Linklaters’ Post

the challenges faced by the UK critical minerals sector due to the risk-averse nature of British banks compared to their European counterparts. Despite government initiatives aimed at securing the supply of key minerals for industries like clean energy and defense, UK banks remain hesitant to finance businesses in the sector due to the volatile nature of commodities markets. The contrast between the UK and European banks, particularly in their willingness to take on such risks, underscores a significant hurdle in aligning the financial sector with the government’s industrial strategy. “For the UK government to support development of a more resilient critical supply chain then the banks need to be prepared to provide the support too,” said Stephen Hall, Chair of the Minor Metals Trade Association . https://lnkd.in/enfNDmGk #commodities

UK CRITICAL MINERALS SECTOR WARNS ON BANKS’ AVERSION TO COMMODITIES 5 Key Takeaways: 1. UK critical minerals companies, like Advanced Alloy Services (AAS), are struggling to secure financing from domestic banks due to the volatility of commodities markets. 2. Despite the UK government's strategy to diversify critical mineral supply chains, support mechanisms like UK Export Finance (UKEF) require banks to take on more risk, which they are hesitant to do. 3. AAS sought refinancing with Lloyds Bank to lower financing costs but was denied after seven months, reflecting a broader issue of banks' aversion to backing metals businesses. 4. European banks, unlike UK banks, are more willing to engage with commodities sectors, with lenders such as Société Générale and ING being more comfortable with the risks. 5. The government is supporting the critical minerals industry through UKEF and the UK Infrastructure Bank, but challenges remain in aligning the finance sector with the country's industrial strategy. #metals #commodities #tradefinance #UK

#resourcenationalisation is becoming more of a norm, and perhaps China's approach of the 'fast hare' to let its cash rich enterprises sector finance the #CRM value chain is backfiring as implied in today's Financial Times. Is the 'slow tortoise' of the EU working on Strategic Partnerships with nations like the recent MOU with Chile to be the wining strategy as part of their #globalgateway for security of supply? However, where is the new cash going to come from? There hasn't been a large mineral investment without Chinese money in recent years with Rio Tinto's Simandou Iron Ore being case in point. With current Chinese control of supply, and influencing prices, how will banks come back into play for finance when the underlying asset is unpredictably volatile? #Lithium

I've recently written a short piece for Daba Finance on why South African small-cap industrials might provide international investors with a route into SA equities. I highlight three particular JSE-listed stocks: 💡 Afrimat (JSE: AFT) 💡 Hudaco Trading Pty Ltd. (JSE: HDC) 💡 Argent Industrial Group (JSE: ART) "[𝘛𝘩𝘦𝘴𝘦] 𝘚𝘈 𝘪𝘯𝘥𝘶𝘴𝘵𝘳𝘪𝘢𝘭𝘴 𝘦𝘯𝘫𝘰𝘺 𝘴𝘵𝘳𝘰𝘯𝘨 𝘦𝘢𝘳𝘯𝘪𝘯𝘨𝘴 𝘱𝘰𝘵𝘦𝘯𝘵𝘪𝘢𝘭 𝘥𝘳𝘪𝘷𝘦𝘯 𝘣𝘺 𝘥𝘪𝘷𝘦𝘳𝘴𝘪𝘧𝘪𝘤𝘢𝘵𝘪𝘰𝘯 𝘢𝘯𝘥 𝘨𝘰𝘰𝘥 𝘢𝘴𝘴𝘦𝘵 𝘮𝘢𝘯𝘢𝘨𝘦𝘮𝘦𝘯𝘵. 𝘚𝘰𝘮𝘦 𝘩𝘢𝘷𝘦 𝘤𝘰𝘮𝘱𝘭𝘦𝘵𝘦𝘥 𝘫𝘶𝘥𝘪𝘤𝘪𝘰𝘶𝘴 𝘢𝘤𝘲𝘶𝘪𝘴𝘪𝘵𝘪𝘰𝘯𝘴 𝘢𝘵 𝘩𝘰𝘮𝘦 𝘢𝘯𝘥 𝘢𝘣𝘳𝘰𝘢𝘥 𝘪𝘯 𝘳𝘦𝘤𝘦𝘯𝘵 𝘺𝘦𝘢𝘳𝘴, 𝘢𝘯𝘥 𝘴𝘵𝘰𝘤𝘬 𝘱𝘳𝘪𝘤𝘦𝘴 𝘳𝘦𝘮𝘢𝘪𝘯 𝘢𝘵𝘵𝘳𝘢𝘤𝘵𝘪𝘷𝘦 𝘥𝘦𝘴𝘱𝘪𝘵𝘦 𝘳𝘦𝘤𝘦𝘯𝘵, 𝘴𝘪𝘨𝘯𝘪𝘧𝘪𝘤𝘢𝘯𝘵 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘦𝘴 𝘪𝘯 𝘵𝘩𝘦𝘪𝘳 𝘷𝘢𝘭𝘶𝘦." Enjoy! https://lnkd.in/eNWKXTxf P.S. LIKE our LinkedIn page (Capital Markets Africa), & SUBSCRIBE to our newsletter. #investinginAfrica #Africanequities #Africanstocks #Africancapitalmarkets #JSE #SouthAfrica Disclaimer: Capital at risk. Michael Ajifowoke Boum III Jr Anthony Miclet Capital Markets Africa

