Glencore reaction: between serenity and the fear of loss

A takeover of raw materials company Glencore by the British-Australian Rio Tinto Group is becoming increasingly closer. What would the departure of the raw materials company mean for the canton of Zug?
 

A few days ago, it was announced that the world's largest iron ore producer, the British-Australian Rio Tinto Group, based in London and Melbourne, is in takeover talks with its significantly smaller competitor from Zug. What this means for the future of Glencore's location in Baar, where its headquarters are located, remains to be seen.

One thing is clear: a move away from Zug would not be without consequences. With 1,304 employees last year, Glencore is the fourth-largest employer in the canton. And Glencore is also a potent taxpayer: the company paid around USD 7.6 billion in taxes worldwide in 2024. According to the Handelszeitung newspaper, CHF 448.3 million is said to have gone to Swiss tax offices in 2021. It’s not known how much money this amounts to in Zug, but it’s likely to be a considerable sum.

Should Zug be concerned about its prosperity?
Finance Director Heinz Tännler (SVP: Swiss People’s party) remains calm. He says these are ‘non-binding discussions at an early stage’. And he notes that experience shows that, in such a transaction, the considerations take ‘a disproportionate amount of time to come to fruition in any form’.

Economics Director (Volkswirtschaftsdirektorin) and cantonal councillor (Regierungsrätin) Silvia Thalmann-Gut (Mitte, centre party) also emphasises that whether a ‘deal’ will eventually be reached is currently speculation. Furthermore, mergers or takeovers do not necessarily lead to a relocation. But she maintains that such a move ‘would be a great loss, not only for Zug, but also for the whole of Switzerland, in terms of (highly) skilled jobs and tax revenue’. A relocation would also result in losses in the supply chain and reduce Zug's international importance as a commodity trading centre.

Peter Letter, member of the board of the Zug Chamber of Commerce (Zuger Wirtschaftskammer) and FDP cantonal councillor (Kantonsrat), expresses a similar view to that of Silvia Thalmann-Gut. In response to an enquiry from the Zuger Zeitung newspaper, he wrote: ‘As a long-standing member of the Chamber of Commerce, Glencore is an important and valued partner for us, and we would naturally regret any departure or relocation of its activities.’

Many highly paid managers and traders work at Glencore's headquarters in Zug        Archive photo
Finance Director Heinz Tännler                                                        Photo: Maria Schmid
Silvia Thalmann-Gut, Director of Economic Affairs              Photo: Jakob Ineichen
Peter Letter, Zug Chamber of Commerce                                      Photo provided
Philip C. Brunner, President of the SVP Canton Zug            Photo: PD
Luzian Franzini, President of the ALG Canton Zug              Photo provided

Zug has proven itself in the past
For Philip C. Brunner, President of the SVP Canton Zug, the news of the possible takeover came as a surprise. He writes: ‘Glencore is a cornerstone of our business location. Its departure would undoubtedly be a loss – not only for Zug, but also for the neighbouring cantons, where many of its skilled workers live.’

But the canton of Zug has proven its resilience in the past. A possible loss of tax revenue could be absorbed without tax increases. ‘A positive side effect would be a possible reduction in the national fiscal equalisation system (Finanzausgleich), into which Zug currently pays almost half a billion Swiss francs annually,’ adds Philip Brunner.

Luzian Franzini, President of the ALG (Alternative Left and Green party), emphasises that his party is committed to a ‘clean, transparent and responsible’ commodity trading centre in Zug. The focus is particularly on working conditions in the Global South and the massive environmental impact. ‘Glencore has repeatedly been criticised and condemned in this regard. It’s not clear whether a takeover by Rio Tinto would improve these standards,’ he continued.

It would be a severe blow for those local people who would lose their jobs. Luzian Franzini added: ‘We would expect Glencore to provide a binding and fair social plan that offers security to those affected.’

A pity, but bearable
Andreas Hotz, former mayor (Gemeindepräsident) of Baar, says that Glencore's departure would be ‘a pity, but not a disaster.’ The municipality has a high level of equity and could absorb the loss of tax revenue. ‘There would be no need to increase taxes In the short to medium term,’ he is convinced.

The former mayor was in office when Glencore went public in 2013. The profit sharing of leading employees (Gewinnbeteiligung) brought a considerable additional income into the municipal coffers at a stroke. But Andreas Hotz emphasises that there was never any dependency. ‘The company is a good employer and offers valuable training places.’ But even in this respect, its departure would not trigger a crisis. "Many employees would probably stay and look for a new job. Many of the management team live in Walchwil or Oberägeri. These municipalities would possibly be hit harder.’

The large company does a lot for the community by generously supporting clubs and events. ‘But there are other companies that are also committed and would step into the breach.’ Hotz is on the organisation committee of the Special Olympics, which will take place in Zug in the spring. "Glencore has deliberately decided not to sponsor this event, but other large Zug-based companies are on board. "

No need to go ‘begging’
‘The name Glencore rarely appears in the financing plans for the professional cultural projects and institutions that we support,’ writes Aldo Caviezel from the Zug Office for Culture. The Zug cultural scene would certainly not have to go begging if the company were to leave. ‘The canton of Zug alone invests over CHF 13 million in our culture, 3.33 million of which is in the form of grants.’

Every franc of donations from private individuals is, of course, valuable for sport, culture, social issues and society. And the demand that the public sector should compensate for the loss of private funds always leads to political discussions. ‘The public sector is not an insurance policy for private funding partners who pull out,’ says Aldo Caviezel. ‘Here, I would appeal to the social responsibility of the business community to invest in society and promote its cohesion, identity, participation and development. Be it in sport or in culture.’