Sources say that Glencore's exposure in Radiant World is more than $500 Million.

Radiant World is a company that Glencore, the London-listed miner and trader, has stopped doing business with. The exposure amounts to over half a billion US dollars, according to two sources who are familiar with the situation. Bloomberg reported that Vitol Group, Cargill, and other commodity traders have stopped trading with Radiant World - one of the largest iron ore dealers in the world - after finding invoices or documents they provided to banks to be 'invalid. Glencore CEO Gary Nagle stated last week that the Swiss commodity?trader took a provision relating to Radiant World but its exposure to the Iron Ore Trader was not material. The company did not give a specific figure for the provision. Glencore's earnings in the first half of 2008 jumped by 86%, topping $10 billion. Sources said that Glencore had the greatest exposure to financial problems at Radiant World at $500-800 million.

Glencore has declined to comment.

RIPPLE EFFECTS Glencore’s auditors set the materiality of the 2025 accounts for the group at $500 million based on the net assets. This means that errors below this level are too small to cause distortions in the figures.

Radiant World, founded in the early 2000s by Pinkesh Nahar, trades over 20 million tons of iron ore per year, according to the website. Radiant?has grown its iron ore business in the last five years, and now trades more than 75 million tons a yearly. This is worth $7 billion at current prices. One source said the volume was big enough to have ripple effects on commodity and financial markets. The source stated that it could disrupt the insurance, debt and banking markets, and harm legitimate businesses.

Radiant World refused to comment. Third source said Glencore has been assessing "potential losses" linked to Radiant for some time, and that they have already set aside money and written off certain exposure. He said that this was more a response to the recent allegations made against Radiant than it was a reflection of concerns over commercial and credit risks.

According to preliminary figures published on the company's website, Glencore's Marketing Division traded 95 million tons iron ore in 2014. This is a 28% increase from 2024. Reporting by Pratima Dasai. (Editing by Veronica Brown, Mark Potter and Mark Potter.

(source: Reuters)