CTRM For Metals – A Brief Review of Metals Solutions by CTRM Center

CTRM FOR METALS A BRIEF REVIEW OF METALS SOLUTIONS

INTRODUCTION

According to Commodity Technology Advisory’s (ComTech’s) most recent market sizing research, the metals side of the global Commodity Trading and Risk Management (CTRM) software market remains the smallest of the three broad categories (Energy, Ags & Softs, Metals) by quite some distance. It is estimated to be around $173m USD for FY2022, which was just around 9% of total expenditures that year on CTRM software. However, the metals CTRM market is likely to grow at quite a pace over the next few years, spurred on by the global energy transition and increasing industrialization and electrification in developing countries. Though it is unlikely to exceed the size of the CTRM software market for either energy and/or ags and softs anytime soon, CTRM solutions servicing this space will benefit from the sharper focus on this increasingly important group of commodities by virtue of the energy transition and drive to net zero, and we can expect to see good growth in the foreseeable future.

Traditionally, there were very few comprehensive physical metals CTRM solutions on the market. By and large, choice was limited to a few software products by the then Brady PLC, Eka, SAP, and to some of those now offered by ION via OpenLink in particular. Although several other vendors claimed metals coverage for their CTRMs, the degree to which physical metals were covered was usually rather limited. Other vendors like Murex, for example, claimed financial metals capabilities and ION OpenLink was likely a stronger solution at that time on the financial side as well. Subsequently, Brady PLC has split into two separate entities and its’ metals CTRM solutions are now offered by one of its successors, Quor. In the last few years however, something quite remarkable has occurred in that many vendors appear to have recently introduced new CTRM solutions for metals, or added comprehensive capabilities, such as Gen10, Amphora, Commodities

Engineering, Enuit, Fendahl, Mineman, and Datamine, amongst others. What drove this interest in metals on the part of vendors?

Providing a CTRM for physical metals is extremely complex and expensive. There are arguably at least four basic categories of metals including industrial, precious, concentrates and recycled. However, each individual metal may have a vastly different set of detailed requirements depending on its supply chain, pricing mechanisms and physical qualities, for example. The emergence of ‘green’ metals and instruments adds additional complexity in that the ‘green’ label requires robust traceability for certification. Though many CTRM solutions can easily support certain derivative or financial metals contracts and thus claim metals coverage, supporting the intricacies of physical metals demands greater functional capabilities, adding

complexity and cost for those vendors pursuing customers in this market. Hence, our surprise at the apparent sudden emergence of several new offerings on the market and the idea for this research project.

This report seeks to examine why there is a greater choice in CTRM for metals as well as to take a closer look at those solutions and their capabilities.

SCOPE OF RESEARCH

In recent years, the number of CTRM and Commodity Management (CM) solutions for metals seems to have exploded. Whereas a decade ago there were a small number of potential solutions available, the number seems to have more than tripled. In part, this may reflect increased activity in metals markets driven in large part by the energy transitions where metals required by renewable resources (primarily wind and solar) and batteries have and will continue to see massively increased demand, including copper, zinc, cobalt, lithium, and nickel, just to name a few. It could also reflect a trend towards traditional investment safe havens in metals like gold, silver and other precious metals as inflationary pressures have grown and geopolitics seeks to erode the strength of the US Dollar. It may also be down to volatilities and opportunities in metals (or a perceived opportunity) to replace older, legacy solutions with more modern cloudbased SaaS solutions. Whatever combination of factors is in play, there can be little doubt that metals of all types are set to become increasingly important, from precious through to battery metals and rare earths, and that this will undoubtedly drive additional CTRM and CM software sales, both now and in the future.

So, which are the solutions on the market that may benefit? Are some solutions more effective at handling industrial or precious metals, concentrates and ores? What are the requirements for such solutions and how well are they met by the current crop of solutions? To our knowledge, no one has yet performed an in-depth review of metals solutions that would aid prospective buyers and examine how the various available solutions are differentiated from one another.

The intent of this research was to investigate the metals side of CTRM and CM looking at:

/ How the metals commodities market is segmented – by industry segment, geography, categories or classes of metals and other market components,

/ Key industry drivers and how they may be reflected in CTRM and CM requirements,

/ Key functional requirements for precious and base metals, concentrates and ores, rare earths, and others, and for different types of prospective buyers,

/ The pool of currently available solutions and attempt to identify their strengths and weaknesses against those requirements.

Our methods for conducting this research included:

1/ Industry-wide surveys, interviews, and fact-finding,

2/ Interviews with vendors regarding their products and their capabilities,

3/ Background research via internet and software demonstrations where necessary.

The following is our research report, sponsored by Amphora, Fendahl and Quor (see Appendix 1).

Note – This report uses terms such as Commodity Trading and Risk Management (CTRM), Commodity Management (CM) and ERP for Commodities somewhat interchangeably however, there are differences as well as considerable overlap. The terms are defined in a White Paper “CTRM/CM as an Architecture – An Approach to A 20-year old Conundrum” by ComTech and available for free download from CTRMCenter.com.

When it comes to physical commodities with complex supply chains, most CTRM solutions will contain significant ERP–like functionalities and ERP solutions that have historically been implemented in commodities with complex supply chains will likely contain some trade and risk functions, i.e. There is considerable overlap by necessity. Hence, in this report, we essentially consider those solutions that feasibly can be used for physical and financial metals and their supply chains meaning CTRM, CM and ERP for commodities.

INDUSTRY SEGMENTATION

The CTRM software space has traditionally been segmented by relatively broad groupings of metals categories.:

/ Base metals – generally in mining, this term refers to non-ferrous industrial metals; however, in CTRM terms it is commonly used to mean a broader set of industrial metals including iron, steel and alloys. That said, sometimes ferrous, and non-ferrous metals are grouped separately. A better term to use here may be ‘industrial metals.’

/ Precious metals – precious metals are rare metallic elements of high economic value like gold and silver.

/ Ores & Concentrates – ore concentrates are the result of mining of metal ores and the rough separation of the metals from waste materials. The resulting concentrated product is comprised of multiple metals and other elements that require additional processing to extract the component metals.

/ Recycled – the result of the process of taking waste metal, processing it, and creating new metal material.

The term ‘green’ metals is also increasing in importance meaning a metal with lowest total life cycle carbon emissions over its useful period.

To classify the industry from a CTRM metals point of view, we have historically used the following industry segments,

/ Miners and mining (producers)

/ Metals traders

/ Multi-class traders

/ Financial institutions

/ Processors (smelters, fabricators, refiners etc.)

/ End Users (Industrial consumers – automotive, infrastructure, transportation, etc.)

For high-level models like our annual market sizing study, this segmentation works. However, depending on the metal and its supply chain there can be significantly more complex segmentation. This report is not going

to dive deeply into each metal and its supply chain but rather look at a generic supply chain to illustrate the point. This “generic” supply chain begins with mining and flows through processing/refining, manufacturing, end use and waste management/recycling. This is broadly reflected in our segmentation with the addition of the merchant function within trading and financial institutions.

Geographically, we use the main continental divisions – Europe, North America, South America, Asia-Pacific, Middle East Africa. Our commodity classification in our market sizing model is very high level looking at only precious metals and all other metals and so the four- or five-fold model outlined above is a better way to describe commodity segmentation and will be used throughout this document.

