Financial firms enter commodities arena

High stakes

parachutists

Commodities financing can be a risky business. Ask Merrill Lynch. The US dealer’s financing venture in an Indonesian coal mine in 2007 (see box, page 34) would represent a good Harvard Business School case study on how not to go about doing things in this market, says one head of commodities at a major bank. In truth, the activity is one of the most intensive risk-assessment businesses in commodities. “You need to take into account sovereign risk, the financial wherewithal of the