Notes from the other side: Retired metal merchant, Anthony Lipmann, illuminates trading for the young entering the world of metals.
Modern view of Cannon Street, City of London
The inaugural meeting of The Minor Metals Traders* Association (now The Minor Metal Trade Association) took place at the offices of the London Chamber of Commerce at 69 Cannon Street in the City of London on Monday 20th August 1973.
The companies in attendance numbered just 19, many of whom (with some notable exceptions) have passed into history or merged into other entities.
In the minutes, acting Chairman, Robbie Lichtenstern of Leopold Lazarus Ltd., “expressed the hope that the formation of the organization would result in a long and beneficial relationship for all concerned”.
I wonder if he could have imagined that the Association he and others formed would last fifty years, or how the trade in minor metals would expand from the seven metals first envisaged to the long list of elements, compounds, and alloys covered today.
In case any readers cannot remember which those first elements (covered under old Rule 3a) were, they were: antimony, bismuth, cadmium, magnesium, mercury, nickel, and selenium.
By 9th March 1977 at a ‘Special General Meeting’ Rule 3a was widened to read ‘“minor metals” shall, at the Committee’s discretion, be taken to include light metals, rare metals, precious metals, their ores, alloys, scrap and compounds and ferro alloys’’.
Nickel soon fled the group when it came under the aegis of the London Metal Exchange (LME) who launched its Nickel terminal market contract in 1979 (something they might now regret).
In 1973, fledgling MMTA members were drawn from base metal companies as well as a new brand of minor metals specialists. Robbie Lichtenstern was employed by Leopold Lazarus Ltd who in 1877 had been founder members of the LME, and now 96 years later were to be a founder member of the MMTA.
Right from the beginning the MMTA was not in competition with the LME. It was never envisaged as a terminal market (the volumes being insufficient to support one) and the minutes record a debate as to whether the new MMTA needed to object to misreporting by American Metals Market suggesting it would be a ring.
Instead, the MMTAs purpose was to bring a level of order to our idiosyncratic markets; to establish standard chemistries for deliverable metal, a recommended form of contract, arbitration rules for settling disputes, recommendations for warehouses that fellow traders would be comfortable with as delivery points.
In the 1970s the minor metals desk was often an off shoot of a base metal operation, operating under its own devices. It had at times been difficult to control, as exemplified when Simon Hicks attempted to corner the market in tungsten and in so doing brought down the parent company, Metal Traders Ltd in 1972.
Minor metals trading, as practitioners know, requires expertise, without the cushion of hedging and with only your customer as an exit.
The formation of the MMTA in 1973 created a centre of excellence able to focus on the smooth running of our diverse and exotic metals trade leaving the base metal bigshots to focus on copper, tin, lead, and zinc.
Aluminium and nickel were not yet adopted as LME contracts.
Attending that first 1973 MMTA meeting from Wogen Resources Ltd was Peter Robbins who later authored with Douglass Lee a Guide to Precious Metals and their Markets (1980), and later ‘Investing in Strategic Metals (1981). Other entities in attendance that day included Ayrton & Partners Ltd (founded in 1958 by Sam Ayrton and my father), Canadian mining house Cominco (now Teck), Amalgamated Metal Corporation Ltd (now AMC), British Oxygen Company (now a part of Linde Plc), Mountstar (founded by Sir Sigmund (Siggie) Sternberg (Mount-Star being a translation of his surname Stern (star), Berg (mountain). Behind each name lies a story.
In those first days the subscription was set at “£100 per calendar year” and a management committee of seven drawn from member companies was given the job of setting the sub. There were three categories of member – Founder members, Ordinary, and Honorary members – the idea behind the hons being to reach out to those on the edge who might appreciate being welcomed into the tent.
Right from the beginning, news organizations were welcomed in too. McGraw Hill (the publisher at that time of Metals Week), American Metal Market (an independent US publication) Metal Bulletin (a private company owned by the Rice-Oxley family) and Reuters (then a news agency owned collectively by the UK press) were all in attendance.
Even at the first meeting, the acting Chairman read out a list of companies who had expressed interest but not yet applied, which included Mitsui & Co Ltd Tokyo and the large commission house, Bache & Co, of New York.
By the time I became MMTA Chairman thirty years later in 2003 the MMTA, through its conservative management of finance, had built up a treasure chest of £250,000 and we were organizing conferences with 300 attendee companies. This was not to make money for the sake of it, but to be ready to return value to members and to cover against unexpected events, pre-figuring an event such as Covid.
In the early days, perhaps the most dramatic vindication of the MMTA’s existence, and one of the best examples of its efficacy, came with the negotiations in 1976/77 with the Bank of England, to allow transactions in minor metals to be financed in foreign currencies, raised and spent outside the UK and latterly to allow transactions in Rotterdam to be outside the scope of VAT. What has been regarded as the norm for our trade for as long as most can remember was far from a given in the 1970s, and had to be forged on the anvil of strong collective representation and huge amounts of work by early officers of the MMTA such as the then Chairman Mr Lef Lubett of Ayrton & Partners Ltd.
It was in a letter issued by Mr Bennett, the Chief of Exchange Control at the Bank of England, dated 8th December 1976 that the minor metals trade was collectively given permission to finance, buy/sell, warehouse, and deliver metals in foreign currency, so long as proceeds were ultimately brought back to the UK and converted into Pounds Sterling.
The context for this was of course the poor state of the British economy in the 1970s, and the country’s wish to restrict capital outflows for which metals could be seen as a convenient conduit. The Bank even went as far as to state the list of permitted metals.
As years went by, the minute book shows the orderly way in which the MMTA fielded issues as they came up and the extraordinary way in which key figures such as Howard Masters of Lambert Metals shouldered personal responsibility and did the work, rather than devolving decisions to bureaucrats. Along the course of this first twenty-five years, crises and conflicts are recorded.
An early example was the weight tolerance on deliveries. In 1980, the state Chinese metals trader Minmetals asserted that Chinese contracts should be +/-5% while the MMTA stipulated +/-2%. And later on, as some will remember, Minor Metals Inc. was famous for exploiting the tolerance in ways not foreseen or regarded as within the spirit of the rules by delivering -2% weights on a rising market and +2% when falling, something that did not entirely endear them to their fellow traders.
What we see from the first half of the MMTAs existence is that this was an entity that was attempting to write the laws of cricket for the minor metals trade. As some might point out, in the wide world not everyone plays cricket, or wants to.
In today’s world, the present MMTA has held on to its position. How this has been achieved is no longer merely as the law maker, but as the home of minor metals. We are today just as disparate, mostly privately owned, non-corporate, non-investor owned, and at times a genuinely high-minded association of fellow companies who come together collectively for the general betterment of our trade. Thanks to this, our voice is sometimes heard above the cacophony of bureaucracy and governmental edicts.
In my next article to mark the MMTAs fifty years, I will look further into the minute book and look at the pathways ahead. How can the MMTA maintain its decisive independence and avoid the pitfall of outside regulation that has come to stifle the LME and other once freer markets?
_____________________________________________________________________
*In time, the MMTA changed its name from the Minor Metals Traders’ Association to Trade Association to reflect our commitment to all sides or the supply chain, producers, consumers as well as traders.
By Anthony Lipmann