INDUSTRY DRIVERS

The future looks bright for metals. It’s not just the energy transition driving that future - although that likely plays a big role in it. It’s also geopolitics as, for example, certain groupings of nations tie their currencies back to gold.

Every technological innovation, every new building, bridge or highway, every consumer electrical item helps drive demand for metals and while demand increases, supply is lagging. Indeed, a recent report by the Energy Transitions Committee (ETC), noted that without further investment, there are likely to be shortfalls of key metals like copper, lithium, cobalt, silver and so on, saying,

Current supply pipelines do not appear sufficient to meet rapidly growing demand from the energy transition, with supply gaps and high prices possible for six key energy transition materials (cobalt, copper, graphite, lithium, neodymium, and nickel). There is major potential to reduce future demand for energy transition materials via technology and materials efficiency and recycling. These can help reduce cumulative primary materials requirementsfromtheenergytransition, and potentially close supply gaps through to 2030. Action to accelerate both materials efficiency and recycling should be strongly supported and required by public policy – especially for battery materials and copper.

They also state that their “report has set out three key challenges facing material requirements for the energy transition: supply struggling to keep pace with rapidly growing demand, concerns around geopolitics and concentration of supply, and the environmental and social impacts of scaling supply.” The report is also focused on the energy transition and it’s unclear how much consideration was given to other demand drivers in developing it. However, it correctly identifies geopolitics and concentration of supply as issues that constrain supplies, increase risks, and require complex supply chains to be efficiently managed to ensure constant and adequate supply at the main points of consumption.

In the short term, the world bank sees the likelihood of declining industrial metals prices outside of Iron (due to strong Chinese demand) over 2023 and into 2024; however, to provide some context, their 2023 Q1 price average was already around 51% higher than its 2015-2019 average price. Key upside risks cited by them include “a stronger-than-expected recovery in China’s real estate sector and supply disruptions, including those resulting from trade restrictions. In the longer term, the energy transition could significantly lift the demand for and prices of some metals—notably aluminum, copper, and nickel.” On the precious metals side, the world bank cites “increased geopolitical

tensions and inflationary pressures, as well as strong industrial demand for silver and platinum. Potential decisions by central banks to hold more gold is a key upside risk for gold prices, while supply constraints may lead to higher silver and platinum prices.”

These two reports tell us at a high-level exactly what is going on with metals generally. That is that there are multiple demand drivers at play, led by the energy transition and Asian economic growth led currently by China - but in the future, perhaps by India. This is combined with increasing technological innovation and demand, the geopolitically motivated tying of certain currencies to gold, and the purchase of gold and other precious metals by certain central banks. On the supply side, constraints in terms of investment levels and the long lead times from discovery to production (can be up to 20-years for certain minerals, for example), environmental considerations, geopolitics in terms of trade barriers, sanctions and wars, and supply concentration.

Exacerbating supply issues, ore grades are declining in many metals and the energy required to extract the metal from the ore is rising exponentially. For example, according to this article1, it takes 16 times more energy to obtain a pound of copper than it did a century ago and that will likely only get worse in the future. On the other hand, substitution can also help play a role in decreasing demand for certain metals and the same article gives an example of how batteries now contain 30% less cobalt than just a few years ago. Add to this the complexity of, and disruptions to, supply

chains and metals prices are likely to be quite volatile and increasingly higher over time, especially if the US Dollar weakens, impacting prices in other currencies. Plainly, each individual metal has differences and complexities as it relates to supply and demand, but overall, everything suggests that metals are set to show volatility and price increases over time.

Another aspect to the business drivers is recycling and the trend to ‘green’ metals. Some metals are termed ‘green’ due to the role they play in the energy transition like copper, rare earths, and so on. However, metals are themselves a source of CO2 due to the need to mine, transport and process ores, and extract the metals. This has led to the emergence of ‘green’ metals like ‘green’ steel, which is produced using renewable energy or hydrogen with fewer CO2 emissions. Such metals attract a potential premium just like renewable power on the energy side, but they require standards, certification, and traceability to ensure that they are truly low emissions metals. Another example is ‘green’ aluminum for which aluminum producers are adopting new smelting technologies or carbon capture technologies to reduce the CO2 emissions associated with production. However, investing in recycling is currently the preferred initiative to reduce carbon emissions in the production process. Regardless of how they are produced, this drive to ‘green’ metals will continue and add a new dimension to metals pricing, supply chain traceability and processing.

Recycling is also another way to increase supply, and with higher prices for many metals, scrap metal

1) https://www.zionmarketresearch.com/report/metal-recycling-market

recovery and processing is an increasingly important component of the metals market The Global Metal Recycling Market size was worth at around USD 52.8 billion in 2020 and is estimated to grow USD 91.1 billion by 2028, at a CAGR of approximately 7.5% between 2021 and 2028 according to Zion Market research2. According to that report, ferrous metals are the most recycled currently and some 42% of steel was made from scrap in 2020 and that share is expected

to rise. Other non-ferrous metals may also be recycled such as aluminum, copper, lead, nickel, and zinc. There is an entire category of software that aids with the recycling business process that is out with the scope of this report but increasingly, the trading of recycled metals after processing is handled within CTRM and Commodity Management solutions. However, to date, this appears to be quite a small component of the CTRM software marketplace.

2) https://www.zionmarketresearch.com/report/metal-recycling-market

CTRM MARKET IMPACTS

In essence, there are several business drivers helping to drive new sales of CTRM and related software. Primarily driven by the energy transition, electrification and industrialization, demand for metals is expected to rise with potential shortfalls in supply, while concentration and supply chain bottlenecks mean that prices may be volatile and generally higher. Other issues at play include decarbonization, the emergence of greener processing techniques and premium ‘green’ metals, increased recycling and geopolitical constraints and issues.

It would be easy to point to these drivers as the reason behind the recent explosion of new CTRM for metals solutions on the market and perhaps that truly is the primary reason. However, ComTech has not yet detected any massive growth in the procurement rate for metals solutions in the market despite these drivers, and our current forecast is for average growth in precious metals and stronger growth in base metals as follows.

“ Metals markets are also expected to be affected by global economic growth rates on the one hand and by broad ESG initiatives on the other.

Precious metals remain a safe harbor investment at certain times, but we will see less than average growth in the Precious Metals side of things over the next 5 years. On the other hand, base metals and concentrates still seem set for some growth and especially those used in the renewables markets, such as lithium, zinc, copper, and others where production remains vastly short of projected future demand. Mining and extraction are also

environmentally sensitive processes that will increasingly need to be better managed, reported and accounted for, resulting in additional software sales to existing firms in the market. In total, our forecast indicates strong growth in base metals and concentrates, with a forecasted annual growth rate of 7.5-8% through 2027. Intriguingly, we have also noted an explosion in CTRM vendors and solutions offering metals capabilities, particularly in concentrates and ores. The enhanced marketing and competition between thesevendorsmayalsodriveincreased demand via enhanced awareness. ”

However, in talking to the vendors concerned, it seems that the apparent sudden growth in potential suppliers had as much to do with perceived opportunity and buyer concerns over certain vendors and solutions on the market as much anything else. One of the suppliers (at that time known as Brady PLC) went through a tough period before some of its assets – its metals and commodities solutions – were sold on to become

part of Quor. Many of these products, though robust and functionality-rich, were based on aging technology, leading some in the market to seek alternative suppliers. It seems to us that it was primarily this fact, combined with the growth potential in metals, that allowed and encouraged new entrants to emerge – often supported by one or two customers that sponsored various developments.

