China’s CMOC says geopolitics helped drive Australia sale

Bloomberg News | December 7, 2023 

MINING IS NOT SUSTAINABLE

Northparkes operation. (Image from Northparkes’ Facebook page)

Chinese copper and cobalt miner CMOC Group Ltd., which sold a controlling stake in its Northparkes mine in Australia earlier this week, said a changing geopolitical situation was one of the reasons for the divestment.


A media representative for the company — confirming comments made by a CMOC official to local media on the sale — said those shifts and a challenging outlook meant it was unlikely to expand its operations in Australia, which ultimately limited future synergies.


Beijing’s relationship with the US and its allies has been fraying, with Washington attempting to build supply chains for ingredients crucial to the energy transition to lessen reliance on China. Australia and Canada have also taken measures to limit Chinese participation in their resources sector.

“Western governments have woken up to the risk that their supply chains of critical minerals could be cut off, or severely squeezed if China dominates supply,” said Grant Sporre, an analyst at Bloomberg Intelligence. That means “a tougher environment for further acquisitions,” especially in developed nations, he said.

CMOC, based in Luoyang in Henan province, agreed earlier this week to sell its 80% stake in the Northparkes copper and gold mine to Australian competitor Evolution Mining Ltd. for $475 million.

Along with peer Zijin Mining Group Co., CMOC has for years been at the forefront of China’s mineral expansion overseas from Africa to the Americas, building copper, cobalt and gold supply. Zijin said in August that it has slowed acquisitions due to high project valuations and geopolitical tensions.

Northparkes’ falling ore quality, meaning its lower metal content, also contributed to the sale, the media representative said, putting annual returns at 15% since the acquisition in 2013. The company has ample capital reserves and will remain open to global acquisition targets, he added.

Chile aims to be among world’s top three cobalt producers

Cecilia Jamasmie | December 8, 2023 

Capstone wants to create a mining district in northern Chile with the integration of its Mantoverde (pictured here) and Santo Domingo operations. (Image courtesy of Capstone Copper.)

Chile, the world’s top copper producer, unveiled this week an ambitious plan to become one of the three largest cobalt producing nations as it simultaneously boosts its lagging copper output.


Declining ore grades, water restrictions and pandemic-related disruptions have seen Chile’s production of the orange metal decline in recent years. That has helped offset a slowdown in demand amid inflation-fighting measures.

Despite the International Copper Study Group’s (ICSG) latest negative forecast, which calls for a 467,000 tonnes surplus next year in 2024, most analysts expect the opposite.

Copper is a key ingredient for the manufacturing of electric vehicles and green technologies and cobalt, also called “blue gold”, is a byproduct of the processing of copper and nickel ores.

For the Chilean government, jumping onto the cobalt wagon is “the next logical step”, Finance Minister Mario Marcel said in a presentation this week.

The economist noted that producing the metal would position Chile as a major supplier of battery metals, as the country is also the world’s second largest supplier of lithium.

Cobalt is used in almost every lithium-ion battery, which in turn power mobile phones, laptops, tablets, bluetooth devices, and even electric toothbrushes.

Getting to the top won’t be an easy task. The Democratic Republic of Congo (DRC) has long been the world’s largest cobalt producer, accounting for 73% of global output in 2022.

Indonesia is in the second spot, with production up more than threefold from 2,700 tonnes in 2021 to almost 9,500 tonnes last year.

According to the Cobalt Institute, the DRC’s dominance is projected to decrease to 57% by 2030 as Indonesia ramps up its cobalt production as a byproduct from its rapidly expanding nickel industry.

The DRC’s supremacy may also be threatened by Chile, according to Pilar Parada, Director of Universidad de Andres Bello’s Center for Systems Biotechnology (CSB UNAB).

Researchers and companies have already taken steps in that direction. Canada’s Capstone Copper (TSX: CS) is one of the companies working on creating a cobalt mining district in northern Chile. The company, born in 2021 from the merger of Capstone Mining and Mantos Copper, recently integrated its Mantoverde and Santo Domingo operations in the Atacama region.

The Vancouver-based miner has said that, in addition to producing 200,000 tonnes of the industrial metal a year, it aims at generating between 4,500 tonnes and 6,000 tonnes of battery-grade cobalt annually.

