Trafigura Scandal Should Be a $577 Million Wakeup Call
If traders try to keep up business as usual even as the value of critical metals and minerals skyrockets, they are going to face many more attempts at fraud.
Western companies are going to have to get their hands dirtier.
Photographer: Cole Burston/BloombergWhen Russia invaded Ukraine last year, the world got a glimpse of what awaits supply chains in the future. Sudden supply constraints meant that the prices of many commodities, including metals and rare earths, spiked. Nickel prices, for example, rose by 90% in the first weeks after the invasion.
Many of these materials have specific roles to play in a low-carbon future: The International Energy Agency has predicted that, if the green transition takes hold, demand for nickel might increase 20 times. Most national governments have woken up to this reality and have started to look for ways to secure their supplies of critical materials. Yet, as we have just learned from commodity trader Trafigura Group’s loss of $577 million to possible fraud, the private sector is relatively unprepared for what the future may hold.