At 19,700 tonnes, the amount of silver held in physically backed ETPs (exchange traded products) is equivalent to almost 80% of 2012’s mined output. If last year’s mass exit from gold ETPs was followed this year by sales from silver ETPs, this could rapidly turn into a substantial new source of supply just as happened with gold last year. Under these scenarios we could see silver prices fall to an average of $15/oz in 2014 and $10/oz in 2015."
See the whole story on Mineweb: Natixis warns of extra risks to silver price over gold - GOLD NEWS - Mineweb.com Mineweb
April 1, 2014
March 31, 2014
The changing world of energy trading #MasterEnergy @PlattsOil
Banks involved in energy have pulled back from the sector while merchant
traders known largely for their secrecy are strengthening their
position
The changing world of energy commodity trading
The Barrel Blog
By Jeff Ryser | March 28, 2014 11:48 AM Comments (2)
The
world of energy commodity trading has gone through a rather extensive
reshuffling over the past few months. The key thing to note is that
banks involved in energy have pulled back from the sector while merchant
traders known largely for their secrecy are strengthening their
position.
The most notable deal came last week when Swiss-based merchant firm Mercuria agreed to buy the entire physical commodity trading business of JPMorgan Chase
for $3.5 billion. Mercuria, which is headquartered in Geneva and is
predominantly a crude and refined products trading shop, has a team of
approximately 1,200 people working in some 37 offices around the globe
and has annual “turnover,” or essentially gross annual revenues of
around $100 billion.
JPMorgan, whose overall size is an
astounding $2.4 trillion in terms of the value of all its assets, had
valued the oil trading portion of the business it sold to Mercuria at
$1.7 billion. It valued its US and European natural gas trading business
at approximately $800 million, its metals business at $500 million and
its electricity and coal trading businesses at approximately $300
million, prior to the sale.
Mercuria therefore agreed to pay $200
million or so above book and will add JPMorgan physical assets, trading
books and contract to its already extensive trading portfolio.
Included
in the deal, apparently, is a trading team in London, New York, Houston
and Singapore that numbers more than 400 people. When JPMorgan bought
the trading operations of RBS Sempra in 2010 for $1.9 billion, it saw
its trading staff balloon to almost 700 people. It spent several years
bringing that staffing level down to a more manageable level.
Now,
Mercuria, founded by Swiss nationals Marco Dunand and Daniel Jaggi in
2004, will begin the task of integrating the various JPMorgan trading
teams with its own teams. Also now under discussion, according to
JPMorgan, is the future role at Mercuria, if any, of Blythe Masters, the
45 year-old British-born global head of JPMorgan’s commodities unit.
Dunand
and Jaggi have both spoken recently, and publicly (at places like
Davos), acknowledging the fact that the merchants’ penchant for secrecy
runs counter to the push by governments to instill far greater trading
transparency. With its deal to buy JPMorgan, Mercuria, for example, will
have to report physical US natural gas sales to the Federal Energy
Regulatory Commission. Its US affiliate already reports its quarterly US
wholesale power sales to FERC.
Mercuria’s vision of its business model is fairly clear. In a recent interview with the newspaper Neue Zurcher Zeitung,
Dunand offered that there are “two schools” for commodity trading. He
said, “One is the Marc Rich school, with Glencore and Trafigura, which
is obviously successful. And then there is the investment bank school,
which has more of a risk approach.”
Marc Rich, of course, is the
legendary commodities trader who, while working for Philipp Brothers in
the late 1960’s and early 1970’s essentially created the spot market for
crude, thereby breaking the hold over the market that big oil companies
had using long-term supply contracts with supplier countries.
The
key idea behind March Rich-style trading is to have access to your own
logistics, such as shipping and storage, and to strike deals with big
bulk buyers. The merchants are also not subject to Dodd-Frank trading
restrictions, as are the banks.
On the other hand, the investment
bank school of trading implies a far greater dependence on the
financial markets to not only hedge positions but also to hedge
positions for fee-paying clients. When trading for their own book–which
banks will be prohibited from doing when the so-called Volcker rule is
implemented in mid-2015–the investment banks rely heavily upon churn, or
buying and selling and re-buying and re-selling, to generate revenue
from large volumes of trading. This activity also provides markets with
liquidity.
Joining Glencore, Trafigura, and Mercuria as exemplars of the Rich school of commodity trading are Gunvor and Vitol.
On
Monday, the head of Vitol, Ian Taylor, made a comment on the impact of
the banks leaving the energy commodities trading business. He said, “The
withdrawal of some investment banks from commodity related activities
has reduced liquidity in markets such as power.” This is no doubt true,
since the pull-back by the banks has been most pronounced in the
wholesale power trading business due in no small part to tightened
regulations and lower prices and thus dampened price volatility.
