Glencore PLC said it recorded a $480 million provision to cover its net exposure to Radiant World, a counterparty facing liquidity stress and a legal dispute over financial obligations.
The provision covers Glencore’s net position of $480 million after netting $951 million owed by Radiant World against $471 million owed to the company, according to figures reported by Bloomberg. The exposure is below the $500 million threshold Glencore uses for material financial disclosures, the miner said earlier this month.
Radiant World has come under severe pressure following allegations that it provided falsified documents to lenders. The company sent Glencore a formal letter threatening legal action over disputed obligations, while Glencore has halted new transactions and is seeking to exit remaining contracts, Chief Executive Gary Nagle told an earnings call.
Glencore’s exposure includes its dealings with Sapphire Minmetals, an entity it considers part of the same group, though Sapphire’s chairman has previously stated the companies operate separately. Late last year, Glencore acquired warrants to take a minority equity stake in Radiant World, though these options remain unexercised.
The $480 million write-down is equivalent to roughly a quarter of the average annual EBIT generated over the past decade by Glencore’s metals and minerals trading unit, highlighting the materiality of the exposure despite falling below internal reporting thresholds.
