One of the world’s largest commodity traders, the Trafigura Group, has completed an agreement with Australia’s Mineral Resources for an iron ore repayment plan worth $400m (A$594.86m).
Mineral Resources has focused on preserving its cash following a rapid decrease in the price of iron ore and lithium, the company’s two main commodities.
The repayment plan was reported by Mineral Recourses in July, but it did not initially report Trafigura as the buyer as it was a private transaction.
The deal allows Trafigura to develop its iron ore trading, and between 2012 and 2022, the commodity trader increased its supply of iron ore fivefold to 31mt.
The company announced further iron ore trading developments at the beginning of 2024 in its first-half report. Trade increased from Australia and India and higher volumes of the material were registered at its port in Brazil.
As this is a private transaction, the processes of the deal cannot be made public, but the prepayment plan is repayable through the delivery of iron ore in the financial years between 2026 and 2028.
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By GlobalData
Prepayment transactions like these are not uncommon for some traders as they can secure access to resources through financing commodity producers.
The agreement comes after Mineral Resources recorded at the end of June that its net debt had increased to A$4.4bn, an increase from $698m in the past two years.
The debt has increased in conjunction with the company building its Onslow mine with a haulage road, as well as its projects operating at higher costs than other mines in the region.
Shares in Mineral Resources have dropped by 50% since mid-May.
