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Anglo steps into copper trading as merchants, banks withdraw

In order to offer marketing support to its customers and suppliers, Anglo American Plc is planning to set up a copper trading book as many merchants and investment banks are moving away from physical trading, Metal Bulletin reported Sept. 27, citing Alexander Schmitt, the company's marketing executive.

The mining giant does not want to become another Glencore Plc, according to Schmitt, but plans a long-term marketing business to generate additional income while using existing capabilities to offer hedging, financing and supply optionality services, among others.

"One of the most obvious services is related to hedging activities," Schmitt was quoted as saying. "Not all customers or suppliers can manage price risk in the way we can, and with banks and other merchants withdrawing from the market, there's a service we can provide there."

The company is preparing for the future, as its expects mega-deposits such as Escondida to run out by 2030 while the global copper market will grow to 30 million tonnes from about 22 million tonnes currently.

Global copper supply will come from smaller mining companies as demand will grow and supply sources will become more fragmented.

"We're going to need to find efficient ways to bring that supply to market, and we can provide that service," Schmitt said. "For example, if you’re a mining company producing 100,000 to 200,000 [dry metric tonnes of copper concentrate] a year, does it really make sense to build your own marketing team, or does it make more sense to bring in a partner to handle it?"

In recent months, the mining major participated in mine tenders to build its third-party trading book and also brought in traders Keith Rowe-Wilson and Jorge Olivares to develop the trading business operating from London and Santiago.