It
was Taylor’s next comment, though, that also caught some people’s
attention. He said that the reduced liquidity “created longer-term
opportunities and our footprint in both the US and Europe is growing.”
Taylor
conceded that 2013 was “a very challenging year for many in the
physical energy distribution business.”” He said that “markets remained
extremely competitive with new entrants increasing margin pressure on
certain regional activity.” “While these market conditions aren’t
expected to change overnight, changing supply and demand balances are
generating some new opportunities,” Taylor said.
Meanwhile,
Barclays PLC and Deutsche Bank are understood to be selling their power
trading books, as the big UK and German banks announced they are exiting
the business.
While Citibank has been trying to strengthen its
trading in Europe and the US, Bank of America Merrill Lynch, strong in
the US, has shutdown European natural gas and power trading.
Morgan
Stanley, of course, is in the process of selling its Global Oil
Merchant unit to the Russian oil company Rosneft, for an undisclosed sum
that is nonetheless estimated to be in the range of $400 million.
Roughly 100 Morgan trading executives are expected to go to work for
Rosneft in London and New York, or about a third of Morgan’s entire
global commodity trading team. Rosneft earlier established a trading
unit in Geneva that is headed up by a former Shell trader.
One
question that has popped up is whether there are any future US or
European sanctions in the offing against Rosneft chief Igor Sechin, and
whether such sanctions could hurt the deal with Morgan Stanley. The US
and the EU have already leveled sanctions against individuals in
retaliation for Russian President Vladimir Putin’s move into Crimea.
Sechin is a former chief of staff to Putin and was appointed head of
Rosneft by Putin in 2004.
On March 20 the US sanctioned the
Russian Gennady Timchenko, who was co-founder of Gunvor. The
Geneva-based firm said that the day before the sanctions were announced,
Timchenko sold his shares in the firm to Swedish co-founder Torborn
Tornqvist, who now owns 87% of the 14 year-old company. Gunvor, mainly
an oil and products trader, employs approximately 500 front and back
office trading professionals and 1,100 people at logistical facilities,
has said that revenue in 2012 was roughly $93 billion.
The US
Treasury Department said it imposed the sanctions against Timchenko out
of the belief that Russian president Vladimir Putin had earlier
invested in Gunvor and “may have access to Gunvor funds,” an assertion
that Gunvor denied.
world of energy commodity trading has gone through a rather extensive
reshuffling over the past few months. The key thing to note is that
banks involved in energy have pulled back from the sector while merchant
traders known largely for their secrecy are strengthening their
position.
The most notable deal came last week when Swiss-based merchant firm Mercuria agreed to buy the entire physical commodity trading business of JPMorgan Chase
for $3.5 billion. Mercuria, which is headquartered in Geneva and is
predominantly a crude and refined products trading shop, has a team of
approximately 1,200 people working in some 37 offices around the globe
and has annual “turnover,” or essentially gross annual revenues of
around $100 billion.
JPMorgan, whose overall size is an
astounding $2.4 trillion in terms of the value of all its assets, had
valued the oil trading portion of the business it sold to Mercuria at
$1.7 billion. It valued its US and European natural gas trading business
at approximately $800 million, its metals business at $500 million and
its electricity and coal trading businesses at approximately $300
million, prior to the sale.
Mercuria therefore agreed to pay $200
million or so above book and will add JPMorgan physical assets, trading
books and contract to its already extensive trading portfolio.
Included
in the deal, apparently, is a trading team in London, New York, Houston
and Singapore that numbers more than 400 people. When JPMorgan bought
the trading operations of RBS Sempra in 2010 for $1.9 billion, it saw
its trading staff balloon to almost 700 people. It spent several years
bringing that staffing level down to a more manageable level.
Now,
Mercuria, founded by Swiss nationals Marco Dunand and Daniel Jaggi in
2004, will begin the task of integrating the various JPMorgan trading
teams with its own teams. Also now under discussion, according to
JPMorgan, is the future role at Mercuria, if any, of Blythe Masters, the
45 year-old British-born global head of JPMorgan’s commodities unit.
Dunand
and Jaggi have both spoken recently, and publicly (at places like
Davos), acknowledging the fact that the merchants’ penchant for secrecy
runs counter to the push by governments to instill far greater trading
transparency. With its deal to buy JPMorgan, Mercuria, for example, will
have to report physical US natural gas sales to the Federal Energy
Regulatory Commission. Its US affiliate already reports its quarterly US
wholesale power sales to FERC.
