‘Glencore Has Been Playing Us’

By Beacon Staff

On March 1, Reuters unveiled a report that Swiss commodities giant Glencore supplied thousands of tons of alumina to a firm linked to Iran’s nuclear program, the most recent eye-catching headline in the company’s controversy-riddled history. Four days later, Montana Sens. Max Baucus and Jon Tester sent a letter to the Environmental Protection Agency about a Glencore concern much closer to home: Columbia Falls Aluminum Company.

Glencore, the largest commodities trading group in the world, has owned the CFAC aluminum plant located along the Flathead River since 1999. Citing high electricity rates and aluminum market conditions, the company closed the facility in 2009. Since then, Tester and Baucus have tried to negotiate a power agreement with Bonneville Power Administration and Glencore to restart the plant.

But the Democrats’ recent letter marks a shift in strategy for plotting the plant’s future. Baucus and Tester are calling on the EPA to study whether contamination levels at the shuttered aluminum plant pose a risk to the community and businesses that might locate there down the road.

Such a study would determine whether the site should be declared a Superfund site, which would create a number of cleanup-related jobs. Under the Superfund program, the EPA can require companies that contributed to the pollution to pay for the cleanup bill.

An underlying frustration in the senators’ letter is evident: Negotiations for a power contract have hit roadblocks and attention is now turning to evaluating the site’s potential as a future home for purposes other than aluminum production.

But while the possibility of reopening the plant is not officially dead, at least one of the two senators appears completely fed up with Glencore – a feeling shared by local officials, state lawmakers and hundreds of former workers who were laid off without a severance package, some after decades of service to the aluminum company.

In an interview, Tester said he was not aware of the Iran report nor was he aware of some of the other allegations against Glencore, which include human rights violations in Africa, pollution and tax evasion. But, after his dealings with Glencore over the last three-plus years, the senator said he wasn’t surprised the company has been involved in controversy.

A frustrated Tester said last week he can no longer take Glencore at its word. He said the company strung him and BPA along during power contract negotiations and has proven to only care about maximizing profit, not providing jobs in a depressed area of Montana that needs them.

“We’d get them a power contract they asked for – they still wouldn’t open the plant,” the senator said. “This happened multiple times, not just once. After the second or third time, I told (former BPA Administrator) Steve Wright, ‘I’m getting played.’”

“I was dealing with them like they were a straight-up company,” he added. “That’s obviously not the case.”

Speaking from Switzerland, a spokesman for Glencore declined to comment on the possibility of a Superfund designation, the company’s plans for the CFAC property or on anything else regarding the facility, including Tester’s comments. He also pointed to a number of documents he says dispute allegations against Glencore, which is headquartered in Baar, Switzerland and has operations spanning dozens of countries around the globe.

Whether the company has committed improprieties has been the subject of press exposes and government investigations, but no matter the conclusions, the very presence of such scrutiny puts into perspective the odd juxtaposition of a global corporate power owning a facility in a small Montana town. And residents of that small town could be forgiven for feeling forgotten by a company whose concerns are as varied as intelligence reports and British parliamentary inquiries.

But as the years go by, those residents and their elected officials are feeling more than forgotten; they’re feeling decidedly mistreated – or as the Columbia Falls mayor puts it, like they’re “getting played.”

“A Cold-Blooded Company”

The Columbia Falls aluminum plant began producing aluminum in 1955, under ownership of the Anaconda Company. Over the years it grew into a major regional employer, reaching around 1,500 employees at one point. Columbia Falls Mayor Don Barnhart says “it supported this community for a lot of years.”

“It was a big deal,” he said.

Like many young men from Columbia Falls, Barnhart began working at the plant right out of high school. But he quickly discovered he preferred construction and switched career paths, though he would return to the plant for contracting projects throughout the years. Two of his uncles retired comfortably after careers at CFAC and he knows many more people around the community with similar stories.

A snow covered road leads to the closed Columbia Falls Aluminum Company. – File photo by Lido Vizzutti | Flathead Beacon

After the Atlantic Richfield Company (ARCO) purchased the Anaconda Company in 1977, the aluminum market hit a tumultuous period in the early 1980s. In 1985, ARCO sold the plant to investors led by Brack Duker. The Duker years were marked by a labor dispute that culminated in a lawsuit and a $97 million settlement paid out to workers in 1998.

