May 31 (Bloomberg) -- Hedge funds sold gasoline at the fastest pace since October 2006, dumping 57 percent of their bets on concern Europe’s debt crisis will hurt energy demand.
Speculative net-long positions in gasoline futures and options on the New York Mercantile Exchange tumbled to 14,228 in the week ended May 25, the lowest level since February 2007, according to the Commodity Futures Trading Commission’s Commitments of Traders Report on May 28. Bullish bets are down 80 percent since setting a record 70,742 on May 4.
“Coming into the month of May the market was heavily skewed with record long positions that exhausted the flow of buying,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We’re now much less vulnerable to a drop in prices and are in a good position to see prices rise. The hedge fund community is sitting on the sidelines.”
Gasoline fell 16 percent in May on concern the sovereign debt crisis in Greece will spread, undermining the recovery from the worst recession since World War II. Supplies of the motor fuel are 5.8 percent above the five-year average, and imports jumped 32 percent in the week ended May 21.
About 28 million people are on road trips during the U.S. Memorial Day holiday, a jump of 5.8 percent from a year earlier and the first increase since 2005, according to motoring club AAA, which calculates the period over five days ending today.
Selling Crude
“The bulls had to throw in the towel,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Commodity funds purchased gasoline in April and early May on expectations that a growing U.S. economy would lead to increasing demand. Concerns about the Greece crisis has spread to the markets and changed these assumptions.”
Hedge funds, commodity trading advisers and commodity pool operators, classified as managed money by the CFTC, decreased net-long positions in crude oil 17 percent to 74,236, the lowest level since July. Wagers that prices will climb have tumbled 53 percent in three weeks.
Crude oil dropped 14 percent through May 25 from a 19-month high of $87.15 a barrel May 3. Oil for July delivery fell 58 cents, or 0.8 percent, to $73.97 a barrel May 28 on the Nymex, capping the worst month since December 2008.
“This shouldn’t be a surprise given the recent activity in the financial markets,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “People are moving money around in an attempt to free up capital.”
Supplies of oil and all petroleum-based fuels jumped to 1.82 billion barrels in the week ended May 21, the highest stockpiles on a seasonal basis based on Energy Department data back to 1990. Inventories of crude oil surged 2.46 million barrels to 365.1 million. It was the 16th gain in 17 weeks.
Refinery Output
Refineries have increased production this year as the profit from processing oil into fuels has climbed. The margin, or crack spread, for processing three barrels of crude into two of gasoline and one of heating oil surged to $16.909 a barrel on May 13, the highest level since February 2009, based on futures prices. The spread narrowed to $11.369 May 25.
“Refinery crack spreads have been pretty good, encouraging gasoline production,” Evans said. “Supplies are ample and we’ve seen an end of the euro effect. The strong euro, weak dollar relationship which supported prices has gone.”
The euro lost 14 percent against the dollar this year.
In other markets, hedge funds, commodity trading advisers and commodity pool operators decreased bullish bets on heating oil 38 percent to 10,707 contracts. Heating oil futures for June delivery fell 8.98 cents, or 4.6 percent, to $1.8717 a gallon in New York during the week ended May 25.
Net-short positions in natural gas grew by 35 percent to 77,121 lots of futures and options on Nymex. Natural gas for July delivery advanced 4.7 cents, or 1.1 percent, to $4.341 per million British thermal units in New York on May 28, after falling to $4.051 May 25.
NEWS - Commodites, Agriculture, Green Investment - NEWS
5/28/2010
Sparx Gains After Saying It Will Start Green Fund Next Month
By Tomoko Yamazaki
May 28 (Bloomberg) -- Sparx Group Co., Asia’s biggest hedge-fund manager, rose as much as 6.5 percent to 11,980 yen in Tokyo trading after saying it plans to start a Japan-focused green fund with backing from a Middle East sovereign investor on June 1.
May 28 (Bloomberg) -- Sparx Group Co., Asia’s biggest hedge-fund manager, rose as much as 6.5 percent to 11,980 yen in Tokyo trading after saying it plans to start a Japan-focused green fund with backing from a Middle East sovereign investor on June 1.
Harbinger Builds African Resources Investments
May 27 2010 | 11:17am ET
You wouldn’t call Harbinger Capital Partners an emerging markets hedge fund. But the firm’s latest strategy is taking it into the frontier.
New York-based Harbinger has made a trio of investments in Africa, chasing the commodities boom to “the last untapped resource frontier on earth,” the firm’s Lawrence Clark told Bloomberg News.
Harbinger has taken big stakes in African Medical Investments and Sable Mining Africa—45% and 22%, respectively—as well as investing in African Minerals. And the $10 billion firm said that is only the beginning; Clark has looked into 15 countries over the past nine months.
“Over time, we’re going to work towards making more investments, but we’re only going to do so with great caution,” he said.
“The dollar value of our African investments, to date, has been very small as an overall percentage of our portfolio,” Clark added. “We’re doing a hell of a lot of work on small dollars right now to get comfortable that we’re making the right investments.”
A lot of that work includes visiting the continent: Clark said Harbinger will not invest in a project that he has not personally seen first-hand.
You wouldn’t call Harbinger Capital Partners an emerging markets hedge fund. But the firm’s latest strategy is taking it into the frontier.
New York-based Harbinger has made a trio of investments in Africa, chasing the commodities boom to “the last untapped resource frontier on earth,” the firm’s Lawrence Clark told Bloomberg News.
Harbinger has taken big stakes in African Medical Investments and Sable Mining Africa—45% and 22%, respectively—as well as investing in African Minerals. And the $10 billion firm said that is only the beginning; Clark has looked into 15 countries over the past nine months.
“Over time, we’re going to work towards making more investments, but we’re only going to do so with great caution,” he said.
“The dollar value of our African investments, to date, has been very small as an overall percentage of our portfolio,” Clark added. “We’re doing a hell of a lot of work on small dollars right now to get comfortable that we’re making the right investments.”
A lot of that work includes visiting the continent: Clark said Harbinger will not invest in a project that he has not personally seen first-hand.
5/27/2010
An ultra-secretive network rules independent oil trading. Its mentor: Marc Rich
One brisk day last fall, globe-trotting oil executive Benjamin R. Pollner was leaving his luxury prewar apartment building on Manhattan's Park Avenue when detectives from Manhattan District Attorney Robert M. Morgenthau's office approached. They began asking him about his alleged involvement in the unfolding U.N. Oil-for-Food scandal. Pollner, a tall, lean sixtysomething who wears European-cut clothes and a world-weary visage, was taken aback, say investigators familiar with the incident.
He snapped that he was in a hurry to make an overseas flight and refused to answer questions. Before hopping into a car that whisked him off to John F. Kennedy International airport, Morgenthau's investigators say Pollner delivered a parting shot: "I did nothing in New York or the U.S. that would be considered illegal." To them, Pollner was admitting he had done something wrong -- just not in their jurisdiction. Pollner, who runs Taurus Petroleum mainly from offices in Geneva and London, hasn't set foot in the U.S. since, investigators believe. He didn't reply to several calls and e-mails.
On the morning of Apr. 14, David Bay Chalmers Jr., 51, who owns privately held oil-trading company Bayoil U.S.A. Inc., emerged handcuffed and bleary-eyed from his high-security mansion in Houston's ritzy River Oaks neighborhood. He had just been indicted by the U.S. Attorney for the Southern District of New York for conspiracy, wire fraud, and trading with a country that supports terrorism -- Iraq -- during the U.N. program. Chalmers has pleaded not guilty.
Another trader, Patrick Maugein, nonexecutive chairman of London's SOCO International PLC oil-trading company, has been under scrutiny by the U.N. for his alleged role in a complex oil-smuggling scheme during Oil-for-Food, the U.N. program that allowed Iraq to sell oil for humanitarian purposes during a period of strict sanctions. Although many deals were legitimate, Saddam Hussein at times demanded illegal surcharges for the right to buy oil at below-market prices. Friends of Saddam's regime allegedly received sweetheart oil allocations, investigators say. Maugein denies violating sanctions or paying illegal surcharges.
LEARNING FROM EL MATADOR
What do the three men have in common, aside from their dubious deals with Iraq? They all belong to the ultrasecretive informal network of traders who dominate global independent oil trading. They don't necessarily act in concert with each other, but they often chase the same opportunities. They are the Rich Boys. All operate in the world of onetime fugitive billionaire Marc Rich, the most-wanted white-collar criminal in U.S. history until his controversial pardon on President Bill Clinton's last day in office in 2001.
Rich came to prominence in the 1970s, when he worked at Phillips Bros. (later Phibro), then the biggest trader. With veteran partner Pincus "Pinky" Green, he pioneered "combat trading" -- getting trading rights from countries in turmoil. Rich, called El Matador for his killer instinct, did the deals. Pinky, "The Admiral," arranged shipping.
Traders soon learned the art of the Rich deal: Do whatever it takes. After Rich and Green left Phibro in 1973 to form their own company, they bought a house in the South of France and "stocked it with hookers from Paris and flew in oil guys who spent a week at their expense," says a former U.S. oil executive who knows Rich. "They got the oil contracts they wanted." A former Rich partner corroborates this. Green, who retired in 1992 after heart surgery, could not be reached for comment.
Rich is notorious for trading with Iran during the hostage crisis, South Africa during apartheid, and Cuba and Libya during U.S. trade embargoes. In 1983 he fled to Switzerland after being indicted by the Justice Dept. for racketeering, trading with the enemy (Iran), dodging a $48 million corporate tax bill, and other violations that could have resulted in 300 years of jail time. Rich's companies pleaded guilty to some charges and paid about $200 million in fines, penalties, and taxes, but the case remained open until the pardon. "Rich's philosophy is that no law applies to him," says Morris "Sandy" Weinberg Jr., the former U.S. prosecutor who pursued and indicted Rich in 1983.
Over the years, Rich has mentored scores of traders. Although the 70-year-old is past his peak in the business, according to industry experts, his protégés are thriving. "You could call it the University of Marc Rich," says a Senate investigator. As Alaskan and North Sea oil production declines, new supplies increasingly come from some of the most corrupt or politically unstable places on earth, such as Equatorial Guinea and Sudan. These are the new frontiers where major U.S. oil companies fear to tread because of sanctions, embargoes, and antibribery and anti-terrorism laws. But it's where these traders, many like characters out of the James Bond flick Goldfinger, make good money, especially when oil tops $60 a barrel.
Governments and law enforcers have long been suspicious of some Rich Boys. In a six-month investigation, BusinessWeek has pieced together the first comprehensive look at their sprawling and deliberately elusive operations. Our findings:
-- Rich has spawned the most powerful informal network of independent commodities traders on earth. He did it primarily by funding spin-offs and startups around the globe for decades, and by training scores of traders who have set up their own shops. Although Rich no longer maintains stakes in most of these outfits, he has helped create a network that, in sum, is far more formidable than his own company in the 1970s and 1980s, when it was the world's premier commodities trader.
-- The Rich Boys' often controversial activities are on the rise. They buy oil from places where corruption is extensive: Some of the Rich Boys have been named in scandals in Nigeria and Venezuela. They also sell oil from pariah states to U.S. refiners.
-- Although Rich testified in writing in March, 2005, to a House committee investigating the U.N. program that he was not in any way active in the Oil-for-Food program, documents suggest that he bought Iraqi oil in 2001 from various front companies, which BusinessWeek has identified. This took place just one month after his pardon. If so, it seems that Rich may have misled Congress. The CIA, the Senate, and others have concluded that from September, 2000, until September, 2002, buyers in the Oil-for-Food oil program had to pay illegal surcharges that Saddam used in part to buy weapons, though no documents show Rich made such payments. Some investigators believe Iraqi insurgents are now using that money.
-- One company from which Rich bought crude during this period was a front for extremist Russian and Ukrainian organizations. All were pro-Saddam; one was a staunch supporter of North Korean dictator Kim Jong Il. Another company was tied to a major money launderer for Saddam.
To reach these conclusions, BusinessWeek traced crucial connections from a number of official inquiries and documents. Key among these documents: shipping tables from the Middle East Economic Survey (MEES), the preeminent authority on tanker activity in the Middle East. These detail the ports, tankers, destinations, and buyers of Iraqi crude. Other insights came from a 2004 CIA report on Iraq, data from Switzerland's Federal Commercial Registry Office, and the many inquiries launched into Oil-for-Food. The Justice Dept., six congressional committees, a U.N. commission, Morgenthau's office, and several countries, including Switzerland, are all investigating the program. Extensive interviews with dozens of oil traders, government investigators, and energy experts around the globe helped form a clearer picture of how the network operates.
Rich did not respond to numerous requests for interviews. But Thomas Frutig, CEO of his major holding company, Marc Rich + Co. Holding, denied to BusinessWeek involvement in Oil-for-Food. Frutig declined to respond to other allegations, despite repeated phone and e-mail requests. Trader Clyde Meltzer, one of Rich's business partners in the 1970s who remains close to him, says: "Marc is the most upstanding guy you'll ever meet. It's untrue he ever did anything dishonest."
Rich's trading in 2001 sheds a harsh new light on his pardon, which is limited to his 1983 indictment. To revoke it would require a constitutional amendment. Even so, it's possible authorities could levy new criminal charges against Rich, who is worth up to $8 billion by some estimates, for activities not included in the pardon. A federal grand jury in New York is apparently still investigating whether any of the money Rich and other traders allegedly funneled to Saddam was used to fund terrorism. The U.S. Attorney's office declined to comment. In 2001, New York State sued Rich for tax evasion, seeking $137 million they say he owes. But given Rich's clout -- he is a major philanthropist, one of Switzerland's largest taxpayers, and extremely well connected -- he'll likely continue to enjoy the good life abroad.
MAVERICKS IN THE MIDDLE
Like Marc Rich + Co. holding, most of the Rich Boys have offices in the tiny Swiss canton of Zug, with its quaint stores, Gothic architecture, and low tax rates. These maverick middlemen typically don't own or operate oil refineries or wells. Instead, they buy oil from producers, line up buyers to refine it, and charter tankers to ship it. Oil trading is often nebulous and opaque. Title to a tanker's oil, for example, may change a dozen times before the ship reaches port.
Some of the Rich Boys, like Pollner and Chalmers, have never worked for Rich. They've merely done business with him or have connections to him through other traders. Typically, Rich has bankrolled or owned stakes in the traders' companies, or sold them to close associates. Among the mightiest is commodities giant Glencore International, based in a suburb of Zug, which boasts annual turnover of $72 billion, according to its financial disclosures, making it one of the world's largest private companies. Glencore owns scores of other commodities companies from Spain to Australia. Rich sold the firm to its management in 1994, and the company says it now has no connection with Rich. It is run by former Rich lieutenants Ivan Glasenberg and Willy Strothotte, according to its Web site.
Companies run by the Rich Boys span the globe. Consider Netherlands-based Trafigura Group, one of the world's top trading companies. According to industry experts and investigators, it was founded in 1993 by former Rich traders with money from Rich. Experts say he invested in companies like Trafigura to expand his empire, though most contend he no longer has a stake in them. Zug-based Masefield Group was also founded by former Rich traders. In Moscow, there's Milio International Ltd., formed by Rich traders in 1997. Rich's flight to Switzerland in 1983 didn't stop him from financing companies in the U.S., among them Novarco, a White Plains (N.Y.) commodities-trading business he established in 1997. He sold its oil contracts in 2002 to Richmond (Va.)-based Dominion Resources Inc. (D ), according to company reports.
Many of the Rich Boys' tactics may be hyperaggressive, but they're perfectly legal. One way they do business: exploiting opportunity in Eastern European or Third World countries in dire need of funding. Rich taught his disciples -- called Lehrlings, German for apprentices -- to lend cash-strapped companies money and get the right to buy their commodities, industry experts say. Last year, for example, Glencore loaned $40 million to Peru's second-largest zinc miner, Volcan Compañia Minera. Volcan agreed to sell zinc and other minerals to Glencore from 2004 to 2010.
