TotalEnergies is considering a foray into copper trading, CEO says

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French energy giant TotalEnergies is studying whether to start trading in copper, potentially paving the way to expand its vast oil trading operations into metals for the first time to capitalize on the energy transition.

Rahim Azouni, senior vice president of crude oil, fuel and derivatives trading, said the company was “studying the case” for copper trading, in remarks made at a closed-door conference in London, according to several people who attended.

Azouni cited the energy transition as a reason to consider expanding into copper trading, but added that he had not yet decided to do so, people who listened to his remarks told the Financial Times on Wednesday.

TotalEnergies already has a large trading arm dealing in oil, gas, electricity and new fuels, although it does not disclose the size of its trading activities.

His remarks come as a growing number of oil traders are expanding into metals to capitalize on the world’s need for copper, which is used in electrical cables, buildings and electric vehicles. The race for cleaner energy is also increasing demand for aluminum and nickel.

While global copper demand is expected to grow over the next decade, the oil market has been weak this year, with China’s reduced demand for fossil fuels keeping prices low despite the war in the Middle East.

Traders and trading firms that built their fortunes around oil trading, reaping windfalls during the volatility in energy prices since Russia’s invasion of Ukraine in 2022, are increasingly moving to metals to capitalize on demand.

Vitol, the world’s largest independent oil trader, recently returned to metals trading, a business it exited in 2014.

This year it poached two aluminum traders from a rival firm and is focusing on aluminum as part of its energy transition strategy.

Geneva-based commodities firm Mercuria is also expanding into metals, building a 60-person metals trading unit under Kostas Bintas, formerly co-head of metals at rival Trafigura.

Even hedge fund manager Pierre Andurand, one of the world’s leading energy traders, has focused on copper and other metals. Earlier this year, he predicted that copper would reach $40,000 a tonne in the coming years, four times the current price.

Tom Price, resources analyst at Panmure Liberum, said low volatility in the oil market and long-term changes in energy systems had driven the shift to metals.

“They can see oil demand and the oil market going down and they’re trying to de-risk that world by moving to the metals world,” Price said, adding that the transition could be difficult for companies built around oil. commercial.

“These markets are not structured in the same way as oil,” he said. “In principle I can do it, but in practice it will be a struggle.”

TotalEnergies chief executive Patrick Pouyanné has previously said the energy transition is likely to raise energy prices in the long term, although the group is now also preparing for a period of lower liquefied natural gas prices as more supply comes online, particularly starting in 2027. .

That added to Total’s incentive to shore up its earnings, with the company telling investors on Wednesday it was confident it could “de-risk” its LNG activities and operate profitably.

TotalEnergies declined to comment on the copper trading plans.

Additional reporting by Sarah White