Global commodities trader Trafigura said on Friday that a multi-billion dollar oil fraud uncovered in Mongolia was hurting its profits in 2024.
The fraud case triggered trading company based in geneva The share capital and profits of previous years have been reduced, while this year's profits have been significantly reduced.
Profit in 2024 will drop 60% annually to US$2.8 billion, the lowest level since 2020.
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The lower performance marked the end of a stellar period of profitability. Over the past four years, commodities traders have profited from unprecedented market volatility triggered by the Covid-19 pandemic, Europe's energy crisis and Russia's full-scale invasion of Ukraine.
As profits fall, the Geneva-based company faces possible fines from a corruption trial in Switzerland, as well as share buybacks for departing senior executives and an upcoming chief executive replacement.
The company paid $2 billion in dividends in 2024, compared with nearly $6 billion in 2023.
The Geneva-based company said its Mongolian operations took an impairment of $358 million in 2024, with “the balance recorded as a prior period adjustment.”
Internal investigation seeks to raise $500 million
Trafigura attributes much of the debt to debt owed by Lex Oil, its counterparty in the country, but its internal investigation is ongoing to try to trace about $500 million in debt.
The Mongolia fraud is the second such loss in two years, after the company wrote off $600 million in connection with an allegedly fraudulent nickel deal.
Trafigura's zinc-lead producer Nyrstar also incurred a significant impairment of nearly $300 million in 2024.
Mongolia's losses of $1.1 billion were accumulated over five years. Trafigura revised earnings and group equity for 2022 and 2023 to reflect losses in Mongolia. The results show that the 2022 budget is reduced from $7 billion to $6.8 billion, and the 2023 budget is reduced from $7.4 billion to $7.3 billion.
After being revised down from US$16.5 billion to US$15.8 billion in 2023, the group's equity fell slightly to US$16.3 billion.
EBITDA fell 36% to $8.1 billion. Trafigura's oil and fuel trading volumes increased to 6.8 million bpd, compared with 6.3 million bpd in 2023.
Trafigura has not yet set aside any provisions to cover possible penalties related to an ongoing corruption trial in Switzerland, where prosecutors are seeking a total of $156 million in damages from the trading company over its activities in Angola.
Trafigura’s 2024 will be Chief Executive Jeremy Weir’s last financial year at the helm. He resigned in January and was replaced by gas, power and renewables boss Richard Holtum. Weill, who has been CEO for more than a decade, will serve as chairman of the board.
- Reuters Additional editing by Jim Pollard
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