At times, some Rich boys apparently use front companies -- opaque holding entities -- to disguise deals. According to Senate documents, they have set up fronts with innocuous names such as Rescor Inc. or Plasco Shipping. Based in tax havens with strong banking secrecy such as Panama, Liechtenstein, and Gibraltar, they come and go like flickering harbor lights once a deal is done.
David Chalmers found such companies useful in trading Iraqi crude during sanctions, according to the Senate subcommittee on permanent investigations. It alleged he routinely used a company called Italtech to do business in Iraq. The submarine-engine outfit was started in the late '80s by Chilean-Italian arms dealer Augusto Giangrandi, who headed the Bermuda subsidiary of Chalmers' Bayoil. Italtech opportunistically morphed into an oil trader in 1999. Chalmers' lawyer, Bart Dalton, says Italtech "was not a front company."
Ben Pollner, law enforcement officials believe, was behind Fenar Petroleum and Alcon Petroleum, registered in Liechtenstein in 1999, according to corporate registry documents. They were among the largest oil purchasers during Oil-for-Food, together exporting $2.47 billion worth of crude, according to a report by the U.N. Independent Inquiry Committee, chaired by former Federal Reserve Chairman Paul A. Volcker. Investigators allege they paid tens of millions in illegal surcharges. The companies sold almost exclusively to Pollner's company, Taurus, MEES shows. "We've interviewed more than a dozen traders who claim [that although] Pollner was working on his own deals, he was often acting on behalf of Rich, too," says a senior prosecutor investigating possible Oil-for-Food violations.
THRIVING IN TROUBLE SPOTS
One reason the rich boys are so busy these days is because they thrive in a world of high oil prices and scarce reserves. Big U.S. oil companies are desperate for crude yet don't want to dirty their hands getting it from global trouble spots. Says a former partner of Rich's, who requested anonymity because he routinely trades with Big Oil: "Majors don't want to touch the oil, yet they want to buy it. If you think Pablo Escobar [the Colombian drug king] was guilty, weren't people who used cocaine, too?" In fact, half the crude on which Oil-for-Food surcharges were paid ultimately ended up with U.S. majors, according to the Senate. Says Richard Perkins, former director of worldwide oil trading at Chevron Corp.: "The majors are the bread and butter" of traders like the Rich Boys.
U.S. companies are forbidden from bribing officials. If they do, it can prove damaging. The Securities & Exchange Commission, for example, is probing Marathon Oil (MRO ), ExxonMobil (XOM ), Amerada Hess (AHC ), Chevron (CVX ), and others for allegedly bribing President Teodoro Obiang Nguema Mbasogo of Equatorial Guinea and his relatives for oil rights. The companies say they're cooperating with the SEC and that they acted lawfully.
Oil majors are also under pressure to shun pariah states. For instance, there are tight limits on deals with war-torn Sudan because it backs terrorism and engages in genocide. But companies set up by the Rich Boys, including Trafigura and Glencore, are among those buying crude there, trade reports say. China is a big customer for the Rich Boys there and elsewhere. Still, says Hal C. Eren, principal attorney at Washington's Eren Law Firm and a former U.S. Treasury Dept. official, tighter controls have "created a situation that's definitely helping independent traders."
Because the Rich Boys operate in such secrecy, one of the few ways to see how they work is when they get busted or investigated. For example, in Nigeria last year, Petrodel, a firm run by former top Rich trader Michael Prest, Glencore, Trafigura, and several other firms, were accused by Nigeria's state oil company of inflating shipping costs by doctoring documents. The Nigerians demanded repayments of more than $100 million. Trafigura denies the allegations and says that all past problems have been resolved. A Glencore spokesman "vigorously disputes" the charges. Petrodel officials and Prest could not be reached for comment.
Some Rich Boys also have their hand in oil-rich Venezuela, whose leftist leader, President Hugo Chávez, is at odds with the Bush Administration. After an oil workers' strike in 2003, Glencore and two U.S. traders allegedly paid kickbacks to secure deals with oil monopoly Petróleos de Venezuela (PDVSA), according to The Wall Street Journal. PDVSA denied accepting bribes and Glencore denied making any illegal payments.
THE SADDAM CONNECTION
Some of the most compelling details to emerge from Oil-for-Food probes revolve around Rich himself. BusinessWeek has pieced together information suggesting that, despite his denials, Rich did buy Iraqi crude from several questionable companies during the program. His name appears in shipping records compiled by MEES. These show he bought from four separate companies, starting in February, 2001: Onako Oil Co., a subsidiary of Alfa Group, one of Russia's largest conglomerates; an Egyptian company called International Company for Petroleum & Industrial Services (or INCOME, for short); and a Swiss company, Zerich, with ties to some extremist groups. The fourth, EOTC, remains a mystery. Hesham Sheta, vice-chairman of INCOME's parent company in Cairo, Egypt, International Group for Investments, confirmed that "Marc Rich has been INCOME's 'agent' [oil trader] since 1990" and that Rich bought Iraqi crude from INCOME in 2001. Zerich has since been liquidated. Alfa denies paying surcharges.
Rich tells a different story. In March he acknowledged his company was on the U.N.'s list of "approved" crude buyers but insisted in written answers to House International Relations Committee questions that "nothing ever came of it." A committee spokesman remarked at the time: "We believe [Rich] knows more than he wishes to acknowledge." Marc Rich + Co.'s Frutig reiterated an earlier press statement: "Marc Rich Holdings reject all the allegations relating to its involvement in the U.N.'s Oil-for-Food program in Iraq."
Even with the new information, it may be difficult for the authorities to prove that Rich did anything illegal. At the time, Saddam offered oil at cut-rate prices to his supporters, who would then sell it for a huge profit on the market. For two years leading up to September, 2002, the dictator demanded surcharges of up to 50 cents a barrel that he deposited in secret bank accounts, according to the CIA, the Volcker committee, and Senate documents.
While Rich's company bought crude from companies acting on behalf of those with allocations, no documents show he paid illegal surcharges. However, allocation holders would typically "pass on the cost of that surcharge," according to a recent Senate report. "[Buyers] were informed of the required surcharges, and either paid them directly or reimbursed the allocation holder." Hesham denies that INCOME paid illegal surcharges.
Saddam banked about $10 billion from oil surcharges and smuggling, says the U.S. Government Accountability Office. Initially it enabled him to live large, buying fleets of Mercedes and the finest wine, according to the CIA. But when pressure from the Bush Administration mounted in 2001, Saddam earmarked the money for a war chest that "is likely funding the current insurgents," says John Fawcett, an independent investigator tracking Iraqi funds who recently testified to the House Committee on Energy & Commerce.
Some Rich Boys were heavy hitters in Oil-for-Food. In February, 2001, for example, the U.N. Security Council reported that Glencore bought 1 million barrels of Iraqi crude destined for the U.S. The oil was diverted to Croatia, where it was sold for a $3 million premium, that went into a secret bank account. Glencore was caught by U.N. overseers, and later agreed to refund the money to the U.N. A Glencore spokeswoman says the oil was shipped to Croatia for storage and later shipment to the U.S. A CIA report alleges that Glencore paid more than $3.2 million in surcharges to Iraq, something it denies.
The numerous investigations into the U.N. program paint a complex picture of how Rich Boys allegedly work. In September, 2001, U.S. and U.N. authorities were tipped off by a Greek shipping captain, who feared his tanker chartered by Trafigura was involved in sanctions busting. Trafigura, run by former Rich traders Claude Dauphin and Eric de Turckheim, bought Iraqi oil from a Bermuda company called Ibex Energy, according to a U.N. report. Ibex was owned by another former Rich trader, Jean-Paul Cayré. SOCO's Patrick Maugein, once a top Rich trader, was close to former Iraqi Deputy Prime Minister Tariq Aziz. The CIA alleges Maugein received oil allocations that he sold through Trafigura. Maugein denies paying illegal surcharges. Maugein says he knows one of Trafigura's founders. Investigators allege he had a contract with or a stake in Trafigura, something both the company and Maugein deny. Maugein and Trafigura also deny having commercial ties to Ibex.
DEALS WITH EXTREMISTS
Rich and those like him are so successful because they'll do business with virtually anyone if there are big bucks to be made. Both Rich and Pollner's Taurus Petroleum bought Iraqi crude in 2001 through the now-defunct Zerich, according to MEES shipping records. Zerich was a front for various groups that received oil allocations, a CIA report says.
Some of them, BusinessWeek has learned, are extremists, including Ukranian and Russian outfits that strongly supported Saddam -- as well as North Korean strongman Kim Jong Il. One, Russia's Peace & Unity Party, threw a birthday bash in Moscow in January, 2004, in honor of Kim. At it, Peace & Unity Chairwoman Sazhi Zaindinova Umalatova called Kim "an all-powerful treasured sword...when the imperialists are getting more undisguised in their military ambition," according to North Korea's news agency. Zerich also acted for the Ukraine Communist Party and the Ukraine Socialist Party. In all, Zerich bought $422 million worth of oil from Iraq, according to the Volcker committee.
In the early 1990s after the Soviet Union collapsed, Rich quickly became the most powerful trader there. He was "a coach and sort of a godfather for several of the oligarchs," says Vladimir L. Kvint, a professor at American University's Kogod School of Business. Pollner worked for Chalmers at Bayoil then, and all of them sold Russian crude that they got through the oligarchs.
Rich has long had ties to Mikhail Fridman and his mammoth Alfa Group, says Kvint. In 2001, Rich nearly sold his company to an Alfa division: Zug-based Crown Resources Corp. (now called ERC Trading). During the U.N. program both Rich and Chalmers bought oil from Alfa units, according to MEES: Onako and Tyumen Oil Co., respectively. The CIA report alleges that Alfa paid illegal surcharges to Saddam during Oil-for-Food, which Alfa denies.
Rich is legendary for cultivating people in high places. Traders say he could reach practically any diplomat, oil minister, or dictator in an instant with a phone that some joked seemed surgically attached to his ear. Two of his key Mideast connections were the powerful Bakhtiar brothers, Esfandiar and Bahman. The Bakhtiars -- whose father, investigators believe, headed the Shah of Iran's secret police -- fled to Iraq after the Shah's ouster. Thanks to family ties, Saddam treated them like "adopted sons," says Jules B. Kroll, founder of Kroll Inc., hired by Kuwait to investigate Saddam's finances in 1991.
The Bakhtiar link helped Rich forge links with the Iraqi dictator, says the Kroll report. Kroll says it obtained faxes between Rich and the Bakhtiars describing Rich's intent to trade Iraqi crude through the brothers. Over two decades, Rich traded allegedly through two companies linked with the Bakhtiars: Jaraco and Dynatrade (now owned by INCOME's parent, IGI). The Bakhtiars set up Jaraco in Geneva in 1981. In 2004, the U.S. Treasury identified Jaraco as a major money-laundering conduit for Saddam's billions. Hesham Sheta says, "[One of the] Bakhtiars still acts as a consultant" to IGI, which in turn owns INCOME, from which Rich bought Iraqi crude during Oil-for-Food.
Rich, along with Pollner and Bayoil's Chalmers, were "very trusted by the Iraqi Oil Ministry," says Axel Busch, chief correspondent for industry newsletter Energy Intelligence. A street-smart Staten Island boy, "Pollner is considered a brilliant trader," says Busch. Cultivating relations with small refineries, particularly in the U.S., enabled him to handle big quantities of Iraqi oil by breaking it into smaller cargoes, say industry experts. Pollner, they say, began trading with Iraq before the 1991 Persian Gulf War and continued after a U.N. embargo.
For his part, Chalmers had loaned money to Iraq since the 1980s and received repayment in oil, according to industry experts. The scion of a wealthy Houston oil family, Chalmers, a tight-lipped trader and tennis ace with a taste for fancy cigars, was used to rubbing shoulders with the elite. But he never worked for Rich. Indeed, his lawyer Dalton says they were always "competitors" and "didn't act together in Oil-for-Food." Still, trade reports and CIA documents show they often did deals with the same people in the same places. Chalmers' deep pockets apparently appealed to Iraq's Oil Ministry. After the U.S. lifted its embargo in May, 2003, the ministry said it would sell only to major refiners, but it still allowed two traders to get supplies -- Bayoil and Taurus.
"EERIE" EXISTENCE
These days rich has opulent digs in several countries. He owns a palatial Moorish villa on Spain's ritzy Costa del Sol and a ski chalet in Saint Moritz, Switzerland. His powerful pals have included opera star Placido Domingo and former hedge-fund guru Michael Steinhardt, who, in a letter backing the pardon, called Rich "my friend...who has been punished enough." Former traders say Rich spends most of his time at Villa Rosa, his compound on Switzerland's glistening Lake Lucerne, surrounded by Picassos, van Goghs, and Mirós.
Rich still keeps offices in Zug. "It's eerie," says a financial executive who recently paid a call. "You go up in an elevator and step into a vestibule where you're asked over an intercom if you have an appointment and whom you're there to see. If you're on the list, a security guard opens a door to another room. There you see a receptionist who scrutinizes you. Then you're escorted into another elevator that takes you to a different floor."
Rich has slowed down since his pardon. He sold Marc Rich Investments in 2003 but still runs Marc Rich + Co. Holding, which has a trading operation and a real estate arm. U.S. authorities -- the Justice Dept., in particular -- are on Rich's case. As for some of the Rich Boys, it's possible that the U.N. or even the Swiss government, which is conducting its own investigation into Oil-for-Food, may act if they can prove wrongdoing.
Maybe Rich will once again elude his pursuers. He is fast becoming a mythic persona: Word is a TV series based on his life may be in the works. And the Rich Boys -- his legacy -- rule.
He snapped that he was in a hurry to make an overseas flight and refused to answer questions. Before hopping into a car that whisked him off to John F. Kennedy International airport, Morgenthau's investigators say Pollner delivered a parting shot: "I did nothing in New York or the U.S. that would be considered illegal." To them, Pollner was admitting he had done something wrong -- just not in their jurisdiction. Pollner, who runs Taurus Petroleum mainly from offices in Geneva and London, hasn't set foot in the U.S. since, investigators believe. He didn't reply to several calls and e-mails.
On the morning of Apr. 14, David Bay Chalmers Jr., 51, who owns privately held oil-trading company Bayoil U.S.A. Inc., emerged handcuffed and bleary-eyed from his high-security mansion in Houston's ritzy River Oaks neighborhood. He had just been indicted by the U.S. Attorney for the Southern District of New York for conspiracy, wire fraud, and trading with a country that supports terrorism -- Iraq -- during the U.N. program. Chalmers has pleaded not guilty.
Another trader, Patrick Maugein, nonexecutive chairman of London's SOCO International PLC oil-trading company, has been under scrutiny by the U.N. for his alleged role in a complex oil-smuggling scheme during Oil-for-Food, the U.N. program that allowed Iraq to sell oil for humanitarian purposes during a period of strict sanctions. Although many deals were legitimate, Saddam Hussein at times demanded illegal surcharges for the right to buy oil at below-market prices. Friends of Saddam's regime allegedly received sweetheart oil allocations, investigators say. Maugein denies violating sanctions or paying illegal surcharges.
LEARNING FROM EL MATADOR
What do the three men have in common, aside from their dubious deals with Iraq? They all belong to the ultrasecretive informal network of traders who dominate global independent oil trading. They don't necessarily act in concert with each other, but they often chase the same opportunities. They are the Rich Boys. All operate in the world of onetime fugitive billionaire Marc Rich, the most-wanted white-collar criminal in U.S. history until his controversial pardon on President Bill Clinton's last day in office in 2001.
Rich came to prominence in the 1970s, when he worked at Phillips Bros. (later Phibro), then the biggest trader. With veteran partner Pincus "Pinky" Green, he pioneered "combat trading" -- getting trading rights from countries in turmoil. Rich, called El Matador for his killer instinct, did the deals. Pinky, "The Admiral," arranged shipping.
