The relationship between Glencore Plc and the network of companies linked to Radiant World was one of “senior partner-junior partner,” a top executive at one of the firms alleged in an interview with Bloomberg.
Rakesh Sethi, who is chairman of Sapphire Minmetals Corporation, said that Glencore’s relationship with the group was driven by its desire to increase its iron ore trading volumes.
“So we were like a partner,” he said. Glencore wanted “more volume, more market control, more customer base”.
Sapphire was part of Radiant World until 2015, and Glencore has said it still sees the two companies as one combined group. The companies have both said they are legally separate.
The comments from Sethi are the latest headache for Glencore stemming from its dealings with Radiant World and related companies, on which it has taken a US$480 million provision – one of its largest trading losses in its history as a public company.
Bloomberg has reported on concerns that Radiant World provided lenders with falsified documents to raise financing. One lender has claimed in court filings that Radiant World sent it contracts with Glencore that the London-listed miner and commodities trader later said were not genuine.
Sethi’s comments about the closeness of the group’s relationship with Glencore echo those made by Radiant World itself. In a letter to Glencore last week, lawyers for Radiant World claimed that Glencore had approved its new hires, directed its payments, and advised on fundraising and the pricing of Radiant World’s physical trades.
“Glencore organised and structured the arrangements and at all material times acted as the senior partner in the relationship,” according to a copy of the letter seen by Bloomberg. The letter was first reported by the Financial Times.
A spokesperson for Glencore said: “These claims are meritless and Glencore will vigorously contest them,” repeating an earlier statement on the claims made by Radiant World. “Glencore has incurred losses and been exposed to risks by Radiant’s actions and will take appropriate action.”
The spokesperson declined to comment further on Sethi’s remarks.
A spokesperson for Radiant World did not immediately respond to a request for comment. Radiant World has previously denied wrongdoing and said it conducts its business to the highest commercial and legal standards.
Earliest sellers
Sethi said he had worked for Sapphire since the time when it was still part of Radiant World, which was until 2015. He said that the relationship with Glencore had begun in 2011 or 2012.
“I think initially we were one of the earliest sellers to Glencore,” he said.
He said that the structure of the network of related but legally separate companies had suited Glencore.
“Glencore has the limitation that they cannot take exposure of more than US$500 million in one company,” he said. “So they wanted some more also.”
“Radiant World also joined, and some other company, and we were working together,” he said. “That continued a long time.”
Sapphire’s iron ore trading volumes with Glencore last year were 30 million tons, he said. That would represent nearly a third of Glencore’s own reported iron ore volumes of 95.4 million tons.
Radiant World, in its letter to Glencore, similarly asserted that Glencore was “the dominant physical counterparty” of the Radiant and Sapphire entities. Radiant’s trading volumes were more than 80 million tons last year, according to its website.
Sethi said the relationship underwent a shift in 2021, when a spike in iron ore prices caused losses on short derivatives positions held by the Radiant World network of companies. He said those derivatives positions were held bilaterally through Glencore, and that Glencore had unilaterally decided to close them out, crystallising a loss for the group.
“In around July 2021, in breach of the agreement that positions would not be closed out without proper notice, Glencore closed out open derivative positions, asserted an exposure of approximately US$1.16 billion and demanded payment of that sum,” Radiant World’s letter stated.
Sethi said that Sapphire’s share of the exposure was US$300 million to US$350 million.
From that point, according to the Radiant World letter, Glencore worked to support it and Sapphire to raise financing. Late last year, it acquired warrants that would have given it a minority ownership stake of approximately 5 per cent in Radiant World, Bloomberg has reported.
Radiant World’s letter cited a November 2024 WhatsApp message from Peter Hill, Glencore’s head of steelmaking raw materials, in which he said that Glencore had “basically bank rolled your entire existence for the last few years”.
Hill declined to comment.
Withheld payments
Glencore began withholding payments to Sapphire around five or six months ago, saying the amounts should be offset against money owed by Sapphire to Glencore, according to Sethi. He said that Sapphire’s lawyers had sent two demand notices for Glencore to pay amounts of US$261 million and US$79 million that he claimed it was owed.
“Our claim on them will be more than US$900 million,” he said. Radiant World estimates its losses as being more than US$1.4 billion, according to its lawyers’ letter.
Sethi declined to discuss Bloomberg’s previous reporting that Jefferies had been told that some invoices used by Sapphire to raise financing were not genuine. He said only that there was “nothing falsified”.
The US Department of Justice, Commodity Futures Trading Commission and the Singapore police are all investigating Radiant World’s activities – and Glencore is among companies that have been contacted by the DOJ about Radiant World.
Both Radiant World and Sapphire are subject to an asset freeze imposed by the British High Court last week at the request of Jefferies Financial Group, Bloomberg reported earlier.
Speaking before news of the asset freeze became public, Sethi said he was confident about Sapphire’s future, but that the company may look to focus more on base metals and less on iron ore. BLOOMBERG
