Glencore-Viterra: Information for Farmers and Growers

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1 Glencore-Viterra: Information for Farmers and Growers Glencore International plc and Viterra Inc. have announced an agreed transaction in which Glencore will acquire Viterra. Glencore has also entered into agreements with Agrium Inc. and Richardson International Limited, who will subsequently acquire a majority of Viterra s Canadian assets from Glencore, ensuring a majority of Viterra s assets will remain in strong Canadian hands. Glencore will bring positive new opportunities to farmers in Canada and growers in Australia, as well as opportunities for the communities and economies that Glencore will become a part of when this transaction is completed. About Glencore Glencore is one of the world s leading integrated producers and marketers of commodities such as minerals, metals, energy and agricultural products. Glencore produces, sources, processes, refines, transports, stores, finances and supplies these commodities needed by industries all around the world. For the 12 months ended 31 December 2011, Glencore had revenues of US$ billion. A global network of more than 50 offices located in more than 40 countries worldwide supports Glencore s marketing activities and industrial investment activities. This network provides Glencore with significant worldwide sourcing and distribution capabilities. Glencore s main offices are located in Baar (Switzerland), Stamford (Connecticut), London, Rotterdam, Beijing, Moscow and Singapore. Glencore s ordinary shares are listed on the London Stock Exchange, with a secondary listing on the Hong Kong Stock Exchange. On completion of the acquisition of Viterra, we will add an important platform for growth in Regina, Saskatchewan and further our operations in Australia. Glencore - Agriculture Glencore produces and markets diverse agricultural commodities such as grains (including wheat, barley and corn), oil/oilseeds (including most edible oils and biodiesel), cotton and sugar. Glencore s Agricultural business division had revenues of $17.10 billion for the 12 months ended 31 December 2011 and is led by Glencore Director of Agricultural Products, Chris Mahoney. Over 8,200 people work across the business with the vast majority, over 7,200, at our farming logistics and processing operations. Glencore is one of the leading grain exporters in Europe, the Commonwealth of Independent States and Australia.

2 Glencore s operations around the world include: 270k hectares of farmland More than 100 origination elevators/silos with a combined storage capacity of 3.8mt 8 port elevators/silos with a combined annual throughput capacity of c13mt Approximately 250 rail wagons with long term contracts for an additional 1,100 wagons in the EU In house freight desk that services the needs of the marketing department with 30/60 vessels under short/medium term charter Who Supplies Glencore? Our agricultural suppliers include farmers, farming co-operatives, processing plants, local exporters and global merchants. Who are Glencore s Customers? Glencore s customers include the processing industry (food, consumer goods and animal feed), local importers, and government purchasing bodies. Glencore is an established marketer of commodities and has, over a period of years, built a strong reputation as a reliable supplier of high quality products on a timely basis. In addition, Glencore s long experience has allowed it to build up extensive market knowledge and insight, as well as full logistics capabilities. Glencore s provision of value added services includes shipping, logistics, transportation, storage, risk management and marketing to producers and consumers of commodities. How Does Glencore Create Value for Suppliers and Customers? Market Insight Market and marketing choices Reliability Financing Seamless global logistics Access to a shipping fleet and various freight intermediaries provides Glencore with valuable information on trade flows. Access to storage and other logistical assets increases Glencore s flexibility to blend products and to manage the their delivery in line with specific customer requirements. Glencore s position as a major global commodities marketer enables it to: be competitive with pricing in tender and other bid processes; develop strong relationships with suppliers and customers; maintain a reputation for reliability with suppliers and customers; maintain knowledge of local market supply and demand dynamics; gain significant insight into trade flows and marketing requirements; flexibly and optimally manage product flows and logistics; access a broad spectrum of commodities in different grades and specifications to meet customer requirements; benefit from economies of scale in relation to all key transaction components, including commodity purchases and sales, storage, transportation and risk management activities; and market commodities linked to several different international exchanges.

