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Trafigura

Trafigura
Based in Amsterdam
Active in Peru, Spain, Morocco, Ivory Coast, Spain, DR Congo
Targeted base metals, energy fuels, precious metals

Trafigura is a Swiss-headquartered oil and metals trading company, the extent of whose operations is probably comparable only to those of Glencore (qv).(Indeed, it was established by two former employees of Glencore). It has offices in many countries, including Argentina, Bolivia, Bulgaria, Canada, China, Ghana, Guatemala, India, Indonesia, DR Congo and the UK.

Trafigura boasts of being the world’s third biggest global oil trader, and second among traders of non-ferrous metals (with 8 million tonnes exchanging hands in 2008).

Its minerals-related fund, Galena (qv), operates out of London, UK.

The company not only arranges the transfer of metals from its store houses to customers, but (like Glencore) operates, or has stakes in, several mines - notably with ownership of the Catalina Huanca lead-silver-zinc mine in Peru, Iberian Mines (also in Peru) [Marketwire 20 October 2009], a project in Spain, and another in Morocco.

In 2009, its Netherlands’s associate, Trafigura Beheer was accused of knowingly allowing one of its ships in 2006 to ferry extremely toxic wastes, ultimately dumping them on the Ivory Coast (Cote d’Ivoire), thus allegedly causing several deaths and injury to many citizens of the West African country [Guardian 14 May 2009; 10 July 2009].

It was with Trafigura Beheer that, in August 2009, Anvil Mining secured a provisional deal that would see the Australian company advance construction of the second phase of its major Kinsevere copper mine in Katanga province, DR Congo [Northern Miner,11 August 2009].

In return for a US$200 million investment from Trafigura – which was then seen as enabling the mine to roll by late 2010 - Trafigura would take a “strategic stake” in Anvil that could reach 36%.

However, Anvil’s shareholders had, at the time, yet to approve of the arrangement.

Canada’s leading mining newspaper, Northern Miner, commented that: “[W]hile raising US$200 million for a project in a notoriously difficult country to operate in, may seem like a no-brainer to some, investors might have pause over the amount of control being handed over to Trafigura.

“As would be expected in a deal with a metal trader [Trafigura] managed to secure a life-of-mine offtake agreement for the sale of all products from the Kinsevere mine. And Trafigura also gets to nominate three of the seven members of the Anvil Board.” [Northern Mineribid].

Trafigura did make the investment in Anvil - to the tune of US$100 million; thus acquiring 39% of the company in a stake valued at over US$350 million.

However, in August 2011, Anvil initiated a "strategic review" of its options in DR Congo, telling its shareholders that Trafigura now regarded its 39% stake as being “non-core” (in other words, not critical to Trafigura's own strategies).

Although Anvil had US$25.2 million in cash at the end of July 2011, and US$43 million was still available from the US$100 million Trafigura loan facility, the miner said it “[did] not expect to make any further drawdown under the loan facility” [MJ 19 August 2011].

BMO Capital Markets was then retained by Anvil to assist it in “considering alternatives to maximise the value” of the stake “for all shareholders” [MJ 10 August 2011].

In April 2010, Toronto-listed Vena Resources cooperated with Trafigura to process zinc from tailings at the former company's Azalcoha mill in Peru [Marketwire 7 April 2010].

The same year, Trafigura signed a financing agreement with Andean American Mining Corp, under which Trafigura invested C$3 million in the Vancouver-based mining company's huge Invicta polymetallic project in Peru [MJ 28 May 2010].

In November 2011, the board of Canada-listed Iberian Minerals Corp (with mining tenements in Peru and Spain) recommended to shareholders that it agree to Trafigura acquiring all the shares in the company that it did not currently own (standing at around 48.3% of the company). Cormark Securities advised Iberian that Trafigura's offer was a fair and legal one.

A year later, Trafigura secured a US$400 million loan from a number of banks in the Middle East, to finance an increase in its local inventories [MJ 14 September 2012].

In mid-2013, Trafigura was cited in another controversy surrounding mining tranactions in DR Congo. The government claimed that ASX- and TSX-listed Tiger Resources was violating its condition that mining companies should not export copper and cobalt concentrates for smelting and refining outside the DRC. This move was intended "to stimulate miners to build smelting and refining facilities inside the country" [Mineweb 11 June 2011].

Tiger, which is the 60% owner and operator of the Kipoi copper/cobalt project in Katanga province, pointed out that it already currently sells over 80% of its concentrates from Kipoi to smelters within the country - ones controlled by Trafigura - "with the balance sold to the Chambishi smelter across the border in Zambia" [Mineweb, ibid].

In early 2014, Trafigura's Singapore unit agred to buy a 30% stake in a new copper smelter in Guangxi province, China, owned by the Jinchuan Group [MJ 28 February 2014].

In August 2014, Trafigura's subsidiary Unrion Holdings (Malta) Ltd built up its share-ownerhship of the AIM-listed EMED Mining Public Ltd (exploring in Spain) to 18.4% which, said Trafugra, was "for investment purposes" [MJ 19 August 2014].

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