"Vitol, the world’s largest independent commodity trader, paid senior employees a record $6.4bn last year, in the latest sign of how companies in the industry have profited from the disruption to energy markets unleashed by Russia’s full-scale invasion of Ukraine. The $6.4bn payout was made to about 450 Vitol partners including top executives, and comes after the Rotterdam-based, privately owned group reported $13bn in net profit for 2023, its second highest and far higher than its rivals. [ ] Volatility in commodity markets brought about by Russia’s full-scale invasion of Ukraine in February 2022 has led to a boom for trading companies. The invasion sent energy prices soaring as western countries imposed sanctions on Russia, which in turn upended the flow of commodities including oil and gas. Volatility eased in 2023, but compared with before the Ukraine invasion, remained high. [ ] Vitol, along with rivals Trafigura and Gunvor, made a combined $46bn in profits in 2022 and 2023, according to calculations by the Financial Times. Trafigura paid out a record dividend of $5.9bn to the company’s 1,200 shareholders in its most recent financial year, ending in September 2023, when it recorded net profit of $7.4bn. The huge profits made by trading companies has enabled them to amass as much as $120bn in cash reserves, according to consultants Oliver Wyman."

We sat down with John Hopkins, CEO at Export Finance Australia and part of a key panel discussion at Critical Minerals 2024, "Financing uncertainty: Industry and banking perspectives on the critical minerals sector". John discussed some of the key projects EFA is currently engaged in, why are critical minerals an important topic in 2024 and who needs to see this panel discussion. Read more: https://lnkd.in/gAdvFreb #CriticalMinerals2024 #CriticalMinerals #AusIMM

ECAs and banks forge US$2.5bn deal for Chile copper mine Export credit agencies from Japan, Canada and Korea have agreed to #finance the expansion of a copper mine and refinery in #Chile, lending a total of US$2.5bn alongside a consortium of global #banks. The project financing, finalised on February 16, funds the development of a new #mining area and the #construction of a copper ore processing plant at the Centinela site in Chile’s Antofagasta region. The expansion is set to boost output by 140,000 tonnes annually and will elevate the Centinela project into the top 15 copper mines in the world by output once it is completed in 2027, says one of its backers, Marubeni Corporation. The Japan Bank for International Cooperation, Export Development Canada | Exportation et développement Canada and the Export-Import Bank of Korea are participating ECAs, alongside a group of commercial lenders including Crédit Agricole CIB, KfW IPEX-Bank, Natixis Partners, Sumitomo Mitsui Banking Corporation – SMBC Group and Societe Generale. Global Trade Review (GTR) understands the commercial banks are altogether committing US$750mn, including US$500mn under an ECA-backed tranche. This portion of the senior bank facilities is being covered by a 90% guarantee from Germany’s Euler Hermes. Sweden’s ECA, EKN Exportkreditnämnden, said in July 2023 it had been conducting environmental and social due diligence for the mine expansion and was weighing a raw material guarantee for the Centinela mine project. JBIC is contributing US$950mn towards the overall #projectfinancing in a bid to secure long-term supplies of #copper concentrate, with Japanese firms offtaking a portion of the increased production. The ECA-backed transaction also boosts the development of a foreign mine a Japanese company holds an interest in, JBIC says. “Demand for copper is expected to increase globally as an indispensable metal for electric vehicles as well as #renewable energy facilities and equipment,” JBIC says. “Since Japan relies solely on imports for copper concentrates, it is an urgent challenge to secure a long-term, #stable supply.” Run as a joint venture between UK-headquartered Antofagasta and Japanese conglomerate Marubeni, the mine first commenced operations in 2001. In all, the expansion is forecast to cost US$4.4bn. According to Marubeni, the Centinela mine is dedicated to producing “sustainable copper”. In late 2022, the mine switched to only using seawater and stopped extracting groundwater for its operations, while the company says 100% of the project’s power is derived from renewable sources. Copper is set to play a vital role in the #energy transition and #global manufacturing demand is set to boom in the coming decades. #tradefinance #trade #finance #risk #mining Full Article at Global Trade Review (GTR): https://lnkd.in/ecfKYswt

