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The Big Picture

Mendip lead ingots Courtesy of Inst of Historical Research - University of Londonl

When I was young in the 1960s our schoolteacher provided each child with a plastic template of the British Isles. Our job was to trace its outline onto a piece of paper and then fill in the key geographical features. The port of Lowestoft for fish, Newcastle for coal, a long thin line for the Pennines and another for the Mendip Hills stretching from the West.

Who would have thought that 60 years later I would live there, close to where the Romans mined and smelted lead using native slaves in penal servitude; at that time under the command of Vespasian (before he became Emperor) the greatest source of lead in the Roman Empire?

But our learning was of course imperfect. There was no Northern Ireland, Hebrides, Orkney, Shetland, Isle of Wight or Anglesey. The picture of my country was circumscribed by the limitations of plastic.

This is how we learnt - imperfectly - and incrementally.  

A geoscientist friend of mine told me the other day that when he was young in the 1940s, there was 2.5 billion people on the planet and the world consumed about 25 mln barrels of oil a day. Today, there are 8 billion people and consumption is 100 mln barrels per day. The population has gone up by 3 and oil consumption by 4.

Meantime while it is believed the earth is about 4.5 billion years old the poles have only been iced for about a third of the last 100 mln years.

If a man stretches out his arms, the period representing man’s existence is represented by about 1mm of his fingernail.

Each one of these facts, factoids and comparisons is food and drink for the metal merchant – a moment when you can perceive a little bit more wood amongst a lot of trees. It takes time.

I often ask older students, trainees, or school children to guess how much copper there is in a copper mine as a percentage of copper in the ore. The answers vary from 50% to 70% and sometimes a bright spark might suggest 20%. The FT recently quoted the average copper content at El Teniente in Chile to be Cu 0.88%. It means nothing unless you compare the figure to Zambia, say, where Mopani’s copper sulphide ore averages Cu 1.5% or to DRC where some copper oxide ores are an astonishing 20% (unlike anywhere else in the world).

When you start out in metals it’s all trees and no wood.

I remember one of my first jobs was to write London Metal Exchange prices in Pounds Sterling with marker-pen on a big white board that filled an entire wall of our brokers office. I dutifully plotted them up, but it was a while before they meant anything, and even longer time before I could take a stab at a sensible view (although it rarely stopped me expressing one).

The point is that fully trained metal merchants need to be carefully crafted – you could say forged and aged – and, as an employer, unless you want to buy old hacks freely available on the secondary market, it’s really best to train and nurture your own. It takes time but it can be a stimulating journey for all.

The younger person needs to be in an open plan office exposed to everyday trading conversations, and in an atmosphere that allows questions. So, if you’re that young person reading this, you need to make sure that this is what you get.

When - in this real life example - a country not hitherto associated with consumption of rhenium (China) suddenly imports 8.5 mt in one year (as it did in 2022), someone needs to be there to point out why this piddling quantity matters! It might be less than half a container-load of copper but in rhenium terms it’s enormous. (In fact, greater than the annual output of the third largest rhenium producer and about 10% of 'world' supply in 2023).

Deciphering tea leaves is an acquired skill. In that following year - 2023 - China then imported 25.6 metric tons of rhenium (!)

Why does it matter?

Because this quantity of imports was greater than the tonnage exported from Chile in 2008 when prices reached their highest price in history of $12,500 per kg Re!

And a secondary question - how could Chile export 60mt of Rhenium in 2023 when total annual Chilean output (meaning year-on-year production) is no more than about 36 mt?

A: (Stockpile).

The context is all - and that all comes from the enjoyment of strange comparisons and a healthy cultivation of a wide range of reference.

Anthony Lipmann

The Crucible, July 2024

[No 20 in a series of articles on the theme of 'Metal Trading for the young']






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