Traders soon learned the art of the Rich deal: Do whatever it takes. After Rich and Green left Phibro in 1973 to form their own company, they bought a house in the South of France and "stocked it with hookers from Paris and flew in oil guys who spent a week at their expense," says a former U.S. oil executive who knows Rich. "They got the oil contracts they wanted." A former Rich partner corroborates this. Green, who retired in 1992 after heart surgery, could not be reached for comment.
Rich is notorious for trading with Iran during the hostage crisis, South Africa during apartheid, and Cuba and Libya during U.S. trade embargoes. In 1983 he fled to Switzerland after being indicted by the Justice Dept. for racketeering, trading with the enemy (Iran), dodging a $48 million corporate tax bill, and other violations that could have resulted in 300 years of jail time. Rich's companies pleaded guilty to some charges and paid about $200 million in fines, penalties, and taxes, but the case remained open until the pardon. "Rich's philosophy is that no law applies to him," says Morris "Sandy" Weinberg Jr., the former U.S. prosecutor who pursued and indicted Rich in 1983.
Over the years, Rich has mentored scores of traders. Although the 70-year-old is past his peak in the business, according to industry experts, his protégés are thriving. "You could call it the University of Marc Rich," says a Senate investigator. As Alaskan and North Sea oil production declines, new supplies increasingly come from some of the most corrupt or politically unstable places on earth, such as Equatorial Guinea and Sudan. These are the new frontiers where major U.S. oil companies fear to tread because of sanctions, embargoes, and antibribery and anti-terrorism laws. But it's where these traders, many like characters out of the James Bond flick Goldfinger, make good money, especially when oil tops $60 a barrel.
Governments and law enforcers have long been suspicious of some Rich Boys. In a six-month investigation, BusinessWeek has pieced together the first comprehensive look at their sprawling and deliberately elusive operations. Our findings:
-- Rich has spawned the most powerful informal network of independent commodities traders on earth. He did it primarily by funding spin-offs and startups around the globe for decades, and by training scores of traders who have set up their own shops. Although Rich no longer maintains stakes in most of these outfits, he has helped create a network that, in sum, is far more formidable than his own company in the 1970s and 1980s, when it was the world's premier commodities trader.
-- The Rich Boys' often controversial activities are on the rise. They buy oil from places where corruption is extensive: Some of the Rich Boys have been named in scandals in Nigeria and Venezuela. They also sell oil from pariah states to U.S. refiners.
-- Although Rich testified in writing in March, 2005, to a House committee investigating the U.N. program that he was not in any way active in the Oil-for-Food program, documents suggest that he bought Iraqi oil in 2001 from various front companies, which BusinessWeek has identified. This took place just one month after his pardon. If so, it seems that Rich may have misled Congress. The CIA, the Senate, and others have concluded that from September, 2000, until September, 2002, buyers in the Oil-for-Food oil program had to pay illegal surcharges that Saddam used in part to buy weapons, though no documents show Rich made such payments. Some investigators believe Iraqi insurgents are now using that money.
-- One company from which Rich bought crude during this period was a front for extremist Russian and Ukrainian organizations. All were pro-Saddam; one was a staunch supporter of North Korean dictator Kim Jong Il. Another company was tied to a major money launderer for Saddam.
To reach these conclusions, BusinessWeek traced crucial connections from a number of official inquiries and documents. Key among these documents: shipping tables from the Middle East Economic Survey (MEES), the preeminent authority on tanker activity in the Middle East. These detail the ports, tankers, destinations, and buyers of Iraqi crude. Other insights came from a 2004 CIA report on Iraq, data from Switzerland's Federal Commercial Registry Office, and the many inquiries launched into Oil-for-Food. The Justice Dept., six congressional committees, a U.N. commission, Morgenthau's office, and several countries, including Switzerland, are all investigating the program. Extensive interviews with dozens of oil traders, government investigators, and energy experts around the globe helped form a clearer picture of how the network operates.
Rich did not respond to numerous requests for interviews. But Thomas Frutig, CEO of his major holding company, Marc Rich + Co. Holding, denied to BusinessWeek involvement in Oil-for-Food. Frutig declined to respond to other allegations, despite repeated phone and e-mail requests. Trader Clyde Meltzer, one of Rich's business partners in the 1970s who remains close to him, says: "Marc is the most upstanding guy you'll ever meet. It's untrue he ever did anything dishonest."
Rich's trading in 2001 sheds a harsh new light on his pardon, which is limited to his 1983 indictment. To revoke it would require a constitutional amendment. Even so, it's possible authorities could levy new criminal charges against Rich, who is worth up to $8 billion by some estimates, for activities not included in the pardon. A federal grand jury in New York is apparently still investigating whether any of the money Rich and other traders allegedly funneled to Saddam was used to fund terrorism. The U.S. Attorney's office declined to comment. In 2001, New York State sued Rich for tax evasion, seeking $137 million they say he owes. But given Rich's clout -- he is a major philanthropist, one of Switzerland's largest taxpayers, and extremely well connected -- he'll likely continue to enjoy the good life abroad.
MAVERICKS IN THE MIDDLE
Like Marc Rich + Co. holding, most of the Rich Boys have offices in the tiny Swiss canton of Zug, with its quaint stores, Gothic architecture, and low tax rates. These maverick middlemen typically don't own or operate oil refineries or wells. Instead, they buy oil from producers, line up buyers to refine it, and charter tankers to ship it. Oil trading is often nebulous and opaque. Title to a tanker's oil, for example, may change a dozen times before the ship reaches port.
Some of the Rich Boys, like Pollner and Chalmers, have never worked for Rich. They've merely done business with him or have connections to him through other traders. Typically, Rich has bankrolled or owned stakes in the traders' companies, or sold them to close associates. Among the mightiest is commodities giant Glencore International, based in a suburb of Zug, which boasts annual turnover of $72 billion, according to its financial disclosures, making it one of the world's largest private companies. Glencore owns scores of other commodities companies from Spain to Australia. Rich sold the firm to its management in 1994, and the company says it now has no connection with Rich. It is run by former Rich lieutenants Ivan Glasenberg and Willy Strothotte, according to its Web site.
Companies run by the Rich Boys span the globe. Consider Netherlands-based Trafigura Group, one of the world's top trading companies. According to industry experts and investigators, it was founded in 1993 by former Rich traders with money from Rich. Experts say he invested in companies like Trafigura to expand his empire, though most contend he no longer has a stake in them. Zug-based Masefield Group was also founded by former Rich traders. In Moscow, there's Milio International Ltd., formed by Rich traders in 1997. Rich's flight to Switzerland in 1983 didn't stop him from financing companies in the U.S., among them Novarco, a White Plains (N.Y.) commodities-trading business he established in 1997. He sold its oil contracts in 2002 to Richmond (Va.)-based Dominion Resources Inc. (D ), according to company reports.
Many of the Rich Boys' tactics may be hyperaggressive, but they're perfectly legal. One way they do business: exploiting opportunity in Eastern European or Third World countries in dire need of funding. Rich taught his disciples -- called Lehrlings, German for apprentices -- to lend cash-strapped companies money and get the right to buy their commodities, industry experts say. Last year, for example, Glencore loaned $40 million to Peru's second-largest zinc miner, Volcan Compañia Minera. Volcan agreed to sell zinc and other minerals to Glencore from 2004 to 2010.
At times, some Rich boys apparently use front companies -- opaque holding entities -- to disguise deals. According to Senate documents, they have set up fronts with innocuous names such as Rescor Inc. or Plasco Shipping. Based in tax havens with strong banking secrecy such as Panama, Liechtenstein, and Gibraltar, they come and go like flickering harbor lights once a deal is done.
David Chalmers found such companies useful in trading Iraqi crude during sanctions, according to the Senate subcommittee on permanent investigations. It alleged he routinely used a company called Italtech to do business in Iraq. The submarine-engine outfit was started in the late '80s by Chilean-Italian arms dealer Augusto Giangrandi, who headed the Bermuda subsidiary of Chalmers' Bayoil. Italtech opportunistically morphed into an oil trader in 1999. Chalmers' lawyer, Bart Dalton, says Italtech "was not a front company."
Ben Pollner, law enforcement officials believe, was behind Fenar Petroleum and Alcon Petroleum, registered in Liechtenstein in 1999, according to corporate registry documents. They were among the largest oil purchasers during Oil-for-Food, together exporting $2.47 billion worth of crude, according to a report by the U.N. Independent Inquiry Committee, chaired by former Federal Reserve Chairman Paul A. Volcker. Investigators allege they paid tens of millions in illegal surcharges. The companies sold almost exclusively to Pollner's company, Taurus, MEES shows. "We've interviewed more than a dozen traders who claim [that although] Pollner was working on his own deals, he was often acting on behalf of Rich, too," says a senior prosecutor investigating possible Oil-for-Food violations.
THRIVING IN TROUBLE SPOTS
One reason the rich boys are so busy these days is because they thrive in a world of high oil prices and scarce reserves. Big U.S. oil companies are desperate for crude yet don't want to dirty their hands getting it from global trouble spots. Says a former partner of Rich's, who requested anonymity because he routinely trades with Big Oil: "Majors don't want to touch the oil, yet they want to buy it. If you think Pablo Escobar [the Colombian drug king] was guilty, weren't people who used cocaine, too?" In fact, half the crude on which Oil-for-Food surcharges were paid ultimately ended up with U.S. majors, according to the Senate. Says Richard Perkins, former director of worldwide oil trading at Chevron Corp.: "The majors are the bread and butter" of traders like the Rich Boys.
U.S. companies are forbidden from bribing officials. If they do, it can prove damaging. The Securities & Exchange Commission, for example, is probing Marathon Oil (MRO ), ExxonMobil (XOM ), Amerada Hess (AHC ), Chevron (CVX ), and others for allegedly bribing President Teodoro Obiang Nguema Mbasogo of Equatorial Guinea and his relatives for oil rights. The companies say they're cooperating with the SEC and that they acted lawfully.
Oil majors are also under pressure to shun pariah states. For instance, there are tight limits on deals with war-torn Sudan because it backs terrorism and engages in genocide. But companies set up by the Rich Boys, including Trafigura and Glencore, are among those buying crude there, trade reports say. China is a big customer for the Rich Boys there and elsewhere. Still, says Hal C. Eren, principal attorney at Washington's Eren Law Firm and a former U.S. Treasury Dept. official, tighter controls have "created a situation that's definitely helping independent traders."
Because the Rich Boys operate in such secrecy, one of the few ways to see how they work is when they get busted or investigated. For example, in Nigeria last year, Petrodel, a firm run by former top Rich trader Michael Prest, Glencore, Trafigura, and several other firms, were accused by Nigeria's state oil company of inflating shipping costs by doctoring documents. The Nigerians demanded repayments of more than $100 million. Trafigura denies the allegations and says that all past problems have been resolved. A Glencore spokesman "vigorously disputes" the charges. Petrodel officials and Prest could not be reached for comment.
Some Rich Boys also have their hand in oil-rich Venezuela, whose leftist leader, President Hugo Chávez, is at odds with the Bush Administration. After an oil workers' strike in 2003, Glencore and two U.S. traders allegedly paid kickbacks to secure deals with oil monopoly Petróleos de Venezuela (PDVSA), according to The Wall Street Journal. PDVSA denied accepting bribes and Glencore denied making any illegal payments.
THE SADDAM CONNECTION
Some of the most compelling details to emerge from Oil-for-Food probes revolve around Rich himself. BusinessWeek has pieced together information suggesting that, despite his denials, Rich did buy Iraqi crude from several questionable companies during the program. His name appears in shipping records compiled by MEES. These show he bought from four separate companies, starting in February, 2001: Onako Oil Co., a subsidiary of Alfa Group, one of Russia's largest conglomerates; an Egyptian company called International Company for Petroleum & Industrial Services (or INCOME, for short); and a Swiss company, Zerich, with ties to some extremist groups. The fourth, EOTC, remains a mystery. Hesham Sheta, vice-chairman of INCOME's parent company in Cairo, Egypt, International Group for Investments, confirmed that "Marc Rich has been INCOME's 'agent' [oil trader] since 1990" and that Rich bought Iraqi crude from INCOME in 2001. Zerich has since been liquidated. Alfa denies paying surcharges.
Rich tells a different story. In March he acknowledged his company was on the U.N.'s list of "approved" crude buyers but insisted in written answers to House International Relations Committee questions that "nothing ever came of it." A committee spokesman remarked at the time: "We believe [Rich] knows more than he wishes to acknowledge." Marc Rich + Co.'s Frutig reiterated an earlier press statement: "Marc Rich Holdings reject all the allegations relating to its involvement in the U.N.'s Oil-for-Food program in Iraq."
Even with the new information, it may be difficult for the authorities to prove that Rich did anything illegal. At the time, Saddam offered oil at cut-rate prices to his supporters, who would then sell it for a huge profit on the market. For two years leading up to September, 2002, the dictator demanded surcharges of up to 50 cents a barrel that he deposited in secret bank accounts, according to the CIA, the Volcker committee, and Senate documents.
While Rich's company bought crude from companies acting on behalf of those with allocations, no documents show he paid illegal surcharges. However, allocation holders would typically "pass on the cost of that surcharge," according to a recent Senate report. "[Buyers] were informed of the required surcharges, and either paid them directly or reimbursed the allocation holder." Hesham denies that INCOME paid illegal surcharges.
Saddam banked about $10 billion from oil surcharges and smuggling, says the U.S. Government Accountability Office. Initially it enabled him to live large, buying fleets of Mercedes and the finest wine, according to the CIA. But when pressure from the Bush Administration mounted in 2001, Saddam earmarked the money for a war chest that "is likely funding the current insurgents," says John Fawcett, an independent investigator tracking Iraqi funds who recently testified to the House Committee on Energy & Commerce.
Some Rich Boys were heavy hitters in Oil-for-Food. In February, 2001, for example, the U.N. Security Council reported that Glencore bought 1 million barrels of Iraqi crude destined for the U.S. The oil was diverted to Croatia, where it was sold for a $3 million premium, that went into a secret bank account. Glencore was caught by U.N. overseers, and later agreed to refund the money to the U.N. A Glencore spokeswoman says the oil was shipped to Croatia for storage and later shipment to the U.S. A CIA report alleges that Glencore paid more than $3.2 million in surcharges to Iraq, something it denies.
The numerous investigations into the U.N. program paint a complex picture of how Rich Boys allegedly work. In September, 2001, U.S. and U.N. authorities were tipped off by a Greek shipping captain, who feared his tanker chartered by Trafigura was involved in sanctions busting. Trafigura, run by former Rich traders Claude Dauphin and Eric de Turckheim, bought Iraqi oil from a Bermuda company called Ibex Energy, according to a U.N. report. Ibex was owned by another former Rich trader, Jean-Paul Cayré. SOCO's Patrick Maugein, once a top Rich trader, was close to former Iraqi Deputy Prime Minister Tariq Aziz. The CIA alleges Maugein received oil allocations that he sold through Trafigura. Maugein denies paying illegal surcharges. Maugein says he knows one of Trafigura's founders. Investigators allege he had a contract with or a stake in Trafigura, something both the company and Maugein deny. Maugein and Trafigura also deny having commercial ties to Ibex.
DEALS WITH EXTREMISTS
Rich and those like him are so successful because they'll do business with virtually anyone if there are big bucks to be made. Both Rich and Pollner's Taurus Petroleum bought Iraqi crude in 2001 through the now-defunct Zerich, according to MEES shipping records. Zerich was a front for various groups that received oil allocations, a CIA report says.
Some of them, BusinessWeek has learned, are extremists, including Ukranian and Russian outfits that strongly supported Saddam -- as well as North Korean strongman Kim Jong Il. One, Russia's Peace & Unity Party, threw a birthday bash in Moscow in January, 2004, in honor of Kim. At it, Peace & Unity Chairwoman Sazhi Zaindinova Umalatova called Kim "an all-powerful treasured sword...when the imperialists are getting more undisguised in their military ambition," according to North Korea's news agency. Zerich also acted for the Ukraine Communist Party and the Ukraine Socialist Party. In all, Zerich bought $422 million worth of oil from Iraq, according to the Volcker committee.
