Both companies are negotiating with Venezuela to operate the plant, in a move that marks the return of major commodity traders
The Daily Journal.- London-listed miner Glencore (GLEN.L) and Swiss commodity trading company Mercuria Energy are among the firms seeking a deal involving Venalum, Venezuela’s largest aluminum plant.
According to Bloomberg, both companies are holding separate talks with the Venezuelan government over an agreement that would include operating the facility and gaining access to the metal it produces. Mercuria is working alongside mining investment firm Heeney Capital in the negotiations.
Venalum deal could revive the industrial sector
Venalum, formerly known as Corporación Venezolana de Guayana (CVG) Venezolana del Aluminio, operates under Venezuelan state control in Puerto Ordaz, Bolívar state, and can produce about 430,000 metric tons of primary aluminum per year.
The plant sits at the center of an industry built around the country’s abundant hydroelectric resources and bauxite reserves. However, years of underinvestment, power outages, and economic turmoil caused production to plummet.
In this context, an agreement involving the Venalum aluminum plant would represent a significant turnaround for a facility that once played a major role in the market.
For Glencore, the deal would mean reestablishing its presence in Venezuela. The company conducted business with the state-owned aluminum sector more than two decades ago and later provided financing to local producers. It also developed extensive oil trading ties with PDVSA.
Aluminum prices have risen about 9% this year, as production disruptions in the Middle East tightened supplies while China operated near its capacity limit.
With information from Bloomberg
