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London Metal Exchange-approved warehousing firm NEMS will be fully integrated into the global terminals business of Impala, a move that could clear the way for a reduction in parent Trafigura’s stake in the firm.
The move will enable the business to consolidate its offering to clients and expand into new markets under one unified banner. This would be beneficial if the firm decides to pursue a strategy similar to that followed by Puma Energy, a vertically integrated midstream and downstream oil company majority-owned by Trafigura.
Last year, Trafigura deconsolidated Puma Energy from its accounts, reducing its stake to 49%. The oil firm is still backed by Trafigura as its largest shareholder but has the ability to raise capital from the capital markets in its own right, while allowing its majority owner to stay private.
Trafigura cfo Pierre Lorinet has said in the past that a similar strategy could be pursued for Impala. Such a move would see Trafigura reduce its stake in Impala, but keep overall control as the subsidiary grew on its own account.
Logical Charles Bucknall, who ran NEMS and will become Impala’s head of LME warehousing and director of business development, said consolidation was a logical route for the companies.
“The driving force for us was that the time was right – we’d been together, other aspects of the business were ready, and now is the time for us to show commitment and to go forward in a very focused manner,” he told Metal Bulletin.
“This is the realisation that the assets are maturing and are ready to be taken to the wider market,” he said.
The integration will be completed by the end of January and the NEMS name retired from use. LME warrants issued by NEMS will continue to be underwritten, but all those issued from January 22 will be Impala warrants.
Trafigura owns Impala, which provides port, warehousing and multi-modal logistics services for commodities, and acquired NEMS in 2010.
Africa Impala’s business is highly developed on the African and South American continents, while NEMS is well established in East Asia and Europe.
Bucknall said that none of its industry peers have assets on the same scale in the southern hemisphere, and that Impala is making and will continue to make significant investments in Africa and Latin America.
In Africa, Impala will concentrate on growing its existing business in the south of the country, while at the same time expanding its LME warehousing business, moving into Jeddah and other parts of the Middle East.
“The same thing will happen in Africa [for metals] as we identify good spots for expansion,” Bucknall said.
“In the future, Africa’s huge urbanisation process will require massive consumption of metal as the construction process starts to kick off. To have the ability to distribute metal in Africa and South America is going to be important,” he added.
The vision is to create a business in which Impala is the one-stop-shop from the mine through to the smelter to the end-consumer, Bucknall said.
Netherlands-headquartered Impala owns and operates a network of over 50 terminals in more than 30 countries worldwide.
Andrea Hotter ahotter@metalbulletin.com Twitter: @andreahotter