However, replacement of CTRM or Commodity Management (CM) solutions has historically been a painful process and replacement markets have remained small until relatively recently when a combination of aging technologies on one side and the possibility of more affordable SaaS and cloud solutions paid via subscription on the other. In the last few years, we have observed rapid growth in replacement opportunities however not all replacement opportunities follow through due to the perceived cost,

complexity, and risk. Additionally, it seems that replacement buyers are far more thorough in their replacement search engaging in detail procurement processes with considerable care, due diligence, and slower progress. Replacement opportunities tend to have longer sales cycles. We do know however, that there are multiple metals replacement opportunities potentially in play now and for the foreseeable future.

If there are few available solutions in a market where there is increased demand, then buyers will become more innovative perhaps engaging in custom builds but more likely, in engaging CTRM and CM vendors to extend their current solutions into metals. The latter is thought to be easier and cheaper as a lot of generic functionality is already there for other commodities and the vendor has usually demonstrated skill in extending its footprint. Given the history of many of the newer solutions, it appears this is exactly what has transpired

and with mixed results. Vendors like ION Aspect, Amphora, Enuit, Gen10, Fendahl and so on have been engaged by larger metals businesses at some point in the last few years and encouraged to extend their footprint working in conjunction with a seed customer or customers. For example, ION Aspect picked up a very important customer several years ago that worked to help it significantly enhance its metals capabilities. Amphora, which had seen its Symphony software used to support metals at multi-commodity customers in a work-around type approach, was encouraged by a customer to build Alchemy – an all-new solution for ores and concentrates. Enuit was engaged in the last few years by several users seeking specific metals capabilities in areas like Iron ore and coal, and other metals. There are other examples of this as well and, this activity has created several newer metals solutions on the market.

As anyone in the CTRM software business will tell you however, one customer does not a market make. First, that customer only engages in certain business processes, assets, and markets and thus the resulting solution is only a partial fit at best to industry requirements. Secondly, there can be a temptation to design the functionality too specifically for the customer as the vendor may lack metals expertise at the time and is unduly influenced by its seeding customer. Here, the result is that the solution is not generic enough to have broader appeal. Thirdly, these sorts of enhancements – functionality to support entire commodities and

industries – are very expensive. Although much of the expense of development may be picked up by the seeding customer usually it expects the vendor to invest as well. Furthermore, the vendor then has a new line of code and a single customer to support indefinitely and that too is an expense burden moving forward. Possibly, this expense burden detracts from the vendor’s ability to support its other customers as well, potentially damaging its reputation. There is therefore an urgent need to find customers number two, three and four as it is only by doing so that the code branch becomes commercially viable. Viability of the code branch – or metals solution – is achieved through an ability to sell to other early adopters of the solution who are also willing to coach the vendor on other needed functionality and who will provide a ready revenue stream for the product and its future support and maintenance.

This is a key aspect of analyzing metals CTRM market dynamics. Which vendors and products have managed to find follow-on customers for its seeded solution and how rounded has its solution become as a result. Add into that mix that Quor now has substantial financial backing from its new owner and is engaged in updating its solutions; that SAP truly emerged as a player with its HANA solution and because of managing multiple co-development projects; and that ION OpenLink remains undeniably a very functionally rich solution. It has become a much more competitive market in recent years.

KEY FUNCTIONAL REQUIREMENTS

A metals-focused Commodity Trading & Risk Management system is simply a CTRM that has specific functionality to support various metals, ores and concentrates not found in other CTRM solutions. All commodities share many features and therefore generic requirements like contract management, invoicing, pricing and valuation, risk management and so on. Metals traders will probably discover that unless their metals business is a very generic, derivatives-centric business that they will need a more specialist and focused solution.

Dealing with metal derivative instruments and financial/ paper trading in a CTRM system is rather straight forward and the requires little more than the rather basic handling of exchanged-based derivatives, pricing, and settlement. This means that quite a few CTRM platforms can and do claim some basic financial metals

coverage. However, it is the complexity of the physical metals side that creates issues for many vendors seeking to supply CTRM for metals. Furthermore, the nature of the complex supply chains in metals and ores also means that many opt for the broader functional footprint of commodities management or are forced

to adopt an ERP-type solution alongside a CTRM. As with other types of commodities, the specific detailed functionality will depend upon the metal/ore being traded. Despite that, there are some generalities that will be covered here.

Industrial Metals

The industrial, or base metals, market comprises of largely de-centralised, over the counter (OTC) trading and via several centralized exchange markets that include the London Metal Exchange (LME). Base metals have been traded on the LME since 1877 and are still often priced with reference to what is the dependable and transparent LME price. Since the late 1970s however, the New York Mercantile Exchange (now COMEX) has dominated the US base metals markets and the Shanghai Futures Exchange (SHFE), established in 1990, has built up the nonferrous metal futures market in China. Keys to the success of these markets are safe and secure warehousing, clearing and settlement.

Key requirements then in base metals trading include meeting the standards of the major exchanges when it comes to supporting specific instruments, warehousing mechanisms, inventory and transfer of custody, margining, settlement and so on. Interfacing with various exchange systems can also be an important requirement. LME requirements are paramount among these and form a large part of the specific requirements for a base metals capable CTRM as the settlement prices discovered on the markets of the LME are the global standards for base metals pricing in the physical market, either for the metals’ production or the raw materials.

LME Clear is a central clearing house set up specifically for metal forwards, futures and options traded on the exchange. The LME allows clearing members to use a variety of cash and non-cash collateral, including LME warrants, to cover their liabilities. The acceptance of LME warrants as collateral can help companies release other types of collateral and improve their capital efficiency. Further, settlement mechanisms with daily physical delivery are of paramount importance for commodity pricing. As of March 2020, the LME has licensed a network of more than 550 approved warehouses in 33 locations across the globe covering the vast majority of metals consumption, supply and logistics centers. With this warehouse network, market participants can sell their excess supply in return for cash through trading on LME and withdraw inventory from LMEapproved warehouses when demand exceeds supply. Therefore, the LME’s inventory data serves as a basis for fundamental data about base metals.

This means that any solution targeting base metals must be able to handle all the intricacies, processes and interfaces required by the LME (and other important exchanges) at all points in the process. Key aspects are the ability to handle specific contracts and instruments

– physical and financial, handle inventory, custody transfer, pricing, and settlement as well as margining and financing. Requirements may also extend into areas like processing and the trading of certain physical products which may include a need to manage various modes of transportation, expenses, quality criteria, and so on. If the requirements include sourcing than the solution will likely need to address specific ores and concentrates functional requirements as well.

The ferrous metals side can be seen as broadly similar in that it too utilizes exchanged-based futures and options making the specific exchange requirements key functions within the CTRM solution. Again, the range of functionality required will depend on the nature of the business – does it involve sourcing, processing, transportation and so on? If so, then the supply chain side becomes key and many of the specific needs to manage ores and/or concentrates also apply. If the software is to be used by a manufacturer, then a different set of needs will be important, such as finished products inventory, manufacturing, trading, and risk management. Additionally, the solution will need to support the various types of products such as sheets, bars, rebar, etc.