Marc Rich, founder, Glencore plc Marc Rich, born in 1934 in Antwerp, Belgium, founded Glencore, a commodities trading company. After leaving NYU, he joined Philipp Brothers (today's Phibro LLC) in 1954, working alongside Pincus Green. He rose to become a metals dealer, gaining expertise in international raw materials markets and trading with third-world nations, managing operations in Cuba, Bolivia, and Spain. In 1974, Rich and Green founded Marc Rich + Co. AG in Switzerland. Nicknamed "the King of Oil," Rich expanded the spot market for crude oil in the early 1970s, challenging established oil companies' reliance on long-term contracts. Rich's key insight was that oil and other raw materials could be traded with less capital and fewer assets than major oil producers believed, especially with backing from bank finance. This leveraged business model became the blueprint for modern traders, including Trafigura, Vitol, and Glencore. Rich built relationships with dictatorial regimes and embargoed nations, conducting profitable deals by circumventing trade embargoes. His clients included Cuba, Angola, Libya, Romania, and Chile. During the Iranian Revolution, he leveraged his ties with Ayatollah Khomeini to procure oil from Iran, becoming Rich's primary supplier for over 15 years who secretly sold the oil to Israel. In 1983, Rich and Green faced 65 criminal charges, including tax evasion and trading with Iran, filed by Rudy Giuliani. Rich fled to Switzerland, remaining on the FBI’s Most Wanted list for years, narrowly escaping capture in several countries. By the end of 1993, Rich had lost control of the company after a failed attempt to corner the world zinc market, leading to several stakeholders demanding he relinquish his majority stake. Following a management buyout, Marc Rich + Co was renamed to Glencore on September 1, 1994. On January 20, 2001, hours before leaving office, U.S. President Bill Clinton granted Rich a controversial presidential pardon. Rich passed away from a stroke on June 26, 2013, at a Lucerne hospital. Reading: World for Sale, Javier Blas (Energy reading list in profile link) 📝 More sources in my profile link

🌟Exciting analysis surrounding the quagmire of Dangote refinery with much deliberation from my group the statement below explained some interesting points that will help us understand the situation properly. Although this perspective is worth noting and likely to change your emotive perception. ☺️ Kindly read and enjoy 😉 the below post and feel free to drop your 2 cents. 😇 The conclusion. DANGOTE REFINERY: THE DANGER OF A SINGLE NARRATIVE -SIFTING THE FACTS FRIM EMOTION. “Lack of tangible steps to refinance or repay the maturing debt would lead to further downgrade while we do not expect a positive rating action until the company’s liquidity position improves substantially.” I love Dangote and his can-do spirit, the reason l initially was emotive when this controversy broke when l felt he was being unduly treated but my study of the whole scenario has changed my perspective. I want him to succeed but he too has to do the needful. The monopolistic mindset which he carried from his cement business cannot work in the deregulated petroleum sector. More importantly, he needs a pragmatic approach to solve his liquidity challenges in this petroleum sector, which, with the benefit of hindsight, he underestimated, based on the seeming hand-in-gloves relationship he had with the previous leadership of the CBN, where it appeared he had “easy” access to funds. Soji Adekunmbi, an Abuja based public policy analyst, in an article in The Cable, proffered solutions to Dangote to enable him navigate the humongous financial quagmire he seems to have found himself, when he posited: “A few options are available to Dangote but the most viable of them is that he should consider divesting some of his shares in the refinery. It may seem a difficult option but it is the best for him given the circumstances. There are business entities who took a similar path when confronted with some of the challenges seemingly facing Dangote. In Saudi Arabia, the Saudi government sold Aramco, the national oil company to the public when it faced difficulties. Even Microsoft founder, Bill Gates sold off a majority of his stake in the company retaining a mere five percent interest in the business. Gates took that route after facing anti-trade court cases following Microsoft’s monopolistic nature, which had caused the collapse of several IT companies. Dangote should do the needful by selling shares to Nigerians as it is obvious given the intricate nature of business in the oil and gas sector particularly the huge capital outlay required to keep a business going, he cannot pull it off alone.” ©️ Richard Akinola

Useful for minerals price