* Plans to use Glencore Agriculture to grow
* No plans to get into commodities does not already trade
* Favours growth through acquisition, not greenfield
(Adds quotes, detail, CHAM dateline)
By Barbara Lewis
CHAM, Switzerland, May 24 Miner and trader
Glencore is looking to expand its agriculture business
via its partnership with two Canadian funds, the company's CEO
said on Wednesday, but has no plans to move into any commodities
it does not already trade.
CEO Ivan Glasenberg was speaking a day after U.S. grains
trader Bunge Ltd said it was not in talks with Glencore,
while Glencore said it had made an informal approach to discuss
"a possible consensual business combination".
"Agriculture has always been our strategy," Glasenberg told
shareholders at the annual general meeting in Cham, near Zug in
Switzerland where Glencore has its headquarters.
Glencore, which became a major international grain trader
through its takeover of Canadian-based Viterra in 2012, sold 50
percent of its agriculture business in 2016 to two Canadian
investment funds, the Canada Pension Plan Investment Board
(CPPIB) and British Columbia Investment Management Corp (bcIMC).
The disposal took place when Glencore was rebuilding its
balance sheet following the commodity price crash of 2015.
Ratings agencies have since upgraded Glencore and analysts say
its balance sheet is now strong.
Glasenberg said he hoped to grow the agriculture business
through its vehicle Glencore Agriculture, set up with the two
"That structure will be used to continue growing our
agriculture business," he said. "Hopefully it will get bigger in
In general, Glasenberg said he preferred to increase the
business through acquisitions rather than greenfield investment,
which in the mining sector can be very costly.
He also said the company had no interest in getting into
commodities that it does not already trade.
Glencore has said the talks with Bunge may not lead to any
deal, but has not said what it might acquire should it not buy
Speculation has mounted that, after a string of poor
results, the world's big grain trading houses are poised for a
wave of consolidation similar to the mergers and acquisitions
seen in the farm chemicals and seed industries.
Apart from Bunge, the trading houses include rivals Archer
Daniels Midland, Cargill and Louis Dreyfus
They have struggled against global oversupply and thin
trading margins, but Glencore sees agriculture as part of the
late-cycle commodities, for which it predicts demand will
strengthen as economies such as China mature.
Glencore shares were unchanged at 1210 GMT.
(additional reporting by Justin George Varghese in Bengaluru;
Editing by Mark Potter and David Evans)