Tuesday, 2 July 2013

Marc Rich and "traders"

I see that Marc Rich died on 26 June 2013, aged 78.   Here's a link to the entry about him in Wikipedia.

Marc Rich was brought up and educated in the US and his early career included a stint at Philipp Brothers (as it was then known).   In 1974 he and co-worker Pincus Green set up their own company in Switzerland, Marc Rich & Co. AG, which has over the years morphed into what is now Glencore Xtrata Plc. Nicknamed "the King of Oil" by his longtime business partners, Rich has been credited with having created the spot market for crude oil in the early 1970s.   He was controversial for having traded oil with Iran, allegedly in defiance of US sanctions, and by some accounts, for "evading" large amounts in US taxes.   I've also heard that Marc Rich & Co made enormous profits during the breakup of the former USSR, trading commodities sourced there, the rumours suggesting that the source of such commodities wasn't always entirely clear.

No doubt others have and will write about Marc Rich and his colleagues.  My personal involvement wasn't with Marc Rich, of course, but I had some contact with the Marc Rich entity when it first started in Melbourne.  The people there most certainly had a "trader" mentality, and I clearly remember the disdainful attitude of the traditional miners to the development of this mentality.   They didn't like the fact that traders made money without "adding value".   I guess many of us would still endorse that view, but for better or for worse the traders and other intermediaries seem to be here to stay.  It's interesting, though, that the wheel appears to have turned somewhat, in that Glencore Xtrata now has very significant investments in production assets.

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