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1、2022ANNUAL REPORTTRAFIGURA GROUP PTE.LTD.2022 financial and business highlights1Trafigura Group Pte.Ltd.and the companies which it directly or indirectly owns investments in are separate and distinct entities.In this publication,the collective expressions Trafigura,Trafigura Group,the Company and th
2、e Group may be used for convenience where reference is made in general to those companies.Likewise,the words we,us,our and ourselves are used in some places to refer to the companies of the Trafigura Group in general.These expressions are also used where no useful purpose is served by identifying an
3、y particular company or companies.1.Trafiguras financial year 2022 covers the period 1 October 2021 to 30 September 2022.2.Total employee numbers are calculated as an average over the financial year and comprise employees of consolidated Trafigura Group businesses,operations and offices.Porto Sudest
4、e and Impala joint venture employees are excluded as these assets are not consolidated in the Trafigura Group financial accounts.Puma Energy was consolidated in Trafiguras balance sheet from 30 September 2021.As from financial year 2022,its employees are included in the above number.3.Million metric
5、 tonnes.Group revenue$318.5bn$231.3bn in 2021$147.0bn in 2020Underlying EBITDA$12.1bn$7.0bn in 2021$6.1bn in 2020Underlying EBITDA margin3.8%3.0%in 20214.1%in 2020Net profit$7.0bn$3.1bn in 2021$1.6bn in 2020Oil and Petroleum Products total volume traded3312.5mmt330.3mmt in 2021269.8mmt in 2020Total
6、non-current assets$19.4bn$15.1bn in 2021$11.1bn in 2020Non-ferrous concentrates and refined metals total volume traded23.3mmt22.8mmt in 202120.9mmt in 2020Total assets$98.6bn$90.2bn in 2021$57.0bn in 2020Average number of employees over the year212,3479,031 in 20218,619 in 2020Total Group equity$15.
7、1bn$10.5bn in 2021$7.8bn in 2020Bulk minerals total volume traded91.3mmt82.7mmt in 202176.7mmt in 2020Managements review02 Who we are04 Statement from the Executive Chairman and Chief Executive Officer06 Financial review12 Operational review14 Marketplace review 18 Performance review18 Oil and Petro
8、leum Products22 Metals and Minerals 26 Power and Renewables30 Shipping and Chartering 32 Assets and Investments38 Sustainability review Corporate governance42 Board of Directors and CommitteesRisk management and funding model44 How Trafigura manages risk48 Financing to meet diverse business needsFin
9、ancial statements52 Report of the auditor 58 A.Consolidated statement of income58 B.Supplementary statement of income information59 C.Consolidated statement of other comprehensive income60 D.Consolidated statement of financial position61 E.Consolidated statement of changes in equity62 F.Consolidated
10、 statement of cash flows63 G.Notes to the consolidated financial statementsContentsWho we areA multimodal logistics provider focused on export-driven emerging markets.It owns and operates ports,port terminals,warehouses and transport assets.3An international producer of critical metals and minerals
11、essential for a low carbon future.A global energy supplier with a leading fuel retail and convenience store network.Primary downstream business segments include:retail and commercial fuels;aviation fuels;lubricants;LPG and bitumen.A joint venture owned by Trafigura,Frontline and Golden Ocean,TFG Mar
12、ine provides competitively priced,premium marine fuels at key hubs along the worlds major shipping routes.A 50:50 joint venture between Trafigura and IFM Investors that invests in on-shore wind,solar and power storage projects.Providing investors with specialised alternative investment solutions thr
13、ough its investments in real assets and private equity funds.Group companies and joint ventures12,347 Employees61 Offices globally1156 Countries of activityOil and Petroleum Products32Product types suppliedMetals and Minerals31 Product types suppliedRenewable energy portfolio22.8GWGeneration capacit
14、yHoustonCalgaryMontevideoGenevaAthensJohannesburgDubaiMumbaiSingaporeShanghaiKey regional hubs1 Trafigura offices only,number excludes other Group companies and joint venture offices and facilities.2 Nala Renewables(50%owned by Trafigura)3 Following the FY2022 year end,Impala Terminals completed the
15、 acquisition of a number of Puma Energys oil storage assets and now has two business units:Impala Terminals Energy Infrastructure and Impala Terminals Dry Bulk and Logistics.Trafigura is a market leader in the global commodities industry.At the heart of global supply,we responsibly connect vital res
16、ources to power and build the world.Across our global network,we deploy infrastructure,logistics and financing to connect producers and consumers,bringing greater transparency and trust to manage complex supply we areAccess toglobal marketsAssets,infrastructure and logistics Market insights and inno
17、vation Financing and risk managementGHG emissions transparency Responsible value chainsEfficientlySustainablySecurelyConnecting vital resourcesto power and buildthe worldConsumersProducersEnergyMobility Construction and industryElectronics and manufacturing MinesSmeltersOil and gas producers Refiner
18、iesPower generators Trafigura Annual Report 20223I am pleased to say that we were able to successfully tackle these challenges and deliver another strong set of results,drawing on the global network,experience and capabilities we have worked steadily to build up over the past three decades.Our perfo
19、rmance allowed us to further strengthen our balance sheet.Group equity has almost doubled over the past two years and now stands at USD15 billion.We continue to have credit lines with around 140 banks globally.This is a source of competitive advantage as producers and customers look to do business w
20、ith strong and reliable partners that have access to readily available liquidity.It is only by having global reach backed up by powerful analysis that we were also able to understand the interplay between different regions and commodities,and use our logistics network to provide valuable services to
21、 our customers.To do this effectively in the current environment requires access to capital,excellent risk management capabilities and a dynamic organisation that quickly adapts to changing circumstances.In particular,the ability to hedge commodity price risk in futures markets has become significan
22、tly more difficult given the withdrawal of market participants and resultant lack of depth in derivative markets.It is also much more cash-intensive due to the vastly increased margin requirements of clearing banks and exchanges.While larger,well-funded companies such as Trafigura are able to withst
23、and these pressures,it is vital that measures are in place to ensure an orderly market even at times of high volatility,so that the real world movement of goods is not impacted.The past year saw our people work hard to solve the disruptions created by unprecedented market volatility and the big stru
24、ctural shifts that are shaping our industry.Europes energy crisis and the war in Ukraine underscored the fragility of global supply chains and why security of supply is vital in a world of increasing geopolitical uncertainty.The impact of climate change and the importance of decarbonisation was agai
25、n evident with extreme events placing further strain on the production and movement of key raw materials.We also responded to new rules and regulations that came into force across multiple jurisdictions following Russias invasion of Ukraine.Trafigura unconditionally condemned the war and the ensuing
26、 humanitarian crisis,and moved quickly to terminate long-term contracts with Russian state-owned entities ahead of sanctions taking effect in May.The company also exited its sole investment in Russia,namely a 10 percent minority stake in Vostok Oil,in a transaction that completed in July.Against a c
27、omplex and fast-changing backdrop,we had to deliver exceptional levels of service to our customers,who were also forced to adapt to changing trade flows,the impact of rising raw material prices and broader inflationary pressures.This has shown that what we do connecting vital resources to help power
28、 and build the world has not only become more complex but also more critical and in demand than ever before.Jeremy WeirExecutive Chairman and Chief Executive OfficerStatement from the Executive Chairman and Chief Executive OfficerResilience and reliability in turbulent markets4Statement from the Exe
29、cutive Chairman and Chief Executive OfficerAt a divisional level,our Oil and Petroleum Products teams performed exceptionally well,adapting quickly to changing trade flows and identifying supply bottlenecks where our operations could add value in markets including crude oil,distillates and in partic
30、ular in liquefied natural gas(LNG),where we navigated policy,price volatility,market liquidity and increasingly complex logistics to deliver a larger number of cargoes to Europe to help offset the decline in Russian gas flows.The Metals and Minerals and Bulk Commodities teams also delivered a robust
31、 performance,although strict COVID-19 lockdowns in China curbed activity in the metals and minerals sector.However,the supply and demand fundamentals remain strong in many of the metals crucial to the energy transition.Low stocks and a lack of investment in new supply characterise many of the raw ma
32、terials needed to build renewable energy or the batteries that power electric vehicles.Our power trading business continued to grow,expanding in Europe and the US and we made further progress in extending our footprint in renewable energy.But just as our customers were challenged by difficult market
33、 conditions and rising costs,so were some of the Groups operational assets.Nyrstar recorded a loss due to operational issues in Australia and soaring power prices which forced the company to curtail production at its European smelters.Regrettably,our safety performance was negatively impacted by two
34、 fatalities at our mining operations.This is unacceptable and we will continue to focus on improving the safety of workplaces across the Group.Our lost time injury rate fell over the year due to enhanced health and safety awareness programmes and training at all levels across the Group.In its first
35、full year following consolidation,Puma Energys management team disposed of a significant part of its infrastructure and storage assets,as part of a wider plan to refocus the business on downstream operations and reduce debt.The business also benefited from closer integration with Trafiguras trading
36、teams.We made good progress on our commitments to reduce greenhouse gas emissions from our operations by 30 percent compared to a 2020 baseline,and our teams have developed longer-term targets that will be announced in our 2022 Sustainability Report,to be published in January.While the security of s
37、upply has been the dominant theme in energy markets over the past year,the energy transition remains a key focus for Trafigura.Policies such as the Inflation Reduction Act and an ambitious plan to repower the EU with a focus on renewable energy and clean fuels such as green hydrogen,show the determi
38、nation of policymakers to hit the goals of the Paris Agreement on climate change.To that end,we are looking to help car companies and battery manufacturers to develop their supply chains to support a ramp up in electric vehicle production and adapt to the changing geopolitical environment.During the
39、 year,we announced deals to help support the development of lithium and cobalt refineries in the UK and the US respectively.On carbon emissions,we joined forces with US data company,Palantir,to build and launch the Agora platform,a GHG emissions tracking and reporting tool.This will initially focus
40、on metals and minerals but will be rolled out to other commodities,helping companies understand,manage and share their supply chain emissions.Alongside this initiative,we continued to invest in building our capabilities and investments in carbon markets,to provide customers with a range of solutions
41、 to offset emissions.We are proud of our involvement in Delta Blue Carbon,the largest mangrove restoration project in the world where we are the anchor buyer of its carbon credits.Nala Renewables,a 50:50 joint venture between Trafigura and fund management group IFM Investors,pressed ahead with inves
42、tments in solar power,onshore wind and battery storage to progress towards its 4GW renewable energy target.We have also made a string of early stage investments in companies involved in new energy technologies and continue to see hydrogen-derived fuels as one of the key commodities of the future.Loo