Chilean Cobalt Corporation, a US-based company, is also conducting exploration at its La Cobaltera cobalt project in the San Juan district of the Atacama region. The goal is to progress to the pre-feasibility stage by the second or third quarter of 2024.

The country is also looking at recovering cobalt from tailings. “Just by extracting the metal in the tailings, Chile could displace Indonesia to become the world’s second-largest producer,” Parada said in an October interview with Latercera.

According to a research commissioned by Chile’s state development office Corfo and the National Geology and Mining Service (Sernageomin), the country has the potential to produce 15,000 tonnes of cobalt from its tailings annually in the medium term.

Green cobalt

With the right technology, Chile could extract the mineral in a cleaner way and at lower production costs, experts say.

One of the methods under study is the application of biotechnology to reprocess tailings to recover cobalt.

This production method could also reduce the environmental risk currently posed by the mining tailings deposits, 86% of which are abandoned or inactive, according to a 2022 Sernageomin survey.

It would also mean additional funding for Chile. Given the potential production based on the current projects and production from tailings and mines, at $33,003 per tonne in November, the country’s annual income would be about $700 million at today’s prices.

Brazil says talks on compensations over Vale-BHP dam burst are halted

Reuters | December 6, 2023 |

October 2017 aerial image of the area affected by the tailings dam failure in Mariana, Minas Gerais, Brazil. (Photo by Vinícius Mendonça, courtesy of Brazilian Institute of Environment and Renewable Natural Resources (IBAMA).)

Brazilian authorities said on Wednesday that talks with miners Vale, BHP and their joint venture Samarco regarding additional compensation for a burst tailings dam in 2015 were halted since the firms did not present a new proposal.


There is still no date for the negotiations to resume as the companies, which own the dam that collapsed in the state of Minas Gerais have refused to submit a new proposal within a pre-established deadline, a group of state and federal government bodies said in a statement.

The dam collapse in the southeastern city of Mariana caused a giant mudslide that killed 19 people and severely polluted the Rio Doce, compromising the waterway to its outlet in the Atlantic Ocean.

The companies’ latest offer presented had “insufficient amounts for the proper reparation of the Rio Doce,” the statement said.

Samarco said it remains open to dialogue and continues to participate in negotiations of the agreement, “in order to move forward with a definitive and consensual solution, based on technical, environmental and social criteria.”

The companies, through the Renova Foundation, had allocated 33.38 billion reais ($6.81 billion) in reparations and compensations as of September.

($1 = 4.9032 reais)

(By Roberto Samora and Peter Frontini; Editing by Anthony Esposito and Kylie Madry)

State auditors recommend Freeport Indonesia be fined for smelter delays

Reuters | December 6, 2023 |

The construction of the smelter is part of the downstream program launched by the government. Credit: Freeport Indonesia

Indonesian state auditors have recommended the energy ministry fine Freeport Indonesia for delays in its plan to build a copper smelter, estimating that such a penalty could amount to $501.94 million, a report issued this week showed.


The Audit Board of Indonesia, known by its local language abbreviation BPK, made the recommendation as part of a summary of its audit results in the first half of 2023, which was submitted to parliament on Tuesday


PT Freeport Indonesia (PTFI), which mines copper and gold in Grassberg in Indonesia’s Papua, is operated by US miner Freeport McMoran, but the majority of its shares are owned by Indonesian state-owned company MIND ID.

The company is building a $3 billion copper smelter in East Java, but the project has faced delays.

Freeport Indonesia said the construction plan has been agreed with the government and the progress, which has reached more than 83% as of November, has been in accordance with the agreed plan targets.

“Regarding the delay fines, we continue to coordinate with the government,” said Freeport Indonesia’s spokesperson Katri Krisnati.

In a memorandum of understanding in 2015, Freeport agreed to build a copper smelter and placed a bond to guarantee the smelter construction in order to obtain an export permit.

Later on, in a December 2018 deal, Freeport and Jakarta agreed that the miner would complete the smelter within five years.

The smelter broke ground in 2021 after being delayed due to the Covid-19 pandemic and is scheduled to start production in mid-2024, before running in full capacity by end of next year.

BPK in its audit found that PTFI has not measured its smelter progress against its initial plan and argued this meant PTFI qualifies to be charged an administrative fine.

