Power of commodity trading Transfiguration He has been identified as the client behind Mineral resources' Malf $400 million prepayment agreement for iron ore. The Australian miner had already reported on the agreement in July, without revealing the identity of the client.
“Due to confidentiality restrictions, we cannot disclose the terms or the client with whom the transaction was conducted,” a Mineral Resources spokesman said. by Bloomberg report.
But according to people familiar with the matter, that client is Trafigura, one of the world's largest commodities traders, which has been aggressively expanding its activities.
Over the past decade, Trafigura's iron ore volumes have increased more than fivefold, reaching 31 million tonnes in 2022, driven by higher volumes at its Brazilian port and trade flows from Australia and India. by The semi-annual report.
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Advance payments are a common financing tool in the commodity sector, allowing traders to raise funds through advance payments to producers. These payments are often structured as interest-bearing loans, but are repaid through future deliveries of commodities.
In this case, iron ore deliveries from Mineral Resources to Trafigura are scheduled between 2026 and 2028, ensuring a stable supply chain for Trafigura for years to come.
Mineral Resources has been grappling with mounting debt, driven primarily by the development of its Onslow The company has built a mine and a new haul road. Over the past five years, its debt has increased from about $468 million to $2.95 billion. The company's iron ore projects have also faced higher production costs than other regional miners. As a result, its net profit margin currently stands at a modest 2.37%.
“We're throwing everything out the window just to make sure we can preserve the cash,” he said. Chris Ellisonchief executive of Mineral Resources, reflecting the company's cautious approach.
Meanwhile, the iron ore market is also facing challenges. The iron ore price recently fell below $100 per tonne, driven by weak manufacturing activity and continued concerns about China's property sector, signalling the market's reliance on the world's largest consumer of the commodity for steelmaking.
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