43、king ahead,we were delighted to be part of a consortium awarded the concession to refurbish and operate a near 1,300 km railway running from the Lobito port on the Atlantic coast of Angola to the border with the Democratic Republic of Congo.The Lobito Atlantic railway line will offer a western route
44、 to market for crucial energy transition metals that is safer and less congested or prone to delay than existing eastern and southern routes.Shifting freight from truck to rail will also significantly reduce greenhouse gas emissions.The project is expected to require a total investment of USD450 mil
45、lion over a 30-year concession agreement,including a USD170 million investment in new rolling stock.We are also working towards a final investment decision on a project to build a one gigawatt renewable hydrogen production plant in Denmark,to provide zero-carbon fuel for trucks and other heavy trans
46、port vehicles.From a personal perspective,I visited many of our operations over the past year,from Montevideo to Singapore,and saw first-hand the hard work and dedication of our employees.It was especially exciting to see so many younger people developing their skills and progressing through the org
47、anisation,including through our graduate and apprenticeship programmes.I would also like to thank our customers and suppliers for their ongoing support and our financial stakeholders for enabling our continued growth.Whilst the new financial year has started well,we need to remain focused and vigila
48、nt in a period that is likely to be at least as challenging as 2022,with further market turbulence as the war in Ukraine continues and central banks lift interest rates to try and quell inflation.Trafigura is well positioned to continue to manage the challenges and supply the vital resources our cus
49、tomers need in the year ahead.Trafigura Annual Report 20225Underlying EBITDA$12.1bn12.17.020222021Total assets$98.6bn98.6202290.22021Net profit$7.0bnUnderlying EBITDA margin3.8%7.03.8%202220223.13.0%20212021Financial reviewStrong demand for our services and a solid risk management framework deliver
50、record results In the 2022 financial year,Trafigura Group further improved its market position and continued its record-breaking financial performance.Christophe SalmonGroup Chief Financial OfficerRevenues,net profit and underlying EBITDA all hit records as customers turned to Trafigura to help them
51、 navigate turbulent markets and disrupted global supply chains.Profit for the year of USD7,026 million was more than double the previous years level of USD3,075 million,itself a company record.Revenues increased by 38 percent to USD318,476 million from USD231,308 million in 2021,driven by elevated c
52、ommodity prices.The companys robust performance was driven by its global network and resilient business model,which enabled us to supply our customers in a market upended by geopolitical tensions.Volatile prices,mismatches between supply and demand and a disconnect between derivatives and physical m
53、arkets made supply chain management significantly more challenging in the past year.This played to the strengths of companies with strong balance sheets,a global footprint and ready access to financial liquidity,such as Trafigura.The Groups underlying earnings before interest,tax depreciation and am
54、ortisation(EBITDA)margin for the year was 3.8 percent,compared to 3.0 percent in 2021.The supply chain and logistics services Trafigura provides remain by global standards a low-margin business,where profit is generated from efficient management of logistics and market risk for a substantial volume
55、of physical commodities.The total volume of commodities traded in 2022 was lower year-on-year.This was due to a reduction in oil and petroleum products volumes in the second half of the financial year which was driven by the termination of long-term contracts for Russian crude oil and petroleum prod
56、ucts in light of international sanctions,reduced availability of hedging in derivatives markets,which we use to manage price risk,and a decision to focus on higher-margin opportunities.Trafigura traded an average of 6.6 million barrels of oil and petroleum products per day in the financial year,comp
57、ared to a daily average of 7.0 million barrels in 2021.Non-ferrous metals traded volumes were flat at 23.3 million metric tonnes,while bulk minerals volumes,driven by increased iron ore volumes,rose by 10 percent to 91.3 million metric tonnes.Group revenue$318.5bn318.5231.320222021Adjusted debt to G
58、roup equity(0.47)xNon-current assets$19.4bn19.4202215.120212022(0.21)x2021Group equity$15.1bn15.110.520222021(0.47)x6Financial reviewIn terms of divisional performance,our Energy operating segment,which includes our Oil and Petroleum Products and Power and Renewables divisions,had an exceptionally s
59、trong year,generating revenue of USD214,178 million equal to 67 percent of total revenue,and an operating profit of USD10,126 million.Performance in Metals and Minerals was robust although the divisions operating profit fell year-on-year,largely reflecting the impact on non-ferrous markets of strict
60、 COVID-19-related restrictions in China,which still accounts for well over 50 percent of the global demand.Metals and Minerals revenue rose to USD104,299 million,while the divisions contribution to operating profit fell to USD1,877 million from USD2,473 million the previous year.Our industrial asset
61、s continued to face challenging market conditions as well as in some cases,operational challenges especially the Nyrstar business which faced soaring energy costs,most severely in Europe.Our balance sheet grew by nine percent during the year to USD98,634 million as at 30 September 2022,but total ass
62、ets were actually smaller at year-end than in March,reflecting the reduction in trading volumes in the second half of FY2022.Thanks to our strong profitability,Group equity rose by 43 percent to USD15,079 million as at 30 September 2022,compared to USD10,546 million a year earlier.Group equity has a
63、lmost doubled over the past two years,and we consider the current level more than adequate to support a USD100 billion balance sheet.IncomeProfit for the year was USD7,026 million,an increase of 128 percent over the 2021 figure of USD3,075 million.Underlying EBITDA rose 73 percent to USD12,089 milli
64、on from USD6,996 million in 2021,while operating profit before depreciation and amortisation rose by a similar percentage to USD11,982 million from USD6,890 million.Costs of materials,transportation and storage were 36 percent higher than in 2021 at USD302,899 million,reflecting the rise in commodit
65、y prices and also the increase in freight costs as a result of the war in Ukraine.Net financing costs rose by 82 percent to USD1,541 million from USD846 million.This largely reflected the rise in interest rates throughout the year,with USD interest rates moving from 0.15 percent in September 2021 to
66、 3.5 percent a year later.The income tax charge for the year was USD933 million compared to USD368 million in 2021.Depreciation of right-of-use assets mainly relating to shipping leases resulted in a charge of USD1,216 million,compared to USD1,095 million last year.Puma Energys inclusion in the Grou
67、ps balance sheet for the first full year made a USD207 million attribution to the USD584 million depreciation and amortisation of property,plant and equipment and intangible assets.Impairments of fixed and financial assets totalled USD639 million,compared to USD683 million in 2021.These included a w
68、rite down of the value of Nyrstars Australian smelter assets,and goodwill and various assets within Puma Energy.Net assets held for sale decreased due to strategic disposals by Puma Energy(Angola and Infrastructure division).Energy*Revenue by geography(%)Metals and Minerals Revenue by geography(%)20
69、22202222021 Africa5%3%Asia&Australia29%30%Europe29%30%Latin America11%10%Middle East3%3%North America23%24%20222021 Africa3%4%Asia&Australia63%58%Europe20%20%Latin America2%2%Middle East6%5%North America6%11%*The Energy segment includes Oil and Petroleum Products and Power and Renewables
70、divisions.Trafigura Annual Report 20227Balance sheetOf total assets amounting to USD98,634 million as at 30 September 2022,non-current assets rose to USD19,433 million from USD15,078 a year earlier,largely reflecting the increasing number and value of shipping leases on our books and long-term LNG c
71、ontracts.Current assets rose eight percent to USD78,767 million from USD72,674 million.Inventories,which are a key component of our balance sheet,fell from USD29,654 million to USD22,584 million due to improved working capital management.Trade and other receivables however,rose to USD27,631 million
72、from USD24,907 million,reflecting an increase in margin payments to clearing brokers and futures exchanges.Our increased balance sheet strength is illustrated by the current ratio that of short-term assets to short-term liabilities.As at 30 September 2022,this stood at 1.27x compared to 1.19x a year
73、 earlier,while the Groups cash position at year-end stood at USD14,881 million,up from USD10,678 million in 2021.Cash flowDue to our robust trading performance,we generated strong cash flows,with operating cash flow before working capital changes of USD12,125 million,a 74 percent increase on the pre
74、vious years figure of USD6,988 million.We believe operating cash flow is the most reliable measure of its financial performance,because the level of working capital is predominantly driven by prevailing commodity prices and is financed under the Groups self-liquidating financing lines.Net cash flows
75、 from operating activities turned positive to a sum of USD13,745 million compared to a negative USD234 million in 2021,reflecting the companys unprecedentedly strong organic cash flow generation and the reduction in inventories.Investing activities resulted in a net cash use of USD536 million,compar
76、ed to an outflow of USD2,728 million in the previous financial year.Net cash flows used in financing activities was a net outflow of USD9,005 million,compared to an inflow of USD7,882 million in 2021.We were able to decrease our use of financing lines even though our balance sheet grew thanks to exc
77、eptional cash generation and an improved working capital cycle.New-build dual-fuelled LPG-and ammonia-powered tanker at Hyundai Mipo dockyard,South Korea.02,0004,0006,0008,00010,00012,00014,00016,0002022202222022220222202120202019USD million6,8057,79010,54615,079Grou
78、p equityFinancial review8Liquidity and financing The Group increased its access to liquidity during the 2022 financial year to manage the impact of higher levels of volatility in global markets and elevated commodity prices.We successfully secured an additional USD7 billion of financing in FY2022,br
79、inging total credit lines to USD73 billion,provided by a network of around 140 banks globally,excluding Puma Energy.Even under conditions of heightened volatility,we continued to maintain an ample liquidity buffer.As at 30 September 2022,the Group had immediate(same day)access to available liquidity
80、 balances from liquidity funds and unutilised committed unsecured corporate facilities of USD14.1 billion,excluding Puma Energy.The majority of our day-to-day trading activity is financed through uncommitted,self-liquidating trade finance facilities,while we use corporate credit facilities to financ
81、e other short-term liquidity requirements,such as margin calls or bridge financing.This funding model gives us the necessary flexibility to cope with periods of enhanced price volatility as utilisation of the trade finance facilities increases or decreases to reflect the volumes traded and underlyin
82、g prices.We also maintain an active debt capital markets presence to secure longer-term finance in support of our investments.During the 12 months ended 30 September 2022,the Group completed a number of important transactions,demonstrating once again our strong access to committed and uncommitted so
83、urces of funding from banks and other sources,despite unprecedented market conditions and extreme volatility in the global economy.In October 2021,we announced the refinancing of our Asian syndicated revolving credit facility(RCF)at USD2.4 billion equivalent.The facility was oversubscribed and upsiz
84、ed from the initial launch amount of USD1.5 billion equivalent,with 36 banks participating in the transaction,including eight new lenders.In line with its European RCF from March 2021,we implemented a sustainability-linked loan structure in the facility.In March 2022,the Group refinanced two of its
