Citi and Mecuria settle China metals financing dispute
Citi and Mercuria, the Swiss-based commodity trader, have settled a long-running legal dispute over a $270m metals financing deal that went sour in China.
“Citi and Mercuria are pleased to confirm that they have reached a commercial resolution in respect of all issues between them relating to the historic base metal transactions in Qingdao and Penglai. This brings to an end the legal dispute between them,” the US bank said in a statement, reports Neil Hume in London.
The dispute between centres on metals-backed sale and repurchase transactions that were made in 2014.
Under a “repo”, a trader sells metal to a bank with an agreement to buy it back at a later date for a slightly higher price. The difference is effectively interest.
Mercuria and Citi were in the midst of several of these deals when the Chinese authorities sealed the ports so they could start to investigate claims of fraud involving a company called Dezheng Resources.
The warehouses have been in lockdown ever since and neither party has been able to assess their exposure to the alleged fraud.
Last year, the High Court in London said Citi could not reclaim $270m it lent to Mercuria in the deal. But in a complex ruling, the court also found that Citi had been within in its rights to demand early repayments of the loans.
This set up the prospect of further legal action with Citi saying it would seek compensation from Mercuria for failure to safeguard the metal once “further facts” had been established.
Citi did not disclose the details on Monday’s resolution.
Mercuria could not be immediately reached for comment. The company, one of the world’s largest commodity traders, took more than $200m of charges and provisions in its last fiscal last year.
http://ift.tt/2h2YRHW
Israeli billionaire Steinmetz detained over bribery allegations
Beny Steinmetz, the Israeli billionaire, has been detained by police for questioning in Israel, the mining group BSG Resources said in a statement on Monday, relating to bribery allegations it described as “baseless”.
“This development is in the aftermath of ongoing and what BSGR believes to be obsolete investigations surrounding bribery and corruption against BSGR which were initiated by the Government of Guinea since Alpha Conde came to power in 2011 to expropriate its assets,” the company said. BSGR identified Mr Steinmetz as an adviser to the company, adding:
BSGR has repeatedly demonstrated that these allegations of bribery are not only baseless, but are a systematic attempt by the current Government of Guinea to cover up the endemic corruption which has blighted Guinea.
The company said it would provide updates.
The Israeli investigation concerns the same allegations that have triggered corruption probes in Guinea, Switzerland and the US.
A two-year inquiry in Guinea concluded in 2014 that BSGR, the mining arm of Mr Steinmetz’s business empire, won rights to half of the Simandou iron ore deposit in the west African nation by paying bribes. BSGR has always denied wrongdoing.
Earlier on Monday, Israeli police said they had detained an unnamed businessman in connection with a large-scale international corruption case in Guinea. Israeli police said their investigation was being done in cooperation with law enforcement authorities in the US, Switzerland, and Guinea, as part of an international effort led by the OECD against the bribing of public officials worldwide.
In Israel, criminal suspects are not normally named until they have been formally charged.
http://ift.tt/2h384kW
Trafigura hit by Angolan shake-up of fuel imports
Angola is set to become a key battleground for the world’s biggest commodity traders as Sonangol, the African country’s state-controlled oil company, seeks to inject much greater competition into fuel imports.
The move will be a blow to Trafigura, the Swiss-based commodity trader that has enjoyed a near-monopoly over the supply of fuel to Angola for more than a decade.
Angola, which has become one of Africa’s largest energy markets since the end of a long-running civil war in 2002, is attractive for oil traders because the country lacks local refining capacity and has to import about 80 per cent of its fuel.
Isabel dos Santos, chair of Sonangol, told the Financial Times that the company was planning to overhaul the way it buys petrol, diesel and cooking gas.
She said Sonangol, which has been hit hard by the oil market downturn and is scrambling to raise cash, would hold tenders for all its imports next year in an effort to reduce its fuel bill and boost profits.
“My vision is to make Sonangol very profitable,” said Ms dos Santos, the billionaire daughter of José Eduardo dos Santos, Angola’s president.
“For that, one thing that I have to do is make sure . . . that we acquire products at the most competitive prices. We want to increase competitiveness, increase the quality and decrease prices.” Trafigura declined to comment.
