Here comes the third instalment of Geoffrey Sambrook’s fictional trading tale.


Since the departure – insisted on by Serck – of Matthias Horner over a year ago, the Metal-Exx copper concentrate book had been run by a young Australian, James Cunliffe. Eisenstadt called him into a side office and gave him his instructions. Actually, Cunliffe was quite pleased. Subsidising Congo Copper – which was effectively what the book had been doing – had had the effect of depressing the profit; and that, of course, would have had a direct impact on his bonus. The Australian stayed in the office late that evening, sending out an email in respect of each separate contract, declaring Metal-Exx’s option to reduce tonnage to the bare minimum in the next contractual period. On a couple of deals, he was able to take a contractual holiday period and reduce the offtake to zero. As he headed down to the garage under the office building, he switched his phone off; he knew there would be squeals from Congo Copper, and he didn’t want to be bothered. He had a date with a hot new trading assistant from the aluminium department and he didn’t want it ruined by a whingeing copper producer. Night had fallen and lights were twinkling off the lakeside as he pointed the electric blue BMW i8 in the direction of the girl’s apartment. He felt good about the prospects of the evening. He’d booked a very smart Italian restaurant, and then, who knew?

The next morning, sitting in the girl’s kitchen with a cup of coffee and the sound of the shower coming from her bathroom, he switched the phone back on. Oh, yes. There was a ream of emails and messages from the marketing guys at Congo Copper in London. They basically all said a variant of the same thing – you can’t do this to us; call back urgently please to discuss. On the table in front of him was a baker’s paper bag, with two pains au chocolat in it. He approved; she’d already been out to get breakfast before he got up. He started munching, and scrolled through his other messages. There was one from Max Eisenstadt: call me. What do you think you are doing switching your phone off? Well, ‘fraternising’ with other members of staff was strictly against the company rules, as well. He could talk his way out of it, for sure – on both counts, if necessary.

Half an hour later, in his car sitting in a traffic jam, he called Eisenstadt.

“Max, hi, I’m sorry you couldn’t get through last night. I don’t know what happened.”

“I do, James. I wasn’t born yesterday, and Leonora works on my desk. But I don’t really care about that, for the moment. We need to talk as soon as you get in. I got a call from DeWet last evening, just when your emails started hitting them. He’s not a happy boy.”

“OK, as soon as I get through the traffic.”

But Steyn wasn’t going to be content with speaking to the monkey; he wanted the organ grinder, and he called Serck’s mobile. The latter was still in London, intending to head back to New York later that day.

“Jason, what the hell are you doing to us? Are you trying to kill us? We can’t operate if you reduce your offtake – I’ll have to close mines, and lay off workers. That’ll hit the share price, so why are you forcing me to do it?”

“DeWet, what are you talking about? What am I supposed to have done since we met yesterday?”

“Yesterday evening Metal-Exx sent out a stream of emails reducing the tonnage they were prepared to take from us. They’ve gone down to the minimum permissible, which is too harsh for us to meet. You know we can’t sell this stuff anywhere else right now, so what are you trying to do?” There was an edge of panic in the South African’s voice, mixed with a big dollop of anger.

Serck was calmness itself. “DeWet, I don’t know what you are talking about. I don’t run Metal-Exx’s business; if they’ve chosen to vary the contracts, then they must have good reason to do so. Have you spoken to them and asked them why?”

“Yeah, I spoke to Max last evening. My guys tried to speak to Cunliffe, but they couldn’t get through.”

“Well, what did Max say?”

“Just that they were having to re-assess their book and the volume of copper concentrate they needed. Look, we all know the market’s soft, but we rely on you to help us through.”

“Not me, DeWet, I run Leopard-Star, and we are shareholders in your company. We are also the owners of Metal-Exx, but they run their own business, just like you run yours. I don’t decide what happens between the two of you; you have to sort that out yourselves. Look, I’m sorry, DeWet, but I’m just going into a meeting. We’ll speak when I’m back in New York.” And he hung up, leaving Steyn fuming at a dead phone.

Serck’s ‘meeting’ was a leisurely breakfast in Brown’s. Then he called the editor of the Metal Bulletin, announcing that he had a free hour or two before heading off back to the USA and would be pleased to meet for a chat about the markets. A meeting with one of the most influential hedge fund managers of the last 20 years wasn’t something that normally fell into the editor’s lap, so she dropped everything and accepted with alacrity.

