Metals and Minerals Perfomance Review

Despite the continued challenging global conditions experienced throughout 2021, the Metals and Minerals division continued to grow and serve a broader range of producers and customers. Consequently, 2021 was one of its most profitable years on record, trading 105.5 million tonnes in total.

Non-ferrous concentrates and refined metals traded (mmt) 2021 2020
Concentrates total 13.3 11.0
Refined metals total 9.5 9.9


In bulk minerals, our iron ore business had a strong year, growing volumes and increasing market share. The coal book also experienced a stronger than average year due to increased price volatility, price dislocations and significant shifts in global trade flows.

Bulk minerals volumes traded (mmt) 2021 2020
Iron Ore 23.1 19.8
Coal 59.6 56.9



Performance overview

The key theme of 2021 in the global markets for non-ferrous concentrates and refined metals was the tension between rising demand on the one hand, and tight supply on the other, with supply disrupted by the effects of the COVID-19 pandemic but more fundamentally constrained by under-investment over recent years. Many of the non-ferrous metals Trafigura supplies have been identified as strategically important for electrification and the energy transition to low- and zero-emissions power and fuels that will be required to meet the world’s climate goals. This means that demand growth, which for many years had been mainly a Chinese phenomenon, is now global. The result has been rising prices, increased volatility and big shifts in geographic flows.

Trafigura’s position as the world’s largest independent metals trader strengthened further during the year with volumes handled growing by eight percent, thanks to our global network of customer relationships among producers, refiners and consumers and our storage, blending, risk management and logistics capabilities.

We also continued to reap the fruits of the decision, taken two years ago, to merge concentrates and refined metals trading teams, thus ensuring more seamless collaboration and sharing of market intelligence, and ultimately, better customer service. Synergies have also been derived from our close cooperation with the Nyrstar smelting business and other asset investments, including the acquisition of a minority interest in the Prony Resources nickel mining operation in New Caledonia in March.

Non-ferrous concentrates and refined metals


For the global copper market, 2021 was a year with significant supply deficit emerging as investment in the transition to a green economy gathered pace. We witnessed phenomenal consumption growth in copper, with trends relating to the climate transition that favour this commodity, such as electrification, renewable power and electric vehicles, driving prices to all-time highs and causing a tight market to become the new normal.

A market that has largely depended on Chinese consumption growth for the past 15 years is now seeing significant growth elsewhere, diverting units from China. In addition, significant increases in freight costs mean that traditional flows are being challenged with more cost-effective alternatives.

It was an exceptional year for Trafigura's copper trading desk, rewarding our long-term commitment to the physical business and customer service. Volumes increased in all regions and segments, and we added experienced recruits to the team to help us handle increased non-China flows, which were especially strong in Europe and the US. Trafigura divested its stake in the MATSA polymetallic mining operation in Spain during the year, but we maintain off-take rights for the life of the mine.

We continued to reap the benefits of creating a consolidated department across refined metals, concentrates and derivatives, ensuring that the book strategy is well coordinated. This was particularly important in an environment of continuous structural change in the copper market. Despite ongoing travel constraints, Trafigura’s strong network of customer relationships and offices around the world allowed us to maintain our competitive edge and first-class customer service.

In 2022, we expect the tightness in the market to continue, creating more volatility. Our priority is to ensure the successful management of this volatility and the accompanying risks that arise for producers and customers.

Alumina and aluminium

A combination of strong demand and strained supply chains created a perfect storm in the aluminium market in 2021, with prices rising 70 percent compared with last year’s average. As the strong story behind the aluminium market developed, so did interest from the investment community.

The fundamentals in 2021 were the complete opposite of events in 2020. A power shortage in China forced substantial reductions in aluminium production. Meanwhile, global stimulus relating to COVID-19 pushed up demand for construction and infrastructure projects. Also, severe constraints on global freight markets underlined the importance of the services provided to a global and interconnected market, with container freight rates rising threefold over the year. Many other existing themes grew in importance, including rising demand for low-carbon aluminium and the need for supply security in a market increasingly moving towards structural undersupply. Over the course of the year, Trafigura further grew its market share, increased volumes traded and improved profitability.