3 GlencoreIn Communities Glencore places the highest priority on its employees, the environment and the local communities where it operates. This approach is set out under our Glencore Corporate Principles. Glencore takes a broad approach to employee well-being, and seeks to maintain and improve its strong health and safety record. Glencore will demand high environmental performance standards from its controlled operations and, while executing marketing and logistics activities, to work with its partners and suppliers to ensure similar standards are demanded within the supply chain, as well as its non-controlled operations. Glencore strives to be a positive contributor to the communities where we operate, communicating and consulting with the community, and investing broadly in quality of life. Glencore in Canada FAQ for Canadian Farmers The proposed agreed acquisition of Viterra by Glencore will provide Canadian farmers with greater access to global markets, increased market insight, generate more choice for Canadian farmers and greater competition for their products. Through the combination of Glencore s unparalleled global marketing network and Western Canada s powerful agriculture base, Canada will be well positioned to play a key role in what is a transformative time for the agricultural industry worldwide. Glencore has chosen Western Canada as its North American platform for the agricultural business, and Regina as the head office of its North American agricultural operations. The proposed acquisition provides the opportunity to leverage Glencore s global networks, expertise, and best practices in order to advance opportunities for the Canadian agriculture sector. Why is this transaction good for Canadian farmers? The proposed agreed acquisition of Viterra by Glencore delivers benefits to Western Canadian farmers by providing more access to global markets, generating more choice and more competition for their products. For farmers, this means more consistent demand and pricing transparency. As one of the World s largest commodity marketers, Glencore will provide Western Canadian farmers with unparalleled global distribution channels and increase their ability to export their product into international grain and oil seeds markets. We will be helping prairie farmers successfully compete in the global marketplace. We will provide farmers with the ability to participate directly in one of the world s largest marketing networks, and give them more choice to market their products when, where and at a price that works for them. We aim to bring more competition and price transparency to your local marketplace the more people bidding for your product, the higher price you can receive. Glencore's financial strength will provide farmers with increased protection from market volatility, more options to market their grain and oil seeds and more competitive pricing resulting from Glencore s wider markets access and its more consistent demand for grains and oil seeds.

4 A majority of Viterra's Canadian based assets will go into the hands of AgriumInc. and RichardsonInternational Limited two significant Canadian companies with a strong heritage and track record that Western Canadian farmers have dealt with for years. As a result of the asset sale agreements with Agrium and Richardson, the transaction is expected to result in the creation of a more robust competitive landscape for Canadian farmers produce. What is your track record on entering new markets? Our entry into Australia is an excellent example.glencore established its Australian Agribusiness nine years ago and since that time has provided reliable and consistently competitive pricing to Australian farmers. We provided a real alternative to the traditional marketers and have been able to establish and rapidly grow our business because farmers have recognized the advantages of Glencore s global marketing and logistics capability and financial strength. They have strongly supported Glencore s business as a result. How will this affect my farm? You will deliver your grain to the same delivery points, and buy your inputs from the same retail locations, as you did previously. The financing options, loyalty and benefits programs and agronomy services that you used in the past will still be available and, in some cases, will be enhanced. What will change is that you will now have access to Glencore'sunparalleled global distribution channels. Glencore has more customers in more locations around the world than Viterra. And Glencore has developed long-term sales agreements with these global customers. This means more choice and more competition for your products. How will the asset sales to Richardson and Agrium affect farmers in Canada? You will deliver your grain to the same delivery points, and buy your inputs from the same retail locations, as you did previously. The financing options, loyalty and benefits programs and agronomy services that you used in the past will still be available and, in some cases, will be enhanced. The separate asset-sale agreements provide that a majority of the Canadian-based Viterra assets will remain in Canadian hands and will ultimately be owned by Agrium and Richardson, two significant Canadian companies with a strong heritage across the Canadian agri-business. WillGlencore be likely to close smaller, less efficient grain handling operations and elevators? How will this affect grain terminals? Over the last decade, western grain handling has been largely transformed and most of the significant consolidation has already taken place. This transaction is about growth. It strengthens Glencore s position as one of the world's leading integrated marketers of agricultural commoditiesand reflects our strong belief in the importance and potential of the Canadian grain business. Regina will become Glencore s North American head office and a platform for growth of the world s largest grain products marketing company. We are excited about growing our business in Canada, working with the Canadian agricultural community and becoming part of the community. How will this impact railcar access in western Canada? Is Glencore supportive of producer cars and the operation of short railways?