In the early 1990s after the Soviet Union collapsed, Rich quickly became the most powerful trader there. He was "a coach and sort of a godfather for several of the oligarchs," says Vladimir L. Kvint, a professor at American University's Kogod School of Business. Pollner worked for Chalmers at Bayoil then, and all of them sold Russian crude that they got through the oligarchs.
Rich has long had ties to Mikhail Fridman and his mammoth Alfa Group, says Kvint. In 2001, Rich nearly sold his company to an Alfa division: Zug-based Crown Resources Corp. (now called ERC Trading). During the U.N. program both Rich and Chalmers bought oil from Alfa units, according to MEES: Onako and Tyumen Oil Co., respectively. The CIA report alleges that Alfa paid illegal surcharges to Saddam during Oil-for-Food, which Alfa denies.
Rich is legendary for cultivating people in high places. Traders say he could reach practically any diplomat, oil minister, or dictator in an instant with a phone that some joked seemed surgically attached to his ear. Two of his key Mideast connections were the powerful Bakhtiar brothers, Esfandiar and Bahman. The Bakhtiars -- whose father, investigators believe, headed the Shah of Iran's secret police -- fled to Iraq after the Shah's ouster. Thanks to family ties, Saddam treated them like "adopted sons," says Jules B. Kroll, founder of Kroll Inc., hired by Kuwait to investigate Saddam's finances in 1991.
The Bakhtiar link helped Rich forge links with the Iraqi dictator, says the Kroll report. Kroll says it obtained faxes between Rich and the Bakhtiars describing Rich's intent to trade Iraqi crude through the brothers. Over two decades, Rich traded allegedly through two companies linked with the Bakhtiars: Jaraco and Dynatrade (now owned by INCOME's parent, IGI). The Bakhtiars set up Jaraco in Geneva in 1981. In 2004, the U.S. Treasury identified Jaraco as a major money-laundering conduit for Saddam's billions. Hesham Sheta says, "[One of the] Bakhtiars still acts as a consultant" to IGI, which in turn owns INCOME, from which Rich bought Iraqi crude during Oil-for-Food.
Rich, along with Pollner and Bayoil's Chalmers, were "very trusted by the Iraqi Oil Ministry," says Axel Busch, chief correspondent for industry newsletter Energy Intelligence. A street-smart Staten Island boy, "Pollner is considered a brilliant trader," says Busch. Cultivating relations with small refineries, particularly in the U.S., enabled him to handle big quantities of Iraqi oil by breaking it into smaller cargoes, say industry experts. Pollner, they say, began trading with Iraq before the 1991 Persian Gulf War and continued after a U.N. embargo.
For his part, Chalmers had loaned money to Iraq since the 1980s and received repayment in oil, according to industry experts. The scion of a wealthy Houston oil family, Chalmers, a tight-lipped trader and tennis ace with a taste for fancy cigars, was used to rubbing shoulders with the elite. But he never worked for Rich. Indeed, his lawyer Dalton says they were always "competitors" and "didn't act together in Oil-for-Food." Still, trade reports and CIA documents show they often did deals with the same people in the same places. Chalmers' deep pockets apparently appealed to Iraq's Oil Ministry. After the U.S. lifted its embargo in May, 2003, the ministry said it would sell only to major refiners, but it still allowed two traders to get supplies -- Bayoil and Taurus.
"EERIE" EXISTENCE
These days rich has opulent digs in several countries. He owns a palatial Moorish villa on Spain's ritzy Costa del Sol and a ski chalet in Saint Moritz, Switzerland. His powerful pals have included opera star Placido Domingo and former hedge-fund guru Michael Steinhardt, who, in a letter backing the pardon, called Rich "my friend...who has been punished enough." Former traders say Rich spends most of his time at Villa Rosa, his compound on Switzerland's glistening Lake Lucerne, surrounded by Picassos, van Goghs, and Mirós.
Rich still keeps offices in Zug. "It's eerie," says a financial executive who recently paid a call. "You go up in an elevator and step into a vestibule where you're asked over an intercom if you have an appointment and whom you're there to see. If you're on the list, a security guard opens a door to another room. There you see a receptionist who scrutinizes you. Then you're escorted into another elevator that takes you to a different floor."
Rich has slowed down since his pardon. He sold Marc Rich Investments in 2003 but still runs Marc Rich + Co. Holding, which has a trading operation and a real estate arm. U.S. authorities -- the Justice Dept., in particular -- are on Rich's case. As for some of the Rich Boys, it's possible that the U.N. or even the Swiss government, which is conducting its own investigation into Oil-for-Food, may act if they can prove wrongdoing.
Maybe Rich will once again elude his pursuers. He is fast becoming a mythic persona: Word is a TV series based on his life may be in the works. And the Rich Boys -- his legacy -- rule.
Geneva officials seek to attract Chinese banks, companies
Tue May 4, By Laura MacInnis and Robin Bleeker
GENEVA, May 4 (Reuters) - Geneva is seeking to transform itself into a hub for Chinese banking and commerce, building on its new strength in commodity trading and hedge funds, officials from the city's economic promotion division said on Tuesday.
The officials told a news conference they were in discussions with "a certain number" of Chinese companies interested in setting up in the city, which is already home to two Bank of China (601988.SS) subsidiaries.
"There are many Chinese delegations that are coming to visit," said Daniel Loeffler, director of the economic promotion division.
He declined to name the companies from China that were interested in a Swiss base, but said that talks with some of them have been underway for some time.
"The process is relatively long," he said. "The fruits of this activity should arrive soon."
Geneva has long been the home of secretive, elite banks catering in particular to wealthy Middle Eastern, Russian and Latin American clients.
However in the last five years, low tax rates and other incentives have transformed the second-largest Swiss city into a major hub of oil and commodity trading as well as for hedge funds, a number of which have moved from London due to the higher taxes in the United Kingdom.
The Hong Kong-based GMT Shipping Group and Addax Petroleum, which was purchased last year for $7.24 billion by China's Sinopec (600028.SS), are both based in Geneva, along with Bank of China (Suisse) SA and BOC (Suisse) Fund Management.
Switzerland has also sent a large delegation to Shanghai's World Expo, which opened this week. The 4,000 square metre Swiss Pavillion is one of the largest and most expensive on display.
QUIET GROWTH
While Geneva's storied banks were squeezed by the global financial crisis and the crackdown on banking secrecy, its commodity and oil community still thrived, and trading houses and hedge funds continued to move there.
This quiet transformation has helped to diversify the Swiss financial landscape and the city now brokers some 33 percent of global petroleum and sugar trading, 30 percent of grain trading and 22 percent of raw material shipments, according to BNP Paribas figures. [ID:nLDE63Q0WU]
Commodity and energy trading contributes as much as 2.5 percent to Switzerland's gross domestic product, which is more revenue than from foreign tourists visiting the Swiss Alps to ski and hike. [ID:nLDE63R1WV]
Physical commodities traders, including Total's (TOTF.PA) trading arm Totsa, Vitol [VITOLV.UL], LUKOIL-owned (LKOH.MM) Litasco, Louis Dreyfus and Cargill [CARG.UL] all have offices in Geneva and European hedge fund firms Blue Crest and Brevan Howard have also moved to Geneva in recent months.
Switzerland is also home to major oilfield services and offshore drilling companies, including Weatherford (WFT.N), Noble Corp (NE.N) and Transocean Ltd (RIGN.S), which listed on the Swiss SIX stock exchange last month. [ID:nLDE63I0VL] The metals trading giant Glencore [GLEN.UL] is based in Zug, near Zurich
GENEVA, May 4 (Reuters) - Geneva is seeking to transform itself into a hub for Chinese banking and commerce, building on its new strength in commodity trading and hedge funds, officials from the city's economic promotion division said on Tuesday.
The officials told a news conference they were in discussions with "a certain number" of Chinese companies interested in setting up in the city, which is already home to two Bank of China (601988.SS) subsidiaries.
"There are many Chinese delegations that are coming to visit," said Daniel Loeffler, director of the economic promotion division.
He declined to name the companies from China that were interested in a Swiss base, but said that talks with some of them have been underway for some time.
"The process is relatively long," he said. "The fruits of this activity should arrive soon."
Geneva has long been the home of secretive, elite banks catering in particular to wealthy Middle Eastern, Russian and Latin American clients.
However in the last five years, low tax rates and other incentives have transformed the second-largest Swiss city into a major hub of oil and commodity trading as well as for hedge funds, a number of which have moved from London due to the higher taxes in the United Kingdom.
The Hong Kong-based GMT Shipping Group and Addax Petroleum, which was purchased last year for $7.24 billion by China's Sinopec (600028.SS), are both based in Geneva, along with Bank of China (Suisse) SA and BOC (Suisse) Fund Management.
Switzerland has also sent a large delegation to Shanghai's World Expo, which opened this week. The 4,000 square metre Swiss Pavillion is one of the largest and most expensive on display.
QUIET GROWTH
While Geneva's storied banks were squeezed by the global financial crisis and the crackdown on banking secrecy, its commodity and oil community still thrived, and trading houses and hedge funds continued to move there.
This quiet transformation has helped to diversify the Swiss financial landscape and the city now brokers some 33 percent of global petroleum and sugar trading, 30 percent of grain trading and 22 percent of raw material shipments, according to BNP Paribas figures. [ID:nLDE63Q0WU]
Commodity and energy trading contributes as much as 2.5 percent to Switzerland's gross domestic product, which is more revenue than from foreign tourists visiting the Swiss Alps to ski and hike. [ID:nLDE63R1WV]
Physical commodities traders, including Total's (TOTF.PA) trading arm Totsa, Vitol [VITOLV.UL], LUKOIL-owned (LKOH.MM) Litasco, Louis Dreyfus and Cargill [CARG.UL] all have offices in Geneva and European hedge fund firms Blue Crest and Brevan Howard have also moved to Geneva in recent months.
Switzerland is also home to major oilfield services and offshore drilling companies, including Weatherford (WFT.N), Noble Corp (NE.N) and Transocean Ltd (RIGN.S), which listed on the Swiss SIX stock exchange last month. [ID:nLDE63I0VL] The metals trading giant Glencore [GLEN.UL] is based in Zug, near Zurich
5/26/2010
10 reasons Switzerland is a cleantech leader
Author Name: Shawn Lesser
Switzerland consistently ranks as one of the world's most energy-efficient economies, thanks largely to advances in renewable energy, green buildings, waste management and sustainable transportation. Switzerland was also recently ranked second on the 2010 Environmental Performance Index [1].
Switzerland’s sustainable/cleantech investment market at the end of 2009 was approximately $30 billion. Switzerland also was recently nominated for recognition as Europe's most innovative country in 2009 [2].
Given this strong history, capital base and innovate spirit, I wanted to take a closer look at the driving forces behind the burgeoning Swiss cleantech movement. Below are the top 10 reasons, as I see it, as to why Switzerland has become a powerhouse in this expanding economic sector.
The Swiss are true pioneers in sustainable and cleantech investing. Bank Sarasin [3] led the way in 1989 with the first asset management mandates defined by ecological criteria. Zurich powerhouse Sustainable Asset Management [4] (SAM) created specialized fund more than 10 years ago and has also been at the forefront of sustainable investing.
Switzerland has set itself apart as the financial global hub of cleantech investing. Swiss companies play key leadership roles in multiple sustainable/cleantech financial sectors. Whether investing in public companies with climate mitigation strategies or a private venture with an innovative solar technology, the Swiss have a wide range of investment firms that are international leaders in cleantech. Additionally, Switzerland is now home to a huge pool of cleantech money from financial powerhouses such as Mountain Cleantech [5], SAM [4], Good Energies [6], Emerald Ventures [7], UBS [8], Picet [9], Sarasin [3], Credit Suisse [10], ZKB [11] and Unigestion [12].
The Swiss have a long history of living within their environmental and economic means. I think Nick Beglinger from Swisscleantech [13] said it best: “The Swiss have a culture and lifestyle that emphasizes sustainability in their daily lives.” The Swiss have one of the highest recycling rates in the world—they recycle up to 95 percent of glass and they use 50 percent of the energy per capita compared to the U.S. Recycling, energy efficiency and stewardship are integrated into daily life in Switzerland. Even Mobility Carsharing [14] has its roots in Switzerland.
The Swiss President Doris Leuthard made cleantech one of the top priorities of the country’s economic recovery. Almost one billion Swiss francs of the Swiss government stimulus package are targeted towards energy efficiency, renewable energy and the environment. As a result of such heavy investment and friendly government regulation, Leuthard expects the clean technology sector to continue to grow, reaching a volume of 3 trillion Swiss francs worldwide by 2020, double its current size. “This is growth that no government can ignore,” she said. Leading the charge towards such productivity are Swiss organizations such as Swiss Cleantech, Think Swiss [15], Switzerland Trade and Investment Promotion [16] and the Embassy of Switzerland [17]. This growth spurt is being trumpeted abroad, and was recently highlighted by Swiss-U.S. Cleantech dialogue events in Atlanta, Washington D.C. and New York. Another such event is planned to take place in Zurich.
Today, with a workforce of 160,000 in cleantech—which accounts for 4.5 percent of all employment in the country—Switzerland is a world leader in terms of its innovation potential and research landscape. Switzerland has scored notable successes in the global cleantech arena through multinational manufacturing giants such as ABB [18] and Oerlikon Solar [19]. Other standout companies include Geberit, Schulthess Group, Ernst Schweizer Metallbau, Walter Meier, Hoval, Landis&Gyr, TRITEC and Renggli.
The Swiss Minenergie is one of the world's most advanced green building rating systems. The Minenergie standard is a quality label for new and refurbished homes for low energy consumption buildings. So far, 15,000 Minergie certifications have been distributed compared to 2,000 LEED certifications in the U.S. The Swiss embassy in Washington, D.C., is currently being renovated as a sustainability an Minergie reference project. The goal is to showcase the key Swiss firms that are supplying the key components for the renovation. Other large corporate buildings that are being designed, constructed or renovated to attain Minenergie certification include Coop and Migros, IKEA, Swiss Re and Zurich Cantonal Bank.
The 2000-watt society is a vision—originated by the Swiss Federal Institute of Technology in Zürich at the end of 1998—that seeks to cut energy use in the developed world. Specifically, the goal is that each person in the developed world would cut their overall rate of energy use to an average of no more than 2,000 watts by the year 2050—and this is to be done without lowering their standard of living. While the goal has been met with some skepticism as to its viability, the concept is well supported nationally. Recently, 70 percent of the population in Zurich voted in support of putting the 2000-watt concept into practice.
Swiss get their own neighborhood in Masdar City, Abu Dhabi [20], called the Swiss Village. Nick Beglinger, SVA President said Eco-City is another example of the close ties between the two countries. It also speaks to a shared sustainability vision. “The relationship between Switzerland and Abu Dhabi is excellent,” Beglnger said. “Swiss Village is an important element of that relationship. We now have a concrete link into the Masdar project, and a platform representing Swiss companies of all types and sizes. SVA offers the possibility to generate exports and to secure one of the most attractive company locations in the Gulf. Swiss firms can act as a community, strengthening each other in terms of know-how and joint offerings.”
Switzerland runs on hydroelectric power! Hydroelectric power accounts for about 58 percent of Switzerland's electricity production. Another 10 percent of electric power production comes from recycling programs. As a country, Switzerland does not use fossil fuel for electricity production anymore.
Swiss Innovations. Switzerland is a small country inhabited by only 7.4 million people. The economy is based on the production of individual goods and services of high quality, such as precision instruments, which is an excellent backdrop for a growing Cleantech economy. “One Third of our portfolio companies are located here in Switzerland”, adds Jürgen F. Habichler, Founder and Managing Partner of Zurich based Growth Capital Fund Mountain Cleantech AG, “the Swiss combine entrepreneurial skills with technical expertise”. Other exciting Swiss Cleantech companies include Myclimate [21], Geroco [22], Nolaris [23], Flisom [24], TEXX [25], Flexcell, Airlight Energy [26], EdiSunPower, [27] and Smixin.
Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital [28] (SWC), which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies and M&A. For information, visit his Web site [29].
Want to author a guest column yourself? We welcome contributions, and would like to hear from you. Guidance and directions here [30].
--------------------------------------------------------------------------------
Source URL: http://cleantech.com/news/5822/10-reasons-switzerland-cleantech-leader
Links:
[1] http://epi.yale.edu/Countries/Switzerland
[2] http://www.proinno-europe.eu/
[3] http://www.sarasin.ch/internet/iech/en/index_iech.htm
[4] http://www.sam-group.com/htmle/main.cfm
[5] http://www.mountain-cleantech.ch/
[6] http://www.goodenergies.com/
[7] http://www.emerald-ventures.com/aboutUs.aspx
[8] http://www.ubs.com/
[9] http://www.pictet.com/
[10] https://www.credit-suisse.com/ch/en/
[11] http://www.zkb.ch/
[12] http://unigestion.com/
[13] http://www.swisscleantech.ch/
[14] http://www.mobility.ch/pages/?dom=6
[15] http://www.thinkswiss.org/events/details/122-Green Job Creation
[16] http://www.osec.ch/internet/osec/en/home/invest/us.html
[17] http://www.eda.admin.ch/eda/en/home/reps/nameri/vusa/wasemb.html
[18] http://www.abb.com/
[19] http://www.oerlikon.com/solar/Oerlikon Solar
[20] http://www.masdar.ae/en/home/index.aspx
[21] http://www.myclimate.org/
[22] http://www.geroco.ch/en/home.html?lang=en
[23] http://www.nolaris.ch/17-0-Our-Technology.html
[24] http://www.flisom.ch/e/index.html
[25] http://www.texx.ch/texx-website/press-release.php
[26] http://www.airlightenergy.com/Default.aspx?AspxAutoDetectCookieSupport=1
[27] http://www.edisunpower.com/de/home-de
[28] http://cleantech.com/news/companies/Sustainable-World-Capital
[29] http://www.sustainableworldcapital.com/
[30] http://cleantech.com/submitnews
Switzerland consistently ranks as one of the world's most energy-efficient economies, thanks largely to advances in renewable energy, green buildings, waste management and sustainable transportation. Switzerland was also recently ranked second on the 2010 Environmental Performance Index [1].
Switzerland’s sustainable/cleantech investment market at the end of 2009 was approximately $30 billion. Switzerland also was recently nominated for recognition as Europe's most innovative country in 2009 [2].
Given this strong history, capital base and innovate spirit, I wanted to take a closer look at the driving forces behind the burgeoning Swiss cleantech movement. Below are the top 10 reasons, as I see it, as to why Switzerland has become a powerhouse in this expanding economic sector.
The Swiss are true pioneers in sustainable and cleantech investing. Bank Sarasin [3] led the way in 1989 with the first asset management mandates defined by ecological criteria. Zurich powerhouse Sustainable Asset Management [4] (SAM) created specialized fund more than 10 years ago and has also been at the forefront of sustainable investing.
Switzerland has set itself apart as the financial global hub of cleantech investing. Swiss companies play key leadership roles in multiple sustainable/cleantech financial sectors. Whether investing in public companies with climate mitigation strategies or a private venture with an innovative solar technology, the Swiss have a wide range of investment firms that are international leaders in cleantech. Additionally, Switzerland is now home to a huge pool of cleantech money from financial powerhouses such as Mountain Cleantech [5], SAM [4], Good Energies [6], Emerald Ventures [7], UBS [8], Picet [9], Sarasin [3], Credit Suisse [10], ZKB [11] and Unigestion [12].
The Swiss have a long history of living within their environmental and economic means. I think Nick Beglinger from Swisscleantech [13] said it best: “The Swiss have a culture and lifestyle that emphasizes sustainability in their daily lives.” The Swiss have one of the highest recycling rates in the world—they recycle up to 95 percent of glass and they use 50 percent of the energy per capita compared to the U.S. Recycling, energy efficiency and stewardship are integrated into daily life in Switzerland. Even Mobility Carsharing [14] has its roots in Switzerland.
The Swiss President Doris Leuthard made cleantech one of the top priorities of the country’s economic recovery. Almost one billion Swiss francs of the Swiss government stimulus package are targeted towards energy efficiency, renewable energy and the environment. As a result of such heavy investment and friendly government regulation, Leuthard expects the clean technology sector to continue to grow, reaching a volume of 3 trillion Swiss francs worldwide by 2020, double its current size. “This is growth that no government can ignore,” she said. Leading the charge towards such productivity are Swiss organizations such as Swiss Cleantech, Think Swiss [15], Switzerland Trade and Investment Promotion [16] and the Embassy of Switzerland [17]. This growth spurt is being trumpeted abroad, and was recently highlighted by Swiss-U.S. Cleantech dialogue events in Atlanta, Washington D.C. and New York. Another such event is planned to take place in Zurich.
Today, with a workforce of 160,000 in cleantech—which accounts for 4.5 percent of all employment in the country—Switzerland is a world leader in terms of its innovation potential and research landscape. Switzerland has scored notable successes in the global cleantech arena through multinational manufacturing giants such as ABB [18] and Oerlikon Solar [19]. Other standout companies include Geberit, Schulthess Group, Ernst Schweizer Metallbau, Walter Meier, Hoval, Landis&Gyr, TRITEC and Renggli.
The Swiss Minenergie is one of the world's most advanced green building rating systems. The Minenergie standard is a quality label for new and refurbished homes for low energy consumption buildings. So far, 15,000 Minergie certifications have been distributed compared to 2,000 LEED certifications in the U.S. The Swiss embassy in Washington, D.C., is currently being renovated as a sustainability an Minergie reference project. The goal is to showcase the key Swiss firms that are supplying the key components for the renovation. Other large corporate buildings that are being designed, constructed or renovated to attain Minenergie certification include Coop and Migros, IKEA, Swiss Re and Zurich Cantonal Bank.
The 2000-watt society is a vision—originated by the Swiss Federal Institute of Technology in Zürich at the end of 1998—that seeks to cut energy use in the developed world. Specifically, the goal is that each person in the developed world would cut their overall rate of energy use to an average of no more than 2,000 watts by the year 2050—and this is to be done without lowering their standard of living. While the goal has been met with some skepticism as to its viability, the concept is well supported nationally. Recently, 70 percent of the population in Zurich voted in support of putting the 2000-watt concept into practice.
Swiss get their own neighborhood in Masdar City, Abu Dhabi [20], called the Swiss Village. Nick Beglinger, SVA President said Eco-City is another example of the close ties between the two countries. It also speaks to a shared sustainability vision. “The relationship between Switzerland and Abu Dhabi is excellent,” Beglnger said. “Swiss Village is an important element of that relationship. We now have a concrete link into the Masdar project, and a platform representing Swiss companies of all types and sizes. SVA offers the possibility to generate exports and to secure one of the most attractive company locations in the Gulf. Swiss firms can act as a community, strengthening each other in terms of know-how and joint offerings.”
Switzerland runs on hydroelectric power! Hydroelectric power accounts for about 58 percent of Switzerland's electricity production. Another 10 percent of electric power production comes from recycling programs. As a country, Switzerland does not use fossil fuel for electricity production anymore.
Swiss Innovations. Switzerland is a small country inhabited by only 7.4 million people. The economy is based on the production of individual goods and services of high quality, such as precision instruments, which is an excellent backdrop for a growing Cleantech economy. “One Third of our portfolio companies are located here in Switzerland”, adds Jürgen F. Habichler, Founder and Managing Partner of Zurich based Growth Capital Fund Mountain Cleantech AG, “the Swiss combine entrepreneurial skills with technical expertise”. Other exciting Swiss Cleantech companies include Myclimate [21], Geroco [22], Nolaris [23], Flisom [24], TEXX [25], Flexcell, Airlight Energy [26], EdiSunPower, [27] and Smixin.
Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital [28] (SWC), which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies and M&A. For information, visit his Web site [29].
Want to author a guest column yourself? We welcome contributions, and would like to hear from you. Guidance and directions here [30].
--------------------------------------------------------------------------------
Source URL: http://cleantech.com/news/5822/10-reasons-switzerland-cleantech-leader
Links:
[1] http://epi.yale.edu/Countries/Switzerland
[2] http://www.proinno-europe.eu/
[3] http://www.sarasin.ch/internet/iech/en/index_iech.htm
[4] http://www.sam-group.com/htmle/main.cfm
[5] http://www.mountain-cleantech.ch/
[6] http://www.goodenergies.com/
[7] http://www.emerald-ventures.com/aboutUs.aspx
[8] http://www.ubs.com/
[9] http://www.pictet.com/
[10] https://www.credit-suisse.com/ch/en/
[11] http://www.zkb.ch/
[12] http://unigestion.com/
[13] http://www.swisscleantech.ch/
[14] http://www.mobility.ch/pages/?dom=6
[15] http://www.thinkswiss.org/events/details/122-Green Job Creation
[16] http://www.osec.ch/internet/osec/en/home/invest/us.html
[17] http://www.eda.admin.ch/eda/en/home/reps/nameri/vusa/wasemb.html
[18] http://www.abb.com/
[19] http://www.oerlikon.com/solar/Oerlikon Solar
[20] http://www.masdar.ae/en/home/index.aspx
[21] http://www.myclimate.org/
[22] http://www.geroco.ch/en/home.html?lang=en
[23] http://www.nolaris.ch/17-0-Our-Technology.html
[24] http://www.flisom.ch/e/index.html
[25] http://www.texx.ch/texx-website/press-release.php
[26] http://www.airlightenergy.com/Default.aspx?AspxAutoDetectCookieSupport=1
[27] http://www.edisunpower.com/de/home-de
[28] http://cleantech.com/news/companies/Sustainable-World-Capital
[29] http://www.sustainableworldcapital.com/
[30] http://cleantech.com/submitnews
5/25/2010
Blair joins green venture capital firm
Mike Harvey in San Francisco Tony Blair has been signed up as an adviser by a Silicon Valley venture capital firm specialising in green technology.
The former Prime Minister “will leverage his advocacy for environmental issues”, according to Khosla Ventures, which has invested billions of dollars in an extensive portfolio that includes solar, wind, and nuclear energy, along with high-efficiency engines.
The firm was started by the Sun Microsystems co-founder Vinod Khosla in 2004.
Mr Blair said: “I share a clear vision with Vinod, one of the earliest leaders in clean-tech investment, that entrepreneurs in Silicon Valley and beyond will have a tremendous impact on our environmental future. I am increasingly and crucially aware of the fact that the answer to these twin challenges — climate change and energy security — lies in developing the technological solutions of the future.”
Mr Blair said that he could help with understanding the direction of government policies and make connections for Khosla. Mr Blair leads a Breaking the Climate Deadlock initiative aimed at getting countries worldwide to work together to combat climate change.
Khosla’s companies include Calera, a manufacturer of green cement products, and Kior, which converts wood chips into biofuels. Mr Blair was taking part in a Khosla Ventures summit in California on Monday.
Mr Khosla said: “I have always admired Mr Blair’s early and consistent commitment to addressing climate change.”
The former Prime Minister “will leverage his advocacy for environmental issues”, according to Khosla Ventures, which has invested billions of dollars in an extensive portfolio that includes solar, wind, and nuclear energy, along with high-efficiency engines.
The firm was started by the Sun Microsystems co-founder Vinod Khosla in 2004.
Mr Blair said: “I share a clear vision with Vinod, one of the earliest leaders in clean-tech investment, that entrepreneurs in Silicon Valley and beyond will have a tremendous impact on our environmental future. I am increasingly and crucially aware of the fact that the answer to these twin challenges — climate change and energy security — lies in developing the technological solutions of the future.”
Mr Blair said that he could help with understanding the direction of government policies and make connections for Khosla. Mr Blair leads a Breaking the Climate Deadlock initiative aimed at getting countries worldwide to work together to combat climate change.
Khosla’s companies include Calera, a manufacturer of green cement products, and Kior, which converts wood chips into biofuels. Mr Blair was taking part in a Khosla Ventures summit in California on Monday.
Mr Khosla said: “I have always admired Mr Blair’s early and consistent commitment to addressing climate change.”
GAM To Launch UCITS Green Fund, Hires Ex-Tudor Manager Udall
Swiss hedge fund firm GAM is planning a UCITS III-compliant green offering.
The single-manager environmental fund will debut in the fourth quarter, helmed by new hire Paul Udall. The long/short vehicle will focus on energy and natural resources firms working on development, transportation and consumption.
GAM already has an environmental fund of hedge funds.
“Funds that focus on sustainable investing and environmental themes continue to play an increasing role in investors’ portfolios,” CEO David Solo said. “We are delighted that Paul has decided to join GAM, given his specialist skills and knowledge in this area.”
Before taking up his new post, Udall was a managing director at Climate Change Capital. He ran that firm’s Global Environmental Long/Short Fund. He also did stints at Tudor Investment Management and Morley Fund Management.
The single-manager environmental fund will debut in the fourth quarter, helmed by new hire Paul Udall. The long/short vehicle will focus on energy and natural resources firms working on development, transportation and consumption.
GAM already has an environmental fund of hedge funds.
“Funds that focus on sustainable investing and environmental themes continue to play an increasing role in investors’ portfolios,” CEO David Solo said. “We are delighted that Paul has decided to join GAM, given his specialist skills and knowledge in this area.”
Before taking up his new post, Udall was a managing director at Climate Change Capital. He ran that firm’s Global Environmental Long/Short Fund. He also did stints at Tudor Investment Management and Morley Fund Management.
5/21/2010
Baby-Faced Hedgie Launches Global Macro Fund
May 20 2010 | 2:25pm ET
A 24-year-old former analyst for Pharos Capital Group has decided to leave the confines of private equity for the hedge fund industry.
Alejandro Paschalides in March launched the Carina Capital Fund I, a global macro vehicle specializing in the energy sector. Paschalides said that the mispricings there were so great that he could not resist the opportunity to launch a hedge fund.
“I noticed that there was a variety of financial instruments and securities that were mispriced,” he said. “There are thinly-traded products, including the volume on long-dated crude oil futures relative to short-dated contracts, where the spread between prices several years out is very small relative to near dated contracts that no one is really looking at so I’m trying to take advantage of that.”
The hedgie rookie said his month-to-date returns are comparable to the precipitous fall of the energy sector in past months. Oil prices hit a seven-month low yesterday and the price of crude for June delivery fell $1.51 to $67.90 a barrel in intra-day trade this morning.
Aside from a down market for energy investors, Paschalides said his age and relative inexperience as a hedge fund manager are also big hurdles to overcome as far as fundraising goes, but he is optimistic that over the next year or so his returns will speak for themselves.
“Age is just a number, but returns are numbers as well and I think investors are smart enough to know which one matters more,” he said.
A 24-year-old former analyst for Pharos Capital Group has decided to leave the confines of private equity for the hedge fund industry.
Alejandro Paschalides in March launched the Carina Capital Fund I, a global macro vehicle specializing in the energy sector. Paschalides said that the mispricings there were so great that he could not resist the opportunity to launch a hedge fund.
“I noticed that there was a variety of financial instruments and securities that were mispriced,” he said. “There are thinly-traded products, including the volume on long-dated crude oil futures relative to short-dated contracts, where the spread between prices several years out is very small relative to near dated contracts that no one is really looking at so I’m trying to take advantage of that.”
The hedgie rookie said his month-to-date returns are comparable to the precipitous fall of the energy sector in past months. Oil prices hit a seven-month low yesterday and the price of crude for June delivery fell $1.51 to $67.90 a barrel in intra-day trade this morning.
Aside from a down market for energy investors, Paschalides said his age and relative inexperience as a hedge fund manager are also big hurdles to overcome as far as fundraising goes, but he is optimistic that over the next year or so his returns will speak for themselves.
