Mercuria to invest in smelters and mines as it expands metals push
Swiss trading house’s move to take 25% stake in aluminium plant in Indonesia marks shift into asset ownership
Mercuria is to take its first stake in an aluminium smelter and will also hunt for copper mining investments, marking a shift into asset ownership as the Swiss trading house continues a $3bn spending spree in base metals.
The company, which has shaken up the world of base metals trading since it began an aggressive expansion in 2024, said it would seek further deals as high copper and aluminium prices spur producers’ demand for funding.
Kostas Bintas, Mercuria’s head of metals, told the FT that the group would keep up its current pace of investment, highlighting that “we have both the appetite and the capacity to do more”. In less than two years, it has distributed more than $3bn in metal pre-payments, which are advance payments for future shipments of metal.
In a shift from the pre-payment model, Mercuria will take a 25 per cent stake in an aluminium smelter in Indonesia operated by Chinese group Tsingshan. The stake, the first equity investment under its new metals unit, is estimated to be worth hundreds of millions of dollars.
The group has reaped the rewards from its big bet on base metals, with the division contributing about 15 per cent of the company’s $1.5bn profit last year.
Its biggest deals so far include a $1.25bn pre-payment to copper producer Kazakhmys and a $200mn pre-payment to International Resources Holding’s Mopani copper mine in Zambia. Mercuria has also inked deals for zinc offtake from Ivanhoe’s Kipushi mine in the Democratic Republic of Congo and for copper offtake from Eurasian Resources Group.
The war in the Middle East, which resulted in the closure of the Strait of Hormuz to most vessels, has choked off the supply of about a fifth of the world’s aluminium. “We are very constructive on aluminium,” said Bintas, noting that the conflict had squeezed supplies. Prices for aluminium on the London Metal Exchange benchmark have risen about 14 per cent since the war began.
However, Bintas acknowledged that a drawn-out conflict could dent demand for copper and aluminium.
Mercuria’s chief executive Marco Dunand, speaking at the FT Commodities Summit in Lausanne, said the group planned to grow its base metals division and bolster its liquefied natural gas division, which would triple or quadruple its trading volume over the next 12 months.
Mercuria’s net debt has been rising as a result of its big investments in metals and LNG, raising concerns among bankers.
However, Dunand said the company’s balance sheet could comfortably support its activity. “We are underutilising our [credit] lines in general,” he said, adding that the company was one of the only large trading houses that did not secure extra credit lines at the outbreak of the war.