Trafigura

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Trafigura Beheer BV
Private
Industry Commodity
Founded 1993; 31 years ago (1993)
Headquarters Geneva, Switzerland
(Head office)
Amsterdam, The Netherlands
(Registered office)
Area served
 Global
Key people
 Claude Dauphin, (Chairman)
Jeremy Weir, (CEO)
Products Raw materials/merchant
Revenue US$ 127.6 billion (2014)[1]
US$ 2.2 billion (2013)[1][2]
Number of employees
 5,326 (2014)[2]
Website www.trafigura.com

Trafigura Beheer BV is a Dutch[3] multinational commodity trading company founded in 1993 trading in base metals and energy, including oil. It is the world's third largest private oil and metals trader after Vitol and Glencore.[4][5]

Trafigura was set up by Claude Dauphin and Eric de Turckheim. It split off from a group of companies managed by Marc Rich in 1993.[5] Dauphin owns less than 20% of the company, with the rest owned by 500 senior staff.[6]

Trafigura has been named or involved in several scandals, particularly the 2006 Côte d'Ivoire toxic waste dump, which left up to 100,000 people with skin rashes, headaches and respiratory problems.[7] The company was also involved in the Iraq Oil-for-Food Scandal.

Trafigura has built or purchased stakes in pipelines, mines, smelters, ports and storage terminals.[8]

History

Trafigura Beheer BV was established as a private group of companies in 1993 by six founding partners: Claude Dauphin, Eric de Turckheim, Graham Sharp, Antonio Cometti, Daniel Posen and Mark Crandall.[9][10] Claude Dauphin, Executive Chairman, and the last remaining founder in an executive position, owns less than 20 per cent of the group’s equity while more than 700 senior managers control the rest.[11]

Initially focused on three regional markets – South America (oil and minerals), Eastern Europe (metals) and Africa (oil) – Trafigura has since diversified and expanded globally.[12]

In November 2013 it was announced that Tory peer and former leader of the House of Lords Lord Strathclyde would be joining Trafigura as a non-executive director. He had previously stood down from the board of the group’s hedge-fund arm following the 2009 controversy over the Côte d'Ivoire incident.[13]

Investments

In 2003 the group established its fund management subsidiary, Galena Asset Management.[14] In 2010, Trafigura bought 8% of Norilsk Nickel.[15]

In February 2013 Trafigura invested $800 million in the Australian energy market, acquiring more than 250 petrol stations, two oil import terminals and five fuel depots in three separate acquisitions by its subsidiary Puma Energy.[16][17] At the time, there was interest in Australia among energy traders due to a combination of rising demand and the closure of outdated, high-cost refineries.[18] The same month, Trafigura joint venture DT Group partnered with Angola’s state oil firm Sonangol to form a new company, Sonaci DT Pte Ltd, to market Angola’s new liquefied natural gas (LNG) exports.[19]

In March, Trafigura announced a deal with South Sudan to export Dar Blend crude oil from Port Sudan.[20]

In October 2013 Trafigura secured USD 1.5 billion in financing for an upfront loan to Russian oil producer OAO Rosneft. The prepayment facility, which provided a loan for advance payment for more than 10 million tons of products over five years, was the largest such deal ever completed by Trafigura.[21]

A month later Trafigura signed an agreement with Dallas-based pipeline operator Energy Transfer Partners to transport crude oil and condensate via a partially converted 82-mile pipeline from the Eagle Ford oil field in McMullen County, Texas, to Trafigura’s deep-water terminal at Corpus Christi Bay, near the Gulf of Mexico.[22][23]

In October 2013 Trafigura subsidiary Impala Terminals became a majority shareholder in the 100-year-old Pacific Railroad Ferrocarril Del Pacífico (FDP). The company is restoring the cargo railway, which connects the Pacific port of Buenaventura with Colombia’s industrial heartland.[24]

In February 2014 Trafigura signed an agreement to acquire a 30% equity stake in the Jinchuan Group’s newly established 400,000 tonnes-per-year copper smelter in Fangchengang, China.[25]

In July 2014 Trafigura launched Lykos, an online platform in India to sell metals to small and medium-sized manufacturers in the country.[26]

In September 2014 Trafigura completed the $860 million sale of an 80 percent stake in a Corpus Christi Texas oil storage terminal to Buckeye Partners LP.[27]

In June 2015 Trafigura announced a 50:50 joint venture with Abu Dhabi investment company Mubadala to invest in base metals mining. As part of the agreement Mubadala also acquired a 50 per cent share in Trafigura’s Minas de Aguas Teñidas (Matsa) mining operation, which owns three mines in southern Spain that produce copper, zinc and lead concentrates.[28] This followed a doubling of processing capacity at the company’s MATSA mining operation in Andalucia, Spain, where two new satellite mines are also being developed.[29]

