Trafigura to Boost Mongolia Trading as ‘Sleeping Giant Awakens’
Nov. 8 (Bloomberg) -- Trafigura Beheer BV, the world’s second-largest independent trader of non-ferrous metals, plans to expand in Mongolia to deliver more iron ore, coal and copper to the China market.
It secured its first iron ore and coal supply agreements in the country in the past few months, Mikhail Zeldovich, head of Trafigura’s Russia and Mongolia unit, said in a telephone interview from Ulan Bator. Talks on more accords are in progress and Trafigura’s first Mongolian tin shipment is due this week, he said.
“In all commodity businesses I anticipate strong growth, and in the bulk commodities of coal and iron ore I am targeting a multiple of what we already have,” Zeldovich said. “We very much see Mongolia as a sleeping giant of resources that’s now beginning to awaken.”
Mongolia in June surpassed Australia as the biggest seller of coking coal to China and total exports are due to rise by 65 percent this year, according to Ulan Bator-based Trade and Development Bank. Rio Tinto Group will begin commercial output from the Oyu Tolgoi mine in 2013, a deposit in central Mongolia that it says is one of the biggest untapped sources of copper and gold.
A mining boom in the world’s most sparsely populated nation promises the greatest influx of wealth for Mongolia since Genghis Khan conquered most of Europe and Asia in the 13th century. Economic growth may surge to 23 percent in 2013, more than twice the forecast expansion in China, as mining projects begin production, the International Monetary Fund said in April.
Funding Mines
Last year, Amsterdam-based Trafigura provided more than $40 million in financing to help start production at a lead and zinc mine in eastern Mongolia in exchange for an off-take accord, Zeldovich said. The trader has also invested in a trucking company in Mongolia to transport coal from producers including Mongolyn Alt (MAK) Group to China, he said. It ranks among the top three sells of copper in Mongolia, he said.
The Trafigura team in Mongolia, including the trader’s truckers, has grown to more than 80 local staff since it began buying copper from local smelters in 1997 and more will be added as the headcount “has to catch up with our business needs,” Zeldovich said. It employs 6,000 people globally, according to the company’s website.
Trafigura is now considering investments in a “few” miners close to starting production, Zeldovich said without providing further details. One project under evaluation is a “mid-size” coking coal deposit that could send its steel- making raw material to Russia, he said.
“There are a lot fewer opportunities close to production than there are greenfields,” Zeldovich said.
Trafigura yesterday said it has set up a joint venture with Origo Partners Plc., a Beijing-based private equity firm with stakes in a number of exploration assets in Mongolia including Gobi Coal and Energy Ltd. The venture will explore for iron ore and coal in north and northwest Mongolia, Zeldovich said.
--Editors: Rebecca Keenan, Indranil Ghosh
To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net
To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net
It secured its first iron ore and coal supply agreements in the country in the past few months, Mikhail Zeldovich, head of Trafigura’s Russia and Mongolia unit, said in a telephone interview from Ulan Bator. Talks on more accords are in progress and Trafigura’s first Mongolian tin shipment is due this week, he said.
“In all commodity businesses I anticipate strong growth, and in the bulk commodities of coal and iron ore I am targeting a multiple of what we already have,” Zeldovich said. “We very much see Mongolia as a sleeping giant of resources that’s now beginning to awaken.”
Mongolia in June surpassed Australia as the biggest seller of coking coal to China and total exports are due to rise by 65 percent this year, according to Ulan Bator-based Trade and Development Bank. Rio Tinto Group will begin commercial output from the Oyu Tolgoi mine in 2013, a deposit in central Mongolia that it says is one of the biggest untapped sources of copper and gold.
A mining boom in the world’s most sparsely populated nation promises the greatest influx of wealth for Mongolia since Genghis Khan conquered most of Europe and Asia in the 13th century. Economic growth may surge to 23 percent in 2013, more than twice the forecast expansion in China, as mining projects begin production, the International Monetary Fund said in April.
Funding Mines
Last year, Amsterdam-based Trafigura provided more than $40 million in financing to help start production at a lead and zinc mine in eastern Mongolia in exchange for an off-take accord, Zeldovich said. The trader has also invested in a trucking company in Mongolia to transport coal from producers including Mongolyn Alt (MAK) Group to China, he said. It ranks among the top three sells of copper in Mongolia, he said.
The Trafigura team in Mongolia, including the trader’s truckers, has grown to more than 80 local staff since it began buying copper from local smelters in 1997 and more will be added as the headcount “has to catch up with our business needs,” Zeldovich said. It employs 6,000 people globally, according to the company’s website.
Trafigura is now considering investments in a “few” miners close to starting production, Zeldovich said without providing further details. One project under evaluation is a “mid-size” coking coal deposit that could send its steel- making raw material to Russia, he said.
“There are a lot fewer opportunities close to production than there are greenfields,” Zeldovich said.
Trafigura yesterday said it has set up a joint venture with Origo Partners Plc., a Beijing-based private equity firm with stakes in a number of exploration assets in Mongolia including Gobi Coal and Energy Ltd. The venture will explore for iron ore and coal in north and northwest Mongolia, Zeldovich said.
--Editors: Rebecca Keenan, Indranil Ghosh
To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net
To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net
Comments
Post a Comment