Another key aspect is hedging. Hedging can become tricky and complex particularly with ores and concentrates where the metal content can change based on the most recent assay. Using financial instruments to hedge physical positions is often an important aspect of a metals CTRM, along with other risk management techniques ranging from position management to more sophisticated measures of exposure like VaR and PaR. Other specific areas may include optimizing contract optionality, especially for producers. In fact, it is this hedging area that can often differentiate CTRM solutions.

In general, however, a base or ferrous metals CTRM will contain standard CTRM functions with the addition of specific support for LME and other exchanges such as handling warrants. This latter point should not be trivialized or underestimated. The solution will then need to be set up to handle a wide variety of metals, instruments, products and so on, to function effectively. In some instances, a broader commodity managementlike footprint will be required to support the entire supply chain including movements, processing, inventory etc. A robust pricing and valuation engine is obviously an advantage.

Ores and Concentrates

Handling ores and concentrates properly is perhaps the most complex of all functional areas in CTRM. This involves significant complexities in areas like pricing, valuation, contract management and optionality, movements, delivery, inventory, assays, and quality data, hedging and risk management, processing, financing, settlement, and invoicing, and others. The complexity largely arises because of the variability of the metals and impurities content of the ores or concentrate which can vary as they move through the supply chain. Each new assay can result in changed values meaning that when and how assays are conducted and by whom becomes important. Each changed result impacts a myriad of other concerns and factors rippling through the transactions increasing risk and the cost of administration.

At the heart of handling ores and concentrates is the pricing and valuation engine which must be capable of handling extremely complex scenarios that include things like,

/ Tiered premiums for metal contents at or between certain levels,

/ Tiered penalties for the presence of impurities at or between certain levels,

/ Ability to reference external prices (curves or other data) and apply complex formulae to those prices,

/ Ability to build formulae to combine metal values and subtract impurities,

/ Include other aspects that might include certain costs, estimates or handling charges.

This means that this engine must be extremely configurable, flexible, and accurate in terms of how it calculates (often to a specific number of decimal points accuracy). Every change in assay values can trigger a recalculation and that, in turn, will impact risk exposures, hedging, settlement, and invoicing. When combined with contractual structures that not only define complex pricing structures, but also often include significant optionality as well, this becomes a large and critical component of the functionality.

Other areas will include handling various invoice types and timings such as interim, final, and others impacting AR and accounting requirements, adding additional complexity. In the case of certain transactions, traceability may also be a key aspect of the requirement and an ability to track from source through processing may be a critical requirement. Add in movements in which various forms of transportation (trucks, trains, barges, ships) needs to be managed along with locations and associated estimated and actual costs and expenses, and this task becomes huge. In some instances, users wish to track changes in valuation via traceability back to the source of the valuation change.

In this area, commodity management solutions compete with CTRM solutions. Additionally, for producers (miners), it may be that the CM or CTRM aspect is an add-on module to their mining operations software solution.

Recycled

Recycled metals may be somewhat easier to handle as in many instances the needs of the actual recycling are managed by separate systems designed for specifically

Precious Metals

Precious metals are a segment in which it is possible for many vendors to suggest that they cover it as for some firms, it is a purely financial instrument pursuit. Any CTRM that can handle various financial instruments – Exchange and OTC – pricing, settlement, and invoicing, can offer their solution as a fit. However, once the physical metals are involved, it does get a tad more difficult. For larger players in these markets areas like vault management also become critical. Of course, if physical simply means buying and selling inventory of precious metals then that is also not so difficult in and of itself. So, for many banks and financial firms, their precious metals trading can be handled by a cross-asset solution (not a CTRM solution per se), an FX solution (as financial precious metals trading is a bit like FX trading) or by a basic CTRM. Where it gets more complex and difficult

recycling, meaning that essentially, the trading and risk side becomes rather more mundane that might otherwise be thought and can be handled by existing CTRMs.

is when the trader is involved in the complete physical supply chain that includes ores and concentrates at one end and refined precious metals at the other. It becomes extremely complex for the reasons outlined above.

For financial firms, a risk system or FX solution maybe an option for purely financial trading or even if trading refined precious metals in inventory. In essence, managing price exposure due to volatility is a requirement for these types of entity along with financing, storage of physical metals and hedging. Complexities could include things like leasing of precious metals, however. For other firms, a CTRM or CM solution is required to manage more complex pricing and valuation, shipping and transportation, inventory, and storage (custody), hedging, assays and much more.

General Needs

A CTRM or CM in metals, by definition, needs to manage the details of one or more different metals and other related commodities as each raw material and finished product is different and has many nuances in terms of physical attributes and characteristics, contract, operational and transportation needs. As previously mentioned, pricing and valuation can be extremely complex with tiered penalties and premiums based on the presence or absence in varying quantities of different elements. It can also include various calculation formulae in nested loops and consistency in accuracy of results is required. The composition of a shipment may also change during the lifecycle of the supply change - even during transportation. Some of the key areas where this is a concern include,

/ Contract management - tracking multiple types of complex contracts and helping identify and manage any optionalities,

/ Generating journal entries at various points in a contract’s life cycle,

/ Monitoring credit exposure,

/ Handling inventory, custody transfer, leasing arrangements and other inventory/vault considerations,

/ Managing shipping and logistics of varying types,

/ Traceability,

/ Tracking physical and financial exposures,

/ Valuing contracts based on complex price formulae, forward curves and changing compositions,

/ Tracking all expenses, charges and fees as estimates and actuals,

/ Producing reports,

/ Managing hedging needs and other risks,

/ And more.

The complexity increases exponentially for ores and concentrates but all metals require a complex set of often different functionalities due to the need to reflect their physical differences.

VENDORS

As stated previously, other than those claiming coverage of financial metals with relatively limited physical metals functionality, the world of metals CTRM and CM was quite limited until recently.

The leader in the category had long been Brady – now Quor, considering their purchase of Brady’s metals solutions in 2021. ION Openlink, Eka, Dycotrade and SAP also have a track record of delivery in metals, albeit ION Openlink was more in metals derivatives and precious metals with banks and financial institutions originally. SAP as more of a commodity-enabled ERP back then often did well in mining – as did Dycotrade. Others such as ION TriplePoint, Murex and several others, also had a few customers – again often more in precious metals than elsewhere. As OpenLink was acquired along with Triple Point by ION, Murex slowly faded away in commodities and Brady struggled in the run up to its re-organisation and ultimate acquisition by Quor, others plotted an opportunity in an area that seemed set to grow on the back of the energy transition and industrialisation. Eka was also one of the earlier entrants into the metals markets and particularly so with their acquisition of MatrixGroup in 2013, a bulk commodity management solution for port operators and one which had developed a solid presence in the metal ores market.

Now, several other vendors that includes Amphora, Commodities Engineering, Datamine, Enuit, Fendahl, Gen10, ION Aspect, and Mineman, have entered the market – or claim to have anyway. Allegro was also in the process of entering the market building a metals version that was essentially stopped when ION

acquired it. Several other vendors also claim some metals capabilities – though again these are often more likely to be for financial metals. These would include Molecule, Beacon, FIS, Hitachi and Ignite for base metals, and Orchestrade for Precious and/or industrial metals (See current CTRM Sourcebook). They join Quor, Eka, SAP, ION OpenLink and the others providing users with a broader range of choice than ever before.