Ms dos Santos, often described as Africa’s richest woman, was named chair of Sonangol in June by presidential decree and charged by the company’s board of directors with restoring its “financial sanity”.
Sonangol has to find about $170m a month to finance its purchases of refined oil products but it has been struggling to make payments because of difficulties obtaining foreign currency.
Ms dos Santos said Sonangol had begun discussions with new suppliers of fuel. These are understood to include Vitol, the world’s largest independent oil trader, which has started to import some petrol and cooking gas into the country.
Analysts estimate that Angola’s fuel needs have increased fivefold in the past decade, reaching about 160,000 barrels a day this year.
Since her appointment as Sonangol chair, Ms dos Santos has moved to restructure the company, slashing operating costs and capital expenditure.
Ms dos Santos said Sonangol would not put any more cash into Puma Energy, a fast-growing fuel storage and petrol station business that it has invested in alongside Trafigura.
“When we look at the amount of profit and revenue generated by the company it didn’t justify capitalising it any further,” she added, explaining a decision to shun a recent $500m fundraising at Puma, which is based in Switzerland and has substantial operations in Africa.
“Our hope now is to see a future for Puma where it will become more attractive to investors,” said Ms dos Santos, who would like to see Puma take a stock market listing.
In 2013, Sonangol increased its stake in Puma from 20 per cent to 30 per cent, a deal that placed a $5bn valuation on the company.
http://ift.tt/2h35Uln
Craft beer sales slip after record US hop revenue
US hop farmers have celebrated record revenues from their crops in 2016 as they planted more acres despite signs that the craft beer boom, which has boosted demand for the key brewing ingredient, may be peaking.
The value for the year’s hop crop soared 44 per cent this year from 2015, totalling just short of $500m, according to the US Department of Agriculture. “Higher hop acreage and production” and the continued trend to shift hop production to more expensive varieties favoured by craft beer makers were behind the jump, said the USDA in its latest report on hop output.
Craft brewers use four-to-ten times more hops than the amount used in the average lager produced by multinational brewers, and the surge in popularity for microbrews, which are high in flavour and aroma, has pushed up demand and prices for certain speciality hops. Nevertheless, as farmers push to plant more hops, US consumption of craft beer may be slowing.
Sales of craft beer at retailers fell 0.4 per cent in the four weeks to early December from the same period last year in volume terms, according to a UBS report on figures from Nielsen, the consumer data group.
Nielsen’s so-called “off-trade” data, which cover about two-thirds of the overall US beer market, showed that sales for the 12 weeks to early December fell 1.5 per cent while rising 4.2 per cent for the 52 weeks.
In certain US cities, especially those on the west coast, craft beer consumption has reached almost 50 per cent of the market, said Michael McDougall at Société Générale in New York. “It appears that craft beer could be reaching a saturation point,” he said.
Despite some analysts’ forecasts of “peak craft”, many growers have remained bullish, as certain specialty “aroma” hops, popular among craft brewers, still command high premiums. Prices were also pushed up by lack of supplies last year after dry weather in both Germany and the US, the leading exporters of hops, hit output.
According to the USDA, US farmers planted 17 per cent more acres in 2016 compared with the year before, with production at a record 87m pounds — up 11 per cent. The price per pound rose 31 per cent to $5.72.
Hop experts are urging caution about further expansion of production. US sales of craft beer, which rose 18 per cent in 2013 and 2014, have fallen 8 per cent in the first six months of this year, according to the Brewers’ Association.
Earlier this year, the Hop Growers of America highlighted the cyclical nature of hop demand, with Ann George, executive director, noting: “We have seen the downside of this market before due to oversupply.”
http://ift.tt/2hhJCZ7
BP takes $2.4bn stake in Abu Dhabi oilfields
BP has agreed a $2.4bn deal to buy a stake in Abu Dhabi’s largest oilfields, in the latest sign of the UK oil group replenishing its portfolio after years of retrenchment.
The investment will give BP 10 per cent of the Abu Dhabi Company for Onshore Oil Operations and its production, which stands at 1.66m barrels of oil a day, for the next 40 years.
