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Aurex Insights: APAC Bulk – Sep 2021

Welcome to Aurex Group's Asia monthly snapshot for metals and bulks commodities where we highlight some of the factors and events influencing the industry for businesses and talent. In this issue, our specialist discusses some of the Spinoffs, Split offs and Disposals changing the landscape of the industry. We also take a look at developing hiring trends and recent talent movement across the metals and bulks community.

What people are talking about

Olam international announced this month that it would list its Food ingredient business (OFI) in London and have a concurrent listing in Singapore by the first half of next year. Will this decision be a boon for the UK market which has otherwise been sluggish in attracting big companies? Further, Olam is in the process of restructuring its business into 2 components – OFI (cocoa, coffee, and edible nuts) and OGA (grains, animal feed, edible oils, rice & cotton). Will this restructuring maximize the company’s long-term growth potential, including a potential IPO for OGA?

Dongying Fangyuan, China’s largest private copper smelter has filed for bankruptcy. Their bankruptcy does not come as a surprise as they were hit by several lawsuits last year by several trading houses and banks due to unpaid debts. Some of these banks included China Development Bank, Bank of China, Everbright Bank, Bank of Communications, Citic Bank, Maybank, and ABN AMRO. ABN AMRO has one of the biggest exposures at $40 million USD to this company. What will be the short- and long-term repercussions of this bankruptcy? Will the auction of their current assets be adequate to pay off debtors?

Fortescue Metals Group & Tsingshan Holding Group are slated to invest $12 billion USD and $30 billion USD respectively to build an industrial estate for metal smelting in Borneo, Indonesia. The large estate will focus on smelting iron ore, nickel, and copper ores. The project is estimated to take a decade to complete with more than $100 billion USD as a projected investment. With Indonesia already being the top nickel producer and attracting EV companies, will the country experience a further boom with such a large-scale investment? Will this in turn spur a large demand for talent in this part of the world?

Cargill along with Bunge and ADM have reported strong quarterly profits after benefitting from rising export demand as well as high prices of commodity crops. Will the ABCDs of agriculture continue to do benefit from this, this year? Are large pay-outs in terms of dividends expected to shareholders? Will these players follow the same route as Glencore paying out $2.8 billion USD to its shareholders this year?

BHP is to sell its oil and gas business to Woodside Petroleum at an estimated $17 billion USD. Will this sale make the miner even more reliant on iron ore? Will its portfolio become less diversified than its rivals Rio Tinto and Anglo American? Will they downsize their staff globally because of this?

What we are currently working on

  • Trade Structured Finance Manager, Singapore

  • Operations Analyst (Metal Investments), Singapore

  • Trade Structured Finance Manager, Shanghai

  • Junior Metals Trader, Shanghai

  • Junior Agri Trader, Shanghai 

  • Coking Coal Analyst, Shanghai

  • Carbon Trader, Europe

  • Environmental Products Trader, Europe

If you are interested in any of these roles, please reach out to us via the contact details at the end of this newsletter. 

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Spinoffs, Split offs, Disposals - What do these mean for hiring? 

Some interesting commodity spinoffs in the past year have included Glencore Plc into Glencore Agriculture, which was later re-branded as Viterra as well as Anglo American spinning off its thermal coal unit into Thungela Resources. During a spin-off, the shares of the parent company and the subsidiary are distributed among shareholders. Shareholders benefit from having stock in two companies for the price of one. Further, the parent company will use its own resources to set up the new entity, which is usually profitable on its own but not compatible with the parent company’s core competencies. This way, the parent company, and the new subsidiary can focus on separate goals while still reaping the benefits of a symbiotic relationship. 

A split-off is similar but the shareholders of the parent company must choose between keeping stocks in the company or its subsidiary. Split-offs are done to offer more value to shareholders as the parent company can shed or transfer its assets for stock capital while offering a new company to shareholders. A notable example of this was LG Chem splitting off its battery business into LG Energy Solutions to raise funds and go public to raise funds for its expensive expansion plans. 

When a company decides to get rid of a particular business such as BHP with its oil and gas unit, that is known as disposal or exit. A complete exit is usually in the form of a sale to a third party and the consequence of this would be a narrower portfolio as well as increased reliance on whatever commodities are currently in the basket. In BHP’s case, it is likely that the exit from petroleum will make the business heavily exposed to iron ore and perhaps moderately exposed to its other smaller units such as potash, nickel, and copper. 

What do these 3 strategies mean for the hiring scene? In all these 3 instances, resources around talent must be rearranged, diverted, or completed axed. In the case of BHP, it is likely the company’s demand for talent related to petroleum will fall or be redistributed to other areas of the business such as potash or be culled entirely. In the case of a profitable spin-off or split-off, demand for hiring related to the subsidiary will increase. Aurex Group works closely with the market and specializes in shuffling talent across businesses, products, and functions. Those who see themselves being directly impacted by such strategies are welcome to approach us for long-term career advice and prospects.

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Market Moves

  • Jason Dobson has joined Morgan Stanley as a Metals Trader, previously Head of Derivatives Trading at UD Trading.

  • David Cox has joined ENGIE in Singapore as a Gas and LNG Trader, previously a Coal Trader at Suek.

  • Wang Chunjiang has joined Yuyuan as GM Singapore, previously Lead Analyst – Solid Fuels at Argus.

  • Krystle Liew has joined Citi in a Commodity Sales role, previously in a similar position at JP Morgan.

  • Saurabh Sharma has joined DRW as Portfolio Manager, previously from ECTP as Head of Metals and Bulks Trading. Amir Ravan has recently left in a Portfolio Manager position.

  • Yibin Shen has joined ICBC bank as Metal Sales Manager, previously at Shenyin Wanguo as Business Development Manager for Metals.

  • Nikita Kabanovs has joined Rio Tinto as Principal Structuring, previously from Global Green Path as Director.

  • Cheryl Bowler has joined Hartree as Senior Originator, Environmental Products, previously Principal Consultant at Northmore Gordon.

  • Peter Wang has joined Fosun in a Commodity Finance role, previously working with CBA as Director – Commodity Finance.

  • Adain Leung has joined Societe Generale having previously worked at OCBC as Associate Director, Commodity Finance.

  • Xin Yuan has joined Santander in an STF position in Hong Kong, previously Associate, Energy and Project Finance at Societe Generale.

  • Jenny Chen has joined ICBC Standard Bank as Physical Commodity Risk and Operational Risk Assurance Manager, previously Business Development Manager at Henry Bath.

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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Alex Kerr
Director

Aurex Singapore Pte Ltd

alex@aurexgroup.com | +65 9007 2185

12 Marina View, #11-01 Asia Square Tower 2, Singapore 018961

EA 18S9493 | R1328009