Commodity Trading I: History, Actors and Weight — a part of the book Zug: The Making of a Global Hub by Dr Alexander Ressos.
The commodity trade is the most important industry of the canton of Zug and the one that has shaped the canton's international image more than any other. Its history begins with the arrival of Philipp Brothers in 1957, passes through the extraordinary career of Marc Rich, and leads to Glencore, one of the largest commodity traders and mining groups in the world, headquartered in Baar. Around these central actors, a cluster of more than two hundred trading firms and service providers has formed. Part D tells this story and measures the weight of the industry. Chapter I follows the trade from Philipp Brothers to the departure of Marc Rich from his company in 1994. Chapter II describes Glencore and the modern cluster, including the legal proceedings that have accompanied its growth. Chapter III explains how commodity trading works as a business and measures its economic weight for Zug and for Switzerland. Part E then examines the financing, the risks and the legal framework of the trade.
This part belongs to Zug: The Making of a Global Hub by Dr Alexander Ressos, published here in full, section by section.
From Philipp Brothers to Marc Rich (1957–1994) — conclusion
The commodity trade came to Zug with Philipp Brothers in 1957 and grew to global importance with Marc Rich + Co. from 1974. Read more Zug · Commodity Trading IPhilipp Brothers: the school of the traders
The history of the commodity trade in Zug begins with a company that had been founded more than half a century earlier in Germany. Read more Zug · Commodity Trading IMarc Rich: the trader
Marc Rich was born in Antwerp on 18 December 1934 into a Jewish family that fled Europe during the Second World War and settled in the United States. Read more Zug · Commodity Trading ITrading across the lines of politics
The success of Marc Rich + Co. rested in large part on a willingness to trade where others would not. Read more Zug · Commodity Trading IThe indictment of 1983
In 1983, federal prosecutors in New York indicted Marc Rich and Pincus Green on sixty-five criminal counts, including tax evasion, wire fraud, racketeering and trading with Iran in violation of the… Read more Zug · Commodity Trading IRich in Zug
For the canton of Zug, Marc Rich was a difficult resident. His company was one of the largest taxpayers in the canton and one of its most important employers. Read more Zug · Commodity Trading IThe sale of the company and the birth of Glencore
At the beginning of the 1990s, the company faced a crisis. An attempt to corner the zinc market failed and caused substantial losses, and senior traders pressed for a change in ownership. Read more Zug · Commodity Trading IWhat the Rich era left behind
The Rich era left three legacies to the canton of Zug. The first is the cluster itself. Marc Rich + Co. trained a generation of traders, just as Philipp Brothers had trained Rich. Read more Zug · Commodity Trading IThe oil market after 1973
The rise of Marc Rich + Co. cannot be understood without the transformation of the international oil market in the 1970s. Read more Zug · Commodity Trading IThe office of a trader
The trading houses of the 1970s and 1980s were small in terms of staff, even when their turnover ran into billions. Read more Zug · Commodity Trading IMutual assistance and extradition: the law then and now
Because the Rich case turned on the rules of international cooperation in criminal matters, the practitioner who advises a trader in Zug today must understand how these rules have changed. Read more Zug · Commodity Trading IThe South African trade and the Swiss debate
The trade of Swiss companies with apartheid South Africa became the subject of a national debate in the 1990s and 2000s. Read more Zug · Commodity Trading IThe sources: how the history of the traders is known
Since the history of the commodity traders of Zug is known only in part, the practitioner and the historian must be aware of the limits of the sources. Read more Zug · Commodity Trading IA partnership of traders
Marc Rich + Co. was, from its foundation, a partnership of traders in all but legal form. Rich and Green held the majority of the shares, and senior traders received shares as they rose in the firm. Read more Zug · Commodity Trading INeutrality as a commercial asset: an assessment
The history of Philipp Brothers and Marc Rich + Co. in Zug raises a question that recurs throughout this book: to what extent did Swiss neutrality serve as a commercial asset for the traders, and at… Read more Zug · Commodity Trading IGlencore and the Modern Cluster (1994–2026) — conclusion
In the three decades after Marc Rich left his company, Glencore grew from a private partnership of traders into a listed group that combines one of the largest commodity trading businesses in the… Read more Zug · Commodity Trading IFrom Glencore International to Glencore plc
The company that Marc Rich sold to his managers in 1994 was renamed Glencore International and led by its chairman, Willy Strothotte. Read more Zug · Commodity Trading IGlencore today
