The World for Sale

🚀 The Book in 3 Sentences

It’s a book about the history of commodity trading and how it has been a significant part of contemporary politics over the last century. It tells the story of the major companies and how the got to the place they are at today.

🎨 Impressions

Not surprised by the lack of women in this field.

✍️ My Top Quotes

• Why, then, had he not responded, even with ‘no comment’, long the favourite response of a stonewalling PR man? His lack of response, he replied enigmatically, should have been seen as a form of response in itself. And then he hung up.

• One thing there is not much of in the commodity trading industry is women.

• As Jim Daley, a former head of oil trading at Marc Rich + Co, puts it: ‘Oil is just a form of money.’

• In dollar terms, the world’s trade in manufactured goods and natural resources rose from less than $60billionjustaftertheSecondWorldWartomorethan$17 trillion in 2017, a quarter of which was made up by commodities.

• The dominance of the large oil companies, known as the ‘Seven Sisters’, was loosened by the wave of nationalisations that swept the countries of the Middle East in the 1970s.

• The family that owns Cargill contains no fewer than fourteen billionaires

• Some of the traders we’ve interviewed have been remarkably blunt about the trading industry’s reputation for bribery and corruption. ‘Unfortunately this is something that has plagued the commodity industry,’

• ‘Just like not every Hollywood producer was a Harvey Weinstein, not every commodity trader is a briber,’ argues Mark Hansen, who runs a mid-sized metals trader.

• ‘One of the basic rules of Philipp Brothers is that business is supreme; political matters are not business.’

• Until the 1950s, the Soviet Union’s oil had come largely from Baku on the Caspian Sea, whose riches had been exploited since the nineteenth century. But now geologists began to develop new deposits in the Volga-Urals basin, and Soviet oil output doubled between 1955 and 1960.23 The Soviet Union displaced Venezuela as the second-largest oil producer in the world, behind only the US.

• Producing a tonne of aluminium uses the same amount of electricity as a US household consumes in a year. The energy consumption is so large that traders jokingly describe aluminium as ‘congealed electricity’. It’s why most smelters are built where electricity is cheap, such as Siberia with its hydropower, Iceland with its geothermal generation, or the Middle East with its natural gas.

• This type of deal, exchanging a raw material for a finished product, was called ‘tolling’ and had been used before in oil and zinc, but Marc Rich + Co brought it to the aluminium sector.

• In the 1980s, the list of countries that ‘most companies’ wouldn’t dream of dealing with grew longer and longer. Exactly where to draw the line was a question of personal taste. Some traders were happy to do business in tricky countries such as India or the Philippines, but drew the line at war zones and pariah states. For others, any corner of the world was fair game.

• The traders weren’t making money through a brilliant understanding of the market. They were simply willing to put aside any ethical principles to make more money.

• Ultimately, Rich and Green never faced jail time or any financial penalty. After nearly two decades as fugitives hunted around the world by US marshals, they were pardoned by President Clinton in his last act before leaving office in January 2001, thanks to a careful lobbying campaign that included the prime minister of Israel and the king of Spain. The pardon triggered a rare show of consensus in Washington, with Democrats and Republicans uniting in condemnation. It emerged that Rich’s former wife, Denise, had been a top donor to both the Democrats and the Clinton Presidential Library.

• Eventually, a consultant came up with the name Glencore, a contraction of the words global, energy, commodities and resources.

• The group was offered a choice of dormant Dutch-registered companies to buy in order to speed up the process of starting. Now they were forced to choose quickly which name they would use. The options were Skydiver, Blackheart and Trafigura. Everyone agreed Skydiver was not an ideal name for a highflying commodities trader; and Blackheart sounded a little too buccaneering, even for the trading industry. So Trafigura it was.

• At the time of its break-up, the Soviet Union pumped more oil than any other country in the world and was also one of the biggest producers of metals and grain. Now, at a stroke, it was transformed from a closed system into a shambolically integrated part of the world economy.