“Age is just a number, but returns are numbers as well and I think investors are smart enough to know which one matters more,” he said.
5/19/2010
Brevan Opens New Commodities Hedge Fund
May 19 2010 | FinAlternatives
Brevan Howard Asset Management has launched a commodities hedge fund.
Europe’s largest hedge fund manager has begun accepting outside investors into the fund, which debuted in March. Brevan seeded the energy and commodities fund, which invests in commodity options and futures, with US$200 million, Bloomberg News reports.
The Brevan Howard Commodities Strategies Master Fund is helmed by Stephane Nicolas, who heads Brevan’s commodities desk. Nicolas has been with Brevan since 2004, and was named a partner three years later. Before joining the London-based hedge fund, he worked at Bank of America, DRW Trading and Société Générale.
The new fund charges 2% for management and 20% for performance. It has a $1 million minimum investment requirement.
Brevan Howard Asset Management has launched a commodities hedge fund.
Europe’s largest hedge fund manager has begun accepting outside investors into the fund, which debuted in March. Brevan seeded the energy and commodities fund, which invests in commodity options and futures, with US$200 million, Bloomberg News reports.
The Brevan Howard Commodities Strategies Master Fund is helmed by Stephane Nicolas, who heads Brevan’s commodities desk. Nicolas has been with Brevan since 2004, and was named a partner three years later. Before joining the London-based hedge fund, he worked at Bank of America, DRW Trading and Société Générale.
The new fund charges 2% for management and 20% for performance. It has a $1 million minimum investment requirement.
Merchant Commodity Fund Lost 19% in Four Months on Agriculture
May 18 (Bloomberg) -- Michael Coleman and Doug King’s $1.13 billion Merchant Commodity Fund dropped 19.4 percent in the first four months of the year, lagging behind the industry average, because of losses in agriculture.
The S&P GSCI Agriculture Index lost 15 percent through the end of April as New York-traded raw sugar slumped 44 percent. The gauge also includes wheat, corn, soybeans, coffee, cocoa and cotton. Crude oil traded on the New York Mercantile Exchange rose 8.6 percent in the first four months. Commodity hedge funds fell 2.1 percent on average in the same period, according to Chicago-based Hedge Fund Research Inc.
The Merchant fund managed $1.13 billion of assets at the end of April, compared with $1.54 billion at the end of 2009, according to the investor report. The fund had $10 million in June 2004 and assets peaked at $2.54 billion in February 2008.
Coleman, 49, and King, 43, are former Cargill Inc. traders. The fund gained 5.2 percent last year and 24 percent in 2008. Merchant more than tripled investors’ money since 2004.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising prices and participate substantially in profits from money invested.
--Editors: Stuart Wallace, Alastair Reed
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
The S&P GSCI Agriculture Index lost 15 percent through the end of April as New York-traded raw sugar slumped 44 percent. The gauge also includes wheat, corn, soybeans, coffee, cocoa and cotton. Crude oil traded on the New York Mercantile Exchange rose 8.6 percent in the first four months. Commodity hedge funds fell 2.1 percent on average in the same period, according to Chicago-based Hedge Fund Research Inc.
The Merchant fund managed $1.13 billion of assets at the end of April, compared with $1.54 billion at the end of 2009, according to the investor report. The fund had $10 million in June 2004 and assets peaked at $2.54 billion in February 2008.
Coleman, 49, and King, 43, are former Cargill Inc. traders. The fund gained 5.2 percent last year and 24 percent in 2008. Merchant more than tripled investors’ money since 2004.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising prices and participate substantially in profits from money invested.
--Editors: Stuart Wallace, Alastair Reed
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
5/17/2010
La colonisation agricole, nouvel apanage des pays riches
Malgré son immensité, la Chine ne cesse de voir ses surfaces cultivables diminuer. Du coup, elle achète à tout-va des terres à l’étranger et possèderait 2,1 millions d’hectares en Amérique du Sud, en Afrique, en Asie du Sud-Est et en Australie. C’est l’illustration d’un phénomène en pleine expansion : des Etats ou des fonds d’investissement privés qui s’emparent de milliers d’hectares de terres exploitables hors de leurs frontières.
Les terres cultivables disponibles sont principalement situées dans les pays en développement.
Un phénomène de grande ampleur
Selon les Nations unies, 30 millions d’hectares de terres auraient été achetés ou loués par des capitaux étrangers sur les trois dernières années. Soit la surface agricole de la France. Cette ruée vers l’or vert n’est pas prête de s’arrêter. D’après la FAO, sur 2,7 milliards d’hectares de terres cultivables dans le monde, seuls 1,5 milliard sont effectivement utilisés.
Or 80 % de ces terres disponibles sont situées en Afrique ou en Asie, dans des pays en développement. Pour ces derniers, l’afflux investissement représente une véritable opportunité pour développer leur agriculture et bénéficier de transferts techniques. Pour les pays riches disposant de peu de terrain, il s’agit de sécuriser leur approvisionnement alimentaire dans un contexte d’envolée des prix des produits alimentaires.
L’Afrique : des immenses terrains sous-exploités
Le continent noir est la cible privilégiée des investisseurs. Selon une étude de la FAO portant sur six pays (Ethiopie, Madagascar, Mali, Mozambique et Soudan), les étrangers auraient acheté ou loué pour 99 ans plus de 2,5 millions d’hectares. Montant total des transaction : près d’un milliard de dollars.
Au seul Soudan, six nationalités différentes sont présentes. La Corée du Sud y possède déjà 690 000 hectares et les Emirats arabes unis 400 000 hectares, cultivés avec du maïs, du blé, des pommes de terre et des légumineuses.
Il faut dire que les conditions sont alléchantes : réglementations inexistantes, gouvernements parfois peu regardants et un coût très faible. En Ethiopie, un hectare se loue ainsi 1,50 euro par an. La firme indienne Karuturi cultive ainsi dans le pays plus de 300 000 hectares de maïs, riz, huile de palme, canne à sucre et légumes. Et le gouvernement éthiopien compte bien tirer parti au maximum de ses terres inexploitées : il prévoit de louer 3 millions d’hectares à des capitaux nationaux ou étrangers.
L’Asie centrale : des friches à la merci des investisseurs
L’Asie centrale, et particulièrement les anciens pays de l’Union soviétique, recèle d’immenses étendues disponibles. Or, “l’envolée des prix agricoles a incité les investisseurs à s’intéresser à l’agriculture alors qu’avant ils investissaient plutôt dans le pétrole, le métal ou le gaz”, expliquait en septembre l’analyste Dmitri Katalevski, du cabinet de conseil Deloitte.
Deux fonds d’investissement suédois, Black Earth Farming et Alpcot Agro, contrôlent ainsi respectivement 323 000 et 161 000 hectares de terres en Russie et en Ukraine (Europe de l’Est). En mai 2008, le gouvernement libyen a conclu avec l’Ukraine un contrat qui prévoit la mise à disposition de 247 000 hectares de terres agricoles contre la fourniture de pétrole et de gaz.
A l’autre bout du continent, la Chine se serait déjà accaparé sans bourse délier de larges portions de terres du côté russe, selon des sources russes non officielles citées par la presse.
Encore non touchée, la Mongolie pourrait être la prochaine cible. Les Sud-Coréens chercheraient à y louer 270 000 hectares pour cultiver du blé ou du maïs.
L’Asie du Sud-est appréciée pour ses terres fertiles
L’Asie du Sud-est est particulièrement recherchée pour la riziculture et la pousse du bois. Les pays voisins, notamment l’Inde et la Chine, y possèderaient selon les ONG respectivement 358 000 et 300 000 hectares, des chiffres largement sous-estimés selon plusieurs analystes.
Au Laos, l’opérateur chinois de télécommunications ZTE a obtenu la concession de 100 000 hectares pour la production de manioc (destiné à l’éthanol) en partenariat avec une entreprise nationale.
Les pays du Golfe s’intéressent également de très près à ce continent. En Indonésie, le groupe saoudien Ben Laden s’apprête à exploiter 500 000 hectares dans le sud de la Papouasie et 80 000 autres dans le sud-ouest. Au total, le groupe prévoit s’investir 2,8 milliards d’euros dans le pays, notamment en y construisant des infrastructures qui font cruellement défaut.
Enfin, en mai 2008, le ministre du commerce du Bahrein s’est rendu en visite prospective aux Philippines et au Laos pour obtenir l’accès à “des grandes surfaces de terres” et y cultiver du riz basmati, selon l’ONG Grain.
L’Amérique du Sud, de vastes étendues à conquérir
Les chiffres d’achats ou de location de terres agricoles disponibles pour le continent sud-américain sont a priori largement au-dessous de la réalité. Rien qu’au Brésil, de nombreux propriétaires ne déclarent pas leur nationalité dans les registres. Or, selon les statistiques de l’institut national de la colonisation et de la réforme agraire (Incra), 4 millions d’hectares de terres agricoles brésiliennes sont officiellement détenus par des étrangers. En Argentine, 10% des terres arables seraient entre les mains de capitaux étrangers, selon l’ONG Grain.
Il faut dire que la réglementation est très floue. Pour l’instant, il suffit de créer une entreprise brésilienne pour acheter des immenses étendues de terre. “On trouve même des terres publiques en vente sur des sites Internet étrangers”, s’alarme Rolf Hackbart, le président de l’Incra, dans le journal Istoé. Un projet de limitation des ventes de terres aux entreprises dont les capitaux sont d’origine étrangère est d’ailleurs en cours d’examen par le Congrès. Le pays n’est pourtant pas exemplaire, puisque des cultivateurs de soja brésiliens accapareraient en toute illégalité des millions d’hectares au Paraguay.
Madagascar, symbole d’une ”néocolonisation”
En 2008, Madagacar est devenu un symbole de la résistance contre “l’accaparement” des terres agricoles.
A l’époque, la compagnie sud-coréenne Daewoo avait négocié avec le gouvernement malgache la location de 1,3 million d’hectares. Une surface colossale, équivalente à la moitié de la Belgique. Le bail, d’une durée de 99 ans, devait permettre d’assurer une production annuelle de 5,5 millions de tonnes de maïs à la Corée du Sud.
La révélation de ce projet a suscité une vague de colère dans tout le pays, provoquant même la chute du gouvernement Ravalomanana. Le nouveau président malgache, Andry Rajoelina, a vivement dénoncé la politique de son prédécesseur.
Mais cet épisode n’a pas découragé les autres investisseurs. En janvier, le groupe indien Varun Industries a entamé les démarches pour louer sur une durée de 50 ans 232 000 hectares dans la région de Sofia, au Nord de l’île. Et si ses plans sont pour l’instant en suspens, un porte-parole de la firme a déclaré fin septembre 2009 au Times of India que les pourparlers étaient toujours en cours et s’affichait “optimiste”.
Or les trois quarts de ces terres sont déjà utilisées. Les paysans seraient donc contraints de la céder, ce qui ne manquerait pas de provoquer de nouvelles protestations.
L’Arabie Saoudite veut sécuriser ses approvisionnements alimentaires
L’Arabie Saoudite n’en fait pas mystère : elle a établi depuis plusieurs années un vaste programme de production alimentaire à l’étranger. Le pays, qui doit importer un million de tonnes de riz par an, a créé en 2009 un fonds d’investissement nommé FORAS International, avec des capitaux du gouvernement, de la Banque Islamique de Développement et d’hommes d’affaires saoudiens. A terme, le fonds prévoit de planter 700 000 hectares de rizières pour produire 7 millions de tonnes de riz.
Le fonds s’est d’abord penché vers le gouvernement mauritanien pour acquérir 100 000 hectares de terres. Finalement seuls 15 000 hectares seraient disponibles. Mais d’autres grosses acquisitions sont en cours. 700 000 hectares en tout de terres agricoles au Sénégal et au Mali seront ainsi prochainement achetés. Un paradoxe, alors que le Sénégal est le deuxième plus grand importateur de riz de l’Afrique après le Nigéria.
Le Cheik “bienfaiteur” de l’Ethiopie
Mais la manne est bien trop importante pour que les états pauvres d’Afrique la laisse passer. Le Cheik Mohammed Hussein Ali Al Amoudi, l’une des plus grosses fortunes d’Arabie Saoudite, est ainsi le premier investisseur en Ethiopie. Déjà très impliqué dans l’agriculture, il envisagerait d’exploiter 500 000 hectares de terres supplémentaires dans le pays.
La France, investisseur ou cible ?
Avec ses 4 000 hectares achetés en Argentine, le chanteur Florent Pagny n’est pas le seul Français à se tourner vers des terres agricoles étrangères.
Dernier en date, l’ex-PDG de Powéo Charles Beigbeder est devenu un des plus importants agriculteurs d’Ukraine. Son entreprise, AgroGénération, exploite 22 000 hectares de céréales dans le pays et a déjà signé pour louer 80 000 hectares supplémentaires. “Une dizaine de groupes d’agriculteurs français sont déjà présents dans ce pays”, confirme Hélène Morin, consultante pour le cabinet spécialiste des matières premières Agritel. Plus discret, le groupe industriel français Louis Dreyfus possèderait 60 000 hectares de soja, coton et maïs au Brésil via sa filiale Calyx Agro.
L’agriculture, nouveau terrain de jeu du privé
Les Etats et fonds souverains ne sont pas les seuls à vouloir racheter des terres agricoles. Les hedge funds et des banques se sont récemment lancés dans ce Monopoly mondial. Les marchés dérivés des matières premières agricoles sont jugés trop incertains, ce qui les incite à se tourner vers le foncier.
“Moissonner de l’argent”
Le fonds d’investissement américain Black Rock a ainsi créé un fonds spéculatif de 200 millions de dollars, dont 30 millions dédiés à des acquisitions de terre. “L’astuce est de ne pas se contenter de moissonner des récoltes mais de moissonner de l’argent”, sourit ainsi Mikhail Orlov, le fondateur de Black Earth Farming, dans le Financial Times. Ce fonds d’investissement est déjà l’un des principaux cultivateurs de Russie, avec 331 000 hectares en sa possession.
Retour sur investissament garanti
Le fonds Global Farming Limited, créé par Dexion Capital, promet un retour sur investissement de 12 à 16%. Il prévoit d’acquérir 1,23 million d’hectares de terres pour la culture et l’élevage. Même des grandes banques généralistes investissent dans ce secteur, comme Barclays, Deutsche Bank, UBS ou Morgan Stanley. Au total, l’ONG Grain a dénombré 120 fonds spécialisés possédant des terres agricoles.
L’impossible régulation
Les organisations mondiales et les ONG commencent à s’alarmer de l’ampleur du rachat des terres agricoles. Le problème, selon elles, c’est que ce sont les gouvernements des pays hôtes qui négocient directement les accords avec les investisseurs, sans consulter les populations concernées.
Or, en Afrique, “80 % des populations sont dépourvues de titres pour des terres qu’elles cultivent parfois depuis des siècles”, explique Paul Mathieu, expert à la FAO, au site Pleinchamp.com. Au Kazakhstan aussi, les terres appartiennent encore majoritairement à l’Etat et sont louées par les paysans. Il est donc facile de les déloger.
“Pour que ces investissements soient une opportunité pour les populations, il faut qu’ils permettent un réel développement rural [...] et une diversification des sources de revenus pour les paysans”, analyse Paul Mathieu.
La FAO prépare actuellement des directives pour “une gouvernance responsable” des modes de faire-valoir des terres, en collaboration avec ONU-Habitat et la Banque mondiale. “D’autres formes d’investissement comme l’agriculture contractuelle et les mécanismes de sous-traitance, peuvent offrir la même sécurité d’approvisionnement aux pays investisseurs”, note la FAO. Dont les directives n’ont aucun pouvoir contraignant…
Les terres cultivables disponibles sont principalement situées dans les pays en développement.
Un phénomène de grande ampleur
Selon les Nations unies, 30 millions d’hectares de terres auraient été achetés ou loués par des capitaux étrangers sur les trois dernières années. Soit la surface agricole de la France. Cette ruée vers l’or vert n’est pas prête de s’arrêter. D’après la FAO, sur 2,7 milliards d’hectares de terres cultivables dans le monde, seuls 1,5 milliard sont effectivement utilisés.
