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In recent years, the commodity trading industry, especially within mining and metals, has seen a remarkable uptrend, underpinned by complex supply and demand dynamics, geopolitical influences, and currency fluctuations.
These elements have not only driven significant price volatility but also introduced financial intricacies that impact market participants. The inherent volatility of these markets poses a dual challenge: it subjects traders to credit risks from potential defaults and creates liquidity constraints, complicating the acquisition of financing.
This volatility is further complicated by supply chain and logistical challenges unique to the mining and metals sectors. Issues such as transportation delays, documentation inaccuracies, and stringent regulatory compliance requirements can severely disrupt trade finance transactions and inflate operational costs. These complexities are magnified in an era where the industry is on the threshold of a transformative shift towards the next normal, spurred by the global energy transition.
This transition, characterized by the economic and physical integration of global food, energy, and materials systems, promises to heighten structural volatility, disrupt traditional trade flows, and redefine commodities in unprecedented ways.
From a trading perspective, this evolving landscape presents a mix of opportunities and challenges, fundamentally altering commercial relationships and profitability metrics.
Commodity trading value pools have witnessed substantial growth, nearly doubling EBIT from $27 billion in 2018 to an estimated $52 billion in 2021, predominantly fueled by gains in oil trading.1
This growth trajectory continued into 2022, setting an all-time high $100 billion for gross margin. However, the path to capitalizing on these opportunities is fraught with hurdles.
The past few years have underscored the market's vulnerability to spikes in volatility, triggered by the pandemic, extreme weather events, geopolitical tensions, and macroeconomic shifts. These fluctuations have rippled through various sectors, affecting not just energy but also metals, where energy inputs significantly influence production economics.
One company addressing these complex issues head on is MineHub Technologies Inc. (TSXV:MHUB) (OTCQB:MHUBF), an enterprise-grade digital supply-chain platform that connects buyers, sellers, labs, and financiers in a digitally integrated workflow that is usable, shareable, verifiable and unforgeable.
MineHub Revolutionizes Trade Finance and Logistics in Metals and Mining
MineHub's SaaS platform eliminates old manual processes, leading to increased efficiency, cost reduction, enhanced security, optimized working capital, and greater transparency across global supply chains. Global mining giants like Capstone Copper, Sumitomo Corporation, and Codelco have already adopted MineHub's platform for logistics, compliance, trade management, and financing operations.
On May 14, MineHub Technologies Inc. (TSXV:MHUB) (OTCQB:MHUBF) announced a partnership with Surecomp Business Solutions, a leader in cloud-based trade finance solutions. This collaboration is set to revolutionize the digitization of trade finance in the commodities sector by integrating MineHub's platform with Surecomp's RIVO. This move is poised to unlock new efficiencies, transparency, and security in trade finance within the commodities sector, providing users with enhanced capabilities such as streamlined document management, real-time visibility into trade finance processes, ESG compliance tracking and mitigation of fraud risks.
MineHub has also signed several new clients this year including a services agreement with a large Canadian bank to deploy its Consignment Module for managing non-ferrous metals transactions. Announced on March 27, this will be MineHub's first major customer in the finance sector, laying a foundation for future growth and new revenue streams. Collaborating with one of North America's largest banks not only validates MineHubs supply chain solutions but also expands its market reach.
On March 19, the company expanded its partnership with Sumitomo, which involves integrating Sumitomos refined copper business onto the Minehub Platform, starting with key customers in the Asian market. Sumitomo will support sales efforts for the refined platform, highlighting its confidence in MineHub's capabilities to deliver value in the metals market.
As MineHub continues to drive innovation and expand its offerings, it is poised to play a pivotal role in shaping the future of the metals and mining sector.
Click here to learn more about MineHub Technologies Inc. (TSXV:MHUB) (OTCQB:MHUBF).
[1] https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/the-future-of-commodity-trading
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