85、core syndicated credit facilities.First,we closed our flagship European multi-currency syndicated revolving credit facilities(ERCF)totaling USD5,295 million,comprised a USD2,025 million 365-day RCF and a USD3,270 million three-year RCF.The ERCF was initially launched at USD4.5 billion and closed sub
86、stantially oversubscribed,with 55 banks joining the transaction.Similar to the previous year,the facilities include a sustainability-linked loan structure,with an updated set of key perfomance indicators.The targets are related to the reduction of greenhouse gas emissions,the further alignment of ou
87、r responsible sourcing programme with international standards for sustainable procurement,the development of a renewable power portfolio,and the alignment of our operations with the Voluntary Principles on Security and Human Rights.We also returned to the Japanese domestic syndicated bank loan marke
88、t for the sixth time and refinanced the Japanese yen term loan credit facility(Samurai loan)with a total value of JPY93.75 billion(USD790 million-equivalent at closing exchange rate).The Samurai loan comprises a JPY84.75 billion three-year credit facility(refinanced this year)and a JPY9 billion five
89、-year credit facility(amended but not refinanced this year,maturing March 2025).In line with the Groups European and Asian RCFs,and a first for its Samurai loan,the company structured the three-year tranche as a sustainability-linked loan.In addition to these renewals,we closed the syndication of a
90、nine-month liquidity facility of USD2.3 billion-equivalent in March 2022.The transaction was set up following the renewal of the Groups ERCF at a time of major uncertainties in global markets due to the invasion of Ukraine.It provided an additional funding buffer for the Group in order to proactivel
91、y anticipate and mitigate liquidity requirements as a result of the substantial ongoing volatility in global commodity markets.We are continuously working to secure new sources of liquidity that help the Group to diversify its access to funding.In September 2022,Trafigura entered into a USD800 milli
92、on five-year loan agreement,which was guaranteed by the government of Germany acting through the German Export Credit Agency(ECA)Euler Hermes Aktiengesellschaft.The guarantee is provided to support the commitment by Trafigura to deliver,under a five-year supply agreement,non-ferrous metals to German
93、y.After the financial year-end,in October 2022,we refinanced our Asian revolving credit facility(RCF)and term loan facilities(TLF)at USD2.4 billion equivalent,with 28 banks participating in the transaction,including three new lenders.The new facilities comprised of a 365-day USD RCF(USD685 million),
94、a one-year CNH TLF(c.USD1,217 million equivalent)and a three-year USD TLF(USD469 million).In line with the ERCF from March 2022,Trafigura implemented a sustainability-linked loan structure in those new facilities.Also in October 2022,we entered into a new USD3.0 billion four-year loan agreement guar
95、anteed by the government of Germany acting through the German ECA.This loan will support a new commitment by Trafigura to deliver substantial volumes of gas to Securing Energy for Europe(SEFE),which was recently recapitalised by the German government,over the next four years.Key financing milestones
96、 in FY2022:Oct.21 Asian RCF refinancingUSD2.4 billionMar.22European RCF refinancingUSD5.3 billionMar.22Japanese Samurai loan refinancingJPY93.75 billionMar.22Liquidity facilityUSD2.3 billionSep.22Euler Hermes(ECA)guaranteed loanUSD800 millionTrafigura Annual Report 20229Public ratingsTrafigura does
97、not hold a corporate public credit rating and does not seek to obtain one.There are a number of reasons for this,including the fact that our strategy has always been to obtain funding from stakeholders that understand our business model,rather than making investment decisions on the basis of a credi
98、t rating.In addition,holding a credit rating could cause Trafigura to take more short-term focused decisions in order to maintain a particular credit rating level.This would conflict with the Groups focus on long-term value creation and maintenance of a strong balance sheet.We have been highly succe
99、ssful in securing funding without a public credit rating.Financial discipline is inherent to the companys business and finance model because of its reliance on debt markets for capital and liquidity.The significant expansion of our sources of financing over the years has been achieved on the basis o
100、f the Group maintaining an acceptable and sustainable credit standing,consistent with an investment grade profile.The Groups financial discipline is reinforced by the financial covenants provided to unsecured lenders in the bank market and is underlined by the strong support we receive from our bank
101、ing group and investors.Value at riskThe value at risk(VaR)metric is one of the various risk management tools that we use to monitor and limit our market risk exposure.We use an integrated VaR model which captures risk,including commodity prices,interest rates,equity prices and currency rates(see fu
102、rther details in Note 39).Average market risk VaR(one-day 95%)during the 2022 financial year was USD199.8 million(1.33%of Group equity)compared to USD47.9 million(0.45%of Group equity)in FY2021.Our Management Committee has established guidance to maintain VaR(one-day 95%)below one percent of Group e
103、quity.This guidance was exceeded in FY2022 due to the extreme and exceptional volatility experienced following the start of the war in Ukraine.Actions were swiftly taken to bring back the VaR within acceptable risk limits,including but not limited to reducing stocks and traded volumes.Thanks to thes
104、e efforts,the average VaR decreased during the second half of the 2022 financial year to USD142.9 million(0.95%of Group equity),with latest quarter average VaR standing at USD115.8 million(0.77%of Group equity).Zinc concentrate arriving at Nyrstar,Budel,the Netherlands.10Financial reviewLeverage and
105、 adjusted debtAs a specialist in management of physical commodity supply chains,Trafigura relies on a specific funding model.As a result,it is not appropriate to apply the same financial analysis framework to it as is used for typical industrial companies.When analysing our credit metrics,banks and
106、investors have historically considered financial leverage after excluding some specific balance sheet items(e.g.inventories and non-recourse debt such as our securitisation programmes),resulting in the use of adjusted debt as an overall leverage metric.Adjusted debt corresponds to the companys total
107、 non-current and current debt less cash,fully-hedged readily marketable inventories(including purchased and pre-paid inventories which are being released),debt related to the Groups receivables securitisation programmes and the non-recourse portion of loans from third parties.This metric is a better
108、 measure of the Groups financial leverage than a simple gross debt metric.In particular,the following adjustments are made:The receivables securitisation programmes are taken out on the basis that they are entirely distinct legal entities from Trafigura with no recourse to the Group and are only con
109、solidated into the financial statements in accordance with the Groups accounting rules.Cash and short-term deposits are deducted from debt.Pre-sold or hedged stock,including purchased and pre-paid inventories which are being released,are deducted from debt.This reflects the great liquidity of the st
110、ock and the ease at which it could be converted to cash.As noted above,our policy is to have 100 percent of stock hedged or pre-sold at all times.Non-recourse invoice discounting or specific portion of loans(for example,non-recourse portions of bank lines used to extend prepayments to counterparties
111、)are deducted from debt.As at 30 September 2022,the ratio of adjusted debt to Group equity stood at minus 0.47x,down from minus 0.21x at 30 September 2021.This reduction principally reflected the exceptionally strong retained earnings during the year,as well as cash generation and improvement of wor
112、king capital.Whilst the ratio of adjusted debt to Group equity was particularly strong in 2021,our intention is to maintain this ratio up to a maximum level of 1x.Any upwards fluctuation of this ratio to 1x in the future should not be considered as a sign of any relaxation of our disciplined efforts
113、 to maintain a solid credit standing.The Groups adjusted debt to equity ratio at the end of the reporting period is calculated as follows:TaxationTrafigura operates in a multitude of jurisdictions and adheres to applicable local and international tax law,including legislation on transfer pricing,in
114、the countries in which it operates.The Groups tax policy is to pay appropriate tax according to work carried out in each jurisdiction,as determined by a functional analysis of operations using standard measures wherever possible,underpinned by reports prepared to fulfill local transfer pricing requi
115、rements.The Groups effective tax rate the average rate at which consolidated pre-tax profits are taxed varies from year to year according to circumstances,and in FY2022 it was 12 percent(or USD933 million)compared to 11 percent(or USD368 million)in FY2021.The change to the effective tax rate is a co
116、nsequence of a change in the mix of taxable profits and losses generated in the various countries within which the Group operates.OutlookThe supply chain disruptions and the volatility in commodity markets that underpinned our record financial performance in FY2022 are continuing.This creates an ong
117、oing,growing need for commodity supply chain management services that we are well positioned to provide.It has become increasingly clear in the past two years that providing these services requires a global footprint,superior market intelligence and an extremely solid balance sheet.With Group equity
118、 of USD15 billion and an unparalleled network of customer relationships around the world,we are more robust than ever.Although our industrial assets,such as Nyrstar,remain challenged,market conditions remain constructive overall and we have made a strong start to trading in our new financial year.Th
119、is gives us confidence that we will deliver another solid year of performance in 2023.20222021USDMUSDMNon-current loans and borrowings 9,614.5 10,911.6 Current loans and borrowings 29,663.6 34,269.5 Total debt 39,278.1 45,181.1 AdjustmentsCash and cash equivalents 14,881.3 10,677.5 Deposits 642.0 46
120、0.0 Inventories(including purchased and pre-paid inventories)23,873.6 30,508.8 Receivables securitisation debt 5,390.7 5,150.6 Non-recourse debt 1,607.1 555.4 Adjusted total debt(7,116.6)(2,171.2)Group equity 15,078.6 10,545.6 Adjusted debt to Group equity ratio at the end of the year (0.47)x(0.21)x
121、Trafigura Annual Report 202211Operational reviewManaging complexity Agility,teamwork and IT provide the platform for growth.Mike WainwrightExecutive Director andChief Operating OfficerTo manage complex supply chains and move commodities around the world requires many things including infrastructure,
122、risk management,sophisticated IT systems,and a skilled workforce,with a clear governance framework.These pillars and other important elements such as our employee ownership model have been the foundations of our companys success since its inception in 1993.Over the past three years,our systems,peopl
123、e and processes have been tested as never before in a persistently and increasingly volatile business environment;first by the global pandemic and more recently Russias invasion of Ukraine.Risk management processTrafigura is an active participant in commodity derivative markets.We use futures contra
124、cts to manage price risk and lock in profit margins when we are moving commodities from where they are produced to where they are consumed.The reason we do this is because supply chain management is fundamentally a low-margin business,operating in markets where prices are often subject to very signi
125、ficant changes outside our control.In the exceptionally volatile market conditions of February,March and April this year,access to these markets became more difficult and expensive.This was because exchanges and clearing brokers significantly increased margins or cash deposits required for each tran
126、saction.This sometimes happened at very short notice.As a result of these margin calls and fearful of a cash drain,some users backed away from the market and liquidity dried up.For a company the size and scale of Trafigura,this lack of depth in financial markets presented a number of challenges,whic