• Posen remembers that the Raznoimport bosses ‘loved to be invited for dinner and drinks’.

• Among the new breed of Soviet entrepreneurs was Artem Tarasov, who shot to fame in the late 1980s after proclaiming himself the Soviet Union’s first legal millionaire. Like many others, he was making his fortune wheeling and dealing in the shadows of the Soviet economy. One day, he struck on an opportunity to buy some fuel oil. The situation was a microcosm of the inefficiencies of the Soviet system: an oil refinery in Ukraine was producing fuel oil to supply local power stations. When a mild winter came, the power stations used less, and so the refinery had excess supplies. With no other instructions on where to deliver it, the director of the refinery simply told his employees to dig holes in a nearby forest and pour the fuel oil into them.

• PepsiCo briefly became one of the world’s largest naval powers when it agreed that, in exchange for the Pepsi it was selling to the Soviet Union, it would be paid with 17 Soviet submarines, a cruiser, a frigate and a destroyer.

• The naval fleet was sold for scrap, leading PepsiCo’s chairman to joke to the White House: ‘We’re disarming the Soviet Union faster than you are.’

• Doing business in a collapsing economy forced the traders to improvise. They would hire whole jets for $20 an hour, loading up with cases of cigarettes and Johnnie Walker whisky, the only currency they could use to buy fuel at remote airports in struggling Siberian towns. They’d arrive at vast mines and smelters where the Soviet-era bosses – known as ‘red directors’ – would start morning meetings with a glass of vodka, or several.

• The Russian press counted dozens of murders connected to the metal trade, and dubbed the struggle the ‘Great Patriotic Aluminium War’. The victims included both allies and competitors of Trans-World, though Reuben has always denied any hint that he or his partners had any role in the violence.

• When Saddam Hussein invaded Kuwait in August 1990, Cuba felt the full force of the spike in oil prices. When sugar prices also tumbled, it seemed that the markets were conspiring against Cuba. The shock was almost too much to bear. The island’s economy plunged into a period of hardship, known in Cuba as ‘the special period in time of peace’.

• The amount of commodities that a country consumes is, for the most part, a function of two factors: the number of people in the country, and their income. The relationship with commodity demand isn’t a straight line, however.

• As long as a country remains relatively poor, with annual per capita income below about $4,000, people spend most of their income on the basics they need to survive: food, clothes and housing.

• As long as a country remains relatively poor, with annual per capita income below about $4,000, people spend most of their income on the basics they need to survive: food, clothes and housing. What’s more, the governments of poor countries don’t have the money to make major investments in commodity-intensive public infrastructure, such as power plants and railways.

• Once a nation’s income rises above roughly $18,000–$20,000 per capita, households spend any extra income on services that require relatively small amounts of commodities: better education and health, recreation and entertainment.

• Commodity trading would soon supplant sports as the main focus of Glasenberg’s time and energy. Still, he ran the New York marathon in 1994, aged thirty-seven, in the respectable time of 3 hours, 34 minutes, and continued to compete in triathlons in Switzerland into his fifties.

• Between 2000 and 2008, global trade in oil increased by 27.2%. That was more than twice the rate of oil demand growth over the same period.

• These were dangerous times for anyone doing business in the Russian commodities sector. The aluminium wars became famous, but oil traders were also at risk. One day Törnqvist’s business partner vanished, presumed murdered. Törnqvist feared for his own safety. ‘Since I was very close to him, I decided to stay out of Russia for at least a year,’ he says. ‘I was very cautious for a while.’

• He says that Khodorkovsky made two mistakes. The first was to ignore Putin’s warning not to meddle in Russian politics. The second was his talks to sell Yukos to a US oil company.

• Mutanda is a symbol of the scramble for Africa that took hold of the resources industry in the 2000s. As the supercycle gathered pace, miners, oil companies and traders alike could no longer ignore Africa’s riches.

