Commodity Management Blog

Innovative Ideas and Thought Leadership for Volatile Commodity Marketplace

Mining companies are no strangers to advanced technology – geological models, dispatch, and plant control systems offer sophisticated databases and solutions for asset optimization. But there’s one exception: supply chain management for tracking assets from mine to customer.

Mining companies often rely on a patchwork of generic spreadsheets to manage the tonnage, quality, and value of their coal or mineral supply chains. This is a very dangerous practice – spreadsheets are not sophisticated enough for handling complex operational processes such as planning, material tracking, and grade control – however, they are often relied upon to do…

According to McKinsey, Asia’s global middle class is likely to grow by three billion people over the next 20 years, and China and India are doubling per capita incomes by approximately 10 times the rate and 200 times the scale achieved by England’s Industrial Revolution in the 1800s.

This massive middle class expansion has fueled demand for commodities such as oil, coal, and wheat. More and more Commodity Management companies dealing in the Asia Pacific (APAC) region are realizing that in order to ensure price volatility doesn’t diminish profitability, they need advanced technology solutions such as Triple Point’s 

In our circles, when we talk about the Dodd-Frank Act, we tend to gravitate our conversations to Title VII – Wall Street Transparency & Accountability.  It is, of course, the most hotly disputed, high profile part of the legislation.   So, it’s easy to forget some of the other sections of DFA that may concern corporations.  One such section is 1502.

Section 1502 – Conflict Minerals

This section requires a disclosure that on the surface seems fairly well intended.  Since Congress has determined that “the exploitation and trade of conflict minerals originating in the Democratic Republic of the Congo and adjoining…

I recently talked to Exxaro, South Africa’s second largest coal producer, about the challenges affecting the industry today and how they are transforming their business to meet the growing global demand for coal. A major part of their transformation has been to reengineer the supply chain so that they can produce substantially more coal and generate more revenue.

During our conversation, Melanie Steyn, Exxaro’s Coal Export Manager offered some fascinating insight into the risks posed by manual supply chains. Using spreadsheets to manage complex supply chains can result in inefficient production, financial penalties, high transportation costs and demurrage.

Melanie…

News-grabbing headlines highlighting commodity price increases due to weather-related and other supply issues have completely shifted the dynamics of Commodity Management and broader procurement, sourcing and supply chain management activities.

According to advisory group Spend Matters, organizations are observing radical commodity price fluctuations of up to 40% which are having a massive impact on their P&Ls. However, despite this volatility and its impact, precious investments in technology solutions and skilled resources often go towards other areas of the business rather than being allocated towards efforts to control, mitigate…

Are you struggling with disparate commodity trading systems, overuse of manual processes and spreadsheets, and underuse of third party solutions?  Have dramatic changes to the energy markets outpaced your technology capabilities?

If you know you need to upgrade your Energy Trading and Risk Management (ETRM) system, but are overwhelmed by the idea of ETRM vendor evaluation, ETRM system selection, and ETRM implementation, you are not alone. Structure’s Baris Ertan recently wrote an article on how to determine ETRM requirements.  He explains that if you ensure the right ETRM requirements, “you’ll be rewarded with a system that meets your needs…

The South African coal industry received a huge boost last month when President Jacob Zuma used his State of the Union address to back critical infrastructure projects in South Africa. He announced a much needed investment of R200bn ($26bn) to help upgrade the capacity of the state owned rail network, Transnet, which currently limits the amount of coal South Africa is able to export.

Transnet is crucial to the future of the South African coal industry. Today, the volume that the rail network can carry is below the export capacity of their largest coal terminal (Richards Bay). Transnet have…

If your answer to the above question is anything less than ‘very,’ your company’s future may be at risk.

In the turbulent seas of the shipping industry, understanding the true market value of your fleet is the difference between sinking and swimming. Performing frequent mark-to-market (MTM) valuations is an integral part of doing business. However, due to the volatile nature of the industry, the complexity of calculating freight rates, and flaws inherent in popular valuation methods and tools, companies often end up with inaccurate numbers. This provides an erroneous picture of financial standing that can result in lost profits, faulty…

Is your commodity trading and risk management system adequate for the “new normal?” New regulations in the US and Europe, extreme price volatility, capital constraints and shorter cycle times demand new risk management strategies.

Triple Point recently hosted a webinar with Accenture’s commodity trading and risk management expert, Alex Chandy, on the latest trading and risk management best practices. Triple Point’s own risk expert, Greg Leck, also discussed how Triple Point’s leading CTRM solution delivers up-to-the-minute risk intelligence to manage portfolio risk exposure, set limits, and control risk.

The webinar highlighted valuable tips on how to deal with today’s market chaos and…

The 2,000 page Dodd-Frank Act is the US government’s response to the financial crisis. While it was signed into law well over a year ago, the finer points are still being negotiated, clarified by lawyers, and challenged by Wall Street players.

For energy and commodity firms operating in Europe, this is a cautionary tale – the European Union (EU) is introducing an alphabet soup of directives and legislation affecting the financial and commodity markets including the Regulation of Energy Market Integrity and Transparency (REMIT), the Market Abuse Directive (MAD), the second Market in Financial Instruments Directive (MiFID II), the European…

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