127、h we were swift to address.First,we moved quickly to secure USD2.3 billion of additional liquidity from a number of our core lenders to provide a cash buffer.In addition,we also reduced our trading volumes,focusing on higher margin business.In some particularly volatile or illiquid parts of the mark
128、ets,as part of a prudent approach to risk management,derivative positions on future exchanges were supplemented with alternative risk mitigation measures.Assessing and managing the liquidity risks and costs associated with hedging on futures markets has become a core part of a traders job.As a compa
129、ny,we are focusing on how we use and access futures markets in a more volatile and uncertain world,assessing the alternatives and not simply defaulting to past practices.And that perhaps is the biggest learning of the past year a greater awareness of what can happen in financial markets and the impa
130、ct that can have on our day-to-day business.Although liquidity on exchanges has improved,it has not returned to its pre-pandemic levels.Certain parts of the market remain difficult to access and that means that some hedges will not continue to perfectly offset the price risk associated with an under
131、lying physical cargo.In these instances that leaves us with a choice:we can either turn away business or charge a higher margin to compensate.Overall,our risk exposure as measured by average Value at Risk(one-day 95 percent)increased during the year because of the extreme market volatility that foll
132、owed the start of the war in Ukraine.However,in the final quarter of our financial year,average VaR decreased and was less than one percent of Group equity,due partly to the actions previously outlined.12Operational reviewComplianceClear communication and teamwork were also vital in addressing gover
133、nment and regulatory interventions following the invasion of Ukraine.While sanctions have been a feature of commodity markets for many decades,an unprecedented number of transactions were affected by the sanctions imposed on Russia.Since March,there have been eight iterations of EU sanctions with th
134、e prospect of more to come,plus the associated introduction of the G7 price cap on Russian oil.Keeping pace with the introduction of new rules across a number of jurisdictions was the job of our strong Global Compliance team which worked closely with senior management and our commercial teams to und
135、erstand what was prohibited by sanctions.Commercial teams access to compliance and vice versa was exceptional during the year,underscoring the importance of Trafiguras open-door policy and team ethos where all parts of the business pull together to support each other.Our Compliance team had access t
136、o the right people internally and externally to dissect the information as it came in and to disseminate it very quickly.As one of the worlds biggest supply chain managers,we must be compliant with sanctions and regulations.Costs and inflationAlthough 2022 has been an exceptional year for our compan
137、y,we have not been immune from the inflationary pressures affecting other industries and the major economies of the world.As such,it is important that we do not become complacent with regards to our cost base.To that end,we maintained a laser-like focus on our overheads.Puma Energy provides one exam
138、ple of how we approach this challenge.Since the consolidation of the company into the Trafigura Group a year ago,its management team has worked hard to rationalise its cost base and reduce unnecessary wastage.This has injected a lot of positive momentum into the business.In the year ahead,we will se
139、ek to become even more efficient in our processes,utilising technology and Titan,the proprietary software platform that we use to manage and plan our business activities.Data science and engineeringIn total,Trafigura spends around USD200 million per year on information technology across a number of
140、platforms including Titan.One focus of activity has been data science the systematic analysis of data within a scientific framework.Due to advances in digital technology,there is now a vast amount of publicly available data that can at times be overwhelming.But if it can be analysed and structured c
141、orrectly this data can be highly valuable and provide the company with a competitive edge.This applies not only to our traditional markets where traffic and aviation data,for example,can help predict peaks and troughs in oil demand,but also to new ones such as gas and power trading,where prices move
142、 in response to a complex number of factors that only a computer can process and understand.Bringing together a huge number of databases and feeds and writing software to integrate the data into machine learning models is no easy task however,and it requires continued investment in our Data Science
143、and Engineering team.We are working to make our data science platform more accessible so that it is easy for employees to access around the world.Employee shareholder modelFinally,a comment on Trafiguras corporate employee ownership model.Since the companys foundation almost 30 years ago,it has been
144、 owned by a growing number of its employees,for whom equity is an important element of remuneration.2022 saw a further increase in the number of shareholders,which now stands at more than 1,100.We continue to see significant benefits from our employee shareholder model.Not only does it set the compa
145、ny apart from our peer group,it also offers a powerful retention and recruitment tool.This is important as the company expands into markets such as green hydrogen and power trading that require a different set of skills to those typically associated with our industry.Our shareholder model encourages
146、 our senior employees to take the long view and think hard about risk,business continuity,and the future performance of the company.Above all,our shareholder structure drives a close alignment between management and senior employees,leading to a highly transparent and collaborative culture that we b
147、elieve is unique in our industry.Trafigura Annual Report 202213Marketplace review A year of disruption and dislocation in commodity markets As the global economy emerged from COVID-19 and picked up speed,initial expectations were for 2022 to be a less volatile year.By any measure,this turned out not
148、 to be the case.Indeed,at the start of our financial year in October 2021,it seemed the lack of investment in new supply,combined with post-pandemic demand recovery,would result in significant tightness in numerous commodity markets.The fact that markets were in a fragile state to begin with magnifi
149、ed the shock from Russias invasion of Ukraine in February 2022 and led to unprecedented price volatility.The war has upended historic commodity trade flows,led to record low inventories in many commodities and created uncertainty about supply.Sanctions added multiple layers of complexity and disrupt
150、ion.Throughout the tumult,commodity prices have consistently struggled to reflect underlying supply and demand.This is due primarily to three major macroeconomic headwinds that overwhelmed the fundamentals:Central Banks,led by the US Federal Reserve,raising interest rates rapidly to combat the highe
151、st inflation in decades;Europes energy crisis;and Chinas zero-COVID-19 policies and property sector weakness.Taking the first point,supply chain disruptions,a surge in demand as lockdown restrictions eased,record low inventories of housing and vehicles,and a lack of workers all contributed to inflat
152、ionary pressures.This was especially true in the US,as the population shifted from consuming goods to services,which in turn drove wages higher,resulting in yet more inflationary pressures.Europe,meanwhile,had to contend not just with these factors,but also with soaring energy costs resulting from R
153、ussian curtailment of gas supplies.Central banks responded by sharply lifting benchmark policy rates in a very short period of time.Rising US yields and concerns about the impact of tighter financial conditions on the global economy saw the US dollar strengthen substantially,to the highest level in
154、over 20 years against major currencies,and the highest ever in the case of many others.This was another challenge for commodity prices,which are denominated in US dollars.While rising energy costs have contributed to inflation across the world,they have been particularly pronounced in Europe,due to
155、the curtailment of Russian exports of gas.This was the second headwind.Although Russian flows to Europe had already started to decline in 2021,it is only in the months following the invasion of Ukraine that the full weight of Moscows cuts came to bear.Over the course of the second and third quarters
156、 of 2022,flows dropped by 80 percent versus pre-invasion levels and sent power and gas prices in Europe soaring to record levels.Europeans benchmark gas price(TTF)rose from a long-term average of close to 20 per megawatt hour to well over 300/MWh,while power prices spiked to a record of over 700/MWh
157、 in some of the major,western European countries.As a result,many big industrial consumers in Europe were forced to curtail output.The prospect of further cuts raised the spectre of a major industrial recession,dampening sentiment and the outlook for demand.The third major macro-economic headwind wa
158、s Chinas growth,which was weaker than expected for two main reasons.The first of these was the impacts of Chinas zero-COVID-19 policies,which led to restrictions being imposed on large parts of the country in the second quarter of 2022.Saad RahimChief Economist 14Marketplace reviewMarketplace review
159、Shanghai in particular saw an extended period of lockdown,and given its status as a main financial and manufacturing hub,the impacts on activity and sentiment were widespread.More broadly,the unpredictable nature of outbreaks and the stringency of lockdown restrictions meant consumer and investor co
160、nfidence remained subdued for most of the year.The impact was magnified by the second factor:ongoing weakness in the property sector,brought about in part by the governments attempts to manage the indebtedness of key players in that sector.Although growth outside the property sector rebounded materi
161、ally in the third quarter of 2022,as shown by dwindling stockpiles of base metals and other production and investment indicators,the weakness in property has soured investor sentiment.In this“macro versus micro”environment,commodity prices struggled to perform,and in many cases seemed to have comple
162、tely disconnected from physical market realities.Oil marketsOil markets were buffeted on one side by constrained supply,due to under-investment and sanctions,and on the other side by potential demand weakness,caused by Chinas zero-COVID-19 lockdowns and higher prices.By the middle of the year,prices
163、 seemed set to move higher thanks to stresses on the supply side,which looked difficult if not impossible to solve in the near term.However,the underlying tightness in markets was masked as Organisation for Economic Cooperation and Development(OECD)governments chose to try and cushion the impact of
164、higher prices on consumers by authorising unprecedented releases from their respective strategic reserves.The impact was most acutely felt in the US,due to the release of 180 million barrels of crude into the market.This oil flowed into commercial inventories,allowing them to hold at levels that by
165、end of the year were well within historical ranges,giving the appearance of a well-supplied market.As a result,however,the US Strategic Petroleum Reserve(SPR)fell to under 400 million barrels for the first time since 1984,as demand remained relatively robust despite high prices,leading to inventory
166、draws.A major reason why SPR releases were needed is because supply has continued to be constrained.Consensus projections coming into this year were for US oil production to grow by close to one million barrels per day(December-to-December),but instead,production has grown only approximately 0.3 mil
167、lion barrels per day.The lack of growth reflects lower investment rates in the sector,as companies have prioritised shareholder returns and capital discipline over increasing capital expenditures and production.As such,while the rig count(as a proxy for overall investment)continued its post-pandemic
168、 rebound in the earlier part of the year,it has effectively flat-lined since June 2022,limiting the scope for further production gains.The other notional source of additional supply has traditionally been OPEC and its allies.Not only did they recently agree to a two million barrel per day output cut
