LONDON – Donald Trump “has a point” in criticising China’s trade in aluminium and steel as cheap power has effectively been a subsidy to Chinese producers, said Glencore chief Ivan Glasenberg.
Trump should be pragmatic in dealing with China, given that it imports a lot of US goods, said Glasenberg during a Bloomberg Television panel at the St. Petersburg International Economic Forum.
“China was producing coal and selling it to the power stations at a loss,” he said. “Aluminium companies were getting subsidised power.”
China’s trade practices have been under scrutiny since Trump swept into office earlier this year, with the President opening investigations into whether foreign steel and aluminium is damaging US manufacturing enough to pose a national security threat. The results of the investigations will be published in June and the US “will take major action if necessary,” he said on Twitter.
The steel and aluminium investigations could succeed in reinvigorating US manufacturing of those commodities thanks to cheap energy from shale gas, Glasenberg said.
“America today with shale gas has the cheapest energy in the world,” he said. “To produce aluminium, they could potentially be competitive.”
Glasenberg also commented on Glencore’s approach to Bunge. Describing agriculture as “a chink in our armour,” he explained that Bunge’s assets in North and South America would fit with Glencore’s business.
“We didn’t have much in the US, we weren’t big enough in South America, so we said that’s where we want to grow,” he said.
He declined to discuss whether the Switzerland-based trading house was considering a hostile approach to Bunge. In May, the US-listed agricultural trader said it isn’t engaged in “business combination discussions” with Glencore or the company’s agriculture unit.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent nonexecutive director at Glencore.