The energy ministry did not immediately respond to a request for comment. By law, officials must respond to BPK’s recommendations, though they are not always followed.

(By Bernadette Christina Munthe and Gayatri Suroyo; Editing by Kanupriya Kapoor and Chizu Nomiyama)

URANIUM
enCore Energy to sell 30% of Alta Mesa project to Boss Energy

Staff Writer | December 6, 2023 |

Rosita central processing plant (Image: enCore)

enCore Energy (TSXV: EU; NYSE American: EU) said on Wednesday it will sell 30% of its Alta Mesa project in South Texas to Australia’s Boss Energy (ASX: BOE) for $70 million.


enCore acquired the Alta Mesa project from Energy Fuels (TSX: EFR) in February 2023. The project has an annual production capacity of 1.5 million lb. of uranium oxide.

Boss Energy will pay $60 million in cash, invest $10 million into enCore shares at $3.90 per share, and loan the company up to 200,000 lb. of uranium oxide for enCore’s commercial use over the next year.

enCore will use the net proceeds from the deal, expected to be completed in February 2024, to accelerate its uranium production pipeline in South Texas and develop other projects.

“The accelerated production plan is designed to take advantage of what is projected to be a very strong uranium market over the next decade,” said enCore executive chair William Sheriff in a news release.

enCore will also establish a new unit to hold the Alta Mesa project and it will be jointly owned by the two companies.

The company officially became a uranium producer last week with the restart of the South Texas Rosita in-situ uranium central processing plant.

The Rosita plant is located about 60 miles from Corpus Christi, Texas, where enCore is headquartered. It has a capacity of 800,000 lb. of uranium oxide per year and the ability to expand capacity within the existing licence.

The company is anticipating its first shipment to occur over the course of the next 45 to 60 days. The uranium price has seen a relentless rise to $81 per lb. from under $50 per lb. at the start of the year as a gap between supply and demand emerges.

Shares of enCore rose 2.4% in New York on Wednesday morning. The uranium company has a market capitalization of $672 million.

Young Chinese spurn traditional investments in favour of gold

Reuters | December 5, 2023 |

Credit: Chow Tai Fook

Gold buyers in China are getting younger, as a property market downturn, weakening stocks and currency and low bank deposit interest rates have left them with dwindling options to save for rainy days in a sputtering economy.


The trend underscores heightening uncertainty about growth prospects in the world’s second-largest economy, which has not recovered from Covid-19 lockdowns as fast as consumers and job hunters had expected.

“The employment market has not been very good,” said Linda Liu, 26, who works for a pharmaceuticals company in Beijing, but worries about job stability. “Buying gold makes me feel better.”

“I want gold jewellery instead of diamonds for my wedding.”

China is the world’s top buyer of physical gold and analysts say this year it has been an increasingly important driver behind a rally in global spot gold prices, which hit all-time highs on Monday.

Analysts expect Chinese demand for the safe haven metal to remain high as economic growth grinds lower in coming years and foreign investment outflows weigh on the yuan, while the property market is still looking for a bottom.

“Incomes are not really appreciating, real estate is not really appreciating, the stock market is not really appreciating,” said Jacques Roizen, managing director of consulting at Digital Luxury Group in Shanghai.

“Gold is a little bit of a unicorn in this environment.”

Gold and silver jewellery have been among the best performing consumer goods in China this year, with a 12% rise in value year-on-year in January-October, outpaced only by garments, according to the latest retail sales data.

A Chinese consumer survey released by jewellery firm Chow Tai Fook in late October found 70% of consumers aged between 18 and 40 intend to purchase pure gold jewellery.

While China has long been a top global consumer of gold jewellery, Chow Tai Fook Jewellery Group managing director Kent Wong said that traditionally, customers in China have been older.


“We’ve found people aged 18 to 24 have started to buy gold jewellery, and we were very surprised by this,” Wong said.

Chinese social media discussions about steady gold accumulation abound, with users recommending small jewellery and marble-like gold “beans” as small as one gram that could be purchased even by those with low incomes for 450 to 550 yuan ($63 to $77).

Beijing student Nadia Qi, 21, has spent as little as she could of her pocket money on daily necessities while spending more than $2,000 on gold bars and jewellery so far this year.