Sitting over a coffee, Serck ranged over his views of the copper price. He was open about the way he had been too optimistic for a recovery earlier in the year, and how he was now resigned to the dull period dragging on. He talked about how that made life difficult for those – like him – who needed volatility and price movement to execute their business, and the editor was in her mind composing the article she could develop out of the conversation. Then Serck switched his attention to the copper producers. He was complimentary about the efforts made by those – Rio, Freeport, Codelco and the like – who had successfully worked to push down their production cost; those, he said, were the ones who remained investable. Others had been less effective in their cost-cutting, but were still working on the right track; they may be worth looking at in the future. And then, he said, there were those who had broadly failed to take any adequate action in the face of price difficulty. He referred to a couple of smaller operators in this group, and then dropped the name of Congo Copper into the conversation. He was disappointed, he said, as a shareholder, to see that they remained stuck way up the cost curve. The editor wasn’t a copper industry specialist, but she knew enough to be aware of two things; one, Serck was being far more open than ever before about the cost profile of Congo Copper, and two, that Leopard-Star was a big shareholder. So why raise the problems? It didn’t do his position any good.

By the end of the meeting, MB’s editor knew the story she had to write wasn’t about flat markets and the difficulties that created for traders, it was about production levels and costs in the copper business. When she got back to her office, she called in her copper reporter and the two of them spent the rest of the day calling all their contacts to try and stand up Serck’s assertions about Congo Copper’s problems. No-one was prepared to be as clear as Serck, but by the end of the afternoon they felt they had enough elliptical or off-the-record comment to be prepared to put the story out. Congo Copper themselves, incidentally, had refused point-blank to speak to them.

So the next morning, the trade woke to the headline in the online magazine “Congo Copper: Heading for Closures?” and an article below it painting a pretty grim picture of the current position of the company.

DeWet Steyn wasn’t best pleased when his attention was drawn to the piece. It was the PR department that felt the rough side of his tongue this time, pilloried for not having refuted the allegations. As Steyn himself pointed out, whatever they said now was never going to have the impact of the journalists’ assertions, and would probably only serve to keep the story in the public eye. He gave instructions that the company should be kept out of the news.


Serck was back in the USA after attending the Board meeting in Geneva. He had shut down any discussion of the change in policy towards Congo Copper, simply saying it was a defensive move to ensure that any problems that the producer had were not able to disturb the strength of Metal-Exx itself. He wouldn’t be drawn on Leopard-Star’s position as the owner of one of the companies and a large shareholder in the other. The Board collectively shrugged its shoulders; its members’ interests were the continued success of Metal-Exx; if Serck felt they needed some insulation from Congo Copper, they were prepared to go along with it. They all knew the relative strengths of the two entities. James Cunliffe on the copper desk bore the brunt of the continuing protestations from London, but ignored them. His job was to trade copper concentrates within the parameters he was set; right now, he had access to more material than his customers were prepared to take, so cutting off a supply source helped him to keep his trading book healthy and balanced.

A week later, Serck boarded the Leopard-Star Gulfstream, heading for sunny California, where he had arranged to meet the mining surveyor whose opinion he had sought previously. Together, they were then scheduled to meet Elon Musk at his Tesla headquarters.

As Christmas approached, the unseasonable warmth had long since deserted New York, shivering around zero with a hint of snow in the air as the little aircraft lifted off. San Francisco was not a whole lot warmer, at around 10 degrees when they arrived, but at least the winter fog and drizzle had taken the day off and they landed under a blue sky. The surveyor arrived from his Texas base a little later than Serck, and joined the latter in his suite in the Fairmont, atop Nob Hill, shortly after he’d checked in. He was armed with rolls of data, and the two of them spent a good three hours going through every part of the man’s summary of his findings. Finally, Serck was satisfied that he hadn’t wasted his money sending the man to East Africa. The results bore out what he had anticipated.

The next day, with the sun still shining despite some minor banks of mist rolling across the Bay, the two men took a cab down to Tesla’s offices in Palo Alto. As they sat in the traffic along Silicon Valley, Serck couldn’t help but notice how many of the cars around them were electric or hybrid. Lots of them were Teslas – unsurprisingly, in their own backyard – but there was also a fair smattering of others. California – or at least the high-tech denizens of the Bay Area – seemed to have adopted the new technology with enthusiasm. Serck was a man whose career had been founded on the staple industrial commodities – oil, metals – and he looked around him in wonder as they passed the offices of so many of the 21st century’s household names. There was almost a sense of child-like excitement as he pointed them out to the surveyor sitting next to him.

Eventually, despite the traffic, they reached Tesla and were shown immediately up to Musk’s own office suite. The man himself came in a couple of minutes later; tieless, tanned, he looked like a completely different generation from Serck; which, of course, he was. The three men went into an adjoining private room on the top floor of the building, where they spent the rest of the morning going through the same data that Serck had seen the previous evening. Then, after a quick lunch, it was suggested to the mining surveyor that he might like to have a tour of the building and see some of the design processes that went into Tesla cars.

That left the other two – two of America’s seriously rich – to withdraw into Musk’s private office and talk about the scheme they initially dreamt of back at that charity ball in New York. There is no record of the conversation, but it went on deep into the evening as they dined together in one of the city’s more exclusive clubs.

