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Four years ago Kenny Ives was a contender to be the next chief executive of commodity trader Glencore. Instead, as head of trading house IXM, he now has a different role: building the company into China’s answer to his former employer.

Chinese-owned IXM, the world’s third-largest metals trader, is a key link in a global supply chain that provides China and other regions with materials used in electric vehicle batteries such as cobalt, copper and nickel.

The Geneva-based company has recently expanded into trading lithium — another key EV battery ingredient — Ives said in an interview with the Financial Times. It is also setting up new offices in South Korea, India and the Democratic Republic of Congo as it expands its global footprint outside China.

IXM’s ambitions are a test case in whether a trading house fully owned by a mining company — Shanghai- and Hong Kong-listed mining company CMOC bought IXM five years ago — can compete with the independent trading houses that dominate the industry. Such firms have been earning record profits in recent years, thanks to the volatility in energy prices following Russia’s 2022 invasion of Ukraine.

Ives, who spent more than two decades at Glencore, has reshaped IXM since he joined as chief executive two years ago.

“We have effectively turned IXM inside out,” he said. “We have diversified the business,” taking the existing futures trading business and adding a cash trading unit that buys and sells physical commodities, and a marketing unit that sells commodities produced by CMOC, he said. This year IXM reported record first-half earnings before tax of $142mn.

But the world of commodity trading has increasingly fractured along geopolitical lines — a process hastened by the war in Ukraine and by growing tensions between the US and China, the world’s biggest commodities consumer — and IXM finds itself in an unusual and sometimes difficult position.

The firm has close ties to China. Chinese battery group CATL holds a 25 per cent stake in IXM’s owner CMOC and is a big customer of IXM, which supplies it with battery materials.

Such ties can be a useful source of market intelligence, but Ives stressed that they do not impinge on his running of the company.

“We are owned by CMOC and I can assure you, if I hadn’t been given the assurances about independence and autonomy, I wouldn’t have joined the group. I need to be able to operate,” he said.

“At the same time that we have this strong nexus to China, we try to maintain strong nexuses to all of the other key consumption regions and supply regions,” he added, pointing to Latin America and a growing US business. “We cannot be beholden to any one geography, any one region.”

IXM’s parent, CMOC, has at times been viewed by Washington with suspicion.

Earlier this year, US under secretary of state for economic growth, energy and the environment Jose Fernandez accused CMOC of using “predatory” tactics to flood the world with cobalt and keep prices down.

“There’s no shortage of sensational or provocative comments,” said Ives, adding that IXM had many long-term customers in the US.

“We hope that will continue, but we are not naive, to think that the political realities of the moment and the geo-security issues of the moment don’t handicap us to an extent,” he said. “This reality is one we have to navigate.”

Formerly part of Louis Dreyfus Company, IXM was bought by CMOC as part of a strategy to build a mining group covering the entire supply chain.

“We are thinking differently than other Chinese mining companies, because we think the trading function is strategically important at the group level,” said Steele Li, CMOC’s vice chair and chief investment officer. A modern mining company should have “a very strong trading team that covers the whole industrial chain . . . all the way from the mining to the customers”.

Other companies, sensing an opportunity in metals needed to build clean energy infrastructure, are also moving in.

Flush with cash, privately owned energy traders Vitol, Mercuria and Gunvor are all expanding metals trading desks and have at times been willing to “overpay” to secure the best talent, Ives said. “We want people who are motivated by the competition and the opportunity to build something special.”

Ives has his sights set on closing the gap between IXM and his former employer.

“Clearly Glencore and Trafigura are the gold standard in metals trading [but] we think we are very competitive now in the business lines that we are in and we’re determined to compete with the best players out there,” he said.

He highlighted that neither Glencore nor Trafigura has a Chinese parent company capable of finding, building and operating new metals and mining projects.

“[CMOC] has that expertise in-house and that’s great for us,” Ives said. “We can leverage that, our customers can leverage that, and I don’t think anybody else can offer that.”

If the FT’s editorial board thinks pylons and cables are “the forgotten, less sexy, part of the green transition” (FT View, October 9), then electricity market reforms are a real turn-off. Yet these, too, could help us benefit from low-cost renewable electricity, and encourage infrastructure development where it is needed.

For example, the UK’s and Australia’s renewable energy industries have resisted a market reform, called locational marginal pricing, that would make electricity prices reflect local supply and demand.

In the UK, all electricity is sold at the same price on the national spot market. This means even if there is low demand or oversupply in a given area, the price isn’t any cheaper than in a location clamouring for energy.

Moving to a market model that captures where electricity is produced and consumed could reduce the amount paid to generators for unused electricity in parts of the country that don’t use much power, and potentially lower energy bills, according to the regulator Ofgem.

Batteries and new renewable projects would become more attractive in places with low supply and high demand. Smart meters could help households use more electricity at cheaper times of day in their area. Locational pricing also could incentivise energy-intensive businesses like data centres and factories to build their facilities in areas with cheap power, contributing to economic development outside of current demand hubs.

Detractors are concerned renewable investment will decrease because of higher uncertainty. Yet more than half of US capacity falls under locational pricing introduced decades ago. This has not deterred renewable investment. According to the International Renewable Energy Agency, the US added over 200GW of capacity between 2013 and 2023, more than doubling over a decade.

While topical, locational marginal pricing is not the only useful market reform to promote the energy transition. Capacity markets shore up reliable electricity supply even if it is ultimately not dispatched, mitigating the risk of renewable intermittency. Carbon prices, like emissions trading schemes, also help incentivise renewable development by making carbon-intensive power more expensive. While both mechanisms are in use in the UK and Europe, neither has widespread global adoption.

Market reforms are even less visible than pylons and wires, yet they are just as essential for realising the world’s renewable energy potential as fast as possible.

Lucy Shaw
London W8, UK

Two articles — “China’s ills are serious but not incurable” (Opinion, October 16) and “Global public debt to exceed $100tn this year, says IMF” (Report, October 16) — indicate a global economic system severely out of balance. Neither high savings rates in the east nor exploding governmental borrowing (and cheap money) in the west are able to generate continued economic growth at levels that were achieved in the recent past.

The problem in both cases is inadequate domestic aggregate demand. Curiously the root cause is the same — an excessive concentration of wealth.

Whether it is investing primarily in export-oriented manufacturing or altering tax policy in favour of “the wealth creators”, the result is the same: domestic aggregate demand has been reduced.

Only by a reversal of policy will things change. Whether this is done deliberately or as the result of a “panic” will determine how dramatic the societal dislocations will be.

Guy Wroble
Denver, CO, US