5 This transaction will not affect rail cars. Glencore is in the business of marketing grain and oil seeds and is supportive of any commercial arrangement that supports this activity, including producer cars and short line railways. How will this affect Viterra s supplier relationships in western Canada? Access to a large shipping fleet and various freight intermediaries provides Glencore with valuable information on trade flows. Access to storage and other logistical assets increases Glencore sflexibility to blend products and to manage the delivery of products in line with specific customer requirements. Glencore offers a broad range of value added services more seamlessly and efficiently than most customers can internally. To what environmental standard will you manage the operations in Canada? Sustainability is an integral part of everything we do. It is vital to good business conduct, and helps us meet both our own expectations and those of our stakeholders. Through our sustainability programmeglencore Corporate Practice we are committed to complying with or exceeding the laws, regulations and best practice guidelines applicable to our operations and products in the jurisdictions in which we operate. Benefits to Canada Glencore is committed to being a strong corporate citizen in Alberta, Manitoba, Saskatchewan and Canada overall, and believes the acquisition of Viterra will enhance Canada s position as a key player in the global grain and oilseeds market. Following the completion of the acquisition, Glencore will repatriate Viterra s executive offices to Saskatchewan and make the Regina head office the platform for its North American agricultural operations and for expansion into the United States. Glencore expects to grow the Canadian business and anticipates ongoing investment in the Canadian operations. In addition to its desire to grow the Canadian and the broader North American business, Glencore is committed to fostering strong community relations. Glencore will continue with and build upon Viterra s existing community and charitable commitments. Glencore also intends to contribute to wheat research and global food security initiatives in Western Canada s internationally recognized research institutions, and will increase Viterra s current funding to other Western Canadian agricultural and educational institutions. Glencore in Australia FAQ for Australian Growers The proposed transaction reflects Glencore s strong belief in the importance and potential of the Australian grain industry. Glencore sees Viterra s Australian assets as a critical and important pillar of Viterra s portfolio. This transaction will extend to more Australian growers the benefits of Glencore s global marketing and logistics capability and financial strength. On a day-to-day basis it will be business as usual for the Viterra. The business would be combined with Glencore s Australian business which is managed from Australia. We believe there are strong growth

6 opportunities across the Viterra business, which will be in the interests of growers, employees, and the industry generally. We are committed to the common user grain receival system. Through the services it offers Australian growers, especially in South Australia, Glencore hopes to position the business to ensure it can take full benefit from the global growth in demand for soft commodities, especially from Asia. What Australian assets are being acquired by Glencore under the Viterra transaction? Glencore will be acquiring all of Viterra's grain handling, marketing and processing assets in Australia, including ports, storages, malt houses, packing plants and other supply chain infrastructure. Viterra s Australian retail facilities will be acquired from Glencore by Agrium. Viterra s Australian assets are chiefly in South Australia. This agreed transaction reflects our strong belief in the importance of Australia in the global grain supply chain; recognition of the high quality of its agricultural output; the efficiency of its industry; and its proximity to key markets such as Asia. What does this transaction increase Glencore s market share of bulk grains and oil seeds exports nationally to? As the Australian market is fully de-regulated, we expect to have a similar share to CBH, Graincorp and Cargill. Market share will of course be dependent on Growers choosing to sell their grain to Glencore/Viterra, We understand we need to continue to provide competitive pricing and service in order to retain growers support. We are committed to the common user grain receival system and understand and appreciate its unique attributes. What about market share in South Australia? We will be the largest exporter from South Australia but the market will remain de-regulated and while the combined businesses will control the majority of the infrastructure, Glencore is committed to and focused on providing a common user open system. How will this acquisition promote healthy competition in Australian grain markets? Glencore will still only be 1 of 23 registered exporters of wheat. According to WEA there were 7 participants who exported more than 1mmt of wheat last year. Glencore s ability to enhance supply chain efficiencies and its global marketing network will result in greater competition for grain in the Australian market. Also, we believe there are strong growth opportunities across the Viterra business which will be in the interests of growers, employees, and the industry generally. Will you give pricing priority to the Grain that Glencore farms itself in Australia? No, the Glencore farms will make up far less than 1% of the grain delivered into the storage system. Will other exporters still have access to Viterra s infrastructure?

