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Arabian Business
14-07-2025
- Business
- Arabian Business
Securing resources as trade continues to become more regional
There's no shortage of ambition when it comes to clean energy. Net-zero targets are everywhere. Capital is flowing into renewables. Technologies are evolving fast. But those ambitions are now coming up against a tough reality: the global trade system that once quietly enabled the clean energy shift is splintering. The old assumption that global supply chains would always deliver what was needed, when it was required, is looking shakier by the day. As the world is more committed than ever to decarbonisation, basic materials needed to get there are suddenly harder to secure. That mismatch is prompting a rethink at every level about how countries and companies go about getting hold of the resources they need. From copper and lithium to natural gas, the playbook is being rewritten. In general, three strategies are emerging. One is the revival of government-to-government deals to lock in supply. Another tries to localise supply chains entirely, which is ambitious, but often impractical. The third, and increasingly the most crucial, leans on the agility of commodity traders to find workarounds in a fractured market. Spotlight on traders Not everything can or should be solved at the state level. That's where commodity traders have become increasingly vital. Long seen as background players, these firms are now operating closer to the centre of the action. What makes them so effective is precisely what they're not: they're not governments, they're not bogged down in bureaucracy, and they're not tied to national agendas. When supply routes seize up or politics interferes, traders often keep the system running. They're evolving fast. Companies like Mercuria and Trafigura are moving beyond deal-making. They're beginning to buy stakes in infrastructure, acquiring refining assets, and in some cases even owning upstream production. That's a big shift: from middlemen to fully integrated players. One firm illustrating that shift is BGN International, the Geneva-based trading arm of Bayegan Group. As a major private commodity trader and one of the largest buyer of LPG from the US, BGN has traditionally played a crucial behind-the-scenes role, moving over 50 million tonnes of commodities a year. Today, they are stepping closer to the physical assets that underpin trade. Its recent acquisition of two mid-sized LPG tankers gives it a stronger foothold in gas shipping. In a world where flexibility and access are everything, it's a strategic move: part logistics play, part supply chain insurance. It shows how today's traders have evolved to be more than intermediaries; they're becoming builders of the very systems that keep energy moving. Africa, too, is a space to watch. With the African Export-Import Bank backing a US$3 billion facility to encourage intra-African fuel trade, there's real momentum behind localising energy flows. The idea is to connect African refineries with African buyers, cutting reliance on imports from faraway markets. Traders like BGN are positioned to help make that happen by handling credit, navigating logistics, and stitching together deals where others might struggle. In a world where supply chains are more brittle, that kind of nimbleness is essential. Traders operate with speed and flexibility, offering financial instruments to manage volatility. Their role now extends beyond simple logistics as they help contribute to the stability of the system. By absorbing shocks and facilitating continuity, they serve an important part in market flows even amid geopolitical disruptions. Resources are big business Some economies have decided the best way forward is to leverage the free market and cut large deals. What's often dubbed 'friend-shoring' has been gathering steam. In May, for example, the US began evaluating a commercial lease sale off American Samoa for seabed mining of critical minerals such as nickel and cobalt offered by California-based firm Impossible Metals. This move opens the door to private sector participation while encouraging investment in deep‑sea mining technology and permitting frameworks. This type of partnership may reflect a broader shift in which mining companies play a growing role in supporting both regional development and global supply chains. In the Middle East, the approach has taken a slightly different form. Armed with capital from fossil fuel exports, Gulf energy companies are now placing upstream bets, investing directly in foreign mines. Considerable capital has already been deployed, for example, billions have been committed to ventures in copper, nickel, and lithium. It's a clear move by regional energy companies to future-proof: if electricity is the new oil, then metals are the new crude. As the Gulf continues to sketch out plans for an integrated gas grid, which would allow for natural gas to move more freely in the region, it's not only emissions targets that are being met. For companies still dependent on oil revenues, gas offers a path toward diversification without ignoring hydrocarbons altogether. In all these cases, properly thought-out resource agreements provide long-term strategic protection for both energy companies and the economies they serve. The cost of self-reliance Meanwhile, a third approach, full-scale localisation, is getting political traction, especially in developed economies. The concept is simple enough: extract your resources, refine them domestically, and manufacture your clean energy technologies. It promises control and security, but the practical hurdles are steep. Start with geology. The US may have lithium, but not in the volumes seen in Chile or Australia. Europe has almost no rare earths to speak of. Yet even when deposits exist, permitting, building, and launching a mine can take more than a decade. That's far too slow to align with 2030 emissions targets. Then there's the cost. Labour, regulation, and environmental standards in richer countries mean domestic refining and manufacturing can be significantly more expensive. A battery metal processed in the US, for instance, might cost 30 to 50 per cent more than one from China. That kind of margin quickly eats into competitiveness—unless companies (whether processing or assembly plants, or OEM's) are willing to backstop the difference. Other problems arise, too. Betting heavily on one material or process risks obsolescence if technologies evolve. Local opposition can block projects. And building entire parallel supply chains introduces the danger of wasteful duplication. That's why some analysts now advocate for something more flexible: what's sometimes called 'regional anchoring.' Rather than trying to do everything in-house, the idea is to focus on specific strengths, processing or assembly, while still importing other inputs. Done right, this middle path offers more resilience than total reliance on imports, but without the massive price tag of full autonomy. A system under pressure – but still moving What's clear is that the road to a greener energy system won't be smooth, and trade, or the lack of it, is becoming a major obstacle. The supply chains that support decarbonisation are increasingly shaped by politics as much as by market forces. Countries are responding in different ways: through diplomacy, through investment at home, and perhaps most effectively through partnerships with traders. All of these responses will remain in play. Bilateral deals will continue. Some will reshape whole sectors. Others will fizzle. But it's the traders who are increasingly critical in keeping the system coherent. They hedge against volatility, re-route cargoes under pressure, and knit together fractured supply chains in ways no government can. While full-on localisation isn't likely to become the norm, strategic investments in key parts of the chain can still help reduce vulnerability. The real trick is finding the right balance. Lean too hard on bilateral deals and risk fragmenting the global system. Rely too much on traders, and questions arise about oversight. Go all-in on local production, and you might sacrifice speed for sovereignty. But for now, the system hasn't broken, that's largely thanks to the quiet consistency of commodity traders playing their own trade game across borders, through crises, and despite the noise.