BP is the second western oil major to secure a stake in the ADCO concession after Total of France acquired 10 per cent last year.
The Abu Dhabi government has been trying to secure new partners for its onshore oilfields since the expiry of a previous long-term agreement with BP and Total as well as Royal Dutch Shell and ExxonMobil in 2014.
Striking deals became more difficult for Abu Dhabi after the collapse in crude prices later that year led oil companies to rein in investment.
However, the recent rebound in prices above $50 a barrel has restored a measure of confidence to the industry, supported by a proposed cut in output by the Opec producer nations, including the United Arab Emirates.
In the past month, BP has given the green light to a $9bn development of the next phase of its Mad Dog oilfield in the Gulf of Mexico and agreed to buy a 10 per cent stake in Egypt’s giant Zohr gasfield from Eni of Italy for $375m.
Together, the deals suggest BP is beginning to refocus on growth and portfolio renewal after shedding $40bn of assets since 2010 to cover its liabilities from the Deepwater Horizon oil spill.
Bob Dudley, BP chief executive, said the Abu Dhabi agreement would “provide BP with long-term access to significant and competitive resources that we already understand very well”.
BP said it would issue 392.9m new shares — about 2 per cent of the group’s share capital — to the government of Abu Dhabi at a price of £4.47 each. This valued the deal at £1.76bn, or £1.92bn based on BP’s share price of £4.90 on Friday.
The ADCO concession, including the Bab, Bu Hasa, Shah and Asab fields, has total resources of between 20-30bn barrels of oil equivalent over the term of the concession, which expires at the end of 2054.
Sultan Ahmed Al Jaber, chief executive of Abu Dhabi’s onshore operating company, said the BP deal was a milestone in efforts to secure the technology, expertise and financing needed to maximise the value of the ADCO resources.
As well as its deals with Total and BP, Abu Dhabi has sold stakes of 5 and 3 per cent respectively to Inpex of Japan and GS Energy of South Korea. The government has said it wants to sell 40 per cent of the concession, meaning 12 per cent remains available.
http://ift.tt/2hxrMEr
Yemen wheat traders raise fears about imports
Yemen’s humanitarian crisis is set to deepen in the coming months as domestic wheat traders warn that they can no longer afford to import the war-ravaged country’s main staple.
Two of the impoverished state’s main wheat traders have written to the authorities in rebel-held Sanaa to inform them that they can no longer import wheat because local banks cannot convert Yemeni riyals into hard currency, according to letters seen by the Financial Times.
For Yemen’s 25m population, bread is the staple diet and 90 per cent of wheat has to be imported via three ports — Aden, which is controlled by the Saudi-led coalition, and the Red Sea ports of Hodeida and Salif, which are under rebel control.
The deteriorating humanitarian situation and more than 10,000 civilian deaths has intensified criticism of the Saudi-led coalition, which launched a military campaign in March 2015 seeking to restore the elected president, Abd Rabbu Mansour Hadi, who had been ousted by Iran-allied Houthi rebels and military units loyal to former president Ali Abdullah Saleh.
One of the trading companies, owned by the Fahem Group, has been lobbying UK parliamentarians, including Keith Vaz, chairman of the parliamentary group on Yemen, seeking a solution to free up dollar funds so traders can resume shipments and ward off the prospect of famine. “Surely food has to be a neutral issue,” said a Fahem spokesman.
The Fahem Group has one 50,000 metric tonne vessel waiting to discharge at the Red Sea port of Salif and another 30,000 tonne ship at nearby Hodeida. Wheat stocks in the country are estimated to be sufficient for no more than two months. “So these are literally the final shipments of wheat into Yemen for the foreseeable future,” said the Fahem spokesman.
Traders, who need $12.5m to fund a single 50,000 metric tonne shipment, have relied on the central bank to guarantee an exchange rate on staples such as wheat and rice, allowing traders to change riyals into dollars to purchase commodities abroad.
Fahem says it has lodged Yemeni riyals for seven shipments valued at about $100m, or most of its trading capital, but has not received dollars yet.