Or 80 % de ces terres disponibles sont situées en Afrique ou en Asie, dans des pays en développement. Pour ces derniers, l’afflux investissement représente une véritable opportunité pour développer leur agriculture et bénéficier de transferts techniques. Pour les pays riches disposant de peu de terrain, il s’agit de sécuriser leur approvisionnement alimentaire dans un contexte d’envolée des prix des produits alimentaires.
L’Afrique : des immenses terrains sous-exploités
Le continent noir est la cible privilégiée des investisseurs. Selon une étude de la FAO portant sur six pays (Ethiopie, Madagascar, Mali, Mozambique et Soudan), les étrangers auraient acheté ou loué pour 99 ans plus de 2,5 millions d’hectares. Montant total des transaction : près d’un milliard de dollars.
Au seul Soudan, six nationalités différentes sont présentes. La Corée du Sud y possède déjà 690 000 hectares et les Emirats arabes unis 400 000 hectares, cultivés avec du maïs, du blé, des pommes de terre et des légumineuses.
Il faut dire que les conditions sont alléchantes : réglementations inexistantes, gouvernements parfois peu regardants et un coût très faible. En Ethiopie, un hectare se loue ainsi 1,50 euro par an. La firme indienne Karuturi cultive ainsi dans le pays plus de 300 000 hectares de maïs, riz, huile de palme, canne à sucre et légumes. Et le gouvernement éthiopien compte bien tirer parti au maximum de ses terres inexploitées : il prévoit de louer 3 millions d’hectares à des capitaux nationaux ou étrangers.
L’Asie centrale : des friches à la merci des investisseurs
L’Asie centrale, et particulièrement les anciens pays de l’Union soviétique, recèle d’immenses étendues disponibles. Or, “l’envolée des prix agricoles a incité les investisseurs à s’intéresser à l’agriculture alors qu’avant ils investissaient plutôt dans le pétrole, le métal ou le gaz”, expliquait en septembre l’analyste Dmitri Katalevski, du cabinet de conseil Deloitte.
Deux fonds d’investissement suédois, Black Earth Farming et Alpcot Agro, contrôlent ainsi respectivement 323 000 et 161 000 hectares de terres en Russie et en Ukraine (Europe de l’Est). En mai 2008, le gouvernement libyen a conclu avec l’Ukraine un contrat qui prévoit la mise à disposition de 247 000 hectares de terres agricoles contre la fourniture de pétrole et de gaz.
A l’autre bout du continent, la Chine se serait déjà accaparé sans bourse délier de larges portions de terres du côté russe, selon des sources russes non officielles citées par la presse.
Encore non touchée, la Mongolie pourrait être la prochaine cible. Les Sud-Coréens chercheraient à y louer 270 000 hectares pour cultiver du blé ou du maïs.
L’Asie du Sud-est appréciée pour ses terres fertiles
L’Asie du Sud-est est particulièrement recherchée pour la riziculture et la pousse du bois. Les pays voisins, notamment l’Inde et la Chine, y possèderaient selon les ONG respectivement 358 000 et 300 000 hectares, des chiffres largement sous-estimés selon plusieurs analystes.
Au Laos, l’opérateur chinois de télécommunications ZTE a obtenu la concession de 100 000 hectares pour la production de manioc (destiné à l’éthanol) en partenariat avec une entreprise nationale.
Les pays du Golfe s’intéressent également de très près à ce continent. En Indonésie, le groupe saoudien Ben Laden s’apprête à exploiter 500 000 hectares dans le sud de la Papouasie et 80 000 autres dans le sud-ouest. Au total, le groupe prévoit s’investir 2,8 milliards d’euros dans le pays, notamment en y construisant des infrastructures qui font cruellement défaut.
Enfin, en mai 2008, le ministre du commerce du Bahrein s’est rendu en visite prospective aux Philippines et au Laos pour obtenir l’accès à “des grandes surfaces de terres” et y cultiver du riz basmati, selon l’ONG Grain.
L’Amérique du Sud, de vastes étendues à conquérir
Les chiffres d’achats ou de location de terres agricoles disponibles pour le continent sud-américain sont a priori largement au-dessous de la réalité. Rien qu’au Brésil, de nombreux propriétaires ne déclarent pas leur nationalité dans les registres. Or, selon les statistiques de l’institut national de la colonisation et de la réforme agraire (Incra), 4 millions d’hectares de terres agricoles brésiliennes sont officiellement détenus par des étrangers. En Argentine, 10% des terres arables seraient entre les mains de capitaux étrangers, selon l’ONG Grain.
Il faut dire que la réglementation est très floue. Pour l’instant, il suffit de créer une entreprise brésilienne pour acheter des immenses étendues de terre. “On trouve même des terres publiques en vente sur des sites Internet étrangers”, s’alarme Rolf Hackbart, le président de l’Incra, dans le journal Istoé. Un projet de limitation des ventes de terres aux entreprises dont les capitaux sont d’origine étrangère est d’ailleurs en cours d’examen par le Congrès. Le pays n’est pourtant pas exemplaire, puisque des cultivateurs de soja brésiliens accapareraient en toute illégalité des millions d’hectares au Paraguay.
Madagascar, symbole d’une ”néocolonisation”
En 2008, Madagacar est devenu un symbole de la résistance contre “l’accaparement” des terres agricoles.
A l’époque, la compagnie sud-coréenne Daewoo avait négocié avec le gouvernement malgache la location de 1,3 million d’hectares. Une surface colossale, équivalente à la moitié de la Belgique. Le bail, d’une durée de 99 ans, devait permettre d’assurer une production annuelle de 5,5 millions de tonnes de maïs à la Corée du Sud.
La révélation de ce projet a suscité une vague de colère dans tout le pays, provoquant même la chute du gouvernement Ravalomanana. Le nouveau président malgache, Andry Rajoelina, a vivement dénoncé la politique de son prédécesseur.
Mais cet épisode n’a pas découragé les autres investisseurs. En janvier, le groupe indien Varun Industries a entamé les démarches pour louer sur une durée de 50 ans 232 000 hectares dans la région de Sofia, au Nord de l’île. Et si ses plans sont pour l’instant en suspens, un porte-parole de la firme a déclaré fin septembre 2009 au Times of India que les pourparlers étaient toujours en cours et s’affichait “optimiste”.
Or les trois quarts de ces terres sont déjà utilisées. Les paysans seraient donc contraints de la céder, ce qui ne manquerait pas de provoquer de nouvelles protestations.
L’Arabie Saoudite veut sécuriser ses approvisionnements alimentaires
L’Arabie Saoudite n’en fait pas mystère : elle a établi depuis plusieurs années un vaste programme de production alimentaire à l’étranger. Le pays, qui doit importer un million de tonnes de riz par an, a créé en 2009 un fonds d’investissement nommé FORAS International, avec des capitaux du gouvernement, de la Banque Islamique de Développement et d’hommes d’affaires saoudiens. A terme, le fonds prévoit de planter 700 000 hectares de rizières pour produire 7 millions de tonnes de riz.
Le fonds s’est d’abord penché vers le gouvernement mauritanien pour acquérir 100 000 hectares de terres. Finalement seuls 15 000 hectares seraient disponibles. Mais d’autres grosses acquisitions sont en cours. 700 000 hectares en tout de terres agricoles au Sénégal et au Mali seront ainsi prochainement achetés. Un paradoxe, alors que le Sénégal est le deuxième plus grand importateur de riz de l’Afrique après le Nigéria.
Le Cheik “bienfaiteur” de l’Ethiopie
Mais la manne est bien trop importante pour que les états pauvres d’Afrique la laisse passer. Le Cheik Mohammed Hussein Ali Al Amoudi, l’une des plus grosses fortunes d’Arabie Saoudite, est ainsi le premier investisseur en Ethiopie. Déjà très impliqué dans l’agriculture, il envisagerait d’exploiter 500 000 hectares de terres supplémentaires dans le pays.
La France, investisseur ou cible ?
Avec ses 4 000 hectares achetés en Argentine, le chanteur Florent Pagny n’est pas le seul Français à se tourner vers des terres agricoles étrangères.
Dernier en date, l’ex-PDG de Powéo Charles Beigbeder est devenu un des plus importants agriculteurs d’Ukraine. Son entreprise, AgroGénération, exploite 22 000 hectares de céréales dans le pays et a déjà signé pour louer 80 000 hectares supplémentaires. “Une dizaine de groupes d’agriculteurs français sont déjà présents dans ce pays”, confirme Hélène Morin, consultante pour le cabinet spécialiste des matières premières Agritel. Plus discret, le groupe industriel français Louis Dreyfus possèderait 60 000 hectares de soja, coton et maïs au Brésil via sa filiale Calyx Agro.
L’agriculture, nouveau terrain de jeu du privé
Les Etats et fonds souverains ne sont pas les seuls à vouloir racheter des terres agricoles. Les hedge funds et des banques se sont récemment lancés dans ce Monopoly mondial. Les marchés dérivés des matières premières agricoles sont jugés trop incertains, ce qui les incite à se tourner vers le foncier.
“Moissonner de l’argent”
Le fonds d’investissement américain Black Rock a ainsi créé un fonds spéculatif de 200 millions de dollars, dont 30 millions dédiés à des acquisitions de terre. “L’astuce est de ne pas se contenter de moissonner des récoltes mais de moissonner de l’argent”, sourit ainsi Mikhail Orlov, le fondateur de Black Earth Farming, dans le Financial Times. Ce fonds d’investissement est déjà l’un des principaux cultivateurs de Russie, avec 331 000 hectares en sa possession.
Retour sur investissament garanti
Le fonds Global Farming Limited, créé par Dexion Capital, promet un retour sur investissement de 12 à 16%. Il prévoit d’acquérir 1,23 million d’hectares de terres pour la culture et l’élevage. Même des grandes banques généralistes investissent dans ce secteur, comme Barclays, Deutsche Bank, UBS ou Morgan Stanley. Au total, l’ONG Grain a dénombré 120 fonds spécialisés possédant des terres agricoles.
L’impossible régulation
Les organisations mondiales et les ONG commencent à s’alarmer de l’ampleur du rachat des terres agricoles. Le problème, selon elles, c’est que ce sont les gouvernements des pays hôtes qui négocient directement les accords avec les investisseurs, sans consulter les populations concernées.
Or, en Afrique, “80 % des populations sont dépourvues de titres pour des terres qu’elles cultivent parfois depuis des siècles”, explique Paul Mathieu, expert à la FAO, au site Pleinchamp.com. Au Kazakhstan aussi, les terres appartiennent encore majoritairement à l’Etat et sont louées par les paysans. Il est donc facile de les déloger.
“Pour que ces investissements soient une opportunité pour les populations, il faut qu’ils permettent un réel développement rural [...] et une diversification des sources de revenus pour les paysans”, analyse Paul Mathieu.
La FAO prépare actuellement des directives pour “une gouvernance responsable” des modes de faire-valoir des terres, en collaboration avec ONU-Habitat et la Banque mondiale. “D’autres formes d’investissement comme l’agriculture contractuelle et les mécanismes de sous-traitance, peuvent offrir la même sécurité d’approvisionnement aux pays investisseurs”, note la FAO. Dont les directives n’ont aucun pouvoir contraignant…
L’épuisement de la terre l’enjeu du XXIe siècle, Daniel Nahon
Le principal outil des agriculteurs, la terre, disparaît à une vitesse effarante autour du globe. Partout, le sol se dérobe sous les pieds de l’homme qui crée deux fois plus d’érosion que l’eau et le vent. Les rendements céréaliers plafonnent, y compris au Québec. Symbole de fertilité des sols, le lombric est le porte-étendard d’une « révolution doublement verte ». Une révolution qui veut augmenter les rendements pour nourrir une population de 9 milliards d’habitants d’ici 2050 tout en incluant le vert de l’écologie. « Agriculture écologiquement intensive », « écoagriculture », peu importe le nom, le concept se situe entre les agricultures intensive et biologique et vise à mieux faire travailler la nature pour le compte de tous. Il intéresse tant les pays riches que pauvres parce qu’il diminue le coût des intrants (engrais, diesel, pesticides) tout en redonnant une santé à une planète intoxiquée.
Le Coopérateur agricole s’entretient avec le chercheur émérite français de réputation internationale, Michel Griffon, auteur d’un nouveau livre Pour des agricultures écologiquement intensives (www.aube.lu.)Depuis cinq ans, en France, la recherche agricole est réorientée à raison de 14 millions $ par année vers ce concept, mariage entre l’agriculture intensive et biologique, qui risque de s’étendre comme une traînée de poudre chez les agriculteurs à l’échelle de la planète.
■ Le Coopérateur agricole : Rappelez-nous comment notre agriculture actuelle s’inscrit dans la Révolution verte?
■ Michel Griffon : Ce qu’on appelle Révolution verte c’est la traduction en Inde, aux Philippines et autres pays tropicaux dans les années 60 de la grande transformation en agriculture américaine et européenne débutée en 1920 et 1930. C’est-à-dire une agriculture fondée sur les semences sélectionnées, l’utilisation d’engrais, la préparation du sol avec un labour profond et puis progressivement l’utilisation de produits de traitements phytosanitaires, pesticides, herbicides.
■Quels buts visaient cette révolution verte?
■Éliminer les famines dans le monde. À cet ensemble de techniques de production se sont ajoutées des politiques d’appui au développement agricole inspirées du plan Marshall. C’est à dire des crédits de subventions aux engrais et des politiques de prix des denrées qui ont boosté l’agriculture.
■Cette Révolution verte aurait-elle atteint ses limites?
■Cette agriculture intensive a permis de sortir des famines. Les résultats étaient fabuleux, les rendements avaient doublé en dix ans. Mais à partir de 1990-92-93, on a commencé à voir des plafonnements de rendements dans presque tous les pays du monde, incluant l’Europe qui a aussi besoin de rendements élevés pour nourrir sa population. Les États-Unis un peu moins parce que, proportionnellement, ils ont plus de surface de culture.
■Cette baisse de rendements à l’échelle mondiale a-t-elle inquiété?
■Oui. Pour The Conservative Group for Agricultural Research (CGAR), qui est l’organisation internationale de la recherche pour la révolution verte, ç’a été un coup de tonnerre. On s’est dit à l’époque que si la population mondiale continue à monter et que les rendements plafonnent, tôt ou tard il y aura des pénuries et on va se retrouver dans une situation qui était celle des années 60. La crise alimentaire mondiale de 2008 vient nous rappeler que la menace existe toujours.
■Qu’avez-vous fait alors?
■On a inventé le concept Double Green Revolution. Double pour accroître les rendements comme lors de la première révolution verte, mais aussi pour introduire le vert de l’écologie. Pourquoi? Parce que dans toutes les régions où il y a eu la révolution verte, il y a eu des problèmes environnementaux.
■Lesquels?
■Baisse considérable des nappes phréatiques là où on a trop irrigué. Pollution au phosphate et au nitrate par surdoses d’engrais des sols. Dans les pays en développement où l’on utilise sans grande précaution des produits phytosanitaires, on constate des maladies de peaux, des yeux, voire de la cécité. On s’est rendu compte aussi que faire du labour détruisait la vie du sol et que ça émettait beaucoup de GES. Et qu’une grande partie des engrais azotés partaient dans l’atmosphère et produisaient aussi des GES.
■Une perte de biodiversité également?
■Oui. On est passé à des paysages ultra simplifiés. D’immenses champs de blé, de maïs, de monocultures, monovariétales, comme le riz en Inde. On a même perdu une partie des plantes améliorées pendant des centaines de milliers d’années par les sociétés qui nous ont précédés.
■Vous référez souvent à l’Inde, mais est-ce que c’est le même constat en France et aux États-Unis et au Canada?
■Les États-Unis, c’est un peu moins parce qu’on ne met pas les mêmes doses. Mais c’est le même cas en France, dans toute l’Europe du Nord et dans toutes les agricultures intensives en engrais et en produits sanitaires.
