Mercuria and Glencore Said to Vie for Venezuela Aluminum Deal
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Mercuria Energy Group Ltd. and Glencore Plc are among firms interested in a deal for Venezuela’s largest aluminum smelter, in what would mark a significant push by top commodity traders into the country’s beleaguered industrial sector.
The two companies are each in discussions with the Venezuelan government about a deal involving the Venalum smelter in the state of Bolivar, according to people familiar with the matter, who asked not to be identified because the talks are private. It’s not clear what precise structure any agreement might take, but talks include operating the smelter and gaining access to the metal it produces, some of the people said.
Mercuria is working together with private mining investment firm Heeney Capital, some of the people said. Still, no final agreement has been reached and the talks could still fall apart, some of the people said.
Mercuria and Heeney have already secured several agreements to purchase Venezuelan bulk commodities and metals, including gold, as major Western traders seek deals in the country after former leader Nicolas Maduro’s ouster.
For Glencore, a deal would reestablish a foothold in Venezuela at a time when the US is pushing to exert leverage over the nation and its vast mineral and oil resources. It would also represent a striking turnaround for Venalum, once a major aluminum producer whose output collapsed after years of under-investment, power shortages and economic turmoil.
Spokespeople for Glencore and Mercuria declined to comment. Heeney Capital and Venezuela’s Information Ministry didn’t immediately respond to requests for comment.
Venalum is controlled by the Venezuelan state and sits at the center of an aluminum industry built around the country’s abundant hydroelectric power resources and significant reserves of bauxite. Located in the industrial hub of Puerto Ordaz, it has a capacity to produce roughly 430,000 tons of primary aluminum a year.
Aluminum prices have climbed about 9% this year as disruptions to Middle Eastern production tightened supplies, while China, which produces around 60% of the world’s aluminum, is operating near a government-imposed ceiling on smelting capacity.
Glencore had dealings with Venezuela’s state-owned aluminum sector more than two decades ago and later provided financing to the nation’s aluminum producers in arrangements backed by their output. It also built an extensive oil-trading relationship with state-owned Petroleos de Venezuela SA, or PDVSA.
–With assistance from Jennifer A. Dlouhy.
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