especially, but not only, in locations experiencing political or civil unrest, or in which they may be exposed to other hazardous conditions.

Comments – Many employees, especially at the Group’s industrial activities, are represented by labour unions under various collective labour agreements. Their employing company may not be able to satisfactorily renegotiate its collective labour agreements when they expire and may face tougher negotiations or higher wage demands than would be the case for non-unionised labour. In addition, existing labour agreements may not prevent a strike or work stoppage.

Mitigation – We understand that one of the key factors in our success is a good and trustworthy relationship with our people. This priority is reflected in the principles of our sustainability programme and related guidance, which require regular, open, fair and respectful communication, zero tolerance for human rights violations, fair remuneration and, above all, a safe working environment, as outlined on our website at: and in our People section on page

Various union strike action has occurred at several of our operations during the year e.g. Coal Australia. Group companies seek negotiated outcomes with employee representatives, based on reasonableness and fairness, however unfortunately and occasionally strike action can occur.

13.    Health, safety, environment, including potential catastrophes

Risk appetite - Low. It is our policy to ensure we comply with or exceed the health, safety and environmental laws and external requirements applicable to our operations and products.

Risk - Our operations are subject to health, safety and environmental laws along with compliance with our corporate sustainability framework. The processes and chemicals used in extraction and production methods, as well as transport and storage, may impose environmental hazards. A serious failure in these areas could lead to an emergency or catastrophe at a site, which could result in injuries or fatalities and also impact production and our corporate reputation.

The storage of tailings at our industrial assets and the storage and transport of oil are material examples of these risks.

Comments - Environmental (including those associated with particular environmental hazards) and health and safety laws may result in increased costs or, in the event of non-compliance or incidents causing injury or death or other damage at or to our facilities or surrounding areas may result in significant losses, including those arising from (1) interruptions in production, litigation and imposition of penalties and sanctions and (2) having licences and permits withdrawn or suspended or being forced to undertake extensive remedial clean-up action or to pay for government-ordered remedial clean-up actions. In each case, liability may arise where the hazards have been caused by any previous or subsequent owners or operators of the property, by any past or present owners of adjacent properties, or by third parties.

We regret, we recorded nine fatalities at our operations from nine separate incidents.

Mitigation – Our approach to sustainability and our expectations of our workers and our business partners are outlined in our sustainability framework. This underpins our approach towards social, environmental, safety and compliance indicators, providing clear guidance on the standards we expect all our operations to achieve. Through the reporting function within the programme, our Board and senior management receive regular updates and have a detailed oversight on how our business is performing across all of the sustainability indicators. We monitor catastrophic risks, in particular, across our portfolio and operate emergency response programmes.

Compliance with international and local regulations and standards are top priorities.

We remain focused on the significant risks facing our industry arising from operational catastrophes such as the examples of tailings dam collapses in Canada and Brazil and the coal mine explosions experienced in the last five years. We seek to learn from these events, and proactively assess our exposure to similar incidents and implement measures to avoid these.

Considerable ongoing investment continues in the Group’s SafeWork health and safety programme.

See also the Sustainable development review on page 24 and the HSEC Committee report on page 100.

Further details will also be published in our 2017 sustainability report.


The following has been extracted from page 189 of the 2017 Annual Report.

In the normal course of business, Glencore enters into various arm’s length transactions with related parties, including fixed price commitments to sell and to purchase commodities, forward sale and purchase contracts, agency agreements and management service agreements. Outstanding balances at period end are unsecured and settlement occurs in cash (see notes 10, 12, and 23). There have been no guarantees provided or received for any related party receivables or payables.

All transactions between Glencore and its subsidiaries are eliminated on consolidation along with any unrealised profits and losses between its subsidiaries, associates and joint ventures. In 2017, sales and purchases with associates and joint ventures amounted to $1,859 million (2016: $1,570 million) and $7,485 million (2016: $3,194 million) respectively.

Remuneration of key management personnel

Glencore’s key management personnel are the members of the Board of Directors, CEO, CFO and the heads of the operating segments. The remuneration of Directors and other members of key management personnel recognised in the consolidated statement of income including salaries and other current employee benefits amounted to $22 million (2016: $13 million). There were no other long-term benefits or share-based payments to key management personnel (2016: $Nil). Further details on remuneration of Directors are set out in the Directors’ remuneration report on page 101.


The following responsibility statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from page 109 of the 2017 Annual Report. 

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for the Company for each financial year. The financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and International Financial Reporting Standards as adopted for use in the European Union (together “IFRS”). The financial statements are required by law to be properly prepared in accordance with the Companies (Jersey) Law 1991. International Accounting Standard 1 requires that financial statements present fairly for each financial year the Company’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s “Framework for the preparation and presentation of financial statements”.

In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, the Directors are also required to:

  • properly select and apply accounting policies
  • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information
  • provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance
  • make an assessment of the Company’s ability to continue as a going concern

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Signed on behalf of the Board

John Burton
Company Secretary
1 March 2018

For further information please contact:

Company secretarial        
John Burton    
t: +41 41 709 2619    
m: +41 79 944 5434

Nicola Leigh    
t: +41 41 709 2755    
m: +41 79 735 3916

Martin Fewings    
t: +41 41 709 2880    
m: +41 79 737 5642

Ash Lazenby
t: +41 41 709 27 14
m: +41 79 543 38 04

Charles Watenphul    
t: +41 41 709 2462    
m: +41 79 904 3320 

Glencore LEI: 2138002658CPO9NBH955

Notes for Editors
Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities. The Group's operations comprise around 150 mining and metallurgical sites, oil production assets and agricultural facilities.

With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.

Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, oil and food processing sectors. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 146,000 people, including contractors.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.

The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, “Glencore”, “Glencore group” and “Group” are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not imply any other relationship between the companies.  Likewise, the words “we”, “us” and “our” are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.