7 We are committed to the common user grain receival system and understand and appreciate its unique attributes. There will be no change from the current regulations and undertakings and on a day to day basis it will be business as usual for the Viterra businesses. A key Glencore objective will be to provide continuity to all Viterra s customers. As one of the leader s in global markets and the strength of our balance sheet means we are a safe pair of hands for infrastructure assets and an advantageous partner for the industry. How will competitor access be structured? As it is currently, access is regulated by the ACCC and the Wheat Export Association. Glencore will continue to adhere to these rules and is committed to developing the industry code of conduct. What regulation is in place to ensure that competition remains? The bulk export terminals are subject to an access undertaking approved by the Australian Competition and Consumer Commission. It is proposed that the undertaking will be replaced in September 2014 by an industry code of conduct. We are committed to the common user grain receival system and understand and appreciate its unique attributes. With the combination of Glencore and Viterra s volumes what percentage of capacity following the acquisition will be non-glencore out of the Viterra handling facilities? We are committed to open access, volumes are dictated by price competitiveness and we aim to be as competitive as possible. What long term commitment will you give to maintain equitable access for other exporters? We are committed to the common user grain receival system and understand and appreciate its unique attributes. We are also committed to working with the industry and growers to ensure we develop a fair and equitable code of conduct. Why is Glencore good for Australian growers, what benefits will result from this transaction? This agreed transaction will extend to more Australian growers the benefits of Glencore s global marketing and logistics capability and financial strength, including the following: A world class international marketing network which provides extensive access to global markets and therefore more options to market Australian grain More competitive pricing resulting from Glencore s greater consistency in demand for crop Highly efficient global supply chain providing more options to market Australian growth. This includes a logistics network that enables Glencore to deliver grain to more regions more efficiently Balance sheet strength which enables Glencore to buy greater volumes. This results in a more consistent demand profile and therefore greater continuity for growers

8 Ability and appetite to invest in infrastructure improvement and development What is your track record in Australia? We have a strong track record in Australia. Glencore established its Australian Agribusiness nine years ago creating much needed competition in domestic markets, there are small parcels of exports before full de-regulation of the wheat market. We provided a real alternative to the traditional marketers and have been able to establish and rapidly grow our business because growers have recognised the advantages of Glencore s global marketing and logistics capability and financial strength. They have strongly supported Glencore s business as a result. How are you any different to Viterra and what changes will Glencoremake to the Viterra operation? Glencore is a larger, more international business and we are a true commodity specialist with skills in all commodities. We are one of the leader s in global markets and the strength of our balance sheet means we are a safe pair of hands for infrastructure assets and an advantageous partner for the industry because we have the ability and appetite to invest in supply chain development, infrastructure improvement and development. We believe the business presents strong growth opportunities which will be in the interests of growers, employees, and the industry generally. What will happen to existing contracts and agreements? On a day to day basis it will be business as usual for the Viterra businesses. All contracts and agreements will be honoured. All grower contracts will be delivered and paid. A key objective of Glencore will be to provide continuity to all Viterra s customers. Can Glencore really provide greater access to markets; Viterra is a large global player and has good access? s? Glencore has a truly global business and is also able to leverage supply chain efficiencies that result from having other bulk commodities in its portfolio. It has a highly efficient global supply chain providing more options to market Australian grain. This includes a logistics network that enables Glencore to deliver grain to more regions, more efficiently than any other firm. Will Glencore achieve better prices? If so, how will it achieve this? Glencore will be able to provide competitive prices based on global markets. Glencore will not be the only buyer of grain, but will be able and willing to provide competitive prices on a daily basis. Do you expect to lose any Viterra growers to competitors as a result of this transaction? Glencore does not attest to owning any growers, our objective is to provide a competitive, fair and efficient service to growers with the aim of having growers choose to use us as their preferred buyer of grain. This transaction will allow us to extend the benefits of Glencore s global marketing and logistics capability and financial strength to more Australian growers. Benefits to Australia This agreed transaction will extend to more Australian growers the benefits of Glencore s global marketing and logistics capability and financial strength. Glencore has been able to establish and rapidly grow its

9 existing Australian business because growers have recognised these advantages; they have strongly supported Glencore s business as a result. The Viterra Australian business will be combined with Glencore s Australian business, which is managed from Australia. Glencore is committed to achieving and maintaining world class standards for the local industry. This transaction represents a long term commitment for Glencore to Australia, its agricultural industry and its growers. Glencore sees the Viterra business as a growth opportunity.