The outlook for 2022 and 2023 depends on whether the world can truly adapt to a new normal of tight supply, strong demand and more complicated logistical concerns. Trafigura’s long-established position in the physical aluminium market means that we remain well placed to serve our customers while continuing to expand our trading book. As the largest independent global alumina and aluminium trader by volume, our focus will be on helping our customers navigate these volatile and unpredictable market conditions.


The global transition to electric vehicles is now well underway and nickel is a key beneficiary. Alongside a stronger than expected stainless steel market in China, this development drove a 16 percent increase in global demand in 2021. Meanwhile, supply growth underperformed in Indonesia, resulting in a significant drawdown of global nickel stocks to fill the gap.

Trafigura’s nickel team had a record year with margins and volumes relating to both battery and stainless steel-related products increasing substantially. We continued to reinforce our position as a leading company in supply-chain management, offering innovative services to our counterparties.

With a strong focus on long-term business and securing supply, we concluded multi-year offtake and marketing contracts that can service our growing customer base in the years to come. Most notably, the investment in Prony Resources in New Caledonia is strategically important, as it is one of the world’s largest producers of nickel intermediates. Along with our minority investment in Terrafame in Finland, where nickel sulphate production commenced in July, Trafigura now markets a significant proportion of the raw materials required by the electric vehicle battery industry.

Long-term offtake contracts with nickel sulphide concentrate producers, including Panoramic Resources and nickel pig iron producers in Indonesia, will further reinforce our strong presence in the stainless steel raw material supply sector going forward.

In anticipation of evolving policies and the needs of our customer base, we are the first trading company able to offer traceability and verification of the carbon footprint (CO2-e emissions) of material we source and supply. This is a unique service that has been received with enthusiasm from electric vehicle battery producers and car manufacturers.

Looking forward to 2022, we see a meaningful surplus materialising from the second half, with the introduction of nickel pig iron-to-matte in Indonesia alongside further nickel pig iron output growth. However, given that this process produces three times more CO2 compared to the current market average for nickel sulphate production, it is not clear that this product will find a place in the electric vehicle battery supply chain.


With the aerospace industry still affected by COVID-19, the cobalt metal market has yet to recover to pre-pandemic levels. However, the chemicals segment, now accounting for over 70 percent of global consumption, experienced solid growth in 2021. Accelerating electric vehicle sales and the roll-out of 5G networks continued to be the major demand drivers.

To supply current and future volumes of cobalt, the battery supply chain relies on material sourced from the Democratic Republic of the Congo. Gigafactories are being built globally and original equipment manufacturers are strategically positioning themselves to lock in long-term contracts. Trafigura’s responsible-sourcing diligence process gained further traction over the course of the year, with comprehensive outreach and support delivered to a number of our producer counterparties.

In response to the threat of COVID-19 and with a view to safeguarding the health of workers onsite and surrounding communities, in March 2020, operations at the Mutoshi Pilot Project, a partnership with Shalina Resources and the non-governmental organisation Pact, were suspended. Subsequently, it was determined that operations would not restart in 2021 as a result of changes to the law in the country that saw the establishment of Entreprise Générale du Cobalt (EGC), a state-owned entity responsible for the purchasing of all artisanal and small-scale mined cobalt. EGC was established in response to two decrees issued in November 2019 by the Prime Minister and the Minister of Mines of the Democratic Republic of the Congo. The role of EGC is to purchase, process and sell cobalt produced by artisanal miners or companies involved in artisanal and small-scale mining in the country.

Trafigura has entered into an offtake agreement with EGC, which is the first of its kind. The trading agreement includes the provision of finance by Trafigura to fund EGC's creation of strictly controlled artisanal mining zones, the installation of ore purchasing stations and to cover costs related to the transparent and traceable delivery of cobalt hydroxide to Trafigura on an export-cleared basis. Under the supply terms, EGC warrants that the ore marketed by Trafigura complies with the terms set out in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Trafigura will market the output of the EGC operation through its global network to a number of end-users that have already committed to integrating this product into their supply chain. Trafigura intends to ensure that all purchasers, as determined by EGC, are provided with access to a blockchain solution, which will provide full transparency of product flow through the value chain and corresponding ESG performance prior to receipt.

Trafigura also continues to supply its customers with cobalt hydroxide from its long-term commercial collaborator Shalina Resources and we are increasing our offering of other products, including cobalt metal and sulphate, in Europe and Asia. Cobalt remains crucial for thermal stability in ternary batteries. Consequently, despite efforts to reduce cobalt content within battery cells, we expect the market to approximately double in size by 2026.