It does seem to us that the emergence of several new vendors in the space over the last several years was likely a result of industry interest in alternative suppliers. Vendors like Amphora, Enuit, ION Aspect and even Fendahl owe much of their capabilities in metals to the assistance of customers using their solutions for other commodities. This is particularly true of ION Aspect, Amphora and Enuit who benefitted from gaining ‘sponsor’ customers that had deep domain expertise in metals and complex requirements. Fendahl has managed to add key customers in areas like iron ore that allowed it to add significant content and capability along with actual users in tha area. Datamine and Mineman had a different trajectory as the come from the minerals & mining area where they have considerable user bases and functional footprints. Still, it was existing customers who most likely helped these vendors expand the breadth of their capabilities into the CTRM area.

Our analysis would suggest that it was the limited choice of vendors and solutions, worries over the future of aging products at Brady PLC (which went through a difficult few years), and also even perhaps the future of products like Triple Point, Openlink, Allegro and Aspect in terms of metals coverage and commitment as a result of their acquisition by ION that sparked interest in finding or sponsoring new solutions. It might well be

that this was also the motivation for the founders at Commodities Engineering a few years ago as well. This worry over availability of modern and comprehensive metals CTRM solutions was likely compounded by the perception that metals were set to grow rapidly on the back of the energy transition and industrialization. The result of these events and perceptions has been to increase the diversity and availability of CTRM and related solutions for metals.

VENDORS & PRODUCTS DESCRIPTIONS AND CAPABILITIES

Amphora

3 London Bridge Station

London SE1 95G

United Kingdon

www.amphora.net

Amphora is a vendor that has been in existence for more than 25-years. Its primary product Symphony was originally developed for oil and gas but has gradually been expanded to become a multi-commodity solution. As a result, the product has many customers globally and a small number use this platform for metals. More recently, it has developed a comprehensive concentrates solution – Alchemy – on a modern platform and has implemented it at the seed customer. It now markets the solution alongside Symphony.

According to its most recent CTRM Sourcebook listing, Symphony has 32 user companies using it in areas like crude oil, refined products, bunker, LPG, LNG, coal, and iron ore. Their CTRM software is multi-commodity and has both broad and deep functionality to support a wide range of business requirements. These include the ability to capture deals and track them through their entire trade life cycle complete with a full audit report. The solution generates trade recaps, confirmations, and invoices, provides up to the minute views of physical price exposures and hedges using derivatives and P&L and VaR across multiple strategies/shipments.

Alchemy is a comprehensive solution for ores and concentrates and takes an innovative approach in terms of design of the UI. However, it has a single core customer for now and will likely require enhancements as it is adopted more widely. Despite that, it ticks all the boxes

for functionalities like pricing and valuation, invoicing, assays and inventory and contract management. For other areas like base metals, for example, it is likely to require some additional functionality as well but has the basics in place. Alchemy is one of several new platforms that have been introduced to the market in recent years

Beacon

5 Hannover Sq., 20th Floor

Suite 2001

New York, NY 10004

www.beacon.io

Beacon is a financial technology firm that has moved into the commodities asset class in recent years. Using the cloud-based Beacon Platform, their customers can build out or deploy only the capabilities they require, and as their businesses grow or their markets change, they can keep pace by adding additional functionality. Beacon has mainly been active in segments like banking and hedge funds, energy trading and risk management. Beacon’s software is basically composed

for concentrates and ores.

Amphora serves customers on all continents and has offices in London, India, Middle East, Singapore, and Houston. The software is available as software as a service, through hosted in the cloud to on premise.

of a secure and scalable quant technology, elastic cloud infrastructure, and front-office applications. The integrated development environment and a web application framework make developing applications faster and easier.

While Beacon’s focus has been in energy when it comes to the commodities asset class, it also works with financial firms and banks and has developed support for metals derivatives across the metals space. It can therefore offer support for financial metals trading and risk management; however, it lacks physical metals capabilities to our knowledge.

The platform is available as SaaS, hosted in the public or private cloud and/or on premises.

Commodities Engineering

Chemin Du Vieux Puits 15 1228 Plan Les Ouates Switzerland

www.commoditiesengineering.com

Commodities Engineering has been in existence for several years offering Balsamo to the industry. Designed by a team of commodities experts with extensive experience of the industry, ‘Balsamo’ is a modern CTRM which applies the latest technologies allowing users to manage the full workflow of demanding and complex commodities. Delivered as a cloud-based solution, the core system can be deployed remotely to provide almost immediate access and minimising the need for lengthy and costly implementation projects. It claims around 8 customers in the space using the solution.

Balsamo is actually a Commodities Management System designed to support end-to-end management of contracts, risk, hedging, logistic operations and finance incorporating trading, treasury, accounting, risk, logistics and market data modules. Balsamo’s

primary focus is dealing with complex materials such as concentrates, industrial minerals, minor metals, precious metals, and scrap. The solution’s unique core engine provides precise and infinite granularity for valuations, risk analysis as well as rapid real-time calculations.

Balsamo has a fully functional pricing and valuation engine capable of calculating payable/penalty contents using business rules created, maintained and applied within the solution. These can be as complex or simple as required based on, for example, treatment charges, refining charges, price participation, price sharing, escalators etc. The system comes with a full set of standard reports, however, client specific reports can be created as required. Balsamo’s risk enegine also provides detailed P&L and Mark-to-Market Risk calculation both as end-of-period and intra-day realtime reports. Fully integrated BI tools provide further enhanced reporting capabilities. To support the complex logistics processes, Balsamo incorporates full support for document generation, receipt and storage based on customer-specific templates including invoices, weight & assay certificates, contracts, certificates of origin etc.

The Commodities Engineering team have implemented CTRM solutions for various producers, traders and consumers worldwide.

Datamine

Hanover House

Queen Charlotte Street

Bristol BS1 4EX UK

www.minemarketctrm.com

Datamine has been around since 1981 in the digital mining technology space and has grown into a sizeable entity with over 500 staff located in 20 different countries. Datamine is a vendor that has historically been focused on mining. Its software suite covers everything from exploration and geology to operations and much more. It has recently extended this coverage into CTRM and now offers a CTRM/CM solution specifically for miners and traders called MineMarket CTRM. It incorporates the full value chain from material management through contract execution to back-office accounting.

MineMarket is an ERP solution targeted at mining management and operations that includes functionality

across production, onsite processing, transportation and logistics, shipping, contract management and more. It is widely used in the industry around the world. Over the last few years, Datamine worked in conjunction with IXM to extend Datamine into CTRM, and now also markets the MineMarket CTRM solution - both as part of the platform and as a stand-alone software product.

It has a materials focus, and the users model the supply chain via workflow and process mapping inside the software. This means that whatever occurs to the material – processing, packaging, transport – it can always be traced from the point of origin to enduse, tracking quality and ownership, and detailing traceability. It is targeted at concentrates, ores, refined metals and coal and it covers functions like quality, assay exchange, pricing, complex contracts, charges, optionality, and other complexities very well along with futures, options, swaps, spreads for commodities and FX.

