Concord Resources eyes listing to fund growth plan

April 9, 2017

by: Neil Hume, Commodities and Mining Editor

Concord Resources, a fast-growing metals trader launched during the worst commodity downturn in a generation, is considering a stock market listing in London to help fund ambitious growth plans

“It’s not inconceivable that we could IPO in a year or two,” chief executive Mark Hansen told the Financial Times. “We will certainly be ready, if that is the best path for the company.”

Mr Hansen, previously head of trading at Noble Group, was speaking after Concord reported its maiden set of results. In the 13 months to December 2016, the Mayfair-based company, chaired by US hedge fund manager Dwight Anderson, made an adjusted pre-tax profit of $16.6m on sales of $1.55bn.

During that period, the company delivered nearly half a million tonnes of commodities to more than 200 customers around the world.

“It was a decent result for our first year of operation,” said Mr Hansen, who is aiming to ship 1m tonnes of commodities this year and lift net profits by 50 per cent.

Longer term, Mr Hansen wants to increase volumes to about 2m tonnes. That would make Concord one of the world’s top five metals traders. Trafigura, the second biggest merchant behind Glencore, traded 6.6m tonnes of non-ferrous refined metal last year, according to its annual report.

“It’s achievable,” says Mr Hansen, adding the company delivered 100,000 tonnes of metal last month.

Concord was formed in 2015 after Mr Hansen and a group of traders left Noble, a Hong-based commodity trader that suffered during downturn in commodity markets.

They quickly secured backing from Ospraie Management, the hedge fund founded by Mr Anderson, MKS, a Swiss precious metals company, and Pala Investment, a natural resources investor.

The company, which now has 48 shareholders and 40 members, acts as a middleman, buying metal from producers and delivering it to customers, two-thirds of whom are in North America and Europe.

Commodity trading is a business of high volumes and thin margins. Metals trading also consumes a lot of working capital, in part because of the need to provide finance packages to miners and smelters to secure long-term supplies.

Louis Dreyfus Company, one of the world’s biggest commodity traders, is trying to sell a stake in its metals unit to boost its competitiveness and reach.

Mr Hansen says the downturn in commodity markets that saw prices crater at the end of 2015, helped Concord get a start, as cash-strapped producers scrambled to find buyers for their output.

“We would never have been able to start Concord and increase tonnage as rapidly as we did, if markets had not been as loose as they were over the past couple of years,” he says.