169、,but their production capacity is falling short of expectations due to years of under-investment.Even prior to the Russian invasion of Ukraine,OPEC+producers were collectively under-performing their production quotas by over 1.5 million barrels per day,as the output of members outside the“core OPEC”
170、countries of Saudi Arabia,Iraq,UAE and Kuwait hit multi-decade lows.New capacity is being brought on in the core group,but outside of the UAE it will take some years yet to reach the market.US crude inventories including Strategic Petroleum ReserveStated in thousand barrelsSource:Energy Intelligence
171、 Agency(EIA)800,000850,000900,000950,0001,000,0001,050,0001,100,0001,150,0001,200,0001,250,000Average(2017-2021)Low(2017-2021)2022High(2017-2021)JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovember DecemberTrafigura Annual Report 202215And this is all before the extent of the impact of
172、 sanctions and the G7 price cap on Russian oil flows is known.While the overall intent of the EU and US is to redirect flows,not reduce them,the uncertainty involved in dealing with such an extensive and inter-connected market means that in reality there is likely to be at least some impact.If nothi
173、ng else,the redirection of Russian barrels from Europe to other markets such as India and China and from Arabian Gulf and US barrels to Europe to compensate has turned the shipping market on its head.Increased transit times have effectively taken vessels out of the supply pool,pushing daily freight
174、rates significantly higher than they were previously,with rates for some classes of clean product tankers reaching new records.Oil demand overall has struggled to regain its pre-pandemic highs,but this is in large part due to the impact of Chinas zero-COVID-19 policies,which have restricted travel b
175、oth domestically and internationally.Even when these policies were relaxed,the risk of further lockdowns impacted domestic travel plans and dampened demand.But while growth might have been softer than anticipated,it was certainly not contractionary.Indeed,the International Energy Agencys latest repo
176、rt estimated 2022 oil demand growth at 2.1 million barrels per day a strong increase relative to history.Metals marketsThe dominant theme in metals this year has been Chinese demand,overwhelming all other factors,including record low inventories for key metals such as copper.The dual headwinds of Ch
177、inas zero-COVID-19 policy and weak property sector drove investor sentiment to the degree that even though demand was robust in the second half of the year and stocks dwindled,prices declined.How metal prices perform from here will depend on Chinas exit from COVID-19 lockdowns,in terms of timing and
178、 sustainability,and also on the property sector not getting worse.Perhaps no other metal has shown the macro versus micro conflict better than copper.By the end of our fiscal year in September,copper stocks had fallen to the lowest level in modern history in terms of days of use,and the lowest absol
179、ute levels since 2007.And yet the price was USD3,000 per tonne below the record levels reached in March.Still,the price has started to pick up since the start of October,helped by a strong rebound in Chinese copper demand.Contrary to what media reporting and sentiment might indicate,Chinas copper de
180、mand in the second half of 2022 should grow by close to seven percent year-on-year.The pick-up has been led by many of the same sectors that drove ex-China growth in the first half of the year,but with particular emphasis on the expansion of the grid and electric vehicle production.Overall,global de
181、mand for refined copper is set to grow by a healthy 2.8 percent over 2022.Global refined copper stocks in days of useStated in days of use Source:Trafigura Research,Bloomberg,LME,SHFE055200820092000002216Marketplace reviewThe year aheadLooking f
182、orward,the world appears poised for more volatility and uncertainty.The war in Ukraine continues and could cause further disruption to global trade if the conflict escalates.Inflation may be coming off its peak,thanks in no small part to declining energy prices,but it remains too high for comfort.As
183、 such,central banks are still in the mode of tightening financial conditions,and the full impacts have yet to be felt,especially as we are still not at the end of the rate-hiking cycle.China may be looking towards a gradual re-opening,but a massive resurgence in COVID-19 cases could see Beijing reve
184、rt to previous lockdown measures.A colder-than-normal winter plus any further disruptions to gas supplies could trigger a fresh spike in European energy prices.And yet,as of now,global economic growth may be slower,but is far from contracting.Labour markets remain very healthy,consumer spending rema
185、ins robust,and credit markets show no signs of stress.A continuing reversal in the US dollar,rates and inflation will all be tailwinds for global growth.Governments have embarked on major renewable and infrastructure investment programmes that should provide a source of sustained future demand,in pa
186、rticular for key metals.However,renewed demand growth will run up against the realities of structural under-investment across commodities.Given how low inventories are for key raw materials already,together with a lack of readily available spare capacity,any sustained rebound in consumption could le
187、ad to significant tightness and a supply crunch.Indeed,we appear to be running the risk of moving away from a world of commodity cycles to one of commodity spikes,where a lack of production capacity results in prices rising to levels that cause demand destruction,before falling.But even then,prices
188、will remain elevated,given how long it takes to bring online new projects and the unyielding focus on capital discipline and shareholder returns of the major mining houses and big oil companies.US dollar strength headwind for commodities Stated in USD/metric tonneStated in Euro:USDSource:Bloomberg F
189、inance L.P.,Trafigura Research7,0007,5008,0008,5009,0009,50010,00010,5000.960.9811.021.041.061.081.11.12MarchAprilMayJuneJulyAugustSeptemberOctoberNovemberLME three-month copper price Euro/USD spot rate Trafigura Annual Report 202217Performance reviewOil and Petroleum ProductsA record performance fo
190、r Trafiguras Oil and Petroleum Products Trading division for a third consecutive year.312.5mmtTotal volume traded(2021:330.3mmt)6.6mAverage barrels traded per day (2021:7.0m)Jose Maria Larocca Ben Luckock Hadi HalloucheCo-Heads of Oil TradingPerformance overviewThe impact of the COVID-19 pandemic an
191、d the subsequent rebound in demand in most key economies placed further pressure on previously efficient global supply chains in the first half of our financial year.But these disruptions were eclipsed by the impact of Russias invasion of Ukraine in February,which required a fundamental reworking of
192、 energy supply routes in addition to the significant humanitarian impact of the war in Ukraine.With an increased focus on security of supply,against a backdrop of heightened market volatility,our Oil and Petroleum Products division delivered a record result in 2022.Key to this performance was a dete
193、rmination to help our customers adjust to changing trade flows,as well as close coordination between each of our trading teams.This allowed the division to identify supply bottlenecks,ensure we could manage significant risk and get oil and petroleum products to our customers as efficiently as possib
194、le.A lack of liquidity in futures markets,which pushed up the cost of hedging,meant higher premiums were demanded by physical suppliers to move products and a period of market imbalance persisted as governments introduced new sanctions and rules.Total volumes traded were slightly lower year-on-year
195、following the termination of our long-term Russian crude oil and products contracts in advance of EU and Swiss sanctions being introduced.Over the year,a combination of rising prices and a strengthening US dollar placed a greater emphasis on energy affordability.Utilising our size and scale,we were
196、able to work with customers around the world to offer more flexible payment terms to ensure continued supply.1234Oil and Petroleum Products volumes traded(mmt)20222021Biofuel0.70.6Bitumen0.20.3Condensates2.01.7Crude oil149.0156.0Fuel oil36.738.4Gasoline24.324.8Liquefied petroleum gas(LPG)7.88.3Lique
197、fied natural gas(LNG)113.014.0Middle distillates41.446.7Naphtha13.616.2Natural gas123.723.2Total312.5330.31 Million metric tonnes of oil equivalent.18Performance review|Oil and Petroleum ProductsAt the same time,we added a number of new commodities to our product offering including aviation gas,biof
198、uels,base oil,petrochemicals and ammonia,a precursor to low carbon ammonia becoming a globally traded fuel source,in particular for the shipping industry and to transport hydrogen.These more specialised commodities are high value products that allow us to offer a wider service to customers and explo
199、it synergies with other trading activities across the business.Looking ahead,we expect the crude oil market to remain unsettled in 2023,as low global inventories and geopolitical instability run up against concerns of slowing global growth as central banks raise interest rates to fight inflationary
200、pressures.Managing the repercussions from these changes will be the main priority for the division in 2023.Crude oilThe global crude oil market was volatile in 2022,as demand remained strong but supply was pressured by the war in Ukraine and active market management by OPEC and its allies.This inclu
201、ded a period of near record prices and backwardation1.The sanctions levied on Russia following the full invasion of Ukraine changed long-established trade flows and forced consumers in Europe and a number of other countries to look further afield for supplies.Our global footprint and experienced tea
202、ms enabled us to adapt to these fast-changing market dynamics.Clear communication and decisive action were key in understanding disrupted markets and providing security of supply for our customers.Volumes were slightly lower,in part due to the decision to terminate long-term contracts to offtake Rus
203、sian origin crude oil.During the year,we struck supply deals with a number of refiners and secured new offtake arrangements with producers in Canada and West Africa.The Crude oil team also continued to build on Trafiguras long-established position in US shale oil,expanding its customer base and intr
204、oducing Midland West Texas Intermediate to several end users that have not used the grade before.The decision to add US Midland West Texas Intermediate to the benchmark assessment for Brent should boost demand and customer A market structure where prompt contracts trade above later-dated ones in a s
205、ign of tightening supplies.GasolineDemand for gasoline remained below its pre-COVID-19 levels in 2022,with the shift to homeworking,particularly in the US,continuing to affect commuter traffic levels.Following the invasion of Ukraine,there were concerns that sanctions placed on Russian exports of va
206、cuum gas oil would affect US refinery runs and a reduction in Russian naphtha supply would shrink global gasoline supply.Consequently,we witnessed a large increase in refinery margins.Against this backdrop,our Gasoline team performed strongly and volumes remained consistent with the same period in 2
207、021.The highlight of the year was the expansion of our European business,which will continue to be an important driver for the Gasoline team over the next 12 months.In the year ahead,several themes will shape the gasoline market,including the trend towards working from home and a policy change in Ch
208、ina to increase refinery runs.At the same time,supply chain disruptions caused by the Russia-Ukraine conflict will continue to create regional imbalances and periodic distortions.Naphtha and CondensatesFaltering demand and ample supply were the main drivers of the naphtha market in 2022,as the condi
209、tions that prevailed in the previous financial year were almost reversed.In Asia,the petrochemicals industry struggled as strict COVID-19 policies took their toll on economic activity in China,while European producers were hit with rising costs and slowing growth,impacting their margins.On the suppl
210、y side,refinery runs picked up.The result was an oversupplied market and naphtha was forced to reprice at a level where a lot more of it could be used in gasoline blending.In condensates,it was a year where heavier grades did significantly better as a result of their higher middle distillates yield.