In August 2015 it was reported that Trafigura subsidiary Impala Terminals is investing USD1 billion in Colombia to develop a new inland road, rail and river network connecting major coastal ports with Colombia’s industrial heartland. The Magdalena River, which runs between Barrancabermeja inland and Barranquilla on the Atlantic coast, will allow transportation of crude oil and petroleum products, dry bulk, containerised and general cargo to and from inland Colombia.[30]

Oil-for-food scandal

The company was named in the Iraq Oil-for-Food Scandal in connection with a Liberian registered turbine tanker, Essex, that had UN approval to load Iraqi crude at Iraq’s main export terminal at Mina al-Bakr. The tanker was chartered by Trafigura Beheer BV. According to her captain, Theofanis Chiladakis, she Essex was 'topped off' at least twice, with a total of 272,000 barrels of crude, after UN monitors had signed off the cargo.[31] This was on May 13 and August 27, 2001. Elf-Aquitaine employees had first talked about this scheme in February 1998.[32]

Waste dumping in Côte d'Ivoire

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Main article: 2006 Côte d'Ivoire toxic waste dump

The 2006 Côte d'Ivoire toxic waste dump was a health crisis in Côte d'Ivoire caused by a Trafigura ship offloading waste in Abidjan, in order to avoid the extra dumping costs requested by Amsterdam Port Services BV due to local complaints about the smell. A local contractor dumped the toxic waste at as many as 12 sites in and around the city of Abidjan in August 2006. The gas caused by the release of these chemicals is blamed by the UN and the government of Côte d'Ivoire for the deaths of 17 and the injury of over 30,000 Ivorians, with injuries that ranged from mild headaches to severe burns of skin and lungs. Almost 100,000 Ivorians sought medical attention for the effects of these chemicals.[33]

The substance was claimed by Trafigura to have been "slops", or waste water from the washing of the Probo Koala's tanks. An inquiry in the Netherlands, in late 2006, revealed the substance was more than 500 tonnes of a mixture of fuel, caustic soda, and hydrogen sulfide for which Trafigura chose not to pay a €1,000 per cubic metre disposal charge at the port of Amsterdam. The Probo Koala was turned away by several countries before offloading the toxic waste at the Port of Abidjan.[34][35]

Trafigura denied any waste was transported from the Netherlands, saying that the substances contained only tiny amounts of hydrogen sulfide, and that the company did not know the substance was to be disposed of improperly. In early 2007, the company paid US$198 million for cleanup to the Ivorian government without admitting wrongdoing, and the Ivorian government pledged not to prosecute the company.[36]

In 2008, a civil lawsuit in London was launched by almost 30,000 Ivorians against Trafigura. In May 2009, Trafigura announced it would sue the BBC for libel after its Newsnight program alleged the company had knowingly sought to cover up its role in the incident. In September 2009 The Guardian obtained and published internal Trafigura emails showing that the traders responsible knew how dangerous the chemicals were. Shortly afterwards Trafigura offered an unnamed settlement figure to the class action suit against it.[37]

Chemical explosion in Norway

On May 24, 2007 an explosion occurred in Sløvåg Gulen, Sogn og Fjordane, Norway in a tank owned by Vest Tank, it had severe environmental and health consequences for people living nearby. In 2008 the Norwegian Broadcasting Corporation published the 50 min documentary "Dirty Cargo" disclosing what had happened in the small community prior to the explosion. The company Vest Tank was trying to neutralize the same kind of chemical waste that was dumped in Côte d'Ivoire when the explosion occurred. The owner of the waste was Trafigura, on whose behalf Vest Tank was working.[38][39][40]

Bond issuances and reported earnings

In 2008, the company had equity of more than $2 billion and a turnover of $73 billion that generated $440 million of profit.[5]

In March 2010 Trafigura made its first venture into capital markets, issuing Euro 400m ($539m) in five-year Eurobonds.[41]

The following month Trafigura listed its first perpetual subordinated bond on the Singapore Exchange (SGX) at a fixed rate of 7.625%.[42] The issuance raised $500m in long term capital that is treated as equity by international accounting rules, leaving existing shareholders undiluted.[43][44] By 2011, its revenue had increased to $121.5 billion and its profits to $1.11 billion,[1] with profits falling 11% in 2012.[45]

In 2013 as a consequence of the Singapore listing, Trafigura released financial statements for the first time, reporting Q1 profits of $216.1 million – up 3.2 per cent on the previous year. Revenue grew 7.9 per cent to USD 31.2 billion.[46]

Price fixing in Malta

In February 2013, Trafigura Maritime Ventures Limited, the Malta based subsidiary of Trafigura Maritime Logistics PTE Limited based in Singapore; along with Total’s oil trading arm became involved in an oil price fixing controversy that led to the barring of both companies from the tendering process by the Enemalta oil purchasing board.[47]