Dycotrade

Molenvleitweg 26

1432 GW AALSMEER

The Netherlands

www.dycotrade.com

Dycotrade has been marketing Commodity

Management solutions on the Microsoft Dynamics AX platform since 2001. The platform is based on the latest Microsoft technology – Dynamics 365 Finance and Operations, follows the latest trends in IT, and is characterized by a user-friendly interface and ease of use. The combined forces of Microsoft and its sectorspecific knowledge are combined to produce the

EKA

Embassy Tech Village SEZ, Phase II

Aster Building 2A, East Tower

Outer Ring Road, Devarabeesanihalli, Bengalaru

India

www.eka1.com

EKA is a long-term provide of CTRM and related software having been in the business for around 20-years. It has customer around the globe primarily in areas like energy retail, generation, finance, agriculture, industrial

software. Its customer base is primarily in Europe and north America and in the trader, agricultural producer, biofuels, producer, and producer marketer segments.

Dycotrade claims coverage of both physical and financial metals of all types and being an extension to an ERP solution, it is likely to be strong in the areas of logistics and other ERP functions. It is less functionally rich in detailed risk management and reporting. Dycotrade tracks the producing, purchasing, selling, transporting and financing of goods, monitors risks and handles financial transactions related to the entire metals lifecycle from raw materials to refined and finished products. The software is available as a hosted in the cloud solution.

consumers, and other areas. It offers a cloud-based solution CTRM, analytics and supply chain solution delivered on a single platform in over 50 applications. It has offices in India, UK, US, Singapore, Australia and Switzerland and the software is either available as SaaS or hosted in the public cloud.

EKA claims coverage in all metals both physical and financial and it has several metals customers utilising aspects of its solution. It has solutions that incorporates stockyard management, warehouse management, risk analytics, treasury management and trading and logistics for metals and mining.

Enuit LLC

1001 Texas Avenue

Suite 800

Houston, TX 77002

www.enuit.com

Enuit is another long-term provider of ETRM, CTRM and more recently, Commodity Management, having been founded in 2008. Its core expertise is in energy however, it has expanded its commodity coverage beyond energy into all other commodity groupings including metals. It’s solution – Entrade – is used by around 55 companies in Europe, north America, and Asia. These companies are mostly producers/producer

Fendahl

Dubai World Central

Dubai, UAE

www.fendahl.com

Fendahl is a specialist provider CTRM (commodity trading & risk management) software solutions to commodity trading organizations. It offers Fusion CTRM and has over 60 customers worldwide using the solution. Its customers include retailers, generators, financial firms, producers, agricultural firms, industrial consumers, and other types of entities. Fusion is a

marketers, energy retailers, and merchant energy firms.

In metals, Enuit has added various metals capabilities for specific customers in areas like iron ore (and coal), aluminum, and concentrates over time since 2018. Most of its metals customers also trade other commodities as well. It has also developed a full ERP or commodity management solution out of EnTrade and so it can handle financial metals and a variety of physical metals with competency as well.

The solution is available hosted in the private and/ or public cloud, as SaaS or traditionally installed on premises. Enuit has offices in Houston, London, Singapore, China, Japan and India.

multi-commodity CTRM solution, but it has functionality to cover all areas of metals including ferrous, ores and concentrates, base and precious.

Fendahl’s Fusion CTRM solution manages trade entry, pricing, contract management, market data integration, electronic exchange integration, enterprise risk, logistics, bulk handling, blending, assay exchanges, decision support, and reporting. The solution supports the functional trading and risk management requirements of a wide variety of metals trading businesses. The solution is available as SaaS in a multitenanted environment.

FIS

347 Riversdale Ave

Jacksonville, Florida

USA

www.fisglobal.com

FIS acquired SunGard and its software a few years ago and now markets and supports a range of ETRM, CTRM

Gen10

Level 39

One Canada Square, Canary Wharf London, UK

www.gen10.net

Gen10 has more than 20 customers globally for its commodity management solution including customers in metals. Its solution is multi-commodity but does not cover electric power. It does however include emissions coverage and deep support for supply chains including workflow and traceability. Gen10’s solution has good

and risk solutions. These are primarily targeted at energy markets. The majority of its over 100 customers are in energy; however, it also has customers in the financial and banking segments, and it is likely that it has had some exposure to metals as derivatives. It does not appear to have true physical metals capabilities currently. Its solutions are available hosted in the private cloud, as SaaS, traditionally on premises and as hybrid cloud/on premises.

functional coverage to support all types of metals including ferrous, base, ores, and concentrates, precious and recycled. Gen10 has an offering for metals (refined and concentrates) that appears to tick all of the boxes and builds on its philosophy of enabling collaboration along the supply chain and managing operational risks. Gen10 tends also to go beyond CTRM and CM as it offers an ecosystem of applications and connectors for a variety of use cases including metals.

It has offices in Brazil, USA and UK and offers its software solutions traditionally on premises, hosted in the cloud or as SaaS.

Hitachi Energy

320 Interlocken Parkway

Broomfield, CO 80021

USA

www.hitachienergy.com

Hitachi energy acquired Pioneer solutions and its TRMTracker software a few years ago and offers that E/CTRM as a part of a suite of products targeting primarily energy. Its solutions are primarily deployed in the energy industry at traders, producers, generators,

Ignite CTRM

820 Gessner Road

Suite 730

Houston, TX 77024

www.ignite-etrm.com

Ignite CTRM is another energy-focused vendor and solution that has broadened its commodity coverage by

retailers and so on; however, it does also have a few customers that are cross commodity and even non-energy. Its customer base is primarily in north America and Europe. The cross-commodity coverage does include base metals where it has some limited functionality for both physical and financial metals and in that context, has some metals coverage.

It has offices in the UK, Netherlands, Singapore, Japan and USA and offers its software traditionally on premises, as Software as a service and/or hosted in the cloud.

virtue of multi-commodity customer installs. Its product is primarily installed in energy companies but also merchants and traders globally. It claims it has some capabilities for both physical and financial base metals that is deployed at a customer site (see 2023 CTRM sourcebook). It appears this would be for customers that trade multiple commodities, however.

The software is available in the cloud, as SaaS and traditionally installed on site.

Invensoft

232 Second Floor, 12th Main, 2nd Cross, RBI Layout, JP Nagar 7th Phase, Bangalore, 560 078, India

www.invensoft.com

Invensoft is a vendor that provides commodity management solutions in ags and metals warehousing from

ION Aspect

1345 Avenue of the Americas

49th Floor

New York, NY 10105

www.iongroup.com/products/commodities/ aspect/

Aspect is a multi-tenanted SaaS ETRM/CTRM best suited for small to medium-sized traders, refiners, producers, and marketers of crude oil, refined petroleum products, petrochemicals, metals, hydrogen, and environmental certificates. The solution provides rich functional coverage for financial and physical trading with integrated live market data and real-time reporting, valuation, and risk analytics. Aspect claims full support for all metals including base, ferrous, precious, and recycled and has benefited from input from several large metals businesses where it is installed.

its office in India. It has over 40 customers using its XBS software including metals companies. Its metals coverage is for base metals and specifically around third-party warehouse processing and logistics covering commodity intake, quality management, warehousing, collateral management, processing, packing, container stuffing and shipping.

The software is available in the cloud, as SaaS and traditionally installed on site.

Aspect is configured with an intuitive scripting language and offers the following key capabilities:

• Trade management: Straight-through-processing to easily monitor physical and financial positions, MTM, and P&L as deals are entered and updated.

