Large commodity traders have said export credit agencies (ECAs) are becoming increasingly important financing partners, as geopolitical uncertainty continues to drive concerns over supply security.
Export finance has historically focused on reducing the risk of lending to domestic exporters rather than securing commodity flows, but rising geopolitical tensions in recent years have resulted in ECAs taking on a more strategic role.
After Russia’s invasion of Ukraine in 2022 triggered unprecedented disruption in the global energy market, agencies in numerous countries issued guarantees backing facilities provided to commodity traders, in a bid to secure long-term domestic supply of gas and fuel products.
ECAs in western nations have also sought to shore up critical minerals supply chains, following warnings from researchers that supply for materials such as copper, lithium and nickel is expected to fall far short of forecasted demand.
“We’ve been quite successful with ECAs over the past four years,” said Trafigura chief financial officer Stephan Jansma, speaking at last month’s FT Commodities Global Summit in Lausanne.
“Based on the security of supply argument from governments, to attract commodities into their economies, the trend I see there is that ECAs are continuing to expand their involvement.”
Trafigura has worked with numerous ECAs since 2022, including those in Italy, Saudi Arabia and South Korea to facilitate imports of strategic metals, and in Germany and Japan UAE for energy flows.
Rival traders Mercuria, Gunvor, Vitol and Glencore have also secured high-value ECA-backed facilities in several markets.
Mercuria’s group CFO, Guillaume Vermesch, said at the FT event that agencies are now “far more willing to deploy capital to address the security and energy needs, and that will continue”.
Muriel Schwab, non-executive director at Statera Energy and founder of commodities consultancy Blue Oak, said this activity marks “quite a significant shift” in the financing landscape.
“These institutions are really trying to stabilise the energy system and create an active role in global supply chains,” she said. “And the driver is more geopolitical than just commercial.”
The need to secure additional financing has been driven in part by intense price volatility in the commodities market, notably during the 2022 crisis and, more recently, the conflict in the Middle East.
Higher prices not only mean more financing is required for the same flows, but risk squeezing liquidity in the event of margin calls.
As Deia Markova, finance director at Swiss fuel trader BGN, said at the event, that kind of market uncertainty means that “to secure energy as a whole… you need even more capital on the table”.
Speakers at the event noted that commercial banks have stepped up support to traders since the US-Israel-Iran war, including by providing liquidity buffers that can be drawn down during periods of extreme volatility.
But at the same time, ECAs are also providing a broader range of financing solutions themselves, Trafigura’s Jansma said.
“Increasingly, I see them participating in pre-payments, in project finance deals, in RCFs,” he said. “In that sense, for us, ECAs have really become a continuous source of liquidity, but also a partner to us, just like the way banks have become to us.”
Vitol’s chief financial officer, Jay Ng, added that the growing involvement of government agencies in a historically opaque market has also helped “give them a bit more understanding of what we do”.
