Macquarie bank headquarters building in Martin Place, Sydney. (Stock Image)
Macquarie Group Ltd is making a renewed push into physical metals, exploring deals to acquire trading books for iron ore and other raw materials as competition in the sector heats up.
The Australian bank — already a powerhouse in other commodity markets — has recently been in talks to acquire at least two physical metals trading businesses, according to people familiar with the matter, who asked not to be identified because the discussions are private.
Targets have included Transamine SA — which specializes in trading semi-refined ores known as concentrates — and Cargill Inc.’s ferrous metals unit, said the people, who asked not to be identified because the negotiations are private.
The bank has considered a full takeover of Transamine, as well as a potential joint venture, although negotiations are currently closed, the people said.
Spokespeople for Macquarie and Transamine declined to comment.
A person close to Transamine — which was founded in 1953 — said that it was not for sale and intended to remain an independent company for another 100 years.
Talks with Cargill are also now at an advanced stage and Macquarie is the leading bidder for its ferrous business, although it is still possible that the unit could be sold to another buyer, some of the people said. Reuters first reported on Macquarie’s discussions with Cargill in May.
Rare push
Macquarie has long been a major financier of metals and is among the biggest dealers in futures traded on the London Metal Exchange. It already trades refined industrial and precious metals, as well as scrap copper.
But it’s rare for an investment bank to push into physical trading of raw materials like copper concentrates, which aren’t deliverable on global exchanges. For decades, the trade has been dominated by Glencore Plc, Trafigura Group Pte Ltd and a clutch of much smaller specialists.
Competition for metals and minerals has grown as supply tightens and western countries look to decouple from Chinese supply chains. The jostling has become particularly intense over the past year, with a US government-backed fund looking to buy stakes in key African mines, while cash-rich energy traders like Mercuria Energy Group Ltd. are paying big upfront sums to secure future copper output from Central Asia and other regions.
Macquarie has a formidable track record in other commodity markets. Its bets on power suppliers and energy-trading businesses in the early 2000s have brought particularly lucrative payouts in the US, where it is regulated less heavily than its Wall Street rivals.
It has developed what is effectively a sizable oil trading house inside the bank, while rivals including Morgan Stanley and JPMorgan Chase & Co have stepped back from physical trading, partly in response to regulatory pressure.
The bank has held stakes in other physical commodity traders, including grain trader Quadra Commodities SA and sugar trader Czarnikow Group Ltd.
(By Archie Hunter, Julian Luk and Jack Farchy)
