National resource giants plot varied paths to global goal

Mon Mar 31, 2014 1:11am EDT
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By Josephine Mason and Jonathan Leff

NEW YORK (Reuters) - In teaming up with Cargill to create the world's largest sugar trader last week, Brazil's Copersucar has joined a small but growing club of national resource champions steadily transforming the commodities landscape.

In the boldest international move in its 50-plus-year history, the world's top sugar producer will form a 50-50 joint venture with global trading powerhouse Cargill, plugging its 47 sugar mills into one of the world's biggest logistical operations, with customers stretching from Chicago to China.

It was a blockbuster deal for the global sugar market, but perhaps even more importantly it opened up a new path for other state-owned or nationally powerful commodity producers, those with domestic strongholds and international ambitions.

From Russia to China, Brazil to Saudi Arabia, national giants are going global at an accelerating pace, eager to squeeze more profit from the lucrative global commodities supply chain - a trend that, until now, threatened to crowd out the global merchants who have long dominated international trade.

Some are simply buying what they want, such as Russian oil firm Rosneft's purchase of Morgan Stanley's (MS.N: Quote) physical oil business; others like PetroChina (601857.SS: Quote), which has been looking to hire traders in Houston, are building it organically.

They are racing in amid once-a-generation reshuffling of commodity industry investors, with many global banks bailing out of the market due to regulatory pressure. The grab for market share could last for years, experts say.

"It's a game of musical chairs and the seats are getting much more valuable," said Chip Register, a long-time commodity executive, currently at Sapient Global Markets.

"For anyone who's got the capital and the interest, it's a land grab."   Continued...

A logo is pictured on the building of Cargill International SA in Geneva August 4, 2009. REUTERS/Denis Balibouse