Bloomberg
11-07-2025
- Business
- Bloomberg
Once-in-a-Generation Copper Trade Upends a $250 Billion Market
Markets The Big Take The Aug. 1 deadline for Trump's 50% copper tariffs signals the endgame for the most profitable trade that industry veterans say they have ever seen. The phone calls started within days. In late February, President Donald Trump ordered a probe to potentially tariff copper imports. Almost immediately, China's top metals bosses began receiving inquiries from some of the biggest Western commodity traders — companies that for decades have played a key role in supplying metal to feed the factories, construction sites and power grids of the world's top consumer of raw materials. But now instead of selling copper to China, the traders wanted to buy from it. Lots of copper, as soon as possible. They were willing to pay big money to get it. They even offered to pay their Chinese customers sizable amounts if they would cancel their obligations to supply them, freeing up that copper too.
The Guardian
08-07-2025
- Business
- The Guardian
Low water levels push up shipping costs on Europe's rivers amid heatwave
Low water levels after heatwaves and drought are limiting shipping on some of Europe's biggest rivers including the Rhine and the Danube and pushing up transport costs. As much of Europe swelters in hot temperatures, water levels in its main rivers have fallen. This is affecting shipping along the Rhine – one of Europe's key waterways – south of Duisburg and Cologne in Germany, including the choke point of Kaub, forcing vessels to sail about half full. Rainfall over the weekend caused only a moderate rise in water levels, according to commodity traders. Shallow water has prompted ship operators to impose surcharges on freight rates to compensate for vessels not sailing fully loaded, increasing costs for cargo owners. Traders told Reuters that loads that are normally transported on one vessel were being carried on several barges. Most of the nearly 200m tonnes of cargo shipped on German rivers each year – from coal to car parts, grains and food to chemicals – is transported on the Rhine, the second longest river in central and western Europe after the Danube. Unusually low water levels on the Danube in Hungary are affecting shipping and agriculture, as temperatures peaked at 35C in Budapest last week. This means cargo ships must leave behind more than half of their loads and can only operate at 30-40% capacity, Attila Bencsik, the deputy president of the Hungarian Shipping Association, said. In Poland, the water level in the Vistula, the country's longest river, has fallen to its lowest ever recorded level in Warsaw as temperatures stayed above 30C for a prolonged spell and there has been little rainfall. Three years ago, German companies faced supply bottlenecks and production problems after a drought and heatwave led to unusually low water levels on the Rhine. That summer, the French energy supplier EDF had to temporarily reduce output at its nuclear power stations on the Rhône and Garonne rivers as heatwaves pushed up their temperatures, restricting its ability to use their water to cool the plants. More rain is forecast in Germany in the coming days, which could raise water levels. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The lack of rainfall is causing problems elsewhere. In Yorkshire in the UK, water reservoirs have plunged. Data released by Yorkshire Water, which has more than 5 million customers, showed levels had dropped further from 63% recorded in May to 55.8% in June – significantly below the average (81.9%) for this time of year. Reservoirs are close to half full, with most of the summer still ahead. Yorkshire's reservoirs have been declining since late January amid the driest spring for 132 years in the county and England's warmest June on record. During warm weather, water usage usually increases, which further affects reservoir levels. Customers used almost 1.5bn litres on 30 June – 200m litres above Yorkshire Water's typical daily output. Another UK water company, Severn Trent, has urged its 8 million customers to be 'mindful of their water use'. It said there was less water in reservoirs and rivers and while there was no plan for a hosepipe ban, it remained an option.