Through poor market conditions, rising electricity prices and the Duker ordeal, CFAC had become a shell of its former self by the final years of the 1990s. Yet many in the Columbia Falls community held out hope for a return to some semblance of the plant’s glory days. Glencore walked into that environment of wishful thinking when it purchased the facility in 1999. In hindsight, Barnhart said the corporation took advantage of the wishful thinking.

“Glencore came in and kept production going and everybody could turn the other way and hold their nose,” the mayor said. “But I think as time went on people could see what was going on there: Glencore was taking it down to bare bones, running the equipment until it fell apart.

They wouldn’t fix anything.

“People started understanding that Glencore has been playing us.”

Dave Toavs, the former president and current vice president of the Aluminum Workers Trades Council, has been heavily involved in severance pay negotiations – or, as he says, “lack of negotiations.” Toavs represents between 250 and 300 former hourly workers, while he guesses there are another 100 or so salary workers who were also fired without any severance.

“They’re a cold-blooded company,” he said of Glencore. “I can’t blame them for closing the doors, with low metal prices and high power prices, but the thing is, if you’re going to close the doors you sever your employees. You treat your people right.”

Toavs said when the first group of workers was laid off, he called Glencore to ask for three months’ worth of insurance for the laid-off employees, which he said “isn’t asking for the world.”

“The answer was, ‘No and don’t ever call again,’” he said. “Their exact words.”

Toavs, who worked for CFAC for 32 years and now works on the railroad, said the remaining employees ran the plant in its final year of operation “on love,” without a budget. When the last of the workers were shown the door, Toavs said it was evident that Glencore didn’t share the love.

“There are people who worked there their whole lives and all of a sudden their jobs are gone,” he said. “I had people come up to me in the union hall in tears, saying, ‘What am I going to do? Who’s going to hire somebody in their 50s? I’m too young to retire but I’m too old to find a new job.’ It was a sad deal, I tell you.”

After futile attempts to get Glencore to sit down at the table for severance discussions, Toavs sees the writing on the wall. He couldn’t discuss specifics but said the workers are “pursuing other avenues” to get the company to address severance.

He also sees the writing on the wall for the plant in general. Echoing Tester, Toavs simply doesn’t believe Glencore anymore when it says the plant will be reopened. Metal prices and power costs don’t seem to make reopening viable anyway, and the “longer it stays idle, the less chance it has of ever reopening.”

“The day comes when you have to wake up and say, ‘OK, it’s over,’” Toavs said. “I don’t know of a single person who thinks that thing is going to reopen. The dream is gone.”

History of Controversy

In 1974, Marc Rich founded Glencore, then called Marc Rich & Co. AG. A decade later in 1983, Rich was indicted on a litany of charges related to tax evasion, fraud and illegal dealings with Iran. It was considered the largest tax evasion case in U.S. history at the time. Rich was in Switzerland on the day of his indictment and decided to stay, becoming a fugitive and making his way onto the FBI’s “most wanted list.” President Bill Clinton pardoned Rich in 2001.

As a fugitive, Rich continued to own the company until he sold his stake in 1994. The company then switched its name to Glencore International. But even in the post-Rich years, Glencore has run into controversy and has been the subject of a number of media exposes.

One such expose, a 2011 piece by the British Daily Mail, was entitled “Greed Inc.: A Special Investigation into Pollution, Dubious Tax Practices and Exploitation of African Workers at Glencore.” And the most recent controversial report was the Reuters story highlighting the company’s bartering transactions with a firm linked to Iran’s nuclear program.

CFAC direction sign in Columbia Falls. – File photo by Lido Vizzutti | Flathead Beacon

In a statement provided to the Beacon, Glencore acknowledged supplying an Iranian firm – Iralco – with alumina but said the barter transactions occurred before the European Union placed sanctions on Iralco last December. The company also said it wasn’t aware until later of the firm’s ties with Iran’s nuclear program, which has been the subject of multiple rounds of sanctions because of concerns that it is seeking to build nuclear weapons. The sanctions have come from a number of entities, including the United Nations, European Union and United States.

“We continuously monitor all contracts which are or could be affected by sanctions,” Glencore said. “As soon as Iralco was sanctioned by the EU we ceased transactions with them.”