The central bank’s assets have declined to less than $1bn, and the institution was already struggling to fund food imports before the Hadi government in September announced it was moving the bank to Aden from Sanaa.
“The move seems to have compounded these problems, with traders saying they have no clarity on the availability of foreign exchange and no guarantees on currency stability,” said Peter Salisbury of Chatham House.
The coalition has defended moving the central bank to Aden, saying the Houthi/Saleh alliance has been plundering the bank’s coffers to fund the war.
The central bank’s move to Aden has also led to months of non-payment of salaries to more than a million Yemeni civil servants, deepening the food crisis and further closing down a health system that is on the verge of collapse, with fewer than one in three of the population having access to medical care.
The UN says half of all Yemenis already do not have enough food, with almost 18.8m people in need of urgent humanitarian assistance.
Rising prices of food, fuel, water and medicine have combined with the closure of half the country’s medical facilities to trigger a humanitarian crisis. Almost 2.2m children in Yemen are “acutely malnourished” and 462,000 suffer from severe acute malnutrition, a four-fold increase since 2014, according to Unicef.
Hunger is acutest in the rugged northern regions that form the powerbase of the Houthi movement. In these mountain provinces, stunting — delayed growth in children caused by chronic malnutrition — affects eight in 10 children, he said.
“We are all struggling to bring life-saving supplies to reach all corners of the country,” said Dr Sherin Varkey, Unicef’s deputy representative in Yemen. “The international community needs to recognise the urgency to respond in Yemen.”
http://ift.tt/2hO27bN
Strong dollar and rising rates take toll on gold
A one-two punch of a surging US dollar and rising interest rates sent the price of gold tumbling to its lowest level since February on Thursday, hurting the shares of miners and spurring hefty liquidations of exchange traded funds that track the metal.
The price of gold in New York fell as much as 1.8 per cent to $1,122 an ounce, as the dollar rose across the board, with the euro and yen each falling more than 1 per cent. Shares of gold miners retreated as the precious metal extended its retreat from July’s peak of $1,366 an ounce.
While gold remains up 6 per cent for the year, that marks a near-collapse for a metal that in July was sitting on a gain of 30 per cent. Although typically a haven in times of turmoil, gold provides no yield for investors, which makes it a less attractive investment compared with other assets that offer income streams when interest rates increase.
A firmer dollar and higher US borrowing costs — after the Federal Reserve nudged its official overnight rate up on Wednesday and signalled further increases during 2017 — has compounded the selling pressure on gold, with the market primed for further liquidations from ETFs.
Ole Hansen, head of commodity strategy at Saxo Bank, said after the Fed meeting on Wednesday: “Investors trading gold through exchange traded products reduced holdings by 22 tons, the biggest one-day reduction since July 2013.”
He added: “Some consolidation can be expected sooner rather than later, with the dollar currently approaching overbought territory while bonds and gold are all increasingly oversold.”
Having helped propel the price of gold sharply higher earlier this year, ETFs are seen weighing on prospects for the sector. Fears over the health of the global economy that dominated the start of 2016 helped gold ETFs draw in about 85 tonnes a month in the first half of the year, the largest inflows since the 2008-09 financial crisis.
The GLD ETF has had outflows of $3.8bn since Donald Trump was elected US president last month, with its price dropping 12 per cent over the period.
Commodity strategists at Citigroup said: “The typically lagging ETF sector may see outflows continue to be a source of selling pressure in the months ahead, especially in light of the current macro dynamics that is favouring inflows into equities, a rotation out of government bonds leading to a back-up in yields and a strong dollar.”
Some of the mining companies were hit hard, with Barrick Gold shares falling 4 per cent. Gold Fields Limited was down 5.1 per cent, Harmony Gold Mining dropped 5.25 per cent, Agnico Eagle Mines was off 5.1 per cent and Eldorado Gold fell 4.7 per cent.
On Wednesday, the US central bank initiated the first increase in its overnight benchmark interest rate since last December, and hinted that three other rate rises could be forthcoming in the new year. That is up from a previous forecast of two.
http://ift.tt/2gFLhXf
Langganan:
Postingan (Atom)