Zinc and lead

Zinc and lead mine supply rebounded strongly in 2021 following disruptions caused by the first phase of the pandemic, particularly in South America. Zinc concentrates have swung from a substantial deficit to a position of balance globally, easing supply pressure midstream but failing to allow concentrate restocking. A number of Chinese mines were disrupted during the year as a result of the country’s power supply problems. However, smelters were more strongly impacted, with assets forced to curtail output in multiple provinces.

Demand for refined zinc was robust with notable strength in the mature markets of Europe and North America. Increased consumer spending and government funds to support COVID-19 recovery are propelling higher levels of activity than have been seen for several years in these locations. Falling exchange stocks, elevated ingot premiums and the curtailment of production in Europe, as a result of surging electricity costs at the end of the year, point to an undersupply of zinc metal as the construction, infrastructure and machinery sectors continue to grow.

In the lead concentrates market, a recovery in mine supply has coincided with disruptions to many primary smelters, whether from climate events, economic pressure or logistical bottlenecks constraining feed access. Scrap availability varies by region, with high operating rates at China’s secondary smelters keeping stocks low, while plant curtailments elsewhere are lifting inventory.

Refined lead market conditions have been markedly different inside China compared to the rest of the world. Rapidly rising Shanghai exchange stocks highlight increasing production from secondary smelters and weak demand conditions in China, while in the rest of the world, the steady loss of smelting capacity has forced exchange stocks to draw and premiums to rise as supply is constrained.

Despite the aforementioned challenges, trading performance on the zinc and lead desks responded well to these market shifts in 2021, benefitting from strong customer relationships and synergies between the global trading book, mining assets and the Nyrstar smelting business. Overall, the zinc and lead book grew volumes by close to 20 percent and profitability was according to expectations. As such, we are well positioned to deliver value from the evolution of the lead and zinc markets going forward.

Bulk minerals


It was a turbulent year for the global coal market, as a strong recovery in demand driven by rising industrial production collided with supply constraints and other restrictions, notably China’s decision to effectively ban imports of Australian coal. Producers knocked out when the pandemic first hit demand have been slow to ramp up production, leaving the market in global deficit since mid-2020, while growing antipathy to coal as a commodity has created an additional drag on production. Prices for some products reached record highs during 2021, while volatility was also pronounced. Australian coal, deprived of one of its top two markets, needed to find new buyers, while China partly replaced Australian volumes with supplies from the Atlantic market and increased imports from Indonesia. The consequences included longer shipping distances and higher delivered costs.

Trafigura’s global coal trading desk had a good year, with volumes stable year on year and a strong financial result. The business is well positioned to meet the requirements of counterparties as the energy transition gathers pace. In 2021, this meant consolidating the number of producing and consuming counterparties we work with and aligning ourselves closely with them. Given the continuing economic uncertainties caused by COVID-19 and the trade dislocations in Asia, this enabled us to provide exceptional levels of service to our trading partners. On the demand side, our Chinese volumes grew, and among suppliers, we expanded flows from Canada, Indonesia and Russia and commenced a strategic offtake agreement, expanding volumes from South Africa.

In the next 12 months, we expect to see a continuation of extreme price volatility. Trafigura’s strategy is to consolidate thermal coal flows and expand coking coal activity.

Iron ore

The iron ore market experienced significant volatility in 2021, principally as a result of policy uncertainties surrounding steel production in China. Curbs on output were announced in December 2020, but implementation was slow, and it was not until July 2021 that production cuts took full effect. This tipped what had been a broadly balanced global iron ore market into a supply surplus, and prices plunged from a peak of USD220 per tonne in the first half of the year to below USD100 by year end.

These were not easy trading conditions and Trafigura’s iron ore desk focused on expanding sources of offtake, including strong growth in Indian volumes, growing seaborne volumes and China portside trade, and consolidating the position of the Porto Sudeste brand in the European and Chinese markets. We were pleased to arrange a number of structured solutions for customers at origin and destination that helped to increase volumes by 17 percent year-on-year.

Over the next 12 months, we expect continuing volatility as non-China steel production volumes ramp up to meet post-COVID-19 stimulus demand.