“Glencore complies with applicable laws and regulations, including applicable sanctions. We closely monitor all new legal developments to ensure that we continue to be in compliance with applicable laws and regulations, including applicable sanctions.”

Today Glencore is often referred to as “secretive” and “shadowy” in news articles, though it gave up some of that widely documented secrecy when it decided to go public, a decision that was met with much anticipation from financial analysts. Its 2011 initial public offering of $10 billion was the largest in the London Stock Exchange’s history. At the time, the company was valued at around $60 billion.

Glencore describes its operations in documents provided to the United Kingdom’s International Development Select Committee as “worldwide activities in the production, sourcing, processing, refining, transporting, storage, financing and supply of metals and minerals, energy products and agricultural products.”

The company says its industrial operations employ more than 58,000 people in 33 countries, while its marketing operations employ close to 3,000 people in over 40 countries. Its customers are from a wide range of industries, including automotive, oil, power generation, steel production and food processing.

“Let’s Get it Cleaned Up”

Dee Brown, a Republican state senator from Hungry Horse, grew up in the area and recalls when Nucleus Avenue in Columbia Falls bustled with activity. The tax base was robust, families were attracted to the area, “our schools were full of kids and there was a lot of community spirit” – all stemming from the aluminum plant.

Brown, whose husband and father-in-law both worked at the plant, thinks Columbia Falls can regain some of that spirit if the CFAC property is properly put to use.

“It was a good time in Columbia Falls,” she said. “I think that opportunity could be there again, if we can see what contamination there is, isolate it and clean it up. Glencore could get on with their life and Columbia Falls could get on with our life.”

“Until it’s cleaned up,” she added, “it isn’t going to happen.”

Brown addressed the Flathead County Commission in December about the possibility of a Superfund designation. She believes the property could be an economic hub with its rail site, attracting manufacturing interests in particular. Like others, she is frustrated by Glencore keeping “the community in the dark” – no outreach, no press releases – and its lack of resolve to make the property viable.

“People are fed up,” she said. “They want something to be done.”

While Tester said the “best outcome is if they reopen it for the long-term,” he has a hard time believing it will happen even if Glencore says it will, since the company has made the claim multiple times before. He agrees that “now it’s time to look at the contamination,” and start creating jobs through the cleanup process and opening the doors to new businesses.

A sign directs traffic around the nearly empty parking area at the Columbia Falls Aluminum Company building in Columbia Falls. – File photo by Lido Vizzutti | Flathead Beacon

“They’ve been playing this game for awhile and I ain’t playing anymore,” he said. “Bottom line is this: It’s a piece of infrastructure that I hate to lose but the fact is we’ve been strung along on this. Let’s get it cleaned up.”

The letter from Tester and Baucus says “due to the complexity” of the 120-acre industrial site, “we urge the EPA, in coordination with Montana Department of Environmental Quality, to swiftly commence a site assessment of the CFAC production facilities and the adjoining areas, including the Cedar Creek drainage.”

The letter refers to the “hazardous waste the plant handled, disposed and released on site.”

“It is important to assure that contamination is assessed and remediated and that future leaks of cyanide, zinc, polynuclear aromatic hydrocarbons are contained,” the senators wrote, adding that federal and state agencies should specifically “assess the risks posted by the solvent landfills and percolation ponds which received effluent from the smelting operations until they were capped in 1980.”

Toavs says the specter of cleanup has contributed to Glencore’s apparent shiftiness in negotiations.

“As long as they keep saying they’re going to reopen, they think they can get out of it,” he said. “They don’t want to pay for the cleanup. That’s the bottom line. I don’t have an exact figure on how much it’s going to cost, but it’s a lot.”

Barnhart, the Columbia Falls mayor, not only agrees that it’s time to address the contamination, he’s surprised it didn’t happen a long time ago. He notes that the property has been home to a large-scale industrial operation since the 1950s, is located directly near a prized river and that “this end of the valley is nothing but river rock.”

“How much of that contamination, after all these years, has actually leached out into the Flathead River?” he said.

“I’m glad that the senators are pushing the issue,” he added. “To me, it’s become obvious that Glencore isn’t interested in a reopening. They keep hanging things out there and giving hope to folks. At some point, you have to put your foot down.”