The next morning, Serck headed back to New York. He was satisfied that his project was on track, that the agreement with Musk was secure and that he could move on to the next stage. It was time to look again at Congo Copper and its performance. The new quotas set by Metal-Exx were due to come into effect from the beginning of January, and that was when the crunch for the company would come. Serck knew full well that if the revised offtake levels were applied, then mines would have to be shut. The cashflow of the company could not support operations at the combination of price and quantity that would be required without cutting back severely on costs, and closures were the only way to do that. Steyn had kept a constant stream of emails and phone calls coming to both the Metal-Exx management and Serck himself, pointing out again and again the negative effect on the trader and Leopard-Star if they eventually forced the permanent reduction in size of Congo Copper. Serck always listened politely, but gave no sign of relenting.

Over the years, Serck had developed some good relationships with a number of financial journalists and market analysts. He preferred to stay in the background, but had a simple mantra: to get information, sometimes you have to give information. Over the next few days, he spoke at length with a number of his contacts, outlining his concern that the copper market still showed no sign of significant recovery and his growing conviction that the flat market was going to make life increasingly difficult for all those producers too far away from the comfortable bottom end of the cost curve. For the analysts, this was like manna from heaven. Flat markets made their task difficult, as well, and having a major market figure come out and make a definite pronouncement about the likely future course of prices eased substantially their task of constantly churning out comment in a largely static market. Serck knew he would get headlines, and this time, that’s exactly what he wanted. Whenever he was asked about Congo Copper and his own fund’s involvement in it, he shrugged his shoulders. “I’ve told you my view – to succeed in this market, you’ve got to control your costs. I’m not going to make any specific comment about Congo Copper; that’s for the management of the company. I’m just one of many shareholders.”

That statement was interpreted by the market as an indication that Leopard-Star was close to getting out of Congo Copper, and sure enough, the price started to drift. It was a slow change at first, but by the end of January, momentum was building up.

DeWet Steyn could do nothing as his company’s value began to fall. Diversification may be what he had in mind, but even the low-cost surface mining he had envisaged in the eastern Congo required some cash investment, and cash was exactly what he was lacking. With declining payments from Metal-Exx, as they took now only minimum tonnages of product from Congo, concentrate building up at the mines with no alternative buyers anywhere to be found, and an increasingly disgruntled labour force as their hours – and therefore wages – were also cut to the minimum, the picture looked bleak. Worse, Steyn’s abrasive personality had made him few friends in the media over the years, and there was no let-up in the reporting of his difficulties. In the past, with some of his flakier ventures, he’d learned to live hand to mouth, but for a long time now, he’d been in the big time as the ceo of a major mining operation, and the squeeze put on by the equity market, then followed by banks and other creditors was a tougher position than he’d faced before.

Jason Serck, meantime, sat in New York, with a very definite strategy; he and his chief dealer at Leopard-Star were constantly monitoring the Congo Copper price, and slowly but surely, they started to put the plan into operation, through both their principal broker in New York and the discreet London bank of Feinstein’s.

Meanwhile, a team of Tesla e ecutives made a promotional visit to Britain. Sales in the UK were growing, although still not reaching the market penetration in Germany and the Netherlands. But the UK is a big market, and the company was anxious to push on. They still had some issues with installing charging points in motorway service areas (although they had hopes of resolving that impasse in the near future), but they were rolling out the network in town centres across the country. Range anxiety is the biggest stumbling block to sales of electric vehicles and they put on a razzamatazz of a roadshow as they toured the country opening the charge points. They finished the show in London, where the mayor was already a keen supporter of fume-free transport. The two most senior engineers spent a full day closeted with the Mayor and his transport adviser; details of the meeting are still not available, but the demeanour of both sides when they finished up late in the evening suggested that they were largely happy with their discussions.

Chapters V-VII will follow daily this week.

What to read next
A summary of second-quarter and first-half results posted by Aluminium Bahrain (Alba) for the period ending June 30, 2022
The publication of Fastmarkets’ daily steel hot-rolled coil index, domestic, ex-works Northern Europe and daily steel hot-rolled coil index, domestic, exw Italy for Monday August 15 took place earlier than scheduled due to a reporter error.
Fastmarkets invites all nickel market participants to provide feedback on its initiative to launch a price for the physical mixed-hydroxide-precipitate (MHP) market.
Inquiries for supplies of low-carbon aluminium in Europe for 2023 are steadily increasing, leading a growing number of market participants to write the Fastmarkets low-carbon aluminium differentials into their contracts
The Inflation Reduction Act in the United States may ironically cause global metal market prices to rise for some metals used in electric vehicles (EVs), Fastmarkets sources said
Globalization, financialization and other key differences in today’s metals markets make comparisons to past periods of inflation potentially misleading. Fastmarkets experts discuss.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.