Claude Dauphin Passes as Trafigura Tested by Commodities Slump

  • Marc Rich protege founded Trafigura with five partners in 1993
  • Yields on Trafigura bonds near record amid Glencore concerns

The death of Claude Dauphin, the billionaire who co-founded Trafigura Beheer BV and built it into one of the world’s biggest commodity trading houses, leaves the firm with fresh challenges amid unprecedented turmoil in the sector.

Dauphin, 64, died in a Bogota hospital Wednesday while on a business trip. He remained until the end a key deal maker for the world’s second-largest metals trader, despite being diagnosed with cancer two-and-a-half years ago.

A protege of Marc Rich, before co-founding Trafigura in 1993, Dauphin negotiated oil deals from Angola to Russia and secured metals and minerals from Zambia to Mongolia as chief executive officer and chairman. Despite reporting record first-half profit of $654 million in June, Dauphin’s passing comes as other traders struggle with plunging raw-materials prices and as crude oil lost half its value in the past 12 months.

While traders can profit from commodity price volatility and declines, shares of Glencore Plc, the world’s largest metals trader and one of the five biggest mining firms, have dropped about 68 percent this year on concerns over the Baar, Switzerland-based company’s debt and slumping metals prices.

Trafigura has been caught up in the turmoil. The yield on the firm’s 550 million-euro bond, maturing in 2020, widened by 18 basis points to a 11.57 percent as of 12:41 p.m. in London. The yield has almost doubled over the past six weeks.

During a week when his own company’s shares were whipsawed from a record drop on Monday, before recovering most of those losses in a two-day rebound, Glencore CEO Ivan Glasenberg paused to pay tribute to Dauphin, his rival and former colleague.

“He was a respected competitor,” Glasenberg said in a statement. “Our thoughts and condolences are with his family and friends.”

Dauphin, a French citizen who held U.K. residency, was the closely held company’s largest owner with a stake of less than 20 percent. He became executive chairman after stepping aside as CEO of the world’s second-biggest metals trader in March 2014 for medical treatment. He was the last of the firm’s six founders with an executive role. A group of 600 employees own the balance of the company.

Executive Role

Dauphin’s death raises questions as to what will be done with his substantial stake in Trafigura. The company hasn’t commented on the matter.

The impeccably dressed Frenchman was the driving force behind Trafigura’s ascension to the top ranks of the commodity trading sector. Armed with a reputation as a hard-driving boss, he asked the same of Trafigura employees who rewarded him with fierce loyalty. The company, which is also the third-biggest independent oil trader, now has almost 5,300 employees in 36 countries.

“Claude will be greatly missed by his family, friends, and vast network of business partners, as well as by us all,” Jeremy Weir, who took over as CEO when Dauphin stepped down, said in an e-mailed statement from Trafigura. “We owe him an enormous debt of gratitude for a career full of achievement and entrepreneurial endeavor and for his energy, inspirational leadership, generosity of spirit, humility and humor.”

Commodities Deals

Until he was grounded by illness, Dauphin spent much of his time on a jet traveling the globe in search of deals for new sources of raw materials. The company earned a profit of $1.08 billion last year.

With major trading operations in Geneva and Singapore, Trafigura grew rapidly as Dauphin leveraged contacts in Africa, Asia, Central and South America to secure flows of metals, minerals and oil. Trafigura’s revenue rose more than 10-fold in the past decade and nearly tripled in the previous five years to reach $127 billion in 2014.

Dauphin’s net worth was at least $1.6 billion, according to the Bloomberg Billionaires Index.

Five Partners

The son of a scrap-metal dealer, Dauphin was born on June 10, 1951, in Houlgate, France and left school at 16 to join his family’s recycling business. He started an eventful career in commodities and joined Marc Rich’s Swiss-based firm in 1977 as country manager for Bolivia.

Dauphin was later promoted to head of zinc and lead trading before joining Rich’s executive committee as head of the petroleum division. Rich, the trader celebrated for inventing the spot-oil market, fled the U.S. to avoid federal indictments during the 1980s before being pardoned two decades later by President Bill Clinton.

He resigned from Rich’s firm in 1992 and founded Trafigura with five partners the next year. The company initially focused on trading opportunities in Latin America.

Dauphin’s success as a businessman was at times overshadowed by controversy surrounding Trafigura’s operations. As CEO, Dauphin spent five months in an Ivory Coast jail in 2006 and 2007 over a dispute involving alleged dumping of toxic waste in Abidjan.

First Vacation

“I do not care about the image they give me,” Dauphin said in a rare interview with France’s Le Point in 2010, commenting on the scrutiny of Trafigura. “I know that we are blameless.”

While in detention, Dauphin had only a mobile phone to keep in touch with the outside world. The jail held some 4,000 prisoners and did not have showers.

“Many times I thought it was all over for us,” he told the French magazine.

Still, the art aficionado whose passions included Picasso and Modigliani, was later able to use the incident to poke fun at his obsessive work schedule.

“This time in prison, it was the first vacation of my life,” he said in the Le Point interview.

Dauphin is survived by his wife and three children.

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