Mercuria’s vision of its business model is fairly clear. In a recent interview with the newspaper Neue Zurcher Zeitung,
Dunand offered that there are “two schools” for commodity trading. He
said, “One is the Marc Rich school, with Glencore and Trafigura, which
is obviously successful. And then there is the investment bank school,
which has more of a risk approach.”
Marc Rich, of course, is the
legendary commodities trader who, while working for Philipp Brothers in
the late 1960’s and early 1970’s essentially created the spot market for
crude, thereby breaking the hold over the market that big oil companies
had using long-term supply contracts with supplier countries.
The
key idea behind March Rich-style trading is to have access to your own
logistics, such as shipping and storage, and to strike deals with big
bulk buyers. The merchants are also not subject to Dodd-Frank trading
restrictions, as are the banks.
On the other hand, the investment
bank school of trading implies a far greater dependence on the
financial markets to not only hedge positions but also to hedge
positions for fee-paying clients. When trading for their own book–which
banks will be prohibited from doing when the so-called Volcker rule is
implemented in mid-2015–the investment banks rely heavily upon churn, or
buying and selling and re-buying and re-selling, to generate revenue
from large volumes of trading. This activity also provides markets with
liquidity.
Joining Glencore, Trafigura, and Mercuria as exemplars of the Rich school of commodity trading are Gunvor and Vitol.
On
Monday, the head of Vitol, Ian Taylor, made a comment on the impact of
the banks leaving the energy commodities trading business. He said, “The
withdrawal of some investment banks from commodity related activities
has reduced liquidity in markets such as power.” This is no doubt true,
since the pull-back by the banks has been most pronounced in the
wholesale power trading business due in no small part to tightened
regulations and lower prices and thus dampened price volatility.
It
was Taylor’s next comment, though, that also caught some people’s
attention. He said that the reduced liquidity “created longer-term
opportunities and our footprint in both the US and Europe is growing.”
Taylor
conceded that 2013 was “a very challenging year for many in the
physical energy distribution business.”” He said that “markets remained
extremely competitive with new entrants increasing margin pressure on
certain regional activity.” “While these market conditions aren’t
expected to change overnight, changing supply and demand balances are
generating some new opportunities,” Taylor said.
Meanwhile,
Barclays PLC and Deutsche Bank are understood to be selling their power
trading books, as the big UK and German banks announced they are exiting
the business.
While Citibank has been trying to strengthen its
trading in Europe and the US, Bank of America Merrill Lynch, strong in
the US, has shutdown European natural gas and power trading.
Morgan
Stanley, of course, is in the process of selling its Global Oil
Merchant unit to the Russian oil company Rosneft, for an undisclosed sum
that is nonetheless estimated to be in the range of $400 million.
Roughly 100 Morgan trading executives are expected to go to work for
Rosneft in London and New York, or about a third of Morgan’s entire
global commodity trading team. Rosneft earlier established a trading
unit in Geneva that is headed up by a former Shell trader.
One
question that has popped up is whether there are any future US or
European sanctions in the offing against Rosneft chief Igor Sechin, and
whether such sanctions could hurt the deal with Morgan Stanley. The US
and the EU have already leveled sanctions against individuals in
retaliation for Russian President Vladimir Putin’s move into Crimea.
Sechin is a former chief of staff to Putin and was appointed head of
Rosneft by Putin in 2004.
On March 20 the US sanctioned the
Russian Gennady Timchenko, who was co-founder of Gunvor. The
Geneva-based firm said that the day before the sanctions were announced,
Timchenko sold his shares in the firm to Swedish co-founder Torborn
Tornqvist, who now owns 87% of the 14 year-old company. Gunvor, mainly
an oil and products trader, employs approximately 500 front and back
office trading professionals and 1,100 people at logistical facilities,
has said that revenue in 2012 was roughly $93 billion.
The US
Treasury Department said it imposed the sanctions against Timchenko out
of the belief that Russian president Vladimir Putin had earlier
invested in Gunvor and “may have access to Gunvor funds,” an assertion
that Gunvor denied.
The changing world of energy commodity trading « The Barrel Blog
The MasterMetals Blog
#Mining Project failure resulting from lack of social license is extraordinary expensive @Mineweb
Tags:
Gold,
mining stocks
Social development shortcomings blamed for mining project failures - Danielson
Although
mining’s record on social license to operate is often seen as poor,
sustainability expert Luke Danielson is confident mining can “lead the
way in pioneering new and more effective social relationships”.
mining’s record on social license to operate is often seen as poor,
sustainability expert Luke Danielson is confident mining can “lead the
way in pioneering new and more effective social relationships”.
