Read Online The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders by Kate Kelly - Free Book Online
Authors: Kate Kelly
Ads: Link
commodities from one place to another, using commoditycontracts to manage price risk in transit. In the latter business, Glencore’s “marketing” arm, which contributed the majority of the company’s revenue, Beard was exceptionally good.
In 2007, a banner year in which Glencore’s top twelve executives saw their company holdings spike by $87 million apiece, Beard was rewarded for his efforts by being named head of the company’s entire oil division, part of the overall energy business that was the company’s second-biggest stream of revenue. It was the same year he turned forty.
Beard had high hopes for the division. He was overseeing six hundred traders, ship operators, inspectors, and other support personnel, a modest but critical fraction of the tens of thousands of staff and contract workers Glencore employed worldwide. The company had always been dominant in crude marketing, the primary activity of the business Rich founded in the 1970s, but it needed improvement in its trading of certain refined crude-oil products. Beard also craved expansion on the industrial side; with a single offshore oil block available for drilling near Equatorial Guinea, its exploration and production, or E&P, business was virtually nonexistent.
He was limited, however, by the company’s finite spending power. As profitable as Glencore was, the lack of the permanent capital that could come from selling shares to the public in an IPO prevented it from investing more than a few hundred million dollars at a time on any particular mine or drill site.
Beard spent half of his first year in the job on planes traveling to Moscow, Argentina, and South Africa to visit clients and work sites while getting to know his new staff in the U.S. and Asia. He was struck by the time that human resources matters consumed. Whereas he had once managed a single trading operation, he was now buried in paperwork, interviews, and other administrative duties.
Becoming a public figurehead was also a huge transition. Beard had always prized his low profile, generally avoiding the London social scene and keeping even his charitable donations largely anonymous. (He’d soon learn what was involved in being a tabloid target, however, when British papers started publishing details of his personal life, such as his home movie cinema and his net worth and snapping photographs as he ducked into a waiting car outside his house.) One of the few things that drew Beard out was the Arsenal Football Club, whose home matches he watched from his regular seats in North London’s Emirates Stadium, a behemoth celebrating the sport known in America as soccer. He also played occasional games at a London sports facility with a bunch of guys from work, five to a side.
The supercycle in commodities benefited Glencore tremendously. For the year 2007, the company sawrecord profits of $6.1 billion, as oil, metals, and other raw materials soared to astonishing price levels on their way to reaching record highs, which occurred alongside that of crude oil in July 2008.
As 2008 started off, Glencore’s performance promised to be even stronger. Oil was trading higher by the day despite signs of weakness, even crisis, in the U.S. The same market denial that had benefited Andurand was helping Beard, whose ability to lock in crude supplies at cheaper rates and resell them at a premium was helped by daily price climbs of $1 or more.
Then, in the middle of the summer, prices abruptly reversed. Oil lost significant ground in late July and August, and in September it was battered by the shock waves generated by the Lehman Brothers bank failure and other close calls in the U.S.
That month, Beard traveled to Glencore’s headquarters in Baar, the leafy valley town about a half-hour’s drive south of Zurich, for Glencore’s semiannual partner meeting. Lehman had recently filed for bankruptcy, and Brent crude was trading at about $95. The broader commodities market was off 30 percent from its
In 2007, a banner year in which Glencore’s top twelve executives saw their company holdings spike by $87 million apiece, Beard was rewarded for his efforts by being named head of the company’s entire oil division, part of the overall energy business that was the company’s second-biggest stream of revenue. It was the same year he turned forty.
Beard had high hopes for the division. He was overseeing six hundred traders, ship operators, inspectors, and other support personnel, a modest but critical fraction of the tens of thousands of staff and contract workers Glencore employed worldwide. The company had always been dominant in crude marketing, the primary activity of the business Rich founded in the 1970s, but it needed improvement in its trading of certain refined crude-oil products. Beard also craved expansion on the industrial side; with a single offshore oil block available for drilling near Equatorial Guinea, its exploration and production, or E&P, business was virtually nonexistent.
He was limited, however, by the company’s finite spending power. As profitable as Glencore was, the lack of the permanent capital that could come from selling shares to the public in an IPO prevented it from investing more than a few hundred million dollars at a time on any particular mine or drill site.
Beard spent half of his first year in the job on planes traveling to Moscow, Argentina, and South Africa to visit clients and work sites while getting to know his new staff in the U.S. and Asia. He was struck by the time that human resources matters consumed. Whereas he had once managed a single trading operation, he was now buried in paperwork, interviews, and other administrative duties.
Becoming a public figurehead was also a huge transition. Beard had always prized his low profile, generally avoiding the London social scene and keeping even his charitable donations largely anonymous. (He’d soon learn what was involved in being a tabloid target, however, when British papers started publishing details of his personal life, such as his home movie cinema and his net worth and snapping photographs as he ducked into a waiting car outside his house.) One of the few things that drew Beard out was the Arsenal Football Club, whose home matches he watched from his regular seats in North London’s Emirates Stadium, a behemoth celebrating the sport known in America as soccer. He also played occasional games at a London sports facility with a bunch of guys from work, five to a side.
The supercycle in commodities benefited Glencore tremendously. For the year 2007, the company sawrecord profits of $6.1 billion, as oil, metals, and other raw materials soared to astonishing price levels on their way to reaching record highs, which occurred alongside that of crude oil in July 2008.
As 2008 started off, Glencore’s performance promised to be even stronger. Oil was trading higher by the day despite signs of weakness, even crisis, in the U.S. The same market denial that had benefited Andurand was helping Beard, whose ability to lock in crude supplies at cheaper rates and resell them at a premium was helped by daily price climbs of $1 or more.
Then, in the middle of the summer, prices abruptly reversed. Oil lost significant ground in late July and August, and in September it was battered by the shock waves generated by the Lehman Brothers bank failure and other close calls in the U.S.
That month, Beard traveled to Glencore’s headquarters in Baar, the leafy valley town about a half-hour’s drive south of Zurich, for Glencore’s semiannual partner meeting. Lehman had recently filed for bankruptcy, and Brent crude was trading at about $95. The broader commodities market was off 30 percent from its
Similar Books
