Soaring demand for copper will help drive mergers, BHP CEO says
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Trafigura Group’s former co-head of metals Kostas Bintas is joining Mercuria Energy Group Ltd. together with several of his ex-colleagues, to spearhead an aggressive push into metals in one of the industry’s biggest shakeups in years.
A copper trader who has long been one of the most bullish voices in the market, Bintas will start next week at Mercuria at the head of what will eventually be a roughly 40-strong metals team, according to people familiar with the matter, who asked not to be identified as the matter isn’t public.
Mercuria already trades some metals, but the new push marks a major expansion. It promises to inject a new rivalry into an industry long driven by larger-than-life personalities, with Bintas, who left Trafigura after being demoted from the company’s management committee, now seeking to build a business that could become a major competitor to his old company.
The return of one of the copper market’s biggest bulls is likely to be a key topic of discussion as the world’s metals traders gather in Hong Kong this week for the London Metal Exchange’s annual Asia party — at a moment when the market is struggling for direction after sliding 13% from last month’s record highs.
Flush with cash from the most profitable period in their histories, some of the world’s biggest energy traders — including Vitol Group, Gunvor Group and Hartree Partners — are expanding in metal markets that have long been dominated by Trafigura and Glencore Plc. For the traders, the move is a way to diversify as profits from energy trading begin to normalize at the same time as metals are being touted as a key beneficiary of the energy transition.
Mercuria is also using its recent windfall to bet on gas and power trading. It has made several high-profile hires — including former Macquarie Group commodities head Nick O’Kane and Steve Hill, who previously ran LNG, gas and power at Shell Plc — as well as investments in assets including a gas-storage facility in Louisiana.
Bintas will be working with some of the same team that he worked with at Trafigura, where he oversaw a dramatic expansion of the company’s copper business to overtake Glencore as the world’s largest trader of the metal.
Svetlana Kabanova, Trafigura’s former head of metals operations, has already started at Mercuria, the people said. Mehdi Wetterwald, former co-head of battery metals at Trafigura, is in talks to join in the next few weeks, as is Michaela Iafeliece, a former Trafigura refined metals trader in the US. Nick Snowdon, until recently metals strategist at Goldman Sachs Group Inc., is set to join as head of research.
Mercuria declined to comment.
Many of the former Trafigura team left in the wake of the revelation last year that the trading house had been the victim of a massive alleged nickel fraud. That caused a highly embarrassing loss of more than $500 million for Trafigura, and sparked a period of jostling for position within the company that has seen several senior executives depart. Trafigura has said it believes that none of its employees were complicit in the fraud.
Mercuria has attempted to expand in metals trading before, and previous efforts have run into difficulties. The company fell victim in 2014 to an infamous fraud involving multiple pledging of warehouse receipts at China’s Qingdao port. Later, it sued a Turkish supplier for delivering painted rocks instead of $36 million of copper, while a bullish bet on zinc concentrates was countered by a flood of material from new mines.
In recent months, Mercuria has already been more actively attempting to win major copper deals, according to market participants. It has discussed tolling and prepayment with Vedanta Resources Ltd. for output from its KCM complex in Zambia, and it has also discussed offtake from Eurasian Resources Group’s copper assets in the Democratic Republic of Congo.
(By Jack Farchy and Archie Hunter)
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