“The only thing that I can trust and makes me feel relatively safe now is investing in gold,” said Qi, who plans to buy at least 20 grams a year for rainy days. “The deposit rate is way too low, and investing in the stock market is too risky.”

The one-year deposit rate at major Chinese banks ranges from about 1.5% to 1.8% and has declined in recent months.

China and India, the world’s two biggest gold buyers, together account for more than half of total global demand.

In China, gold trades at a premium to the global spot price. That spread has been $25 to $35 per ounce in the past week, down from a record high of $121 in mid-September, but still above its usual $5 to $15 range.

Office worker Yang, 38, from the central Hunan province, is not discouraged by the rise in gold prices, arguing “the yuan has been depreciating, financial investment is too risky … and the property market remains disappointing.”

“There are not many choices left,” said Yang, who only gave her surname for privacy reasons. “Gold is like hard currency, and this is especially true in the face of mounting geopolitical uncertainties for the moment.”

($1 = 7.1424 Chinese yuan renminbi)

(By Casey Hall and Amy Lv; Editing by Marius Zaharia and Jamie Freed)

Piedmont Lithium gets another extension amid North Carolina mine permit review

Reuters | December 5, 2023 |

Piedmont lithium project, North Carolina. Image from Piedmont.

North Carolina regulators have granted Piedmont Lithium’s request for more time to provide information needed to complete the state’s long-running review of the company’s mine permit application.


The proposed mine, if built, would become one of North America’s largest sources of lithium for electric vehicle batteries, but it has faced extensive opposition from neighbors worried about water, noise pollution and other potential problems.

Piedmont had been expected to provide North Carolina officials with information on 10 areas by the end of November. Company officials, though, asked in a letter dated Nov. 16 for the deadline to be extended by 180 days to May 24, 2024.

Piedmont said it needed the additional time to study the use of a synthetic liner, rather than a clay liner, for a waste rock pit that would touch heights of roughly 500 feet (152 m). North Carolina regulators, who approved Piedmont’s request on Nov. 21, have in recent years asked mining applicants to consider use of synthetic liners.

A Piedmont spokesperson said the company expects to provide the additional information well before May and it does not believe it will need more time to provide other information.

Piedmont first applied for the permit in August 2021. The state asked for additional information in October 2021 and in January 2022. The company’s deadline to respond to the January 2022 request was extended twice. In May 2023, state regulators asked for more information within 180 days; that deadline has now been extended through next May.

Piedmont’s failure to detail plans for residents of Gaston County, just west of Charlotte, prompted local officials to delay needed zoning changes.

During the North Carolina delay, Piedmont invested in Quebec-focused Sayona Mining and Ghana-focused Atlantic Lithium, deals that give it access to lithium from both companies.

(By Ernest Scheyder; Editing by David Gregorio)

Rescuers pull out first survivor of Zambia landslide that trapped 38 miners

Reuters | December 6, 2023 

Small-scale miners in Zambia. (Image courtesy of President Hichilema via X.)

Rescue workers in Zambia have pulled out the first survivor of a Dec. 1 landslide that inundated an open-pit copper mine and trapped at least 38 people who were working there without a permit, the disaster management unit said on Wednesday.


The rescue team also retrieved two bodies, which were yet to be identified, the Disaster Management and Mitigation Unit said in a statement posted on Facebook.

“A 49-year-old man has been rescued from the collapsed mine slug dump site in Chingola after being trapped with several other miners,” it said, adding that he was being treated in hospital.

Zambia’s president Hakainde Hichilema said on Tuesday he was still hopeful that the trapped miners were alive, as rescue efforts continued.

The miners at Seseli Mine in Chingola, about 400 km (250 miles) northwest of Lusaka, were trapped in three locations and heavy rains had flooded the pit, the government said.

The mine was previously owned by Vedanta’s Konkola Copper Mines (KCM) but is now in the hands of a local company that is yet to start mining operations as it awaits safety and environmental approvals.

It was still not clear how many miners had been trapped but Mines Minister Paul Kabuswe said on Monday 25 families had so far come forward to report missing relatives who were working when the accident happened.

Copperbelt Minister Elisha Matambo said on Wednesday more family members had come forward with claims of missing relatives, raising the number of those trapped to at least 38.

“We still have hope that we will find others who will be alive,” Matambo said during a media briefing.

