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Exclusive: Glencore's top aluminum exec to leave, first exit since takeover-sources

By Josephine Mason

NEW YORK (Reuters) - Glencore Xstrata's head of aluminum, Gary Fegel, is set to leave the company, three sources said, the first high-profile departure since commodity trading giant Glencore closed its purchase of miner Xstrata this month.

Fegel's departure from one of the most powerful jobs in the global aluminum market will come as a surprise to many since he was reconfirmed in the post just weeks ago, and aluminum is one of the few areas of Glencore's mining portfolio that has no overlap with Xstrata.

The specific timing and reason for his exit - after 12 years at Glencore - are unclear, and discussions over possible succession continue, the sources said.

His leaving comes as Chief Executive Ivan Glasenberg undertakes a three-month review of the division, a source familiar with the company's operations said.

A successor is expected to be named this summer, around the time Glasenberg completes his 100-day review, the source added.

"He's there until the merger has bedded down," said another source who spoke to Glencore traders about the change.

A spokesman for Glencore Xstrata declined to comment.

Fegel, one of Glencore's most senior executives and among its largest shareholders, has run the division alone since the departure of co-head Steven Blumgart in January 2012.

He was reconfirmed as head of the aluminum arm early this month when the group unveiled the merged entity's management team. His departure will come as an unwelcome surprise just as Glencore begins its biggest ever integration challenge.

The departure may also raise questions about the retention of top talent at the merged miner and trader. The takeover led to the departure of all but one of Xstrata's divisional heads. Glencore bosses have taken 12 of 14 top divisional jobs.

Fegel is a long-time top trader at Glencore. He joined the firm in 2001, took over co-management of the aluminum division in 2006, and became a paper billionaire when Glencore went public in 2011. He now owns a 1.2 percent stake in Glencore Xstrata, worth almost $800 million at current prices.

With Fegel's departure, attention will focus on his key lieutenants, Matthew Lucke and Andrew Caplan, who are viewed as the company's top traders for aluminum and alumina, respectively. Both would be considered contenders for the top job, but there could be further departures, sources said.

The source familiar with the company's operations said the change reflected Glencore's natural "evolutionary process," where ambitious traders in a division jostle to move up when a top executive "is perceived to be easing off." The source said Fegel's departure was "really no surprise."

As part of the 100-day review, Glencore's top managers may consider a shake-up of the department, one source said. The aluminum group, one of the firm's six mining and metals divisions, has seen more turnover at the top than other parts of Glencore, a company in which loyalty is fiercely prized.

Lucke, who has been with Glencore for 17 years, worked as a senior trader on the U.S. aluminum team in the firm's Connecticut office until he moved to headquarters in Zug, Switzerland, last year, a step seen as a promotion, according to people who know him. He also runs the trading book for caustic soda and coke, both used to produce aluminum.

Caplan is a more recent hire. He joined Glencore as an alumina trader from Trafigura in 2007 and now runs the firm's global trading book for the material. He is listed as a director of Century Aluminum, a primary aluminum producer with plants in the eastern United States and Iceland.

(For a graphic on Glencore's current management structure, click on: http://link.reuters.com/juz77t)

XSTRATA OVERLAP

The change in leadership comes at a tumultuous time in the primary aluminum market, and follows a period in which Glencore has reduced its ownership of producing assets.

LME prices are languishing at close to four-year lows due to global overcapacity and concerns about weakening demand from China, the world's No. 1 aluminum consumer.

Unlike the other metal and mining divisions, there is no overlap with Xstrata in Glencore's aluminum business, which includes bauxite and alumina, raw materials for aluminum production. Xstrata focused on producing copper, nickel, zinc and some steelmaking raw materials.

In a three-way deal in 2007 that created Russia's United Co RUSAL Plc <0486.HK>, the world's largest aluminum producer, Glencore offloaded its alumina assets in exchange for an 8 percent stake in the Russian company.

But Glencore is still the most influential player in the 50 million metric ton a year aluminum market. Two years ago it estimated that it controlled 38 percent of the "addressable" global market - a figure that excludes supplies that are not freely traded - of alumina, and 22 percent of aluminum.

In 2009, Glencore saved RUSAL from collapse after agreeing to buy the Russian producer's output for cash over several years. That deal was renewed in 2011 and gives Glencore a big portion of RUSAL's production, traders said.

The acquisition of warehousing group Pacorini in 2010 strengthened Glencore's grip on the physical metal trade, giving it access to low-cost storage and a vast logistics network. London Metal Exchange warehouses in the Dutch city Vlissingen, most of them owned by Pacorini, hold about a third of all LME-registered aluminum stocks.

Its only remaining stakes in aluminum and alumina assets are a major share in Century Aluminum and Sherwin Alumina in Texas, which extracts alumina from raw material bauxite.

(Reporting By Josephine Mason in New York; Additional reporting by Clara Ferreira Marques in London; Editing by Jonathan Leff and John Wallace)

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