211、Our Naphtha and Condensates team seized on these changing market dynamics to deliver a strong performance over the year,using its global reach and diversified portfolio to help balance supply and demand.However,volumes were down on 2021 as a result of reduced activity in Russia following the invasio
212、n of Ukraine.Given our global footprint and access to storage and shipping,the Naphtha and Condensates team is in a strong position to help its customers adapt to changing trade flows and market dynamics and to keep sourcing products at competitive prices.We expect the disparity in condensate premia
213、 to persist,with heavier grades supported by strong gasoil refining margins,but lighter grades likely to lag as naphtha displaces condensate in splitters.We expect the market to remain volatile in 2023 as the European Union embargo on Russian oil exports comes into force and the regions petrochemica
214、l industry seeks new sources of supply.Trafigura Annual Report 202219Fuel oilHigh prices,low stocks and volatility were the key features of bunker and fuel oil markets in 2022.On the supply side,traditional trade flows were disrupted by the war in Ukraine and the subsequent sanctioning of Russian oi
215、l.At the same time,fuel consumption continued its post-pandemic recovery as reflected by increased bunker demand.There was also greater use of fuel oil in power plants as a result of soaring gas prices.Together,this led to heavily backwardated markets and record-high premia.Our Fuel oil team perform
216、ed exceptionally well in this challenging environment,stepping up as a stable and reliable supplier as many rivals struggled to access the finance or hedging tools needed to handle unprecedented market volatility.Although our traded volumes fell in Europe,we increased our presence in Asia and expand
217、ed our footprint in the Americas.In addition to our strong performance in physical trading,we continued to expand our operations with TFG Marine,the bunkering joint venture between Trafigura Marine Logistics,Frontline and Golden Ocean,building our volumes and customer base year on year.We also estab
218、lished a new base oil trading book,a product used by refineries to make lubricating oil and greases,quickly finding synergies with our current customer base.Looking forward,the key challenge for the Fuel oil team will be understanding and handling the impact on supply and demand of heightened geopol
219、itical tensions,tighter monetary policy and a changing competitive landscape.Marine fuel bunkering,Algoa Bay,South Africa.DistillatesThe distillates market in 2022,was a story of strongly rising demand as the post-pandemic economic recovery continued.Gas-to-oil switching provided a further demand ki
220、cker.The global refining system struggled to increase production fast enough,while supply chains had to be consistently rearranged amid complex web of sanctions on Russian oil and diesel flows.In addition to those factors,extreme weather events and significantly higher gas prices in Europe resulted
221、in a large volume of diesel being used.Against this backdrop,it was a highly successful year for the Distillates team.Lower volumes meant we were able to focus on core markets and help key clients make sense of an increasing complex supply picture.The team was able to extend its reach into industrie
222、s that had previously relied on gas but were looking for cheaper options to power their operations.This highlighted the ability of Trafigura to draw on a deep pool of expertise to help create new supply chains.We made sure storage positions did not become over troublesome in a heavily backwardated m
223、arket and we were alert to inflationary pressures in shipping and liquidity requirements to enable us to hedge price exposure.The outlook for 2023 will depend on the balance between slowing global growth and the extent of gas-to-oil switching.The availability of cargoes as Europes embargo on Russian
224、 diesel comes into force will be another factor in determining the direction of the distillates market.BitumenCommodity prices and high energy costs were the main influences on the bitumen market in 2022.The year started slowly,in terms of paving activity,especially in developing countries,which str
225、uggled with the rising cost of bitumen.COVID-19 lockdowns in China weighed on demand in the Far East for the third year in a row.As we progressed through the year and the roadwork season started in the US and northwestern Europe,consumption started to pick up,creating business opportunities mainly i
226、n the Atlantic basin.On the supply side,production was ample because of a strong pickup in transport fuel demand,which triggered higher refinery runs globally.Our Bitumen team was able to react quickly to these regional trends and deliver a stronger performance on a year-on-year basis,using storage
227、capacity and our large fleet of bitumen carriers to win tenders and supply customers.Volumes were broadly stable across the financial year.The outlook for the year ahead is highly uncertain and dependent on the impact of tighter financial conditions as central banks raise interest rates and uncertai
228、nty over the rate of crude and fuel oil production next year.20Performance review|Oil and Petroleum ProductsBiofuelsBiofuel markets were rocked by extreme turbulence in 2022,with prices swinging from levels high enough to spark demand destruction to lows that made it a cheaper blending component tha
229、n fossil fuels in some regions of the world.Adding to the volatility,some countries in Europe also slashed their blending mandates to reduce prices at the pump for consumers and because of concerns about supplies of grain,vegetable oils and gas following events in Ukraine.As the war continues,other
230、countries could do the same,placing a question mark over biofuel demand in the year ahead.Notwithstanding these developments,we remain committed to continuing to find ways to grow and expand our customer base.The Biofuels team performed exceptionally well during the year,weathering a multitude of st
231、orms,while at the same time expanding our business in Europe,Latin America and Asia.As we head into 2023,a strong focus will remain on any further changes to government policies and blending mandates.We will continue to look for synergies between our biofuels and the rest of our refined products bus
232、iness.Liquefied petroleum gasUnlike other parts of the oil industry,liquefied petroleum gas(LPG)experienced little impact from the war in Ukraine.The main driver of the market in 2022 was sluggish economic growth in Asia,and China in particular,as a result of strict COVID-19 policies and weakness in
233、 the property and petrochemicals sectors.This dented demand for LPG from the Chinese petrochemicals industry,which also had to contend with weak export markets in Europe.On the supply side,we continued to see an increase in LPG exports,with strong flows out of the US and the Arabian Gulf.We expect p
234、roduction growth to continue in 2023,although infrastructure bottlenecks could crimp supplies from the US.Over the financial year,our LPG business continued to expand its geographical reach and the scope of its operations.Our portfolio now includes ammonia,a fuel we expect to play a meaningful role
235、in the energy transition.While we expect more challenging conditions in 2023,large flows of LPG will still need to be moved between regions to balance the market.We expect to play a meaningful role in this process and also in helping Europe seek alternative sources of supply as trading flows of othe
236、r products are further affected as a consequence of the war in Ukraine.Liquefied natural gas and Natural gasIn 2022,natural gas made headline news as prices rocketed to unprecedented levels deepening the energy crisis in Europe.Over the past two years,Russia has been steadily reducing its sales to t
237、he bloc so that today they are now at a fraction of pre-pandemic levels.To compensate,Europe has been forced to restart its fleet of coal-fired power stations,extend the life of ageing nuclear power plants and bid aggressively for every available cargo of liquified natural gas(LNG)on the market.In t
238、his environment,our integrated LNG and Natural gas team performed well.However,our immediate priority following Russias invasion of Ukraine in February 2022 was ensuring the safety of colleagues in Kyiv,who had built a successful domestic trading business.Our LNG and Natural gas team also got to wor
239、k helping customers adapt to the new market realities caused by the war and the reordering of global energy flows.Using our network of leased pipelines,we were able to carry gas from the Permian Basin,which straddles West Texas and southeastern New Mexico,to liquefaction plants on the coast,then acr
240、oss the Atlantic to deliver it to our regasification slots in Europe.From here,our LNG and Natural gas team was able to trade and deliver the molecules to where they were needed.In many instances,the gas went into leased storage ahead of the winter.This cohesive approach allows us to increase effici
241、encies,reduce costs and meet demand wherever it appears in the supply chain.Of course,the year was not without its challenges.The sharp increase in margining requirements by futures exchanges and clearing brokers substantially increased the cost of moving physical cargoes,which reduced liquidity in
242、both physical and financial markets and exacerbated volatility.The explosion at the Freeport LNG terminal,where we have an offtake agreement,removed LNG and significant flexibility from our portfolio at a time when the market needed them most.However the size and scale of our operations meant that w
243、e were able to substantially mitigate any issues for our end buyers relating to the lost Freeport volumes and we continued to ensure safe and reliable LNG supply.Looking forward,we expect gas and LNG markets to remain volatile.While Europe should avoid a blackout this winter by drawing on inventorie
244、s and cutting demand,it will need to import huge volumes of LNG in 2023 given the massive reduction in flows from Russia.For LNG to continue to flow to Europe as opposed to other demand centres,the price will need to remain elevated and we expect security of supply to remain paramount for customers
245、in Europe through next winter and beyond.Trafigura Annual Report 202221Performance reviewMetals and Minerals Despite market volatility due to numerous geopolitical events,the Metals and Minerals division recorded a robust performance in 2022.Performance overviewDemand from China was subdued for a nu
246、mber of metals compared to prior years due to successive and prolonged shutdowns as the government sought to contain rising cases of COVID-19.This was,however,partially offset by strong demand from western economies driven by the acceleration of the energy transition,namely investment in renewable e
247、nergy and electric vehicles.Despite the broadly positive fundamentals of underlying supply and demand for metals and minerals,London Metal Exchange(LME)prices were weighed down,in particular in the second half of our financial year.The key drivers for weaker prices include a strong US dollar and mac
248、roeconomic concerns as central banks increased interest rates to combat inflation and fears grew of recession in major economies.Volumes remained broadly consistent with the prior year,with concentrates up eight percent and refined metals down by six percent.During the year we were alert for opportu
249、nities to expand our business and started to explore investment in lithium,a key battery metal.23.3mmtTotal volume non-ferrous concentrates and refined metals traded(2021:22.8mmt)91.3mmtTotal volume bulk minerals traded(2021:82.7mmt)Non-ferrous concentrates and refined metals traded(mmt)20222021Conc
250、entrates total14.4 13.3Refined metals total8.99.5Total23.322.8Bulk minerals volumes traded(mmt)20222021Iron ore31.0 23.1 Coal60.359.6 Total91.382.7Ken Loughnan Head of Bulk MineralsGonzalo de Olazaval,Kostas BintasCo-Heads of Metals22Performance review|Metals and M some of our metals,inventories wer
251、e and remain at record lows,while the power crisis in Europe has forced many smelters to curtail production,further tightening markets.Amid rising geopolitical tensions,there is also a sharper focus on security of supply,particularly around key energy transition metals such as copper,nickel and coba
