Metalshub takes commodity trading into the digital age
It’s not the first time that there has been attempt to ‘digitalise’ minor metals trading, but traditional practices have endured. Now Metalshub is on the scene, will we finally see a shift to the digital?
In late 2017, Metalshub launched its metals marketplace of the future hoping to transform the way metals and ferroalloys are traded. Metalshub claims to deliver a faster, more secure and more cost effective handling of physical transactions.
Over the last few years, E-commerce has massively changed our way of life as consumers. I do my shopping, pay my bills and even found a babysitter through online platforms.
However, the digital transformation of complex business-to-business supply chains is just starting. Some of the largest B2B markets are commodities. Fuelled by population growth, global demand for commodities has grown 50% over the last 30 years. Electric vehicles, Industry 4.0 and renewable energy will further increase demand for high-tech commodities. While some industrial metals are traded on the London Metal Exchange, for many other metals organised trading currently does not exist. Chrome, titanium or silicon in the form of alloys are used in steel making, 3D printing and chemicals. Cobalt, rare earth elements and lithium are used in magnets, batteries for electric vehicles and wind turbines. These are markets together worth more than 100 billion dollars underserved by technology. But the digital revolution enables the transformation of these markets in the same way it has already transformed so many other industries.
Metalshub was founded in Düsseldorf, Germany, in 2016 by Dr. Frank Jackel and Dr. Sebastian Kreft. The two founders previously worked together in London for one of the world’s leading mining companies, Anglo American, as sales executives for ferroalloys and nickel respectively. The start-up is backed by experienced business angels such as Dr. Dieter Heuskel, former Chairman of The Boston Consulting Group, Jochen Engert, Co-Founder of FlixBus, Dr. Ralf Köster, former CEO of the Bartec Group and Entrepreneur of the Year in Germany and Dr. Gerald Schönbucher, Managing Director of real.digital.
In Europe alone, there are more than 10,000 companies which rely on the supply of metals to produce their products. Metalshub brings buyers and suppliers together on its digital marketplace and opens up new commercial opportunities. The challenge in today’s analogue metals trading world is trust. People trade with people they trust. Metalshub will create a trusted environment. All participants are vetted through a diligent onboarding process following the “know your customer” principle.
“In my job as Head of Ferroalloys Sales at Anglo American, I experienced the complexity of selling ferroalloys in a very large but fragmented market. We see a huge opportunity to introduce new technologies to make the business more efficient,” states Co-Founder Dr. Frank Jackel.
A typical commodity transaction involves several parties: buyer, seller, logistics provider, insurer and trade finance provider. Moreover, information needs to flow across various departments within the company. Due to the value of most transactions, there is zero tolerance for errors.
“This combination is an efficiency killer for any analogue process. Metalshub has managed to digitise it. Many process steps which were previously done manually, such as the creation of a legally binding contract, have been automated. This reduces costs and boosts transaction speed,” explains Co-Founder Dr. Sebastian Kreft.
The Metalshub team
Metalshub is working with some of the world’s leading companies in the logistics, trade finance and insurance industry. For example, Metalshub has partnered with Euler Hermes, the global leader in credit insurance, to be the first marketplace to offer its transaction insurance Wilfried.ai. This new and innovative product uses invoice level data and artificial intelligence to more accurately price credit risk. To provide logistics services, Metalshub is working with the leading European metals logistics companies. It uses “big data” and “predictive analytics” methods to model transport demand and supply and propose the optimal logistics solution.
Looking to the future, Metalshub plans to pilot Blockchain, the technology behind bitcoin, in the metals market. Blockchain has the potential to solve some of the most pressing issues in commodity trading: providing access to affordable trade finance and receiving a tamper-proof evidence of origin of commodities.
More than 100 producers, consumers and traders of commodities have already registered for Metalshub, among which some heavyweights of the industry. The conservative commodity trading industry is on the verge of a technology revolution. Digital platforms will play a major part in it.
Frank Jackel T: +49 (0) 177 462 6262 E: Frank.Jackel@metals-hub.com
Sebastian Kreft T: +49 (0) 171 564 2575 E: Sebastian.Kreft@metals-hub.com
Michiel Minnaar T: +31 (0) 646 09 5254 E: Michiel.Minnaar@metals-hub.com
Christine Allmendinger T: +49 (0) 1577 909 6284 E: Christine.Allmendinger@metals-hub.com