Glencore

The higher risk-taking by Glencore is partly explained by the physical nature of its business, which makes price hedging difficult.

Glencore's announcement that it plans to list up to 20% of its shares in an initial public offering excited the markets.

The proposed flotation of Glencore, valuing the company at up to $73bn, is a sign of how capital is flooding back into the sector.

Then on Thursday he finally stepped out of the shadows as he launched Glencore's multi-billion dollar initial public offering.

The good thing about Glencore's decision to go public is that this information is now in the public domain.

Such ventures have left Glencore with a reputation as a risky trader which exploits weak governments, an argument he strongly denies.

Until now, however, Glencore has rarely made public statements of its views on the direction of commodity prices and demand.

Whichever is right, Glencore's IPO will give it the currency to continue expanding in both sides of the company.

Xstrata, one of the world's biggest mining firms, was born out of the initial public offering (IPO) of Glencore's coal mines in 2002.

The game's complex rules may remind him of Xstrata's intertwined relations with its biggest shareholder, Glencore.

As such, the emirate is set to become Glencore's largest shareholder, after the company's employees.

Glencore dwarfs its rivals in terms of size and the number of raw materials it trades.

Glencore expects to price its IPO around May 19, becoming a public company a few days later.

Miriam Hehir, at RBC Capital in London, said that Glencore's IPO could herald a series of mergers and acquisitions.

"As economic growth resumes, the outlook for most commodity markets is continuing to improve, " Glencore said in a statement.

Glencore added another worry this week, when it revealed its share in a number of raw materials markets.

The latest China bonus is a commodities boom that put Glencore in need of a chairman of a FTSE 100 company with global experience.

But Mr Davis added: "I know Glencore have thought about this. "

To ease Chinese antitrust concerns, Glencore said it would sell a Peruvian copper mine currently owned by Xstrata.

Those who attended Glencore's analyst day last week reported that the commodities trading house had noted slowing demand.

Glencore's acquisition will ensure that it reaps the benefit from the deregulation of Canada's export market for wheat.

Chemoil, Morgan Stanley and Glencore spokesmen declined to comment on the deal. Vitol was not available to comment.

Commodities trading giant Glencore has reported a sharp rise in profits and revenue thanks to strong demand for grain and oil in particular.

A bigger question is how Glencore's management will cope with unaccustomed public scrutiny and the demands of quarterly financial reporting.

If Glencore does choose to go public, it will be subject to much more onerous reporting and disclosure rules.

As much of Glencore's $14. 4bn in net debt is held in bonds, it discloses quarterly financial information to bond holders.

To fill Glencore's pockets, Xstrata has agreed to buy a Colombian mine from it, and to give it the option to buy it back within a year.

But the higher figure also reflects the fact that Glencore does speculate in the market from time to time.

Glencore also has extensive direct interests in mining companies including a 35 per cent of the London-listed Xstrata.

In fact, Glencore's sprint towards its IPO has coincided with wild price gyrations across most commodities markets.

In New Orleans, warehouses owned by Goldman, J. P. Morgan, Glencore and Trafigura have accumulated 60% of all the LME's zinc stock.

Glencore, the world's largest trader, said it saw "encouraging signs of increased levels of business activity" .

Once the IPO establishes a value for Glencore's shares, it will be much easier to convince Xstrata's other investors to swap.

This is not just a story about loose US monetary policy, or the rise of large commodity businesses such as Glencore.

Glencore and the cornerstone investors declined to comment.

Glencore agreed to sell this asset to Xstrata for $2bn in January to take up its share of Xstrata's rights issue.

Glencore stopped supply in late 2009, breaking a relationship with Iran of more than three decades.

While insisting that Glencore would be disciplined, Mr Glasenberg said it could use its shares as currency to buy larger assets.

There is also a plan by Credit Suisse and Glencore, the commodities supplier, to launch an aluminium-backed exchange-traded fund.

He has, however, promised not to sell a single share while he works for Glencore.

Another possibility is a merger with Glencore.

But according to documents that went to Xstrata's board on Sunday evening, Glencore has stopped short of taking such an aggressive tack.

A Glencore spokesman also declined to comment.

Glencore said on Sunday its overall positions in grains had mixed "outcomes" in 2010.

Glencore declined to comment.

The prospect of Glencore using its new share currency to buy other mining companies makes the deal makers giddier still.

Glencore and Gunvor also see little upside for prices in early 2010, said people familiar with their trading views.

Glencore plans to sell a 20 per cent stake worth around $10bn, valuing the whole company at around $60bn, bankers said.

In addition to those assets, Glencore controls unlisted assets, such as mines and farming activities, and its trading business.

Glencore's risk appetite will be an important factor for investors weighing this month's offering in London and Hong Kong.

These are far easier to value than Glencore's trading business.

Glencore plans to become a public company in London and Hong Kong later this month.

Xstrata's founding 35% shareholder Glencore, a privately held trading firm, lacks the cash to take part in the $5. 9 billion rights issue.

Glencore had sold the mine to Xstrata last year for $2 billion, to raise the funds to participate in Xstrata's rights issue.

And Glencore adds heft to Hong Kong's underdeveloped resource sector, giving investors another way to bet on Chinese demand for commodities.