Activities

Trafigura operates from 65 offices in 36 countries.[48]

Trafigura is the third largest physical commodities trading group in the world behind Vitol and Glencore.[49] Trafigura sources, stores, blends and transports raw materials including oil, refined petroleum products and non-ferrous metals (iron ore and coal).[50][51]

Trade in non-ferrous and bulk commodities – mainly copper, lead and zinc concentrate, alumina, refined metals of copper, lead, zinc and aluminium as well as the iron ore and coal trading books – made up 15% of Trafigura’s overall trading turnover in 2013. The group traded 32.9 million metric tons of non-ferrous and bulk commodities during 2013.[52][53]

In January 2013, Trafigura bought three medium range crude oil tankers to add to the existing six vessels that are operated by the joint venture company DT Group, and in May 2013 confirmed its order for up to eight medium-range product tankers.[54][55] In 2013 Trafigura's fleet of chartered tonnage consisted of between 50 and 60 tankers and 30 to 40 bulkers at any given time.[56]

In the year ending 30 September 2014 trading volumes in oil and petroleum products increased 2 percent to 120.4 million metric tons, or more than 2.5 million barrels a day. Volumes in minerals and metals – mainly copper, lead and zinc concentrate, alumina, refined metals of copper, lead, zinc and aluminium as well as the iron ore and coal trading books - grew 49 percent to 49.1 million tons as Trafigura became one of the three largest traders of coal.[57][58]

In support of its arbitrage-based business model, Trafigura ensures a degree of control over supply, storage and logistics through industrial subsidiaries: oil storage and distribution business Puma Energy, in which Trafigura holds an 49% interest.[59]

Trafigura is involved in paper trading through its subsidiary Galena Asset Management, which was set up in 2003 to invest in commodity funds.[51][60]

Corporate structure

Some of Trafigura's major international units include:

  • Trafigura Beheer BV, based in the Netherlands. In 1999 it became the first company to obtain a contract to sell Sudan's oil internationally.[61]
  • Impala Group of Companies which operate the group’s worldwide oil storage and distribution assets and investments has been a wholly owned subsidiary since 2001. Puma Energy operates in more than 20 countries, mainly in Central America and Africa, and supplies a network of just over 600 service stations. On 7 May 2012, Puma entered into an agreement to buy out the key shareholders in KenolKobil (the largest independent Oil Marketing Company in East & Central Africa) which could add 400 stations to its network.[62][63] However, Puma Energy later terminated its bid to acquire oil marketer.[64]
  • EMINCAR, based in La Habana, Cuba until 2010. Dedicated in Consulting and mineral logistic administration.
  • Galena Asset Management, based in London and FSA registered, is the subsidiary through which Trafigura has established and manages a fund management business. Lord Strathclyde, the leader of the Conservative Party in the House of Lords, is a non-executive director on the board, although he has stated his intent to stand down from this post.[65]

References

  1. ↑ 1.0 1.1 1.2 Lua error in package.lua at line 80: module 'strict' not found.
  2. ↑ 2.0 2.1 Lua error in package.lua at line 80: module 'strict' not found.
  3. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  4. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  5. ↑ 5.0 5.1 5.2 Lua error in package.lua at line 80: module 'strict' not found.
  6. ↑ Lua error in package.lua at line 80: module 'strict' not found.
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  10. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  11. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  12. ↑ Bond Prospectus 17 Apr 2013 PDF (1.4 MB)
  13. ↑ Lua error in package.lua at line 80: module 'strict' not found.
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  32. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  33. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  34. ↑ Papers prove Trafigura ship dumped toxic waste in Ivory Coast. David Leigh and Afua Hirsch. The Guardian, Thursday 14 May 2009
  35. ↑ "In pictures: Ivorian toxic waste" bbc.co.uk Link 7 September 2006.
  36. ↑ Trafigura to pay $198 mln settlement to Ivory Coast. Reuters. 13 February 2007.
  37. ↑ The Guardian, 17 September 2009, How UK oil company Trafigura tried to cover up African pollution disaster
  38. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  39. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  40. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  41. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  42. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  43. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  44. ↑ Lua error in package.lua at line 80: module 'strict' not found.
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  49. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  50. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  51. ↑ 51.0 51.1 Bond Prospectus 17 Apr 2013 PDF (1.4 MB)
  52. ↑ Bond Prospectus 11 Feb 2014 PDF (1.33 MB)
  53. ↑ Lua error in package.lua at line 80: module 'strict' not found.
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  64. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  65. ↑ David Leigh and Rob Evans, "Lord Strathclyde severs links with oil trader Trafigura after waste scandal", The Guardian, 17 September 2009.

Literature

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External links

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