Trafigura Group Pte Ltd. (“Trafigura”), a market leader in the global commodities industry and one of the world’s chief independent aluminium traders, has established a ‘low carbon aluminium’ financing platform of up to USD 500m. Natixis and Rabobank supported Trafigura in the design and structuring of this innovative instrument.
As the first financing of its kind for Trafigura and for the wider market, the facility has been designed to meet growing demand from downstream manufacturers for low carbon aluminium and to support upstream producers in accelerating their transition to low carbon technologies. The platform will enable Trafigura to access financing at a preferential interest rate and, in turn, to pay a premium to low carbon aluminium producers. It follows Trafigura’s establishment of a low carbon aluminium trading desk in 2019, the first commodity trader to do so.
Aluminium is expected to be a major enabling material for the transition to a low carbon economy due to its low weight, high recyclability and wide range of applications across diverse industries including transport, packaging and consumer goods, and building and construction.
Numerous regulatory and voluntary initiatives have sought to improve the emissions and energy intensity of the aluminium production sector, but there is still no official market definition of ‘low carbon aluminium’. Through this new financing, and in coordination with Natixis and Rabobank, Trafigura has developed a methodology that sets out clear parameters for low carbon aluminium production, drawing on existing recommendations and standards such as those formulated by the EU Technical Expert Group on Sustainable Finance and the Aluminium Stewardship Initiative (ASI).
“The metals industry has an important role to play in the fight against climate change. Trafigura is committed to facilitate the transition towards a sustainable aluminium supply chain,” said Philippe Müller, Global Head of Aluminium and Alumina Trading for Trafigura. “For aluminium, our objectives are to secure long-term low carbon aluminium supply for our customers, to support the efforts of our business partners as they invest in decarbonisation and ultimately to create efficient linkages between suppliers and end-users. We’re already seeing increased demand for low carbon aluminium particularly from the European automotive industry and the packaging industry worldwide,” concluded Philippe.
Orith Azoulay, Global Head of Green & Sustainable Finance, Corporate & Investment Banking at Natixis said: “The environmental transition of many industries will rely, in large part, on the creation of a low carbon aluminium value chain from extraction to final use. This financing marks the first milestone on this journey, notably by engaging key stakeholders on this value chain and by establishing the necessary technical and price signals. We are proud to have supported Trafigura in this financing, drawing on our historical expertise in commodity trade finance and leadership in sustainable finance. As demonstrated through our innovative Green Weighting Factor mechanism, Natixis has put the transition to a lower carbon economy at the heart of its business strategy and client strategic dialogue.”
Rabobank’s Global Head of Trade & Commodity Finance, Jasper van Schaik said: “It is great to see that Trafigura is taking a pivotal role in the transition towards a low carbon economy in the aluminium supply chain. We are honoured to provide Trafigura with our support through this innovative low carbon aluminium financing solution. It is an excellent example of Rabobank’s mission: Growing a Better World Together. We fulfil this mission by drawing on our longstanding client relationships and partners in the commodity supply chain. Our global coverage as a well-recognized commodity finance bank helps us to initiate, facilitate, encourage and support sustainability initiatives of our trading clients by providing them with tailored financing structures, unique expertise, dedicated people and a global network.”