It is a widely held view that metal trading is impossible to teach. After all, there is to my knowledge no school in it, nor university degree. There are courses in economics, algorithms, option-trading, hedging, shipping, warehousing, currency trading - all relevant to the metals industry - but where is the academy for metal merchants?
There could be a couple of reasons for this absence. Perhaps one is that physical metal-trading is all-consuming ; doing it well, or at least with commitment, leaves precious little time to spend on teaching others. Another is that perhaps the skills of being a metal person do not usually co-habit with the patience and nurturing required to bring on the young. Perhaps another reason, is that those who make money trading are not desperately keen to share with others the secrets of how this is achieved. And yet a further reason might be that metal trading is not formulaic – perhaps it just cannot be taught.
The Right Choice?
My own journey from new-hop to middle metal age was unlikely. The call confirming I was to start work in the back office at ACLI in Plantation House arrived on the same day as - but two hours before - a letter offering me a starting package at Ernest Benn publishers. At the age of 22, as I had committed to ACLI, I could not possibly imagine breaking my agreement. It’s a habit I have tried to maintain; and 36 years in metals is long enough to wonder whether I did the right thing.
My father was appalled that I was going into metals following my boarding school and University education. Although he had loved his work as a metal merchant, for reasons unknown he did not foster in me the idea of buying and selling metal as a career. By the time I reached the world of work, the only job I had held was postman at Christmas and delivering a paper-round at around the time The Sun was launched containing double-page spreads of Oh Calcutta! [Interesting enough to a fourteen-year old to cause some delay to deliveries in the Walton-on-Thames area].
These thoughts come to mind this week, when I have had the pleasure of one of the many young people who come to us for work experience in our small metals trading office. We are not a large company – hardly Goldman Sachs – but the young who come through the door for a week or two appear to enjoy it.
Teaching and Explaining
Downstairs, I usually start with our glass-fronted metals cabinet in which some of the less abundant elements in the periodic table are on display. I will ask our trainees to place a piece of, say, titanium or silicon in one hand and a piece of tungsten or rhenium in another. We compare and discuss properties and applications; that tungsten has the highest melting point of any element at 3422°C, and is used in tool steels and moulds where strength is needed; that a third of the world’s supply of rhenium with a density of 21 gms per cm3 will occupy a cubic metre of space - the space the student will encompass by stretching out his arms. Then we might talk of how titanium is as strong as steel but 45% lighter, how its strength-to-weight ratio promotes its use in aeroplanes, or that new alloys of the even lighter material of magnesium will soon be used for aircraft seats to further reduce weight in the air. We then might look at a glass phial containing a few grammes of thallium and marvel that while our Victorian forebears used this element to poison rats, today the glass industry uses a form of it doped in the glass used in scanner lenses.
Then we might go on to ideas of supply and demand, of how the metals industry is a pyramid with 1.5 bln tons of steel traded each year, 40 million tons of aluminium, perhaps 70,000 mt of cobalt and then no more than 3000 mt of tantalum and 60mt of rhenium. A sense of proportion of where metals come from and who uses them then follows. A discussion might follow about how every nation has resources and how the differences in surpluses and deficits are resolved by trade. We talk about the way that trade is anthropological in that the merchant will be interacting with cultures in a way that is determined by where metals arise or where they are needed. We might talk about regimes and how centrally-controlled societies affect the movements of metals and resources as much as democracies – but in different ways. We might touch also upon moral issues about whether mining companies do enough for the countries in which they mine or whether developing countries pay too high a price in terms of the by-products of mining – such as pollution or corruption. We might despair that it is mooted that, not content with polluting the earth, the industry appears now bent on mining the sea.
Then we go upstairs, where in our old-fashioned way of working, we have a series of yellow folders face up and in sequence on a shelf representing our live sales contracts and a series of red folders with the contents of our purchases. ‘Pick any one’, I say, and we examine just how simple a metal contract can appear. It is the launch point to explain the strange world in which the key matters about ‘quantity’, ‘chemistry’, ‘packing’, ‘price’, ‘time of delivery’, ‘place of delivery’, ‘payment terms’ and ‘documents’ are the essence of a metals contract, and this in turn leads to a discussion about where metals are stored or insured and how shipped.
I do all this partly because almost no one did this for me and quite how I survived I am no longer sure. No one really wanted to explain much. It was assumed that you would just learn by watching and I did my very best to do so.
As a generation appears to be leaving the trade right now, either burnt or bored by the aftermath of the super cycle, even less time is being devoted to ask the fundamental question as to ‘What are metal merchants for?’ and, ‘If we are for anything, how the hell do you do it?'
Skills and Learning
Each one of our work experience young people has been of much greater use than I can ever have been to those who so patiently paid me for my work in my early years. Above all, the young person of today appears to be useful from day one. Naturally their computer skills make them instantly superior to me but I have found their ability to assimilate and reduce large amounts of data to key bullet points astonishing. Each time we are due for a work experience week I wonder for my sanity – it takes time and effort on my side, I must think of projects, I must take time to explain. Last week I decided to take our intern to the LME to think about, and contrast, the purpose of the exchange versus the illiquid, almost old fashioned physical markets in which minor metal people reside. During the week, our young person looked into the way lithium is being used in the new Tesla batteries and what regions in China produce which types of rare earths. The reports were accurate and will help us for many months after he has gone.
What I would like to say with this short piece is that for our trade to continue and thrive we should make the introduction of young people into what we do a much greater priority than at present. I am often rung by other trading companies to ask if I know a young person who might like to come into the business, as if there are not more than enough bright young things ready willing and able to come into our trade. Is it that these companies have not had a policy of being interested in the young? Did they suddenly look round the trading room and notice the geriatric faces just about to retire and panic?
If I had to sum up the value of the young to our own business, it is that it stops our company from being inward looking. It forces us, through explanation to the young, to articulate what we do and justify it. It means we need to learn to teach – and that is no bad thing. Finally, if we have a moral view of what we as metal people should or should not be doing that at least is something that can be taught too and, who knows, perhaps passed on.
This article was written by Anthony Lipmann. All views and opinions are stictly his own.