252、lt.This was highlighted by the US Inflation Reduction Act,a USD369 billion flagship package to spur investment in green technologies.It was also evident in the EUs decision to increase its renewable energy production target to 45 percent by 2030 as the region seeks to wean itself off Russian fossil
253、fuels.Ultimately,these policies and others are highly metals intensive.However,a lack of investment in new supply means large deficits could emerge in a number of the products we trade between now and the end of the decade.Looking forward,we expect macro economic factors to continue to influence met
254、als prices into 2023,albeit with the potential for greater supply disruptions as consumers become more selective about the origin and carbon footprint of the metal they consume.Non-ferrous concentrates and refined metalsCopper For the copper market,2022 started brightly with prices pushing steadily
255、higher in a tight stock environment.Copper went on to hit a record high,at above USD10,600 per metric tonne,amid fears that Russias invasion of Ukraine could curtail supplies.The concerns proved to be misplaced but sentiment remained positive,with copper viewed by many investors as a beneficiary of
256、the accelerating decarbonisation agenda in the US and Europe.However,as attention shifted to aggressive monetary tightening,Chinas property market and increasing COVID-19 cases in the countrys major cities,prices plunged,falling briefly below USD7,000.A strong US dollar also weighed on copper,which
257、continued to trade at a narrow range to the year-end although it has since rallied to around USD8,500 per metric tonne at financial year end.For most of the year,copper demand remained robust.Investment in energy infrastructure in Europe continued.The same was true in China after a third year of sum
258、mer power shortages.Combined with another year of spectacular growth in electric vehicle output,that provided enough demand to more than offset the loss of activity in the property sector.On the supply side,we have seen a year of heightened disruptions,with many mines forced to lower production fore
259、casts as a result of operational problems related to COVID-19 and local community issues.These factors,combined with a drought in Chile,the worlds largest copper producer,left the copper market running close to the disruption levels seen during the height of the pandemic in 2020.As we head into 2023
260、,we expect to see a change in the traditional physical flows on the back of further self-sanctioning of Russian metal.Despite this turbulence,the Copper team delivered a solid performance as we continued to reap the benefits of an integrated approach across refined copper and concentrates.Volumes we
261、re broadly stable and we continued to actively engage with our customers,helping them to determine the carbon footprint of the cargoes they are buying through cutting edge digital technology.As financial conditions continue to tighten,we expect the market to further consolidate as clients recognise
262、the value in dealing with counterparties that have the scale and financial strength to cope with increasingly volatile markets while delivering first-class customer service.Even after several new projects come online in 2023,we expect to see increasingly large supply deficits and for a tight market
263、to become the new normal for copper.Trafigura Annual Report 202223Alumina and Aluminium The aluminium market experienced unprecedented volatility in 2022,reflected by extreme price movements on the London Metal Exchange.In the space of three months between December 2021 and the start of March 2022 t
264、he benchmark aluminium price rose 60 percent to a record high above USD4,000 per tonne as a result of strong demand and concerns over disruptions to Russian supply.However,prices quickly reversed course as a deteriorating macroeconomic outlook and rising inflationary pressures weighed on the market.
265、While demand fears persist,Europes energy crisis and the war in Ukraine have exposed serious fault lines in the supply chain both for aluminium and its key ingredient alumina.These risks were particularly noticeable in Europe in 2022,with soaring gas prices increasing aluminium production costs to m
266、ore than USD15,000 a tonne at certain points of the year.This is because of the large amounts of electricity needed to transform alumina into refined metal.We estimate that a third of European aluminium production is now curtailed,and that further closure risks remain.In China,which is the worlds bi
267、ggest producer of aluminium,lower-than-expected rainfall in the south-west forced further capacity cuts.The war in Ukraine also caused production disruptions,with one of the largest alumina refineries in the world curtailed because of its proximity to the conflict.Our Alumina and Aluminium team was
268、able to successfully meet these challenges in 2022,drawing on our long-established position in the physical market to serve our customers and expand our trading book.As the largest independent global alumina and aluminium trader by volume,our focus going forward will be on helping our customers mana
269、ge these volatile and unpredictable market conditions.For 2023,the outlook hinges how producers and consumers adapt to less stability and more complicated logistics.Nickel and CobaltThe nickel market was challenging in 2022,caused by the technical squeeze on the London Metal Exchange in March,which
270、saw prices hit USD100,000 per metric tonne.This further exaggerated the disconnect between prices in the physical and futures markets.Fundamentally,the market remained well supplied during the year thanks in large part to increased production capacity in Indonesia and new facilities capable of conve
271、rting nickel pig iron into battery grade metal.If plans for further expansions are realised,it could see Indonesias share of global nickel supply rise to more than 50 percent next year.On the demand side,there was healthy demand for battery grade nickel as global electric vehicle sales continued to
272、grow rapidly,led by China but weaker for lower purity metal used by the stainless steel industry.The outlook for the nickel market in 2023 is one of oversupply,driven by production growth in Indonesia and the ongoing weakness of the Chinese property sector,which is affecting stainless steel demand.S
273、et against this,demand for battery-grade nickel is likely to remain robust although consumers are becoming more selective about the volumes they are prepared to buy,seeking assurance on sustainability,origin and carbon intensity.Despite these volatile market conditions,the nickel team supplied recor
274、d volumes to our customers,boosted by increased supply from Terrafame and Prony Resources.As a result,we are able to meet the needs of our growing customer base in both stainless steel and battery metals while also developing new products,such as lithium and other key battery metals,to meet the futu
275、re needs of the market.For cobalt,COVID-19 outbreaks and flooding in Durban,South Africa,created huge logistical challenges exporting material from the Democratic Republic of the Congo(DRC),in the first half of the financial year.This boosted prices that in turn incentivised higher output from small
276、 scale or individual mines,also in the DRC.This artisanal production doubled year-on-year to account for 20 percent of primary supply.Despite a mild recovery in demand from the aerospace industry,sales of portable electronics dropped,while car manufacturers continued efforts to reduce cobalt in the
277、batteries that power electric vehicles.Together,these factors lead to a significant market surplus that started to materialise by the end of our financial year in September and weighed on prices.The highlight of the year was completing the largest pre-financing on record for a mine in the DRC.The US
278、D600 million facility will allow our long-standing partner Shalina Resources to complete the Mutoshi mine in Kolwezi.This is expected to come online in 2023 and has the potential to provide a new source of supply of cobalt hydroxide for refiners around the world.Overall,the demand profile for cobalt
279、 remains attractive due to the rising popularity of electric vehicles.However,as with nickel,the provenance of material is becoming increasingly important.While supply is sufficient to meet demand over the coming years,certain volumes may not be accepted by consumers.As a result,prices could diverge
280、 between responsibly sourced metal and metal that fails to meet industry standards.Trafigura Groups equity investment:Prony Resources cobalt-nickel mine in new Caledonia.24Performance review|Metals and MineralsZinc and Lead Throughout the 2022 financial year,the zinc market experienced periods of ex
281、treme tightness in the physical market and declines in London Metal Exchange stocks to historically low levels.A key driver of these trends was surging gas and power prices.A number of zinc smelters in Western Europe were placed on care and maintenance,including Nyrstars Budel plant in the Netherlan
282、ds.These closures and rising freight costs drove up premiums outside China for refined zinc.In China,rolling lockdowns hit demand and the market was weaker.In zinc concentrates,mine supply was stable year on year and treatment charges trended higher.The lead market was more subdued in 2022.There was
283、 continued strong demand for the metal outside China but inside the country demand and production dynamics were greatly affected by reduced mobility from the COVID-19 lockdowns.The concentrates market has seen strong continued demand from Chinese smelters and mine supply remained stable.The refined
284、and concentrates markets are both expected to be balanced this year with low stocks of both globally.The Zinc and Lead team responded well to these market conditions,drawing on its global reach to meet the evolving needs of its client base.In terms of volumes,we maintained our market position over t
285、he year.We expect similar conditions in 2023 financial year with European power prices,demand growth in China and recession fears the key factors that will influence zinc and lead markets.Against that backdrop,our strategy will be to remain agile and respond to the changing needs of our customers.Bu
286、lk mineralsCoalCoal prices scaled new heights during the 2022 financial year as record gas prices and sanctions against Russia boosted demand.Thermal coal,which is burned in power stations to generate electricity,rose as high as over USD400 per metric tonne for some brands as buyers in Asia and Euro
287、pe scrambled for material in a market where there has been an almost total absence of investment in new mines outside of China.Metallurgical coal,used to produce steel,had a more turbulent year,with prices pulling back from record levels of USD660 per metric tonne in early 2022 as mills in Europe cu
288、t production in response to slowing demand.Against this backdrop,our global Coal Trading team performed strongly with volumes steady year on year and robust financial results.There was strong demand for the teams services throughout the year,both from customers looking to replace expensive gas with
289、cheaper coal and from those seeking an alternative to sanctioned Russian output.The Coal team was able to respond rapidly to these changing requirements drawing on its strong relationships with producers around the world.On the demand side,we saw increased volumes being delivered to Europe as utilit
290、y companies restarted mothballed power stations in response to an unprecedented energy crisis in the region.Over the next 12 months,we expect thermal coal prices to remain at elevated levels because of the lack of new supply and the ongoing energy gas crisis in Europe,while metallurgical coal will b
291、e more subdued as recession fears mount.We will continue to meet the fuel requirements of our customers globally,whilst providing support for their energy transition goals.Iron ore The iron ore market traded in a wide range in the 2022 financial year,between USD87 and USD163 per tonne as optimism ab
292、out the outlook for the global economy and Chinese policy stimulus gave way to pessimism as central banks rapidly raised interest rates and China persisted with its zero-COVID-19 policy.Prices briefly rose above USD160 per metric tonne in March based on anticipation of easing lock-down restrictions