Rescue workers, including military personnel and others from large-scale mining companies, were being cautious due to soft ground, slowing down the operation.

(By Chris Mfula; Editing by Bhargav Acharya and Mark Potter)

Deadly attack spurs plea for Peru crackdown on unlicensed mines

Bloomberg News | December 5, 2023 | 

Credit: Minera Poderosa SA

Mining executives in Peru are imploring authorities to crack down on escalating violence by informal miners, which this weekend cost the lives of nine staff members of a large, legal gold mine.


“Formal mining is under attack,” Angela Grossheim, the head of industry group SNMPE and a former minister, told reporters Tuesday. “Illegal mining today is the country’s main illicit activity, even bigger than drug trafficking.

Over the weekend, workers in a shaft at a mine run by Cia. Minera Poderosa SA were ambushed by explosives, bringing the number of deaths in clashes with informal miners at Poderosa to 16 in the past two years. Peru is a major gold and copper supplier, with the two metals attracting more informal mines made more lucrative by high prices and new techniques.

Conflicts have extended to some of Peru’s sprawling copper deposits, including Southern Copper Corp.’s Los Chancas project and MMG Ltd.’s Las Bambas mine. Both have struggled to develop new pits in areas that have drawn informal miners. The Los Chancas mining camp was burned down last year.

The industry is laying part of the blame on temporary permits known in Peru as Reinfo, a registry that allows informal miners to operate with some legal protections while they formalize operations. But the registry has been open for a decade and many workers have remained in the system without formalizing.

“It’s time to put a stop to this mantle of impunity,” said Poderosa corporate affairs manager Pablo de la Flor. He added that Poderosa has been in conflict with informal miners who are part of the Reinfo registry.

Poderosa is calling on authorities to send in the army at a site where hundreds of additional police officers have been deployed. The Lima-based firm has hired an additional 1,200 security guards just in the past few months.

(By Marcelo Rochabrun)

CRIMINAL CAPITALI$M

Bribery case snares man who held Trafigura’s secrets and purse strings

Bloomberg News | December 8, 2023 | 

Image: Trafigura

For years, one of the most powerful people in commodity trading has been a quietly spoken English accountant who is barely known outside his own company. But this week, Trafigura Group’s Mike Wainwright was thrust into the spotlight after being charged by Switzerland’s top prosecutor for allegedly bribing an Angolan government official.


Wainwright, who has spent his whole career at Trafigura and was a protégé of charismatic founder Claude Dauphin, might be the most senior commodity trader ever to be charged with corruption. Despite the industry’s reputation for brown envelopes and backhanders that goes back to the days of Marc Rich, very few of the most senior figures have ever faced prosecution.


If found guilty he’ll face up to five years in prison. He denies the charges.

An avid motor racer, Wainwright, 50, has avoided the public profile of some of the company’s top traders. But people who have worked with him at Trafigura say he has for decades been a hugely powerful figure — and one of the largest shareholders — at the company that ranks as one of the world’s biggest commodity traders.

The Swiss case against Wainwright and Trafigura highlights the growing desire of prosecutors to hold the industry’s top figures accountable for alleged corruption in a sprawling set of cases that have entwined most of the biggest traders. In the UK, prosecutors say they are weighing charges against up to eleven former Glencore Plc traders and executives after the company admitted to charges of paying numerous bribes over a period of years in multiple countries.

For Trafigura, the case coincides with the start of a generational shift in leadership. Wainwright, who held the title chief operating officer from 2008 until earlier this year, had already announced plans to retire next year. He is now on a leave of absence, although he remains an employee.

Both Trafigura and Wainwright intend to defend themselves against the Swiss allegations in court, the company said on Wednesday. A lawyer for Wainwright said he denied having “made, instructed or authorized payments with a corrupt intent.”

In recent years, while prosecutors in the US, UK, Switzerland and Brazil have brought a wave of corruption cases against large commodity trading houses, only a few mid-level traders have been charged with wrongdoing as individuals. Marc Rich freely admitted to having paid bribes in his heyday, but that was in an era of laxer laws on bribery — especially in Switzerland where many traders are based. The oil-for-food scandal involving kickbacks paid to Saddam Hussein’s Iraq in the early 2000s led to several prosecutions of individual traders, largely in the US, but not of the leaders of the world’s largest trading houses.