• Most African countries export commodities, and little else.1 And that means Africa’s economic fortunes have risen and fallen with the commodity markets.

• By 2001, the size of the economy of sub-Saharan Africa was no larger than it had been in 1981.

• The country that is now called the Democratic Republic of Congo had been one of the world’s largest copper producers, accounting for more than 7% of global supply in 1975. Twenty years later, its output had plunged to just 0.3% of the world total.

• Zimbabwe went from a breadbasket to a basket case. Nigeria pumped less oil in 1999, when democracy returned after decades of kleptocratic military rule, than it had done in 1979. Africa was, in the eyes of many foreign investors, ‘the hopeless continent’.

• ‘There’s no way to do business in the Third World without enriching government leaders,’ said Calil. He explained how the practice of greasing the palms of African potentates evolved: ‘You used to give a dictator a suitcase of dollars; now you give a tip on your stock shares, or buy a housing estate from his uncle or mother for ten times its worth.’

• About two-thirds the size of Western Europe, the Democratic Republic of Congo contains one of the world’s richest tracts of minerals.

• In a day, a digger could make more money than a schoolteacher made in a week. For the artisanal miners, the copper and cobalt ore was the only source of income in an otherwise bleak economy.

• The purity of the Congolese ore was off the charts, not just for copper ore, but also for cobalt. The world’s average ore grade for a copper mine is about 0.6%. In Chile and Peru, any mine with an average ore grade of more than 1% would be seen as exceptionally good. In its early days, Mutanda had an average copper ore grade north of 3%.

• By the mid-2000s, Africa, in the traders’ eyes, had become a place where the commodities that no one else wanted could be disposed of. It was not just the supplier of last resort, but also a buyer of last resort. And for the least scrupulous, it became a dumping ground.

• Some traders were worried about the impact of this massive diversion of global food supplies into fuel. Warren Staley, chief executive of Cargill until 2007, argued that the promotion of ethanol could end up taking food out of people’s mouths. ‘The world will have to make choices,’ he warned.

• By 2011, as the Arab Spring engulfed the Middle East, the US ethanol industry was consuming one in every six bushels of corn on the planet.

• Then, in 2006, Margaret Cargill, the granddaughter of the company’s founder, passed away. Margaret was one of America’s richest women, but the bulk of her fortune was tied up in a stake of about 17.5% in Cargill. After her death, the charities she had founded looked to cash in their investment. They started lobbying the trading house to arrange an IPO, at least for Margaret’s stake in the business.

• With the help of the commodity traders, the regional government of Kurdistan was shipping nearly 600,000 barrels a day at its peak – equivalent to about half of Norway’s oil exports.

• Today, the Glencore loan is so important for Chad that, when the IMF publishes reviews of the country’s economy, the commodity trading house merits its own mention in the analysis of the African nation’s government finances. Even before coronavirus struck, the country didn’t expect to finish paying back Glencore until 2026.

• After the Watergate scandal, American officials started to investigate companies’ payments to politicians in the US and beyond. What they uncovered shocked the foundations of corporate America. More than 400 companies admitted to having made questionable or outright illegal payments overseas.

• But some, notably Switzerland, were extremely slow to act. Paying bribes to foreign officials was not only widely accepted within the business community, but the bribes were even tax deductible. It was only in 2016 that Swiss companies stopped being able to claim a tax credit against the bribes they had paid to businesspeople abroad, with the approval of new legislation.

• Wyler, who was one of Glencore’s most senior executives until 2002. Once, he was stopped in Heathrow airport by customs officials shocked at the amount of cash in his luggage. They asked him what he planned to do with such a lot of money. Knowing that he wouldn’t be able to get a receipt for what he was planning to spend it on, Wyler calmly replied: ‘I go gambling.’

• As Torbjörn Törnqvist, chief executive of Gunvor, puts it: ‘I think the old-style traders, the Marc Rich diehard breed, some of them don’t quite get it. Until they’re sitting and talking with the FBI. Then they get it.’