■Comment ce concept Double Green Revolution a-t-il été adopté en France?
■Suite à ce que l’on appelle le Grenelle de l’environnement. C’est une très grande négociation qui a eu lieu en 2007 après des phases de grands conflits opposant les agriculteurs aux partis écologistes. On a proposé les thèses de Gordon Conway, un Anglais qui présidait le CGAR.
■Quels genres de thèses?
■Conway a essayé de comprendre comment mieux utiliser les écosystèmes à des fins productives pour faire face à la vague démographique et augmenter les rendements sur des terres cultivables limitées. Il faut trouver des technologies qui ne coûtent pas cher et qui soient « Environementaly Friendly » pour les agriculteurs du monde. On a cherché un mot qui convenait un peu mieux à la situation française. Alors, on a l’a baptisé l’agriculture écologiquement intensive (AEI).
■L’AEI est donc un nouveau contrat social entre la France et ses agriculteurs?
■Oui.
■Et vous la définissez comment, cette AEI?
■C’est une agriculture qui utilise intensivement les écosystèmes.
■Se servir des écosystèmes pour mieux produire?
■Le principe, c’est que vous avez dans la nature beaucoup d’insectes qui tuent d’autres insectes, des oiseaux qui mangent des insectes, ce que l’on appelle des chaînes alimentaires. La connaissance d’un écosystème c’est, par exemple, mettre des arbres dans les champs qui constituent des habitats pour certaines espèces d’oiseaux. Et ces espèces d’oiseaux se nourrissent particulièrement d’insectes et qui contrôlent les populations d’insectes ravageurs.
■D’autres exemples?
■La fertilité du sol est devenue purement chimique, c’est-à-dire que le sol est un substrat à l’engrais. En fait, un sol, c’est un écosystème extrêmement complexe. Il y a tout un cortège d’arthropodes, d’insectes, de nématodes et surtout des milliards de bactéries qui décomposent les plantes pour en faire de la matière organique. Cet humus se décompose à son tour et fournit d’éléments nutritifs les racines des plantes. La question que l’on s’est posée, c’est : est-ce que l’on peut amplifier ces mécanismes naturels?
■Et alors?
■Lorsqu’on arrive à recharger de la matière organique dans le sol, l’eau s’accumule dans les horizons un peu argileux et forme des complexes qui retiennent les ions minéraux et les engrais. Au bout d’un certain temps, dans certains climats, on arrive dans des performances égales ou supérieures à l’agriculture chimiquement intensive.
■Le semis direct s’intègre-t-il dans l’AEI?
■Oui cela fait partie de la famille AEI. Le semis direct a commencé à intéresser du monde parce que ce système suppose une fertilité écologiquement intensive, c’est-à-dire mieux faire travailler entre autres les vers de terre. Cette pratique tombe au moment où il y a eu les hausses des engrais et les hausses du pétrole en 2007-2008. Et le labour coûte très cher en énergie et en pétrole.
■Quelle différence faites-vous entre l’agriculture biologique et l’AEI?
■L’agriculture biologique se distingue de l’AEI au sens où on accepte encore de mettre de l’engrais, mais en complément. De même que l’on accepte de mettre des produits phytosanitaires, mais uniquement pour sauver des récoltes dans des situations très difficiles. Donc, l’agriculture biologique fonctionne un peu comme une direction générale de la recherche.
■Ça se traduit comment?
■L’agriculture biologique est extrêmement exigeante. C’est une bonne direction, mais il ne faut pas non plus se mettre des contraintes trop fortes sauf, par exemple, quand on produit de la salade ou des légumes que l’on mange crus. Par respect pour le consommateur, il faut prendre le maximum de précautions. Mais en AEI, s’il y a une rouille du blé intraitable biologiquement, on fait un traitement phytosanitaire dit raisonnable. On a diminué de moitié l’utilisation des produits phytosanitaires.
■Ce nouveau contrat social, 20 % des surfaces agricoles en bio en 2020, 50 % de fréquence de traitements phytosanitaires d’ici la même année, inquiète-t-il les agriculteurs?
■Il y a des molécules phytosanitaires qui ont été interdites purement et simplement.
■Ah oui?
■Les directives européennes suivent de toute façon. Ça inquiète beaucoup les agriculteurs parce que parfois on va se trouver en situation de manque de molécules pour faire face à des maladies. Il faut penser à l’AEI dans une transition lente. Déjà les gens qui abandonnent le labour ne le font pas sur toute la surface de l’exploitation. Ils ne prennent pas de risques.
■D’autres inquiétudes?
■Les changements climatiques. Il suffit d’une sécheresse pour que les rendements baissent fortement. On fait tout un travail d’analyse des risques.
■Et les OGM dans votre stratégie?
■Notre principe c’est qu’il faut utiliser des OGM qu’en dernier recours lorsqu’il n’y a pas d’autres solutions, ne serait-ce parce qu’il y a une immense opposition de la société en général à la manipulation du vivant. Mais on considère qu’à long terme il ne faut pas se priver d’utiliser des fonctionnalités pour les transférer d’une plante à une autre. Si par exemple, on peut lutter contre la salinité en transférant des gènes de cocotier à une autre plante.
■Les pays subventionnent l’énergie fossile à raison de 300 milliards $US par année1. Croyez-vous que l’abolition de ces subventions favoriserait l’adoption de l’AEI?
■Les agriculteurs français ont une détaxation partielle des carburants. J’y suis totalement opposé. Je pense qu’il faut au contraire que le carburant coûte cher pour évoluer le plus rapidement possible. Par ailleurs, les agriculteurs pourraient shifter vers la production de leur propre carburant, du biodiesel fabriqué à partir de colza ou autres oléagineux.
■Ce débat a lieu en France?
■Oui. C’est un débat qui n’a pas encore débouché sur des mesures de politique.
■Selon certains experts, les sols constituent un formidable piège à carbone. Est-ce que les bourses européennes prévoient récompenser les agriculteurs qui augmentent la matière organique de leur sol?
■Cette question est débattue. Les sols sont des puits de carbone à la condition que les techniques culturales conduisent bien à accumuler le carbone. Mais ce n’est pas encore reconnu par le marché européen et les droits d’émissions. On fait des travaux de recherche en ce sens.
1 BARBIER, Edward. B. Global Green New Deal, mars 2009, UNEP
A Desert Kingdom's Quest for Food Security
Rich in oil money but poor in arable land, the Saudi government is groping for a strategy to ensure it continues to meet the appetites of a growing population .
During the recent boom years it became common to talk about how many of the huge building projects in Dubai – like the Palm Island – had joined the Great Wall of China as among the few man-made structures that could be seen from space.
But satellite pictures of the Arabian peninsula have for years shown green dots in the Saudi deserts on the edges of the Najd Central Plateau. These are the country's circular farms – the average areas of which are around 54 times that of a soccer field. Testament to the ingenuity it requires to grow food in a desert nation, they are created by a combination of huge government subsidies, the latest farming techniques and water pumped from underground caverns to rotating sprinklers.
.Only about 2% of the country's enormous landmass is arable. Saudi Arabia is spending an ever-greater proportion of its petrodollars overseas – a strategy that some critics label "agricultural imperialism" – to secure a supply of food that will help alleviate shortages at home.
Saudi's population is growing at a rate of more than 2% each year and is expected to rise to 29 million by 2015 and almost 32 million by 2020, according to Riyadh-based Banque Saudi Fransi. The sheer pace of population growth makes Saudi's food supply problems all the more acute.
Pradeep Unni, a senior research analyst with Richcomm Global Services in Dubai, says: "Meeting the demands of the growing population's food needs is a tough challenge for Saudi Arabia." He argues that the kingdom's decision to use oil revenues to secure agricultural land contracts in different countries is the correct one. He adds: "The cost of producing food grains under the Saudi Arabian climatic conditions makes this choice an economically viable one."
The kingdom already imports the bulk of its food. But the decision to buy or rent land in countries such as Pakistan, Sudan and Ethiopia is a relatively new development. It is a trend that analysts say is unlikely to reverse anytime soon. However, some have warned that investing heavily in poor and politically unstable countries may open Saudi Arabia to a new set of risks.
So far, the Saudi government has mostly done deals with near neighbors that already have close links to the Gulf Cooperation Council area. Jarmo Kotilaine, the chief economist at NCB Capital in Riyadh, says the underdeveloped agricultural sectors of countries such as Sudan and Pakistan means that there is room for yield improvement, while their geographic proximity helps keep transportation costs low.
Saudi Arabia's dietary staples – rice and wheat – make up a significant portion of overall food imports. In recent years the kingdom has struggled to contain soaring rice and wheat prices as demand consistently outstrips supply.
Saudi doesn't grow its own rice and mainly imports the notoriously thirsty crop from India, Thailand, Pakistan and the U.S. Last year alone it bought more than one million tons of rice, according to the U.S. Department of Agriculture's Foreign Agricultural Service. Last November, in an attempt to trim the kingdom's grocery bill, the government removed a two-year-old subsidy on rice imports, which were adding up to about SAR1.5 billion ($400 million) a year.
In January 2008, Saudi Arabia decided to reduce its production of wheat by 12.5% a year, abandoning a 30-year-old program to grow its own, having achieved self-sufficiency but at the cost of depleting the desert kingdom's scarce water supplies. Saudi consumes around 3 million tons of wheat a year.
It is such difficulties in balancing the supply and demand of food that have led to a number of recent high profile acquisitions of foreign farmland. These include an agreement signed by the BinLaden Group, a privately owned family conglomerate, in August 2008 to invest at least $4.3 billion, on behalf of Saudi investors, to develop 500,000 hectares of rice farmland in Indonesia.
In February last year, Hail Agricultural Development Company, or Hadco, which is owned by Saudi dairy firm Almarai, said it plans to invest about $45.3 million over the next two years to develop 9,239 hectares of farmland in northern Sudan for wheat, corn and feed for livestock.
John McKillop, the managing director of Clyde Agriculture, an Australian-based farm manager, recently visited Dubai as part of a regional roadshow to sell his company's portfolio of 12 farm properties. The importance of food security in the Middle East makes the region an obvious place for him to tout his wares.
"The motivation for the likes of Saudi is food security whereas a U.S. investor might be more focused on the return on the asset," says Mr Mckillop.
The process of buying up large swathes of land in foreign countries is politically sensitive and has opened up the country to the charge that it is potentially exploiting poorer nations and opening itself up to political risk.
"Gulf countries, including Saudi Arabia, have been looking at nations that are unstable politically, socially and economically, which is a risk on the longer term," says a senior executive at a leading Middle Eastern food commodities trading firm who declined to be named. "But beggars can't be choosers. This seems to be only way out for the region."
Andrew Ferrier, the chief executive of New Zealand's Fonterra Cooperative Group, the world's biggest dairy exporter, agrees but reasons that Saudi Arabia is in a strong bargaining position.
"[Saudi Arabia has] a lot of commodities that are in incredible demand like oil, and they need a lot of commodities in demand like grains. They should be in a strong position to trade on this over the very long term," says Mr. Ferrier.
5/12/2010
Cargill’s Black River eyes food, land deals
Reuters | 10 May 2010
Peasant farming in China and India is "not an optimized or efficient system and is unsustainable to meet demand," says Rich Gammil of Cargill's Balck River Asset Management (Photo : DDS).
New York, May 7 – Agribusiness giant Cargill’s $6 billion Black River arm is making its next big bets on changing eating habits in major developing nations, buying into dairy farms in Asia and breeding fish in Latin America.
Black River Asset Management, which mostly manages third-party capital, plans to close a private equity fund this summer that will target food production, processing and distribution with a focus on dairy and aquaculture segments, said Rich Gammill, managing director and senior portfolio manager for Black River.
The “sweet spot” for the fund is $300 million to $400 million, and will be similar in size to a sister fund that closed earlier this year and is focused on agricultural land investing.
“We’re looking for growth equity opportunities,” Gammill told Reuters in an interview on the sidelines of an investment conference in New York.
Black River is among a growing number of investment groups establishing positions in global farmland and food production amid concerns about a growing world population and supply and demand imbalances for food, water and energy.
Members of Action Against Agrofuels blockading the entrance to Cargill's European regional head office in Cobham, Surrey, the UK, July 2008.
Gammill said the fund is aiming for returns of more than 25 percent a year by investing in new western-style dairy farms in developing parts of Asia. The new farms could require initial investments estimated at $35 million each and will operate with 5,000 to 8,000 cows in areas that have relied largely on small peasant farmers for dairy production, he said.
Black River is partnering with local groups putting the farms together.
“We’re not building companies. We’re investing in local teams we think know how to do it right,” he said.
Gammill said the dairy sector in Asia provides particular opportunities because of broad inefficiencies across production and distribution channels.
In Central America and South America, the focus will be on expanding efficiencies in aquaculture amid growing demand from North America and Europe for farmed fish.
Gammill said one challenge to investing in farmland and food production is a lack of expertise in modernized, highly efficient production practices.
“There is a huge lack of competency in farm management practices in China and India. The efficiencies aren’t there yet in emerging markets,” he said. “We’re so used to efficient food production in the United States. But in China and India a lot of it depends on peasant farmers. It is not an optimized or efficient system and it is unsustainable to meet demand.”
Many potential investors remain skittish about the risks associated with emerging markets, Gammill said. But interest and comfort levels were growing.
“People are starting to acknowledge that to meet demand… investor capital needs to be directed toward the supply side. That can be in the form of row crops… or in the form of food production, protein production, which is the biggest driver of that demand,” Gammill said.
Peasant farming in China and India is "not an optimized or efficient system and is unsustainable to meet demand," says Rich Gammil of Cargill's Balck River Asset Management (Photo : DDS).
New York, May 7 – Agribusiness giant Cargill’s $6 billion Black River arm is making its next big bets on changing eating habits in major developing nations, buying into dairy farms in Asia and breeding fish in Latin America.
Black River Asset Management, which mostly manages third-party capital, plans to close a private equity fund this summer that will target food production, processing and distribution with a focus on dairy and aquaculture segments, said Rich Gammill, managing director and senior portfolio manager for Black River.
The “sweet spot” for the fund is $300 million to $400 million, and will be similar in size to a sister fund that closed earlier this year and is focused on agricultural land investing.
“We’re looking for growth equity opportunities,” Gammill told Reuters in an interview on the sidelines of an investment conference in New York.
Black River is among a growing number of investment groups establishing positions in global farmland and food production amid concerns about a growing world population and supply and demand imbalances for food, water and energy.
Members of Action Against Agrofuels blockading the entrance to Cargill's European regional head office in Cobham, Surrey, the UK, July 2008.
Gammill said the fund is aiming for returns of more than 25 percent a year by investing in new western-style dairy farms in developing parts of Asia. The new farms could require initial investments estimated at $35 million each and will operate with 5,000 to 8,000 cows in areas that have relied largely on small peasant farmers for dairy production, he said.
Black River is partnering with local groups putting the farms together.
“We’re not building companies. We’re investing in local teams we think know how to do it right,” he said.
Gammill said the dairy sector in Asia provides particular opportunities because of broad inefficiencies across production and distribution channels.
In Central America and South America, the focus will be on expanding efficiencies in aquaculture amid growing demand from North America and Europe for farmed fish.
Gammill said one challenge to investing in farmland and food production is a lack of expertise in modernized, highly efficient production practices.
“There is a huge lack of competency in farm management practices in China and India. The efficiencies aren’t there yet in emerging markets,” he said. “We’re so used to efficient food production in the United States. But in China and India a lot of it depends on peasant farmers. It is not an optimized or efficient system and it is unsustainable to meet demand.”
Many potential investors remain skittish about the risks associated with emerging markets, Gammill said. But interest and comfort levels were growing.
“People are starting to acknowledge that to meet demand… investor capital needs to be directed toward the supply side. That can be in the form of row crops… or in the form of food production, protein production, which is the biggest driver of that demand,” Gammill said.
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