“We are revisiting the past with today’s eyes,” said Jean-Francois Lambert, a consultant and former banker to the commodity trading industry. “The outcome will be painful for trading houses.”
Employee 41

At Trafigura, Wainwright was formally responsible for the unglamorous side of commodity trading: the teams of logistics specialists and bookkeepers who work in the background to keep track of a company’s trades.

But his role was much more than that. He joined the company in February 1996, just a few years after it was founded by a group of disaffected former Marc Rich + Co. employees. Wainwright was employee number 41, and started as an accountant.

Over time, he became a favorite of founder Dauphin, who valued him for his loyalty and trusted him without question, say several people who worked with both men.

Wainwright was one of the only people inside Trafigura other than Dauphin who knew the ownership stake of each employee in the company, a privately-held partnership where each year employee-shareholders wait with baited breath to discover how many shares they have been allotted.

One former board member recalls how Dauphin and Wainwright would discuss the shareholding breakdown between themselves before presenting it to the rest of the management board as a fait accompli.

In a sign of his significance, it was Wainwright, along with chief executive Jeremy Weir and longtime head of oil trading Jose Larocca, who Dauphin chose to shepherd the company after his death in 2015. For years, Trafigura’s chief financial officer did not have a seat on the company’s board; but Wainwright, its chief operating officer, did.


The individual shareholdings of Trafigura executives are a closely guarded secret, but numerous current and former employees say that Wainwright is one of the company’s largest shareholders.

On Friday, the massive wealth generated by Trafigura for its top executives was underscored when the company said it paid $5.9 billion of dividends to its roughly 1,200 employee shareholders, after notching up another record annual profit.

While Wainwright has maintained a far lower profile outside of the company than Weir or Larocca, he received a rare moment of publicity when he bought a villa on Lake Geneva for just shy of 50 million francs ($57 million). And the wealth he has generated over the years at Trafigura has helped fund his passion for motor racing — he owns an endurance driving team and has competed in amateur versions of the famed Le Mans 24-hour race.
Personally approved

Wainwright is known inside Trafigura for his focus on numbers rather than relationships — almost a mirror image of his mentor, Dauphin, who relished striking friendships with business leaders and politicians and pursued new deals with a passion that sometimes obscured their dubious commercial logic.

He personally approved even relatively small expenditures – such as a subscription to an industry newsletter – making him unpopular among some in Trafigura’s ranks who bridled at having their spending pored over.

That oversight has also made him a target for prosecutors pursuing Trafigura’s alleged historical corruption. When Brazilian prosecutors accused Trafigura of corruption as part of the sprawling “Car Wash” probe in a civil case in 2020, Wainwright was named as a defendant. Prosecutors showed emails in which he approved payments – providing five-digit reference numbers for Trafigura’s books – that they say were used to bribe Petrobras officials.

A spokesperson said that Trafigura was not aware of any evidence that Wainwright or anyone in its current management had “authorized or had knowledge of improper payments to employees of Petrobras.”

And in Angola, Swiss prosecutors allege, Wainwright approved bank transfers and cash payments totaling around $5 million to the head of a unit of state oil company Sonangol.

Trafigura said it had been willing to settle the Swiss investigation out of court, but that now it would defend itself in court.

Still, Trafigura in a statement this week acknowledged past wrongdoing.

“We sincerely regret these incidents which breached our code of conduct and are contrary to our values,” CEO Weir said in the statement. “Our compliance policies and procedures have been externally reviewed and found to meet relevant legal requirements and international good practice standards. These historical incidents in no way represent the company we are today.” The company said it was close to a settlement with the US Department of Justice in relation to “improper payments” in Brazil.

In other trading companies, a settlement with US prosecutors has heralded a generational shift in management. For example, almost all of the top tier of Glencore’s management retired in the years leading up to the company’s settlement with the DOJ.

For Trafigura’s leadership, the charges come at a sensitive time, as the company is still dealing with the fallout after falling victim to a massive alleged nickel fraud. It also recently announced a reorganization of its top management, although Weir and Larocca remain its two most senior executives.

Trafigura does not expect any changes in its senior management as part of the settlement process, the company said in a response to questions on Thursday.