• Data and analytics: Enhanced with market data from leading exchanges and news sources coupled with pre-trade analytics for optimizing trading strategies.

• Risk management: A suite of tools to assess the price, volume, volatility, quality, delivery, counterparty, credit, and multi-currency exposures from physical and financial deals.

• Physical operations: Tools for tracking and optimizing the logistics of complex supply chain activities.

Aspect is available as Software as a Service or hosted in the cloud and is supported by multiple ION offices around the globe.

ION Openlink

1345 Avenue of the Americas 49th Floor

New York, NY 10105

www.iongroup.com/products/commodities/ openlink/

Openlink is a multi-commodity ETRM/CTRM best suited for diversified, top-tier, global companies who engage across multiple commodities markets with advanced risk and physical logistics needs. It supports a comprehensive list of instruments, including natural gas, power and renewables, crude oil, refined products, base and precious metals, coal, hydrogen, weather derivatives, environmental products (certificates), interest rates, and foreign exchange. It also provides comprehensive risk management, real-time streaming risk data, and high-performance operations. It covers derivatives and physical asset classes and provides a consolidated physical-to-financial view of positions, risks, and P&L — from lease management and generation to physical movement planning, hedging, inventory management, actualization, and settlement.

Openlink is a highly scalable and extensible solution built on proven technology and robust architecture with the following key capabilities:

• Trading and analytics: Direct exchange integration lets users enter, retrieve, and view trades, run and

view reports, and run ad hoc simulations and stresstesting scenarios.

• Sophisticated credit and risk management: Realtime streaming data for market risk exposures (mark-to-market, Greeks, VaR, etc.) and credit exposure monitoring.

• Scheduling and logistics: Continuous planning of asset allocations and movements for any mode of transportation, including truck, rail, pipeline, vessel, and grid.

• Confirmation and document management: Management of all back-office and logistics document generation and tracking.

• Workflow tools: Dynamic, multi-layer workflow engine that enables automation, execution, and monitoring of custom business processes from beginning to end, combined with extensive exception handling.

Openlink uniquely also offers a fully integrated treasury capability.

The solution supports all metals and has many customers in all different industry segments. It is particularly known for its precious metals capabilities and is used by many top tier multi-asset class traders and financial entities.

The solution is available hosted in the public or private cloud and traditionally installed on site.

Mineman Systems

2 Eastern Rd, South Melbourne

Vic 2305, Australia

www.mineman.com

MINEMAN is an integrated global solution for Commodities Management in base and precious metals targeted at mining. Mining companies use MINEMAN to sell their products, including concentrates containing copper, gold, silver, lead and zinc. MINEMAN is also used to sell metals such as gold and silver doré, refined bullion, and copper cathodes. Smelters and Traders use MINEMAN to buy the products. It is essentially a CM solution in that it incorporates a finance module, logistics module and marketing module.

The solution includes concentrate handling for copper, gold, nickel, lead and zinc concentrates. It handles

Molecule

1333 west Loop South Suite 950

Houston, TX 77027

www.molecule.io

Molecule is a modern cloud-based solution for energy and commodities trading and risk. It is used by generators, hedge funds, marketers, producers, refiners, merchants, and industrials mostly in north America

functionality like assay exchange processes by tracking all assays including buyer and umpire assays. It supports the generation of multiple invoices including proforma, provisional and final invoices. Invoices are dynamically generated from the specific sales contract configured in the system automatically gathering the latest available weight, assay, and price data. It also includes a specialized doré management system which can assist in tracking of gold and silver doré. The system will track melts and bars as well as samples. The Marketing Module also has specific functionality to handle copper cathode sales. MINEMAN can track cathode production from initial batch and bundles right through to final invoice.

The company has been in existence for 20-years and supports its customers globally from several office locations in Peru, Philippines, Hong Kong, Australia, USA, and India.

but also in Europe and elsewhere. Its capabilities are multi-commodity, and it claims customers using it for metals in all major metals categories – both physical and financial. However, it lacks several aspects of a commodity management solution and does not support transportation modes, for example. Rather it is more of a trade capture and risk solution. Despite that, it is a viable option for multi-commodity traders who may be doing derivatives.

Molecule is available as a SaaS solution and is supported out of its Houston office.

Murex

15-25 Boulevard de l’Amiral Bruix

75116 Paris France

www.murex.com

MX.3 is a leading capital markets trade and risk management solution offered by Murex. It is a crossasset class solution that has been offered into energy and commodities for some time. It supports various

Orchestrade

74 Coleman St London, EC2R 5BT

www.orchestrade.com

Orchestrade is a modern cloud-based solution that was originally designed and marketed into other asset classes but by virtue of a major French energy customer, has extended its footprint into ETRM specifically and is now marketing itself into energy and commodities. Due to its modern architecture and usage in financial

commodities including both physical and financial base and precious metals and it has several customers in the space including banks and market makers. Murex was seen as a strong financial metals system and has increased its functionalities in the physical side as well. The solution is more of a trading, treasury and risk management solution however as opposed to a fullyfledge commodity management solution.

The solution is supported out of offices around the globe and is available traditionally on site, in the cloud or as SaaS.

entities, it is capable of near real-time risk calculations and high-performance computing and is therefore a potential platform for large and complex organizations with commodity and other asset class exposures. It also has precious metals functionality and claims customers using it for precious metals. It is however, a trade capture and risk solution primarily and lacks any ERPtype functions like transportation to help manage the supply chain.

The solution is available on public or private cloud on AWS, Azure or GCP It is supported out of offices in the UK, France, and USA.

Quor

1st Floor Victory House Vision Park

Histon, Cambridge, CB24 9ZR

www.quorgroup.com

Quor is the current owner of the former Brady PLC assets – Trinity, Aquarius and Fintrade. These products were widely using in metals for many years and Brady was known for its metals capabilities. Subsequently however, this part of Brady was sold to Quor and the functionality of Aquarius has in recent years been subsumed by Trinity. The Trinity and Fintrade CTRM Solutions cover the needs of:

1. Derivatives traders, physical traders, and financial institutions

2. Miners, producers, and manufacturers across base, concentrates and precious metals.

3. Agri co-operatives and bulk agri physical commodity traders

Trinity is a CTRM solution for multi-entity financial trading. It specializes in hedging and risk management, supporting standard financial contracts including

forwards, futures, options, and averages to complex derivative instruments. Trinity supports on exchange trading (including LME, CME and TOCOM) or OTC trading of base and precious metals.

Fintrade is a Commodity Management solution for multi-entity trading across a complex supply chain. The solution enables strong P&L management and cost control for physically traded commodities. It specializes in inventory and logistics management for deliveries via land, sea, and air. Fintrade supports both exchange and OTC traded base metals, ags and softs.

Quor is working to provide a new user interface for its functionally-rich software products that will span both Trinity and Fintrade and provide a consistent look and feel across its suite.

Quor Group is now fully owned and supported by STG, a reputable U.S.-based Private Equity Firm. Established in 2002, STG boasts a portfolio comprising more than 50 global companies, with assets under management exceeding $10 billion.

The solutions are available as hosted in the cloud or traditionally installed on site.

