What people are talking about
China has recently launched its emissions trading system which allows firms to buy the right to pollute from others with a lower carbon footprint. While this system serves as an important tool to reduce greenhouse gases and help go carbon neutral, will this be a quick fix to China’s pollution problem? Or will it take decades before the country’s biggest polluters stop polluting?
Glencore settled with a USD $9.85 million payment to resolve an antitrust lawsuit accusing them of monopolizing the zinc market. Zinc buyers accused Glencore and Pacorini Metals of colluding for 6 years to make sure there were long queues in the front of their physical warehouses. This allowed Glencore to receive higher storage fees and command increased premiums. Is this settlement enough to warrant the years of monopolization? Also, is this an effective deterrent for other trading shops who wish to undertake such methods to rig the market?
Nickel prices continue to climb, hitting USD $19,500 per tonne. This boost in price is sustained by demand from steel mills and electric battery makers primarily. Will this trend be sustainable and hence boost demand for nickel related roles on the market? Or will over-production in Indonesia tip the market into over-supply and hence decreasing nickel prices?
Mercuria is aggressively ramping up its energy transition business and is rapidly picking up employees from BP and Shell. They have picked up at least 5 senior employees from BP and 2 from Shell. These hires indicate urgency in the energy sector to employ people with prior knowledge of carbon trading and the renewable fuels market. Will we see this trend continue with other trading houses through the year and into 2022?
Jiangxi Copper, one of China’s biggest copper producers, is to invest USD 1.7 billion in a two-phase project to make copper foil for lithium batteries. Phase 1 of this project will start by the end of 2023 and full production of phase 2 is expected by the end of 2028. Will this project trigger a massive avalanche of hiring in the copper space, creating even more demand than there is now for personnel with copper expertise? On top of commercial and trading roles, will there be a demand for technical and engineering roles related to this metal?
What we are currently working on
Coal Trader, Russia
China Dairy Commercial Manager, China
Structured Finance Manager, Singapore
Commodity Structuring Manager, Singapore
Structured Finance Origination SEA, Singapore
Ferrous Sales Manager, Singapore
Junior Trader, Shanghai
Junior Trader, Singapore
Coal Analyst, Shanghai
If you are interested in any of these roles, please reach out to us via the contact details at the end of this newsletter.
Copper’s role in the low carbon economy
Copper is a very important metal in the energy transition many companies are embarking on. Copper is strategically perhaps more important than oil as decarbonization of transport and industrial fuels through electricity requires a lot of copper. An electric car, for example, contains five times more copper than a car with a traditional combustion engine. Aluminium is a good substitute, although it does not have the same thermal and electrical conductivity as copper. To truly decarbonize, the International Energy Agency predicts that the market for critical minerals, mainly copper, must grow seven times in the next decade. This level of supply will support the photovoltaic systems reliant on copper for solar energy, wind turbine production, energy storage as well as the electric vehicle production.
However, with that said, there are several challenges associated with sourcing copper. One of the main difficulties involves going to difficult parts of the world to mine this product. Several copper mines are in hard-to-reach areas without the proper infrastructure to transport and export the metals globally. This would mean, companies involved, would have a very high capital-intensive outlay in the exploration and procurement process. This investment is only possible if prices rise high enough to support such initiatives.
Glasenberg once said that copper prices need to hit USD $15,000 per tonne to encourage companies to go on this journey. Further, aging mines in countries such as Chile need an additional investment of a few billion to keep an annual steady output of 1.6 to 1.7 million tonnes per year. Also, major billion-dollar copper projects such as the recent Jiangxi Copper one can take 7 to 10 years to take complete fruition. Even if the mining industry is tempted by the high prices, it might be too late to prevent large supply deficits from happening later in the decade.
What does this mean then for the low carbon economy as a whole? Copper continues to play an integral part in the existing system and its dominance is likely to rise with time. We can expect to see a huge surplus in roles related to technical and metallurgical functions, engineering functions– very specifically related to mining infrastructure in complex terrains, and analyst functions for this metal. Further, on top of physical traders, we can expect a lot of firms diving in to seize arbitrage opportunities and it is likely demand for paper traders will increase in the next year. We expect demand for hiring in this space to remain positive and potentially be at a level where there is more demand than supply in the labour pool.
I hope you enjoy our latest market insight for metals and bulks commodities. For a discussion around recent mandates, compensation, or other hiring trends, please do not hesitate to get in touch.
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