(By Jack Farchy and Archie Hunter)

Trafigura targeted by US and Swiss over corruption
Bloomberg News | December 6, 2023 | 

Trafigura office in Geneva, Switzerland. Credit: Trafigura

Trafigura Group and one of its longstanding top executives have been charged over allegations of bribing public officials in Angola, in a major blow to one of the world’s largest commodity traders.


Trafigura acknowledged the Swiss charges in a statement, and also revealed for the first time a US Department of Justice investigation into “improper payments” made in Brazil.

The charges are the latest in a series of actions from global prosecutors targeting corruption in the commodity trading industry, and the most serious so far against Trafigura, a leading oil and metals trader.

The charges against Mike Wainwright, who as Trafigura’s chief operating officer has for a decade formed part of the top trio running the company, make him the one of the most senior commodity traders ever to be charged for corruption.

Trafigura’s top competitors Glencore Plc and Vitol Group have in recent years both agreed to pay fines to settle wide-ranging US investigations into corruption, but until now only a few, largely mid-level individuals have been charged in those cases.

The energy crisis over the past two years has raised the profile of companies like Trafigura, Glencore and Vitol in global capitals, as politicians realize they are reliant on commodity traders to secure supplies of essential resources. But it has also heightened scrutiny of an industry that has since the days of Marc Rich had a reputation for corruption and wrongdoing.

For Trafigura, the charges follow a series of setbacks that have pressured its leadership and fueled tensions among the senior ranks — including having fallen victim to a massive alleged nickel fraud. The group, which is preparing to report results for its latest financial year, recently reorganized its top management and has been wrestling with the future of its metals business. Still, the company continues to reap huge profits from its energy divisions.
Cash payments

In a statement Wednesday, the Swiss federal prosecutor’s office said that Trafigura, through its unit Trafigura Beheer BV, failed to take necessary organizational measures to prevent the payment of bribes in Angola between 2009 and 2011.

The trading house paid €4.3 million euros ($4.6 million) to a bank account in Geneva and made cash payments of $604,000 to an Angolan official between April 2009 and October 2011 in relation to its activities in the country’s petroleum industry, the prosecutor said in the statement. It also paid hotel and meal expenses of 797 Swiss francs ($911) for a stay in Geneva.

In return, the Angolan official, the former chief executive officer of a subsidiary of the state oil company Sonangol, favored Trafigura in shipping contracts, the Swiss prosecutor alleges. Trafigura’s alleged profits from those contracts amount to $143.7 million.

Under Swiss law, Trafigura faces penalties equivalent to the total illicit profit plus a fine of up to 5 million francs — or around $150 million in total. That compares to net profits of $5.5 billion reported by Trafigura in its latest half year accounts.

Trafigura said it expects to resolve the DOJ case “shortly” and has made a $127 million provision in its 2023 financial year accounts.

It said that the investigations related in part to statements made by former Trafigura executive Mariano Ferraz as part of a plea agreement following his conviction in a separate case in Brazil. Ferraz was charged with corruption and money laundering as part of the Petrobras Carwash probe, while Trafigura and several of its senior executives have been accused of corruption by Brazilian prosecutors in a civil lawsuit.
Court defense

Trafigura said it had been willing to settle the Swiss investigation out of court, but that now it would defend itself in court. It said Wainwright rejects the Swiss charges and will be mounting a court defense.

“We sincerely regret these incidents which breached our code of conduct and are contrary to our values,” Trafigura CEO Jeremy Weir said in the statement. “Our compliance policies and procedures have been externally reviewed and found to meet relevant legal requirements and international good practice standards. These historical incidents in no way represent the company we are today.”

If Wainwright is found guilty, he faces a potential fine or a maximum of five years in prison. Trafigura earlier this year announced his planned retirement in March 2024, but he has now handed over his responsibilities and is on a leave of absence to focus on his defense, according to a person familiar with the matter.

The Swiss attorney general’s office stressed in today’s statement that this is the first time that a case against a company for alleged bribery of public officials has ever been sent to the country’s top criminal court.

Swiss indictments of companies are rare and convictions even rarer. The last major Swiss company to be convicted of a crime was Credit Suisse Group AG for failing to prevent money laundering. It was one of a series of scandals that befell the bank, which collapsed, and was bought by UBS Group AG less than a year later.

(By Jack Farchy and Archie Hunter)