Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Four years ago Kenny Ives was a contender to be the next chief executive of commodity trader Glencore. Instead, as head of trading house IXM, he now has a different role: building the company into China’s answer to his former employer.
Chinese-owned IXM, the world’s third-largest metals trader, is a key link in a global supply chain that provides China and other regions with materials used in electric vehicle batteries such as cobalt, copper and nickel.
The Geneva-based company has recently expanded into trading lithium — another key EV battery ingredient — Ives said in an interview with the Financial Times. It is also setting up new offices in South Korea, India and the Democratic Republic of Congo as it expands its global footprint outside China.
IXM’s ambitions are a test case in whether a trading house fully owned by a mining company — Shanghai- and Hong Kong-listed mining company CMOC bought IXM five years ago — can compete with the independent trading houses that dominate the industry. Such firms have been earning record profits in recent years, thanks to the volatility in energy prices following Russia’s 2022 invasion of Ukraine.
Ives, who spent more than two decades at Glencore, has reshaped IXM since he joined as chief executive two years ago.
“We have effectively turned IXM inside out,” he said. “We have diversified the business,” taking the existing futures trading business and adding a cash trading unit that buys and sells physical commodities, and a marketing unit that sells commodities produced by CMOC, he said. This year IXM reported record first-half earnings before tax of $142mn.
But the world of commodity trading has increasingly fractured along geopolitical lines — a process hastened by the war in Ukraine and by growing tensions between the US and China, the world’s biggest commodities consumer — and IXM finds itself in an unusual and sometimes difficult position.
The firm has close ties to China. Chinese battery group CATL holds a 25 per cent stake in IXM’s owner CMOC and is a big customer of IXM, which supplies it with battery materials.
Such ties can be a useful source of market intelligence, but Ives stressed that they do not impinge on his running of the company.
“We are owned by CMOC and I can assure you, if I hadn’t been given the assurances about independence and autonomy, I wouldn’t have joined the group. I need to be able to operate,” he said.
“At the same time that we have this strong nexus to China, we try to maintain strong nexuses to all of the other key consumption regions and supply regions,” he added, pointing to Latin America and a growing US business. “We cannot be beholden to any one geography, any one region.”
IXM’s parent, CMOC, has at times been viewed by Washington with suspicion.
Earlier this year, US under secretary of state for economic growth, energy and the environment Jose Fernandez accused CMOC of using “predatory” tactics to flood the world with cobalt and keep prices down.
“There’s no shortage of sensational or provocative comments,” said Ives, adding that IXM had many long-term customers in the US.
“We hope that will continue, but we are not naive, to think that the political realities of the moment and the geo-security issues of the moment don’t handicap us to an extent,” he said. “This reality is one we have to navigate.”
Formerly part of Louis Dreyfus Company, IXM was bought by CMOC as part of a strategy to build a mining group covering the entire supply chain.
“We are thinking differently than other Chinese mining companies, because we think the trading function is strategically important at the group level,” said Steele Li, CMOC’s vice chair and chief investment officer. A modern mining company should have “a very strong trading team that covers the whole industrial chain . . . all the way from the mining to the customers”.
Other companies, sensing an opportunity in metals needed to build clean energy infrastructure, are also moving in.
Flush with cash, privately owned energy traders Vitol, Mercuria and Gunvor are all expanding metals trading desks and have at times been willing to “overpay” to secure the best talent, Ives said. “We want people who are motivated by the competition and the opportunity to build something special.”
Ives has his sights set on closing the gap between IXM and his former employer.
“Clearly Glencore and Trafigura are the gold standard in metals trading [but] we think we are very competitive now in the business lines that we are in and we’re determined to compete with the best players out there,” he said.
He highlighted that neither Glencore nor Trafigura has a Chinese parent company capable of finding, building and operating new metals and mining projects.
“[CMOC] has that expertise in-house and that’s great for us,” Ives said. “We can leverage that, our customers can leverage that, and I don’t think anybody else can offer that.”