Author: Dorothy Kosich
Posted:
Monday
,
31 Mar 2014
RENO (Mineweb) -
“A large and growing number of project failures
are a direct result of the inability to deal successfully with the
combination of environment, community and social” concerns, said former
Mining, Minerals and Sustainable Development project administrator, Luke
Danielson.
In a speech to the 2014 Mining and Land Resource Institute in Reno,
Nevada, attorney Danielson observed, “(Mining) Project failure and
conflict resolution resulting from lack of social license is
extraordinary expensive.”
“Lengthy conflicts are all too frequent and debilitating” for
companies, governments, communities, shareholders and other
stakeholders, he said.
Danielson, now the president and co-founder of the Sustainable
Development Strategies Group highlighted several major mining projects
which have had difficulty with issues stemming from social license to
operate.
For instance, Freeport-McMoRan Copper & Gold’s Grasberg project
in Indonesia has experienced 51 incidents since July 2009, which
resulted in 17 fatalities and 59 injuries, Danielson noted. He estimated
that the company has incurred $352.3 million in direct security costs
from 2001-2012.
Plans by Rosemont to build North America’s largest new copper mine
were dealt a major blow in November when congressional supporters of the
project canceled their vote after Native American tribes through the
United States lobbied against the Arizona mining project.
The difficulties of securing a social license to operate also proved a
headache for Pebble Project partner Anglo American, which eventually
wrote off $300 million on the project, he observed.
The stalled Newmont Conga Project may be headed for the same fate of
the Cerro Quilish project, which was suspended in 2004, Danielson
suggested.
Vedanta’s battles with indigenous tribes resulted in the suspension
of its Orissa bauxite mining project in India after the company had
invested $800 million in it, Danielson observed.
Among the other stalled projects highlighted by Danielson are the
Lucky Jack Molybdenum project in Colorado, Ascendant Copper’s Junin
project in Ecuador, along with Glencore-Xstrata’s intent to sell its
ownership in the controversial Tampakan copper-gold mine in the
Philippines.
Meanwhile, as global populations grow, so does the demand for
minerals to support their economic development, Danielson noted.
Ironically, securing a social license to operate has become even more
challenging for mining companies because it is becoming “harder and
harder to find places to mine that don’t have people living in them.”
He observed that the top five countries for mining investment also
have low populations. Even in the gold mining state of Nevada, the
percentages of persons employed by the mining industry have declined
dramatically, although the Nevada population has increased 17-fold since
1950, according to Danielson.
Danielson, who has served as a legal and sustainable development
consultant to a number of hardrock mining companies, highlighted what he
viewed as the questionable tactics of mining companies, including major
mining companies, to secure a social license to operate. Among the
tools utilized by miners is using high-tech software to identify and
track members of anti-mining project groups; or buying hundreds of radio
spots which promote the message that the Bible says minerals are good,
while the Catholic Church is wrong to oppose mining projects.
Mining companies have hired detectives to track opposition, while
other miners have doubled campaign contributions in an effort to buy
project approval, Danielson alleged.
A chairman of a mining company once reportedly declared,” We’ll give
10% of our stock to the Army and then see how long these [community]
protests last,” said Danielson.
Yet, another company has been engaging in a highly technical debate
of what constitutes a glacier. “Engaging in technical debates…with a
bunch of local farmers doesn’t work,” Danielson declared.
Meanwhile, most banks now subscribe to the Equator Principles, a
credit risk management framework for determining, assessing and managing
environmental and social risk in project finance transactions.
“The negotiation of community development agreements is now expected
in much of the world,” Danielson said. “We are headed toward of system
in which some form of community consent in the norm.”
“In Canada it’s almost impossible to develop a (mining) project without a community development agreement,” he added.
Another potential problem involves first contact between mining and
exploration employees and community members. Studies show community
attitudes are highly impacted by the actions and attitudes of the first
company representatives on the ground,” said Danielson. “How many drill
crew chiefs are trained in community relations?” he asked.
Nevertheless, Danielson is confident that mining will make the same
kind of strides in community consent for mining operations that the
industry has already made in environmental and health and safety issues.
Observing that in the past the mining industry has often employed
highly trained experts to analyze problems and devise solutions, “Today,
mining can lead the way in pioneering new and more effective social
relationships,” Danielson advised.
“These issues are extremely important to the future of the industry,”
Danielson concluded, adding they can become “very expensive when things
go wrong.”
Read the article online here: Social development shortcomings blamed for mining project failures - Danielson - SUSTAINABLE MINING - Mineweb.com Mineweb
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