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Donald Trump has described the Inflation Reduction Act (IRA) as a "green scam" and vowed to repeal it after he returns to the White House in January.
Sitting on a cash windfall from the elevated oil and gas prices of recent years, energy traders Mercuria and Gunvor are delving into metals, with the expectation that structural changes in global energy systems will prove lucrative.
The world’s largest energy trader, Vitol, is meanwhile exploring opportunities offered by the global clean energy transition which includes electric vehicles and renewable energy such as solar and wind.
Swiss-based Mercuria, Vitol and Gunvor focus mostly on oil and other energy products, where volatility in the aftermath of Russia’s invasion of Ukraine in February 2022 rewarded them with record profits.
“You need exposure to metals that go into electric vehicles and renewables to understand the energy transition,” said a source with direct knowledge of the issue. “There is a weakness in your strategy without that exposure.”
Leading the charge is Mercuria where Kostas Bintas, previously at rival Trafigura, has been on a hiring spree across Asia, Africa, North America, Europe and Latin America since joining as global head of metals and minerals in July, three sources with direct knowledge said.
Bintas’ team already comprises more than 40 people, they added.
“Kostas hit the ground running, the team has grown very quickly,” another of the sources said.
As of Sept. 25, Mercuria was advertising four metals-related jobs on LinkedIn; three in Geneva and one in Athens.
Leaving Trafigura and joining Mercuria in recent months were Mehdi Wetterwald in Geneva, Michaela Dempsey in the United States and Leonard D’Offay in Dubai, according to their LinkedIn profiles.
After the departure of Wetterwald, Dempsey and D’Offay, Trafigura extended the notice period for traders leaving the Swiss commodity trader to a minimum of six months or up to one year, depending on seniority.
Along with Eugene Chan in Asia, Wetterwald, Dempsey and D’Offay are core Mercuria hires in their respective regions, the sources said.
Mercuria declined to comment.
Gunvor hired Ivan Petev last year to grow its base metals offering. It has since hired George Donoghue previously at JP Morgan, Paolo Cabrejos previously at Traxys and Michael Gerard previously at IXM.
Meanwhile, Vitol is waiting for the arrival in October of Benjamin Seaford and William Gayner, poached from Mercuria earlier this year.
Gunvor and Vitol declined to comment.
Mercuria bought metals warehouse and logistics company Henry Bath from JP Morgan in 2014. It then sold a 51% stake to China’s CMST Development for $60 million in late 2015, making a profit in the process, and retained a 49% stake.
It also forayed into metals trading in 2014 with aluminum, maintaining a staff of four to five in this sector until this year.
Electricity is conducted through copper wire needed for electric vehicles. Power can also be carried through aluminum.
Aluminum is also used to reduce the weight of electric vehicles to help extend the driving range of their rechargeable batteries.
Vitol’s previous excursion into base metals ended in 2014, though it did maintain a presence in alumina, a feedstock for aluminum, and iron ore until 2018 and 2017 respectively.
“We’re not alien to metals, we had a metals business in the 1990s and the early 2000s. We had smelters…I wouldn’t describe it as (our) finest hour,” Vitol’s chief executive Russell Hardy said earlier this year.
Gunvor left industrial metals in 2016, when the trader decided it could not expand at the pace needed to be an effective player and chose to concentrate on energy.
Now with the energy transition and the role metals play across the “energy value chain”, Gunvor has a model that better fits its operational capabilities, a fourth source with knowledge of the matter said.
(By Pratima Desai, Julian Luk and Eric Onstad; Editing by Veronica Brown and Kirsten Donovan)
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