Glencore plc has its registered office in Saint Helier, Jersey, and its headquarters in Baar. Read more Zug · Commodity Trading IThe legal proceedings of 2022 and 2024
The growth of Glencore was accompanied by a long series of accusations of corruption, environmental damage and human rights violations in the countries where it operated. Read more Zug · Commodity Trading IThe cluster around Glencore
Glencore is the largest of the many commodity trading companies in Zug. According to the cantonal economic promotion office, more than 200 enterprises in the canton focus on commodities. Read more Zug · Commodity Trading IThe partnership and the culture of the trading house
For most of its history, Glencore was owned by its senior employees. The partnership model that Marc Rich had practised, and that his managers continued after 1994, gave the traders a share in the… Read more Zug · Commodity Trading ICompliance after the convictions
The compliance obligations that follow from a resolution with the United States Department of Justice are demanding. Read more Zug · Commodity Trading ICoal, climate and the shareholders
A further challenge for Glencore, and for the trading cluster of Zug, concerns coal. Read more Zug · Commodity Trading IThe structure of a trading group
The legal structure of a commodity trading group headquartered in Zug often follows a pattern along the following lines. Read more Zug · Commodity Trading IGlencore and the canton
The relationship between Glencore and the canton of Zug is close and, at the same time, distant. Read more Zug · Commodity Trading IOther groups in the orbit of the traders
The commodity cluster of Zug extends beyond the trading companies themselves to groups in related industries that have established their headquarters or principal companies in the canton. Read more Zug · Commodity Trading ITraders, consumer goods and the definition of the cluster
The statistics of the cluster depend on its definition. The cantonal economic promotion office distinguishes a commodities cluster of more than 200 enterprises from a consumer goods cluster of more… Read more Zug · Commodity Trading IThe critics: Public Eye and the scrutiny of the trade
The commodity traders of Zug are organised in the Zug Commodity Association, and at national level in Suissenégoce, the Swiss association of commodity trading and shipping. Read more Zug · Commodity Trading IThe Business of Trading and Its Weight — conclusion
Part D has followed the commodity trade in Zug from the arrival of Philipp Brothers in 1957 to the present. Chapter I described the formative years, when Philipp Brothers and Marc Rich + Co. Read more Zug · Commodity Trading IWhat a commodity trader does
A commodity trader buys raw materials where they are produced and sells them where they are consumed. The simplicity of this description conceals a business of considerable complexity. Read more Zug · Commodity Trading IIntegration: from trading to production
The largest traders have integrated vertically, acquiring mines, oil fields, refineries, storage terminals, ports and ships. Read more Zug · Commodity Trading ITransit trade: why the goods never touch Switzerland
The commodities traded from Zug almost never pass through Switzerland. A cargo of copper concentrate bought from a mine in Chile and sold to a smelter in China is shipped directly from Chile to… Read more Zug · Commodity Trading IThe weight of the trade: two measures
The economic weight of the commodity trade in Switzerland was, for many years, difficult to measure. Read more Zug · Commodity Trading IZug's share and Zug's revenue
With 27 per cent of the value added of the Swiss commodity trade in 2024, Zug is the second centre of the industry in Switzerland after Geneva. Read more Zug · Commodity Trading IBenchmarks, price reporting and market integrity
Commodity prices are determined in two ways. On the futures exchanges, prices are formed transparently through trading in standardised contracts. Read more Zug · Commodity Trading IThe service cluster: shipping, inspection, finance and law
The commodity trade depends on a network of service providers, part of which is located in Zug. Read more Zug · Commodity Trading IThe taxation of trading profits after 2020
With the abolition of the regime for mixed companies on 1 January 2020, the trading profits of the principal companies in Zug became subject to the ordinary profit tax. Read more Zug · Commodity Trading IGeneva and Zug: two centres of one industry
The comparison with Geneva is particularly apt in the commodity trade, since the two cantons together account for more than 85 per cent of the Swiss industry. Read more Zug · Commodity Trading ICredit, counterparties and the fragility of the trade
The thin margins of the physical trade are accompanied by large exposures. A trader that buys a cargo of oil worth fifty or a hundred million dollars and sells it to a refinery on thirty days' credit… Read more Zug · Commodity Trading IFederal policy on the commodity trade
The federal government has taken an increasing interest in the commodity trade since the early 2010s. Read more Zug · Commodity Trading IPractitioner's note: advising a trader in Zug
The practitioner who advises a commodity trader in Zug must combine several fields of law. Read more