SAP

69190 Walldorf Germany

www.sap.com

The SAP Commodity Management solution is designed to allow customers to run fast, intelligent, and tightly integrated commodity trading and risk management processes with enterprise resource planning (ERP) systems from SAP, natively and seamlessly integrated with the ERP components and processes. The SAP Commodity Management solution is available for SAP S/4HANA as well as in the SAP Business Suite software.

The solution is designed to enable enterprises to buy, sell or trade physical commodities. It provides real time and end of day commodity risk analytics and enables organizations to manage price risks with financial commodity derivatives. SAP Commodity Management is commodity agnostic and provides functionality to manage the whole spectrum from very complex pricing mechanics to straight forward manual future and basis

pricing. It comes with a query-based commodity risk analytics layer that can be consumed by the broad range of tools within the SAP Analytics portfolio.

The SAP Commodity Management solution includes the SAP Commodity Procurement, SAP Agricultural Contract Management, SAP Commodity Sales, and SAP Commodity Risk Management applications. SAP Commodity Management for SAP S/4HANA is part of the digital core for implementing new technologies such as artificial intelligence through machine learning, robotic process automation, conversational AI for natural language processing, predictive analytics and blockchain technology. This opens a huge opportunity for SAP, their implementation partners, and Commodity Management customers to deliver and build the intelligent enterprise for all commodity related businesses.

The SAP solution is primarily used by larger and more complex entities, and it counts more then 270 customers globally with many in metals and mining. It has offices all around the world and implements hosted in the cloud or traditionally with multiple applications also available as SaaS solutions.

COMPARATIVE CAPABILITIES

With a project like this one, it is simply impossible to get too far into the weeds of functionality with each vendor. The issue is one of complexity. How do you score a vendor for a generic set of requirements that represents every possible buyer? It is simply an impossible ask. Each selection project essentially attempts this for a single user company and many of these end up seeming to be flawed as vendors often can and will over state their true capabilities.

Instead, we can provide a guide at a high level. How do we see each vendor’s product in terms of the likelihood of it meeting most requirements for a business looking for a specific type of solution. This may then be used to help prospective buyers determine a long list from which to conduct a specific and focused search. And that is what we have attempted here. This represents our informed view after conducting the research and acting as an analyst in the space. However, it is only a view and vendors are constantly adding and updating so it is a view in time and while it can be useful in aiding buyers understand what is available it should be supplemented with proper due diligence and procurement processes on the part of the buyer.

Key

Solution may meet some requirements

Solution should meet most requirements

Alchemy is a new product with potential to cover all metals eventually – for now it is ores & concentrates-specific for a customer with some base metals’ capabilities.

Beacon being more of a ‘toolset’ and coming from more of a financial markets background may support derivative trading in most metals and can be extended to cover all.

Commodities Engineering

Balsamo is fully functional solution in all areas but may lack some specific needs in precious metals. DataMine

Datamine is an extension to a mining ERP solution and may lack detailed risk analytics as well as certain specifics for precious and industrial metals as a result.

Dycotrade is an essentially an extension to the MS ERP for commodities and it has support for all types of metals however, it likely lacks detailed risk analytics, various trading views and specific functionality in certain areas.

EKA appears to support all aspects of all types of metals however, in detail it will reflect the specific needs of installed customers and ay require enhancement for other users.

Enuit has added Commodity Management and detailed functionality to support ores and concentrates as well as other metals. However, its customer set is limited so far.

Fendahl has a good customer base using it for most metals.

FIS might be used for metals derivatives, but the software really targets energy commodities.

Gen10 has developed functionalities to support all categories of metals however, its customer base may not be so diverse as to cover all needs. Despite that, its solution has proven to be extensible and configurable.

Hitachi has had some use in base metals specifically via its Pioneer acquisition.

Dycotrade

EKA

Enuit

Fendahl

Gen10

Hitachi Energy

Vendor/Product

Ignite CTRM

Invensoft

ION Aspect

ION Openlink

Ignite has had some exposure to base metals but it is primarily an energy solution.

Invensoft’s commodity management solution has a specialist module for metals warehousing.

ION Aspect has become a solid solution in all metals over the last few years and enjoys a good customer base in most categories.

ION Openlink is a top tier and extremely functional solution with treasury capabilities as well as strong risk management. It is strong in Precious metals and derivatives specifically.

Mineman is an extension to a mining solution and has a growing customer base.

Molecule

Molecule has strong derivative and risk capabilities. Murex

Orchestrade

Orchestrade is increasingly a potential solution in commodities and has multi-asset class capabilities.

Quor has the old Brady software products that have a large customer base and deep functionality however, they are aging and Quor is engaged in giving the products an uplift.

SAP is an ERP solution with a commodities extension into commodity management.

Mineman

Quor

SUMMARY

The sudden interest in offering metals solutions on the part of the vendors seems to be related to two key areas,

1. The first is that interest in metals is thought to be increasing and will likely increase further in the coming years because of the global energy transition, industrialization and electrification in developing countries and other trends. This will likely lead to greater demand for solutions in metals globally.

2. At the same time, as this trend began to emerge, the leading vendors in the metals CTRM space appeared to run into issues. Brady PLC entered a phase of significant disruption that ultimately led to it going private and then splitting in two. Meanwhile, Openlink was acquired by ION and there were quite a few grumblings in the market about ION’s aggressive M&A activities and survival of the various platforms that it acquired including ION. This and the general paucity of solutions seems to have both encouraged end user companies to seed other vendors and assist them in building out metals functionality, or it encouraged new vendors to emerge focusing on metals.

The result of these trends has been a sudden and rapid expansion in choice for end users seeking solutions for industrial metals, precious metals, ores & concentrates. That being said, some of the newer and emerging solutions lack broad market exposure and could pose a risk of functional deficiency in certain areas. However, as these vendors and products add new customers and deeper, broader functionality, they should emerge as true challengers in this important software market.

In reviewing all the solutions that we are aware of, there are many more solutions that can likely cater for financial trading with rather limited physical exposure. There is also a core group of around half a dozen solutions that extend into various aspects of physical

metals coverage. We have attempted to characterize our view of this coverage at a high level in this report but please note – footprints are constantly changing as vendors evolve their solutions and a full and complete selection process should always be undertaken.

Quor (as the successor to Brady PLC’s metals software products), ION OpenLink, Eka and perhaps SAP Commodities Management, remain the market leaders by virtue of their historical dominance in this space. Increasingly they are being challenged by a variety of newer entrants such as Fendahl, ION Aspect, Commodities Engineering, Amphora, Enuit, Mineman and Datamine, for example. It will be intriguing to watch and see how this plays out in the coming decade or so.

ABOUT

Commodity Technology Advisory LLC

Commodity Technology Advisory is the leading analyst organization covering the ETRM and CTRM markets. We provide the invaluable insights into the issues and trends affecting the users and providers of the technologies that are crucial for success in the constantly evolving global commodities markets.

Patrick Reames and Gary Vasey head our team, whose combined 60-plus years in the energy and commodities markets, provides depth of understanding of the market and its issues that is unmatched and unrivaled by any analyst group.

For more information, please visit: www.comtechadvisory.com

ComTech Advisory also hosts the CTRMCenter, your online portal with news and views about commodity markets and technology as well as a comprehensive online directory of software and services providers. Please visit the CTRMCenter at: www.ctrmcenter.com

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CTRM For Metals – A Brief Review of Metals Solutions