293、in China and the likelihood of even more stimulus to fight the slump of the property market.As these expectations fell short in July,the steel making commodity moved steadily lower and ended September at below USD100 per metric tonne roughly where it had been a year earlier.The 2022 financial year s
294、aw bleaker demand in Europe,where soaring energy prices have forced steel mills to curtail production,weighed on the market in the latter months of the financial year although it displayed less volatility than other commodities.On the supply side,output from Australia and Brazil was weaker than expe
295、cted amid logistics-related challenges,but not enough to impact prices,while China continued to buy iron ore at roughly the rate predicted by forecasters despite weakness in the property market,as infrastructure and manufacturing activities expanded.For our Iron ore team,it was another year of expan
296、ding trading volumes.We saw increased shipments from Porto Sudeste,our Brazilian iron ore terminal,a trend that will continue next year with the commissioning of the Tico-Tico mine in the south-eastern state of Minas Gerais.We also increased other export volumes through deals with the industrys majo
297、r producers.Looking forward,we expect iron ore to remain in a tight range until there is more certainty around the outlook for the global economy.Finished zinc blocks at Nyrstar smelting facility Budel,the Netherlands.Trafigura Annual Report 202225Performance reviewPower and RenewablesTrafigura cont
298、inued to build its presence in the fast-evolving power and carbon markets and to invest in new clean energy technologies.2.8GWRenewable energy portfolio2(2021:1.7GW)$70.9mUnderlying EBITDA(2021:$80m)$170.6mInvestments in renewable projects1Julien RollandHead of Power and Renewables Trading1 Includes
299、 investments in Nala Renewables and clean energy projects and technologies,including hydrogen,to date.2 Nala Renewables(50%owned by Trafigura).Performance overviewIn 2022,we made further progress in building our power and carbon trading capabilities and activities,and continued to invest in renewabl
300、e energy generation and technologies.In carbon trading,we rapidly established a leading position in the voluntary carbon market,investing in high quality,nature-based carbon removal projects.Nala Renewables,our 50:50 joint venture with international fund management group IFM Investors,pressed ahead
301、with a range of projects in solar power,onshore wind and battery storage and is on track to reach its target of building a portfolio of projects with a cumulative generation capacity of four gigawatts by the end of 2025.Our investments in clean energy ventures also continued apace.Overall profitabil
302、ity for the division was down 11 percent compared to the same period in 2021,as we continued to grow our activities and investments,and managed some temporary operational issues in Asia Pacific.At the end of the 2022 financial year,we announced plans to combine our gas,power and carbon trading activ
303、ities into a new Gas and Power division.We also created a new business line focused on renewable energy and strategic investments to provide greater management focus and impetus to this growing and important area of our business.The events of the past year have further highlighted the need to invest
304、 in renewable energy to provide security of energy supply and improve self-sufficiency,in addition to meeting urgent decarbonisation needs,in an increasingly complex world.Looking forward,the key focus for 2023 is working toward a final investment decision for the one gigawatt hydrogen production pl
305、ant we are planning to build in Denmark through H2 Energy.We see hydrogen and hydrogen-derived fuels playing a big role in the energy transition,particularly in mobility.26Performance review|Power and RenewablesPower trading 2022 was one of the most extraordinary years in the energy markets in gener
306、al and in power in particular,with geopolitical events changing trade flows and impacting supply and demand.These shifts have the potential to permanently change the structure of the power market.European markets experienced extreme volatility with prices rising from EUR200 per megawatt hour(MWh)at
307、the turn of the year to levels over EUR1,000 MWh by the summer of 2022.These movements placed significant strains on the liquidity and risk appetite of market participants.As a result,the ability to hedge physical price risk in the futures market became much more challenging.The Power Trading team m
308、anaged the turbulent conditions,growing our business in Europe and the US and entering into several new types of transitions,including agreements to purchase battery capacity.Overall,trading volumes increased in FY2022,while profitability was slightly down on the previous year.However,the team has m
309、ade a strong start to FY2023.The decision to combine our Gas,Power and Carbon teams into a new division will allow for closer cooperation across the energy generation spectrum from fuel to power,including carbon permits and renewable certificates,and help facilitate business development.Looking ahea
310、d,higher capital requirements and greater regulatory intervention may lead to structural changes in the power market and also the competitive landscape.In particular,long-term hedging of energy offtake agreements may become challenging for some market participants.Our focus for the next 12 months wi
311、ll be to expand our physical footprint in the power market globally and continue to build our customer base.Delta Blue Carbon,the worlds largest mangrove restoration project,south-east Pakistan.Carbon tradingIn our first full year of operation,the Carbon Trading team was active across global volunta
312、ry and regulatory markets and also invested in carbon removal projects as well as investment in technology to provide greater transparency of supply chain greenhouse gas(GHG)emissions.Net zero pledges now cover over 80 percent of global emissions across both the public and the private sector.In the
313、public sector,a growing number of countries have plans for regulated markets that will put a price on carbon emissions.At the same time,the private sector continues to increase its ambition and level of corporate disclosure with the voluntary market growing to USD2 billion.Among this years highlight
314、s was the first issuance of credits from Delta Blue Carbon,a mangroves restoration project in Pakistan.Covering 350,000 hectares of tidal wetlands on the South-east coast of Pakistan,it is the largest project of its kind in the world.We are an anchor buyer of the nature-based carbon removals credits
315、 generated by the project.We also launched Agora,our emissions tracking joint venture with US technology company Palantir,during LME Week in October.Initially focused on providing greater transparency in the reporting and verification of mining and metals value chain GHG emissions,the scope of the p
316、latform will extend to energy,helping our customers calculate and manage their GHG emissions across oil,gas and power value chains.Looking forward,a key focus for the Carbon Trading team will be the ongoing developments related to carbon in Article 6 of the Paris Agreement on climate change.This par
317、t of the accord allows countries to trade and facilitate capital into emission removal and emission reduction activities,underpinning a global carbon market for the first time.We are working closely with governments and the private sector to develop robust commercial trading frameworks for new decar
318、bonisation and carbon removal projects.Trafigura Annual Report 202227Nala RenewablesNala Renewables is a 50:50 joint venture between Trafigura Group and IFM Investors established in September 2020 with the aim of investing in onshore wind,solar and power storage projects.Since its inception,Nala Ren
319、ewables has been transformed from a concept to an early stage business with some of its first assets operational or in construction.Nala Renewables now owns and is developing renewable energy generation and storage assets in Belgium,Chile,France,Greece,Netherlands,Poland and the US.To date,the compa
320、ny has grown its renewable energy asset portfolio to 2.8GW and is well on track to meet its 4GW target by the end of 2025.A key focus for the last twelve months has been to build and strengthen the team,acquire late stage assets and secure new development partnerships for greenfield development oppo
321、rtunities in several different countries.In the last financial year,Nala Renewables has focused on building its presence in Chile where it initially acquired a portfolio of 110MWp of ready-to-build solar assets.This acquisition set the foundation for Nala Renewables regional cluster approach for exp
322、anding its pipeline.More recently,it has acquired a further 60MWp in Chile,and it plans to increase its presence in the country further over the coming year.Nala Renewables has set up a regional office in Santiago to oversee its activities in Latin America and provide local expertise as its portfoli
323、o begins construction and operation.The company also expanded into the Greek market with the acquisition of a 106MWp ready-to-build portfolio of solar assets and entered into development agreements in Spain to build an early stage project pipeline.In each of these countries,Nala Renewables plan is t
324、o continue its expansion to complement its existing portfolios to create scale and a deeper presence.Assets that have entered construction in the last financial year include a 198MWp wind project being developed by North American clean energy development and investment platform Swift Current Energy,
325、which Nala Renewables acquired together with Buckeye Partners.This asset is targeting commercial operations in the first quarter of 2024.The Balen Battery project,which involves investment of up to EUR30 million to develop one of Belgiums largest battery energy storage systems at Nyrstars zinc smelt
326、ing facility,is also in construction with commercial operations targeted to begin in the first quarter of 2023.Utilising lithium-ion battery technology,the 100MWh battery project will be able to store 25MW for over four hours.The battery energy storage system will provide stability and balancing ser
327、vices for the Belgium grid,as well as help shift renewable energy production into high-energy demand Construction of one of Europes largest battery energy storage systems by Nala Renewables in Balen,Belgium.28Performance review|Power and RenewablesInvestments in clean energy ventures In 2019,Trafigu
328、ra established an internal venture capital-style fund to invest in start-up companies and projects developing alternative and renewable energy technologies.The focus for investment is three-fold:to gain access to experienced teams and intellectual property in early-stage companies working in sustain
329、able energy;to support the conversion of their intellectual property into viable development projects;and ultimately to help develop new markets and business opportunities for Trafigura.Investment decisions are guided by an investment committee comprising four members of Trafiguras Management Commit
330、tee,thus ensuring all decisions are fully aligned with Group strategy.To date,we have close to USD60 million of investments in priority hard-to-abate or tough to decarbonise sectors,including hydrogen-based fuels for mobility,electricity storage and emissions capture and utilisation.These investment
331、s are already providing us with unique insights into sectors that will be extremely important to our future strategy as well as project opportunities in which we are also investing.Our investments allow us to generate valuable insights into markets that have yet to be formed.We envisage that hydroge
332、n and hydrogen-based fuels will play a large role in the shift to a low-carbon economy and that carbon capture will be required by a number of industries for years to come.Similarly to its core activities,Trafigura works with leaders and peers in these respective sectors,such as SK Gas,Shell,Chevron
333、 and Saudi Aramco,but also with newer market entrants,such as Breakthrough Energy Ventures sponsored by Bill Gates.In 2022,we invested in two companies:C-Zero,a technology developer of low-carbon hydrogen production;and Malta Energy,a technology developer of thermal long-duration energy storage.Both of these investments represent new accomplishments for Trafigura in their respective spaces.C-Zero