Energy commodities trader Mercuria set on China expansion

Swiss trading company Mercuria has achieved a solid and stable presence in China, this year marking its 11th anniversary of sponsoring the Beijing Music Festival.

As a transnational energy-focused commodities group, Mercuria said it aims to develop with a geographical balance between Asia, the Americas and Europe.

Marco Dunand, CEO of Mercuria, said: "Music is a good bridge between different parts of the world. While BMF has an extremely strong classical music team, it also has already been one of the top 10 music festivals all over the world.

"So we are confident that BMF will be the bridge to connect Mercuria and China to help us to understand each other better.

"The talent, history and celebration of the cultures where we operate are core to our business model. Just like Mercuria, the music festival has a strong and deep connection with China and the talents of the Chinese people, but also celebrates expertise and history from around the world."

Mercuria believes in corporate social responsibility and in giving back to the community, including its sponsorship of the music festival.

In the past decade, Mercuria has formed strong strategic relationships with many pioneering players in numerous industries, such as China National Chemical Corp, also known as ChemChina, and China National Materials Storage and Transportation Corp, or CMST.

In 2016, the company received a strategic investment from ChemChina, allowing Mercuria to gain access to its expertise and global reach. Combined with its own experience, Mercuria has since fueled and diversified its organic growth.

As the biggest logistics company in China, CMST assists Mercuria in bringing international standards used on the London Metal Exchange to China.

Since Chinese documents, certification and regulations are different from other country's, Mercuria needs a fully professional company such as CMST to securely import metals.

CMST has an extensive portfolio of logistics assets and land holdings in premium locations across China, allowing Mercuria to expand its businesses in China and drive its growth.

"Over the last 13 years, our return on equity has been around 10 to 25 percent per year. It is by no mean feat that we have never had a negative year," according to Dunand.

Looking ahead

Regarding the company's development prospects in China, the CEO said that he is happy to see that the 19th National Congress of the Communist Party of China signaled that China will further open-up and integrate with the international market.

"It is definitely a positive movement," Dunand said.

"Over the past decade, Mercuria has accumulated a great deal of experience collaborating with Chinese companies, banks and governments.

"For instance, Mercuria has founded two joint ventures with Sinopec and ChemChina, and has found two shareholders in ChemChina and China Reform Holdings Corp. So, I am convinced that, combined with its international expertise and experience, Mercuria's development in China is promising enough."

Mercuria is proactively looking for new opportunities in China, so as to ensure strong growth momentum.

"The Belt and Road Initiative proposed by Chinese government is wise enough to connect all the countries involved. Every company can find its own business opportunity.

"From my perspective, with deep knowledge of lots of those diferent countries, Mercuria maybe can play a role as a co-investor to participate in this initiative," Dunand said.

In fact, Mercuria has been in touch with many State-owned investors and several banks to discuss how to take part in and contribute to the Belt and Road Initiative.

Yet, challenges are inevitable when forging ahead into new territory.

One of the biggest challenges, not only for Mercuria, but also for the energy market in general, is the ongoing technology revolution.

"As we can see, we have some renewable energy such as solar energy and wind energy, which are becoming cheaper to produce. So it is extremely urgent for the traditional energy industry to update its technology," he explained.

The CEO added that technological change is happening at every level of the businesses.

"It is a big challenge but also a big opportunity. By updating its own technology and integrating with the renewable energy industry, Mercuria is willing to help other companies to restructure and to better understand technological change," Dunand said.

He added that China is definitely moving in the right direction in terms of innovation, by increasingly openingup and proactively working to integrate with the rest of the world. China has already become the world leader in terms of the economy and many other international afairs, he said.

To look for new supplies of energy from shale in Argentina, Mercuria, this year, teamed up with Andes Energia.

This was reported in China Watch which appears in UNO Newspapers; La Capital Rosario and El Cronista Comercial, Mercuria and Andes announced the creation of Phoenix Global Resources plc from the combination with Petrolera El Tr??bol S.A.

Phoenix is now an independent exploration and production company with a balanced portfolio of assets in both Argentina and Colombia. It has been admitted to trading on Alternative Investment Market of the London Stock Exchange, the exchange's international market for smaller growing companies.

"The election of Argentine President Mauricio Macri in 2015 has increased our confidence in investing in the country. The company has over 4 million licensed gross hectares in Argentina, 61.7 million barrels of oil equivalent net working interest of proven and probable reserves and production of over 11,300 net working interest barrels of oil equivalent per day on average in 2016. This has tremendous promise," said Dunand.

Although China does not have the magic answer to solve every problem at once, its technology has already become much more advanced than many other countries', and it is this advanced technology that will provide a shortcut for China's development, according to Dunand.

(China Daily 11/10/2017 page16)